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"Of What Use Is A Gun With No Bullets?", BIS Says Central Banks Defenseless Against Coming Crisis
If you know anything about the history of the BIS, you know that the bank’s latest annual report is glaringly ironic and somewhat hypocritical. The “bank for central banks” as the highly profitable institution is known, has for decades served as a secretive club for the world’s most influential central bankers. The lavish governors’ weekends hosted by the bank in Basel allow the world’s most powerful monetary policy mavens to discuss the most important issues facing the global financial system in complete privacy with no fear that anything will leak to the public or to the press.

In other words, the BIS serves to encourage and perpetuate the power and prestige of the world’s central bankers and provides a top secret forum for the monetary policy cabal to meet and commiserate safe at all times from the prying eyes of those to whom the bankers should by all rights be accountable.
In this context it’s somewhat absurd that the bank’s annual report — which, as a reminder, is required reading in treasury departments and monetary policy circles around the globe — contains a scathing critique of the very same policies which were no doubt devised, tweaked, and honed over dinner and fine wine in Basel. Nevertheless, the BIS’ latest tome is replete with criticism for the idea that the very people who make up the bank’s Board of Governors are indeed omnipotent.
* * *
Excerpted from the BIS Annual Report
Policies have been unable to constrain the build-up and collapse of damaging financial booms, ie the global economy exhibits “excess financial elasticity” – think of an elastic band that can be stretched out further and further until, eventually, it snaps back more painfully.

The interaction of monetary regimes has spread the easing bias from the core economies to the rest of the world. This happens directly, because key international currencies – above all, the US dollar – are extensively used outside the issuing country’s borders. Thus, the core countries’ monetary policies directly influence financial conditions elsewhere. More importantly, an indirect effect works through the aversion of policymakers to unwelcome exchange rate appreciation. As a result, policy rates are kept lower and, if countries resort to foreign exchange intervention, yields are further compressed once the proceeds are invested in reserve currency assets.
All this raises the fundamental question that lies at the heart of the current policy debate: Why are market interest rates so low? And are they “equilibrium (or natural) rates”, ie are they where they should be? How are the market and equilibrium rates determined?
Inflation need not reliably signal that rates are at their “equilibrium” level. Rather, the key signal may be the build-up of financial imbalances. After all, pre-crisis, inflation was stable and traditional estimates of potential output proved, in retrospect, far too optimistic. If one acknowledges that low interest rates contributed to the financial boom whose collapse caused the crisis, and that, as the evidence indicates, both the boom and the subsequent crisis caused long-lasting damage to output, employment and productivity growth, it is hard to argue that rates were at their equilibrium level. This also means that interest rates are low today, at least in part, because they were too low in the past. Low rates beget still lower rates. In this sense, low rates are self-validating. Given signs of the build-up of financial imbalances in several parts of the world, there is a troubling element of déjà vu in all this.
Shifting the focus from short-term to long-term rates does not change the picture. There is no reason to presume that these long-term rates will be at their equilibrium level any more than short-term rates are. Central banks and market participants fumble in the dark, seeking either to push rates towards equilibrium or to profit from their movement. After all, long-term rates are just another asset price. And asset prices often do follow unsustainable and erratic paths, as when they are at the root of financial instability.
What are the policy implications of this analysis? The first is that monetary policy has been overburdened for too long, especially post-crisis. The second, more general one, is the need to rebalance policies away from aggregate demand management to initiatives that are more structural in character.
What to do now? Room for manoeuvre in macroeconomic policy has been narrowing with every passing year. In some jurisdictions, monetary policy is already testing its outer limits, to the point of stretching the boundaries of the unthinkable. In others, policy rates are still coming down. Fiscal policy, after the post-crisis expansion, has been throttled back, as sustainability concerns have mounted. And fiscal positions are deteriorating in EMEs where growth is slowing. What, then, should be done now, besides redoubling reform efforts to strengthen productivity growth?
