'..the Great Depression.
Alas, that depression was caused – like our crisis today – by too much debt. A modest amount of deflation in itself is not bad. Over decades, the United States and other European countries experienced falling prices and high employment – paired with impressive growth.
Deflation is normal in an economy where competition truly works and which features continuous productivity gains.
In reality, central bankers had quite a different form of deflation in mind – deflation in asset markets, as this would cause the debt bubble to burst, leading to a collapse of the whole financial system.
This is where the real sting occurs: Any effort to prevent a bursting of asset bubbles intensifies the deflationary pressure in the real economy, as bad investments and overcapacities are not cleared from the market. Normally, such companies and assets would disappear in a recession.
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Now, as global demand drops, the extended capacities drive down the price of oil and other commodities, further destabilizing many regimes that were already on the brink politically, economically and socially.
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It is fascinating to see that even more than 30 years of mismanagement by central banks, with significant damage to the real economy, has not yet dispelled the “hope” of politicians, business leaders, financial markets and the broader population of our countries that recovery rests on the shoulders of the central banks.
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It is time for a fundamental shift in policy – if we can still bring it about. Either way, try we must. We need to stop the nefarious machinations of the central bankers, especially the high priests working at the U.S. Fed.'
- Daniel Stelter,
Central Banks as Relentless Boosters of the Rich, February 16, 2016
'..Never before has the world economy been as highly in debt as it is today. We are reaching the limit of debt capacity. All those able and willing to take on debt are already heavily in debt.''The rationale remains the same in either case: The higher the leverage given of a system, the higher the probability of a crisis.
This “logic” forced central banks to intervene even more, creating even stronger incentives to borrow and to use leverage for financial gains. The medicine provided by the central banks made the addicts more addicted.
The result: Never before has the world economy been as highly in debt as it is today. We are reaching the limit of debt capacity. All those able and willing to take on debt are already heavily in debt.
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Without the central banks, Thomas Piketty who wrote the best-selling book “Capital in the 21st Century,” a heavy treatise about inequality, would have had to look for another research topic.
But even though his book runs some 800 pages, he did not make the connection that growing wealth and inequality were closely linked to the debt super-cycle of the past 30 years. He is thus describing symptoms, not causes.'
- Daniel Stelter,
Dismantle the Central Banks! February 15, 2016
Context '..negative interest rates are an abomination. They could not possibly exist in a free market..''..2016 and inflated global securities and derivatives markets are more dangerous than ever..''In terms of the business cycle this confirms that the liquidation phase is indeed beginning..''..the economic analysis of the necessary consequences of intervention in the free market by bank credit expansion.''The collapse of the Soviet Union .. U.S. finance was becoming increasingly state-directed..''Central banks in Japan, the U.S. and Europe tried multiple rounds of QE. That none of these programs were any more successful than their predecessors also points to empirical evidenced failure..''The bottom line is that Bubbles destroy and redistribute wealth..''..the theorem of the economic impossibility of socialism .. is fully applicable to central banks..' - Jesús Huerta de Soto(Banking Reform - English/Dutch) '..a truly stable financial and monetary system for the twenty-first century..'