Have Central Banks failed?



gerhard dengler

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Is this correct? AFAIK, the ECB is using its digital printing press. Or those of its constituent country central banks.
Society owns Central Banks.

It is society which provides the capital which allows each central bank to operate.
Therefore the gains or losses incurred by Central Banks notionally accrue to society.

http://www.bis.org/publ/bppdf/bispap71_ov_and_cc.pdf

Who got tapped to "rescue" AIB and BOI? It wasn't the Irish Central Bank who got tapped.
It is society which is picking up the tab.

Now instead of going down that particular parochial rabbit hole, where have Central Banks brought the economic/financial system to?
And is where we are a failure on the part of the central banks?
 

clearmurk

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Society owns Central Banks.

It is society which provides the capital which allows each central bank to operate.
Therefore the gains or losses incurred by Central Banks notionally accrue to society.

http://www.bis.org/publ/bppdf/bispap71_ov_and_cc.pdf

Who got tapped to "rescue" AIB and BOI? It wasn't the Irish Central Bank who got tapped.
It is society which is picking up the tab.

Now instead of going down that particular parochial rabbit hole, where have Central Banks brought the economic/financial system to?
And is where we are a failure on the part of the central banks?
Society in Ireland is indeed picking up the tab for our rotten banks. This is due to some spurious argument that money created by banks always has to be redeemed, regardless of the circumstances that prevail. This is where the failure of the ECB comes in. It is completely incongruous in its approach to the money supply, as evidenced by your OP.

Apparently we can have no problem with banks operating with overall liquidity levels of about 10%, or loan reserve ratios as low as 3%, but if the proverbial hits the fan as it did, suddenly the liquidity required to be returned becomes 100%.

That's 100% rotten.
 

im axeled

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why did the us invade and or destroy countrys with centeral banks, they are not many left in the world
 

GDPR

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For the past number of years, European Central Bank (ECB), Japanese Central Bank (JCB), Federal Reserve Bank (FED) and the Bank of England (BOE) have for the past few years worked together to try to

(1) save the international economic and financial/banking systems
(2) stimulate economic activity across international regions
As Alan Greenspan, among others, has said, the basic problem is the aging demographic of the developed countries. Central banks can't do anything about that. It's not a monetary problem, but a political one.

In Europe we have a ruling class that sees the results of its psychotic greed - the European population is in demographic collapse because the young can't afford to get married, buy homes and have children. That means the ruling class is facing continued economic recession unless that demographic collapse can be reversed. Well, there are two methods to reverse the trend.

1/ The ruling class can restructure the economy so that they have less wealth and the young have enough wealth to reproduce.

2/ Don't restructure the economy, but bring in millions of third world immigrants to build up the population numbers.

Well, it obvious which option the ruling class has gone for, and it's also obvious that all that option is resulting in is chaos and violence - and most likely an accelerating economic decline.
 

VHF

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why did the us invade and or destroy countrys with centeral banks, they are not many left in the world
Trust you to ask the rather awkward sensitive question of the day :lol:
 

captain obvious

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As Alan Greenspan, among others, has said, the basic problem is the aging demographic of the developed countries. Central banks can't do anything about that. It's not a monetary problem, but a political one.

In Europe we have a ruling class that sees the results of its psychotic greed - the European population is in demographic collapse because the young can't afford to get married, buy homes and have children. That means the ruling class is facing continued economic recession unless that demographic collapse can be reversed. Well, there are two methods to reverse the trend.

1/ The ruling class can restructure the economy so that they have less wealth and the young have enough wealth to reproduce.

2/ Don't restructure the economy, but bring in millions of third world immigrants to build up the population numbers.

Well, it obvious which option the ruling class has gone for, and it's also obvious that all that option is resulting in is chaos and violence - and most likely an accelerating economic decline.
I'm sorry I don't buy that. Greenspan has lost all authority given that he is/was probably part of the problem. It certainly does not make sense if you factor in the numbers in the developing and un-developed world.

The real problem, in my opinion, is the liberalisation of credit, mainly due to the loss of the Gold Standard in the seventies followed by the Commodities Futures Liberalisation Act brought in by Bill Clinton. This imaginary money has allowed resources to be redirected from productive areas and concentrating them in the hands of an ever decreasing number of increasingly wealthy people. It has also has had the nasty side-effect of making the overall economic network more and more unstable.
 

