ECB Warning: More Directed History

[mick silver]

http://www.thedailybell.com/images/library/Directed150.jpgECB Warning: More Directed History

By Staff Report - November 29, 2013

ECB warns of danger from Federal Reserve's policy shift US decision to scale back stimulus is a potential threat to euro zone economy, says European Central Bank ... The ECB said the risks to the eurozone's financial system from outside the currency bloc had grown since May. – The Irish Times
Dominant Social Theme: Central banks are not aligned. Chaos rises. A beast stalks Bethlehem.
Free-Market Analysis: Have you noticed the disarray? China is squaring off against Japan and the United States over some funny little islands. Israel is furious with the United States over an Iranian pact and may go to war. And now the ECB is facing off with the Fed over monetary easing.
All of the above are directed history at their finest, in our humble view. None of this is real.
What is China anyway? It is lines on a map. Same with Japan. There are no Japanese or Chinese per se. There is culture, perhaps race and then there are elite and powerful Chinese and Japanese families that want to keep power and manipulate military conflict and economic chaos to do so.



You can bet the topmost Chinese families and their assorted hanger-ons have more in common with top Chinese and Western families than they do with their own middle classes. Same with top Iranian families and also, of course, the central bankers that run monetary affairs for their masters.
The people who control central banks (http://www.thedailybell.com/definitions/params/id/2958/) are the masters. The rest are merely minions of the most wealthy, doing their bidding.
Do the topmost men of Japan and China care a whit about some empty islands? Nope. Do the topmost men of Iran and the Anglosphere (http://www.thedailybell.com/definitions/params/id/956/) care whether or not Iran has nuclear weapons? Nope. Everyone has them at this point, or almost everyone. The topmost men of Iran and the Anglosphere are interested in expanding and maintaining wealth.
The idea that the ECB (http://www.thedailybell.com/definitions/params/id/1857/) and the Fed (http://www.thedailybell.com/definitions/params/id/1855/) are going to begin to quarrel or pursue separate policies is a ludicrous one. Yet we are being asked to believe it:
The European Central Bank yesterday issued a warning of the threat posed by the scaling back of monetary stimulus in the US. It called on the currency bloc's policymakers to prepare for the ill effects of Federal Reserve tapering.
(http://www.thedailybell.com/books-by-anthony-wile/)
The ECB said in its latest financial stability report that the risks to the euro (http://www.thedailybell.com/definitions/params/id/28311/) zone's financial system from outside the currency bloc had grown since May on the back of the Federal Reserve's talk of tapering its $85 billion worth of monthly bond purchases, despite a general improvement in market conditions.
"Starting in May, there was a significant repricing in global bond markets, which took place largely because of changing monetary policy expectations in the United States – with increased foreign exchange market volatility and stress borne largely by emerging market economies," the ECB said.
The ECB warned that, while the euro zone's institutional investors were more exposed to bond markets than the region's lenders, it was difficult to know where the risks of ultimate losses were greatest.
... The ECB said weak bank profitability and persistent financial fragmentation still presented a threat to stability. Banking union would be "an important contribution" to resolving these hurdles.
This last statement is perhaps the most telling. These people never let a good crisis go to waste. Part of the point of the lingering EU (http://www.thedailybell.com/definitions/params/id/1891/) credit crunch is to create a necessity for a deeper union, monetarily and politically. ECB pols have said as much.
So it is certainly possible that it has been decided that the rhetoric surrounding the Fed's policies is to be notched up a bit along with some potential fallout. Who knows where the monetary fallout will come from or why? But it will certainly be attributed to Fed price fixing.
The goal of ECB bureaucrats is to further paste together the fraying EU and its even sicker euro currency. At this point, this policy is being pursued in direct defiance of EU citizens who have voted continuously, when they can, against a deeper union of any sort.
As for the US, those reading our recent articles know quite clearly that the intentions of the Fed and those setting its larger strategy do not include radical tightening or even tapering.
Just yesterday, we ran an article pointing out that others are coming around to our perspective that the Fed and those using the Fed for their own purposes have in mind creating a firestorm of higher averages. Dow 20,000 is their cry.
But one cannot manipulate markets outright in a visible way. One needs to disassemble and make monetary policy seem to be the product of various national interests. We know it is not, of course. Why do the top men meet in Switzerland at the BIS (http://www.thedailybell.com/definitions/params/id/1812/) every few weeks to coordinate monetary policy?
The operative word is coordinate. There are no rogue central banks. Everyone has a part to play. The idea that Fed bankers are diverging from ECB ones is fairly, well ... ludicrous.
These monetary quarrels, like more visible military ones, are for public consumption. Thanks to the Internet we and millions of others are able to see that now.