For monetary policy, there is a need to fully appreciate the risks to financial and hence macroeconomic stability associated with current policies. True, there is great uncertainty about how the economy works. But precisely for this reason it seems imprudent to push the burden of tackling financial stability risks entirely onto prudential policies. As always, the correct calibration will be country-specific. But, as a general rule, a more balanced approach would mean attaching more weight than hitherto to the risks of normalising too late and too gradually. And, where easing is called for, the same should apply to the risks of easing too aggressively and persistently.
Given where we are, normalisation is bound to be bumpy. Risk-taking in financial markets has gone on for too long. And the illusion that markets will remain liquid under stress has been too pervasive (Chapter II). But the likelihood of turbulence will increase further if current extraordinary conditions are spun out. The more one stretches an elastic band, the more violently it snaps back. Restoring more normal conditions will also be essential for facing the next recession, which will no doubt materialise at some point. Of what use is a gun with no bullets left? Therefore, while having regard for country-specific conditions, monetary policy normalisation should be pursued with a firm and steady hand.
* * *
As you can see, the BIS is now pounding the table on the irresponsible actions of the bank's own board members. The celebrated monetary policy "bazooka" is out of ammunition even as the imbalances, excesses, and outright speculative bubbles post-crisis central bank policy has helped to create appear set to boil over. That is, the "rubber band" — to use the BIS' analogy — has been stretched farther than ever before and now threatens to snap back violently, only this time around, the world's central banks, having driven rates below zero and having monetized everything that's not tied down from USTs to German Bunds, to Japanese ETFs, to shares of Apple, will have no recourse.
In sum, central banks have sown the seeds of their own destruction by failing to acknowledge their limitations, setting the stage for a tragically absurd endgame wherein central bankers suddenly realize that bringing every tool in the monetary tool box to bear on financial markets has created the conditions for a collapse which they will be unable to arrest precisely because any and all emergency measures were exhausted in the frantic attempt to reflate the last centrally planned bubble.
We may not have to wait long for the day of reckoning because as we saw last week with Sweden, the game is now officially up.
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"CB's will print forever!"
HAHAHAH!
Farking idiots
Thanks ZH for the list of guillotine contenders.
"Of what use is a gun with no bullets left?"
In hollywood movies, when the old-west convict riding away runs out of bullets, they throw the gun back at the sheriff, grab the reins with both hands, and they ride away faster.
"Heavy is good, heavy is reliable. If it doesn't work you can always hit them with it."
-Boris
the g-n has more b-ll-ts than you can possibly imagine
hugs,
gideon gono
http://tanwj.com/wp-content/uploads/2011/01/zimbabwe-2009-100-trillion-d...
For you pilots out there, I believe what the BIS is saying is that we have a "pilot-induced occilation" problem with the world's central banks.
"In sum, central banks have sown the seeds of their own destruction by failing to acknowledge their limitations, setting the stage for a tragically absurd endgame wherein central bankers suddenly realize that bringing every tool in the monetary tool box to bear on financial markets has created the conditions for a collapse which they will be unable to arrest precisely because any and all emergency measures were exhausted in the frantic attempt to reflate the last centrally planned bubble."
Blah, blah, blah. Next year, they'll all meet in secret again to discuss the "destruction," if any, they've caused. But if said destruction happens, it won't be to the Central Banks, anymore than any of the previous busts have destroyed them. In fact, it won't phase them and they'll probably garner more power after the next crisis. No, the effects of their actions will be felt where they always are - in the real economy and by real citizens.
Bingo. "Of what use"? (Whose use, who uses?)
Getting ready to end CBs! (to be replaced by...hummmmm)
BIS Says Central Banks Defenseless Against Coming Crisis
So this will be the excuse for the BIS to introduce a single currency for the whole world, and by the way, I'm using the term "currency" only in its most figurative meaning because you won't get folding money, no walking around money for you. You'll only get some digital data on a card that is tied to your job and your home and your dependents.
Yup. It'll start off as a card, then eventually an RFID chip implanted in your body. And if you do something they don't like, they will just turn off your chip...
