Thursday, March 21, 2019

Politics Has Failed, Now Central Banks Are Failing

With each passing day, we get closer to the shift in the tide that will sweep away this self-serving delusion of the ruling elites like a crumbling sand castle.
Those living in revolutionary times are rarely aware of the tumult ahead: in 1766, a mere decade before the Declaration of Independence, virtually no one was calling for American independence. Indeed, in 1771, a mere 5 years before the rebellion was declared, the voices promoting independence were few and far between.
The shift from a pre-revolutionary era to a revolutionary era took less than a year. Perhaps no one exemplified the rapidity and totality of radicalization more than Benjamin Franklin, who went from an avowed Loyalist bent on reform to a dedicated, zealous revolutionary at the tender age of 70. (Old dogs can learn new tricks, at least in revolutionary eras.)
Recall that news could only travel as fast as a ship between seaports or a horse on the colonies' minimalist roads, and it took days to travel between Boston, Philadelphia and New York, and much longer to reach Williamsburg and Charleston and points west. Communications were slow and limited, and this makes the rapid change of the political tide even more extraordinary.
Are we in a pre-revolutionary era? Here's clue #1: politics has failed. When the political process can no longer fix what's broken, politics has failed. When entire classes of citizenry no longer feel represented, politics has failed. When the system delivers a steadily declining standard of living to the bottom 80% of households, politics has failed.
Clue #2: having failed, the political machinery passed the baton to the central bank, which attempted to fix what's broken by creating money out of thin air."Free" money and low-cost credit has always been viewed as the go-to fix for whatever's broken, because it's, well, free to the issuing central state and politically popular (everybody loves free money, free bread and free circuses).
This political expediency works for a time--hence it's popularity throughout history-- but eventually the asymmetries, perverse incentives and unintended consequences pile up and the entire financial system capsizes.
Clue #3: America's monetary substitute for political process has failed. The failure isn't visible to those paid not to look at centralized failure, but it's visible to objective observers. Glance at the chart below: the Federal Reserve has announced it will end reducing its "emergency response to save the world" balance sheet in September 2019, leaving it roughly $3 trillion larger than it was a decade ago in the pre-crisis definition of "normal."
This exceedingly modest reduction has been called "normalization," and so the end of "normalization" means we're back to normal, right?
Calling the extraordinarily abnormal balance sheet "normal" doesn't magically render it normal.
The magic trick of substituting monetary policy for the political process has failed. Creating credit and currency out of thin air is not a substitute for the loss of representation, soaring inequality, the dominance of parasitic elites or for responding to the changing realities of finance, economics, demographics or resources.
Central banks only have a few levers, and when they lower interest rates and buy assets, they're only temporarily propping up a failing system: they've fixed nothing. Huge swaths of the populace are still unrepresented; parasitic elites still dominate the financial and political systems; wealth and income inequality has been greatly accelerated; the majority of people are still losing ground and their wealth/income are increasingly precarious.
Revolutions are manifestations of dynamics that have been festering beneath the surface for decades. Those benefiting from a failing status quo--the top 5% that dominate finance, government, the media, think tanks, philanthro-capitalist foundations, higher education and the national defense/healthcare cartels--all reckon that since the system works great for me, it works great for everyone.
With each passing day, we get closer to the shift in the tide that will sweep away this self-serving delusion of the ruling elites like a crumbling sand castle.
My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
Thank you, William S. ($100), for your outrageously generous contribution to this site -- I am greatly honored by your steadfast support and readership.
 
Thank you, Robert J. ($50), for your splendidly generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.


Our Privacy Policy:


Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative). If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.


PRIVACY NOTICE FOR EEA INDIVIDUALS


This section covers disclosures on the General Data Protection Regulation (GDPR) for users residing within EEA only. GDPR replaces the existing Directive 95/46/ec, and aims at harmonizing data protection laws in the EU that are fit for purpose in the digital age. The primary objective of the GDPR is to give citizens back control of their personal data. Please follow the link below to access InvestingChannel’s General Data Protection Notice. https://stg.media.investingchannel.com/gdpr-notice/


Notice of Compliance with The California Consumer Protection Act
This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising. If you do not want any personal information that may be collected by third-party advertising to be sold, please follow the instructions on this page: Limit the Use of My Sensitive Personal Information.


Regarding Cookies:


This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative) If you have other privacy concerns relating to advertisements, please contact advertisers directly.


Our Commission Policy:

As an Amazon Associate I earn from qualifying purchases. I also earn a commission on purchases of precious metals via BullionVault. I receive no fees or compensation for any other non-advertising links or content posted on my site.

  © Blogger templates Newspaper III by Ourblogtemplates.com 2008

Back to TOP