News & Analysis
The Disease of Central Banking
Rich nations need to support growth ... The US and rich nations in Europe need to take action to shore up confidence in their economies as their recoveries are set to stagnate or go into reverse, the Organisation for Economic Co-operation and Development says. The Paris-based watchdog for the world's most developed economies slashed its forecast for growth in the US and the eurozone this year due to government belt-tightening and falling consumer and business confidence. The agency's head economist said governments needed to take urgent steps to restore confidence and break the vicious circle in which they are trapped. The combined economies of Germany, France and Italy, the three largest members of the eurozone, will grow by under 1 per cent this year, less than half the OECD's May forecast of 2 per cent growth ... In its update to the twice-yearly economic outlook report, the OECD forecast the US economy will grow at only a 0.4 per cent annualised rate in the fourth quarter, while in Europe, the three largest economies in the eurozone will contract by 0.4 per cent in that period. – AFP
Dominant Social Theme: Things are bad and getting worse. Time to loosen.
Free-Market Analysis: What do modern economists suggest when the going gets tough? OECD chief economist Pier Carlo Padoan told the Associated Press that with the world facing another "recession," it was time loosen the central bank purse-strings.
According to the article, he said that, "there was space for looser monetary policy – either by cutting interest rates or using tools such as the Federal Reserve's program to buy bonds to stimulate the economy. If needed, he suggested governments with credible debt reduction plans could temporarily boost spending."
There is something almost pathological about these suggestions. President Barack Obama last night made similar ones. There is yet endless faith among the economic and political enablers of globalism that the way to create prosperity is by over-printing money.
Why it is that the world's leading lights believe that price fixing (for that's what over-printing is) will produce prosperity is a puzzle. If someone suggested that the way to improve one's fortunes was by creating more of a product than the market could bear, that suggestion would be seen as ridiculous.
And yet with unemployment reaching 20 and even 30 percent in some parts of the Western world, the idea that printing too much paper money (delinked from an underlying asset) persists in the halls of power.
Western economies collapsed in 2008. Central banks around the world printed up to US$50 TRILLION to salvage elite banks and securities firms. But the dollar reserve system is essentially done. Money printing will not help; only a world war will likely return prosperity and that's because a world war, with all the destruction it entails, will essentially reset Western economies back to zero.
In other words, a world war and commensurate mobilization can help the world start with a blank slate when it comes to industry and the money business. After World War II, the elites were able to entirely reconfigure the global economy via the World Bank, the IMF, the UN, etc. This is the last gasp – the final chance of elite manipulation.
But between the Internet and nuclear weapons it is very hard to start and pursue a world war these days. It is a conundrum for the elite deceivers who are desperately trying to hold onto their power and kick-start some sort of global conflagration via the war on terror, etc.
The alternative to world war is simply to create such economic chaos that people will finally be willing to agree to world government to stop the pain. But this kind of manipulation has many risks of its own. Nonetheless, Keynesian monetary stimulation is the secret weapon of world government.
And that's why the elite banking families that are trying to run the world and their enablers return to it over and over. The worse things get, the more chances the globalist elites – the powerful banking that run the world – will have to engineer real global government.
The world is not what it seems. Every elite talking point, every solution, every governmental action taken in the West only brings chaos nearer. The world's central banking economy – driven by fiat currency and printing money from nothing – is set up to fail. Whatever is said, the opposite is likely true.
The ONLY solution is a return to gold and silver as money and competing currencies, including free-banking within a competitive, free-market worldwide. This is not a hypothetical suggestion. At some point the Invisible Hand itself will drive even the largest and most powerful economies back to economic reality.
Conclusion: The fiat money experiment will end – as such have throughout history. Flying money, as the Chinese called it, doesn't work. It is a recipe for financial consolidation that bankrupts the middle class and eventually results in the demise of civil society. This is what is happening today, abetted by the chattering classes and mainstream economists and business people. They are slitting their own throats and staining their own hands with the blood of millions.
Posted by John Danforth on 09/12/11 01:43 AM
Don't die-hard collectivists advertise themselves openly?
Posted by Bischoff on 09/09/11 07:14 PM
"There are lots of true believers willing and ready to stand in and do the dirty work for the central bankers."
Do you have names, or is this a general comment... ???
Posted by Bischoff on 09/09/11 07:11 PM
There is at least one individual who had the guts to break with the central bankers.
Juergen Stark, a member of the ECB's executive board resigned today. Extensively, due to personal reasons. However, with the consequent sell off in the European and American equity markets, there is little doubt that his resignation had everything to do with his disagreement and outright opposition to Claude Trichet's and the ECB board's willingness to bail out Greece.
Can anyone imagine a resignation from the Board of Governors of the Federal Resere System, because one of the governors disagrees with Quantitative Easing... ???
Posted by John Danforth on 09/09/11 06:07 PM
Guess who has more faith in the market than an a student of Austrian economics?
A die-hard collectivist, that's who.
The True Believers think that there is no breaking point, that they can just continue to heap insult upon insult on the system with taxes, regulations, and currency debasement without end, and no amount will be too much. Their faith is based on the basic fact that economics is what we do to survive. They have found a way to get between us and our own food, and they know that no matter what they do, we still want to eat tonight. If they want more, they just take it, they figure we'll just make more and keep a little less for ourselves.
There are lots of true believers willing and ready to stand in and do the dirty work for the central bankers. They're even taught that the system in place now is The Only Way Things Can Be, and Things Should Be This Way. A Black Swan comes their way.
We will not accept their new paper as our only means of survival.