Actually, the funniest thing was the old George Reeves Superman shows. The bad guy would unload a clip into Superman, who would just stand there laughing and smiling as the bullets bounced off. Then, out of bullets, the bad guy would throw his gun - and Superman DUCKED.
I forgot about that one, lol.
Maybe ZH can dig up a list of the BIS shareholders.
The pozi scheme founding families.
The gods on earth.
[you are of course a sub human according to them and will be treated as such]
So did Zimbabwe, and didn't that work out well.....
Currency wallpaper just might come back in style at some point......
The central banks are doing precisely what they were designed to do. There is absolutely nothing frantic or accidental that brought us to where we are now. It is by exacting design.
Once the Fed and other central banks are cluelessly blamed for causing the collapse with "Keynesian insanity," the "wise" BIS and the "governance-reformed" IMF will take over many functions that national central banks do today. Power overy monetary policy and financial markets will be internationalized as the globalists always intended.
If you wish to avoid getting scammed, you must first be aware of the scam. Then you can undertake countermeasures.
http://redefininggod.com/2015/06/globalist-agenda-watch-update-48-the-ba...
Well, yes, that is probably the plan.
I find it particularly funny that there is no mention of how large amounts of debt plays into this scenario and/or the question whether any governing body should or can set the price of money effectively so that money is neither loose or tight?
Why don't they go into the actual problem that is faced with a system that needs continuous growth to feed a debt based monetary system? How come no discussion on that?
All we are hearing now from these asshats is how the CB's were not acting responsible and the know-it-alls at the BIS are now disturbed about it (having had years to point out the issues during their secret meeting in Basel).
The world collectively has to call bullshit on these fuckers and burn their house down.
Fuck the BIS and the moneychanging scum they support
Precisely.
And don't forget that the "scum" that own the BIS are never going to let go of the Global Monetary System. As they crash the old monetary system you can rest assured that they will be in full control of creating the new one.
Keep your eye out on the IMF-SDR... AKA "the Phoenix" It was predicted by the Rothschilds owned Economist Magazine back in 1988 (No really)
Here' the guts of the 1988 Economist article...
"The phoenix zone would impose tight constraints on national governments. There would be no such thing, for instance, as a national monetary policy. The world phoenix supply would be fixed by a new central bank, descended perhaps from the IMF. The world inflation rate – and hence, within narrow margins, each national inflation rate- would be in its charge. Each country could use taxes and public spending to offset temporary falls in demand, but it would have to borrow rather than print money to finance its budget deficit. With no recourse to the inflation tax, governments and their creditors would be forced to judge their borrowing and lending plans more carefully than they do today. This means a big loss of economic sovereignty, but the trends that make the phoenix so appealing are taking that sovereignty away in any case. Even in a world of more-or-less floating exchange rates, individual governments have seen their policy independence checked by an unfriendly outside world.
–
As the next century approaches, the natural forces that are pushing the world towards economic integration will offer governments a broad choice. They can go with the flow, or they can build barricades. Preparing the way for the phoenix will mean fewer pretended agreements on policy and more real ones. It will mean allowing and then actively promoting the private-sector use of an international money alongside existing national monies. That would let people vote with their wallets for the eventual move to full currency union. The phoenix would probably start as a cocktail of national currencies, just as the Special Drawing Right is today. In time, though, its value against national currencies would cease to matter, because people would choose it for its convenience and the stability of its purchasing power.
…..
The alternative – to preserve policymaking autonomy- would involve a new proliferation of truly draconian controls on trade and capital flows. This course offers governments a splendid time. They could manage exchange-rate movements, deploy monetary and fiscal policy without inhibition, and tackle the resulting bursts of inflation with prices and incomes polices. It is a growth-crippling prospect. Pencil in the phoenix for around 2018, and welcome it when it comes."
https://socioecohistory.wordpress.com/2014/07/26/flashback-1988-get-read...
All we need now is also predicted massive instability in the global currency markets that make this new and stable NWO global currency necessary.
+1 Just not yet, wait until the yuan is admitted into the SDR toilet paper basket.
