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zugzwang

We've Seen This Movie Three Times This Century Already

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And we're not talking about the next episode of Star Wars. ;)

Leading Fed critic, former Reagan Administration Budget Director and author of the best selling book The Great Deformation: The Corruption of Capitalism in America, David Stockman tells Lindsay Williams that we have seen this act before. Stocks are in the third bubble this century.

He says that the Twitter IPO rings the bell for the next bust which will be caused by the Fed's policies of doubling down on past mistakes. He says that Janet Yellen is living in a time warp as she inherits Bernanke's disaster. He also gives a fascinating perspective on the historical precedents for today's economic policy failures.

Click here to listen to the interview.

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To me there are only three possible explanations for the actions of central bankers:

1) They're ivory-towered academics whose lack of business experience blinkers them to reality.

2) They're involved in a conspiracy with the banking elite.

3) They're fukcing idiots.

Interesting as well to hear Stockman use the phrase 'doubling down' for current monetary policy, which is the exact same description I gave a few days ago. It's so obvious what's happening and yet there is still so little mainstream criticism.

This may not be a popular comment, but I have to say that I'm increasingly taking the view that the general populace is getting no less than it deserves. Maybe the proles really are there to be farmed by ambitious, intelligent, unscrupulous individuals with no moral conscience.

We had a massive financial bust and the misdeeds were fully publicised. No bankers went to jail. The central bankers and regulators overseeing the system all kept their jobs and continue to dictate policy. The politicians survived. The perpetrators kept their gains.

In all seriousness, I can't really blame the same actors from thinking: "haha, we got away with it ... okay boys, here we go ... let's do the same again."

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I would go for option 3.

It's like someone playing roulette and doubling down, they went bust, changed the rules and printed the money needed to double down again. The ball is still bouncing, but it's not looking too good. :unsure:

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Thanks for posting.

To me there are only three possible explanations for the actions of central bankers:

1) They're ivory-towered academics whose lack of business experience blinkers them to reality.

2) They're involved in a conspiracy with the banking elite.

3) They're fukcing idiots.

Interesting as well to hear Stockman use the phrase 'doubling down' for current monetary policy, which is the exact same description I gave a few days ago. It's so obvious what's happening and yet there is still so little mainstream criticism.

This may not be a popular comment, but I have to say that I'm increasingly taking the view that the general populace is getting no less than it deserves. Maybe the proles really are there to be farmed by ambitious, intelligent, unscrupulous individuals with no moral conscience.

We had a massive financial bust and the misdeeds were fully publicised. No bankers went to jail. The central bankers and regulators overseeing the system all kept their jobs and continue to dictate policy. The politicians survived. The perpetrators kept their gains.

In all seriousness, I can't really blame the same actors from thinking: "haha, we got away with it ... okay boys, here we go ... let's do the same again."

Unfortunately, I think the same thing. Each day I wake up and think, well today may be the day, when we all en masse start to shout! And the shouting gets louder, and the bankers, politicians, regulators and the one percent start to look sick and pale. But, oh no. The masses go back for more. I used to be optimistic,now I am feeling scared and intimidated.

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Thanks for posting.

To me there are only three possible explanations for the actions of central bankers:

1) They're ivory-towered academics whose lack of business experience blinkers them to reality.

2) They're involved in a conspiracy with the banking elite.

3) They're fukcing idiots.

I go for a mix of all three.

If all of your mates are bankers or in the elite - then you indulge in reality denying group think partly motivated by the desire to look after each other.

It has worked for centuries though (Read Confessions of a Monopolist to get a turn of the last century account), so perhaps their version of reality is correct.

Perhaps what has been described as a crisis is really nothing but an irregular and particularly hard farming of the masses by the 0.1%.

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Thanks for posting.

To me there are only three possible explanations for the actions of central bankers:

1) They're ivory-towered academics whose lack of business experience blinkers them to reality.

2) They're involved in a conspiracy with the banking elite.

3) They're fukcing idiots.

4) Things are much scarier than they're admitting

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Thanks for posting.

To me there are only three possible explanations for the actions of central bankers:

1) They're ivory-towered academics whose lack of business experience blinkers them to reality.

2) They're involved in a conspiracy with the banking elite.

3) They're fukcing idiots.

Interesting as well to hear Stockman use the phrase 'doubling down' for current monetary policy, which is the exact same description I gave a few days ago. It's so obvious what's happening and yet there is still so little mainstream criticism.

This may not be a popular comment, but I have to say that I'm increasingly taking the view that the general populace is getting no less than it deserves. Maybe the proles really are there to be farmed by ambitious, intelligent, unscrupulous individuals with no moral conscience.

We had a massive financial bust and the misdeeds were fully publicised. No bankers went to jail. The central bankers and regulators overseeing the system all kept their jobs and continue to dictate policy. The politicians survived. The perpetrators kept their gains.

