Trend forecaster Gerald Celente has been a much sought-after analyst for business media worldwide this summer. Here’s a summary of the some of the key questions Celente fielded during numerous interviews on central bank activity in recent weeks.
What are the risks to the market if in fact central banks admit defeat and pass the baton to the government to stimulate growth – and I’m referring to central banks everywhere, including the U.S.?
Sociopaths never admit to anything. Central banks will continue to invent whatever they can to try to generate growth despite eight years of dismal GDP performance in developed and developing nations. Recently, some corners of the equity world cheered yet another round of Japan’s Abenomics (Ponzinomic) stimulus scheme after two previous rounds of quantifiable abject failure.
Where is the stimulus money going to come from? Japan already has a debt to GDP ratio of about 240. Perfect, pour on more debt atop the already enormous debt that will never be paid by launching the third round of what failed before. Who in private enterprise could get away with this…triple down on massive failure and get promoted to run the company?
Would you say that central bank influence and measures are not particularly helpful everywhere?
It’s not what I would say, it’s what the data prove despite lofty promises such as President Mario Draghi who said, “We have the power to act. We have the determination to act. We have the commitment to act … the bottom line of what I’m saying is QE is here to stay.”
Braggadocio Draghi, with a proven track record of nothing but failure, dictating to citizens of the eurozone how he will determine their future with his negative interest rate policy and a €80 billion-a-month government and corporate bond-buying scheme that boosted Eurozone’s last quarter domestic product a measly 0.3 percent.
Indeed, not only are they not helpful, central banks are an outright fraud … anathema to capitalism, since manipulating money supply, rates and stimulus intervention prevents true price discovery and honest economic growth. The numbers speak for themselves. Equity markets in the US and global merger and acquisition activity soared by allowing speculators to borrow money cheaply and gamble. And as the facts show, there was no “trickle down” from Wall Street to Main Street.
In the US, for example, 95 percent of the wealth gained since 2009 has gone to the 1 percent. That’s a hard fact. It’s the same across the globe. According to Oxfam, some 62 people have more wealth than 1/2 the world’s population combined. Again, the GDP numbers don’t lie. They rank between soft to miserable among developed and developing nations.
You say that central banks are caught in a rate trap….so what would be the best option for them if raising rates and lowering rates have risks associated with them?
Raise rates back to average normal to restore true price discovery in the equity markets and the general economy. Low rates are a war against We the People who at one time could put money in banks with no risk and were guaranteed a decent return on interest in our bank accounts. When rates are eventually raised, and at some point they will be, initially, the enormous equity and housing market bubbles blown up with cheap money will deflate and true recessionary pressures will return. However, free enterprise systems can create – as they have throughout modern history – economic growth that will gradually generate true , rather than central bank artificially induced inflated growth
Why was central-bank money injections during the Panic of 08’ unable to actually cure the problem that caused it (it merely relieved the symptoms, as you say)?
Again, all it did was bail our Wall Street and the banks. That’s where the money was funneled into. As we said, this is the slowest economic recovery since 1949. What cheap money has created, here and in much of the world, are massive bubbles in equity and housing markets. Again, in capitalism there is no such thing as too-big-to fail. You rise and fall on your own merits.
What is really behind the Fed’s moves? You ask: Does the Fed lie, or is it really stupid? Well, what do you think?
Stupid liars. Read the Fed minutes that they withhold for five years. They didn’t have a clue that the Panic of ’08 was coming even after it arrived. And they are anti-gold, since the higher gold prices rise, the more it reflects how worthless over printed, devalued fiat currencies are.
Thus, they are liars by talking down the gold market by continually insinuating they will raise rates. In fact, go back to December 2015 when the Fed raised interest rates for the first time in over 9 years, and a measly 25 basis points at that. All we heard from FOMC members following their meeting was to expect four more hikes in 2016.
Now, here we are, in August 2016 and they raised interest rates the grand total of zero times this year. So yes, they are stupid liars.
What do you make of the Bank of England’s rate cut and stimulus program? Some say it’s radical.
Desperate. The UK GDP was slowing down long before Brexit. It will hurt pensions, savers, insurance companies and banks that are already struggling and make life more expensive for its citizens as the pound loses value and import prices rise. The same holds true for other nations whose central banks crash down interest rates, while doing nothing to restore economic growth or true price discovery. How much more global proof is needed that low rates and bond buying stimulus schemes do not boost GDP, raise wages or create living wage jobs?
What do you make of the Bank of Japan’s stimulus package?
Too small to be meaningful and if it was larger it would only provide temporary relief.
What do you make of the Reserve Bank of Australia’s rate cut?
Same. It’s a desperate move. It will do nothing to increase job growth. Do nothing to reverse the decline in raw material exports to China who’s economy is also slowing down and will inflate the already over inflated Australian housing bubble. All these central banks do is buy time. When will they finally fail? It’s hard to forecast since they come with schemes undreamed of…like $17 trillion of bonds with negative yields…a first in the History of the World … parts one and two!