Those who don’t believe that the world’s biggest banks run the world need to think again! The world’s biggest banks own the world’s biggest central banks: the Federal Reserve, the European Central Bank, and the Bank of Japan. Of course, there is really only one central bank that counts and that would be the Federal Reserve. The heads of the ECB and the BOJ basically follow Ben Bernanke’s lead. It would appear that Bernanke, in his infinite wisdom, has decided that he is much smarter than anyone else. He has decided that the “free market” system isn’t good enough. He has decided that the central bankers should control the world’s economy (the global economy) rather than let the seven billion people who inhabit this planet to control the economy through their individual decisions on what to buy and what to sell. In other words, Mr. Bernanke does not believe in the natural law of supply and demand. He believes that he and his central banker friends in Europe and Japan can do a much better job of … what? Of protecting their owners, that’s what!
There is an unwritten law in the high finance world of Wall Street that says: Don’t bet against the Fed! Many a smart person believed that the Fed’s Zero Interest Rate Policy (ZIRP) and money printing, aka Quantitative Easing would destroy the dollar and so they, in order to protect their wealth, invested in gold. But, the central banks do not want any competition for their fiat currencies. Through ZIRP, they want people to invest in the stock market and not in precious metals. Those who bet against the Fed are getting hammered.
There is also a unwriten law for central bankers that says : Protect your bankers at all cost! But, sometimes the politicians get in the way of their betters. You may recall when Greece needed a bailout, the decision was made that the banks holding Greek bonds would take a major haircut. That is what created the banking crisis in Cyprus. They had invested heavily in Greek bonds. So, this time the banks had to be saved, And, as you recall, the banks of Cyprus were saved, more or less, by confiscating the deposits of the biggest depositors. That worked once because it was a surprise attack. Now the rich in countries like Spain and Italy and Portugal will be moving their money to Germany or other countries perceived to be safe. But cash money is not the only store of wealth. One can move money, but moving house or businesses or land is another matter. Zero Hedge fills us in on the latest plans for protecting the bakers:
… Germany’s Council of Economic Experts (or so-called ‘Five Wise Men’) just confirmed a wealth tax is coming. As the Telegraph reports, confirming our expectations, Germany warns that states in trouble must pay more for their own salvation, arguing that there is enough wealth in homes and private assets across the Mediterranean to cover bail-out costs. They further added that targeting deposit-holders is also a mistake, since the “resourceful rich just move their money to banks in northern Europe and avoid paying,” preferring instead taxes on property or other less-mobile assets, “for example, over the next 10 years, the rich should give up a portion of their assets.” As we noted here and here, the differences between mean and median wealth in the peripheral nations suggest that people in the bailed-out countries are often better-off than those in Germany – – “this shows that Germany has been right to take a tough line of euro rescue loans.” However, the implications of a wealth tax – implicitly impacting the pro-euro Southern European uber-rich – raises the specter of EU breakup once again.
Raises the specter of EU breakup once again?
Your humble observer here at Asylum Watch has no special knowledge on monetary policy. I am not an economist. But, somebody tell me when has central planning ever worked in the long-term? Why would central planning by central bankers be any different? There is an excellent article at Fox Business titled: All the Rage: Central Banking on Steroids Goes Global. The article is worth reading because it offers opinions from experts on both sides of the issue.
Me? I always bet against central planning. If you are in the stock market, you’re going to do fine, as long as, you get out before the Fed stops it QE and ZIRP. The EU breakup will be the tip of the iceberg, in my opinion.
Well, that’s what I’m thinking. What are your thoughts?