GDPR

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I'm sorry I don't buy that. Greenspan has lost all authority given that he is/was probably part of the problem. It certainly does not makes sense if you factor in the numbers in the developing and un-developed world.

The real problem, in my opinion, is the liberalisation of credit, mainly due to the loss of the Gold Standard in the seventies followed by the Commodities Futures Liberalisation Act brought in by Bill Clinton. This imaginary money has allowed resources to be redirected from productive areas and concentrating them in the hands of an ever decreasing number of increasingly wealthy people. It has also has had the nasty side-effect of making the overall economic network more and more unstable.
I just mentioned Greenspan to save having the usual suspects on this site asking for a link to someone famous. Pretty much everyone involved with the problem is saying this. And that's why the Chinese have not only stopped the one child policy, but there are now calls to force couples to have more than one child. At the end of the day, the old and middle aged have their homes and have reared their children (if they had any), and giving them cheap credit will not get them to spend more. Only the young need to spend and borrow, and thus only the young can drive inflation \ growth.

What you are saying about fiat money is certainly a factor in the overall disaster. Without the debt driven fiat system there would be no desperate need for economic growth, and demographic collapse would be less of a disaster. During the Black Death, as population declined, living standards in Europe actually increased - given that labour was now more highly paid and rents were lower. Of course, the ruling class did suffer.
 

WTTR

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Not entirely unforeseen circumstances happen when you keeping dancing to the popularist's tune

I stopped worrying about the financial system years ago. There was a time when you could see a vague equilibrium at play in it. Interest rates went up and other indicators moved accordingly etc etc.

It stopped behaving as it should and became a distorted thing some years back and I realised that in reality we are looking at an enormous fiction. Money gets printed and dumped into one country's financial system. No indicators in particular move- and yet the currency apparently doesn't depreciate.

Countries are buying their own debt via third party countries. Weird interventions in many markets.

The markets themselves race ahead and bear no relation to the underlying actual economies they are reporting from.

I had a handle on what should happen around loosening and tightening the money supply in a system back then. Now you might as well stick your finger up your nose.

There is apparently enough 'dry powder' (investment capital searching for an investment) to launch the world's biggest private equity fund at $100 billion which is four times the size of the previous world record fund back in 2006 I think.

The tech sector valuation analysts are banging zeros on the end of anything that moves worse than US Navy bangery on a visit to Bilbao.

It is like a kid has stomped all over a lego set and is stood there asking you to admire what he has 'built'.

So I no longer worry about it. There's no point. There's nowhere to start any more to even try to understand it with logic, economics or politics. The whole lot in my opinion is being propped up by hope.

I wouldn't discount hope's ability to prop everything up for a few years yet and maybe there'll be a new paradigm out of it and a shape will form that is understandable. But for now nothing to me seems to mean anything as any kind of economic indicator.
When you ignore, disrespect the exhortations and warnings of our learned and wise ancestors; show lack of respect for the functioning of best practice of economics, banking, religious doctrine, accounting and finance; knowledge that has given us a fairly solid foundation since the Great Depression.

What can one expect?

• Financial Companies are no longer stand alone Merchant Banking Lending Companies, but are in the main International Conglomerates encompassing Merchant Bank arm, Commercial Bank arm, Life Assurance arm, Credit Card arm etc. Rates have falling drastically since the late 1970’s, 80’s.

Big Conglomerates have insulated themselves against movement in Interest rates. How? They just piled on charges onto their customers who use their Commercial Bank arm or direct lending to their high interest Credit Card arm.

When interest rates fall, bank charges go up. Would somebody tell Alan Greenspan of the United States Federal Reserve and all the other Central Bank governors worldwide, who after all must have sanctioned each charge along the way?

A change in interest rates does not matter a whit to the ordinary consumer anymore! So this method of encouraging the consumer to up his spending is out, dead, gone! Taken from the Editorial, Mayo Association Yearbook 2002
Central Banks have thrown away their most powerful tool since the turn of the millennium.

And there was sweet-all, the cries of concerned citizens could do about it.

[video=youtube;UXOCHn7Vfec]https://www.youtube.com/watch?v=UXOCHn7Vfec[/video]

So the Pipe Piper is leading us all into indentured Debt Slavery, with society divided into
  • Those of us that work their backs off to service the constantly rising debt
  • Those of us that fight the coming wars of Creditors.
 
