The Real Reason Behind The Surge In Populist Anger: Central Banks

Tyler Durden's picture

In the din of the relentless theatrics of the US presidential election, and the soaring wave of global populist discontent blamed on a "us" versus "them" narrative, it is easy to lose track of what is not only important, but is the critical catalyst behind much of the build up in world anger over recent years.

Courtesy of Bloomberg's Chris Maloney, a market strategist and former portfolio manager, here is a much needed reminder of what is truly going on behind the scenes, an explanation for the rising sentment that something is now simply "broken."

Populism Surfs a Wave of Inflation
By Chris Maloney of Bloomberg

 

The Keynesian belief outlined in the “General Theory” (p.17), that “an increase in employment can only occur to the accompaniment of a decline in the rate of real wages,” appears to be bearing bitter fruit this election cycle.

 

The rise of populism in America is a byproduct of inflationary policies that have helped trigger a dramatic increase in consumer debt, declining real wages and rising prices for food and housing since 1999.

 

From 2000-2014, housing prices have risen 73% and rents were up 45%; the cost of putting food on the table rose 47%, and college costs increased 137%

 

Over the same period nominal real household mean incomes rose just 38% while declining 3% in real terms.

 

 

Consumers covered the gap in part by taking on more debt, with outstanding credit balances up 117% since 1999, which may have helped mask the rise in inequality that dominates the headlines today - and which has been brought to the fore by the inflation in credit engineered by monetary authorities.

 

Ben Bernanke warned of this when he wrote that inflation “induces redistribution of wealth” to the detriment of “less sophisticated investors” (Inflation Targeting, p.17).

 

This is no surprise as the working class and poor get any newly created money and credit last and hence “will find themselves compelled to pay higher prices for the things they buy, which means that they will be obliged to get along on a lower standard of living,” a point made by Hazlitt in his "Economics in One Lesson’’ (p.153).

 

This is what has voters up in arms, and the Fed’s adherence to its 2% inflation target forgets to remember what Dostoevsky’s “The Honest Thief” reminds us, “To poor folk like us, sir, every little counts."

* * *

And now back to the narrative painted by the global media owned by a handful of giant multinational corporations, who benefit every single day from the same monetary policies shown above, and the endless distraction from what truly matters.

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Steroid's picture

And what about the rule of law?

Son of Captain Nemo's picture

And what about the rule of law?

Who needs a "rule of law" when you have worthless depreciating currency and a Central Bank to enforce it with attorneys and a military with nuclear weapons?!!!...

0hedgehog's picture

One EMP blast and there is no money.......except gold and silver! If the grid goes down, how long will your cash in hand last and how much will it purchase?

Ignorance is bliss's picture

Doomsday wishing? It amazes me how people would rather suffer a mass extinction level event rather then continue with the current monetary drudgery.

Son of Captain Nemo's picture

Doomsday wishing? It amazes me how people would rather suffer a mass extinction level event rather then continue with the current monetary drudgery.

Ii

Your point is?...

It can't continue of course. And that is precisely "why" when the appropriate time comes that the CBs can no longer maintain the charade the ONLY diversion left  in their minds will be used.  

Because when you choose to maintain chaos as your only goal through banking and war, you're a certified nut and anyone following you at this point is "bat shit" certifiable as well!!!

Herd Redirection Committee's picture

'Post-industrial economy' exists to benefit the 0.1%.

Central bank tricks are just to 'slow boil' the population.  Puts more time between the politicos (and bankers) decisions, and the consequences thereof.  Making it impossible for more than 1 man in 100 to pinpoint the causes.

johngaltfla's picture

OH, I don't know. the Central Banks have done an awesome job! (Of screwing up the PIIGS and most of Europe):

6 Years Later the PIIGS and Europe Still Wallow in Bear Markets
Aristotle of Greece's picture
Aristotle of Greece (not verified) johngaltfla Jul 31, 2016 12:16 PM

CUT the HEAD of the BEAST. https://goo.gl/2SIIh0

Paul Kersey's picture

Nothing in the article mentioned the destruction of middle class savings and of pension/retirement plans. When folks, who can't afford to retire, have to fight to land minimum wage part-time jobs, the shit will have finally hit the fan.