Soros the Globalist was talking about how China should be the lead in the new global currency IMF-SDR back in 2009 already.
Here's the Financial Times interview with Chrystia Freeland and George Soros (12 minutes)
https://www.youtube.com/watch?v=NLX7SFdQmyI
Chrystia's head nods so much during this interview that my guess is that her neck is thicker than a horses. She will also likely be Canada's new Finance Minister if the Trudeau Liberals win in the Fall 2015 election.
Looks like you've been reading some Brandon Smith. That mofo was RIGHT...*DAMMIT*
That mofo IS RIGHT.
When you look through his lens of the false East West paradigm then everything (and I mean everything) suddenly makes sense.
It was a "bitch-slap" moment into a full conscious awakening.
Nice picture of Putin and Reagan back in the day when Putin was a nobody if you read his Bio... I guess every Russian met Reagan...
http://og.infg.com.br/in/3576924-6f1-570/FT631A/O-ex-presidente-american...
BTW... check out how well Vladimir Putin speaks english back in 2008... (30 seconds into the 1:32 video) This will be important when we face the nuclear showdown the globalists have planned for us with Russia and China...
https://www.youtube.com/watch?v=vyqAFO7RJeg
Plus he is an "old friend" friend of rabid Rockefeller NWO architect Henry Kissinger
http://www.nytimes.com/2012/01/20/world/europe/henry-kissinger-to-meet-w...
Translation: Rising interest rates are good.
A gun persieved to have bullets is scary until you know it is firing blanks
Long. Walmart ....
didnt 6 walmarts close recently?
Don't expect a market collapse or a reversion to free market anything...once the CB's broke the markets (rather than watch them fall), they effectively owned them. Now, they are all in regardless the ever more draconian efforts needed to maintain the fraud. Almost certain the markets have already been replaced by meaningless centrally dictated #'s (whether pro-activly or re-activly...who knows?)...all we are watching now are kabuki centrally directed financial markets with ever worsening economic impacts.
Some sort of collision lies dead ahead...just don't expect you will see it in the "#'s)...
if recent history is any guide...look for urgent "buyers" to show up soon and buy equities, buy bonds, and sell paper PM's on dollar weakness?!?
Otherwise...look out below.
Satan might just execute order 66 on his bankster puppets this fall.
I'm no expert, but I'm fairly certain that the blue waves on that chart getting bigger every seven years or so is not a good thing..... just sayin.
You mean the waters are not supposed to recede like that ?
i thought that was Capt.Yellen Canute doing it.
That's because you're not a trained professional in the field of central bank magic - if you were you'd understand that those blue waves getting bigger are setting up for a permanent liftoff - like bouncing on a trampoline until you reach escape velocity and fly into orbit.
Thank God for the experts.
Hey it's all good. The finiancial cycle is just starting to swing up and will soon go into orbit.
Breaking: Janet Yellen has locked herself in a bathroom and refuses to come out!....
LOL!!! Plenty of guns, bullets and knowledgible experts around here.
Its no suprise criminal Bankers use terms such as 'bullets' to describe econimic policy. It seems violence, theft and war is what they know and how they operate.
Tragedy and Hope
A History of the World in Our Time by Carroll Quigley, 1966
Pg. 324: the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank, in the hands of men like Montagu Norman of the Bank of England, Benjamin Strong of the New York Federal Reserve Bank, Charles Rist of the Bank of France, and Hjalmar Schacht of the Reichsbank, sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.http://www.thirdworldtraveler.com/Banks/Tragedy_Hope_excerpt.html
“… the treacherous signing away of American rights at the 7-power conference at London in July 1931 … put the Federal Reserve System under the control of the Bank of International Settlements.”
Rep. Louis T. McFadden, chairman of the House Banking Committee, on May 4, 1933.
http://home.hiwaay.net/~becraft/mcfadden.html
"Just in time for Hitler."
Ooooops.
Say hello to the IMF now would appear...
