That central banks have saved us from a financial crisis is a myth. Central banks have caused our financial crises, not saved us from them. Central banks don’t serve people, or even societies. They serve banks.
In the past decade, central banks have purchased $20 to $50 trillion in bonds, securities and stocks to keep banks from failing, increase their profits and maintain the illusion that economies are healing and growing.
They achieve this by creating bubbles. Along with QE programs, they lowered interest rates to make borrowing money so cheap everyone could do it. It has worked miracles in blowing stock market valuations out of all realistic proportions, and in doing the same for housing markets all over the globe.
Today, the world’s central banks are stuck in their own bubbles. They talk about how they solved the issues, and how they will now return to normal, but the truth is, they can’t.
We have arrived at a dangerous point for the global economy. The world’s central bankers have an incentive to create the next crisis because it’s inevitable, and they know the banks risk suffering immensely, or even going under. Tapering will blow up bubbles one by one, and often in violent fashion.
The worst of it is not government debt; the big hit to economies will be private debt. In many bubble areas homeowners won’t be able to sell without being hit by crippling losses.
Another crisis lies in wait, and politics and media have made sure no one is aware of it. The world’s central bankers have an incentive to bring about the crisis, if only by sitting on their hands long enough.
Yellen, Draghi and Kuroda may leave before it happens, or be fired. Whoever is left will realize that unleashing a crisis sooner rather than later is the only option. They can say nobody saw it coming, while at the same time saving what they can for the banks. That option will not be on the table for much longer.
We should have never given them, let alone their member/master banks, the power to conjure up trillions out of nothing, and use that power as a political tool – but it is too late now.
The comments above are an edited and abridged synopsis of an article by Raul Ilargi Meijer
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