Posts Tagged ‘QE’

European Politics: Wall Street Servant

January 23, 2015

European Politicians Did What Washington & Wall Street Said, As the Obsequious Butlers They Are:  

Europe is made of small nations which feel independent of each other, an entertaining madness. But its corrupt elite has only one master, body and soul, and it’s on the other side of the Atlantic, where the strongest nation rules (the world, mostly through the meek minds of their butlers anxious to please).

EUROPE WILL GIVE BANKERS MORE MONEY, JUST AS IN THE USA:

The European Central Bank will enable member central banks to buy a trillion euros/dollars of assets owned by banks (sovereign, that is, government bonds, mostly). This is called “Quantitative Easing” (QE).

QE buys assets held by banks, to make banks richer. Supposedly credit will then be easier to have for the little guys. The idea is that then everybody will feel richer, when bankers feel better and wealthier. A happy banker is the greatest gift.

We are fully in the logic, and mood, that bankers, and their delicate psyche, make the world turn around.

Make no mistake, as Obama would say: we are still in democracy. Proof? Common citizens are not asked to kneel when bankers pass by on their way to private jets. At least, not yet. What the Commons are asked to believe is that bankers will become interested by their miserable, unworthy, low class plight. Instead of having the bankers send all the money they manage and command, most of the money in the world, to fiscal heavens, financial derivatives, dark pools, and giant above the ground plots, like the Davos World Economic Forum. It is entirely their right, for bankers to provide money wherever they want, to whoever they want, as bankers created the world, and thousands of pet politicians, besides.

This is so true that French president Hollande went to Davos to beg the high financiers to stop financing terrorist networks. It is like asking crocodiles to stop taking care of their young. The financial saurians neither understand what the French are talking about, nor care to, as all they know is biting and gulping furiously.

What QE does, is to remove from bankers the excuse that they do not have enough money. Don’t laugh: bankers own everything, including the notion of seriousness. That’s why satire is not welcome in the USA.

Europe is following the USA, which started an enormous QE as Obama got to power… While preaching austerity, and accusing Europeans to be big spenders addicted to state insured health care (instead of the wonderfully profitable Obamacare).

The same as in the USA, giving bankers money, was done in Great Britain (and that’s why interest on UK’ long bonds are thrice those of France).

By comparison to what the European Central Bank (ECB) is going to do, the TARP inspector in the USA claimed that the Fed provided eight trillions of QE (the Fed says it owns 4 trillion dollars of USA government bonds from the Treasury of the USA… to which it returns billions of interest).

Krugman criticizes Europe to have been “Too Responsible”: “The United States and Europe have a lot in common. Both are multicultural and democratic; both are immensely wealthy; both possess currencies with global reach. Both, unfortunately, experienced giant housing and credit bubbles between 2000 and 2007, and suffered painful slumps when the bubbles burst.

Since then, however, policy on the two sides of the Atlantic has diverged. In one great economy, officials have shown a stern commitment to fiscal and monetary virtue, making strenuous efforts to balance budgets while remaining vigilant against inflation. In the other, not so much.

And the difference in attitudes is the main reason the two economies are now on such different paths. Spendthrift, loose-money America is experiencing a solid recovery … Meanwhile, virtuous Europe is sinking ever deeper into deflationary quicksand; everyone hopes that the new monetary measures announced Thursday will break the downward spiral, but nobody I know really expects them to be enough.”

Neither did the ECB chief, who said exactly that. Clearly, Europe did not create enough money.

Krugman did not explain why, and how, the difference arose, and he is silly to believe that the economy of the USA is now growing at a 5% just because its bankers are bathing in money. Economist are often one trick donkeys, but here Krugman overlooks the obvious: look at the price of energy, look at the tax heaven status of the USA, look at USA monopolies.

EUROPEAN LEADERS ARE SERVANTS OF THE GREAT WALL STREET SPIRIT:

The question is why did American politicians and European politicians behave so differently from each other?

