print aussie dollars, page-23

There is a common misconception that central bankers have their printing presses running 24/7 printing cash notes to drop from their helicopters.

The over-used and misunderstood term "printing money" actually refers to central banks buying of debt and creation of cheap credit. But with more than $60 trillion in outstanding USD denominated debt at risk of deflation, the Fed's bloated $3 trillion balance sheet has already placed themselves at risk of collapse.

Political will for further QE & bailouts (ultimately backed by taxpayers) is waning across the board (from the extreme right Tea Party movement to the extreme left Occupy movement to liberals & conservatives alike and everyone in between). So central bankers are limited in their actions, via political will, by the mood of the people.

And, just as Japan has already proven, unlimited amounts of cheap credit does not guarantee inflation let alone prevent deflation. That's because if people remain reluctant to borrow, as is the case during a deflationary spiral resulting from debt deflation & credit contraction, no amount of free credit will entice them to borrow. So during such rare times as we're witnessing today, central bankers are merely pushing on a piece of string.

2013 should prove to be the start of the end in people's still unwavering belief in the alchemy of central bankers.