It's A Centrally-Planned World After All, With Ever Diminishing Returns

Tyler Durden's picture

By now it is no secret that the primary beneficiary of the over $7 trillion pumped by global central banks into the financial system in just the past 4 years, and countless other trillions in miss-spent fiscal stimuli has been the stock market. But what about the global economy: after all five years after BNP Paribas stopped withdrawals from their investment funds - the unofficial start of the Great Financial Crisis - whose primary beneficiaries have been corn, gold, silver and brent - we should have seen at least some sustained impact in the economy if all Econ 101 teaches us about the virtuous business cycle is true, and if any of this countless money out of ZIRP air actually made its way into the economy instead of just the stock market. Well, let's take a look shall well. Courtesy of Bridgewater we present a chart of coordinated interventions and their impact not on the stock market, but on the economy. What we find is that it was, is, and will be a centrally planned world after all.

Bridgewater's take:

The three contractions in global growth that have occurred since the financial crisis were offset by heavy blasts of fiscal and monetary stimulation by global governments and central banks. But each wave of support has also had less impact on global conditions than the previous wave. We remain concerned that the ability of those policy responses to stabilize the situation is diminishing. The third wave stabilized global growth after last summer’s dip and allowed for the bounce in global conditions and markets over the early part of this year – but its impact on global conditions was more modest than that of earlier waves of stimulation. As the third wave has ended, global growth has again rolled over.

The scariest thing about the above chart? The ever lower global growth bounce as a result of ever increasing, or exponential, central bank intervention.

In other words, not only is conventional economics wrong about virtually everything, but the impact of whatever the real underlying story is, certainly not one that can be captured by econometric models which continue to falsely model out what is essentially a system of infinite complexity and soaring fragility, has increasingly diminishing returns.

Also, when we get to the point on the chart above where global growth is at or below zero irrelevant of how much "money" is pumped into the system, that will be the moment to shut the lights out, because it is then that the central planning fat finger which has to date mostly impacted various intraday inflection points in the S&P, will simply press CTRL-P. And not let go.

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orangegeek's picture

The Dow has always been a strong indicator of change of presidency.  This weekly goes back to 2004 - Bush's re-election.


If markets hold (unlikely), Obama is in.  When markets crash, Ryan's cost cutting mentality will be welcomed...and necessary and largely dimish centralized planning, but not eliminate it.

Seize Mars's picture

Orange geek, your narrative is phoney.

There is no Ryan cost cutting mentality. It's a goddamned lie. And you are promulgating it.

Red versus Blue is GS versus GS. They win. Liberty loses.

theTribster's picture

Nice! Well said Mars. You couldn't be more right and I couldn't say it better myself. GS vs GS is exactly right.

You win today's best comment award!


francis_sawyer's picture

Trying to mix a RED/Blue narrative & cram it into a treatise which correlate them to Elliott Wave Rorschach blots mocked up [in crayon] by an amateur... LMFAO!


Jeez Man... Someone must have slipped some purple micro-dot into my whiskey last night...

macholatte's picture

purple micro-dot into my whiskey...... the good 'ol days


I know *exactly* what you mean. Let me tell you why you're here. You're here because you know something. What you know you can't explain, but you feel it. You've felt it your entire life, that there's something wrong with the world. You don't know what it is, but it's there, like a splinter in your mind, driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?

Chris Jusset's picture

The LAW OF DIMINISHING RETURNS is just one of many downfalls of central bank intervention.  But Tyler is correct that when the net returns equal ZERO (or less), then it's LIGHTS OUT ... GAME OVER.  I think we're quickly approaching that point, and Bernanke and Draghi realize it.