The reason is simple: American politicians are masters, European politicians are servants, or, at best butlers, of the former (Jean-Claude Juncker being an example of the latter sort).

Nowadays, a politician is a professional employed by wealth. She, or he, is like a bookmaker, somebody who takes bets. In this case, the bets are on those policies who will benefit most those who have the money, that is, the power. It’s a delicate thing, made of polls, lies, and taking orders from wealth.

That was completely obvious in France: the ex-fascist, Mitterrand, ran for president on a socialist-communist platform. Once that did not work too well, the Vichysto-resistant president went on a Wall Street compatible program, and France has never looked back since (with disastrous consequences).

Now they teach five year old French children how to do banking (at least my daughter explained that last week). Hey, I guess, she can become a banker too, and get money for nothing. If not that, she can turn to Islamophilia, and make a career talking about big, bad French imperialism, until Wall Street proposes her a job. But I digress…

If France fell in that high finance trap, money for nothing thanks to friendly bankers, you can be sure the rest of Europe did even worse. (Don’t roll out Germany as an example of probity: the success of its expensive cars, I drive one, and its machine tools export was greatly obtained by paying workers salaries as low as one euro an hour… This has just been corrected.)

WE PLUTOCRATS RULE HELL:

The most powerful nation, the USA, is ruthlessly led by its plutocracy. The bubble of 2008 transferred massive winnings from bets by some plutocrats against their peers and against giant money center banks which were public in two ways: on the stock exchanges, and, more importantly, as the organizations in charge of creating most of the money (through the extension of credit).

The bubbles popped. The financial system, throughout the world, was bankrupt. To fix it, the Central Banks enabled the creation of massive new credit (=money), by lowering interest rates to zero. The money center banks were then free to re-enact their previous act, and re-invest massively in financial derivatives, same as before, but now even more.

True, Obama dispersed a few hundred billions of “stimulus”. Much more money went from the Fed to the money center banks, trillions of dollars of it. One started, just as before.

A lot of the wealth of the USA comes from fracking (a gift from god), Wall Street conspiracies, and worldwide tax dodging by giant USA monopolies, all of this with the complicity of the world’s most powerful capitals, Washington and New York.

By pretending otherwise, attributing all the economic splendor of the USA to the wisdom of QE, Krugman is promoting the myth, and the banker.

THE EUROPEAN ELITE IS CORRUPT:

If not corrupt as far as getting money directly (but it does: watch the number of EC commissioners who ended in fancy Wall Street employ), its mind is sure corrupt (they all want to be employed by Wall Street; by the way, lots of French president got lots of money, and not just directly from Wall Street, or the like; an example was torrents of money from Hariri, a Lebanese-Saudi businessman, later exploded by Hezbollah).

Is the European elite culprit? Sure. It was bought into the mood, and money, coming from the USA. So it saw nothing, it wanted to see nothing.

So the European elite saw nothing that what was going on. It did not see the more than 100 billion of tax dodging by USA corporations, through Luxembourg alone. It did not want to see it, so it did not see it. The European elite did not see the Euro which was too high, way too high, maybe twice the vale it deserved against the dollar.

The European elite did not see the cutting of the science budget in Greece by 75%, and the like. The European elite did not see the young people deprived of education, of jobs, of future, of money… The European elite did not want to see European discoveries exploited in Silicon Valley and coming back as tax dodging monopolies. The European elite did not want to see that European energy became twice more expensive than it is in China, or the USA.

All what the European elite has been doing, for 35 years, is to please plutocracy (also known as “liberalism”). Plutocracy central is based in the USA, in the most powerful nation. Thus, in a way, Europe is paying the price of not being master of its own destiny, because, naturally, its elite politicians go to serve the richest masters, with the biggest army, and those are based in the USA.

(The USA’s wealth has much to do with being the owner of a giant expanse of temperate real estate, immensely rich in all ways; it’s not all about today’s conspiracies.)

So the USA got the best policy, not because the Americans are the smartest, but because they are the masters.

