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Faith In Central Banks Dwindles
Submitted by Pater Tenebrarum via Acting-Man.com,
Even Bloomberg Notices that Something is Amiss
As anyone who hasn’t been in a coma knows, assorted central bank interventions have failed to achieve their stated goals over the past several years. A recent article at Bloomberg focuses on their failure to reach their “inflation” targets.
Of course, this particular failure is actually reason to celebrate, as it means that consumers have at least been spared an even sharper decline in their real incomes than has been underway in spite of relatively tepid increases in consumer prices (whereby it should always be kept in mind that whether or not such price increases are considered “tepid” depends on on the composition of the basket of goods and services relevant to each individual).
Market-based inflation expectations in the major currency areas have crashed again – click to enlarge.
Of course central banks have succeeded in blowing up the money supply at truly astonishing rates since 2008, so prices in the economy have certainly been vastly distorted. The devastating effects of such price distortions are currently being visited on the oil patch, where credit-financed malinvestment on a stunning scale has occurred as a result of an erroneous appraisal of future oil prices. A slowdown in money supply growth in the US and China between 2011 and 2014 was all it took to take the wind out of the sails of this particular collective hallucination.

Inflating the euro alone wasn’t enough to keep oil prices afloat …
Illustration by David Simonds
To the delight of the financial industry, asset prices have been the main beneficiaries of money supply inflation, but deep down many market participants are presumably aware that the “wealth” ostensibly created by artificially pushing the prices of titles to capital to the stratosphere is just as ephemeral – it is ultimately nothing but phantom wealth. If everybody tried to cash in, it would disappear in a flash. And of course, that is what it will eventually do, one way or another (it would be possible for even more intervention to keep nominal prices high, as was e.g. recently demonstrated in Venezuela, but certainly not in real terms). As an aside to this, even the accounting profits reported by listed corporations are in many cases largely illusory – they are often little more but capital consumption in disguise.
Anyway, various financial market participants interviewed by Bloomberg are lamenting the “loss of credibility” suffered by the central planners. From our perspective, they never had any credibility. This has nothing to do with the persons running these agencies (although we certainly believe that the economic theories they base their decisions on are extremely misguided), it is simply due to the fact that central planning is literally impossible. Even the best-intentioned planners cannot circumvent economic laws – they might as well try to outlaw gravity.
This development is nevertheless of interest, because the superstitious belief that central bank interventionism actually does work has been widely held in the mainstream (or let us say, the utterly illogical faith that this time, central planning will somehow work in spite of the massive heaps of countervailing evidence that have accumulated over the years). If this faith is lost, it will have implications for financial markets.
One can invest realistically, by being aware of the short and long term effects of money supply expansion and interest rate suppression, but in order for the cynical approach to work as one would expect, the support of a broad foundation of the uncritically faithful is still required. Once this congregation of high-IQ morons becomes antsy, things can change rather dramatically. Or as one observer-participant interviewed by Bloomberg puts it:
“There’s a lack of faith in monetary policy — you’ve thrown the kitchen sink at it, you’ve cut rates to zero, you’re printing money — and still inflation is lower,” said Lee Ferridge, the head of macro strategy for North America at State Street Corp. “It leads to a risk-off environment.”
Risk off? Uh-oh.
US money supply TMS-2 since 1988 – sure looks inflated to us – click to enlarge.
Credibility Crash
Another reason why we wanted to draw the attention of readers to this article – besides the fact that it documents that faith in central bank omnipotence is dwindling – is a single sentence in it. One thing that always leaves us scratching our head is that the mainstream financial press never asks a question that seems rather obvious to us: is it possible that the economy’s performance is so poor not in spite, but because of the policies implemented by central banks?
Our answer to this question is no secret. One cannot improve prosperity by creating more money from thin air and manipulating the most important price signal in the economy. In fact, it is completely beyond doubt to us that this will end up weakening instead of strengthening the economy. This happens “in spite” of the superficial short to medium term impression of growth conveyed by the increase in aggregate economic activity during the boom phase. As we always stress, activity alone is not enough – its quality is the decisive point. A loss-making company can be quite active while nevertheless still producing losses. No-one would get the erroneous idea that its activity makes any economic sense.
The above mentioned question neither seems to occur to the authors of such articles, nor to the vast majority of mainstream economists. Instead, a truly bizarre routine conclusion tends to be drawn from the evidence of failure: we must try to fail on an even grander scale. In other words, let’s fail in style! With a bang instead of a whimper! Here is the lone sentence from the Bloomberg article exemplifying this mind set:
“Recent economic reports have renewed calls for major central banks to do more.”
We regard this as evidence that the unnamed authors of these “recent economic reports” are certifiably insane. Instead of demanding that central banks should stop what has so obviously failed to work, they want them to do even more of it! If there is any consolation, it is that this is certain to make the eventual “credibility crash” all the more profound. A small consolation to be sure, but better than nothing.
Lastly, we should perhaps mention that the main focus of the Bloomberg article, namely the “concern” allegedly created by the seeming inability of central banks to create “inflation” is extra absurd. One thing we will never worry about is the ability of a sufficiently committed central bank in a fiat money system to debase the money it issues.

