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Diminishing Returns On Central-Planning Policy Extremes = 2016 Crash
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The problem with these policy extremes is that they are so painfully visibly acts of central-planning desperation.
It is perhaps fitting that I am posting a call for a financial crisis that fails to respond to the usual central-planning manipulations on Bastille Day. There are two main lessons for the present era we can draw from the storming of the much-hated Bastille fortress-prison by a revolutionary mob in 1789 Paris:
1. The authorities can only keep a lid on a simmering stew of injustice, inequality and structural imbalances for so long before the pot boils over.
2. Last-minute baby-step reforms designed to placate the masses (i.e. simulacra reforms that are all show and no substance) cannot resolve the crisis; rather, they only reveal the full depth of the injustices, inequalities and imbalances.
We are in the endgame of central planners' attempts to keep the lid on the simmering stew of profound imbalances that characterize the status quo. As I have described many times, Maintaining the Illusion of Stability Now Requires Ever-Greater Extremes of central-planning policies.
Mortgage/housing market melting down due to systemic fraud? Nationalize the mortgage market. This is what the federal/Federal Reserve central planners did post-2008, as 97% of all mortgages were guaranteed by federal agencies and the Fed bought $2 trillion of the $10 trillion outstanding mortgages in the U.S.--fully 20% of the entire mortgage market.
Stock market bubble popping? Ban short-selling, criminalize negative comments in the media, and withdraw half the companies on the stock exchange from trading. This is partial list of the extremes China's central planners recently imposed in an panic-driven orgy of central-planning.
Another way to understand the increasing reliance on central-planning extremes and their declining effectiveness is diminishing returns: more treasure, capital, time, energy and labor must be expended to keep the status quo from falling off a cliff.
The Fatal Disease of the Status Quo: Diminishing Returns
All of this extreme malinvestment requires more and more control of the national resources, so liberties must be curtailed and further extremes of centralized power and control must be imposed on the hapless citizenry. The resources of the many are increasingly stripmined to maintain the power and avarice of the few.
I recently discussed these trends with Greg Hunter of USAwatchdog.com in a 23-minute video program, Policy Extremes Maintain Illusion of Stability.
Let's review the policy extremes that are yielding diminishing returns:
1. Zero interest rate policy (ZIRP): central planners' favorite tool for robbing savers and people who have socked away money for their retirement and handing the cash to banks. Now that central bankers have pegged interest rates at zero for 6+ years, there's nothing left in ZIRP but to push rates into negative territory, i.e. it now costs you money to park your cash in a bank.
There's not much juice left in the zero-interest rate policy, and negative interest rates smack of central-planning desperation--which feeds the very fear and insecurity that trigger panics and crashes.
2. Directly buying assets to prop up failing markets. The Chinese central planners are the latest authorities to reach for the last tool at the bottom of the central-planning toolbox: buying stocks and bonds directly to create the illusion of demand for increasingly shaky financial assets.
There are two problems with creating bogus demand by using central bank money to buy stocks and bonds: one is this communicates desperation (see above), and the vast scale of bubblicious debt and equity markets have turned even trillion-dollar purchases by central planners into handfuls of sand thrown at a rising tide.
Global equities now total $64 trillion and debt securities (bonds, etc.) total $95 trillion. Global real estate totals $180 trillion. Once the risk-on euphoric trust in central banks' omnipotence fades and risk-off selling begins in earnest, how much would central banks have to buy of this $340 trillion to keep the bubble inflated?
Is it plausible to believe that central planners buying less than 1% of this will stop a landslide of selling? Would even 2% ($7 trillion) make any difference?
3. The grab-bag of desperate policy extremes: banning short-selling, bail-ins (the theft of depositors' cash to bail out the bankers), partial closure of stock exchanges, currency devaluations, and so on. You can create a good catalog by just listing every action of Chinese central planners in the past month.
As noted above, the problem with these policy extremes is that they are so painfully visibly acts of central-planning desperation. If things are as positive as we're told, then why are central planners forced to impose such absurdly extreme policies to keep the status quo from imploding?
If these policies worked, why are interest rates still pegged to zero after six years of "growth" and the inflation of monumental asset bubbles?