The Europeans are “much too responsible”, because they are, fundamentally, servants, and servants have to be responsible. Servants of their masters in the USA, one rung below the servants there.

Will Europe revolt?

Maybe it will. Maybe it will wake up from its Wall Streetophilia, Washingtonophilia, Islamophilia, and Europhobia, which has masochistically affected it al too long.

The satirical, thus critical, core of Europe is France, and France got a number of jolts. The last of which left not just the president of the USA pretty cool, but even officially disingenuously spiteful of Europe’s alleged lack of inclusivity.

The French Republic is under attack, and maybe it is what it will take. France, with her welfare state, under attack, may remember who created Al Qaeda. France may remember that Wall Street and other vast chunks of USA plutocracy are not her friends… Ever since they financed Hitler in the 1920s and 1930s. Or even before that.

The adviser of president Wilson proposed an alliance to the Kaiser on June 1, 1914; said alliance was crucial to said Kaiser, in the first three year of the war. That such facts are not in Franco-British (or German!) history books is very telling. It means official history has a Washington bias. (Sponsored by the same people who brought you Islamophilia, and decry European colonialism! Never mind that Europe’s largest colony is the USA itself!)

France told the European Commission (EC) that she will disregard the deficit limits (as the UK, did, long ago, by the way). Now the EC says it’s a great idea.

Bring the Euro down to 80 cents on the dollar, or lower. Institute deficit spending… until interest rates climb back up (they are down to nearly one half of one percent in France, negative in Switzerland). Rearm. Yes, rearm. That’s where hope lays. Following the poisonous, Trojan Horse advice from Washington, for Europe to lay on her back and present her soft belly, is only the path to gloom and doom.

And please do not restrict the financing of Europe to QE, Wall Street style. American corporations ought to pay tax, effective immediately. Just sequester 10% of their revenues, and, if they don’t like it, they can go back where they come from. Arresting all the high financiers who finance terrorists would be also helpful. One should put them in the same quarters as the Salafists: they could preach to each other their versions of hell on Earth.

Patrice Ayme’

Krugman’s Ignominious Retreat on Quantitative Easing

December 20, 2014

In the 1980’s Paul Krugman worked at the White House under Reagan. In later decades, he somewhat mysteriously acquired a left wing reputation for what he wrote (in particular for daring to oppose the Iraq War; that, in 2003, qualified you as far out leftist). Naturally, after he got the Nobel Prize in Economics, his colossal reputation gave him great influence in the Obama administration.

Krugman gave the advice to institute a massive “Quantitative Easing”. In this the Central Bank (“Fed” in the USA) buys assets held by the largest banks (so a branch of government, the Central Bank, buys something sold by another branch of government, Government Bonds, and held by others, supposedly private parties, large banks; it’s all very absurd).

The USA and the EU engaged in trillions of Quantitative Easing.

Result?

More plutocracy than ever, as I had anticipated, more than 6 years ago by calling TARP (the lending of nearly a trillion dollars to the largest banks), Transfer of Assets to the Richest People

Increasing the money supply to banks is not increasing the money supply to people. Especially with the derivative trading being 12 times world’s GDP. So no wonder QE does not work: most of the financial activity is not about financing the real economy, but the big banks casino.

Under the last part of his reign, when Clinton demolished the Banking Act of 1933, FDR’s great work, financial derivatives trading was only 80 trillion dollars. Now it’s 800 trillions. A weakening of rules in effect only weeks ago, written by Citigroup, is now the new law…

People need money and they need work. The government is the lender, and employer, of last resort. When things go back to normal, the government can withdraw. Cyrus the great, founder of Achaemenid Persia used the government, and then, wild private capitalism: there is a time for either. Now we are at a time where governments need to provide with an economy for common people, not just an economy for fat cats.

Absent the will to do this renewal of economic activity in a civil way, the military option will show its ugly face… Yes, could start in Russia… Wait…

Here is Krugman:

“Money isn’t everything… Well, the money supply isn’t everything, either.

