One by One the Central Banks Are Losing Control

Phoenix Capital Research's picture

For six years, the world has operated based on faith and hope that Central Banks somehow fixed the issues that caused the 2008 Crisis.


All of the arguments supporting this defied common sense. A 5th grader knows that you cannot solve a debt problem by issuing more debt. If the below chart was a problem BEFORE 2008… there is no way that things are better now. After all, we’ve just added another $10 trillion in debt to the US system.


Similarly, anyone with a functioning brain could tell you that a bunch of academics with no real-world experience, none of whom have ever started a business or created a single job can’t “save” the economy. Indeed, few if any of the Fed Presidents have even run a bank before. And yet they’re in charge of the banking system.


However, there is an AWFUL lot of money at stake in maintaining the illusion of Central Banking omniscience. So the media and the banks and the politicians were happy to promote them. Indeed, one could very easily argue that nearly all of the wealth and power held by those at the top of the economy stem from this fiction.


So it’s little surprise that no one would admit the facts: that the Fed and other Central Banks not only don’t have a clue how to fix the problem, but that they actually have almost no incentive to do so.


So here are the facts:


1)   The REAL problem for the financial system is the bond bubble. In 2008 when the crisis hit it was $80 trillion. It has since grown to over $100 trillion.


2)The derivatives market that uses this bond bubble as collateral is over $555 trillion in size.


3)Many of the large multinational corporations, sovereign governments, and even municipalities have used derivatives to fake earnings and hide debt. NO ONE knows to what degree this has been the case, but given that 20% of corporate CFOs have admitted to faking earnings in the past, it’s likely a significant amount.


4)   Corporations today are more leveraged than they were in 2007. As Stanley Druckenmiller noted recently, in 2007 corporate bonds were $3.5 trillion… today they are $7 trillion: an amount equal to nearly 50% of US GDP.


5)   The Central Banks are now all leveraged at levels greater than or equal to where Lehman Brothers was when it imploded. The Fed is leveraged at 78 to 1. The ECB is leveraged at over 26 to 1. Lehman Brothers was leveraged at 30 to 1.


6)   The Central Banks have no idea how to exit their strategies. Fed minutes released from 2009 show Janet Yellen was worried about how to exit when the Fed’s balance sheet was $1.3 trillion (back in 2009). Today it’s over $4.5 trillion.


We are heading for a crisis that will be exponentially worse than 2008. The global Central Banks have literally bet the financial system that their theories will work.  They haven’t. All they’ve done is set the stage for an even worse crisis in which entire countries will go bankrupt.


This process has already begun abroad.


In January 2015, the Swiss National Bank (SNB), backed into a corner by the ECB’s QE program, had a choice: print an obscene amount of money to defend the Franc’s peg or break the peg.


The SNB chose to break the peg. In a single day, the bank lost an amount of money equal to somewhere between 10% and 15% of Swiss GDP. More than that, it let the Franc appreciate… in a country in which 54% of the GDP is based on exports.


The next bank to lose its grip is the Central Bank of China.


With an economy in free-fall (GDP is growing by 3% at best), a dual house and stock bubbles bursting simultaneously, China’s regulators went on the offensive: freezing the markets, banning short-selling, arresting short-sellers, and pumping tens of billions of Dollars into the market per day.


Despite this, Chinese stocks continue to crater. And its economy hasn’t budged.



Now Europe’s Central Bank is losing control.


The ECB announced Negative Interest Rate Policy (NIRP) in June 2014. At that time EU inflation was around 0.5%. It plunged soon after sinking to a low of -0.6% in January.


That is when the ECB announced QE (something that the EU’s charter deemed illegal). The result?  Six months of an uptick in inflation, before it rolled over again. We’re back into deflationary levels. Hence why ECB President Mario Draghi has suggested increasing QE.



To give you an idea of just how bad this is, consider that the January 2015 low for the EU’s inflation was virtually the same as that of 2008-2009.


Put another way, despite NIRP, and record stimulus, the EU’s inflation rate hit levels associated with the worst economic collapse in 80 years. Small wonder the ECB is terrified.




The fact of the matter is that despite public opinion, there are problems that are so big that the Central Banks cannot fix them. We’ve seen this in Switzerland and China and now in Europe. It will be spreading to other countries in the near future.


