Biggest central bank mistake?

[Rambo35]

I was wondering what you think was the biggest mistake made by any central bank since 2008?

I think all central banks failed together and am a big opponent of stimulus as it only applies a short term fix hoping it will buy the economy time, but at some point someone has to pay for the stimulus which in my opinion is far worse than a recession from which sustainable growth can be achieved.

I think there are quite a few historical cases which show that stimulus does not work and ends up being counter-productive. It is terrible that central banks act in order to please investors and not in order to create an environment for stable as well as sustainable economic growth.

 

[Pharaoh]

Central Banks seem to have been having a contest for who can make the most amazingly stupid mistakes. Although there are plenty of nominees, I'm going to have to give my vote to Cyprus (with the backing of most of the banks in the Eurozone) to steal money directly from the accounts of depositors in order to alleviate some financial problems. This is the sort of abuse one might expect from 3rd world dictators, not established countries that claim to have legitimate banking systems that are designed to keep funds safe.

The door to legalized bank robbery has been thrown open and given the blessing of the ECB. I believe it's just a matter of time until some other government follows this example. At that point, people worldwide may finally realize that all the government assurances about the safety of deposits means absolutely nothing is that same government can freely steal your money out of your bank account.

At that point, we're looking at the probability of bank runs world wide. The banks won't have the cash. ATMs will be emptied. Liquidity will dry up. All the lies and false assurances that "everything is under control" won't stop this tidal wave once it gets rolling.

The choices at that point will be:

1. Great Depression 2.0

2. Throw all the money presses into maximum overdrive - then see how long until hyperinflation kicks in.

3. First 1, then 2.

Don't wait for the bank runs to begin. Put your cash and precious metals on deposit with Mattress Bank now. Mattress Bank - the only bank that's secure against legalized bank robbery.

 

[FringFX]

biggest mistake is of course, kicking the can further down the highway.

Artificial measures will take their tolls in the future.

Seriously, I have applied the "Mattress way" in recent months. I don't want to fall in line at the bank when everyone's there and thinking the same thing.

 

[Pharaoh]

biggest mistake is of course, kicking the can further down the highway.

Artificial measures will take their tolls in the future.

Yep! Although some intervention was necessary to prevent a total meltdown, the actions taken in 2008 went way too far and set the state for worse problems.

The same can be said of actions related to US Social Security over a number of decades. I haven't studied how other countries handle this, but the US isn't the only country with an aging population, a workforce declining as a percentage of population, and politicians who base their campaigns on how much the government can give to voters.

Seriously, I have applied the "Mattress way" in recent months. I don't want to fall in line at the bank when everyone's there and thinking the same thing.

One less person who will be in the crowd fighting each other for the chance to try to get money out of ATMs (which will quickly be emptied) when something too big to quickly paper over with "the government has everything under control comes along.

 

[FringFX]

Yup! lots of aging populations around the world. It's a very interesting time indeed.

Regarding the ATM lineups, I guess I dreaded seeing myself lining up like those in Cyprus and Egypt. I hate lining up. I always like to get in first!