… I argued that it’s hard to see why anyone believes that money supply increases will do the trick after the past six years. … maybe describing my own conversion to monetary pessimism may help clarify what’s happening now. 

So, back in 1998 I was looking at Japan’s troubles, and — like Evans-Pritchard and many others now — believed that the Bank of Japan could surely end deflation if it really tried… doubling the monetary base will always raise prices, even if you’re at the zero lower bound… To my own surprise… when you’re at the zero lower bound, the size of the current money supply does not matter at all. You might think that it’s a fundamental insight that doubling the money supply will eventually double the price level, but … short-term interest rate is currently zero, changing the current money supply without … raising expected inflation — matters not at all.

And as a result, monetary traction is far from obvious. Central banks can change the monetary base now, but can they commit not to undo the expansion in the future, when inflation rises? …

But, asks Evans-Pritchard, what if the central bank simply gives households money? Well, that is, as he notes, really fiscal policy — it’s a massive transfer program rather than a conventional monetary operation… it would have no effect … households would know that future taxes will have to rise to pay for today’s gift, and save all of it.

[How silly and wealthy can Krugman be? Really poor people have no money… And very good things to spend it on, should they have any. All poor people know that, but Krugman never interviewed any of them, apparently. If the government gave the poor money, they would spend it right away. It’s actually a well-known fact that all the money given to the poor is immediately recycled in the economy!]

More Krugman:

“… Central banks aren’t in the business of just giving money away; what they do is always some kind of asset swap, in which they buy assets or make loans which then become assets. I’m pretty sure that neither the Fed nor the Bank of England has the legal right to just give money away as opposed to lending it out; if I’m wrong about this, put me down for $10 million, OK?”

Still, isn’t this just theory? Well, no. Huge increases in the monetary base in previous liquidity trap episodes had no visible effect.

And now we have the post-2008 experience, and it’s certainly not an example of central banks easily dealing with economic downdrafts.

Just to be clear, I have supported QE in both Britain and the US, on the grounds that (a) central bank purchases of longer-term and riskier assets may help and can’t hurt, and (b) given political paralysis in the US and the dominance of bad macroeconomic thinking in the UK, it’s all we’ve got. But the view I used to hold before 1998 — that central banks can always cause inflation if they really want to — just doesn’t hold up, theoretically or empirically.”

So Krugman supported Quantitative Easing for the same reason as a drunk searches for his keys below a lamp post: it’s the only thing he sees. How smart is this?

As I said, the state will have to be the employer of last resort, it has always been, and always will be. The free market is great, but it’s not really free; the state pays for it.

Patrice Ayme’

Krugman Rising From The Deep

October 31, 2014

Nowadays, I rarely bother to criticize, let alone advise, Obama (OK, I did it on Syria).

The One has become insignificant, it does not matter what he thinks, supposing he thinks at all. (Chuck Hagel, the Defense Secretary just called the policy of the USA in Syria strategically compromised, long term, as it profits the other enemy of civilization, Assad. Hagel is right. Attacking ISIL without taking out Assad is unbalanced. I am sure another Christain, or Druze strongman can be found.)

Soon the entire Congress will be Republican, and the Obama groupies will wonder what happened. Well, they have only themselves, and their reveling, to blame.

What happened is that, while Obama adulators were celebrating, when Obama became president he got surrounded by a thick cloud of plutocrats and their servants. Thus all Obama’s policies were all plutocratic, including (most of) Obamacare.

Unfortunately, the so called “Democrats” were not brainy enough to realize this. They believed that their beige hero would save them all. And, besides, superman like, find a solution to everything.

And, even if “Democrats” had brains, they had neither theory, nor a plan on how to handle the world.

The same problem has arisen with Clinton, Bill, earlier, and with the dimwits of the Socialist Party in power (supposedly) in France: no progress whatsoever.

I can’t reproach right wingers such as Cameron, or Merkel to be right wing. Even Abe in Japan does what he said he would do.

