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The Monetary Policy Dead-End
Submitted by Christopher Dembik via SaxoBank,
The Federal Reserve’s September status quo proved how difficult it is for central bankers to bring an end to the emergency measures they adopted in the aftermath of the 2007 crisis. Fed chief Janet Yellen’s hesitations and the market turmoil since August seem to validate that it is impossible to stop the accommodative monetary policy, unless you accept that doing so would trigger a new global crisis.
Markets have been used to living in a protracted low rate environment, which led to a $57 trillion increase in public and private debt between 2008 and 2015. The surge of public debt represents almost half of this growth. It is the result of the fiscal stimulus and rescue measures taken to save the global banking system. In most advanced countries, household debt has also increased, except in the US where the financial situation of households has improved due to the default on real estate loans.
The Fed is aware that raising interest rates too fast and too high could have the same effect as pressing the nuclear button. The whole system could collapse and it cannot be taken for granted that the central banks would be able to extinguish the fire this time. Their strike force has weakened because their balance sheets are exposed to market fluctuations and their credibility was seriously damaged because the measure they have taken have failed to strengthen the economy.
The comeback of financial excesses
The same mistakes that led to the financial crisis are now happening again worldwide. Access to credit, hardened for some time, is softening, leading to over-indebtedness and speculative bubbles. In the United States, first-time buyers can get loans covering the equivalent of 97% of their purchase. In the UK, the housing market moves the same way thanks to a first-purchase aid programme launched in 2012. It met such success that first-time buyers now account for half of real estate loans, a proportion not seen since 2000.
David Cameron’s ambition to make the United Kingdom a country of owners is about to be achieved. An easier access to credit, particularly for first-time buyers, was systematically the political answer to favour the forgotten ones of globalisation.
During the past 20 years, only two parts of the world’s population have seen their income grow: the Chinese and the top 1%. At the opposite end of the spectrum, the middle and working classes in western countries, as well as the poorer, have benefited sparsely from the economic spinoffs of the increasing commercial exchanges and trade restrictions removals.
Their stagnating incomes urged them to borrow at attractive rates to maintain their living standards which, until now, allowed social peace. Nevertheless, this patch found by the political authorities is illusive. Should even a slight rise occur in interest rates, the most fragile households will prove unable to make their loan repayments, with consequent negative effects on demand and economic activity.
Increasing income inequality
Even if European GDP rises at 2% per year in the next few years, leading to a decrease of the unemployment rate, this growth would be nothing but a flash in the pan as the financial system hasn’t actually been drained and no serious anti-inequality fight has started. We live in the middle of a huge speculative bubble, possibly bigger than in 2007 because of the rise of shadow banking and quantitative easing by central banks.
We can credit economist Thomas Piketty for picking on the figure of the rentier, as John Maynard Keynes did decades before, but his long-term analysis forgets the misdistribution of incomes, despite the fact that this element is enough to explain the last crisis and the one we are leaning towards.
The 1914-1950 period enabled an unprecedented decrease of income inequality, but that movement was then brutally stopped. The wage differential between those who have access to knowledge and technology and those whose instruction is insufficient for highly qualified jobs is increasing and will increase with the digitalisation and robotisation of the economy. This increasing income inequality explains why demand, a traditional supporting factor in the advanced economies, is no longer sufficient to restart growth.
There is no readymade solution available to impulse a better wealth distribution. Everyone knows that keeping interest rates low longer is not the solution. It prepares the ground for a new financial crisis. From this perspective, we certainly have to get used to the idea that capitalism will suffer more and more frequent upheavals, given the fact that households are not ready to accept a reduction of their consumption and that politicians are reluctant to focus on the core issues.
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Another author who's confusing capitalism with cronyism
Yeah well when cronyism dies you might find capitalism disappeared at about the same time. Not saying they were the same person, but I think they might have been.
Central Bank is heroin addict drown in only vomit.
glenlloyd, it is WAY WORSE than merely confusing labels like "crony capitalism."
There are comprehensible and comprehensive REASONS for how and why everything appears to be absurdly backwards. I repeat a couple of my favourite quotes which should be kept in mind regarding the bullshit about "capitalism," (as well as the bullshit about every other "ism.")