In all seriousness, I can't really blame the same actors from thinking: "haha, we got away with it ... okay boys, here we go ... let's do the same again."

I'll go for one and three.If they are in a conspiracy,they're the unwitting dupes rather than being the Fagin.I think Bernanke genuinely believes he's an expert on misinterpreting the history of GD1.

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The chief weakness of Martingale bettng systems is that they require infinite money to guarantee a win.

One assumes that Central Bankers now assume they have that via QE so can not lose.

Off course one should also remember that Martingale systems were originally concocted by 18 th century French aristocrats as a method of gambling away the money they had extracted in rents and taxes from the French peasantry and urban bourgoisie.

http://en.wikipedia.org/wiki/Martingale_%28betting_system%29

No prizes for guessing what happened to them come the Revolution.

Edited by stormymonday_2011

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The chief weakness of Martingale bettng systems is that they require infinite money to guarantee a win.

With fiat currency, there is infinite money (for as long as the issuer is prepared to risk printing it).

One assumes that Central Bankers now assume they have that via QE so can not lose.

As long as the monetary system endures, they can't lose.

Off course one should also remember that Martingale systems were originally concocted by 18 th century French aristocrats as a method of gambling away the money they had extracted in rents and taxes from the French peasantry and urban bourgoisie.

http://en.m.wikipedia.org/wiki/Martingale_(betting_system)

No prizes for guessing what happened to them come the Revolution.

Ultimately, the risk for the establishment is that they kill the goose that lays the golden eggs. However, as long as those in power can continue to deliver acceptable living standards to the masses, any kind of real change is unlikely. Especially given the pervasiveness of modern media pumping out 'the right message' and an all-encompassing surveillance apparatus to clamp down on dissent before it happens.

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The chief weakness of Martingale bettng systems is that they require infinite money to guarantee a win.

Wow. I use that whenever I play roulette (bored on a boat, whatever). I didn't realise it had a name - I just thought it was the slowest way to lose money...

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Thanks for posting.

To me there are only three possible explanations for the actions of central bankers:

1) They're ivory-towered academics whose lack of business experience blinkers them to reality.

2) They're involved in a conspiracy with the banking elite.

3) They're fukcing idiots.

Interesting as well to hear Stockman use the phrase 'doubling down' for current monetary policy, which is the exact same description I gave a few days ago. It's so obvious what's happening and yet there is still so little mainstream criticism.

This may not be a popular comment, but I have to say that I'm increasingly taking the view that the general populace is getting no less than it deserves. Maybe the proles really are there to be farmed by ambitious, intelligent, unscrupulous individuals with no moral conscience.

We had a massive financial bust and the misdeeds were fully publicised. No bankers went to jail. The central bankers and regulators overseeing the system all kept their jobs and continue to dictate policy. The politicians survived. The perpetrators kept their gains.

In all seriousness, I can't really blame the same actors from thinking: "haha, we got away with it ... okay boys, here we go ... let's do the same again."

It's 2.

The Quiet Coup written in 2009 and nothing has changed.

A whole generation of policy makers has been mesmerized by Wall Street, always and utterly convinced that whatever the banks said was true. Alan Greenspan’s pronouncements in favor of unregulated financial markets are well known. Yet Greenspan was hardly alone. This is what Ben Bernanke, the man who succeeded him, said in 2006: “The management of market risk and credit risk has become increasingly sophisticated. … Banking organizations of all sizes have made substantial strides over the past two decades in their ability to measure and manage risks.”

http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/?single_page=true

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What would the Magnificent Seven do.

http://

en.wikipedia.org/wiki/The_Magnificent_Seven

especially now that the bandits have started to poison things with their money printing (QE).

Edited by billybong

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Thanks for posting.

To me there are only three possible explanations for the actions of central bankers:

1) They're ivory-towered academics whose lack of business experience blinkers them to reality.

2) They're involved in a conspiracy with the banking elite.

3) They're fukcing idiots.

I'd go for all 3 in some combination.

I think you missed the one about them believing they are cleverer than the markets, unless you where covering that with 3?

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Indeed it was thought that you could shear a sheep many times but only skin it once. Then the neoliberal experiment examined how much skin the herd could lose and still remain viable, resulting in a bloody mess (wearing credit filled hunter wellies no less).

#5) they are owned by the primary dealers.

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Basically....the modus operandi is simple, they create a market/bubble and trade on it to take a cut/fee, a casino economy,.......there is no real reason now why anything is worth anything, how long it will be worth anything....it only has a value long enough to make a profit on it, be it because it was manipulated to be high or manipulated to be low..... ;)

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Thanks for posting.

To me there are only three possible explanations for the actions of central bankers:

1) They're ivory-towered academics whose lack of business experience blinkers them to reality.

2) They're involved in a conspiracy with the banking elite.