If these policies don't work (and they obviously don't, otherwise the authorities could have normalized interest rates and ceased quantitative easing, stock purchases, plunge protection schemes, etc. many years ago) and central planners keep doing more of what has failed, then the only possible conclusions are:
1. The policy extremes will never work
2. The central planners' continued expansion of policy extremes reveals their desperation
3. When diminishing returns drop below the zero boundary, the system crashes.
Ignore the goofy guy in the blue shirt (me) and just ponder the issues Greg raises:
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2015 crash, 2016 crash, etc., etc., etc., its all bullshit. It will keep going until it no longer does.
was going to say the same thing but you beat me to it
I’m certainly not going to put a date on it, but this monetary system is reaching the end of its rope, and is due for an overhaul, sooner rather than later. I would hope that that overhaul would be a move back toward sound money, here's an example of a first step, but that would put some power back in the hands of the people and it is far more likely that it will fit the past rule of monetary shift. Namely the government and banks get stronger.
It aint over 'til the fat lady sings. Hope Yellen has been resting her voice.
The final year of a President's 2nd term is a good year for a crash. Easy to get the outgoing POTUS to sign off on bailing everyone out. No President wants the utter collapse of the US economy (I mean banking system) on their record.
Oh, you think they wouldn't possibly try that again? Guess again. Those banks have brass balls the size of Kentucky.
Global currency, global central bank, global .gov. YIPPEE!
He should pass the 'free spoon act" since everybody is going to be eating a big pile of shit. The FED will be printing huge quantities of money trying to save Wall St. and the bond markets. Of course it won't work, but that's never stopped them before. Lastly, the elite has been priming the free shit army for the coming riots and will be quite surprised that they can't control the monster......
If I didn't know better I'd think this was Celente changing his target date AGAIN. Will someone PLEEEEEEZZZZZEEEE forward this to Michael Snyder?
Exactly Haus-Targaryen! The usual ZH scaremongering: throw enough darts at random dates, and sure enough you'll eventually hit the bulls eye.
Of course the system is totally broken, but predicting when the wheels will fly off is just plain guesswork. The whole point of Black Swans is that nobody (including ZH) sees them coming.
Anyway, with Greece 'saved' yet again, more time is bought. Time we can use to prepare ourselves.
Let them smash gold down some more, it'll be an excellent time to add to my position!
it will keep going up and one day they will just freeze the markets, and everyon'e statements will look great and the banks will keep taking their fees until it's all gone
And then whichever year it does 'crash', that will just be another opportunity for the Banksters to once again rape the peasants.
retail sales reported as -0.3%
BUT
may revised down (total adjusted) ... initial $444.926 billion ... revised to $443.236 billion
June initial $442.032 billion
if may not revised ... june would have been -0.7%
So the goal posts keep getting pushed back another year....I guess one of these will eventually be right.
Nobody knows when but it will eventually happen only when TPTB decide on it. Until then. It's Better to Be a Year Early Than a Day Late
Look, those working at the upper levels of the entire financial system are not "desperate". They are liars. They KNOW what the outcome will be. They expect it. They willl benefit from it. Any discussion of mistakes, and foolish chioces, or "bad policies" etc. is just playing their game of believing they are trying to help or are "misguided". They are neither. They know what they are doing and they are quite successful. Yes, they lie to cover their tracks. They use non-linear disinformation to put every possibility out there so nobody can track down the reality. http://www.thetruthaboutthelaw.com/non-linear-disinformation-makes-it-im...
The Crash got pushed back to 2016? Crap, need to close my shorts
Crap, I need to wash my shorts.
Looks like someone set Oblunders teleprompter to high lmao
The President Announces a Historic Nuclear Deal with Iranhttps://www.youtube.com/watch?v=OLhV3JRWKUM
The "crash" is always the next year...
Seriously. Really getting old. Half the people predicting this shit have been saying next yr for 7 yrs now
Depends on your definition of a "crash". For 80-90% of the population there has been a depression going on for the last decade. However, if the government statistics are massaged, the central bank keeps the stock market up and bond yields low, and no one acknowledges it - has there been a crash? It's likle a tree falling in the forest with no one to hear it. The banksters can create unlimited banknotes...that's a lot of can kicking
The market will crash when all the papered over cracks finally coalesce. Not even J Yell's (fat) finger could fill that hole in the dyke.
The "CRASH" has already happened.
Everthing is on lie support.
Except maybe Iceland.
There is a policy extreme not yet tried. QE for the people ala Steve Keen. It would be politically palatable with numbers big enough to make a difference.