From historian Carroll Quigley,
THIS WAS ACCOMPLISHED:
However, it is MISTAKEN to label that "financial capitalism." Rather, it is really the triumph of organized crime applied through the political processes, to result in a political economy based upon governments ENFORCING FRAUDS by privately controlled banks.
http://www.conspiracyarchive.com/NWO/silent_weapons_quiet_wars.htm
Silent Weapons for Quiet Wars
Energy is recognized as the key to all activity on earth. Natural science is the study of the sources and control of natural energy, and social science, theoretically expressed as economics, is the study of the sources and control of social energy. Both are bookkeeping systems: mathematics. Therefore, mathematics is the primary energy science. And the bookkeeper can be king if the public can be kept ignorant of the methodology of the bookkeeping. ... In this structure, credit, presented as a pure element called "currency," has the appearance of capital, but is in effect negative capital.
Everything in the currently established political economy operates through fundamentally fraudulent financial accounting systems, where the public "money" supply (which is supposed to represent accumulated "capital" as a store of value) is actually the banksters' FRAUDS ENFORCED by governments, which operates through the vicious feedback loops of its POLITICAL FUNDING.
The banksters are the FRAUD KINGS, since "the bookkeeper can be king if the public can be kept ignorant of the methodology of the bookkeeping." Hence, the public "money" supply is actually as ABSURDLY BACKWARDS as possible, because it continues to be able to presented as IF it "has the appearance of capital, but is in effect negative capital."
Human beings necessarily operate as entropic pumps of environmental energy flows. However, civilization developed to do that through the maximum possible deceits and frauds. That development has REASONS which are comprehensible and comprehensive as the results of human beings and civilizations actually operating as general energy systems. Natural selection drove the development of artificial selection systems to operate through the maximum possible deceits and frauds. Therefore, the actually existing political economy is really based upon governments ENFORCING FRAUDS by privately controlled banks, while those social facts simultaneously require attitudes of deliberate ignorance towards the principle of the conservation of energy, as well as deliberately misunderstanding the concept of entropy in the most absurdly backward ways possible.
"Capitalism" only makes sense as a subset of organized crime. The best organized gangsters, the banksters, have captured control over governments, which are the biggest forms of organized crime. Hence, the public "money" supplies are being created out of nothing as debts by privately controlled banks, while governments ENFORCE THOSE FRAUDS. Of course, since that "money" is made out of nothing, it is NOT actually "capital" in any old-fashioned sense. Rather it is effectively "negative capital."
The deeper problem is that most people keep on discussing those social facts through the same old-fashioned bullshit-based languages, using terms such as "capitalism" that no longer mean anything that makes sense, according to either their dictionary definitions, or according to their relationships to the actual social facts. On the contrary, what we should do is change the paradigms with which we perceive politics, in order to make that become consistent with physical science. However, doing that takes profound changes, because all the established systems are being run by the best available professional liars and immaculate hypocrites, including the layers of controlled opposition that surround the central core of the organized crime done by bankster controlled governments.
While the banksters' fiat "money" has no intrinsic value, it has value because governments demand payment of taxes with that money, as well as governments deem the banksters' fiat money to be legal tender in general. Therefore, the banksters' fiat money systems operate through governments ENFORCING FRAUDS by privately controlled banks, and thus, the "value" of that "money" is based upon the police and armed forces being paid to back up the rule of law, such as the taxation laws and legal tender laws in general.
Money is measurement backed by murder,
as debt controls backed by death controls.
People who already own private property tend to deliberately ignore the ways that all private property was based on backing up claims with coercions, the same as all money was based on backing up measurements with murders. The only things that exist are the dynamic equilibria between different systems of organized lies operating robberies. After sufficient disequilibria develop to be sufficiently unbalanced, then that provokes death insanities to result from the debt insanities. After those eruptions of death insanities, perhaps some new dynamic equilibria emerge.
