Art Cashin On The Clandestine War Among Central Banks

Tyler Durden's picture

Nothing dramatic here, but the Chairman of the fermentation committee just has that unique flair in explaining things so simply, even an economics Ph.D., a caveman, or the other kind of 'Chairman', would understand...

The Not So Clandestine War Among The Central Banks - Back in Philosophy class in the 5th grade, the instructor in Epistemology used to have an interesting parable on problems of perception.


The thesis went something like this: Suppose you are an alien and have been told about the game of chess. Due to a technicality, however, your equipment would only allow you to see one square on the board. Over the course of the game any, or all, the pieces might arrive on your square.


You might see a Knight or a Bishop; a Rook or a Queen or a Pawn, but you would never know where it had come from nor where it had gone when it disappeared. You never got quite enough information to envision the entire board or the concept of the game.


I was reminded of the parable as I have watched the actions of some key central banks over the last few years.


According to the financial media, each central bank is easing aggressively to serve a need of the area it serves.


The Fed is easing to help employment and the housing market in the U.S. The ECB is easing to help it banks, sinking under sovereign debt problems. The People’s Bank of China is easing to avoid a hard landing. The Bank of Japan is easing to restart an economy that has been dormant for two decades.


Those may be the official lines but cynics think there may be more to the game than is seen through this telescope. Cynics think it’s all about the currencies.


The thinking is that each bank would like to see its currency weaken to make its exports more attractive. It doesn’t stop there. With Europe being China’s biggest trade partner, some believe the PBOC is the bid under the Euro at 1:30, keeping the Euro strong enough to make Chinese goods attractive.


The currency influences of the other central banks may be a bit more subtle but no less effective or intense. No trade war yet but lots of drilling and marching.

Actually that is not true. from Mercopress: "US and EU considering WTO actions against Argentine ‘protectionist practices"

The US and forty countries which formalized a joint statement before the World Trade Organization complaining about Argentina’s trade restrictions are considering moving a step further and begin a “disputes settlement” process which could lead to an open condemnation if the administration of President Cristina Kirchner does not lift the protectionist network.


According to Buenos Aires daily Clarin quoting WTO sources in Geneva, “expectations are that it will be the US that presents the “disputes settlement” process since the White House was the main sponsor of the joint statement. The process could end with a formal condemnation of Argentina opening the way for commercial reprisals”.


In the March joint statement presented by the US and forty other leading countries the main complaints against Argentina included the non automatic licences system; the previous sworn statement registry to obtain the approval of an imports operation and the policy forcing companies to apply the ‘dollar-to-dollar’ mechanism which means they have to export a dollar for each dollar import.


Once the disputes settlement begins there is a period of consultations in which in this case Argentina must prove it has not infringed WTO rules, and if no agreement is reached a three member panel is named, chosen by the litigants or WTO Director General Pascal Lamy.

Time for some blogger-cum-budding author (which is about 99% of all) to write a currency wars sequel: Trade Wars: The Final Frontier.

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gjp's picture

Who cares about all that.  Europe faces the long-extinct-on-this-side-of-the-pond bond vigilantes while America celebrates by buying AAPL, AMZN, and SBUX.  Hallelujah!

Thomas's picture

Philosophy class in fifth grade? I am outgunned. I can't even see a whole square of the chess board.

johnu1978's picture

It's getting worse by the day!!!


Edible Plant Tours - Bowmaking Classes

Dr. Richard Head's picture

You missed out then.  Our public school encourage paste eating at the 5th grade level.  My daughter aced that bitch.

PianoRacer's picture

I feel so sorry for your daugher that her father has chosen to subject her to state prisons...

Raynja's picture

He is just dating himself, they stopped teaching how to think and started teaching what to think a long time ago.

Bicycle Repairman's picture

My school offered face painting in the 7th grade.  This is why I read Plato at home.

Nukular Freedum's picture

Yes they were all killed off by the bond- vigilante vigilantes at the Fed. Tough place, Dodge.

Eireann go Brach's picture

Maradona for President! It now deserves a true lunatic to drive it over the cliff!

Dr. Engali's picture

Madonna can't be run for president. She is currently on tour. But my guess is she would be just as capable as any of those ather clowns. At least she knows how to make money.

machineh's picture

Madonna and Maradona are the same person?

