STAFF NEWS & ANALYSIS
Faced With Central Bank Dysfunction, Media Focuses on Individuals, Not the System
By Daily Bell Staff - July 05, 2016

Raghuram Rajan: Why RBI needed more of him …  Finally, Prime Minister Narendra Modi spoke up to give outgoing RBI governor Raghuram Rajan a thumbs up. The endorsement that came a wee bit too late was welcome nevertheless …  – India.com

With economies worldwide in a mess, the mainstream media is increasingly concentrating on individual central bankers.

This is propaganda, of course.

Instead of having to deal with the failure of central banking as a system, the media can direct attention to individual central bankers and ask whether they are “up to the task.”

In fact, central banking is price fixing – of money. Price-fixing never works and eventual results in catastrophic failures.

By focusing on the individual in charge of a given central bank, the mainstream media redirects our attention.

We are supposed to stop wondering whether the system is a failure and instead try to figure out whether the individual running a given central bank is competent.

Rajan is a good example of this sort of approach.

Since he resigned, there have been a number of commentaries in the Indian and Western media expressing disappointment.

With his astute handling of the affairs, he helped modernize India’s central bank, controlled inflation, assured investors that India was a good place to put money and made banking sector more competent with introduction of more players.

His superlative performance at such a sensitive time is a snub for those who alleged that engineers and CAs can’t be good economists … It is not without reason that the World Bank chief has called India as bright spot in the otherwise morose world.

… As for the future, one can only hope that another equally competent person will take charge and keep the economy safe.  Raghuram Rajan’s parting line of communication about being “available to serve” the country gives us hope. Probably, we will see him back in some other influential position in the North Block!

This article, as we can see, has all the elements of central bank propaganda.

India’s economic performance was in the hands of one man. Since he has left, India must search out someone else just as competent.

If such competence is not to be discovered, than the Indian economy is in danger of slumping.

It is a clever equation. The onus is on the man not the structure.  We can see the same mechanics at work in a Reuters article focused on the Bank of England’s chief, Mark Carney.

Some … excoriated [Carney] before the June 23 referendum for warning of the economic risks of leaving. Their best bet now would be to woo him, rather than to undermine or dislodge him.

The central bank is a pillar of stability at a time of huge turmoil. Britain is in uncharted waters after voting to end its four-decade membership of the European club, and is politically rudderless to boot.

… To be fair, Boris Johnson, a leading campaigner for Britain to leave the EU … has already tried to mend fences. He said on June 26 Carney had done “a superb job” and that the central banker would be able to continue without coming under political fire now that the referendum was out of the way.

This is a high endorsement indeed. Carney is portrayed in the article as so important that he ought not to receive criticism.

If he is made to feel uncomfortable, he may depart before his “tentative 2018 departure date.”

Across the pond, Janet Yellen is subject to the same sort of treatment.

A US News and World Report post labeled her “The Most Important Person in 2016 – Forget the Presidential Candidates.”

The idea here is that Yellen would be responsible for raising rates or not and the US economy would either benefit considerably or suffer catastrophically as a result.

For all the hoopla and breathless coverage that’s sure to come, 2016’s most important political player won’t be on the campaign trail. She’ll be heading up America’s central bank.

…The question now for Yellen and the rest of the central bank’s board is what comes next. Its answer will not only determine the course of the U.S. economy, but could very well affect who steps into the Oval Office after President Barack Obama takes his leave.

Once again, we see the issue is not that Yellen has the power to influence a $4 trillion economy but whether or not she will use her enormous power well.

By making central bankers into “celebrities” and focusing on their decisions as if they were normal executives of normal companies, the mainstream media adeptly sidesteps the much larger question of how modern economies are organized and led.

Conclusion: When economies are in terrible shape as they are now, the personalities and competence of the individual central banker suddenly takes on new importance. The system itself must not come under fire at any cost.

Tagged with:
Posted in STAFF NEWS & ANALYSIS
  • Bruce C.

    Well, one could always ask, “Why do we have a system that depends so much on the competence of individuals? Isn’t that too risky? Maybe it would be better to let the markets handle such things?”

  • Praetor

    Yes, Janet Yellen most go, but our fiat empire will prevail, even until the end! As Keynes said, we are all dead in the end, and then there will be no more need for a fiat empire. And the need for Yellen’s and Rajan’s will have passed, also!!!

  • r2bzjudge

    “With economies worldwide in a mess, the mainstream media is increasingly concentrating on individual central bankers.

    This is propaganda, of course.”

    That is what the mainstream media do- propaganda.

  • alohajim

    What’s more pathetic, top level minions pretending to be human beings or the sad attempt of defending our system of long term institutionalized legal plunder by throwing a few puppets without a conscience under the bus?

    Central banking is not about price fixing. They are counterfeiters extraordinaire perpetuating an ongoing crime in progress with the result being nothing, anywhere, is ‘priced’ right. When the ‘money’ we are forced to use has zero intrinsic value, i.e., worthless, everything is mispriced.

    • The mechanism of the operation is a “price fix.” That’s a fact.

      • Doc

        What price do you mean is fixed?

        • The Fed operates a money monopoly that basically “fixes” short-term interest rates. And price fixes invariably end in disaster.

          • alohajim

            Sorry DB, respectfully disagree. Doc is asking the right question. Exactly what is being ‘fixed’? Only a real product or service can be ‘fixed’ in price. Price fixing does not apply to pure frauds. Bernie Madoff didn’t ‘fix’ prices, he stole from his clients. Central banking’s control and setting of short term interest rates is not a fraud or a crime, nor is it what central banking is all about, it’s simply as you said part of the ‘mechanism of the operation’. The crime and what they are all about is their creation of all currencies from nothing and charging the world ‘interest’ on it.

            Don’t take my word for it. Simply look around and ponder the various ‘prices’ for things in our world with a healthy dose of common sense. Everything’s mispriced because the money is fake, a complete fraud.

            The disaster is not the setting of interest rates, it’s the 24/7 theft of human labor by the folks that own the banks in conjunction with governments and corporations – their ‘enforcement’ and ‘business operations’ arms.

          • You have thought about the process a good deal. Thanks for responding. But the Fed is a monopoly issuer of credit and fixes the value and volume. The market is not allowed to function. It’s obvious.

          • Doc

            But if they had no monopoly, theywcouldn’t be able to manipulate the interest rates the way they do. I’d say the monopoly is the problem to focus on.

            Doesn’t alter the great point you want to make in this article though.

  • Pater Tenebrarum

    Carney has saddled Canada with the biggest debt and real estate bubble in the country’s history. The man is an outright danger to civilization.
    http://www.acting-man.com/?p=28004
    http://www.acting-man.com/?p=25626
    http://www.acting-man.com/?p=30623

loading