The one thing they can actually do …
Cartoon by B. Rich
All that has happened so far is that price increases have not yet shown up where they would have liked them to show up, but even that can be easily remedied. Keeping the process under control is an altogether different kettle of fish though.
Conclusion
Back in 2008/2009, we pointed out that during the “great financial crisis”, central banks proved to be the last bulwark market participants trusted to be able to keep the implosion of the credit bubble at bay. In effect, a bureaucratic arm of the government was seen as more likely to succeed in this than governments themselves.
It follows from this that there is little that is of greater importance to systemic confidence than faith in the abilities of central banks. Thus, when even the mainstream financial press begins to publish articles about a potential “loss of credibility” faced by these august institutions, one must begin to pay close attention.
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It's a giant $hit sandwhich and unfortunately, we are all likely gonna end up having to take a bite!
I don't consent to paying the debt they racked up. Need to find a legal way to cram that wad down their throats and make them pay for it.
How does a corporation realistically, or legally tie unlimited spending on the people of a soveriegn country?
The problem is that the US government does not represent the American people. It is a foreign entity in and of itself.
The American people have no responsibility for the acts of the US government.
If you signed up for the 14th amendment trust you do. You get all the benefits, but are responsible for the liabilities as well.
pods
CBs are tools of the big money folks. We can shoot the messengers, but that is just the beginning.
Central bankers are the new priest class.
And unpayable debt is the new slavery.
Obama will not finish his second term! Banned independent documentary reveals the truth. This will scare millions! Current Events Linked to Ancient Biblical Prophecy!
http://motivationdose.com/is-america-babylon/
"The American people have no responsibility for the acts of the US government."
Insofar as they support it by returning to the polls — and they most assuredly do — they most definitely bear responsibility. Otherwise the USG would collapse.
If you are a citizen, you are responsible. Per the 14th amendment.
Sucks ass. Unless you have time to rot in jail and $$ to defend yourself after trying to extricate yourself from the system. Ask Chumblez. He was doing it.
pods
The 14th Amendment has no more moral authority that the Constitution itself:
"The Constitution has no inherent authority or obligation. It has no authority or obligation at all, unless as a contract between man and man. And it does not so much as even purport to be a contract between persons now existing. It purports, at most, to be only a contract between persons living eighty years ago [at the time of this essay's writing]. And it can be supposed to have been a contract then only between persons who had already come to years of discretion, so as to be competent to make reasonable and obligatory contracts.
Furthermore, we know, historically, that only a small portion even of the people then existing were consulted on the subject, or asked, or permitted to express either their consent or dissent in any formal manner. Those persons, if any, who did give their consent formally, are all dead now. Most of them have been dead forty, fifty, sixty, or seventy years. And the Constitution, so far as it was their contract, died with them. They had no natural power or right to make it obligatory upon their children. It is not only plainly impossible, in the nature of things, that they could bind their posterity, but they did not even attempt to bind them. That is to say, the instrument does not purport to be an agreement between any body but "the people" then existing; nor does it, either expressly or impliedly, assert any right, power, or disposition, on their part, to bind anybody but themselves."
http://freedom-school.com/the-constitution-of-no-authority-by-lysanser-s...
Jefferson, however incompletely, understood this at the outset:
http://student-of-life.newsvine.com/_news/2010/11/21/5502595-thomas-jeff...
I would not cram it down their throat.
I would shove it up their......
It would be the poor man's dream of trickle up economics coming true.
The spending will end only with the collapse of fiat currency. Then, people will use any alternative medium of exchange, irrespective of possible harm to them.
But people can actually hasten that collapse by a simple market choice: use real money today, wherever it is accepted. U. S. law does not forbid this as yet.
When it comes to shit sandwiches, the more bread you have the less shit you taste.
more like work every day to try to make a sandwich for yourself. Just when youre about to take a bite, most of it is taken from you. Then try to make it again and again forever until you die.
fun aint it!
https://thinkpatriot.wordpress.com/2015/10/07/leboweski-enlightenment-5/
The questions you don't get around to asking are the important ones. And the question of why you never got around to thinking about that?
Revised definition of insanity: Continued trust in a banker uebermenschen when they repeatedly fail.
" Faith in central banks", what an interesting concept. The next round of magic money is about to begin come January and it should be enough to kill the patient.....
On schedule with Chinese inclusion in the SDR, Sept. 2016. Debase the dollar and make the Yuan look good.
Faith?
I am trying to understand why the central banks and international banks are not simply classified as criminal organizations?!?
Can anyone think of a logical reason why we would not simply consider them criminal organizations?
They infiltrated the courts.
Drug Smuggling -> Banks -> Intelligence Agencies -> Drug Smuggling - > Banks -> Intelligence Agencies - Drug Sm...
Cash goes from smugglers to launderers. Info goes from banks to 3 letter agencies. And of course its the 3 letter agencies making most of the cash from smuggling.