TBT or not TBT's picture

Either way, this idea that central banks are the source of the problem is, well it is a brand new idea here in my 6plus years on the hedge.

I for one would like to see a second article along these lines. And maybe a third if that goes well. Then we should step back and see what difference we have made, and adjust fire. Can I get some uparrows on this??

ersatz007's picture

You're exactly right, Herd. The redistribution of wealth from the producers of said wealth into the hands of the banking elite has been going on for roughly a century at this point if not longer.  And it will continue until the parasites kill the host or the host is somehow relieved of the parasites.  

0hedgehog's picture

Who's wishing? I merely suggested a possible outcome.....get real!

sun tzu's picture

The doomsday has already been set in motion by the psychotic elitists. It's just a matter of time. Will it happen before you die or after you die? You're hoping it happens after you die so the next generation has to clean up the clusterfuck. 

Son of Captain Nemo's picture

One EMP blast and there is no money.......except gold and silver! If the grid goes down, how long will your cash in hand last and how much will it purchase?

0h

When that happens on a debilitating scale you probably won't be needing to worry that much about the Au and Ag you have in your possession either!...

The only thing that will save us at this point is this on such an overwheling level in the U.S. that we won't be able to be in all the places we already are OCONUS in order to put the growing "fires out at home"...  Let's hope this happens!

Because the delusional nut jobs running this have a very itchy "trigger finger" and are fully prepared to let the likes of Russia and China keep a Civil War at home from happening!!!

KnuckleDragger-X's picture

Yep, at a certain point, PM's don't matter, and it comes down to beans, and the weapons needed to protect them. I try to be optimistic about the next collapse, but it looks like a complete disaster coming.......

JRobby's picture

The rule of law?

(Laugh Track Deafening)

When they are putting whistle blowers in jail or worse, financial crimes of fraud at an unreal magnitude go unpunished, and corruption at the highest levels remains un-prosecuted, what rule of law are you referring to?

This is all a by-product of the NWO which is based with the ongoing control of the Illuminati and other elites they control. There is plenty of evidence to support what they have done and continue to do. But for obvious reasons they conceal themselves. This is Satan's servants at work. You don't need to know more than that.

Consuelo's picture

 

 

 It all goes hand in hand, sauceman.   Which is why, not coincidentally, there are passages in the Bible that speak to the importance of fiduciary responsibility and the moral code of men and how it (and laws) can be corrupted by the lack thereof.

 

*Disclaimer: No, I'm not a Bible-thumper, but I do find the writings both fascinating and telling with regard to the timelessness of human nature...

JRobby's picture

Satan and his followers, the Illuminati have no fiduciary duty to The Human Race, only to darkness, evil and death.

MFL8240's picture

Its not central banks, it is the tribe running them!

Son of Captain Nemo's picture

Since when did the American people come to the realization that $20 Trillion and counting in debt is a good thing for them?!!!

Far too late to pine for what is not with those kinds of "numbers"!!!

 

Mountainview's picture

Multiply by 10 (to include promissed payments).

0hedgehog's picture

Please Donald, end the Fed!

CorporateCongress's picture

Central banks are not the cause, but certainly make it worse.

There are just too many people fighting for not enough resources.

CorporateCongress's picture

We need less people, so a lot of blame can be put on all those humanitarians passing out food to sustain population growth were it's not possible (hello africa)

KickIce's picture

You should set an example and go first, just make sure you have the media there to make the political statement.

We use some of the best farmland in the world, otherwise known as the "I" states to grow ethanol ans corn syrup.  It's a horrible misuse of resources using all that land to grow soft drinks, candy and doritos.

thecondor's picture

I'll let him go first and I'll let him borrow my gun. 

CorporateCongress's picture

Well there is an active approach or a passive approach in reducing population. I am against active encouragement of population growth. And I certainly encourage a passive approach in reducing population. People need to be self sufficient.