* claps hand to forehead *

Now that you mention it, I've never seen them in public together ...

Dull Which's picture

Maradonna has bigger boobs

I said bigger, not necessarily better....

Dr. Engali's picture

Yeah but Madonna could poke an eye out with hers.

ihedgemyhedges's picture

Now you're thinking of Belladonna in those scenes with Peter North...................

roadhazard's picture

I have no idea what you are talking about.

Bicycle Repairman's picture

Dig up Eva Peron, prop her up and have Kirschner use her as a talking dummy.  The Argentinians will buy it.  Then wooden dummies as world leaders will become all the rage.  And matches will be illegal.

AchtungAffen's picture

Argies will believe anything as long as you can paint a bogeyman that reminds them of the military Junta.

eddiebe's picture

You mean to say she could do worse than our current commander in chief?

SheepDog-One's picture

'The FED is 'easing' to help the U.S. housing markets and unemployment'....LOL sure, have another drink Art.

francis_sawyer's picture

Dual mandate:

1. Print

2. Print at mega fucking hyper warp speed

Ultros88's picture

It doesn't matter how much is printed provided the additional money supply is contained and does not find its way to general consumer goods or their industrial precursors. If Benny Boy printed $5 trillion and gave it all to say... me, then there would be no general inflation as a result. Any inflation that occurs will only be in those goods demanded by the recipients of the added dinero, and so on down the pyramid from there. If it all gets pooled up and doesn't move then it really doesn't matter how much is printed. The broad effects of hyperinflation can and do only occur when nominal holdings increase on a widespread basis. Keep the monies in some 'local' region and there is no issue or chance for hyperinflation.

hoos bin pharteen's picture

There is no such thing as "containment."  Even black holes leak.  The money sloshing around to cover broken, derivitized instruments can and always will spill over into the real world. 

The only thing that delays hyperinflation is imperfect knowledge about who leaks said over-printed capital at what rate.  The more information that gets out, the faster the initial recipients of said capital use it to pay salaries, bonuses and acquire hard assets in anticipation of collapse. 

Stagnant wages don't matter at that point, except as a predictor of whether someone becomes a pitchfork-wielder in the inevitable conflagration. 

On a long enough timeline...

alexwest's picture

thanks pal.. you were first to catch..


Eireann go Brach's picture

Bloop de squeak, blobby boo who bababoohey!

mathdock's picture

I thought you were going with ding dang walla walla bing bang....


manhunter's picture

So Europe is China's biggest trade partner. Europe doesn't even run much of a trade deficit (sometimes a surplus). And the euro currency has a mysterious bid, despite all the bad press.

Maybe things aren't so bad in Europe as some think. Maybe Europe is winning the clandestine war.

SheepDog-One's picture

Yea? Well I wouldnt bet on it myself.

youngman's picture

I am amazed how "strong" the Euro has stayed....its not right

Dr. Engali's picture

  When you say "strong" what is your measuring stick? Another basket of shit currencies? We are as fucked up as Europe. Besides there is nothing that is "right" with any of these markets.

moonshadow's picture

pick a horse in the glue factory...even the swiss horse voluntarily walked in to hang out with his buddies there!

alexwest's picture

aha.. you are not manhunter.. you are TRURH CATCHER..

EXACTLY.. NOT WHOLE EUROPE IS BAD... north europe/ protestant europe is doing pretty fine... average gov debt, mostly positive balance of paymets,, average citizen is for sure likes to save... people are very frugal..


here in USA .. its totally collapse.. fed gov/ local gov/ citizens are all fucked up.. all are upto eyeballs into debt.. so I guess this 200 years experiment will end sonner or later...

so sad

Clowns on Acid's picture

alex - so you are saying that Germany will leave the EUR and write off all the bad debt from the PIGS?

If the US goes down....Europe will not be far behind, or if europe goes down...US will not be far behind...


HD's picture

"Cynics think it’s all about the currencies"

Cynics KNOW it’s all about the currencies.

Central banks can print all they like, but have little control over where the money ends up.

Cognitive Dissonance's picture

Open up that perspective just a bit more and one might see that there is a coordinated effort among all the central banks to keep the Ponzi going just a little bit longer.