This is best understood as not three separate groups/organizations, but a vertically integrated single organization.
a dumb criminal breaks the rules
a smart criminal changes the rules
Federal Reserve heads point at other people when they have the resposibility of fostering and enabling criminal behavior.
central banks enable congress not to act within a budget.
moody's enables central banks to enable congress:
Moody's says US government's Aaa credit rating and stable outlook are supported by a variety of credit strength's, allowing the country capacity to support a higher level of debt relative to other sovereigns
hey, i recognize the name Moodys. Aint those the folks that rated toxic mortgage backed securities AAA?
Anyone still having 'trust in central banksters' to do anything but enrich themselves and their crony pals is a complete asshole.
Central Banks don't earn faith, they purchase it. And QE4 is going to be one helluva buying spree.
OT ALERT
I have practiced medicine for 40 years.
About 10 years ago Veterans were asked about guns. It seemed to be part of an antigun agenda, but it was limited to veterans.
Yesterday I saw a medical record from a primary care doc that stated 'no guns in the home'. This effort is now mainstream. Your primary care doc gets paid more if the record is 'complete.
I would suggest that you do not need to be thorough or honest when completing the physicians intake form. I would not make a stink because that action could just flag you as a potential trouble maker.
I do not think the plan is to use medical records as part of a system to confiscate firearms, there are better ways to do that. I think it is just to further prejudice against gun ownership. It is completely inappropriate data for the federal government to collect however.
You should be aware that it is being done and prepare yourself to deal with the question when it arises.
I will just lie to them, like they lie to me.
Okay. Allow me to practice...
Guns?
"No"
PMs?
"No"
Glad to see that the Doctors are optimistic and still think everyon is honest with them.
After 40 years of talking to people every day one gets a different view of what people are like. I doubt many docs believe people always tell them the truth....'I hardly eat anything but I still gain weight'....another miracle on par with the loaves and fishes...
Don't forget: Do you support and stand with the State Of Israel unconditionally? Yes!
Answer that one incorrectly and you're on the no-fly list.
It's strange we never see a cartoon of Stanley Fischer......hmm, I wonder why.
Perhaps he's too ugly or too good looking enough to print.
carter claimed he lost the reelection because greenspan raised rates rather than wait til the 1980 election was over. interesting?
he had alot going against himself[?], but in reality, any incumbent nominee...[???] ie., clinton did some nasty shit to get reelected, as did reagan... etel.!
now, back to raising rates and why the CBs are in collusion.
this, so called TPP is going to cement the mini-asian-tigers into the asain-pivot matrix forever, thus isolatiing the dragon? if screaming J. Yellin raised rates in sept/15 the mini-tigers would certainly have had second thoughts about the 'not-so-long-ago' emasculation (Asian Finnial Crisis-1997) of their very economic/fiscal export-driven sovereignty. (and the hopes of ever growing into a semi-liquid dm!, living in equilibrium like big brother)
screamin J Yellin won't do shit until after the TPP passes in early/2016.
bet on it!
Faith based economics? And all this time I thought it was based on production of goods and services. You know real things.
So if faith wont work next up is force? Golly gee whiz nobody could have seen that coming.
So about that stall thing? At some point we are going to need to leave behind these child like beliefs. The only way that happens is if everyone is put in a place where they must deal with truths face to face. Starve or do it yourself. In a complete stall those with real skills and abilities will be fine. It will rock the faith based world of useless eaters. There is no free lunch and it high time it was made clear to all.
Experts everywhere are the problem.
We have made the systems we live within far too complex. The way forward is to repeal laws wholesale. Like all of the laws since 1776, or pick your year. But eschew reform, that is just more rational analysis, the same low-precision tool that got us here.
https://thinkpatriot.wordpress.com/2015/10/02/warning-ideas-are-dangerous/
We had un-regulated, trickledown Capitalism in the UK in the 19th Century.
We know what it looks like.
1) Those at the top were very wealthy
2) Those lower down lived in grinding poverty, paid just enough to keep them alive to work with as little time off as possible.
3) Slavery
4) Child Labour
The beginnings of regulation to deal with the inhuman monster that is the wealthy UK businessman seeking to maximise profit, the abolition of slavery and child labour.
Where regulation is lax today?
Apple factories with suicide nets in China.
A leopard never changes its spots.
The rich are very greedy and will do anything to line their pockets.
we don't have capitalism....we have cronyism. In capitalism....when you fail YOU DIE! We have bankers failing and they are showered in Trillions who then tip the corrupt poly/ central banker....like they are a croupier at a casino....which I guess they are. Just like Communism or Socialism...cronyism is bound to fail...
We Central Banked some people
OT: Looks like "faith" is eroding elsewhere...key word, convicted.
Lois & Hitlery the new Thelma & Louise?
Are the snakes are turning on each other or more theater?
https://www.youtube.com/watch?v=jgpJRoqyeJo
When in doubt!
https://thatguybloke.wordpress.com
“There’s a lack of faith in monetary policy..."
I am reminded of the time Archie argued with Meathead for his lack of faith. Archie, claimed everybody should depend on religious faith. "Oh yeah, Arch," said Meathead, "Give me your definition of faith." "Faith, began Archie, "is...is... [groping for ideas] when you believe something... nobody in his right mind would believe."