But the left, in Europe and the rest of the West has long been derelict.

Why? How? Lack of correct ideas. They did not think it through.

The best Krugman could suggest, for years, was more money for kleptocratic banks (“QE”), or devaluation (as Abe is doing in Japan). Fortunately, at last, Krugman is changing. As he is the most followed political economist in the world, it matters. Polls in Europe showed that the (Ex(?)-Europhobic Krugman) is the most trusted voice… On the left!

Then, of course, it all makes sense: if Krugman, the most trusted voice on the left, was actually on the right, or nowhere in particular, then no wonder the left was a right, and civilization got off the rails.

Krugman is realizing, slowly, that the debate has been framed by the plutocracy, especially about the lack of investments.

So now Krugman realizes that he and his kind (ex-Fed chief Bernanke) owe apologies to Japan. Says he:

TOKYO — For almost two decades, Japan has been held up as a cautionary tale, an object lesson on how not to run an advanced economy. After all, the island nation is the rising superpower that stumbled. One day, it seemed, it was on the road to high-tech domination of the world economy; the next it was suffering from seemingly endless stagnation and deflation. And Western economists were scathing in their criticisms of Japanese policy.

I was one of those critics; Ben Bernanke, who went on to become chairman of the Federal Reserve, was another. And these days, I often find myself thinking that we ought to apologize.”

Well, indeed, you should: to keep its economy up, the Japanese government engaged in a gigantic effort (its debt is now 240% of GDP… Slightly more than the 90% of Britain or France).

And Krugman to diagnose: “… the West has, in fact, fallen into a slump similar to Japan’s — but worse. And that wasn’t supposed to happen. In the 1990s, we assumed that if the United States or Western Europe found themselves facing anything like Japan’s problems, we would respond much more effectively than the Japanese had. But we didn’t, even though we had Japan’s experience to guide us. On the contrary, Western policies since 2008 have been so inadequate if not actively counterproductive that Japan’s failings seem minor in comparison. And Western workers have experienced a level of suffering that Japan has managed to avoid.”

If it were only workers! Grandmothers and everybody not a banker or hedge fund managers also suffered from Quantitative Easing (which brought savings’ interest down to zero).

So what happened? Krugman again:

”What policy failures am I talking about? Start with government spending. Everyone knows that in the early 1990s Japan tried to boost its economy with a surge in public investment; it’s less well-known that public investment fell rapidly after 1996 even as the government raised taxes, undermining progress toward recovery. This was a big mistake, but it pales by comparison with Europe’s hugely destructive austerity policies, or the collapse in infrastructure spending in the United States after 2010. Japanese fiscal policy didn’t do enough to help growth; Western fiscal policy actively destroyed growth.”

And Krugman to evoke the austerity mistake even in Sweden, and to conclude:

“I’ll be writing more soon about what’s happening in Japan now, and the new lessons the West should be learning. For now, here’s what you should know: Japan used to be a cautionary tale, but the rest of us have messed up so badly that it almost looks like a role model instead.”

I added the following in a comment:

The case of Japan is special: it has collapsing demographics, not compensated, as it is in many Western countries, by a vigorous immigration. Japan also has no indigenous energy to speak of (even its nuclear waste recycling long depended upon France).

It was long obvious to yours truly, that the conditions we are in are worse than in 1930s. The Great Depression of the 1930s happened mostly accidentally; it was a succession of obvious mistakes: a boom, followed by a crash, made worse by a tariffs war, leading to industrial shrinkage, and a liquidation of banks.

Nowadays, it’s different: the planet is crashing, a more serious problem. This could be stopped, but for that the general mindset would have to be different. However, said mindset is constructed by an ever more powerful plutocracy, a few hundred individuals who order the world around.

In particular, the plutocratic mindset has seized the financial sector and the government. The former does not need the public to make money: the financial sector has tricks such as Quantitative Easing up its sleeve, boosted by the continual authorization for banks to cooperate with, or engage in financial piracy.

