The following is very good article on the real state of the economy and central banks role.

It is copyrighted, therefore only a snippet. Well, a little more. Do read it!

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Central banks: a sausage based conundrum

By Mark GB

They say if you like laws and sausages, you should never watch either one being made. Banking belongs on that list also, but it seems most people would rather not know. Economic conditions are poor. We are not in a recovery; we are in a depression. Central Banks don’t understand the problem because central banks are the problem.

1. The conundrum:

“We cannot solve our problems with the same level of thinking that created them” – Albert Einstein.

Despite the Federal Reserve expanding their balance sheet from $800bn to $4.4tn; despite holding interest rates at zero for 8 years; despite all the new ‘jobs’ that have reduced unemployment to 4.4%: the Fed’s measure of inflation is 1.8% and falling, wages are going nowhere, and the Keynesian holy grail of surging ‘aggregate demand’ is as elusive as a glass of lemonade in a Dublin pub.

It seems that no matter what they do, they can’t get companies to pay higher wages, or get people to spend more money. The ‘recovery’ that High Priest Bernanke promised before he took his talents (AKA his address book) to Citadel…has gone bye-byes.  And Sister Yellen, alone and forlorn, left holding the can…has run out of places to look.

This is not the way it was supposed to work.

2. The Sausage:

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before morning”– Henry Ford.

The way our banking and monetary affairs are conducted resembles the making of sausages – seeing a sausage being made dulls the appetite, so even people who know, prefer not to dwell on it when they’re eating one. Even so-called ‘experts’ apparently.  Here’s Adair Turner, former Chairman of the Financial Services Authority, talking to Martin Wolf over ‘Lunch with the FT’ in June 2016:

“I’d forgotten that banks create credit, money and purchasing power and that they can create too much. But once you return to the fundamentals, you realize that it’s very dangerous to construct a currency union that doesn’t have enough of a political union to make it work” – Adair Turner.

In the mistaken belief that our money and our banking are in some way inevitable, the average person learns to avert their eyes, and after a while, they forget they are eating a sausage.  However, our money and our banking are not inevitable; they are merely ubiquitous.

The Federal Reserve (along with the ECB, BOE, BOJ) has spent the past 8 years desperately trying to create inflation. This is because the thing that scares the bejeebers out of them is deflation…

Deflation is the ‘monster’ because in a debt based monetary system (AKA a Ponzi scheme), new debt has to be constantly created to keep asset values expanding. When asset values shrink, the debt acquired to ‘buy’ them doesn’t – revealing what was hidden all along – insolvency – which leads to contagion – which leads to government bailouts – and the process starts all over again. Except that this time the CBs are afraid the monster will be too big to bail out. For once they are right.

This Ponzi scheme was originally designed to serve the interests of two groups of people:

a) Governments – who borrow billions of dollars every month that they cannot acquire through taxation: this is used to bribe ‘special interests’ with government contracts (military, pharmaceutical, oil etc.), and to con the masses with entitlements and benefits (unfunded pensions etc.). A sizeable proportion is used to pay interest on old debt, and an increasing amount is required to fund the ever-growing bureaucracy required to maintain the government itself.

b) Banks – who raise this ‘money’ for governments by selling their debt into the bond markets, making huge profits in a wide variety of ways: some by performing useful functions, and some that can be summarised as ‘front-running’, ‘insider dealing’ and good old-fashioned ‘selling crap to muppets’. Bankers are protected from prosecution because many of their scams are carried out on behalf of governments, and/or contribute to the commercial benefit of government officials; and although politicians tend to be rather dim, they are not so stupid to believe that the bankers would go quietly…

As an aside, the New York mafia have traditionally enjoyed similar privileges, but mainly at the city and state level; though of course the comparison ends when it comes to the printing of money – only the banks are allowed to do that. The government still frowns on money printing when the mafia does it – so they’ve largely given up on counterfeiting, and instead concentrate on things like drugs and prostitution – two activities which politicians and bankers find much easier to overlook, and indeed often partake of.

But I digress…

Full article here