Japan has been a 30+ year petri dish for central banks around the world to watch and learn from their monetary policies. And despite the fact that in that time the island economy has gone through five recessions, people have lost nearly all their purchasing power, central banks own over 50% of all market assets, and in 2016 have seen their sovereign debt now issued in negative rates, both the Fed and the European Central Bank (ECB) hail these policies as both successful, and ones that they are implementing themselves.
Yet even with the outcomes it appears that even these policies are not enough, as we have also seen central bankers and academics calling for a ban on cash throughout the world. And now the banks are preparing to reveal their full monty as the foundations are being set for direct ‘helicopter money’ to be given to the people just so they can spend it and try to sustain economies that no longer produce anything besides debt and Starbucks coffee.
Speaking overnight in Australia, the Fed‘s Loretta Mester said “helicopter money” could be considered to stimulate America’s economy if conventional monetary policy fails.
As Australia’s ABC reports, Mester, president of the Federal Reserve Bank of Cleveland and a member of the rate-setting Federal Open Market Committee (FOMC), signalled direct payments to households and businesses to stoke spending was an option if interest rate cuts and quantitative easing fail.
“We’re always assessing tools that we could use,” Mester told the ABC’s AM program. “In the US we’ve done quantitative easing and I think that’s proven to be useful.
“So it’s my view that [helicopter money] would be sort of the next step if we ever found ourselves in a situation where we wanted to be more accommodative.
Mester’s qualified support for the use of “helicopter money” comes amid expectations that the Bank of Japan is poised to unleash a major fiscal stimulus package of at least 10 trillion yen ($130 billion) to kickstart its flat-lining economy. – Zerohedge
It is no longer surprising that central banks like the Fed, ECB, or BOJ have completely thrown out their original mandates, and are proving themselves to be little more than shills for the banks and corporations who rely upon cheap money when they no longer can earn revenues through production and consumption. In fact, the bottom line mandates for nearly all central banks were to protect their sovereign currencies, contain inflation, and try to stimulate employment. And while central bank Presidents jawbone to the public these are their priorities, the results show that their real focus is directed towards propping up insolvent banks, feeding debt to government spending, and funneling wealth from the people directly into the hands of the 1% through the devaluation of currencies and price inflation in the general economy.
At this point central banks are no longer interested in fixing the root problems, otherwise they would consider such policies as global debt renegotiation, a currency reset, or a return to a precious metals based standard. No, to the incompetent and sometimes insane academics who run the world’s most powerful monetary systems, their myopic view is that if creating more debt doesn’t fix the problem, then the answer lies in doing more of the same until it eventually blows up and they stand around saying that they never saw the consequences coming that the rest of the world now must live with.
“This is a reason why the Board is getting an unfair rap on this stuff. We didn’t forecast better than anyone else; we regulated banks that got in trouble like anyone else. Could we have done better? Yes, if we could forecast better. But we can’t. This is why I’m very uncomfortable with the idea of a systemic regulator, because they can’t forecast better.” – Alan Greenspan
But obviously others could and did in 2008, and no one wanted to listen.
Is anyone listening today?
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com,Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.