Citizens Will Soon Turn Their Rage Towards Central Bankers, by Tyler Durden commenting on a piece by Albert Edwards. This is a possibility — though it seems unlikely for the time being, given the lack of public understanding about where money comes from, and the media’s compliance with keeping it that way.
During the populist revolt of 2016, which first led to the “shocking outcomes” of Brexit and then Trump, we cautioned that these phenomena were merely the “silent majority” of the developed world’s middle class expressing their anger and frustration with a world that has left them — and their real disposable income — behind, while rewarding the Top 1% through policies that have led to a relentless and record ascent in global asset prices, largely the purview of the world’s wealthiest. More recently, we also noted that it was only a matter of time before this latest “revolt” fizzled, as the realization that changing one politician with another would achieve nothing, and anger shifted to the real catalyst behind growing global inequality (and anger): central banks.
In his latest note today, Albert Edwards picks up on this theme…:
“While politics in the West reels from a decade of economic crisis and stagnation, asset prices continue to surge on the back of continued rapid growth in [quantitative easing, i.e. money manufacture by central banks]. In an age of “radical uncertainty” how long will it be before angry citizens tire of blaming an impotent political system for their ills and turn on the main culprits for their poverty – unelected and virtually unaccountable central bankers? I expect central bank independence will be (and should be) the next casualty of the current political turmoil.” …
“Evidence of the impact of monetary madness on assets prices is all around if we care to look. I read that a parking spot in Hong Kong was just sold for record HK$5.18 million ($664,200). What about the 3.5x oversubscribed 100 year Argentine government bond? Sure, everything has a market clearing price, even one of the most regular defaulters in history. …”
“But no one cares when the party is still raging and investors, drunk with the liquor of loose money, are blind to the inevitable catastrophe that lies ahead.”
“There is a lot of anger out on the streets, as demonstrated most visibly in recent elections. Even in France where investors feel comforted that a “moderate” has gained (absolute?) power, it is salutary to remember that the two establishment parties have just been decimated by a man who had never before stood for public office! This is perhaps even more radical than Trump’s anti-establishment victory under the Republican umbrella. The global political situation is incredibly fluid and unpredictable.”
Much of politics is motivated by economics, and the economic stagnation brought on by the misbehavior of the central banks is a major underlying cause of political discontent and revolt. The economic problem — which manifests itself as huge debt loads, low interest rates, unaffordable houses, economic stagnation, and wilting real incomes for the bulk of the population — is only going to get worse before it is resolved, either by a very great depression or prolonged and nasty inflation.
Keynes. Solved a problem peculiar to the 1930s, and misapplied ever since.
Reader Chris adds:
It is interesting to note that the study of economics once went under the banner, ‘Political Economics’. The removal of the word political, perhaps accompanied by the rise of ‘Keynesian Economics’, left it known in central bank circles as just plain, ‘Economics’.
With the pretense of removing politics from economics, the Central Bankers can carry on independent and unanswerable to the voters — laughing all the way to the printing press [in a chauffeured car].