Jump to content
House Price Crash Forum
Sign in to follow this  

Central Bankers Lurch From 'whatever It Takes' To 'whatever Next'

Recommended Posts


The Swiss currency shock has raised an awkward question many investors have been fearful of asking - what if central banks become as unpredictable and fallible as they are powerful?

The Swiss National Bank's sudden decision to abandon its three-year-old cap on the franc - the "cornerstone" of its monetary policy just three days before - led to the biggest one-day move in major exchange rates in the post-1973 floating rates era. To some it was a warning sign of other U-turns, mishaps and possible failures by central banks still ahead, outcomes not fully appreciated by long-becalmed markets.

For decades the power of currency printing presses has held markets in thrall. "Don't fight the Fed" and all its international variations has been a devout belief among financial traders.

Even after the failure of Alan Greenspan's Federal Reserve to spot and headoff one of the biggest credit booms and busts in history, the ability of the Fed, Bank of England, Bank of Japan, European Central Bank and others to flood their money supply to ease the fallout helped anaesthetise fractious markets.

The subsequent waves of cheap credit, currency fixes and "quantitative easing" drove down borrowing rates and erased volatility.

Hilarious, central banks merely have the illusion they are in control, events in 2007-08 demonstrated clearly how clueless they are and the fact that it's growth at all costs. However it's not sustainable to have perpetual growth at some point you will have to have a contraction.

Share this post

Link to post
Share on other sites

their power comes, of course, from creating money. when that money gets worthless, so does their power.

Share this post

Link to post
Share on other sites

Ultimately it's about them being in control and their own self interest and that's clearly evidenced by their battle against cheaper prices.

Through their incompetence and economic delusion they can't know, predict or control the outcomes of their policies but their responses to the repeatedly bad outcomes are again about self interest.

Edited by billybong

Share this post

Link to post
Share on other sites

Like you cannot get rid of complexity; you can only hide it.

They cannot get rid of risk; they can only transfer it elsewhere.


Share this post

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   206 members have voted

    1. 1. Which of the Prime Minister's options would you choose?

      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.