Central Bankers 'Are' The Crisis

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

If there’s one myth - and there are many - that we should invalidate in the cross-over world of politics and economics, it‘s that central banks have saved us from a financial crisis. It’s a carefully construed myth, but it’s as false as can be. Our central banks have caused our financial crises, not saved us from them.

It really should -but doesn’t- make us cringe uncontrollably to see Bank of England governor-for-hire Mark Carney announce -straightfaced- that:

“A decade after the start of the global financial crisis, G20 reforms are building a safer, simpler and fairer financial system. “We have fixed the issues that caused the last crisis. They were fundamental and deep-seated, which is why it was such a major job.”

Or, for that matter, to see Fed chief Janet Yellen declare that there won’t be another financial crisis in her lifetime, while she’s busy-bee busy building that next crisis as we speak. These people are now saying increasingly crazy things, and that should make us pause.

Central banks don’t serve people, or even societies, as that same myth claims. They serve banks. Even if central bankers themselves believe that this is one and the same thing, that doesn’t make it true. And if they don’t understand this, they should never be let anywhere near the positions they hold.

You can pin the moment central banks went awry at any point in time you like. The Bank of England’s foundation in 1694, the Federal Reserve’s in 1913, the ECB much more recently. What’s crucial in the timing is where and when the best interests of the banks split off from those of their societies. Because that is when central banks will stop serving those societies. We are at such a -turning?!- point right now. And it’s been coming for some time, ‘slowly’ working its way towards an inevitable abyss.

Over the past few years the Automatic Earth has argues repeatedly, along several different avenues, that American society was at its richest between the late 1960s and early 1980s. Yet another illustration of this came only yesterday in a Lance Roberts graph:

Anyone see a recovery in there? Lance uses 1981 as a ‘cut-off’ date, but the GDP growth rate as represented by the dotted line doesn’t really begin to go ‘bad’ until 1986 or so. At the tail end of the late 1960s to early 1980s period, as the American economy was inexorably getting poorer, Alan Greenspan took over as Federal Reserve governor in 1987. A narrative was carefully crafted by and for the media with Greenspan as an ‘oracle’ or even a ‘rock star’, but in reality he has been instrumental in saddling the economy with what will turn out to be insurmountable problems.

Greenspan was a major driving force behind the repeal of Glass-Steagall, which was finally established through the Gramm-Leach-Bliley act of 1999. This was an open political act by the Federal Reserve governor, something that everyone should have then protested, and still should now, but didn’t and doesn’t. Central bankers should be kept far removed from politics, anywhere and everywhere, because they represent a small segment of society, banks, not society as a whole.

Because of the ‘oracle’ narrative, Greenspan was instead praised for saving the world. But all that Greenspan and his accomplices, Robert Rubin and Larry Summers, actually did in getting rid of the 1933 Glass-Steagall act separation between investment- and consumer banking was to open the floodgates of debt, and even more importantly, leveraged debt. All part of the ‘financial innovations’ Greenspan famously lauded for saving and growing economies. It was all just more debt on top of more debt.

Greenspan et al ‘simply’ did what central bankers do: they represent the best interests of banks. And the world’s central bankers have never looked back. That most people still find it hard to believe that America -and the west- has been getting poorer for the past 30-40 years, goes to show how effective the narratives have been. The world looks richer instead of poorer, after all. That this is exclusively because of rising debt numbers wherever you look is not part of the narratives. Indeed, ruling economic models and theories ignore the role played by both banks and credit in an economy, almost entirely.

Alan Greenspan left as Fed head in 2006, after having wreaked his havoc on America for almost two decades, right before the financial crisis that took off in 2007-2008 became apparent to the world at large. The crisis was largely his doing, but he has escaped just about all the blame for it. Good PR.

With Ben Bernanke, an alleged academic genius on the Great Depression, as Greenspan’s replacement, the Fed just kept going and turned it up a notch. It was no longer possible in the financial world to pretend that banks and people had the same interests, so the former were bailed out at the expense of the latter. The illusionary narrative for the public, however, remained intact. What do people know about finance, anyway? Just make sure the S&P goes up. Easy as pie.

