Wednesday, March 06, 2013
Gentlemen, Start Your Presses
Many have dubbed the last decade or so to be an era of easy money. As it turns out, that characterization may have been premature. Based on the new crop of central bankers who are primed to take control of the world's financial system, the age of truly easy money may be just getting started.
Many expect that when Bernanke's term expires in January 2014, he will be succeeded by the dovish Yellen. But that's just the beginning. In short order, a host of serial money printers will take up the reins at the world's most important central banks .
In January of this year Canadian banker Mark Carney, a committed Keynesian , was selected to replace Mervyn King as the Governor of the Bank of England in July 2013. Despite a native population of some 63 million people to draw from, the UK's so-called Conservative government has now, for the first time in its history, selected a foreigner to run the Bank. At a salary of some $1,200,000 a year, he will be earning more than that of the heads of the Fed and the ECB combined. Undoubtedly, Carney can command such a salary because he can be relied upon to create synthetic Sterling along the lines of Bernanke. Already he is talking of increasing the UK's two percent upper inflation limit.
In a further effort to distort the value of money, the Deputy Director of the Bank of England, Paul Tucker, spoke recently of his idea to engineer negative interest rates. All this is to hold reality at bay.
Plagued by over a decade of economic stagnation, Japan has recently elected Shinzo Abe as prime minister, who has virtually promised the most expansionist monetary policy in the developed world. Shinzo made good on his campaign promises by selecting Mr. Haruhiko Kuroda as the next Governor of the Bank of Japan. He is yet another major Keynesian monetary expansionist in the Bernanke mold. The likelihood of extraordinary policy moves in Japan increased with the subsequent nomination of Kikuo Iwata for deputy governor. This week Mr. Iwata told legislators that he favors revisions to Japanese law that would require the Bank of Japan to achieve inflation targets set by the government, or face revocation of its charter. With a national debt already accounting for more than 200 percent of GDP, Japan is prepared to go into uncharted territory.
At the ECB, the well-known Keynesian monetary expansionist and creator of limitless synthetic euros, Mario Draghi , remains firmly ensconced in office. Indeed, he appears to be overcoming German-inspired austerity measures in the Eurozone. Further, the so-called 'Troika' of the International Monetary Fund , the European Commission and the ECB, appears to be retreating from its initial Germanic demands for economic austerity and stronger banks.
In retrospect, events of the past few months illustrate a serious spread of Bernanke's policies across the entire developed world. I believe that we are headed for a period of massive asset booms, followed by a debt and bank collapse of unprecedented ferocity.
John Browne is a Senior Economic Consultant to Euro Pacific Capital. John will be speaking and mixing together with the 200 other attendees who will be collectively examining individual solutions and other more organized ways of protecting like-minded thinkers' rights to person, exercise of faculty and property at FAFMT's unique Liberty Summit 2013 . Don't miss this summit, October 16-20 in beautiful Cape Breton, Nova Scotia. Space is very limited... Register now !