Conclusion

Here at The Daily Bell we will continue to try to divine the larger truth behind the curtain. We don't believe in the "interests" of nation-states anymore. We believe in directed history. We can see it at work every day.

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- See more at: http://www.thedailybell.com/news-analysis/34787/ECB-Warning-More-Directed-History/#sthash.EfqUBtO6.dpuf

[mick silver]

Central Banking The primary function of a central bank is supposedly to monitor and control a nation's money supply by either printing money, removing money or raising and lowering interest rates.
The modern central bank prints paper money (http://www.thedailybell.com/definitions/params/id/803/) divorced from an underlying asset, which means that the bank can print as much as it chooses. The first central bank was the Bank of Amsterdam, established in 1609. Almost 100 years later, the Bank of England (http://www.thedailybell.com/definitions/params/id/1860/) was created by Scottish businessman William Paterson in the City of London (http://www.thedailybell.com/definitions/params/id/1814/) at the request of the English government to help pay for war.
In the US, the Federal Reserve (http://www.thedailybell.com/definitions/params/id/1855/) was established in 1913. By 1935, the only significant independent nation without a central bank was Brazil, which today has one. Central banks are thus prevalent around the world, including Asia and China. China has a central bank, though unlike some central banks, the People's Bank of China is not considered independent of the State but is run by the Chinese Communist Party.
Whatever central banking was once, the idea is basically flawed. Human beings do not know how much money an economy needs. Only the free market can determine that.
Nonetheless, a host of socialist (http://www.thedailybell.com/definitions/params/id/1901/) and quasi-socialist economists have glorified the role of central banks and obscured the real reason for their invention. Perhaps the most brilliant of these central bank apologists is John Maynard Keynes (http://www.thedailybell.com/definitions/params/id/831/), himself a central banker, whose great economic tract, The General Theory of Employment, Interest and Money, advocated the use of both fiscal and monetary stimuli to make economies prosper.
With Keynes's help, government intervention through taxes and central bank policies became an accepted way of running economies.
In simplest terms, central banks inflate by creating money. The more money they create, the cheaper money becomes, and the less a government's debt becomes. By cheapening money, the government deprives individual citizens of part of the value of that money. As the value is eroded, the citizen becomes poorer, even if he or she doesn't notice it right away.
There are three often-mentioned ways for central banks to help stimulate or deflate the economy.
• One way is for the central bank to buy or sell Treasury IOUs.
• Another way, which was more popular in the 18th and 19th centuries, is to raise and lower the rates of the so-called discount window, the amount that the central bank charges to its member banks for short-term borrowing.
• The third way is to move short-term interest rates up or down.
The main manner in which central banks move the economy is by adding to or subtracting from the amount of money in circulation by buying or selling government bonds, as mentioned above.
Even raising short-term rates constitutes a kind of tax because when rates are raised, bonds can lose their value, and citizens holding onto bonds — especially longer bonds — can suddenly find themselves poorer by thousands of dollars as the market reacts to rate news.
While the manipulations of the central banking mechanism sound innocent enough, free-market economists (http://www.thedailybell.com/definitions/params/id/1918/) fervently blame almost every economic disaster of the last 500 years, with the exception of Tulipomania (http://www.thedailybell.com/definitions/params/id/2356/), on government intervention in the money supply or the marketplace.
Today, thanks to the Internet, central banks are under attack as never before. Their franchise provides the great central banking families with the funding they need to try to move the world toward global governance (http://www.thedailybell.com/definitions/params/id/2045/). Nothing in the world is what it seems today because of central banking and the monetary distortions that it causes.
The boom-bust cyclicality of modern economies can be laid directly at the feet of central banking, with its monetary stimulation, which first expands an economy and then contracts it when the expansion has gone too far. Thus, central banking is responsible for the manifold disasters that have overtaken the Western world in the past century at least.
Wars, industrial collapse, recessions and depressions can all be laid at the feet of central banking and the great families that insist on its ongoing implementation. In the age of the Internet Reformation (http://www.thedailybell.com/definitions/params/id/2195/), however, more and more people understand how central banking really works and the devastation it causes.
The 21st century may see a real conflict between a power elite (http://www.thedailybell.com/definitions/params/id/610/) that insists on a central banking model for the economy and millions, if not billions, who begin to demand free markets (http://www.thedailybell.com/definitions/params/id/1942/) and freer economies.

