Central Banks Are Talking More Than Ever

Tyler Durden's picture

Authored by Samuel Rines via AvalonAdvisors.com,

This note takes a brief look into "narrative economics" and the link to central banks.

In the wake of the financial crisis, central banks have stepped up their communications, whether in the form of speeches, press conferences, or the like.

While not a quantitative style of understanding economics, it may prove a useful tool to understanding broad shifts in the economy.

Robert Shiller, in a discussion paper earlier this year, laid out the argument for economists paying closer attention to the "narratives" surrounding economics. To Shiller, popular narratives drive more of the fundamental economic outcomes than economists are typically willing to admit.

For example (one provided by Shiller), the 1921 recession following the end of World War I was, in part, driven by narrative. In contrast to the typical explanation of why it occurred (a central banker went on a long vacation), there are more fundamental reasons for the downturn, including a 50% increase in the price of oil (with wide-spread fear that oil production would peak in a few years) and-probably the most important-deflation expectations. Because consumers believed that prices would fall, they held back from making purchases.

This was the era of the "profiteer", the word used to describe price gouging. Thrift became a virtue, and there were calls to avoid buying anything other than the essentials. Consumer spending plummetted, leading Shiller to describe the recession as a "consumer boycott" lead by narrative, not by a traditional business cycle.

While the example above is buried deep in history, there is applicability to the present. Specifically, the rise in central bank communications. There have never been more speeches given by representatives of central banks than today. In a recent speech given by the Chief Economist of the Bank of England Andrew Haldane,  he calls for less complex and more accessible communication of monetary policy. Ostensibly, this is to increase transparency and trust with the public and describe their actions and intentions to markets.

Being clear and transparent about the goals and sought after outcomes is a legitimate strategy being pursued by central banks around the world, the "forward guidance" policy tool. That is meant to build trust and utilize that trust to instruct outcomes. In some ways, build and maintain a narrative of economic conditions.

This is where it becomes interesting for modern central bankers.

First, it is not quite that simple to construct a narrative. Note that the accessibility of monetary policy is low. The primary piece of material used by the Fed to communicate its strategy, the FOMC minutes, has an exceedingly low accessibility. This makes the communication outside of it far more important to the broader public and the maintenance of a given narrative.


Second, while the Fed (or other central banks) may wish to control the economic narrative, it may not be capable of doing so. Narratives, as pointed out by Shiller, have a life of their own.

What does this have to do with anything? One of the critical elements embedded within both the "narrative economics" theory and "forward guidance" is that the ability to avoid a repeat of a 1921 style, narrative driven retreat. It also shines a light on the need to carefully deconstruct popular narratives for their potential economic consequences. Further, it points to the potential consequences of shifts in the efficacy of forward guidance from central banks.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
The best Sun's picture

(((Central banks))) are lying more than ever.


JerseyJoe's picture

When conmen lie, do they actually tell the truth?  Hmmm. 

Why would a imposed construct like a Central Bank that manufactures "money" out of thin air and then charges interest for the privelege of borrowing their fabrication be concerned?  It is because that their scam is unravelling in plain view????       

Barnhardt provides her unique perspective in this Q&A session where she warns of the dystophian outcome to this travesty.   

Once you take the Red Pill on the whole fraud of Central Banking, it is hard to climb back into the matrix.



SoilMyselfRotten's picture

Talking more than ever yet saying less tham ever

Arnold's picture

I will step back and read the article,
but is it Jawboning,
talking their book or
a promo for their newsletters that nobody reads.

The central planners's picture

Wow the bullshit chart is exploting.

rocmon's picture

People only talk more when they have more explain (cover up), might be time to get out of the pool (swamp)!

new game's picture

understand exactly opposite of what they say. 99.9 percent accuracy will then be achieved. all for the thieves, the .01 percent that game the ponzi fiat currency creation mechanisms.

the fiat currency situation is theft, 104 yeqars of theft. thieves lie. moar they talk moar the problems are becoming accute, duh!

simple shit maynard...

Darth Rayne's picture

Central Banks have only one mandate.


One of the core demands of our society, is that we believe that bank credit is money

A Mindful Being or a (Sith Lord) does not obey the demands of these foolish bureaucrats


Let it Go's picture

One indication of just how messed up and flawed the global markets have become is reflected in the way central banks across the world are now buying stocks. This has become a part of their response to correcting the forces of past excesses.