Dr Benway's picture

It will be interesting to see how long they will be able to drag it out though. And it will be hilarious to see the shills continously evermore desperately claim that *now* the bottom has been reached and everyone should buy. Bullish and Bullshit are very similar words.

trebuchet's picture

the basic hypthesis of that article is that the CB intervention was MEANT to equal fiscal stimulus (build a straw man to knock it down)  but it was about fixing broken banking system keeping GS vs GS in play etc. 

if that is the case, why did stock market go up?  A "fundamentals" interpretation of the side effect of overcompensation of declining velocity/deleveraging =  reduced discount factor/lowering shapre ratio - cost of "risk" has fallen as banking system chases higher returns/tries to maintain performance for bonus payouts etc etc

But underlying "cost" of risk - the failure rate of businesses, job losses, etc has not been fixed. 

This disconnect - based on expectations and front running CBs is now evident to central bankers and as ZH keeps pointing out, reduces the chances of CB action...   despite algo action when the average fund manager realises that CB isnt intervening to raise asset prices  and in fact wont if they are being overly "front run" then it is game over.... 


how long does it take for momos work out they're being played for muppets? if only i knew.... 




cranky-old-geezer's picture



But Tyler is correct that when the net returns equal ZERO (or less), then it's LIGHTS OUT ... GAME OVER. 

No, zero return isn't game over, because it never was about helping the economy recover, it's always been about looting the economy, and the looting will go on until there's nothing left to loot.

I think we're quickly approaching that point, and Bernanke and Draghi realize it.

No, Bernanke and Draghi realize more QE might precipitate a currency collapse, especially USD.

Fear of currency collpase is the only thing putting brakes on their looting spree.

And it's not 7 trillion, more like 26 trillion.  Fed's balance sheet shows 1/10 of it.  90% is "off balance sheet".

If they showed the whole 26 trillion, faith in the US dollar would collapse overnight and we'd see currency collapse tomorrow.



centerline's picture

Yup.  They are gonna try and play this game right up to the 19th tee.  Hard to tell how far they make it before lightning strikes though.

Wild tree's picture

Your comment center/, reminds me of that golf play in Caddyshack in a driving rainstorm with the best game of his life, until lightning struck. Unfortunately, that movie is closer to reality than what passes for informed consent today, but the result is the same. All get burned except the men behind the curtain. Party on.......

goldfish1's picture

Certainly the demise is accelerating :

Sharp rises in pig feed prices are not new. There have been spikes in 2008 and 2011 due to poor weather. "But what we are seeing now is a fundamental shift in grain prices going upwards," said NPA general manager Dr Zoe Davies.

tenpanhandle's picture

No, I don't know what yer talking about.  I guess it's because I only dropped a couple hits of acid in my drug daze.  It didn't take me long to figure out that elucidation and enlightenment wasn't what was really going on during those few trips.

francis_sawyer's picture

It was fun while it lasted anyway... (same could be said about the dollar someday)...

groundedkiwi's picture

I have often wondered why Orwell gave him an Irish surname

orangegeek's picture

Really?  You should try and get out a bit more.

potlatch's picture

Mr. Mars, my comments on this site constantly harp on moonbases,  You are a bolder person, since you advocate straight to Mars.  I salute you.


Your comment is spot on.  Elelctoral level politics is a downward directed informational grindhouse, that only witless proles think matters.  It is a side show for people without enough sense of reality to tell its a sideshow.

Nobody For President's picture

Plus one for 'informational grindhouse'.

Silver Bug's picture

A small minority is controlling a mass majority. Sad really.

tenpanhandle's picture

GS versus GS:  Gold/Silver versus Goldman Sachs

fiftybagger's picture

Red algos versus blue algos might make for some very volatile markets eh?  Buy straddles.

Chief KnocAHoma's picture

Mars - with all due respect I must debate this point. While aspects of your argument are valid in that GS and Wall Street have fixed the game in their favor, there are actions the country can and must take if we are to survive. Romney and Ryan are the grown ups in the whore house that is Washington. I'm gona cast my vote for them based upon one issue and one issue only which is this .... The current dumbass in the White House has increased our national debt from $10-trillion to $16-trillion in just a 104 rounds of golf. I'm no genius, but that seems like a lot of printing to me.

