Guest Post by Sven Henrich
Game over. The grand central bank experiment of the last 10 years has ended in utter and complete failure. The games of cheap money and constant intervention that have brought you record global debt to the tune of $250 trillion and record wealth inequality are about to embark on a new round of peddling blue meth again.
Australia has already cut, so has India. The ECB is talking about it, markets are already pricing in multiple Fed cuts. The new global rate cutting cycle begins anew before the last one ever ended. Brace yourselves as no one, absolutely no one, can know how this will turn out.
Absolutely staggering. We are witnessing a historic unraveling here. Everything every central banker has uttered last year was completely wrong. Every projection they made over the last 10 years has been wrong. No wonder Jay Powell wants to toss the dot plot. It’s a public record of failure.
Why place confidence in people who are staring at the ruins of the policies they unleashed on the world and are about to unleash again?
All the distortions of 10 years of cheap money, debt, wealth inequality, zombie companies, negative debt, TINA, you name it, will all be further exacerbated by hapless and scared central bankers whose only solution to failure is to embark on the same cheap money train again. All under the banner to “extend the business cycle” at all costs. Never asking whether they should nor considering the consequences. But since they are not elected by the people and face zero consequences for failure they don’t have to consider the collateral damage they inflict.
I repeat: Structural bears who have predicted that central bankers would never be able to normalize the construct they created and has produced the world’s greatest debt explosion ever were 100% correct. We’re all staring at a colossal policy failure with no accountability.
Draghi: Several members of the Governing Council raised the possibility of rate cuts, others the possibility of restarting the APP or the extension of forward guidance
— European Central Bank (@ecb) June 6, 2019
Back to the same TINA (there is no alternative) nonsense:
At this moment in time with the ECB’s balance sheet at all time highs amid collapsing inflation expectations:
With rates still negative:
Coming rate cuts in the US following the most pitiful rate hike cycle in history with debt to GDP higher than ever before:
And with economic data, yields and inflation expectations collapsing all around:
And so the TINA effect is back, the blue meth is on the market again and investors are chasing back into stocks in the face of deteriorating fundamentals:
Bringing FOMO back with the expectation that this will usher in a new era of record highs as central bankers are once again stepping in at the right moment trying to prevent another key break in stock prices:
One is virtually enticed to chase assets again for that big grand finale perhaps.
Not because of earnings, not because of revenues or growth. Because they have to as yields are once again collapsing and central bankers are again promising free money.
As I’ve outlined for quite some time: Stock markets can’t sustain gains or record prices without intervention, without a helping hand, without dovish and intervening central banks. This has been true for 10 years and it continues to be true in 2019 cause that’s where all the big gains are:
This is not capitalism, nor does this ongoing farce constitute free market price discovery. It’s politburo based central planning, desperately trying to keep the balls in the air.
“To extend the business cycle” Jay Powell stated this week. Since when is this the primary purpose of the Fed? What happened to inflation and price stability? Already they are tossing their stated inflation goals and are talking about letting inflations run hotter if they can juice it up. There’s no integrity, only moving targets and carrots driven by equity prices.
The pretense is gone, it’s all about keeping the illusion alive that the Fed knows what it’s doing, that it’s always there to save markets from any trouble.
But its track record is obvious: It has failed to meet its inflation targets (ill guided as they may be) for 10 years. It has failed to normalize despite years of promises to do so, and will never be able to normalize. Between 2008-2019 the Fed was non-accommodative for 3 months. It blew up in their faces in December. They’ll never be non accommodative again. They can’t.
This week investors are happy to chase the coming free money train again. They may well be rewarded for the same gig that has worked for 10 years with the consequences already apparent: Ever more record government, corporate and consumer debt and yes, ever more extreme wealth inequality. Bravo.
Alternatively investors may want to exercise caution in chasing policy failure, but rather keep an eye on technicals that may well point to a different result:
While markets will negotiate the ultimate outcome the verdict on the policy front is already in: Game over. The grand central bank experiment has been revealed to be a colossal failure. Brace yourselves.
