Central Banks Are In Trouble

Central banks are in trouble. The belief that a committee of academics can manage an economy is wilting as more and more question their role. The trillion euro quantitative easing and absurdly low and falling interest rates smack of desperate times and desperation.

The vast injection of make-believe money will act as a great boost to the make-believe economy noted in official statistics. The one-per cent will certainly add to their paper wealth. It will not help the real economy though – the one where businesses employ people to produce goods in the hope of making a profit. Quite the opposite.

According to ECB president Mario Draghi, the aim of the Euro QE is to create yearly price rises of 2% – central bank Nirvana. More money equals higher prices – just like what wasn’t achieved in the US and Japan.

It is not that individual central bankers are incompetent; it is that the very idea of central planning any aspect of an economy, particularly money supply and interest rates, is deeply flawed. Laissez faire.

Since 1913, the Federal Reserve Bank of the US has held sway over the world’s money, not only practically, but also intellectually. Its pronouncements have held the world’s bankers and media in thrall.

It has been broadly understood and accepted that it is through their central banks that governments manage ‘their’ economies. It is the principal source of the legitimacy of today’s hyper-regulatory governments. The simultaneous dawn of central banking and total control governments was no coincidence.

What happens when it becomes obvious that central planning of the whole sphere of money can be no more successful than the central planning of any other aspect of the marketplace?

What happens when the real problem, which is the debt, becomes too obvious to ignore and when people realise who created the debt?

What happens when the debt money system that the central banks birthed and guided and that now envelops the world collapses?Who can really be so giddily optimistic as to imagine that the answer will be just a depression?

It seems reasonable to surmise that not only central banks, but also the whole concept of governments managing economies will be discredited to a degree that is difficult to fathom right now. Oh, and Gold will be circulating again.


This is an excerpt from the Gold Standard Institute newsletter, authored by Philip Barton President. The Gold Standard Institute recently published Dawn Of Gold (hardcover).


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