One thing is clear, the central bank's large foray into stock ownership represents more than just a moral hazard and in many ways, it paves the path for a liquidity crisis in our future. More on this subject in the article below.


Arnold's picture

Your liquidity crisis has been here for some time.
The mask has been Central Bank support of equities.
And that support has been through the issue of governance bonds. creating future liquidity promises.

Maestro Maestro's picture

**Since neither the Americans, the Russians nor the Europeans can even issue their own (national) currencies; none of you are sovereign countries, that is, free peoples. You are all the bankers' witting slaves. The manipulation of gold's price lower is the principal method used by the bankers to hide this fact in plain sight. If gold is not money (alongside whatever else) than you are a slave, period. Read on.**

Worse than the bankers rigging gold and silver prices and not having the gold that they sold you (or selling gold that they don't have via fraudulent COMEX Futures contracts) is the fact that we don't even have MONEY today.  Therefore all financial transactions and economic numbers predicated on the existence of money are FRAUD and FORGERIES presently.

Electronic digits and paper fiat currencies in use today are NOT money, according to the law of the country that issues the reserve currency of the world, the US Dollar (Article 1, Section 10 of the US Constitution); or by the tenets of the science of Economics (i.e., fiat currencies are not money because they are not a store of value nor a unit of account due to the fact that NOT ONE fiat currency's value is actually determined or stipulated in concrete legal terms).  Dollars and Euros and Yens are not even lawfully DEFINED as to what they all are exactly; what their economic worth and transactional value is. Hence, fiat currencies simply cannot constitute the legal foundation of any lawful contract!

(Also, there cannot be either inflation nor deflation in the ABSENCE of money.  Both inflation and deflation are monetary events which cannot take place where there literally is no money.)

What we have today is massive GLOBAL FRAUD mascarading as a monetary system based on the (fraudulent) US dollar because all fiat currencies are basically only a derivative of the US dollar, including the Euro, the Yen, the Yuan, the Rouble, the Shekel and the Riyal.


Why do a few people get the right to print fake fiat money out of nothing and buy your goods and  services with it whereas you have to WORK to obtain the same worthless money created out of nothing?

THAT is the question at the heart of the matter.  That the bankers manipulate interest rates or the price of gold via fraudulent Futures trading (by selling gold that they don't have) with fiat money is a moot point.

To put it differently: why do the bankers get to have anything that they want without working for it and you, you don't?

All this talk about market rigging, monetary theory and fraudulent (paper) gold trading is a cover-up for INJUSTICE.

The US Constitution FORBIDS the use of debt as money; the US Constitution proscribes (debt) notes which is what the US dollar is presently.  Think, all other currencies are just another name for the US Dollar.

What passes for money today is a CRIME, no more no less.


You are all aiding and abetting this crime every time you buy, sell, pay or get paid.

And then you ask, Why our leaders, the politicians, the bankers, and our military men and women are EVIL?

The answer is, because they are just like YOU. They are your sons and daughters.

LawsofPhysics's picture

Don't overthink this fool.

"Full Faith and Credit"

...that is all...

max2205's picture

Please have the irs report the amount of interest reported on 1099 In 2008 vs 2016


Mine is zero 

spanish inquisition's picture

"To maintain the stability, we must bone you in the jaw...That is how you say, no?".

moonmac's picture

Central Bankers will never talk about how they can create a "Wealth Effect" for some without causing a "Poverty Effect" for others because it's impossible. There's always an equal and opposite reaction to their Market Rigging Schemes.

Wealthy Money Manipulators accept the positive results of their Monetary Experiments while all the negative outcomes get shoved down the throats of the Working Classes. 

Wealth and Income Disparity from the top executives to the bottom workers has never been this extreme! Our Financial Criminal Rulers have all profited greatly from their Ultra Loose Easy Money Policies while the lower and middle class take all the misery and suffering. Central Bankers and their corrupt cronies have completely divided up humankind like never before which always leads to war and even more profits. 


shizzledizzle's picture

The shit ain't gonna Jawbone it's self!

GlassHouse101's picture

In their world of spinning plates on sticks, there is becoming less and less room for error.

LawsofPhysics's picture

Just another reason to take their fucking heads!

NOTHING, changes otherwise.

"Full Faith and Credit"

Dr.Engineer's picture

So, let's dissect this a little.  Central Bank narrative is propoganda to try to decieve the masses into doing what they want.  It is nothing but lies.  So, do you believe the lies or do the opposite of what the lies say?