That was a fine, fine book. Antony Sutton wrote quite a few good ones that explain why we are where we are today as well, and many of those are accesible from his Wikipedia page for free. Also, Gary Allen and Larry Abraham wrote a very good book called "None Dare Call it Conspiracy" which is also downloadable for free via PDF (just do a web search). Never a bad time to brush up on history...
If nothing else, those books provide an excellent springboard for further research...
I don't necessarily believe every word that someone writes, so I do further research on everything to corroborate what they say. It's the only way to avoid author bias and get to the facts of the matter.
Yes, the atmosphere is full of fear from both parties involved.
Actually, I like the idea that even the global elite can be embarrashed and put into a corner for a while. An experience I really enjoy to see unfolding. :))
BIS - that secretive cabal - has something to think about, eh?
They may learn that there are boundaries what can be done esp. when time is so short.
Their self-criticism is nothing that can be taken seriously, they are all psychopaths.
They don't appear to be "settling" anything that's fer sure.
Just a bunch of clowns sitting around staring at each other saying "you owe me/no you me"?
This is full blown sophistry rather than fear. They're just setting up the stage for the next act.
What good is a gun with no bullets? Well, it is good enough to make the goddamned Superman duck.
https://www.youtube.com/watch?v=tGf1r8-Snss
Now there was some fine acting. I never understood the statement "can leap over a tall building in a single bound". Why would he leap when he can fly? Just one of the many things I ponder on in life.
I work with comic nerds, so I asked.
Apparently in the early comics he couldn't actually fly, just execute astounding leaps. Later on, fuck all that gravity shit, it's all sci fi ooga booga because oif our yellow sun.
I used to wonder how could he accelerate once he was already flying.
Once when I was about 8 years old, in a Catholic confessional, I noticed that the priest was sounding bored and distrcted, so I got my eye right up to the screen and managed to see that he was reading a Superman comic. He may have been working on the same question from a theological persepective.
Nice... he stands there to take all the bullets, but ducks for cover when the gun is thrown at him... because I guess that would hurt more?
Kryptonite grips. Better than Mother of Pearl inlays.
Greece is like Lehman Brothers.
http://michaelekelley.com/2015/06/29/greece-is-like-lehman-brothers/
Here are some more signs of a coming recession.
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
http://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
Can't they just use their superpowers? I was lead to believe they're omniscent, omnipresent and omnipotent.
They REALLY thought they were.
Now, they are shaken. They have to rearrange their strategies for working with "outcasts".
If Janet Yellen is in her bathroom, where is Draghi?
Lastly, when will Lady Lagarde declare the IMF bust?
True contagion should have that time line: from bathroom to dustbin of financial crimes.
We have technology to sever your head from your body. Laser based. Shhhhh.
When someone points a gun at you bullets or not you assume bullets and shit yourself,a debt instrument not so much.
what a bunch of clownz. it's not a gun it's a bazooka.
"Pistol whip them niggazzzzz!!!"
What the hell is wrong with the printer. Everybody hates their printer.
Load it with nails.
Yes the monetization has compressed the PM market to the point of explosion as well.
Bad bankster analogy! You always assume a gun has bullets until it doesn't, either by pulling the trigger until it's empty or you have inspected it and confirmed there to be no ammo inside.
Interest rates OTOH, no tactical advantage... you can point that ZIRP gun anywhere you want.
I suggest that they put it to their head and pull the trigger to see if it's empty.
I hope you all know that the Greek finance minister Varoufakis is a professor of game theory.
I don't dare to hope in a win-win solution but I am ceratain that the Greek gov't can scare the shit out of the world financial elite (BIS).
He's like a dungeon master or something?
+ 20 health points.
He likes to take risks. And that's what the global elite does NOT like.
Was this FT article published too long ago to remember?
http://www.ft.com/cms/s/0/0b340146-b20e-11e4-b380-00144feab7de.html#axzz...
What good is a Republic, when the people are unarmed?
No bullets? Huh? Central banks could always let the price of gold rise....
They still have negative interest rates, price controls, confiscation, wealth tax, etc.