To think that the various central banks are competing with each other when they are all dependent for their very survival upon the same financial/social system to function is childish. They are in cahoots with each other, but maintain their own distinct flavors and political orientations in order to maintain plausible deniability.

SheepDog-One's picture

Yeay, but then when you ask why theyre keeping it going a little bit longer, theres no clear answer at all, wheres the benefit in that unless its simply about ensuring all currencies are totaly destroyed.

Cognitive Dissonance's picture

When it can no longer be kept afloat, take it down and rebuild it to suit your needs.

Remember, never waste a crisis. Particularly one you created all by your big boy self.

SheepDog-One's picture

See but my point is, they could do that right now, or could have done it 3 years ago for that matter, and who would have done anything against it? No one. This is about the same as telling your wife she's crazy and youre not cheating when she has a stack of pictures of you with another chick. Its just delusional.

Cognitive Dissonance's picture

I agree.

But who is the one who is delusional here? Those who promote the insanity or those who believe in (or at least live and prosper within) the insanity?

Or maybe those like us who don't believe in it....yet go along with it because we have convinced ourselves we are powerless? Isn't that what the delusions is all about, creating the sense of powerlessness (combined with some sugar and honey) in the population so they do as they are told?

I would need to amplify on this thought. But you get my drift.

john39's picture

the masses need to be sufficienty frightened before they will accept what the banker cabal has in mind for the next stage.  Sure the masses are largely asleep, but if the bankers move too quickly, the plan will not work.  It is all carefully choreographed.

Chief KnocAHoma's picture

Yo SheepDog, watch your ass!

Dog... it's what's for dinner!

mick_richfield's picture

Who tells the central banks what to do?  What is at *their* center?

I can't believe the CBs are the top of the pyramid, and it seems obvious that their respective nations' political leaders are just entertainment for the childrens' tables.

The CBs are clearly coordinated, so I expect there is a coordinator, and I sure don't think it's Bernanke. 

In my model of reality, the more famous a man is, the less real power he has.  So Bernanke, whose name everybody knows, has less real power than less famous bankers -- and much less real power than names we *never* hear.



czarangelus's picture

Rothschilds? Reptilians? Satan?

RunningMan's picture

Really CD? I think they want to keep it going, but that it isn't necessarily a formal coordination. Ego-centricity is way too big an issue for these folks to all just get along and make nice. It plays out exactly the same way - all the currencies bob around as the money prints to fill the holes of destroyed assets.

But behind the scenes is some serious game theory. Coincidence that forty countries plus US go after Argentina to play nice on trade and then they nationalize an oil company? China broadening the currency range, but all optics, not substantive. Fed involved in Eurozone solution, but not (yet) propping individual countries since Spain seems doomed. Gold manipulated six ways to Sunday... The list goes on. This all seems like a big conspiracy, but I see desperate and uncoordinated actions of individual groups.

The plan may actually work, with everyone declaring victory despite the ongoing challenges, except the downside risk is massive. You can't coordinate every atom in the system as a central banker, you can only set policies to influence the atoms and molecules to behave a certain way. We've got no way to earn interest on savings, but people are either too poor to save, or afraid to invest. This is the trigger for the next event. Our current liquidity trap blows up when either one country goes rogue and decides to look out for #1, and people fear their cash is worthless and start panic spending on real assets (commodities, real estate, etc.). The apparent coordination will be revealed as a fragile truce on the road to complete economic war.

Spend it if you've got it.

Cognitive Dissonance's picture

I do not deny that there is "competition" among the CBs. And I am certain that the so-called CB "heads" might actually think they are in control. But the primary purpose for their existence is to serve their masters, which on the surface appears to be the banks and financial houses.

I suspect that there are deeper tentacles working behind the scenes. The people whom we think control the system are simply pawns. The real power, the true hands that control the power levers, never show themselves in public.


Dr. Engali's picture

I disagree to a certain extent Art. I think it's east vs west when it comes to currencies. The U.S and Europe are clearly working in tandum when it comes to easing trying to keep the scam going. I don't think that each central bank is "easing aggressively to serve a need of the area it serves".  The only area they serve are the bankers.

Dr. Engali's picture

The only way to stay solvent in the U.S.S.A is to change the rules whenever needed.