Posted by Rod Farmer on 09/09/11 02:02 PM
When the going gets tough the tough go shopping (LOL).
Winning carries the seed of its own destruction. The Universe is relative; there will always be opposing forces. A one-world government can not exist.
Maybe that will make you sleep better.
Throwing money at a problem is silly. Sending our money out of the country to create jobs to compete with ours is treasonous. Our stimulus money should be spent on large capital projects that will provide every interested citizen with a living wage. This will provide our economy with a true and stable base.
Posted by robert wheeless on 09/09/11 01:20 PM
Snooves, what does that moniker stand for? Oh, I'm sorry, carry over from 1923 Germany, you say.
Posted by robert wheeless on 09/09/11 01:11 PM
The objective is clearly visable; Prey-tell what's the solution? Is it a free market economy where only 15% of the world's population understand the real problem.
I'm tired of hearing the problem, let's hear some lucid answers for once.
Posted by Abu Aardvark on 09/09/11 10:45 AM
DB: "Thanks. Can you tell us what it means in English?"
"It's Official: Stark Is Gone - Today, Jürgen Stark, Member of the Executive Board and Governing Council of the European Central Bank (ECB), informed President Jean-Claude Trichet that, for personal reasons, he will resign from his position prior to the end of his term of office on 31 May 2014. Mr Stark will stay on in his current position until a successor is appointed, which, according to the appointment procedure, will be by the end of this year. He has been a Member of the Executive Board and Governing Council since 1 June 2006.
Having been informed by Jürgen Stark of his decision to resign for personal reasons, President Jean-Claude Trichet thanks him wholeheartedly for his outstanding contribution to European unity over many years. Having worked with Jürgen Stark for almost 20 years, he expresses particular gratitude for his exceptional and unwavering dedication as a member of the Executive Board and Governing Council for more than five years."
Click to view link
Reply from The Daily Bell
Thanks. Insight from a Zerohedge feedback? ...
"Notice how the German Hawks are getting picked off one by one. First it was Axel Weber, now it's Stark."
Posted by reegje on 09/09/11 10:42 AM
Reinstall Glass-Steagall Act;
Chargeback the Federal Reserve with whatever they doled out to their cronies;
End the Federal Reserve.
Posted by Frank on 09/09/11 10:20 AM
"... governments needed to take urgent steps to restore confidence and break the vicious circle in which they are trapped."-AFP
Yes, but their solution is wrong: more of the same that got us into this mess.
Real solution: return to sound money (gold/silver), end Central Banking, balance the budgets & start to pay down the debts, reduce & simplify taxes/regulations, return to small government, end the welfare state (& for the USA, also end the warfare state) & return to a truly free-Market system.
Posted by Abu Aardvark on 09/09/11 10:17 AM
Breaking news: ECB chief economist to step back ...
Click to view link
Reply from The Daily Bell
Thanks. Can you tell us what it means in English?
Posted by Snooves on 09/09/11 10:16 AM
I don't see how any rationale person could buy the idea that somehow, so called "elites" are pushing us toward a world war to benefit themselves. Its just far to convenient to take our current situation and say its all caused by a small group of "elites" who are manipulating politics, economics, and society as part of some grand underlying motive or scheme...
The term "elite" by its definition implies that a person has "talent" - we're in this situation as a result of the opposite of talent. Incompetence, combined with increasing complexity in the public and private sectors, combined with structural-imperfections and misalignment in our governmental system - all lead to problems that compound over decades and create disasters.
Its just a simple fact, that Congress will never become an effective group of cost cutters and reformers. You simply can't get re-elected by reducing the resources that government is spending on its constituents - no matter how wasteful or damaging to the long-term, that that spending may be. The individual constituents won't tolerate it. Therefore, The ONLY thing our government can do is spend their way problems - we're seeing that yet again last night in Obama's American Jobs Act and we saw it over the summer in Congresses pathetic showing in their resolving the debt ceiling issue.
So given this inherent problem, the US would either have to default on its obligations - which would take most our professional lives to recover from... .or the Central Bank can step in and deal with problem through quantitative easing measures to devalue the currency - thus effectively reducing the government's debt and reducing its contingent obligations. Remember, a devalued currency will cause some short-term trauma, but long-term, its not all that bad - if there is any hope to get exports going again, its a weak dollar... .
Reply from The Daily Bell
OK, Snooves. You think you are contributing something that the readers of alternative media haven't already considered?
Posted by willowspring on 09/09/11 10:14 AM
This only verifies the book I am reading by W. Cleon Skousen, titled:"The Naked Capitalist" that it is right on target. It is a commentary on a 1300 page book written in 1966 by Dr. Carroll Quigley, titled "Tragedy and Hope-A History of the World in Our Time." It is the central bank and all other world banks,(England, London, Paris, New York, etc) all working in concert connected by family members operating those banks to bring about the New World Order. It has been in process since the late 1800s and into the early 1900s when it began to really take shape. Our Federal Reserve, which has nothing to do with our government and everything to do with world domination, is run by the elites chosen by a handful of wealthy elites and their descendants and their secret society. Sounds almost like a conspiracy theory, but in fact it is not theory and the NWO is almost completed. It has taken more than 100 years from it's beginnings. President Woodrow Wilson realized after the fact what he'd done our country.
-In 1913, President Woodrow Wilson approved the Federal Reserve Act. A few years later, he reflected:
"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world -- no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men."
Posted by Abu Aardvark on 09/09/11 10:11 AM
Awesome article, once more! Thank you, DB.
Posted by charlesfrith on 09/09/11 07:31 AM
The central banking perpetual war model. Western psychopathy in five words.