The narrative has switched to Bernanke, and Yellen after him, as well as Mario Draghi at the ECB and Haruhiko Kuroda at the Bank of Japan, saving the world from doom. But once again, they are the ones who are creating the crisis, not the ones saving us from it. They are saving the banks, and saddling the people with the costs.

In the past decade, these central bankers have purchased $20-$50 trillion in bonds, securities and stocks.

The only intention, and indeed the only result, is to keep banks from falling over, increase their profits, and maintain the illusion that economies are recovering and growing.

They can only achieve this by creating bubbles wherever they can. Apart from the QE programs under which they bought all those ‘assets’, they used -and still do- another tool: lowering interest rates to the point where borrowing money becomes so cheap everyone can do it, and then do it some more. It has worked miracles in blowing stock market valuations out of all realistic proportions, and in doing the same for housing markets in locations all over the globe.

The role of China’s central bank in this is interesting too, but it is such an open and obvious political tool that it really deserves its own discussion and narrative. Basically, Beijing did what it saw Washington do and thought: why hold back?

Fast forward to today and we see that we’ve landed in a whole new, and next, phase of the story. The world’s central banks are all stuck in their own – self-created – bubbles and narratives. They all talk about how they solved all the issues, and how they will now return to normal, but the sad truth is they can’t and they know it.

The Fed stopped purchasing assets through its QE program a while back, but it could only do that because Frankfurt and Japan took over. And now they, too, talk about quitting QE. Slowly, yada yada, because of control, yada yada, but they know they must. They also know they can’t. Because the entire recovery narrative is a mirage, a fata morgana, a sleight of hand.

And that means we have arrived at a point that is new and very dangerous for the entire global economy and all of its people.

That is, the world’s central bankers now have an incentive to create the next crisis. This is because they know this crisis is inevitable, and they know their masters and protégés, the banks, risk suffering immensely or even going under. ‘Tapering’, or whatever you might call the -slow- end to QE and the -slow- hiking of interest rates, will prick and blow up bubbles one by one, and often in violent fashion.

When housing bubbles burst, economies lose the primary ingredient for maintaining -let alone increasing- their money supply: banks creating money out of thin hot air. Since the money supply is one of the key components of inflation, along with velocity of money, there will be fantastic outbursts of debt deflation. You’ve never seen -let alone imagined- anything like it.

The worst part of it is not government debt, though that, when financed with bond sales, is not not an instrument to infinity and beyond either. But the big hit to economies will be private debt. Where in many bubble areas, and they’re too numerous too mention, eager potential buyers today fret over affordable housing supply, it’ll all turn on a dime and owners won’t be able to sell without being suffocated by crippling losses.

Pension funds, which have already suffered perhaps more than any other parties because of low interest ZIRP and NIRP policies, have switched en masse to riskier assets like stocks. Well, another whammy, and a bigger one, is waiting just outside the door. Pensions will be so last century.

That another crisis is waiting to happen, and that politics and media have made sure that just about no-one at all is aware of it, is one thing. We already knew this, a few of us. That the world’s main central bankers have an active incentive to bring about the crisis, if only by sitting on their hands long enough, is new. But they do.

Yellen, Draghi and Kuroda may opt to leave before pulling the trigger, or be fired soon enough. But whoever is in the governor seats will realize that unleashing a crisis sooner rather than later is the only option left not to be blamed for it. Let the house of dominoes crumble now, and they can say “nobody could have seen this coming”, while at the same time saving what they can for the banks and bankers they serve. That option will not be on the table for much longer.

We should have never given them, let alone their member/master banks, the power to conjure up trillions out of nothing, and use that power as a political tool. But it is too late now.


BullyBearish Scrimpy (not verified) Tue, 07/25/2017 - 21:29 Permalink

C*&^sucking motherf*&ing thieves...they stole the money from real estate equity till it was gone in 2008, they stole all of the "bail out" money that has come from future tax receipts and they have been stealing interest payments, mostly from seniors for the past 8 years...if you don't get this you're either a paid troll, a member of "the club" or beyond hope.  I have one word for the dominance they have over us...BLOCKCHAIN.  Learn about it, tell your family and friends about it, and support it and cryptocurrencies.   As long as they control the money, they control EVERYTHING!

