Quotable
“If the great Government of the United States were a private corporation no bank would take its name on a piece of paper, because it has cynically repudiated the words engraved upon its bonds.” – Garet Garrett
IT’S OFFICIAL – CENTRAL BANKS ARE DEMIGODS
No, not because Warren “I never met a camera or young female reporter I didn’t like” Buffet says so. No, not because Nancy Pelosi or the other wealthy-class of President Obama’s supporters’ 401k plan proves the affirmative. Not even because Ben Bernanke has given Mr. Paul Krugman and Larry Summers everything they’ve hoped for, and more. But it’s because the banker for central banks—The Bank of International Settlements—has said so. [Effectively saying that CBs can create as much credit as they want; it really doesn’t matter because they will never go bankrupt—so don’t worry, they got your back.]
And we should all be very proud because “central banks gains and losses belong to society,” says the BIS. Funny though how those societal gains and losses are distributed isn’t it? Extremely steep yield curves and direct confiscation of wealth through taxation is heaped on “society” to cover the losses we guarantee. But the gains don’t seem to be distributed very evenly. I guess that is our destiny as Proles; as usual the spoils go loyal Party Members. America, ain’t it a great country!
It truly seems a tale of two economies…apologies to Mr. Dickens:
If the Central Bankers are true demigods, and doing such a “gutsy” job, as lead Party Member Warren “I never met a camera or young female reporter I didn’t like” Buffet says, why are the reserves being created not getting into the real economy where the Proles live?
• Monetary Velocity is at a new all-time low since record keeping began back in 1959 (the chart the upper right on the page above); proving Proles are worried about their future.
• Bank reserves surged again to a new record high while interests on deposits to the Proles remains in record low territory and Commercial & Industrial loans have still not surpassed where they were before the credit crunch.
The banking reserves have spiked higher yet again. If we are in the midst of a recovery, why should this be? I ran the numbers. Reserves to banks have increased over 2000% since the credit crunch. This is nothing less than stunning to me. This credit has leaked out indeed—to Party Members—who work and live in the financial economy and are compensated by increases in financial assets.
Could it just be my sour grapes for not being part of the Greenwich-cum-Street Crowd that has to make those weighty decisions each day: Should I buy a third yacht? And if so, how much longer should it be?
No matter. Be long or be wrong. There will be no pay back for this unbelievably stunning monetary dislocation and imbalance. It’s all good.
Jack Crooks Black Swan Capital
www.blackswantrading.com
info@blackswantrading.com
