STAFF NEWS & ANALYSIS
UK Telegraph: 'We No Longer Have Free Markets'
By Staff News & Analysis - June 19, 2013

If Bernanke really shakes the tree, half the world may fall out … We no longer have a free market. The world's financial asset prices have become a plaything of central banks and the sovereign wealth funds of a few emerging powers. Julian Callow from Barclays says they are buying $1.8 trillion worth of AAA or safe-haven bonds each year from an available pool of $2 trillion. Nothing like this has been seen before in modern times, if ever. – UK Telegraph

Dominant Social Theme: Oh, this is overwrought. Even conspiratorial.

Free-Market Analysis: We can hardly keep track of how many times the alternative 'Net media, including ourselves, have been proven correct in the past few months.

The war in Afghanistan is an admitted failure; the world is swimming in shale oil; central banking's credibility shattered … and now one of the most mainstream and powerful newspapers in Britain has published an article admitting that the West's economy is far from free.

We've been banging the drum about "directed history" for years, especially when it comes to central banking. Like many other alternative outlets (though sooner than most), we've made a consistent effort to report on what is evidently and obviously an aberrant and dangerous monopoly "central bank" economy.

Never in the history of the world have so few controlled so much. And never have they done so with such meretricious logic.

The idea that a few good, gray bankers can fix the price of money is a ludicrous one. There is no instrument that can be tracked. There is no forward looking index that allows bankers to know for certain whether their decisions are the correct ones.

And they never are. Central planning doesn't work. And central planning when it comes to money is even worse. It is immensely destructive. And now it has come to this, a final yelp (now that it is too late) in the dark from one of the more prestigious British newspapers.

Here's some more:

The Fed, the ECB, the Bank of England, the Bank of Japan, et al, own $10 trillion in bonds. China, the petro-powers, et al, own another $10 trillion. Between them they have locked up $20 trillion, equal to roughly 25pc of global GDP. They are the market. That is why Fed taper talk has become so neuralgic, and why we all watch Chinese regulators for every clue on policy.

We will find out … whether Ben Bernanke is ready to blink after the market ructions of the last three weeks, sobered by the cascading upsets across the Brics and mini-Brics; or whether he will stay the course with Fed tapering sooner rather than later. Investors seem to think he will indeed blink, or at least blink enough to put off the day of reckoning for another three month investment cycle, which is what hedge funds care about, and that if he doesn't blink it will be because the economy is picking up speed.

They cling to the Bernanke Put, when the new reality may instead be the Bernanke Call. Perhaps Bernanke will oblige one more time, knowing that the US economy has yet to absorb the full shock of fiscal tightening, the biggest squeeze for half a century. Besides, core PCE inflation is down to 1.1pc. Jim Leaviss from M&G says the Fed would normally be cutting rates by 1.5pc under the Taylor Rule in these circumstances, not tightening.

Yet what causes me to hesitate is the drip of reports and comments from key figures in – or near – the Fed seeming to suggest a loss of nerve, or who fear that QE has turned counterproductive. First we had a paper co-written by Frederic Mishkin – Bernanke's close friend and a former board member – warning that is becoming ever harder for the Fed to extricate itself safely from QE, and the door my shut altogether from 2014.

Despite the apocalyptic tone of this excerpt, the article is still not blunt enough, in our humble estimation.

Attempting to undo the damage of the Great Recession, central banks have not printed trillions but TENS of trillions, trying to keep a comatose global economy on life support.

Those who see ever-increasing internationalism – and have relied on central banking to promulgate it – now find themselves walking a thin line, trying to balance chaos with recovery. The fear that peasants may revolt and their anger spill over onto manicured grounds is palpable.

And so those who have created and nurtured the monstrous disaster that is central banking continue to do the only thing they know how to do, which is to implement further manipulations and further monetary controls.

Central banks really only know how to do one thing: print money. The idea that central bankers can scientifically extract money from the global economy and thus create a "soft landing" is nonsensical. It's never been done, certainly not on a global scale.

It's easy to print money – and in doing so to take over vast parts of the world's financial structure. But what happens when you try to "unwind"?

This is the question we and an increasing chorus of other alternative media blogs and websites have been asking. Meanwhile, the institutions of the world have continued to treat central banking as if it is a logical and disciplined manifestation of Western economic genius.

Unclothed and unshod, the central banker marches naked in the parade; the sycophants and sophists have cheered him on and praised his taste in garments.

Yes, the world has been subject to a kind of forceful, deviant and quite intentional mass illusion. The very best and brightest have participated, knowing full well that they mouth falsehoods. Now the day of reckoning approaches.

After Thoughts

To quote the great Nigerian author Chinua Achebe, "Things Fall Apart."

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