Central banks expanding their reach

October 3, 2012 by · Leave a Comment
Filed under: Opinion 

I want to start my dialogue with this quote:

We’re at the dawn of a revolution in central banking, in which the likes of the Bank of Canada, the U.S. Federal Reserve Board, and eventually the European Central Bank (ECB) will exert more influence over the global economy than government, business or consumers.

That is really a scary thought but still a true statement and is becoming more of a reality by the day.  Central banking does sit at the apex of our economy and through their different programs and levers, that affect basically every person on the planet. 

The problem I have is that was not the deal we made in America when we were fed up with Monarchical rule from England and decide to revolt against the foreign ruler.   Now we have another entity trying to sit on the throne and because our representatives can not make the hard choices and risk being unelected, they give that new throne more power by the day.  What I mean is by us giving more and more entitlements to our people without the means to pay for them, we RELY on outside financing to fill the gap by issuing IOUs (Treasuries).  This gives them a claim and that give power and influence to exert polices choices that may not be our own.

You may counter that the Federal Reserve and other central banking institutions are part of the government but the continual claim of needed independence allows them to make decisions on their own without the influence of the people.  This can not be discounted and popular rule is not such a bad thing with the proper checks & balances.

At the end of  the day, the people you elect go along with this system so until you will take time out of your day to go something that may not have a direct effect on your daily life, our representatives with continue to think they have the support and a mandate of the people.   Democracy is not easy and need participation to work effectively.  Somewhere we have missed this crucial point.  Enjoy the rest of the article.

The Star – It’s a quiet revolution. And it’s the inevitable consequence of our currently difficult times. If not for the near-collapse of the world financial system in 2008-09, and the seemingly intractable financial crisis in Europe, central bankers would have remained the unseen players who for decades devoted themselves mostly to controlling inflation.

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Fed’s Bullard says must shield Federal Reserve’s independence

June 30, 2009 by · 1 Comment
Filed under: Opinion 

This pains me to say but at the moment, Bullard is correct on this point.  With the Fed pursuing their policy of quantitative easing (print money), there is a real concern with foreign investors that hold significant U.S. bond holdings that an erosion of the Fed’s independence could be a sign that a more populist approach to this stage of the economic recession.  If the investors think the amount of money printing will increase to pay for more stimulus and bailouts then they will demand much higher yields and will increase the cost of imported goods which in turn will import inflation into the U.S.  Long term I do think the independence on the Federal Reserve will be eroded because they are not maintaining the normal policy central bankers use of “price stability”.

News (Reuters):

St. Louis Federal Reserve Bank President James Bullard said on Tuesday that public anger over the U.S. financial crisis and subsequent bailouts could cause big problems if this escalated into a political challenge to the independence of the U.S. central bank.

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Modern Money Mechanics Videos by Al Wagner CPA

October 22, 2008 by · 5 Comments
Filed under: Videos 

This was an interesting watch, I have read through the manual he mentions that shows the reader how we “create” money in our economy.  Here is a link to the manual “Modern Money Mechanics“, by the Federal Reserve Bank of Chicago.  It is quite peculiar that we create our curreny through the “Fractional Reserve Banking” along with “Central Banking“.  This is a very interesting subject that I will be exploring in more detail when I launch a new forum for this type of discussion.

Update (07/08/09): After noticing that this video on how money is brought into existence was so popular and out of no where the user pulled the video I took some time and found another hosted version of the video condensed into 70mins.  Enjoy!

Direct Link