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Guess it all depends on how you look at it. From another perspective it looks like a massive success. A very small group of people- using a perfect combination of greedy investors, corrupt governments, compliant media, delusional economists in ivory towers, fiat money, central banks, venal executives, a bogus globalist agenda, power hungry bureaucrats, and a drug addled, uninformed population of tax cows- managed to fleece the world to the tune of 250 trillion dollars not once, but twice, in less than ten years and make it look like an unavoidable economic downturn. And you’ve got poor Sven sweatin’ these charts and graphs like they mean something.
I’d say that was the very definition of successful.
More so than 9/11 or the Moon hoax.
Hell in the henhouse, blood in the barn.
Economic collapse? Financial collapse? Those are features, not liabilities. I must hand it to you Mr. Farmer, you have most succinctly hit the nail on the head.
When this mess collapses, it will be epic, making the Great Depression look like a picnic…
Failure for who ?? Not the circle jerk of Wall Street to K-Street to Capitol Street . The real ruling elites that own and operate government and their minions in government employ are doing well . Especially the badge wearing armed minions or the actual enforcers of the socialist monetary economic policy of organized theft and asset forfeiture . This group are still living the American Dream while fleecing a population that has seen their wages stagnent against real costs of living and pensions evaporate along with skyrocketing health care costs and increasing direct and indirect taxation on everything .
The biggest farce of all is property tax , you get to claim ownership providing you pay the state to in essence rent your property .
I know of several former government employees retired in their mid 50’s worry free for now little health care costs assured pension regardless of the fact their plan is grossly underfunded
They show no concern at all finding comfort in the fact that government will continue to support the promise made to them somehow ! We out here in reality land know how that promise will be kept , indentured servitude by ever increasing taxation and theft while the private sector work till we drop or drop out !
See how socialism works for the connected few at the top and their paid followers especially the just doing my job badge wearing armed minions of the now totally corporate state !
I don’t need no stikin charts to tell me something, that is the way of banksters, and charlatans.
The west is simply following the same model of Japan, who has been at this for 20 years, we are just at the beginning of the next stage: where the gov steps in as the buyer of last resort for the failing manufactures.
Central bankers are already buying their own sovereign debt all over the world, and the next step is to buy actual stock in companies, as a way for the central bank to balance their books (they get zero return from buying their own bonds, but if they start buying dividend paying stocks….
Let’s face it, our Auto manufacturing sector would not have survived 2008 without intervention.
GE is a zombie of it’s former self, and ought to be taken out into a field and buried.
But they need to make the narrative work (yeah recovery) and this is what the stock market is, a component of the narrative, if the stock market “appears” to be doing well,then they can cover up all the other indicators (like inflation, which is really starting to hurt). Most insurance companies and pension funds now invest in stocks, because the bond world is not providing enough return for their models to work.
It’s no illusion. The Fed/BIS know exactly what they’re doing and will continue to do so until they decide to pull the plug and blame it all on some one or some thing other than themselves. And after everyone has suffered enough and the herds have been thinned enough they will come up with a new Global Currency of some sort (digital for sure) that will “save the world” and everyone will rejoice in their digitally controlled servitude.
Like Rev 13: 16, 17
SOME COLLECTED WARNINGS (from many sources most not mine) TRUTHS & THOUGHTS
• All currencies die. In all the history of paper money, there isn’t a single currency that lasted 100yrs. Then there is real money that has lasted over 5000 yrs. with equal purchasing power as it did 5000 yrs. ago. Gold and Silver. Gold (and silver) acts as both money AND currency.
• Stack some Gold and Silver ‘YOU’ are comfortable with…no two situations or budgets are alike, but don’t be like the majority of Americans who are clueless on this, follow the 1% (yea they are who we post about most of the time) who understand economic and financial history (and control it). Put some of your savings in Gold & Silver and keep it outside the eye that never blinks, the banks.