KickIce's picture

So what's the passive approach?

CorporateCongress's picture

Well it's starts by not messing in any shitpool from africa/me and whatnot. Let them sort their shit out on their own. Same goes on a local scale as well, SNAP anyone?

JRobby's picture

You miss the effect that a controlled, planned financialized economy vs. a resource based economy has on creating scarcity.

When propaganda labels something as socialism, the conditioning mechanisms, centuries in the making take care of support of the resource allocation models used.

WorkingFool's picture

You have a scarcity mentality which is a product of a collectivist state with a centrally planned economy.  A state based on personal liberty recognizes, respects and manafests as abundance, or as we used to believe, America. Dasvidaniya tovarishch

CorporateCongress's picture

Well I was trying to encourage people to be self sufficient, not depending on your state to provide and certainly not depending on foreign states. Guess my message got lost in translation

WorkingFool's picture

Please accept my apology.  I misunderstood.  I agree, in my opinion self-sufficiency produces stress and struggle which in turn produces a stronger more adaptable organism, fosters innovation by directing abundant resource to resolve the scarce.  It's one which naturally limits it's risk and consumption.  Dependency, statism, produces just the opposite. The character of the people has been reveled in the option they have choosen.  Obama, the defender of personal liberty?

CorporateCongress's picture

Accepted. Indeed when states provide, innovation dies

Radical Marijuana's picture

CorporateCongress:

See my replies below, to VWAndy, regarding WHY I regard the typical patterns of down votes on Zero Hedge regarding any ENVIRONMENTAL ISSUES to be based upon trends to push cynicism to the point of stupidity!

The Duke of New York A No.1's picture

But, but, but, but .... Ben is the "HERO"!!!!!!.

WorkingFool's picture

Abolish the Fed!!!

Bob's picture

I'm all in on eliminating the private bank enslavement of Americans.

But let's not be so offensively stupid as to pretend that's the Why and How of the decimation of the working class, End of Story.

Anybody heard of "Free Trade" agreements? For fuck sake.

http://commondreams.org/views/2016/07/31/millions-people-yearning-brexit...

KickIce's picture

But if we're on a gold standard it is much more difficult to make our workforce uncompetitive and impossible to sustain these bubbles for such a long period of time.

el mago's picture
el mago (not verified) KickIce Jul 31, 2016 12:05 PM

There is no difference between the gold standard and the current system. Both are fiat based systems and since nobody can audit the FED, the gold standard will fail miserably. Banks shouldn't have control over the wealth of a nation, period. By wealth, i mean physical gold and silver and nothing else.

KickIce's picture

Are you kidding me, there is a world of difference between the two.  One takes actual resources to sustain it while the other simply requires pushing a button.  Don't believe me, take a look at the CPI since 1971.

VWAndy's picture

It will create more problems than it will solve. The MOE must be tied to labors value. Golds value is simply an abstraction if its not tied to other real things value. Its barter so is everything else. It cannot be the sole store of value. Everything does have a value. Dont let yourself fall for this concept that only gold or silver has a value.

 The only real value that really matters is our labors value. All the other values are secondary to our fucking labor. Thats what this whole money scam is about. Cheating us out of our labor.

 Please debate this hard as you can.

KickIce's picture

First, I don't believe that gold and silver are the only thing with value.  I do agree that labor is king but you must still assign a value to it.  I don't care if it's wheat, corn, lumber or anything else.  The point is it has to be REAL and there must be a consequence for trading it.  This would eliminate the CBs ability to sustain these massive bubbles for extended periods of time.

"It will create more problems than it will solve."

I can't believe anyone would make this claim after watching the central banks the past eight years "purchase" the world simply by pushing CNTL-P without creating a single thing.  Ben created trillions of dollars in this manner, you must believe the labor involved was truly significant.

As I mentioned above, just take a look at the CPI since 1971.

VWAndy's picture

 Its to easy for a guy like me to shave coins. That is just one of many issues. For long term saving its the best possible. For a MOE it wont work like your thinking. A 100 proof pint in a good glass container is better. One taste and you know whats in your hand. Unlike that paper or that coin.