Political economy necessarily exists INSIDE human ecology, and therefore, the debt controls exist INSIDE the death controls. What actually exist are combined money/murder systems. The "value" of the money is the degree to which it can pay for the murders to back it up. The problems we now face are the breakdowns of the previously established globalized dynamic equilibria, whereby the best organized gangs of criminals were able to control the biggest forms of organized crime (i.e., primarily some Western World banksters dominating primarily some Western World countries, that were able to defeat all others.)
Meanwhile, progress in physical science enabled the globalized systems of ENFORCED FRAUDS to become electronic frauds, backed by the threat of atomic bombs. Nobody fully comprehends what it means when those kinds of combined money/murder systems break down! Rather, generally speaking, the vast majority of people continue to want to indulge in false fundamental dichotomies, and the related impossible ideals, in order to promote bogus "solutions" based upon various sorts of old-fashioned bullshit.
What actually exists is civilization based on the principles and methods of organized crime, which have been magnified many orders of magnitude by progress in physical science, while there has been no progress in political science which has surpassed that. Rather, human history was warfare on larger and larger scales, which developed on the basis that successful warfare worked by backing up deceits with destruction, which then eventually became the currently established systems where financial success is based upon governments ENFORCING FRAUDS by privately controlled banks. However, the introduction of technologies which are trillions of times more powerful and capable than anything that previously existed in human history has made the emergence of any new dynamic equilibria between the different systems of lies backed by violence become way more problematic than ever before in known human history.
There are NO good grounds to doubt that the established systems of DEBT SLAVERY BACKED BY WARS BASED ON DECEITS will not continue to automatically become worse, faster. Central banks, and their "monetary policies" exist as the best organized forms of organized crime, which captured control over the powers of governments. Those systems of ENFORCING FRAUDS never stopped those frauds from being false. However, the abilities to continue to back up integrated systems of legalized lies, backed by legalized violence, for generation after generation, has resulted in society as a whole becoming terminally sick and insane.
In order for those ENFORCED FRAUDS to continue to be socially successful, everyone who adapted to live successfully inside of those systems developed their proportional abilities to operate as professional liars and immaculate hypocrites. Of course, central banks are professional hypocrites, since everything they do is based upon governments ENFORCING FRAUDS, by enabling the public "money" supplies to be made out of nothing as debts, while everyone was required to use that kind of "money" to pay taxes. AROUND AND AROUND AND AROUND THAT WENT, FRACTALLY REPEATING THE SAME BASIC PATTERNS, since that kind of "money" made out of nothing as debts being deemed as "legal tender" drove civilization to develop on the basis of excessively successful organized crime, more and more becoming runaway criminal insanities.
Theoretically speaking, it is possible that human beings and civilization could and should adapt and change in ways which were not quite so criminally insane, however, such changes are politically impossible, given the established vicious spiral feedback loops of POLITICAL FUNDING ENFORCING FRAUDS. Theoretically speaking, human beings and civilization can and ought to better understand themselves as general energy systems, nested inside or embedded within other general energy systems. However, no such social psychiatry is actually feasible, but rather, appears to require a series of political miracles, since the established social systems are based upon being able to back up lies with violence, or ENFORCE FRAUDS.
The currently established sociopolitical systems are NECESSARILY based upon the maximum possible deceits and frauds, while being operated by the best available professional hypocrites, such as the banksters, and their puppet politicians. Furthermore, the masses of muppets have also been brainwashed for generation after generation to believe in bullshit, in order to live inside Wonderland Matrix Bizarro Worlds, where everything was being explained in the most absurdly backward ways possible. Those established systems have perfected their ability to believe in bullshit, so that the central social facts about central banks tend to be deliberately ignored and denied.
THE FUNDAMENTALS OF CENTRAL BANKING:
GOVERNMENTS ENFORCING THEIR FRAUDS!
The more that one learns about that, the worse it gets. Now that the industrial revolutions, which started with the physical debt engines, along with the matching social debt engines, have been running at an exponential rate for a few Centuries, the planet's natural resources have already been strip-mined to the point where serious diminishing returns from continuing to do that are just beginning to manifest, in ways which no longer can be so easily denied or deliberately ignored. We have already had fundamentally fraudulent financial accounting systems high-grade ourselves to hell. Nothing was able to effectively prevent the most psychopathic people from controlling civilization, and therefore, nothing can be done to effectively prepare for the longer term consequences of the civilization that they made and maintained manifesting psychotic criminal insanities.
