Illustration by Rachael Bolton

During the past ten years, we have witnessed unprecedented manipulation of stock, bond, and property prices by global central banks. The inflation of these grotesque asset bubbles will not end well as indicators in the USA point towards an economic recession.

For the past twelve years, Ben Bernanke and Janet Yellen have been piloting the US Federal Reserve Bank with the same hubris as Captain Edward John Smith when he cheerily departed Southampton at the helm of the RMS Titanic. The big difference: around 1,500 people died due to Captain Smith’s arrogance and incompetence; whereas, Bernanke and Yellen’s arrogance and incompetence regarding the “magicing-up” of trillions of dollars in global credit as a substitute for consumer growth will end in epic policy failure.

The biggest problem is that inflation-adjusted wages have been flat while central bank manipulation has inflated unsustainable asset bubbles in stocks, bonds, and property markets making the cost of living impossible. As wages have stagnated, DEBT HAS DRIVEN consumption—and the consumers are now tapped out. The claim that the USA’s economy is at “full-employment” is one of the century’s most risible claims. Labor participation has not been this horrible since 1977!

The biggest problem is that inflation-adjusted wages have been flat while central bank manipulation has inflated unsustainable asset bubbles in stocks, bonds, and property markets making the cost of living impossible.

The likely outcome of the Bernanke-Yellen “great economic experiment” is the USA’s loss of USD hegemony followed by a massive global financial collapse, a catastrophic economic depression, and possibly another world war. But rest assured that when, not if, the next crisis hits, our fake-news pundits will all blame the above and the thirty plus years of excess on President Donald J. Trump.

Central bank “interventions” have allowed market valuations to enter the Twilight zone, a place where reality no longer exists. The US Treasury is about to run out of money and Illinois is broke as are most woefully underfunded USA pension funds, and yet disconnected markets trade like they are playing with risk-free assets.

These central planning interventions have created an exquisite garden paradise where princes and princesses happily gallop along riding their unicorns without a care in the world because the omnipotent central bankers have eliminated all political, monetary, geopolitical, fiscal, and economic uncertainties in the stock, bond, and property markets. A wonderful world where prices can only go up, up, up!

In Bernanke, Yellen and New York Federal Reserve Bank President Bob Dudley’s version of utopia, everyone remains convinced our central bank super heroes can easily unwind the Federal Reserve’s $5-trillion-dollar balance sheet with no harmful side effects. In fact, as Yellen cited last week, “It will be like watching paint dry.” Will our divine soothsayer’s forecasts be just as accurate as their asset price, growth, and inflation guesses have been for the last several decades?

Does anyone remember this July 2005 interview with U.S. Federal Reserve Chairman Ben Bernanke?

INTERVIEWER: Tell me, what is the worst-case scenario? Sir, we have so many economists coming on our air and saying, “Oh, this is a bubble, and it’s going to burst, and this is going to be a real issue for the economy.” Some say it could even cause a recession at some point. What is the worst-case scenario, if in fact we were to see prices come down substantially across the country?

BERNANKE: Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow, maybe stabilize: might slow consumption spending a bit. I don’t think it’s going to drive the economy too far from its full employment path, though.”
 

Or this chart?

 Above is a snapshot of the USA’s property market. Similar property bubbles exist in Canada, inflated by Mark Carney, who is now at the helm of the UK’s BoE where the central London property bubble he helped inflate will experience an extreme collapse. What could possibly go wrong?

Have global markets finally reached a zenith after the multi-decade enterprise of monetary central planning engineered by the Bernanke-Yellen Fed using the same groupthink policies adopted by central bankers around the globe that helped spawn the last credit crisis bubble? Have these central bankers all become intoxicated by the same monetary madness?

Albert Einstein said, “Insanity is doing the same thing over and over again and expecting different results.”  Well, our central bankers either have been lying to us for the past decade or they have been dead wrong. In either case, why should a sane society entrust our global financial stability to nonelected officials who have made heinous mistakes and have been wrong more than they have been right over that past thirty years.

Our central bankers either have been lying to us for the past decade or they have been dead wrong.

Central banks are picking market winners and losers—that’s no longer capitalism. Central banks are making wildly speculative bets. For example, take a look at the Swiss National Bank’s gargantuan stock positions (nearly $70Billion) in US companies such as Apple, Facebook, Boeing, Tesla, Microsoft, and Amazon. The European Central Bank has manipulated the European Union sovereign bond market to the extent that price discovery and normal functioning market mechanisms no longer exist. The Bank of Japan has experienced three lost decades destroying their economy.

Is it different this time? Sorry folks, it is never different not this time or anytime. Has the West learned anything from Japan’s nearly thirty-years massive policy failures? Nope. In fact, central banks have recklessly tripled down. Central banks have become nothing more than highly opaque, out-of-control hedge funds with unlimited balance sheets run by people who arrogantly believe they can control volatility and markets by distorting reality with no consequences. What needs to be done? We needed to rein in these rogue central banks years ago. But, it may now be too late and people will only wake up after the next crisis.

Mitch Feierstein

Mitch Feierstein

Mitch Feierstein is a British-American investor, banker and writer. He has worked as a columnist for the Daily Mail and currently works as a columnist for The Independent and the Huffington Post. Feierstein appears regularly as a financial commentator on SKY, BBC, and RT. In 2012 he published his first book, Planet Ponzi, which gives his perspective of the global credit crisis.

Getting to know Mitch Feierstein:

- How do you spend your days?

In addition to acting as an advisor to several family offices I am a Managing Director at Storia Inc. a multi-media platform created to change the paradigm in digital content creation, delivery and consumption. Storia will leverage the generational shift away from traditional media to 'mobile and video first'.