A stock market crash is coming.


Smart investors are preparing now. The August-September correction was just a warm up. The REAL drop is coming shortly.


We just published a 21-page investment report titled Stock Market Crash Survival Guide.


In it, we outline precisely how the crash will unfold as well as which investments will perform best during a stock market crash.


We are giving away just 1,000 copies for FREE to the public.


To pick up yours, swing by:


Best Regards


Graham Summers

Chief Market Strategist

Phoenix Capital Research


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smokescreen's picture

I DON'T THINK you guys are thinking outside the box...what if debt doesn't matter...what if debt is a sort of store of value a perpetual iou...the key to that game is to never raise interest rates...then you can accumulate and roll over debt for perhaps a decade longer or beyond...remember the sheep don't understand the mechanisms therefore tell them a pretty story and they will believe it. The game shall continue for atleast 10 more years...2025 or so then look out world pop. around 9 billion...that could in itself break the bankers back and bank.

hootowl's picture

A fifth grader could have calculated the eventual outcome of this fractional-reservel banking/debt-money system 100 years ago.  Today even Phd.'s from the Ivy League can't understand what is going to happen.....even though collapse and chaos is inevitable.

We are manifestly in a darkening moral and intellectual death spiral of human devolution.......Just turn on your TV and watch the antics of the savages and morons interacting on our streets and institutions.

There is really nowhere to run.

Jack Oliver's picture

It can't be fixed without a global currency reset - AND they KNOW it ! While they can print and deceive the idiotic people - they will continue on as usual until WAR enters the equation ! All bets are off then !

lasvegaspersona's picture

In spite of daily changes the underlying issue has not been resolved. Things must end in a deflationary collapse in which debts are extinguished by default and the wealth of the world is given to those with the capital to buy things and start over ends with a response to deflation with a massive printing of currency to prevent such a deflationary collapse.

The rules say a deflation should occur and the foolish should be punished with poverty.

The rules are always bent however. We will not allow pensions to go unpaid, saver to lose their savings and the government to default...not when they can print the medium of exchange.

Hyperinflation is coming.

In spite of daily changes the underlying issue has not been resolved.


Perimetr's picture

The "faith and hope" that I have been operating on is that the damned banksters will one day rot in jail or better yet, be taken out along with the fascists and neo-nazis running the Western governments.

and their system will collapse, along with the fiat currencies, rigged markets, and war machines

1033eruth's picture

ZH readers make fun of almost every single one of Phoenix Capital posts.  

Now who can argue that what Phoenix Capital said in this post isn't true?  

SNB lost control, was forced to depeg and causing a massive tsunami (and we never did find out who got crushed in entirety).

China is playing spin the plates and arresting everybody in sight that doubts the magic of their stock Ponzi.

But I would put Japan ahead of the EU for spinning out of control.  They can't do anything except print more money and there hole is halfway to China.  

We're experiencing our own central bank ponzis here in America with absurd grocery prices.  

Anybody with a modicum of life experience and financial management can see that this is not going to end well.   Although we'll put on the happy face and pretend otherwise because lying is an American tradition and well accepted even from our President.  More people think that the Emperors clothes look grand, than do not.   

ThrowAwayYourTV's picture

The definition of insanity is doing the same thing over and over and expecting different results."

They are all insane as far as I'm concerned.

Printing money so their buds will give them money to run for an office that requirers them to print more money so their buds will print more money to give them more money to run for an office that will print more money to give to them/

I long to see this stupid sytem spin off into space in flames.


March 10th 2008 all CBs in the entire world lost complete control. On a quantum level de Rothschild Bank has lost all control of their scheme to control banking in the world. On a quantum level they could not possibly make the required assessment of the changes in architecture that have manifested since March 10th 2008. In brief, all the academics, and bankers, Economists, et cetera, are most assuredly completely out of their element and grasp of the required knowledge base.

There is only one individual in the entire world that fully understands this implosion, and all others are merely taking slightly educated guesses each business quarter. In brief, I know exactly what is manifesting, and have since March 10th 2008. Moreover, I know for a fact that there is nothing that is capable of stopping the world wide implosion of all the banks, and banking empires, that have no aptitude to comprehend what has transpired since March 10th 2008 on a quantum level of knowledge. The top thinkers in the world regarding Economics are completely powerless to stop their own worlds from complete, and utter, destruction.