While there are an abundance of theoretically possible creative alternatives, none of those can surmount the ways that everything is now based upon the history of POLITICAL FUNDING ENFORCING FRAUDS. Being able to make more "money" out of nothing as debts is no longer going to work, due to the underlying lack of natural resources to continue to exponentially strip-mine, to keep that social pyramid system going and growing. However, since all the social political systems are dominated by professional hypocrites, it is politically impossible to have any rational debates regarding that overall situation. Rather, one can only expect that the established systems will continue to turn natural resources into garbage and pollution as fast as possible, while their fundamentally fraudulent financial accounting systems will continue to present that as being totally positive, good things. We are not likely to be able to develop better dynamic equilibria between the established systems of organized lies operating robberies, because of the ways that the most successful of those, namely the central banks, will not admit that to be the case.
AFTER THE BANKSTERS WERE ABLE TO CAPTURE CONTROL OVER GOVERNMENTS, IN ORDER TO ENFORCE FRAUDS FOR CENTURIES, THERE ARE NO REASONABLE WAYS TO EXPECT THAT THOSE GOVERNMENTS ARE GOING TO ADMIT AND ADDRESS THE RADICAL TRUTHS REGARDING THOSE PROBLEMS!
Everyone is necessarily living INSIDE systems of organized lies operating robberies, and the only way that anyone can survive is to continue to do so. However, we are now facing the INTENSE PARADOXES of final failure from too much success. The excessive successfulness of the international banksters, which was always based upon applications of the principles and methods of organized crime through the political processes, have resulted in civilization as a whole manifesting runaway criminal insanities.
The deeper nature of those issues are that they exist as sets of consistent contradictions, since human beings and civilization must necessarily operate as entropic pumps of environmental energy flows, which had to most closely match the principles and methods of organized crime, manifesting in fractal patterns, which have grown to become bigger and BIGGER at an exponential rate throughout the history of Neolithic Civilization's social pyramid systems, which were based upon bigger and better systems of organized lies operating robberies, with the currently existing systems becoming governments ENFORCING FRAUDS by privately controlled banks, whose social successfulness is necessarily based upon the vast majority of people not only NOT understanding that, but also, having been conditioned to NOT want to understand that.
Since everyone enjoys proportionately personal success WITHIN systems based upon ENFORCING FRAUDS, they all have a proportional stake in continuing to be professional hypocrites with respect to themselves doing that. The currently established monetary policies are based upon bankster controlled governments ENFORCING FRAUDS, whose longer term consequences are threatening to become increasingly catastrophic. However, in each short to medium term increment, the vicious spirals of POLITICAL FUNDING keep those systems going, because everyone INSIDE those systems are personally successful through doing that.
By and large, almost everyone is taught to perceive political problems in the most absurdly backward ways possible, and therefore, almost the only "solutions" to those problems that become publicly significant are also absurdly backward too. THERE IS NOTHING ACTUALLY EXISTING WHICH FITS ANY OF THE OLD-FASHIONED LABELS, SUCH AS CAPITALISM OR SOCIALISM, ETC. ... None of those labels are remotely close to being able to match their dictionary definitions with the social facts. Rather, almost all publicly significant discussions of political economy have become gibberish, based on bullshit.
It seems IMPOSSIBLE to fix the MAD Money As Debt systems, other than through their own MAD self-destruction. That "We the People" gave away the power to make the public "money" supply to privately controlled banks, which banks could then legally make that public "money" supply out of nothing as debts, as FRAUDS ENFORCED by governments, was due to the persistent and prolonged application of the methods of organized crime through the political processes, which has driven the entire political economy to become criminally insane. There are no good reasons to believe that enough people would understand enough that MONEY IS MADE BY LAW, but the only connection between human laws and natural laws is the ability to back up lies with violence.
William K. Black's book, "the best way to rob a bank is to own one," was about a time in history when control frauds still resulted in some individuals going to jail. However, in retrospect, nothing was changed, other than the banksters developing their abilities to continue to corrupt governments even more, so that nobody significant would go to jail for the excessively successful frauds that precipitated the 2008 financial crises.