[mick silver]

Federal Reserve System The Federal Reserve System (the Fed) constitutes the central bank (http://www.thedailybell.com/definitions/params/id/2958/) of the United States. Created in secret in 1913, the Federal Reserve Act was passed by Congress in a controversial holiday session near Christmas of that year. Initially, the Fed was restricted by a relationship between currency and gold but there is a good deal of evidence that from the very beginning, the Fed was printing more money than it was legally allowed. The Great Depression (http://www.thedailybell.com/definitions/params/id/2305/) itself was likely set off by the Fed's overprinting of money and led ultimately to the abrogation of the gold standard (http://www.thedailybell.com/definitions/params/id/2453/), which has allowed the Fed, unfettered, to issue even more currency.
The Fed's main duties are to provide a level of employment while maintaining financial stability and low inflation. Of course, it is Fed money printing that is responsible for inflation in the first place and one could argue, generally, these goals are at cross-purposes. But when it comes to the Fed, logic seems to have little to do with its activities.
The Fed is composed of the Board of Governors (Board), the Federal Open Market Committee (FOMC) and 12 regional Federal Reserve Banks. Its membership includes numerous US member banks and councils. The FOMC sets monetary policy, or at least that's how it is supposed to work. In fact, the Fed chairman has enormous clout and virtually dictates Fed policy in the modern era. While the Fed's decisions do not have to be "ratified by the President or anyone else in the executive or legislative branch of government," according to the Fed, it has considerable congressional oversight and many of its top members are presidential appointees.
The government sets the salaries of the top people, as well, but in practice, little impedes the Fed. By some estimates, the Fed has dumped up to US$20 trillion or more into the world economy since the 2008 economic crisis. The Fed, it could be said, has virtually reliquified the dollar reserve system on its own, a feat so massively arrogant that many outside critics believe it cannot help but end badly.
The Fed under Ben Bernanke, the current chairman, is confident that it can "mop up" excess liquidity (though how one mops up US$20 trillion is questionable at best). More likely, the Fed – as all central banks do – will misjudge the advent of price inflation because the signals that indicate that price inflation has taken hold are all backward looking. In other words, by the time the Fed brain trust has figured out that price inflation has taken hold, it will be spread throughout the system making it difficult if not impossible to combat.
Because it is so obvious that the Fed has basically placed a ticking time bomb at the center of the world's economy, some have accused the Fed of intending to destroy the dollar reserve economic system on purpose. The logic is that the powers that be, the Anglo-American (http://www.thedailybell.com/definitions/params/id/956/) monetary elite (http://www.thedailybell.com/definitions/params/id/679/) that stands in the shadows behind the Fed, intend to replace the current system with a more globalized currency, perhaps run by the IMF (http://www.thedailybell.com/definitions/params/id/1823/). Using this logic leads one to the conclusion that the Fed is purposefully cooperating in its own demise and the demise of the currency it is supposed to protect and nurture.
In fact, such an outcome would be no surprise as the Fed has proven itself to be a vile manager of the US dollar, which has devalued by some 95 percent or more during the Fed's tenure. If the Fed is in fact putting itself out of business, it surely will not be missed. It has presided over the hollowing out of the American economy and the emphatic debasement of the currency via a series of disastrous booms and busts. There is almost nothing positive to say about the Fed except that its demise would surely be a blessing to the struggling, hard-working people of America who deserve better than this treacherous and deceitful organization.