Bank For International Settlements Calls For Obedience to Central Banks
The anointed ones, the banks, like to parade around blaming incompetent politicians for the economic depression into which the world is heading. The official central banker worldview – that is, the one that is displayed to the people – posits that “central banks have done their utmost to keep the world economy afloat, in the face of ceaseless governmental incompetence.” The report goes on to call for politicians to heed the recommendations – read: orders – of the central banking establishment. In the spirit of politicese, which calls for collective mobilization of politicians and citizens towards an agenda, central banks are calling on governments for a “healthy push” to fix balance sheets.
But, the Bank for International Settlements warns, their benevolent competence can only go so far towards saving the world. According to The Economist, we are witnessing the end of “the epoch of the central banker as oracle, guru, maestro.”
“Imbalances” in the world economic system have not been addressed according to the BIS, and de-leveraging is unfolding across the world. Monetarists have managed the devaluing of fiat currencies. In the view of BIS, “The global economy is certainly better off today because central banks moved forcefully after the 2008 collapse of Lehman Brothers and in the years since.”
And forcefully indeed they did act, utilizing the power of the state to secure their own temporary solvency. Since this show of force, it has been at the expense of great sacrifice by society as whole, as aggregate assets of all central banks have grown to 30% of global GDP, which is double the ratio from one decade ago.
The Bank for International Settlements recognizes this “imbalance:”
The world is now five years on from the outbreak of the financial crisis, yet the global economy is still unbalanced and seemingly becoming more so as interacting weaknesses continue to amplify each other. The goals of balanced growth, balanced economic policies and a safe financial system still elude us.
And the BIS maintains that we cannot depend on balance sheet trickery to re-balance the world economy:
It would be a mistake to think that central bankers can use their balance sheets to solve every economic and financial problem; they cannot induce deleveraging, they cannot correct sectoral imbalances, and they cannot address solvency problems. In fact, near zero policy rates, combined with abundant and nearly unconditional liquidity support, weaken incentives for the private sector to repair balance sheets and for fiscal authorities to limit their borrowing requirements.
As central banks make move to tighten monetary policy, large banks – who over time since the crisis has grown expectant and dependent upon these policies – will become precarious, as central banks “unconventional measures will prevent a timely exit from monetary stimulus, thereby jeopardizing price stability.”
The central banks are implying a future crisis in currency and financial markets, going on record in favor of more aggressive political interference with the economy. Until that point, however, the official story maintains that “central banks have done what the economic situation has called for and then some, and they should not and cannot be expected to do much more.” In other words, a further cataclysm in world markets is approaching.
Instead, the political class – and other members of the bootlicking class – “must heed central bankers’ recommendations for how to clean up their messages, fiscal, structural, and otherwise.” So, in other words, quite possibly how to clean up society overall.