Central Banks Ending Era Of Clear Promises, Return To 'artful' Policy

[interestrateripoff]

http://uk.reuters.com/article/2014/07/07/uk-cenbank-communication-insight-idUKKBN0FC0AJ20140707

The world's major central banks are returning to a more opaque and artful approach to policymaking, ending a crisis-era experiment with explicit promises that they found risked their credibility and did not substitute for action.

From Washington to London to Tokyo, the global shift from transparency to flexibility underscores the challenges central bankers face as they test the limits of what monetary policy can achieve.

The return to a more traditional policymaking approach and nuanced statements will challenge the communication skills of central bankers who have been chastened in the last year after some too-specific messages confused and disrupted financial markets.

Complicating things on the world stage, the U.S. Federal Reserve and the Bank of England are looking to telegraph plans and conditions for raising interest rates, while the European Central Bank and the Bank of Japan are heading the other way.

"Central banking used to be an art," said a senior official of a G7 central bank. "It became less so once, globally, but with what's happened at the Fed and the BoE, it may be back to being an art."

Both the Fed and BoE had promised to hold interest rates near zero until their jobless rates had fallen to a particular level. However, unemployment in the United States and Britain fell much more quickly than economists expected and both central banks scrambled to replace their suddenly outdated "forward guidance".

"Too much transparency may sometimes be counter-productive. The balance is always tricky," the official said, requesting anonymity.

If only we had some Austrians in the central bank fraternity they would be able to explain the folly of forecasting.

The central bankers are looking stupid as they have no idea how the economy works and modelling it means you need a future prediction machine which lets be honest is beyond human capability.

[zugzwang]

http://uk.reuters.com/article/2014/07/07/uk-cenbank-communication-insight-idUKKBN0FC0AJ20140707

If only we had some Austrians in the central bank fraternity they would be able to explain the folly of forecasting.

The central bankers are looking stupid as they have no idea how the economy works and modelling it means you need a future prediction machine which lets be honest is beyond human capability.

Steve Keen's Minsky model predicted both the Great Moderation, the Crash and the subsequent Non-Recovery (a never-ending series of 'double-dips' like Japan).

[billybong]

"Central banking used to be an art," said a senior official of a G7 central bank. "It became less so once, globally, but with what's happened at the Fed and the BoE, it may be back to being an art."

They're always offering thinly disguised excuses for being incompetent as well as for telling blatant lies.

When the 2007/2008 economic calamity happened in the UK Mervyn King had to announce the BoE's version of what had happened and the possible consequences and the policy responses etc etc. He said at the time that he would have preferred it if all that sort of stuff was done in secret. Whether they like to flatter themselves by calling that an art or not they chop and change what they say they are doing so regularly they clearly haven't got a clue what's really going on from one day to the next - except that they're going to be very well paid for it.

Whatever they're trying to claim (an art or not an art) you can be sure that it's most likely the opposite of what it is. If they're going to be even more "opaque" now then it'll make no differences to the economic calamities they create but they'll just be trying to shift responsibility for their incompetence even more.

Edited July 7, 2014 by billybong

[billybong]

"We have to be careful (and) certain that you do not commit to things that we're not sure we can actually produce," Alan Greenspan, Bernanke's predecessor, told the Economic Club of New York in April. "Remember, we don't forecast very well."

If they don't forecast very well then what is their point.

If after several centuries of central bankism they still don't forecast very well then there's no point in them having such a central and powerful position.

Edited July 7, 2014 by billybong

[Dorkins]

What's 'artful' about printing a load of money every time the government/banksters need some?

[Reck B]

What's 'artful' about printing a load of money every time the government/banksters need some?

I think 'artful' is an excellent description of their behaviour.

[The Knimbies who say No]

They're always offering thinly disguised excuses for being incompetent as well as for telling blatant lies.

When the 2007/2008 economic calamity happened in the UK Mervyn King had to announce the BoE's version of what had happened and the possible consequences and the policy responses etc etc. He said at the time that he would have preferred it if all that sort of stuff was done in secret. Whether they like to flatter themselves by calling that an art or not they chop and change what they say they are doing so regularly they clearly haven't got a clue what's really going on from one day to the next - except that they're going to be very well paid for it.