Up yours, de Rothschild.

new game's picture

MASTER- they never lost control, history says they controlled the outcome- did they not?

are they in complete control-factoid for you! they actually control even moar. they are heading to an even moar controlled centrally planned financial system. can u not see that? hello, u have some serious cog dis issues....

try forming a new strategy.

but, plez don't admit defeat. 

we always have options

know your enemy

plan ahead

and quit fooling yourself

start with a fresh outlook that is realistic...

medium giraffe's picture

As Wheeler predicted, our reality is a data feed.  We are interacting with a computed and rendered environment.  Anything running contrary to the aims and goals of this virtual reality has little hope of surviving.

It is the sound of inevitability, Mr Anderson.

Herdee's picture

Just do what Abe did.He claimed that where they made the mistake was that they didn't do money printing big enough!And the result is ...dud.Hint:It's a structural problem in the United States along with a demographic problem.The NeoCons do not want to leave the industrial age and move into a new age of scientific innovation in order to change society for the better.It's just a matter of time till she all busts apart.Mother Nature will have her way with those destroying the earth.

Suleyman's picture

"Regardless of what the central banks do" ... yeah right. Regardless of what they do, because what they already have done, can not easily be undone.


RMolineaux's picture

The advantage that the Chinese have over less regulated markets is that they can intervene very quickly and heavily to puncture speculative bubbles.  One can argue that they need these powers since the Chinese have a traditional and cultural propensity to gamble and speculate.  Nevertheless, they have appeared to have reined in speculation before it got completely out of hand - something western regulators appear unable or unwilling to do.  IMO, the overall problem in the world economy is that, given current income distribution, the volume of goods and services on offer (supply) is considerably in excess of demand, resulting in a continuing deflationary tendency, regardless of what central banks do.  The challenge will be to find mechanisms that will, at the same time, level off the distribution of income and restrain the volume of goods and services on offer. 

lakecity55's picture

The ChiComs fix a lot of stuff with a bullet.

lasvegaspersona's picture


The Chinese let a housing bubble of an outrageous proportion to develop. Heard of Ghost Cities? There are dozens if not hundreds of whole communities, large enough to house MILLION!! I guess the current stock market bubble is an attempt to stop the housing bubble but now they must arrest sellers to keep that bubble afloat. This ends in a hyperinflationary collapse that will make other extinction level events seem placid.

Buy some gold bullion and if you are the praying type...pray.

conraddobler's picture

Again with the idea that the central banks are somehow going somewhere they don't want to be?

That I think is a false premise.



Debt-Is-Not-Money's picture

The ending to the movie "The Godfather" gives us the only solution.

new game's picture

exactly,the cog dis of epic proportions, that krakers prey on...

the sky is falling, better get some advice from a kraker, ha, moar theft by deception...

fuck off gram kraker...

Dame Ednas Possum's picture

'one by one the central backs are pretending to lose control so that the reptiles behind the curtain can fabricate a massive transfer of wealth to enslave the human race indefinitely.'

There... fixed it for ya'.

You're welcome.

new game's picture

thanks. but past tense, happend, ongoing and even moar shit coming from behind the curtains. reptiles are not pieces of shit, though. shit is shit...

aliki's picture

"when there is no way out, the only solution is to go deeper-in"

this seems to be the central banker way.

in my world, when you are on the wrong-side, stop digging & deal with the pain. the longer you put it off, the harder & longer the pain will be.

1033eruth's picture

Yup, you can double down as long as you want when you've got the printing press.  I'm not saying it doesn't have consequences.  But look how far we've come already since 1913.

new game's picture


can't U understand one simple concept? it ends up on the black hole fed balance sheet- so fucking what? so the fed is going to collapse? gram kraker, i ask u if the fed balance sheet impacts future monetary affairs? day to day, this number grows and impacts the world noda-not one fucking iota.

and even if this 4 trillion mattered, the fed can alter the players, rules and change the board and pieces to monoply II. gram kraker, u can't pass go, as u r a fraudster preaching bull shit.