When the Central bank is the top money-print lobbyist...
What is the main function of the Central bank? To keep the price stability. This is not just a whim of any ancient economist. This is a result of natural evolution of money management. Once upon a time there had no Central banks. The money was gold and silver and its value was based on the value of gold and silver. The paper money were invented later. As the paper has no its own value, it had to be granted by the government. First the guarantee was the gold in government's treasury. After that, the guarantee became the Central bank and the confidence in it.
Read more...Are the markets going crazy?
Today most of markets skyrocketed after the ECB Chairman Marion Draghi promised to do everything needed to save the Euro. He also added that high interest rates on government debts in Europe are a bad thing.
Read more...Spain: The poison of left thinking
The yield on Spanish debt surpassed 7,5%. At the same time some Spanish regions are preparing to request a government aid. I.e. to ask for more money from lacking it government. It is obvious that Spain will be the fifth country to ask for EU help, after Greece, Portugal, Ireland and Cyprus. It is not clear if the EU bailout funds will be enough for Spanish needs.
Read more...Who is the real Libor manipulator?
Will you save and keep money in bank in exchange for 0,25% annual interest?
Will you invest in government debt for 1-2% annual interest?
Will you invest in a de facto bankrupted debtor in exchange for 7% interest?
I can ask tens of such questions, but these 3 are enough to be asked at the current moment of exploding "libor-scandal" that is to decapitate some of the most important CEO-s in bank-world.
Why these 3 questions are important?
The answer is very simple - because they point to the real and most dangerous interest manipulator in last decades. A manipulator that is not under investigation. A manipulator that can manipulate absolutely legally and call this "policy".
A time to fire John Law from ECB
If you open Wikipedia on John Law page you can read the following:
"...Law proposed to stimulate industry by replacing gold with paper credit and then increasing the supply of credit, and to reduce the national debt by replacing it with shares in economic ventures. Though they failed, his theories ironically live on 300 years later and "captured many key conceptual points which are very much a part of modern monetary theorizing"...
Today almost all central banks of the developed countries operate on the principles formulated by John Law. But as we remember, Law's experiment caused one of the biggest financial catastrophes in history. So will the result today be different?