Plus Obama is Muslem.

Ima anal sphincter's picture

First screw up....."Romney and Ryan are the grown-ups"

Second screw up....."I'm going to cast my vote"

Third screw up..... "Obama is Muslim'

1,2,'re out.

Just as a question....are YOU any better than Muslims? Please tell me why.

Seize Mars's picture


Hating the guy because he's a muslim is a failure of intellect, but more importantly a failure of spirit. Don't hate people because of their religion, race, et cetera. It's unproductive, but also a fake standard to measure a person's character. Accept people the way they are. If you want to hate, hate injustice. For example, Obama is a liar, phoney and megalomaniac. He doesn't deserve the office. Hate him for that, don't hate his religion. Hate the fact that he lied when characterizing himself as a Christian.

Now, as for voting, don't vote for liars and puppets! Will you be posting on the internet lamenting the police state we inhabit, only to make-believe you are surprised? (Oh No! How could this happen? It's a Republican administration!)

Act like a man. If you vote at all, vote for Ron Paul. If we are all going to submit to a violent police state, then at least you can tell your children you tried something real, something true.

The national debt is a moan from a sinking ship. The dollar will not survive. It's not going to matter. Render unto Caesar what is his. If your bills are denominated in dollars, pay them in dollars. Get rid of every dollar you have. Let the lying puppets tell their lies. Turn away and chart a true course.

banksterhater's picture

Where's he getting the $4 TRILLION in 10yrs by dropping the top rate? $35>25% ? Defense? NOPE, mortgage deduction? NOPE, employer deductn for healthcare? NOPE! FROM WHERE?

FreedomGuy's picture

It is not just the economy that is centrally planned. "They" have plans for our whole lives. Your life is and will be centrally planned and you WILL like it.

PiratePawpaw's picture

When was the last time that anyone in office actually CUT federal spending?.......................................

kito's picture

Ryan the fake conservative knows full well that if there are any real cuts to the 1.3 trillion deficit crutch, that whopping 1 percent gdp would quickly be -5 percent gdp and he would be thrown out on his ass by the angry much better to just talk about cuts and hope the herd moos loudly in approval while grazing on the government grass......

Hype Alert's picture

That's a key point: not one MSM source has ever pointed out that deficit spending, money printed out of thin air for the last 30 years, has been such a large part of GDP.  I really don't know how any "source of information" can continue, with a straight face, without recognizing this fact.  It's like their saying "We promote ignorance", and look, we can smile while we say it!





macholatte's picture










trebuchet's picture

"it is the people that can make you believe absurdities are the people that can make you commit atrocities"  (or something like that)  - voltaire 

Republicae's picture

“In a way, the world-view of the Party imposed itself most successfully on people incapable of understanding it. They could be made to accept the most flagrant violations of reality, because they never fully grasped the enormity of what was demanded of them, and were not sufficiently interested in public events to notice what was happening. By lack of understanding they remained sane. They simply swallowed everything. . .” 1984

Law97's picture

We've pretty much pulled the next 30 years of economic growth and prosperity into the last 30 years.  This was the easy path of least resistance for policy-makers and citizens alike and covered over a LOT of egregious policy errors.  We are now paying the piper and will be for the next 30 years or more while these excesses and malinvestments are worked off.  Or, we crash the system and/or have a world war, and we clear the system in 10 years. 

PiratePawpaw's picture

Since people in general and politicians in particular are prone to take the path of least resistance(initialy); I would bet on the latter since the former contains the word "worked".

Aknownymouse's picture

How do you know that? The guys budget is definitely serious. I dont understand. You bring in the biggest commie in the world for 4 years just because he is black, and you would not give those guys even five minutes before the long knives are out? I bet you the general public is much happier with that pick than the arrogant know it alls in zero hedge seem to be.

kito's picture

aknownymouse--WAKE UP!!!!  your boy ryan voted for the expansion of medicare, patriot act, ndaa, tarp, the invasion of iraq....should i go on?????? get a clue......your eye is so far off the ball,  crying about one commie that you cant see BOTH PARTIES are stripping you and the country of everything sacred......................