In reply to by Scrimpy (not verified)

GRDguy Tue, 07/25/2017 - 19:38 Permalink

The financial sociopaths stole all the seed corn prior to the "crisis;"the central banks could only replace it with pop corn.That's why the silos (banks) still appear "full." 

Rebelrebel7 (not verified) Tue, 07/25/2017 - 19:52 Permalink

The Central Bank has left Americans in a Fractional Reserve induced state of dissociative disorder, we are awakening and realizing the unjust and unnecessary brutality of it all! We have witnessed the endless wars! 221 years of war! We have witnessed the cronyism! 190,000 corporations absurdly listed as defense contractors on the dole! We have had it with trickle-up crony socialism empowering Warren Buffet, and George Sorros- the greediest and most violent socialist on Earth !We have had it with the lies about Russia from both parties! Americans should unite around issues that we can all agree upon. These issues are all ignored by the establishment elites of the neocons and neoliberals. 1.We must repeal the Federal Reserve Act of 1913 and abolish the Federal Reserve. Congress must resume its responsibility and coin money and regulate its value as granted to Congress in Article 1 Section 8 Clause 5 of the constitution. 2.The military should be used for defending our borders. We should close the 698 permanent foreign military bases and 400 temporary military bases. Our international meddling is jeopardizing national and international security, human life, and economic prosperity. We should retract from all war on foreign soil. 3. The prison industrial complex and the war on drugs must end. It is a horrific human rights abuse and is completely unacceptable. 4. All laws which violate the Bill of Rights must be immediately repealed. The NDAA, The Patriot Act, HR6393, The American Freedom Act are all grotesque unconstitutional violations of the 4th amendment.   5. Freedom of speech and of the press , and  the right to assemble, must be protected.  

NAV Rebelrebel7 (not verified) Tue, 07/25/2017 - 21:39 Permalink

 And among the 19 behind bars in the Bunkerville stand-off trial (the Bundy Ranch case), Jerry DeLemus, co-chair of Veterans for Trump during the New Hampshire Primary last year, received a seven year plus (87 month) sentence from US District Judge Gloria Navarro, a sentence 15 months harsher than the one requested by federal prosecutors in the case. As for the defendants' right to representation, last year a Nevada judge refused to let Larry Klayman join Cliven Bundy’s defense team, citing Klayman’s long “practice of impeding the ethical and orderly administration of justice.”Given a just system of law, the protestors in the Oregon Standoff with the BLM would be exonerated, would be respected for standing up for their Constitutional rights and the Oregon ranchers and the Hammonds who were jailed as terrorists for lighting a backfire to protect their land from an encroaching forest fire started by lightning, would be free.But, alas, we are an occupied country and the enemy has subdued us by using our very own institutions against us.

In reply to by Rebelrebel7 (not verified)

illuminatus (not verified) Tue, 07/25/2017 - 20:02 Permalink

 The greatest con of our time, yet most people are completely clueless. Amazing!! It is so atrocious that it defies all decency and logic and yet, day after day our whole government and economy keeps genuflecting before these scheisters as if they were Gods gift to the citizenry.

helloimjohnnycat Tue, 07/25/2017 - 20:07 Permalink

Do not pass joos, Do not collect 200 shekels, Go directly to joo jail.God fuckking damn, Greenspan will still be slobbering-out goo-face joo-spittle for weeks after passing.No open casket for him without a spit valve screwed into da' pinewood box.  The cheap bastard will prolly be buried in a wife-beater. Donated his one cheap suit to Salv-Army for a posthumous write-off.Tell me I'm wrong !

