-- Published: Monday, 10 November 2014 | Print | Disqus
By Graham Summers
Anyone with even a cursory understanding of human nature knows that if you give someone virtually unlimited power with next to no oversight, they will quickly become despotic.
Consider what is currently happening in Japan.
Two weeks ago, the Bank of Japan shocked the world by increasing its QQE program. True, Japan’s economy was faltering, but that was nothing new. And given that the “shock and awe” QE program of $1.4 trillion announced in 2013 had failed go generate sustained growth, why on earth would the Bank of Japan expect that increasing this would somehow work?
Turns out it didn’t. In fact the whole decision was mainly due to Bank of Japan Governor Haruhiko Kuroda’s ego.
The Bank of Japan Governor not only surprised the markets with his latest splurge of monetary easing. He sprang it on his own board members just two days earlier, jolted into action to stop them making a low-ball forecast that might have sunk his flagship inflation target.
To achieve maximum effect for the shock decision, Haruhiko Kuroda and right-hand man Masayoshi Amamiya kept only a handful of elite central bank bureaucrats in the loop as they laid the ground for the expansion of their quantitative and qualitative easing (QQE) programme.
You read that correctly… Kuroda announced the program NOT to fix Japan’s economy or to create jobs… but so that his own Board would be shocked into adjusting their numbers so that their new forecasts would match his target.
This is the ultimate sign or Central Banker insanity. For six years now (20 years if you want to include Japan’s lost decade) Central Bankers have employed a series of emergency measures, spending over $10 trillion in the hope that the global economy would align itself with their largely academic theories.
Now that their theories have been proven to be total bunk, rather than retreating, they are actively spending money just to massage data so that it matches their still misguided theories.
The Central Bankers bet the financial system that their theories were correct. They were wrong. Horribly wrong. And we will all pay the consequences for it. When the next Crisis hits, it will feature entire countries going bust.
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-- Published: Monday, 10 November 2014 | E-Mail | Print | Source: GoldSeek.com