-What in your answer to Q1 is especially important to you and why?

It is important to make an impact that can positively influence change.

The west has lost its way, capitalism and free markets have been bulldozed by the interests of .001% of the USA’s gargantuan Military Industrial Complex. Add in a dash of 'narrative designed to move forward specific political agendas', a controlled media, owned by six mega corporations and a cabal of reckless misguided academic central bankers - you have the perfect recipe for either:

1) The worst global economic depression in history, or

2) Civil war, as the left’s political repression of speech, thought and conduct has become 'nazism of the left,' which will end badly, or

3.) World war.

- What drove you to focus on finance & investment? Was there a particular moment you can remember that led you to this field?

Yes. When I was in college I was fascinated by everything 'Wall Street'. I was drawn in by the action and went to work in World Trade Center, Tower I in the very early 1980’s. OUCH.



- What drives you professionally?

Every day presents a different set of challenges.

-In your opinion what are the three biggest problems facing the developed and developing world?

1) Non-elected out-of-control rouge central bankers acting as risky, highly leveraged speculative hedge funds – picking market winners and losers.

2)Non-elected politicians in Brussels that want to strip EU citizens of sovereignty, liberty and democracy.

3) Extremism by the left: A 'social-justice' movement designed to end conservative thought. It seems like totalitarianism because it is. The left are only tolerant, accepting, inclusive if you agree with their opinions – when you disagree they become intolerant, violent fascists.

-If you hadn’t become an investor what would you have done?

Played golf on the PGA tour.

-If you look at recent history, can you identify a turning-point that explains how we come to face the peculiar challenges of today?

It was the excesses of the 1980’s and 35+ years of failed neo-liberal thought and policies that began with bill Clinton and ended with Obama. In reality, this was plunder, (financial fraud), on a massive scale that saw wealth inequality ratios skyrocket.

It started with Larry Summers and Robert Rubin’s convincing Bill Clinton to scrap Glass-Steagall – this allowed securitisations and use of derivatives as speculative financial instruments or weapons of mass financial destruction that allowed creation of massive credit, leverage and debt.

-What are the lessons we failed to learn during and since the 2008 crisis?

Nothing learned – we have re-inflated the same bubbles only larger – no meaningful deleveraging and risk assets are now even more risky.

- Name one measure we might implement immediately to improve the situation.

Immediately stop the central banks madness.

- If you were a President / Prime Minister what would your first three pieces of policy be?

1) Audit, shudder the Federal Reserve Bank, deflate the bubbles and jail the financial terrorists.

2) Disband and dismantle the deep state and shadow government operatives working on behalf of the military industrial complex en mass.

3) Maintain sovereignty – secure the nation- ensure democracy- end the policy failures and restore growth.

- What was your biggest & / or your most recent mistake?

Biggest mistake: owning a huge position on Lehman options.

Most recent: assuming central banks would act rationally.

- Name the book that changed you.

Alexander Hamilton by Ron Chernow

- What would you do differently if you were to start all over again?

Nothing, no regrets I move forward!

- Give our readers, members and subscribers a piece of advice that has served you well.

Never invest in anything you don’t fully understand and never, ever believe that 'it is different this time'.

- What is your main anxiety where you and / or your family are concerned?

How the coming global financial collapse unfolds and will DC be stupid enough to allow WWIII.

- What gives you hope for humanity?

As we near our darkest hour, a ray of sunshine will brightly illuminate the process in which we may begin to rebuild our crippled, corrupt and broken financial and political systems from the ground up… The revolution is coming prepare now…
Mitch Feierstein

4 thoughts on “Why central bankers’ great monetary experiment is about to explode

  1. A ray of light at the end of a long dark tunnel…….it’s going to be brutal……who you going to call?

  2. …biggest problems..3) Extremism of the left… totalitarianism because it is.
    Really, are you serious? Totalitarianism only exists under complete control. The “left” will never be in control, therefore, we will always experience totalitarianism by the right not the left. Don’t worry about it.

  3. Monetary policy has run amok, fully enjoying the fiat currency system we’ve had for the past four decades. Neoliberals have long presumed that the private sector does a much better job at managing the economy than government. Now we have yet another reason to discredit this fascist ideology that can only be enforced through brute force.

    “If you’re not willing to kill everybody who has a different idea than yourself, you cannot have Frederick Hayek’s free market. You cannot have Alan Greenspan or the Chicago School, you cannot have the economic freedom that is freedom for the rentiers and the FIRE (finance, insurance, real estate) sector to reduce the rest of the economy to serfdom.” ~ Michael Hudson

    The global banking cartel has even detached itself from adhering to national laws and has created its own legislation that constitutes what fraud is and isn’t. Here is a great documentary that further explains it: https://www.youtube.com/watch?v=2gK3s5j7PgA

    Government also has the power to create new currency ‘out of thin air’, just like private banks, but has been dissuaded from doing it by using financial myths like ‘balancing the budget’ and pretending that taxes fund federal spending in order to keep from creating ‘chaos and inefficiency’. Well, dissuaded from spending on the public sector, but it still has no problem issuing trillions for defense spending, corporate subsidies and bank bailouts.

    We can demand government (fiscal) spending on the public sector TODAY, when we all understand that nothing but blatant lies have been used as obstacles against this. All sovereign nations have the authority to issue their own currency and can NEVER go broke.

    Why don’t we worry if private banks balance THEIR budgets all the time? Because they’re not supposed to! Same thing applies to government.

    “The Government is not like a household. A government is like a bank. And a government running a balanced budget is like a bank that simply lends back as much as it gets in repayments, therefore the money supply never grows and without that, you don’t have a growing economy,” Steve Keen said.”

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