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captain obvious

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I just mentioned Greenspan to save having the usual suspects on this site asking for a link to someone famous. Pretty much everyone involved with the problem is saying this. And that's why the Chinese have not only stopped the one child policy, but there are now calls to force couples to have more than one child. At the end of the day, the old and middle aged have their homes and have reared their children (if they had any), and giving them cheap credit will not get them to spend more. Only the young need to spend and borrow, and thus only the young can drive inflation \ growth.

What you are saying about fiat money is certainly a factor in the overall disaster. Without the debt driven fiat system there would be no desperate need for economic growth, and demographic collapse would be less of a disaster. During the Black Death, as population declined, living standards in Europe actually increased - given that labour was now more highly paid and rents were lower. Of course, the ruling class did suffer.
I have no idea why the Chinese have stopped their one child policy. It is not like they don't have the internal market as it stands, given that wealth in China is mainly concentrated towards the costal regions.

It also does not make sense to me given that the world median age (2014) is 29.7 years and is substantially less in undeveloped and developing countries. A cynic might be forgiven for concluding that the demographic time-bomb only really exists in the developed economies who are more interested in the status quo than distributing wealth more evenly. But I don't think that would align with Mr Greenspan's agenda or that of his peers'.
 

gerhard dengler

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By expanding their balance sheets from $7 trillion in 2007 to $21 trillion in 2016, it is abundantly clear that central banks are participating in market operations far more than ever before.

Traditionally, central bank intervention has been the exception but since 2007 central bank intervention has become the rule as evidenced by the growth in central bank balance sheets in the past 9 years.

Central banks assets include the bonds which it purchases.
By buying the quantity of bonds that they do, Central Banks are inflating demand for an asset class (bonds) which is artificially high.

If on maturity these bonds cannot be repaid and are defaulted upon, what then?
If on maturity the prices paid for these bonds has fallen below the price paid originally for the same bonds, what then?

Who picks up these tabs.

What happens when the bond bubble bursts and bond prices start decreasing and yields begin to increase?
Those possessing bonds (debt) in that situation will look to sell debt because they won't want to be holding bonds that are depreciating in value.
Who will be the buyers of bonds (debt) that are depreciating in value, in that situation?
 
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YouKnowWhatIMeanLike

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QE was a very bad idea from the get go in 2008. It has prolonged and intensified the crisis to a point of no return. the recovery now will take even longer. just have a quick glance at the QE supporters and you will notice some similarities. so maybe there is something inherently wrong with the contemporary state of the "science" of economics...
 

captain obvious

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By expanding their balance sheets from $7 trillion in 2007 to $21 trillion in 2016, it is abundantly clear that central banks are participating in market operations far more than ever before.

Traditionally, central bank intervention has been the exception but since 2007 central bank intervention has become the rule as evidenced by the growth in central bank balance sheets in the past 9 years.

Central banks assets include the bonds which it purchases.
By buying the quantity of bonds that they do, Central Banks are inflating demand for an asset class (bonds) which is artificially high.

If on maturity these bonds cannot be repaid and are defaulted upon, what then?
If on maturity the prices paid for these bonds has fallen below the price paid originally for the same bonds, what then?
Who picks up these tabs?
Well it is digital money anyway. The result I suppose is that we all end up with less purchasing power for our Euro. It is not like we have to bail out the ECB unless of course there is an international dimension to these purchases (is there)?
 

YouKnowWhatIMeanLike

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By expanding their balance sheets from $7 trillion in 2007 to $21 trillion in 2016, it is abundantly clear that central banks are participating in market operations far more than ever before.

Traditionally, central bank intervention has been the exception but since 2007 central bank intervention has become the rule as evidenced by the growth in central bank balance sheets in the past 9 years.

Central banks assets include the bonds which it purchases.
By buying the quantity of bonds that they do, Central Banks are inflating demand for an asset class (bonds) which is artificially high.

If on maturity these bonds cannot be repaid and are defaulted upon, what then?
If on maturity the prices paid for these bonds has fallen below the price paid originally for the same bonds, what then?

Who picks up these tabs.

What happens when the bond bubble bursts and bond prices start decreasing and yields begin to increase?
Those possessing bonds (debt) in that situation will look to sell debt because they won't want to be holding bonds that are depreciating in value.
Who will be the buyers of bonds (debt) that are depreciating in value, in that situation?
but the intervention is uneven. you will notice a transfer from "debt poor" to "debt rich" countries in the EUssr directly financed by the ECB.

 

gerhard dengler

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but the intervention is uneven. you will notice a transfer from "debt poor" to "debt rich" countries in the EUssr directly financed by the ECB.

