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STAFF NEWS & ANALYSIS
Debunking the Recovery Meme – A Lousy Job but Someone's Got to Do It
By Staff News & Analysis - October 21, 2013

Economic recovery proves QE working, says Paul Tucker … Outgoing deputy governor of the Bank of England says the UK's economic recovery is evidence that quantitative easing is finally working … Although Mr Tucker said it was still too early to say whether the economy had reached "escape velocity", his comments come ahead of new GDP figures which are expected to show growth hitting 0.8pc for the third quarter. The outgoing deputy governor of the Bank of England, Paul Tucker, has said the UK's economic recovery is evidence that quantitative easing is finally working. In his last interview as a senior figure at the Bank, Mr Tucker argued that the effects of the vast expansion of the UK's monetary base was initially smothered by the problems in the eurozone economies. Although Mr Tucker said it was still too early to say whether the economy had reached "escape velocity", his comments come ahead of new GDP figures which are expected to show growth hitting 0.8pc for the third quarter. – UK Telegraph

Dominant Social Theme: Central bankers have finally overcome the dark forces of depression.

Free-Market Analysis: The only real recovery that is taking place in the US or Britain or the EU is a financial industry recovery. Sooner or later stocks are likely going a lot higher and the mainstream media is going to report on this manipulation as if it is representative of a miraculous, generalized recovery.

They are lining up the memes, even now. Yes, they are. It's discouraging sometimes to see the level of manipulation that is practiced, but someone has to report on it. And we do … every day.

  • First, there's the fracking meme, which is certainly intended to give people the confidence that energy is going to be plentiful and cheap.
  • Second is the sudden decision that free speech extends to advertising, as represented by the JOBS Act that will allow entrepreneurs to publish their opportunities.
  • Third, add in the deliberate selection of new US Federal Reserve boss, uber-dove Janet Yellen.

See the cocktail brewing? Energy, advertising and cheap money are all being stirred together to create a fizzy punch that will be offered to all. Its effects will eventually wear off, of course, leaving a hangover and a stomachache but really, you may not care (to begin with) so long as you are pocketing a generous return.

But move cautiously! Play the game but don't mistake it for reality. The top elites are not in the reality business. They are in the narrative/storytelling business.

And they are in the middle of telling a whopper. We've often written that the bankers misjudged the depth of the economic slump after 2007, and that they also misjudged the amount of anger and frustration it caused.

The 21st century is not the 20th and more people have a better idea of the manipulations that are taking place. There's rioting in Greece, Italy and Spain. In the US gun sales have climbed continuously. And now new political parties are being formed that don't conform to the kind of fascism that the elites are comfortable combating but to libertarianism and classical liberal perspectives that elites are morbidly uncomfortable contemplating.

The result from the point of view of top bankers is … trouble. And they shall deal with trouble by continuing to create a stock market bubble, in our humble view, and by then maintaining that the bubble is symptomatic of a larger prosperity that they themselves have managed to create by money printing.

Just listen …

If the consensus estimates are correct it would mean the fastest rate of growth since early 2010, beating the second quarter's 0.7pc. "We've provided an extraordinary degree of monetary stimulus and the whole euro area crisis was like switching it off," he said. "I felt that as soon as [fears] receded, spirits would revive and the existing monetary stimulus would gain traction. And I think that's what has happened

Mr Tucker also suggested politicians should hold a public debate on whether to hand the Bank of England the power to intervene directly in the mortgage market if house prices start to spiral out of control. Last year, the Bank asked Parliament to consider giving its financial stability arm the ability to ban buyers with small deposits from taking out a mortgage to deflate a housing bubble. The request for a response from politicians was never taken up, though.

Mr Tucker said: "We thought this is something that warrants public debate. There hasn't been [any] really. Not of the kind that I suppose we'd hoped for. "We said we're not asking for these powers, because we think it might be a step too far in terms of the legitimacy of an unelected body. If the politicians thought we ought to have those powers they could generate the public debate. One almost infers that they don't think that."

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The assumption is made that money power has lifted up the British economy. Mr. Tucker is so sanguine about it that he mentions the Bank of England ought to be given MORE power on the housing front. Funny, we thought low mortgage rates in the US and Britain precipitated the 2007-2008 crash.

Top bankers are not even bothering to rewrite history anymore. They're moving too quickly for that. They're simply asserting what they wish the historical record to contain and their scribes at the Telegraph and elsewhere are making the appropriate notations.

But in fact, Western economies have not improved. They cannot improve at this point because the central banking economy – the first of its kind in history – has leached out all the vitamins and minerals that might otherwise help an economy to grow.

Central banks provide such growth above what economies can naturally create. They are steroids for industry, supercharging enterprises with easy money that can be spent on numerous additional gambits that would not otherwise be contemplated.

There is nothing wrong with industrial vitality. There is nothing wrong with consumer choice. But the trouble with central banking is that it plays havoc with society and social institutions. Detroit was once the "motor city" and exported cars around the world. Now barely 50 years later, the city is being virtually razed.

The same symptoms show up elsewhere. Some of China's empty cities have been built to represent wonderful urban environments such as Paris and Manhattan. But they are filling with mold, having never been lived in, and soon likely will be torn down. When cities are built up and then destroyed within generations, or even years, or worse yet never filled to begin with, then the economies that create them have surely got problems.

Normal economies contract and expand based on demand. And demand can presumably overshoot and undershoot. That's why economies expand and contract even without monopoly central bank money printing.

But central banking super-money supercharges economies and the contractions and expansions are far greater than they would be otherwise. Whole industries can expand and contract in a single generation. People who leave stable jobs to work in the new and adventuresome environments can be badly injured, professionally and economically.

This is all presented by the mainstream media as part of the hurly-burly of capitalism. It is not. There is nothing healthy about money power. It eventually destroys almost all it touches and centralizes every part of an economy, putting the best ideas and the most powerful industrial elements in the pockets of just a few.

And so … no, there is no "recovery." There won't be.

After a century of explosive central banking developments that has seen the plague of artificial money creation spread from five countries to over 150, the world's industrial capacity is exhausted, sick and weakened. Western economies, artificially stimulated for decades, need a good deal of time to rejuvenate themselves and rediscover what "normalcy" means.

They won't get it.

The top banking men are more determined than ever to press forward. For them, going backwards to something more normal is not an option. They will print and print – and then the bought-and-paid-for mainstream media will trumpet the effectiveness of the "battle" against recessionary forces.

Black markets will expand; unemployment will rise; malnutrition in the West and even starvation will climb. But none of that will be reported on. Instead, we will get articles organizing reality along central banking lines …

The Great Recession happened, but it was conquered by good gray men who knew what levers to pull in the world's US$100 trillion economy to recreate prosperity.

This is the narrative that they intend to spread.

The difference is that today what we call the Internet Reformation is interfering with its completion. The narrative is not nearly so effective because people have imbibed a different narrative on the 'Net.

Here's our take: The globalists have literally and figuratively lost the plot. There is almost no doubt that they will re-stimulate markets – and people, even average people, may benefit from that. But the credibility is gone. The believability is absent.

At the proper time, therefore, once past yet another, even more terrible crash, they will attempt to suggest something new – bigger and grander. A worldwide central bank perhaps and a global money.

After Thoughts

We'll see how that goes over …

Posted in STAFF NEWS & ANALYSIS
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