3) They're fukcing idiots.

Interesting as well to hear Stockman use the phrase 'doubling down' for current monetary policy, which is the exact same description I gave a few days ago. It's so obvious what's happening and yet there is still so little mainstream criticism.

This may not be a popular comment, but I have to say that I'm increasingly taking the view that the general populace is getting no less than it deserves. Maybe the proles really are there to be farmed by ambitious, intelligent, unscrupulous individuals with no moral conscience.

We had a massive financial bust and the misdeeds were fully publicised. No bankers went to jail. The central bankers and regulators overseeing the system all kept their jobs and continue to dictate policy. The politicians survived. The perpetrators kept their gains.

In all seriousness, I can't really blame the same actors from thinking: "haha, we got away with it ... okay boys, here we go ... let's do the same again."

Central banks don't make policy. Politicians do.

Politicians can decide to tax those with wealth whenever they wan't to. They choose not to for the very obvious reason that they're completely captured by that wealth. Just as Ronald Reagan was. He did what ever he was told by that same wealth. After 30 years of 'free market' liberalism this is where we ended up. Captured by it.

Who appointed Carney? Osborne. QED.

Edit: Btw, you'll surely agree that Bernanke has pointed this out ad nauseam from the beginning. He's made it perfectly clear QE (for instance) is just a temporary bandaid to enable the politicians to act. They've failed to act. The nutters are even going the other way attempting to bring the entire building down around everyone's ears. But you cannot with a straight face claim he hasn't made it clear that it's their responsibility to ACT, not the FEDs.

Edited by R K

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Central banks don't make policy. Politicians do.

Politicians can decide to tax those with wealth whenever they wan't to. They choose not to for the very obvious reason that they're completely captured by that wealth. Just as Ronald Reagan was. He did what ever he was told by that same wealth. After 30 years of 'free market' liberalism this is where we ended up. Captured by it.

Who appointed Carney? Osborne. QED.

Edit: Btw, you'll surely agree that Bernanke has pointed this out ad nauseam from the beginning. He's made it perfectly clear QE (for instance) is just a temporary bandaid to enable the politicians to act. They've failed to act. The nutters are even going the other way attempting to bring the entire building down around everyone's ears. But you cannot with a straight face claim he hasn't made it clear that it's their responsibility to ACT, not the FEDs.

So Ben Bernanke/Mark Carney et al...

A ) ...believe that politicians AREN'T captured and that monetary policy will be accompanied by a political response that will rectify the situation. I think that puts them in my categories 1 and 3.

OR

B ) ...know that politicians ARE captured and they know full well that they will NOT do anything to rectify the situation. I think that puts them in my category 2.

And in response to your final sentence, I'd put it to you that you cannot with a straight face claim that the central bankers aren't fully complicit in this mess. Let's never forget that Bernanke was a Fed Governor from 2002 - 2005 and was then Chairman of the President's Council of Economic Advisers until he took the Fed Chair in Feb 2006.

He was as clueless as the rest of them.

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So Ben Bernanke/Mark Carney et al...

A ) ...believe that politicians AREN'T captured and that monetary policy will be accompanied by a political response that will rectify the situation. I think that puts them in my categories 1 and 3.

OR

B ) ...know that politicians ARE captured and they know full well that they will NOT do anything to rectify the situation. I think that puts them in my category 2.

And in response to your final sentence, I'd put it to you that you cannot with a straight face claim that the central bankers aren't fully complicit in this mess. Let's never forget that Bernanke was a Fed Governor from 2002 - 2005 and was then Chairman of the President's Council of Economic Advisers until he took the Fed Chair in Feb 2006.

He was as clueless as the rest of them.

He certainly was. Just as his predecessor had been before him. Didn't stop Bernanke congratulating himself and his fellow central bankers for bringing about the Great Moderation in 2004. Others argued that it was just good fortune - or perhaps globalisation - that had brought about the 'transformation' of the world economy but Bernanke was certain that monetary policy had played the biggest role.

Steve Keen subsequently exploded this nonsense by producing a cyclical model of the economy that showed the Great Moderation as merely a transient phase between boom and deflationary collapse brought about by exponentially increasing debt.

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To me there are only three possible explanations for the actions of central bankers:

1) They're ivory-towered academics whose lack of business experience blinkers them to reality.

2) They're involved in a conspiracy with the banking elite.

3) They're fukcing idiots.

I'm willing to accept that Bernanke is not a conscious tool of the bankers, nor he is an idiot- I'd opt for 1). What makes Bernanke dangerous is not his cynicism but his sincerity- he genuinely believes that the theories he holds to are correct and acts accordingly.

And as Steve Keen has pointed out- those theories do not recognize the role that private banks and the private credit they manufacture have in the current situation- so there is a massive hole in Bernanke's understanding of reality- so it's not surprising that reality does not behave as he expects.

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