Charles, even you are throwing in the towel. I will stay the course with The Plan B. The attempt will be to avoid any collapse and that's where the whole problems begin in that there is no scope for healthy collapse. Collapse will eventually occur, who knows when? only when they fail to keep the system from collapsing. By then they would have nice places to run to and hide while the rest will be forced into destitution. The end of Capitalism, at least for the new few generations including that of mine, may not be violent. It will get violent only if someone up in the chain gets hurt badly and still can retaliate.
http://just-a-thought-from-thinair.blogspot.com/
"The problem with these policy extremes is that they are so painfully visibly acts of central-planning desperation."
I hardly think the centeral banks are desperate. Criminal genius is more accurate.
Hanlon's Razor:
Never attribute to conspiracy what can easily be explained by stupidity.
https://en.wikipedia.org/wiki/Hanlon%27s_razor
Atlas is about to shrug.
Use your imagination Charles. There is always NIRP. Then we go to plaid.
Is that as in "Plaid Swan"?
Have you not seen the documentary film "Spaceballs" ?
More Fed QE coming and number fudging is a given.
Everything is fine until everyone is sucking on the government tit.
Think of how long it took for the Soviet Union to fail financially. When you have financial criminals working together it can take a long time.
Okay, now its 2016' last year it was 2015 and the year before it was"............. Blah blah blah, really getting tiring
I want the crash to happen NOW!!! I am all prepped and can you imagine all the young beautiful girls I will get? I will have a friggin harem!! :-) so then central bankers, lets get the show on the road, I am not getting any younger ya know. (satire)
(Or not.)
We will not get the crash until people realize that voting in elections no longer matters. Like in Greece right now the will and vote of the people did not matter. When the people in the U.S. actually begin to wake up and realize that the politicians have lost control of our future to the creditors that's when we will crash.
Many in the U.S. already know this.
The question is; When does a significant percentage realize this?
Gotta change the equation to one that can be solved. 1 person, 1 vote does not work. 1 person, 1 pitchfork . . . that might just do it.
After WWII who did the Greeks vote into office? The comunists and various other socialists.
When people finally clue in that the Grande Experiment begun by the Fabianists in the late 1800s, leading to comunism and various types of socialism such as Fascism and Nazism, is all an utter failure.
When people do wake up it may be too late, the general public has been indoctrinated by the school system to believe they need the government to look after them. The entire system must collapse before it can be rebuilt.
Atlas has to shrug.
Nah! LYNCHING LAMPOSTS will come into vogue. Cities like D.C. and NYC will have to dedicate entire swaths of their available stock for duty Miestones
Historical similarities.
1929 The Great Depression Part 1 - YouTube
"The problem with these policy extremes is that they are so painfully visibly acts of central-planning desperation."
lolololololololololololololol
Not to the MSM and therefore not 99% of the public. I invite the author to conduct a random survey of his countrymen and see for himself just how many can even describe, let alone, define, central planning, have even heard of the Fed, know what a central bank is, know what an investment bank is, know anything about anything else he mentions, let alone understand. Then let him tell me how "visible" these acts are.
"End the fed" and "fuck the banks" and "occupy wallstreet" and "throw out the bums" will in no way qualify as passing answers.
Seriously Charles, remember you're talking about people who think that their pensions are money in the bank ... and that "money in the bank" actually exists, and that all "we" have to do is choose either Hitlery or Jebush and it's morning in America, easy as that.
So there will be a crash at some point, caused by government intervention, only to be "resolved" by even more government intervention. People will eat it up too because they are more gullible than ever. I mean government saved us during the Great Depression and after the housing bubble burst, right? That will be the rationale and all they need is for 51% to believe it.
The very reason this probably won't crash next year is contained in Chuck's own article. Central Planner Desperation. My guess is their bag of tricks has only just been opened.
They are no where near the building of bridges to nowhere, construction of empty cities, WPA programs, dams in the desert and ultimately, a big fat world war. And even if those fail, they still have Bernankecopters in there somewhere too.
But, kicking the doomsday can down the road is better than capitulation, I guess. Seems to be working in the EU, so why not give it a try in gloomer blogs? Maybe the clicks are slacking and a bit of blogger desperation is setting in?
In the end, there will be a grand reset, just not for quite a while yet.
So as not to leave it hanging, I'll predict that when this blog goes all in bullish, that will be the sell signal.
"Submitted by Charles Hugh-Smith of OfTwoMinds blog,"
Made it this far and stopped reading. Tyler is trolling us hard with this retard's articles.