Don’t take offence if you knew this 10 years ago – this post isn’t for you.
• Central banks continually devalue their currencies and always cause collateral damage from that devaluation, but central banks exist to facilitate the transfer of wealth from the masses to the wealthy and powerful, so that collateral damage has been inflicted upon the masses for over 100 years. Expect it to continue. Pay attention to this: Central Banks are buying Gold hand over fist…so are Billionaires. Silver is the Poor Man’s Gold and is affordable for most. Plus it probably has the most upside considering many other factors.
• Parasite Politicians and Crime Family Central Bankers need and want more consumer price inflation. One good war will do the trick. Pick your poison – Russia, China, the Middle-East, South China Sea, the Ukraine or Civil War 2! One or multiples are coming.
(Ya, ya, ya, beans & bullets & Band-Aids first).
• Devaluation of fiat currencies (even the Dollar) is locked in – it is essential to the system. Hence consumer price inflation, over the long-term, is guaranteed. Gasoline prices may be low compared to two years ago, but most other prices are higher.
• Consumer price inflation is here to stay, unless central bankers and politicians choose to crash the system, default on $ trillions, and want to lose their jobs, perks, power and wealth. Don’t bet on that choice.
• Central bankers may be the cause of many of the ills in the world, but they own the politicians, so expect central bankers to remain powerful, wealthy, influential, and corrupt…and they are buying Gold.
• Stocks are overpriced, bonds are in a bubble, and gold will be much higher over time. Bet on consumer price inflation, continued devaluation of fiat currencies – all of them – and much higher gold and silver prices.
• Stack gold, stack silver (depending on many personal factors – Gold is for wealth – if you have some – if not silver is affordable and wise) and ignore the babble from Wall Street, the media, and all the mostly bought and paid for or bribed or brown-stoned or hand-picked sociopath politicians.
Brief, easy to listen to, likeable source of wise staccato bursts of information:
https://www.youtube.com/channel/UCJP5o2L4nZZAAM6Vub8E6cw
This new Basel III rule in relation to what it means about the future of GOLD from the Banksters…is HUGE!
JAY TAYLER: UNDER ‘BASEL III’ RULES, GOLS BECOMES MONEY!
https://www.zerohedge.com/news/2019-03-17/jay-taylor-under-basel-iii-rules-gold-becomes-money
Or get good quality guns to rob people who have stacked gold and silver . Guns and ammo will be of high value.
BB,
I covered that in the sixth paragraph knowing that would be a response.
“(Ya, ya, ya, beans & bullets & Band-Aids first).”
However, I’m not a robber and neither are you. I am the opposite of a victim no matter how much PMs I have or don’t have.
Some bad robbers will succeed against some good prepped people, bad shit will happen when it hits the fan and is flung everywhere. Anybody can be ambushed by anyone…I already learned that the hard way, more then once.
But, if you’re smart enough to have prepared with hard assets…why would you not already have ‘good quality guns’ too? And strive for ‘good quality’ defensive plans, preps, positions, family-friends-church, community banded together?
Here ,Here Mark ,Good come back. You are right I am not going to be robbing people. Hopefully I will be in the mountains before the big shit hits the fan. As the Great Smokey mountains.
BB,
That would be a great place to be…I hope you make it buddy, I really do!
“This week investors are happy to chase the coming free money train again. They may well be rewarded for the same gig that has worked for 10 years with the consequences already apparent: Ever more record government, corporate and consumer debt and yes, ever more extreme wealth inequality. Bravo.”
But that was the plan all along. The transfer of wealth from honest producers to a parasitic elite using the greatest system of theft, plunder and destruction ever devised by mankind – central and fractional banking. And BTW, we already have high inflation at 8-12%, not the 1-2% fake numbers put out by BLS…or BS for short.
See: http://www.chapwoodindex.com/.