quantitiveeasing     Acting responsibly with your money, saving it perhaps?

You sir/madam are an idiot; at least according to the Bank of Canada. “Why are you not out there spending money and making the economy grow?”, asks our benevolent Central Bank.  The temerity you have displayed (despicable saver!!), acting responsibly and not going credit debt wild is unacceptable. As a matter of fact, let’s punish you for your responsible fiscal behaviour.

My faithful readership by now is aware of the rambling nature of my commentary so I advise you to go to the CBC right now and watch the video about what I’m faffing on about before reading the rest of what I have to say.  This is some scary shite we are talking about today and it highlights precisely what is going wrong with our Western Democracies.  But before we get to that, lets get some quotes from the article and lay down a rough sketch to aid in understanding what “quantitative easing” is and how it is ruining your life.

“Every six weeks or so, they gather in Basel, Switzerland, for secret discussions and, to an extent at least, they act in concert.The decisions that emerge from those meetings affect the entire world. And yet the broad public has a dim understanding, if any, of the job they do.  In fact, these individuals now wield at least as much influence over the lives of ordinary citizens as prime ministers and presidents.”

Let me assure you that this is not Shadow Cabal Cranktastical Serendipity Territory straight up.  These people meet regularly and make policy in very ordinary hiding in plain sight sort of fashion.   Our central bankers meet and then robustly plan the future of the world economy…  no problems right?

“The tool they have used to change the world so profoundly is one they alone possess: creating money out of thin air.  There is an economic term for this: quantitative easing. More colloquially, it’s called printing money.  Since the great economic meltdown in 2008, these central bankers have probably saved the world’s economy from collapse, and dragged it into the unknown at the same time.”

I have trouble when the term “saving the world economy” means printing and then giving more money to the people who just finished wrecking the economy with hopes(!) that they would fix it and mend their avaricious ways (!!).

“Stock markets have risen on this tide of cheap money. So has real estate. So, arguably, has everything else.  But there are two big concerns with what this new central banker elite has done.  One is that no one really understands the consequences of pumping such vast amounts of money into the world economy. It’s already distorted the prices of certain assets, and some fear hyperinflation or market crashes are inevitable (the subject of tomorrow’s column).  The other is that it’s caused a massive shift in wealth, from savers to borrowers, and is taking money out of the pockets of almost everyone approaching or at retirement age.“

I did not see Quantitative Easing  in any of the party platforms in Canada.  People are deciding by fiat, who is going to win and who is going to lose.

“Probably the most painful of the consequences of quantitative easing has been borne by the elderly.  Most of that generation grew up believing that if you save and exercise prudence that you will earn at least a modest return on your hard-earned money to keep you comfortable in your old age, perhaps along with a pension.  But the money-printing orgy of the last five years looks to have shot that notion to smithereens.  Very deliberately, the central bankers have punished savers, pushing interest rates so low that any truly safe investment — and older people are always advised to play it safe — yields a negative return when inflation is factored in.”

So, the new economic paradigm is that investing or saving prudently is actively discouraged.  It is just me or does this seem like greasing the skids for a race to the bottom on a global scale?  Looking back to Canada we can see our Central Bank Mandarin preaching the value of the damage done to Canadians that have the audacity to save.

“As Canada has performed better than most Western nations, Carney has not ordered any new money printing.  But he has kept interest rates down, and that has fed the real estate booms over the last few years in Vancouver, Toronto, Calgary and elsewhere.  He scoffs at the suggestion that “the party” will end at some point. “I am not sure we are having a party right now,” he says. “It doesn’t feel like a party.”  And, in fact, he has repeatedly expressed concern at the huge debt levels Canadians are accruing, at least partly because of his low-rate policies.

 

But surely he understands the anger of an older person watching their savings being eroded, I ask him.

 

Carney smiles grimly. That question is clearly a sore point. He gets a lot of mail on the topic.  Canadians, he says, must understand that the alternative is massive unemployment and thousands of businesses going under, and “my experience with Canadians is that they tend to think about their neighbours and their children and more broadly … they care a little bit more than just about themselves.”

Seems like a lot of justification for keeping the “free market” afloat not to mention keeping the class that currently holds much of the wealth in the country protected and wealthy.

Being a citizen of the world I am rightly pissed off at the machinations going on because I wasn’t consulted.  The absence of the political class on the issue speaks volume to the primacy of the Central Banks in our economies today.  This sort of power without accountability is recipe for disaster.

Do note that when the money printing ends, the next bludgeon deployed is “Austerity”.   Greece and Spain are certainly thriving under the auspices of this particular policy, one wonders who is next?