Don’t look now, but the Bank for International Settlements (BIS), which is often referred to as the “central banks’ central bank”, just advised the world’s central banks to stage a market collapse now rather than later.
For anyone claiming that the many global critics of central banks are a “bunch of doomers”, that argument has now been officially buried, as the world’s premier forum of central bankers just sounded the alarm themselves:
“The risk of normalising too late and too gradually should not be underestimated… The trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on .”
So what was that about “bringing forward the downward leg of the cycle”? For anyone who thinks collapses aren’t planned, let’s call that “Exhibit A”. So much for free markets. Let’s be clear: The same forum of the world’s central bankers which recommended this monster bubble in the first place and enriched the world’s top-1% to historic levels, is now discussing “bringing forward the downward leg of the cycle“. Is there anything that isn’t planned?
Oh well, so much for our roaring equity markets. Those are apparently about to be sacrificed in a planned collapse — er, sorry, in a “bringing forward of the downward leg of the cycle“. Not that our soaring markets were indicative of any underlying economic health anyway. The BIS was kind enough to point out to it’s member central-banks that, markets are not only officially broken but the disconnect between markets and economic reality is your fault guys.
“Financial markets have been exuberant over the past year, at least in advanced economies, dancing mainly to the tune of central bank decisions. … Growth has disappointed even as financial markets have roared: The transmission chain seems to be badly impaired. … Over time, policies lose their effectiveness and may end up fostering the very conditions they seek to prevent”.
The BIS is worried about the bubble it recommended in the first place:
Well it’s all very nice that the BIS has warned that the world’s central banks have now officially broken markets and created a new bubble. But there seems to be some serious double-speak involved in the language of “recovery” and “new bubble creation”. Literally everyone in central-banking-land agreed that the bubble needed to be reflated after the housing-bust. But now that it’s been reflated there’s a rather ironic concern that…uh oh… we reflated.
Viva la collapse: BIS
But that’s where the humor ends. Next on the agenda at the BIS is: What to do about this dreadful bubble that we helped create and are now somewhat surprised that we actually have.
“Few are ready to curb financial booms that make everyone feel illusively richer. Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms,” …
“The road ahead may be a long one. All the more reason, then, to start the journey sooner rather than later.”
Read that last sentence again, folks. “Start the journey”? As in, the “collapse“? If we may paraphrase: This is going to be seriously ugly no matter what. So we might as well bite the bullet and get on with the ugliness.
When the “central banks’ central bank” slaps central-bankers on the wrist and tells them to get on with the (planned) correction, it’s certainly time to take notice.
We are listening… and watching, BIS.