The latter, the government, refuses to engage in massive public investment, from top notch free public schools, to massive infrastructure to massive public healthcare (if you brandish Obamacare, contemplate its deductibles). Simply because, as a proximal reason, if government goons hold that line, cushy jobs are for them to take when they come out of government.

The way it connects with the financial pirates is simple: money creation is a zero sum game, when pushed to the max. If more money went to the real economy, it would be as much not going to the financial pirates.

Krugman, and his eminent colleagues have not understood this yet, that all the money created for financial thugs, is as much not going for vaccine research, schools, bridges, healthcare, etc. Hopefully, they will, some day. Before that day, do not expect progressive polices to bear fruit, or, even, to exist.

The media, everywhere, is little better than FOX News: it’s a giant propaganda machine which has interest to make the rich richer, and the poor, stupider.

Plutocracy is the metastatic cancer which has invaded, paralyzed all the minds. Before a stunted economy, and decaying society, we are confronted to decomposed minds. And mostly on the left. The right, at least, the plutocratic right, knows how to take care of its own.

Patrice Ayme’

Central Banking

October 9, 2013

What does a Central Bank do?

Plots with plutocrats. Plutoplots. Especially in the USA, where major plutocrats are Central Banks directors (and also private bank directors).

Seriously, Central Banks regulate the financial system and, thus, a large part of the broader economy. That means that the financial system is a public system masquerading as a private system (privateering system?)

Think of a financial system as an engine. The Central Bank (“Fed” in the USA, ECB in Europe) controls how much fuel there is, by manipulating its price. The Central Bank is also supposed to dictate the permissible uses of fuel. That latter mission has been completely forgotten under Clinton, the great demoncrat, that’s why plutocrats lov him.

Historically the Fed’s mandate was made very precise in 1979: “to maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.”

What are interest rates in this engine?

The fuel of the financial system is money (generally under the form of credit). Central bank control interest rates, and those fix the price of money. The central bank raises and lowers the interest rates it charges banks when giving them money. When the central bank wants to slow down economic activity, it raises those interest rates, increasing the cost of borrowing money. Banks pass the augmentation to individuals and businesses: the latter borrow less and spend less, and economic activity slows down. When the central bank wants to stimulate the economy, it lowers interest rates.

So what happened under Fed Chair Greenspan?

In 1996, Greenspan said there was a bubble (some indicators were as bad as in 1929). However he refused to increase interest rates, because he claimed bubbles were self correcting (he read it in Ayn Rand). Yet when a fund of his friends crashed in 1998, Long Term Capital Management, he intervened (by giving enough money to friends in big banks to save his friends at LTCM and those in business with LTCM).

So Greenspan kept on piling up the fuel?

Worse than that. Under Rubin, Greenspan, Summers, in the 1990s, their boy Clinton allowed fuel to be freely used by the biggest banks to do things having nothing to do with the Fed’s mandate. Like setting fire to the entire economy and society, and then cashing in on the insurance.

Why did they allow this?

Because  the sums engaged, about ten times world GDP, or more, allowed outsize profits. They, their friends, families, and acquaintances, all made like bandits. Still do: dark pools are bigger than ever, and increase ever more every year.

After he retired, president Truman lived nearly at the poverty level. When asked why he would not cash in, he replied that he did not want to soil the office of the presidency. Compare with Clinton.

What’s your remedy?

I will come back to that. Outlaw all and any financial investment that does not benefit the economy directly (except for insurance, and some very restricted commercial derivatives, with sharp distinction between commercial operators and casino players).

Why hasn’t the Fed made larger cuts to consumer interest rates?

Because the financial system is run for profit. Lots of profits. and the financial, for profit system, is supposed to run the economies of the USA, and the EU.

That’s why some European Commissioners (Otto Rehn) are blue in the face at France for running an important socialist, not for profit economy. I mean, they are paid to be upset. When they come out of their stint at the European Commission, they expect a job at the like of Goldman Sachs.