KickIce's picture

Did you read my post?

"First, I don't believe that gold and silver are the only thing with value.  I do agree that labor is king but you must still assign a value to it.  I don't care if it's wheat, corn, lumber or anything else.  The point is it has to be REAL and there must be a consequence for trading it."

Under the current system, tell me how losing my purchasing power has been beneficial to me.  (You did claim that a gold standard would create more problems)

You also stated that labor is king, please place a value on Ben or Janet creating value out of thin are.  Just what did they create with there labor and how the gold standard would create more problems than this system.

Then tell how a system that allows banks to create this money out of nothing, and how they can pass down this money to themselves in the form of bailouts, (when they were well aware of the risky subprime risk beforehand), and they get to keep the property on the books as collateral would create less problems than a gold standard.

You seem to be a walking contradiction.  You claim labor is king yet you support a system of parasites that creabates absolutely nothing and has allowed them to purchase the world with a currency conjured out of thin air.

VWAndy's picture

 The system we have now is a slavery sytem it does not bennefit you the average person in any way. Its theft. Point one.

 Jannets labor only has value in a fiat scam. In a real value MOE system she gets paid 0. point two

 On to the meat. Gold as a MOE does not scale because it is finite and can and has been monopolized by savers. While it works well for savers it screws up the real function of coins as a MOE. As savers save more money it becomes a commodity effecting all markets depending on its availability. At this point it no longer protects the value of our labor. Gold is a very good way to save wealth. But it will not work well long term as a MOE. Trade just is. The coin we use should not be allowed to interfear in fair trade. Labor will be short changed every time.

 The other aspect there is no getting around is Gold is far to easy for people to shave,skim,trim,hollow out or dilute. So there is no good way one can verify its true value. For savers its not much of an issue buyer beware. But as a MOE? Bad idea.

 Yet another issue thats hard to get around. Just whos got the gold to stamp now and how in the world do we switch over to it without blowing the world up? Golds true value should be based off minning and processing costs. Thats another catch 22. Minning costs are calculated in fiats now.

 You want to measure anything first you need something consistant to measure it against. To go to a gold standard we would first need to discover the real values of pretty much everything. Bartertown is the only fair way that could happen. 

  PS I read your post several times. My labors value is mine to determine in a fair market. Stop thinking in fiats terms. And try not to put words in my mouth.

 

 

 

KickIce's picture

Question:  Do you feel that the fiat system is superior to the gold standard or do you think that at the present time it would be a clusterfuck to switch over to?  If it's the latter I would agree with you as the elite own damn near everything and it would make the wealth gap even wider.  The elite would have to be removed from power and wealth confiscated before it could even be considered.

As far as shaving coins and such, dishonest people have always found ways to dilute their products whether it be by water in alcohol, fillers in food or substituting materials below code.

The economy based on pure trade is interesting but my thoughts are that any asset can be hoarded.  Sure you might be a great craftsman but if some rich sob owns all the raw materials than he is still very much in control of the market.  Even food production becomes a concern because the growing trend is for farms to grow larger, 2000 plus acres on a farm is not uncommon.  My point here is that much of this farmland is held by the banks as collateral so it could be fairly easy for them to take control of that by say causing another depression.  Bottom line, we're in the same situation as I referenced in the first paragraph, the only way out is to first remove those that are in power.

Couple more questions:  How does a grain elevator pay the farmer for his crop?  Since we're in Iowa, how does a farmer purchase an auto?  Will every car dealership in Iowa have to purchase grain bins to sell their product?  How does the government buy a fighter jet? 

 

 

 

VWAndy's picture

In my opinion any fiat/MOE is basically a slavery system. Whats needed is a MOE thats we producers can keep stable thru our free will and effort. The energies measured coin or chit works as long as its value or buying power is fixed and measureble.

VWAndy's picture

 The grain elevator can pay the farmer in whatever the two can agree on. Seed,farm equip, store credit, fuel, coins too. As long as there is no force involved free will works very well every time Ive tried.