There is a bullet. Allow ALL governments of the world to default to their central banks and central banks only.
The central banks brought the debt into the world via thin air and can take it out the same way.
This would do miracles for all debtor nations ... which is all nations.
According to Macquarie Research:
http://personal.crocodoc.com/lHeFs3w
China drama & Greek farce
Are Central Banks at the end of the road?
Greek and Chinese dramas question role of Central Banks…
- The latest developments in China and the Eurozone inevitably invite the question whether Central Banks are coming to the end of the road. Given the limited impact of their policies on real economies with stimulus largely being confined within walls of financial assets, has the time of reckoning finally arrived?
- As discussed in the past (here & here), the only sustainable LT outcomes for the over-leveraged and over-supplied global economy are either: (a) allowing the deflationary cycle to go through, thus eliminating global excess capacity in service and merchandise economies; (b) elimination of excess debt via some form of hyperinflation and/or co-ordinated debt cancellation; or (c) banning capital markets via nationalization. Given that neither of these alternatives is attractive, involving pain for either borrowers or savers; intergenerational transfers or courting sharply lower ROIC, CBs would rather kick the can down the road in the hope that a solution would be eventually found.
…and should CBs place monetary policies in neutral gear?
- PBoC’s half-hearted attempts last week to slow the pace of appreciation of the equity market have inevitably and predictably resulted in severe correction. The double-barrel reduction in interest rates and RRR on Saturday is a belated realization that it is courting a significant economic backlash. As discussed here, we do not believe that China’s de-leveraging is either possible or desirable. Having reached leverage of ~3:1, any debate about the evils or virtue of debt has passed a long time ago, and the only viable choice from now on is to continue leveraging, though perhaps at a somewhat slower and safer pace.
- In order to continue leveraging, PBoC has to make sure that: (a) there is no sharp correction in any of the key asset prices; (b) at least some asset prices are appreciating; and (c) there is no further contraction in nominal GDP. This requires a combination of exceptionally stimulative monetary and fiscal policies as well as trust that a country is not yet in a liquidity trap and that it is capable responding to stimulus in safeguarding nominal GDP. The game is no longer about reaching 7% real GDP growth but avoiding zero nominal GDP.
- The same dynamics are playing out in Europe. The battle is between politicians who have not yet grasped that deleveraging is no longer feasible, and the ECB, which is fully onboard. Whether Greece is allowed to exit does not alter the basic argument that the numbers do not work, unless leveraging continues.
China is at very early stages of stimulus
- We maintain that China is at an early stage of significant (probably the largest globally) stimulative action. We expect that over the next two years, RRRs would be reduced to historic levels (i.e. 5-6%); interest rates would be lowered to zero and fiscal spending would become much more aggressive (including multiple banking re-capitalizations). The only question is whether China would send a massive inflationary pulse through global economy or would aim for more moderate impact. Initially, the PBoC would be aiming for moderate outcomes, ensuring support for asset prices but avoiding more disruptive action. However as we progress into 2016-17, more drastic actions might be needed. In the meantime, we remain O/W MSCI China, as equities remain the least systemic asset class that can be leveraged, at least for now.
No worries. The BIS is here to keep the wheels of commerce rolling in peacetime or war. Come what may, banks first, banks always.
Of what use is a gun with no bullets?
Well, they're usually hunks of steel so you can still bludgeon BIS employees with them.
Some of them, you can attach bayonets to and then stab BIS employees.
Some shotguns you can smoke weed through, and then turn it around and again bludgeon BIS employees.
So, apart from bludgeoning or stabbing BIS employees, I've got nothing.
Where the hell are all the Blooms, Steens, Steins, Farbs, etc?
"All this raises the fundamental question that lies at the heart of the current policy debate: Why are market interest rates so low? And are they “equilibrium (or natural) rates”, ie are they where they should be? How are the market and equilibrium rates determined? "
Wonder why BIS didnt' touch unemployment and Larry Summers' IMF speech where he argued that natural rate is currently negative.
Did BIS write this to annoy Larry, IMF ot both?