GOBBLEDY MEETS GOOK

                           








 
You got to give it to central bankers and their loads of economists. They like to take a language and screw it up as badly as they can, almost as badly as governments around the globe like to screw taxpayers.

We'd include a host of others who enjoy torturing the language, but space doesn't permit. Yet most of you sociologists, psychologists and business school grads know whom we're talking about. So for now we'll start with this cute phrase that came out of a recent Financial Times article about the ECB and their new found love for financial charity.

One for the money, two for the show, three to get ready and here we go: "monetary transmission mechanism." In case you haven't guessed it, it's broken. Wow! Sounds like a Bad Day At Blackrock and we're not talking about the investment funds.

So what is the monetary transmission mechanism that's so busted? It's banks refusal to lend money or make loans irrespective of how low central bankers lower the interest rates it charges bankers. Now that brings up an interesting point. You first roll out the regulators to financially pistol whip the banks for doing all the things they should not have done in the first place and now you want them to make loans and take risk just because money is cheap.

In the past when banks were given the prospect of cheap money, they did what any sane banker would do, they bought government bonds to make guaranteed money on the spread. After all, lending to families and small businesses can be a risky business especially when you relax the the lending standards like the U.S. government did with its an affordable home for everyone program that led to the subprime explosion.

But that's a topic for another time, one that will never show up in the lives of the bureaucrats and politicos responsible. Meanwhile, we'll just entertain ourselves with some redundancies like feeling tones and aggregate demand. 

And please don't get us started on economic redundancy, a term you and I know we most likely wouldn't capisce even if it were written on the stall door in a public restroom as diversification.