"The Monetary Policy Dead-End" appears to become proportionately worse the more deeply one understands the nature of that Monetary Policy actually being based upon ENFORCING FRAUDS! The next rounds of financial crises are going to be way worse than the previous events. More and more energy has been pumping up and UP the sociopolitical systems based upon ENFORCING FRAUDS, which never could stop those FRAUDS from being FALSE. Therefore, more and more energy has been pumping up and UP the potential for psychotic breakdowns, causing collapses into chaos, since all that ENFORCING FRAUD ENERGY has been driving the potential for severe social storms to build and blow through. Indeed, those severe social storms, which have become based upon globalized electronic frauds, backed by atomic bombs, where the relationships between the physical world versus the financial fictions became ratios of less than 1 to more than 100, while those ratios are automatically getting more lopsided and unbalanced every day!In that context, I admired another recent article:
Leaving The Eye Of The Hurricane | Zero Hedge
Of course, I would qualify that by once again asserting that the situation is WAY WORSE. Anyone who still uses old-fashioned labels, e.g., "capitalism" or "socialism," or any other similar "isms," therefore necessarily tends to be presenting grossly superficial analyses. Those may well be superficially correct, but otherwise are profoundly WRONG. The author of the article above was doing that when using the word "capitalism," and doing so in worse ways than those who merely modify "capitalism" with any adjectives, such as "crony capitalism," and so on and so forth ... It is not merely "Monetary Policy which is at a Dead-End." It is Neolithic Civilizations' social pyramid systems, based on being able to back up lies with violence at an exponentially increasing rate, which are at a Dead-End!
Methinks you should just write a book and sell it on Amazon.
There was never an exit plan to QE to begin with. The projected path was always to head off the cliff. It was just a matter of how many people they could get into the bus and how long it'd take them to push it over while keeping everyone on the bus blissfully unaware.
The wage gap is very easy to explain .... shit work hasn't changed much .... top jobs have experienced marketing growth unprecedented in history .... it's not a conspiracy !
http://www.livecharts.co.uk/MarketCharts/silver.php
http://www.livecharts.co.uk/MarketCharts/gold.php
get ready for the shaningans in the phony paper prices tonight.....
The whole system is crashing like the house of cards it is; it's just in slow-motion. The fraudsters are all over the place, running from card to card, trying desperately to keep it all standing.
"we certainly have to get used to the idea that capitalism has destroyed itself."
There fixed it for you.
"we certainly have to get used to the idea that crony capitalism has destroyed itself."
There fixed it for you. Fixed it for you, too.
Nice try putting lipstick on that pig. It's dead anyway.
These authors apparently don't read the other ZH articles. This guy says:
"get used to the idea that capitalism will suffer more and more frequent upheavals, given the fact that households are not ready to accept a reduction of their consumption and that politicians are reluctant to focus on the core issues"
Meanwhile another article indicates that the savings from lower gas prices is going to more gas and that households are generally decreasing their discretionary spending.
So which is it?
One is consumption as entertainment (people like to drive), the other is consumption as survival (they need to drive to work). And you might be surprised to find out what all else people accept as "survival consumption".
Perhaps ONE of the problems is that too many of us have already crossed the finish line in terms of wealth and income but are manically driven to keep running. This has the result of making us greedy without any consequent qualitative enhancement to our lives and secondly it also has the effect of crowding out others out of the game. Hence the inequality we speak of.
Of course the problem is much moe complex and multifaceted than I have described but it is something that I have noticed amongst many friends and acquaintances.
This article is a bit too blah, and not in tune with my cosmic resonance.
As an aside I thoroughly enjoyed how this douche from Saxo Bank seems to imply that the upheavals capitalism is experiencing is due to consumers and politicians but not the actions of the central banks themselves. These guys are fucking clueless.
Dupe
Let it crash - the longer they wait the more damage the crash will cause.
3% of us are prepped and armed - hope to survive the wave
There's a lot of silly talk about how and when to rase rates while the simple truth is that they can't and they won't. So stop that!
Isn't supposed to be the reason that the Fed is unaccountable to congress?