Even Krugman has finally understood what they were up to, and condemned Rehn vigorously for the hypocrite he is; France is being attacked because it’s too much of a Republic, not enough of a plutocracy! (Basically Krugman dared to say this.)

Is the Fed powerless to reduce those consumer rates further?

There is what the central banks say they can do, and the reality that some of what they can do, they don’t even want to talk about. The Fed and the ECB have tried to distract us by a pair of novel strategies to drag consumer and business rates down. So they say.

One strategy is called Quantitative Easing (QE). The Fed has purchased more than $4 trillion in Treasury securities and mortgage-backed securities since 2008, driving up prices as investors compete for the diminished pool of available securities.

When investors pay a higher price for a bond, they accept a lower interest rate from the borrower. So the Fed’s purchases have helped to reduce the interest rates paid by the government and by home buyers. The Fed claims other interest rates are driven down, but that’s controversial.

Another campaign is called forward guidance. One reason for higher interest rates on long-term loans is uncertainty about the future level of short-term rates. The Fed has sought to decrease this uncertainty by declaring it intends to keep short-term rates near zero as long as the U2 unemployment rate remains above 6.5 percent.

Experts sing that these efforts have helped (at least a little). But, of course, this is all a sick joke.

Before you explain why it’s a joke, shouldn’t the Fed be worried about inflation?

Right now the problem is threatening deflation. All over.

Fed officials think they’ve got a clever new tool to prevent inflation. The money spent on bond purchases is credited to banks, but it is kept in accounts held by the Fed. The Fed recently started to pay interest on those accounts, giving banks an incentive to leave the money with the Fed. If the economy started to inflate, Fed officials say they can keep a lid by paying the banks higher interest rates to leave the money at the Fed.

In other words the fat cats of the biggest banks will keep on making ever more money.

President Obama said he wants no more asset bubbles like the housing bubble that caused the financial crisis. How?

Before the lamentable Greenspan, and since the bubble of the 1920s, that led to the 1929 crash, preventing bubbles used to be the Fed’s main job. As a Fed chief said generations ago, “by taking out the punch bowl when the party gets going“. This is done by rising interest rates. Volcker, named by Carter, brought interest rates up to 23.5%. That killed inflation (and the economy).

Under Clinton, the corruptocrats connected to the plutocracy claimed that there were no bubbles, on the grounds that the price of an open-market transaction is perfect by definition. If they had eyes to see, they could have observed there is no free market, just a rigged market. Others simply denied that the Fed could identify or pop bubbles. Both imbecile statements.

Why did you say that the ways presently used by central banks to decrease interest rates were a joke?

The Greater Depression started in 2007-2008 has been triggered by a crisis of banking caused by the unsupervised power of the abusers of the fractional reserve system: central banks give money to private bankers, and the latter lend 30 times that to… their friends. This happened in several ways: USA subprime, derivatives (especially swaps), European investment in continent size corruption, etc.

For example those banks could be British, French, German, and the corrupt friends could be Southern Europeans, and other Irish. When the whole castle of speculation crashed, European governments were asked to save the banks on the front lines, crashing their own governmental finances.

The rest of society was left holding the bag, while the plutocrats are dining on caviar in their castles. Instead the plutocrats ought to have been expropriated, and the castles put for sale.

A beautiful example is Greece. All the aid programs to Greece, as I have said forever, were mostly aid programs to big Northern European banks. Said programs were paid by the Public (all over Europe). The International Monetary Fund just recognized this was debated secretly inside the IMF (October 2013!).

Most of the  money created by QE goes into the derivatives business and other shadow banking and associated dark pools. It does not go to the real economy.

Thus not enough money is available to the real economy, that’s why interest rates are still high, and part of the reason QE ends up just as a subsidy to the worst financial pirates. The financial fuel goes into burning the house down, not the cooking stove.

Hence the importance of nominating Janet Yellen chief of the Fed. If she is nominated, I will explain why.

***

Patrice Ayme