More grist to the mill that CB actions have beggared societies.

And worse than that, despite the actions taken, generally economic conditions shows few signs of having improved.
 
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YouKnowWhatIMeanLike

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More grist to the mill that CB actions have beggared societies.

And worse than that, despite the actions taken, generally economic conditions shows few signs of having improved.
well you could argue that they have prevented the melt down so far with the central bank proxy.
 

McTell

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Some good charts here from the nice folks at the ECB:

https://www.ecb.europa.eu/stats/money/securities/debt/html/index.en.html

.. about halfway down at - "Outstanding amounts of debt securities for issues by euro area residents broken down by sector". Amount 17 Trn or so. When we joined the euro in 2002 it was under 10 Trn.

You'll see that most issues are made by states and MFIs - central banks - to help buy your votes. That's what it's all for, really.

The blue = high street banks /"financial corporations other than MFIs" (c'maan guys ffs just say banks).

The tiny red line in the graph is the debt issued by real companies that make things, employ people and get things done.

Now you know why the euro is so unpopular. Your vote costs too much!


The McTell Corp solution is to give the ~4 trn since 2008 to the public. If it's for buying votes anyway... 4Trn divided by 300m in the EU = 13,333 per man, woman and child.

Let them spend it or save it, or gear it up, and see what banks stand or fall. Let property tycoons go under - hey, they've got 13k as well. Result: probably better than what we have today.
 

clearmurk

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Some good charts here from the nice folks at the ECB:

https://www.ecb.europa.eu/stats/money/securities/debt/html/index.en.html

.. about halfway down at - "Outstanding amounts of debt securities for issues by euro area residents broken down by sector". Amount 17 Trn or so. When we joined the euro in 2002 it was under 10 Trn.

You'll see that most issues are made by states and MFIs - central banks - to help buy your votes. That's what it's all for, really.

The blue = high street banks /"financial corporations other than MFIs" (c'maan guys ffs just say banks).

The tiny red line in the graph is the debt issued by real companies that make things, employ people and get things done.

Now you know why the euro is so unpopular. Your vote costs too much!


The McTell Corp solution is to give the ~4 trn since 2008 to the public. If it's for buying votes anyway... 4Trn divided by 300m in the EU = 13,333 per man, woman and child.

Let them spend it or save it, or gear it up, and see what banks stand or fall. Let property tycoons go under - hey, they've got 13k as well. Result: probably better than what we have today.
Does the ECB have a metric for the velocity of money?

As is being shown, there is little point dumping trillions of liquidity into the banking sector which is then used to fund government bond purchases. Unless of course your real objective is to bail out governments.
 

WTTR

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Some good charts here from the nice folks at the ECB:

https://www.ecb.europa.eu/stats/money/securities/debt/html/index.en.html

.. about halfway down at - "Outstanding amounts of debt securities for issues by euro area residents broken down by sector". Amount 17 Trn or so. When we joined the euro in 2002 it was under 10 Trn.

You'll see that most issues are made by states and MFIs - central banks - to help buy your votes. That's what it's all for, really.

The blue = high street banks /"financial corporations other than MFIs" (c'maan guys ffs just say banks).

The tiny red line in the graph is the debt issued by real companies that make things, employ people and get things done.

Now you know why the euro is so unpopular. Your vote costs too much!


The McTell Corp solution is to give the ~4 trn since 2008 to the public. If it's for buying votes anyway... 4Trn divided by 300m in the EU = 13,333 per man, woman and child.

Let them spend it or save it, or gear it up, and see what banks stand or fall. Let property tycoons go under - hey, they've got 13k as well. Result: probably better than what we have today.
I opened your link page

But could not find "Outstanding amounts of debt securities for issues by euro area residents broken down by sector"
 

WTTR

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We could be on the pig's back if we have learned anything from the property fiasco of the last twenty years

but the intervention is uneven. you will notice a transfer from "debt poor" to "debt rich" countries in the EUssr directly financed by the ECB.

Now, if Deutsche Bank goes belly-up

I expect the blue line of Germany to take a nose dive

With both the Dollar and Sterling appreciating against the Euro.

I note that the Irish Target2 Balance is increasing

It could go up further with the odd billion getting lost on its way to GB and USA.

Now, if we only had the politicians to use favourable international flows of money wisely

i.e. invest in productive indigenous enterprises instead of into property purchases
 


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