Frightened Little Men
Does anyone in the world still think, REALLY think, that the central bankers who are supposed to keep economies healthy actually know what they’re doing?
Frightened Little Men
They meet to shape our daily lives,
It’s basics and its graces,
Our economic masters,
In near and distant places.
The media are reverent,
Let speakers posture, preach,
They know (we’re told) the many ways,
To keep good times in reach.
But as I watch them carefully,
I see what I have feared:
These masters of economies,
Are little men—and scared.
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If I was responsible for a $700 trillion dollar debt, I’d be scared spitless!
It is important to remember that central banks are operated first and foremost for the benefit of the banking and financial industry, not the country that the Central banks are in.
The Great Financial Crisis and Recession taught us a lot, at least if we care to listen. We learn yet again what we have been taught many times before, the financial markets do not self-regulate. There has to be external regulation or the financial markets will destroy themselves and seriously damage the real economy.
We learned that the financial industry expects the country’s tax payers to bail them out if they behave irresponsibly, providing the industry with an unfunded massive subsidy, but the financial industry is allowed to complain that the poor and unemployed are freeloaders and leeches. Anyone who points out this obvious hypocrisy is starting a class war.
We learned that central banks are limited in what they can do in a liquidity trap and that the nation should have some backup plans, preferably ones that kick in automatically to breakout of the trap.
We learned that the current set of economic policies that we have, known as neo-liberal economics, which are intended to spur capital investment and thereby spread prosperity throughout society by intentionally directing more and more of the nation’s income and wealth to the already wealthy actually only directs more of the nation’s wealth and income to the already wealthy and doesn’t spur investment and doesn’t spread prosperity to anyone in society except the already wealthy. And the already wealthy are willing to live with the policies’ limitations as is their favorite political party.
As much as I would hate to throw the financial sector a bone, one of the big issues seems to be that there is all this money the wealthy have, trillions and trillions of it, and because interest rates are so low, they don’t really have anywhere to put it to get any kind of a return. Now while this only fixes part of the problem, if we were to raise rates enough they wouldn’t need to shove all that money into these massive and risky credit default swap and derivative vehicles we’d take a big chunk of the volatility out of the market.