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Central Bankers And Einstein’s Definition Of Insanity

This is a syndicated repost courtesy of The Felder Report. To view original, click here. Reposted with permission.

“Insanity: doing the same thing over and over again and expecting different results.” -Albert Einstein

Central banks are doing everything in their power to try to boost their weak economies right now. The amount of global QE is staggering and totally unprecedented.

Liquidity moves markets!

Follow the money. Find the profits! 

Financial markets have certainly responded well in recent years but these extraordinary policies haven’t had anywhere near the intended effect on the global economy. Why is that?

“One in six prime-age guys has no job; it’s kind of worse than it was in the depression in 1940.” http://www.npr.org/2016/09/06/492849471/an-economic-mystery-why-are-men-leaving-the-workforce 

Photo published for An Economic Mystery: Why Are Men Leaving The Workforce?

An Economic Mystery: Why Are Men Leaving The Workforce?

Millions of men in their prime working years have dropped out since the 1960s — they aren’t working or even looking for a job. Factors including technology, education and family reasons play a role.

npr.org

Jeff Snider makes a compelling case by explaining, “There is no money in monetary policy. The ‘clogged transmission channel’ isn’t clogged at all, it just doesn’t exist.” In short, so called “shadow banking” has taken effective control of the global monetary system while central banks have remained wed to outdated frameworks.

Then again, it could just be that central banks’ ability to inspire greater and greater debt creation has simply reached its limit.

‘Once you reach the end of the debt super-cycle monetary policy is essentially pushing on a string.’ http://www.cnbc.com/2016/09/13/bridgewaters-dalio-theres-a-dangerous-situation-in-the-debt-market-now.html 

Photo published for Bridgewater's Dalio: There's a 'dangerous situation' in the debt market now

Bridgewater’s Dalio: There’s a ‘dangerous situation’ in the debt market now

The debt market is in a “dangerous situation” as central banks around the world lose their ability to stimulate growth, the hedge fund giant says.

cnbc.com

Consumers are now up to their eyeballs in debt…

Chart: US consumer credit (excluding mortgages) as % of the GDP over the past 70 years –

…as are corporations.

Maybe they ought to start asking a very simple question before engaging in any further extreme policy: “Does it work?”

Attn: Central Bankers https://www.farnamstreetblog.com/2016/09/lee-kuan-yew-rule/ 

Photo published for Lee Kuan Yew's Rule

Lee Kuan Yew’s Rule

Lee Kwan Yew had a simple test to guide his actions: Does it work?

farnamstreetblog.com

In that light, there simply is no evidence at all that extraordinary monetary policy does any good whatsoever.

Failed Transmission: Evidence on the Futility of Activist Fed Policy- Hussman 9/5/16 Commenthttp://www.hussmanfunds.com/wmc/wmc160905.htm 

Perhaps a more important question to ask then is: ‘What are long-term consequences of explicitly boosting asset prices and debt creation in such a massive way without achieving any concomitant boost in underlying economic fundamentals?’

‘Central banks have created a tremendous increase in hidden risk.’ http://www.cnbc.com/2016/09/13/elliott-management-founder-singer-low-rates-radical-monetary-policy-have-not-led-to-sustainable-growth.html 

Photo published for Elliott Management founder Singer: Low rates, radical monetary policy have not led to sustainable...

Elliott Management founder Singer: Low rates, radical monetary policy have not led to sustainable…

Investors face risks they haven’t seen before due to the aggressive actions of global central bankers, Paul Singer of Elliott Management said Tuesday.

cnbc.com

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