Whatever they're trying to claim (an art or not an art) you can be sure that it's most likely the opposite of what it is. If they're going to be even more "opaque" now then it'll make no differences to the economic calamities they create but they'll just be trying to shift responsibility for their incompetence even more.

Producing quasi-cryptic comments that keep economic commentators guessing or attempting to 'read between the lines' just sounds like an arsecovering exercise so that come what may, there's always a retrospective interpretation of previous comments which can be spun to fit the facts on a particular day to make it look like they were in control, appreciated the nuances and were tuning policy to suit.

Still, London prices rising at greater than gross salaries, no problem there

[Eddie_George]

Back to their tried and tested methods:

[thecrashingisles]

I await forward guidance like, "Can you tell what it is yet?"

[oracle]

I think 'artful' is an excellent description of their behaviour.

well the note he is holding is supposed to say "i promise to pay the bearer on demand the sum of five pounds sterling"

now take a look at the fiver in your pocket.

aha!!..the sterling has gone!!

that's magic.

how many of you had noticed?

[winkie]

Back to their tried and tested methods:

for entertainment value only.

[billybong]

for entertainment value only.

If the reference to the G20 plus the date of 20 July does have any special significance there's a G20 Trade Ministers Meeting on the 19 July (19 07 2014 = 24 = 6, good game good game) so there might be an announcement the following day about trade?

Maybe they'll agree to significantly reset the oil price downwards - some hope but that might help things along.

Really it's anybody's guess

Edited July 7, 2014 by billybong

[A.steve]

What's 'artful' about printing a load of money every time the government/banksters need some?

I appreciate your cynicism...

My reading of this announcement is that there's an intention to move away from the 'transparency' that has been the modus operandi of central banks around the world for the past 25 years, or so. I was intrigued by this 'transparency' - when I read about it in Greenspan's book - 'Age of Turbulence.' I felt that the 'openness' of central bank operations could only lead to reduced volatility as - irrespective the efficacy of central bank action - the story of a predictable, managed, monetary system could only breed speculative confidence. I feel that 'openness'/'transparency' undermined any competition between financial market participants - effectively allowing them all to act as if they were one cartel. I was interested to learn from Greenspan that for many years - until the 1990s - central banks had operated under the assumption that they needed to operate in complete secrecy in order to avoid skewing the market.

If central banks are retreating from open/transparent policies (whatever adjective we use to describe the replacement doesn't seem important to me) then I'd expect this to lead (over time) to more volatility and - as a direct consequence - lower systemic leverage.

[onlyme2]

They've been caught lying - repeatedly, so are going back to no written policy, no promises, no nothng, just the meddling and manipulation without any remit.

[Venger]

for entertainment value only.

"So listen up. She's sending a message to the elite. And that message is a date."

That's today, but a Sunday???

I'm so worn out waiting for a hpc, after boom/bubble - multi-trillion VI asset bailouts - hard reflation, that I'm taking notice of irrational desperate mysticism.

[oracle]

"So listen up. She's sending a message to the elite. And that message is a date."

That's today, but a Sunday???

I'm so worn out waiting for a hpc, after boom/bubble - multi-trillion VI asset bailouts - hard reflation, that I'm taking notice of irrational desperate mysticism.

good.

and for our next targets.......

1)rupert murdoch, owner of FOX( 6,60,600...or 666) news.

2)the OXO tower in london( actually that's meant to signifiy ordo templo orientis or grand orient lodge, not our one)

3)the Food Aid Organisation( 6,1,60 or 616....which was the original nero ceasar denotation)

4) the headquarters of the Fabian society...THE FAMOUS WOLF IN SHEEPS CLOTHING.(the ones that jesus said to beware of)

oh, and ratzinger will be arrested and tried for attempted genocide

( a picture tells a thousand words, and his tells us that he is the mastermind in the formenting of the conflict between us and russia)..it's not yet too late to stop this one and correct action will save millions of lives.

yours sincerely

23280

Edited July 20, 2014 by oracle

[billybong]

Still 29 minutes to go.