JailBanksters Tue, 07/25/2017 - 21:56 Permalink

Not just AREThey provided the Platform, They Created the Crisis, Funding the Crisis, making the Crisis bigger and Blaming everybody else on the Planet.It's Jewarchy

Aquarius Tue, 07/25/2017 - 22:01 Permalink

On 23/07/17 02:36, Peter Bolton wrote:Are Politicians to blame? Or Economists,? or Bankers? Bureaucrats? Financial types? The Commercial CEO+?  Pick your favourite.Let me declare it is government that is the problem, which means that directly, the people who choose the government, are part of the government and those that decalre themselves, and in turn be called "leaders" are to blame. IOW - we are to blame for our social mess, Nobody is a leader, nobody has the necessary education and all depend on everybody else.So we form Collectives, eg gangs, party's, committees, religions, functionaries, States, Nations, provinces, military forces, etc.,  in an uneducated state and sacrifice our cognitive potentials to this single celled Amoeba called a Collective. We admit this.We fall in love with money so everybody steals, lies, loots, wars; such are our values; they are the values of the Collective.The values of the Collective are numeric ie to become bigger and stronger and  dominate as the sole Power;Almost any sect, cult, or religion will legislate its creed into law if it acquires the political power to do so. - Robert A. HeinleinTribal Nationalism, Terrorism, Lies, Looting, Waring, murder, Totalitarianism and the Mandate of Heaven, etc.Solution: Change the education system from employment skills demanded by industry to a program of History to include the old Masters, such as Solon and Socrates, Aristotle, Plato, Confucius, Lao Tze, Orwell. - the Emphasis to be governance through the individual. Of course, math, languages, politics, the social and humanitarian, agriculture, chemistry, Electronics, Astronomy or Cosmology sciences, and the Prime Subjects pf Physics and Philosophy. etc.Economics, like religion and the Arts are not sciences, but studies of that which is within..The emphasis must be focussed on true History.And we need a new subject: The Collective vs. The Individual. Collective can no longer be permitted to be a form of social control, by Force.None of the above as taught today.Add Law: With the emphasis that useless Laws destroy Society, as too many Laws destroy Society as "Political Correct" destroys societies and peoples and nations.The Language and structure of Law should a priori be constructed to protect the Innocent and not be an income source for rotten judges and prosecutors with ambitions beyond the balance of Order.Will this fix our problems today? No, but it would be a vision for a better future. Teach the search for truth based on the mistakes of the PastIt is the time for the end of populace politics where Collective become dominant and totalitarian looting become the Prime Objective of government. The US Constitution was written with this as its Primary Objective, originally which has devolved to Collective and Grifter Wars. And here we are.Want to blame somebody for Humanity's state of affairs? Blame yourself, and Yes, we are all guilty.Too idealistic did you say?Well, we have to start somewhere and what we have today, sucks. And it will remain as such until we accept the fact that "leadership" today are made up from mainly scum or the Lowest Common Denominator (LCD) of the most vulgar elements of Society - with and without Cancer of the brain.Today the West is rapidly in decline: Devolution: This is due to the fact that Gangs and Collectives have control and are competing for total control against other gangs and Collectives; nobody is representing Humanity.https://verbewarp.blogspot.my/2006/03/warning-to-east.htmlAnswer: embrace Risk and plan, design the coming change through Objective Consciousness aka Intellect.Ho hum

alphasammae Tue, 07/25/2017 - 22:08 Permalink

Greenspan is a lionized JPM banker and came to the FED desk to carry out the Banks' interests agenda. President Clinton came to implement the takeover of the US Treasury by Goldman Sachs with Robert Rubin, the architect at the helm of the new agenda that ultimately resulted with the end of Glass-Stegall that led to the 2008 crisis. The three marketeers made President Clinton president and rich at the same time and President Clinton washed his hands after the 2008 crisis by pointing out that he told Rubin the new changes may not work out> Rubin like Greenspan suddenly developed amnesia claiming not to know why the crisis happened, etc.Now the bankers are back at the helm with Trump trying to get Dodd-Franck dropped.The problem, people are too busy and distracted with fake News watching CNN or CNBC/Bloomberg while the lobbyists and FED banksters and congressmen TV investigations screw us, the media is controlled to allow all this to happen. Since they never go to jail and have special rights the merry-go-round never ends.

gregga777 Tue, 07/25/2017 - 22:11 Permalink

The probability that the next, the current and the previous two chairman of the Goldman Sachs Feral Reserve System would be Jews, based on their general distribution of 2% of the American population is:

p = (1/50) * (1/50) * (1/50) * (1/50) = 0.02 * 0.02 * 0.02 * 0.02

  = 0.00000016

or 16 in 100 million.  

