The Disease of Central Banking
By Staff News & Analysis - September 09, 2011

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.

After Thoughts

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.