Central Banks: When We Succeed, We Fail

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Goosing stocks ever higher will eventually push wealth inequality to the point that it unleashes social instability.

Central banks around the world share a few simple goals:
1. Defeat deflation by sparking inflation–in the cost of goods and services, not wages.
2. Weaken the currency to boost exports and counter beggar thy neighbor devaluations by other exporting nations and trading blocs.

3. Boost the value of stocks to keep pension plans afloat and project a politically powerful message of “growth” and “prosperity.”

 

What no central bank dares say is what happens should they manage to boost inflation, devalue their currency and continue pushing assets higher: when we succeed, we fail.
Consider the consequences of juicing inflation: every click up in inflation further reduces the purchasing power of wages, which do not keep up with inflation in a world of labor surplus.
When central banks succeed in jacking up inflation, they will fail the households and enterprises whose income is stagnating or declining:Were European Central Bank head Mario Draghi honest, here is what he would say:
Devaluing one’s currency is another way of pushing down the purchasing power of households’ income and savings. Were Bank of Japan head Haruhiko Kuroda honest, here is what he would say:
Goosing stocks ever higher will eventually push wealth inequality to the point that it unleashes social instability. Were Federal Reserve chair Janet Yellen honest, here is what she would say:

Should central banks succeed in jacking up inflation, devaluing the purchasing power of fiat currencies and pushing stocks to the moon, they will have failed their citizenry. Should they succeed in reaching their goals, they will trigger catastrophic instability.

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BUCKHED
BUCKHED

Central Bankers….there’s no inflation in the true cost of rope…plus trees grow for free .

Golden Oxen
Golden Oxen

Whatever you do, don’t buy Gold.

There is no inflation and you can’t eat it.

MuckAbout

I agree with the Ox above. Gold is the worse investment ever, except for everything else.

MA

A. R. Wasem
A. R. Wasem

I agree with MA. Also – there are more than enough lampposts and rope for every Central Banker in the world. Stand with Rand and BC-LR to all

BUCKHED
BUCKHED

Ox..I agree that you can’t eat gold/silver but it’ll always be a commodity of trade and stored wealth in SHTF times .

Golden Oxen
Golden Oxen

Of course Buckhed, was jesting. Devoted Gold Bug here.

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=0CAcQjRw&url=https%3A%2F%2Fstore.nwtmint.com%2Fproduct_details%2F2410%2F2.5_Dollar_Indian_Head_Gold_Coin%2F&ei=LG1zVLukEsT4igL0x4D4Cg&bvm=bv.80185997,d.aWw&psig=AFQjCNHsj5vxw39PyA0VmjOj_WJc2f32mg&ust=1416937128259160

Golden Oxen
Golden Oxen

comment image

BUCKHED
BUCKHED

OX…sweet..my all time favorite gold coin .

Golden Oxen
Golden Oxen

OX…sweet..my all time favorite gold coin .

Hi Buckhed, a favorite of mine as well.

The incuse design makes it so special.

Wish they had used that design on more coins than the two Indian Head Series.

A. R. Wasem
A. R. Wasem

The $5 and $10 incuse Indian Heads are beautiful but not as beautiful as the St Gauden’s $20 (arguably the most beautiful circulating coin ever minted). Stand with Rand and BC-LR to all

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