See?  The game is rigged against us by the gangsters that own the Goldman Sachs Feral Reserve System.

But, of course it's anti-Semitic to discuss these facts. Our masters say it's so, so it must be true.

gregga777 Tue, 07/25/2017 - 22:13 Permalink

"A narrative was carefully crafted by and for the media with Greenspan as an ‘oracle’ or even a ‘rock star’, but in reality he has been instrumental in saddling the economy with what will turn out to be insurmountable problems."

And who owns and controls the 6 Crony Capitalist CONporations that control at least 90% of the Mainstream FAKE NEWS Media that made Alan Greenspan the 'oracle' or 'rock star'?

gregga777 Tue, 07/25/2017 - 22:17 Permalink

It doesn't matter who we vote for anymore. The political parasites are ALL owned by the banking gangsters, CON Street Swindlers and Crony Capitalist CONporations and they will ALWAYS do their bidding. Forget making changes via elections. It will never work.

SHADEWELL Tue, 07/25/2017 - 22:52 Permalink

Greenie trotting out 80 yr old Angela Mitchell to turn tricks, pimping out that dried out filthy cuntAndrea babay,...gimme some gumGreenspan...fucking cocksucker..started this whole disaster..green bag you nursing home fuck...you happy you took the money to destroy US?Special place in hell for you, you bald fucking dickheadCUNT

Dwarsligger Wed, 07/26/2017 - 04:03 Permalink

The banks are now putting the final details in place to turn up the notch again:
Step 1 a cashless society and the looting of the poor can get started in earnest
Step 2 biometric ID on the ethereum distributed ledger, deceptively called 'financial inclusion' aka inclusion in a financial system of slavery

Get inside their own strategic documents here:

Looting the Poor with ID2020

MEFOBILLS Wed, 07/26/2017 - 16:11 Permalink

 Central bankers should be kept far removed from politics, anywhere and everywhere, because they represent a small segment of society, banks, not society as a whole.The above statement by author is ostensibile reason for creating Federal Reserve.  Go back in time and look at pro-fed arguments. They use almost the exact same words.  Even today, FED chief loudly proclaims his/her independence from politics.  The election cycle for FED chairman is even out of sync with politics.The real problem is that banks create the money that is used by the people.  Banks do not intermediate funds.  How the money is created and where it flows is a legal function that properly belongs to the commons.  The commons in turn are to be under the polity and law.This whole independence argument has at its root, that bankers simply perform a modest service.  This service is finding new creditors and debtors and having them come together.  This is NOT what happens.  Banks create the money upon hypothecation.  They buy your new debt instrument (called asset in the article) and in the course of this purchase, they create their bank money.  Their bank money is then "assigned" to your checking account.  New money accounting is a liability to the banker and an asset to you.  It is pure bookeeping on a double entry ledger.  The new bank money is a ledger account of the banks liability to you.  The banker then attaches your debt instrument to his ledger.They do not perform a modest service, and they are paid exorbitant wages, and they "take" from society.  They support all sort of nefarious activities, to then keep their easy life of money power.Allowing un-elected people to run the world means there is no political control, and hence these predators, if they gain access to levers of power, will then feather-bed and form oligarchy.  Finance oligarchies today are oftentimes Jewish- and to say otherwise is to be ignorant of the facts.  It is actually Jewish Illuminism, which have its antecedents in Cabala, and before that Zohar, and before that Hermeticism.  This ability to create money and take usury is funding tap-root for their nefarious affairs.  Our ((friends)) learned their methods during their long sojourn in Babylon, and was secret verbal tradition amongst Sanhedrin.  Usury is a method of controlling populations, while simultaneously stealing wealth.  It is the taking of something for nothing.  It is sordid gain.So, it is more than just central banks, it is the actual structure of debt spreading credit banking itself.  Personally, I would strip the money creation privledge away from banks... they have abused it.  It is too much power concentrated into wrong hands.www.sovereignmoney.eu