Oil And The Global Slowdown:It’s time for central banks to admit their failures

Thursday, December 4, 2014
By Paul Martin

by Chris Martenson
Wednesday, December 3, 2014

The world economy is slowing down and the authorities are fretting.

Japan, Italy, and Greece are all in recession. China is slowing down according to official statistics, and even more according to whispered accounts.

Germany, France and the Netherlands are all at stall speed.

According to the BLS, the United States is doing just great at nearly 4% growth for two straight quarters, but you wouldn’t know that either from the quality of the few jobs being created (which is low) or from consumer spending (also low).

The worry, as always, has nothing to do with the central banks’ concern for you, your job, your children, the actual prices you pay, wealth equality, or the future, and everything to do with the simple fact that the stability of the banking system absolutely depends on a steady stream of new loans.

The problem, as always, is that we have a monetary system that is either expanding or collapsing. It has no steady state.

Either money and credit are expanding and the banks are relatively happy or the banks are collapsing and demanding taxpayer bailouts. It’s really that stark. We are being driven by our system of money, we serve it not the other way around, which is a tragedy of both epic and comic proportions.

I guess with the binary choices of growth or collapse before them it only makes sense for the current crop of central bankers to do whatever it takes to keep that system limping along, er growing, for as long as possible.

In 2008 and 2009, net credit creation was only slightly negative, but that was enough to very nearly cause the entire system of money and banking in the developed world to collapse.

Now after the most heroic period of interest rates forced to zero (ZIRP) and below (NIRP in Europe) and the grandest experiment with money printing in global history, credit growth is somewhat back on track but not enough to ease the banker worries or to justify their actions.

So the bankers continue to pump, jawbone, and panic at every slight downturn in financial market prices because that’s all they have left in the world upon which they can hang their reputations.

The actual economy, the one that lives on Main Street, never really bounced back fully, at least not compared to past recoveries. Growth, jobs and incomes all were anemic compared to prior recoveries. Investment in new capital was and remains dead in the water.

Bad Ideas Repeated

The Rest…HERE

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