zerohedge.com / by Eugen von Bohm-Bawerk via Bawerk.net / Oct 19, 2016 3:15 PM
In the years following the 2008 crash and today, the use of forward guidance from central banking policy makers has become increasingly important. What this nonsense ultimately has translated into is a ridiculous track record in posting upbeat assessments on the economic environment, aimed at trying to fool the marginal investor into believing “there are no need for worry, central bankers have everything under control”. Unsurprisingly, as with all psychological conditioning, forward guidance have lost its effect as more and more market participants lose confidence in central banks and their promise that everything will eventually mean revert to happier days. Contrary to what the smartest people on the planet are saying. Fool me once, shame on you, fool me twice shame on me.
This unfortunate practice is making in-roads into the most important of commodity markets: crude oil. Ever since the last QE taper in June 2014 triggered a dollar rally and a corresponding crash in oil prices, OPEC has been struggling to find its role in this new normal. Market power has, with the emergence of QE and ZIRP/NIRP, been moved to a different set of central planners than themselves, namely those controlling the flow of credit into and around the system.
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