Aknownymouse's picture

You do the best of what we got. Ryan and romney are much better than obummer. Dont like it? Work on the better team to put pressure. But what other constructive options do you have? Being negative and sitting home will only give way to the extremists to take over.

Sudden Debt's picture

Obama? every time he went golfing, are moments he didn't hand out money.
if no.... god help America....

Skateboarder's picture

Fool loves going on vacation. He's leading the way to our part-time worker society! TWO DAYS OF WORK PER WEEK OR BUST!

trebuchet's picture

im all for part time work as long as i get shit loads per hour :)  

and i get counted in the employed category - good for economy, good for stock market, good for quality of life :) 


get a part time job !!! 


share the jobs, spread the wealth!!*   (*after i get paid my shitloads of course)

Poetic injustice's picture

You mean he will be hired as part-time president, without pension and healthcare? That makes too much sense.

Herodotus's picture

Dwight D. Eisenhower is the last President to cut federal spending in absolute terms (actual $ cut!!!, not percentage of GDP, not inflation adjusted).

This was done after the Korean War ended.



goodrich4bk's picture

I see you've drunk the kool-aid, Orangegeek.  Just think about what you have said: "when markets crash cost cutting will be welcomed."  Do you not see that every "cost" is some lobby's gain, that the lobbies bring the politicians to the dance and therefore get to call the tune?  You are hopelessly naive if you think the Red Team has any intention of cutting costs in the middle of a market crash.  The Republicans will never forget the last time they did that --- Hoover --- and that they were out of power for almost 40 years.

Just look at how frightened your Republican saviors are of the fiscal cliff.  Here's there chance to cut spending across the board and what do they do?  Scramble to delay it --- and we're not even in a market crash!  How much more evidence do you need to see that the bankers own our government, that the bankers WANT more debt and a larger government, and that both parties are beholden to the bankers and will do nothing to change the trajectory of growing debt and growing central government until people like you wake up.

A Man without Qualities's picture

I love the way Americans think they live in a democracy.  Listen, the fix is in, the fix is always in.  Obama is going to win.  Romney doesn't even want to be president, because it's all going to go wrong in the next four years.  But the American people need to be pushed to the edge of the precipice on spending to keep the American underclasses in fried chicken and sweat pants.

Ryan is being prepped for 2016, he's the man who will push for the debt held by the Fed to be cancelled and in exchange take a slash and burn to the entitlement programs, especially Medicare and Medicaid that Bernanke despises.


resurger's picture

Do you still believe in elections? It has already been decided who will be the next president... whether the markets hold or not.

Am sorry, but you have no VOTE, its all a charade, wake up

LMAOLORI's picture



"The Dow has always been a strong indicator of change of presidency.  This weekly goes back to 2004 - Bush's re-election"

Orangegeek the problem I see with your argument is banana ben he will print to save obama so the market's won't crash until after the election. Obama's been great for the markets and the bankster's  ZERO PROSECUTIONS he's just been shit for mainstreet.




Obama Has Been The Best President For The Stock Market Since Eisenhower



deflator's picture

 When markets crash, Ryan's cost cutting mentality will be welcomed...

When/if markets crash, governments and technocratic central bankers will print, period end of lesson.

Redhotfill's picture

Ryan  was that the dufus who was arguing about cuttin like 300 billion, or some other number that amounted to like less than 3% of the budget, or some amount that was less debated in the house longer than it took uncle sugar to spend that amount?  IE more budget theater.

diogeneslaertius's picture

because it is then that the central planning fat finger which has to date mostly impacted various intraday inflection points in the S&P, will simply press CTRL-P. And not let go.