As central banks gear up for new rounds of stimulus and QE, where they will be printing trillions of dollars out of thin air to buy every type of asset imaginable, a fascinating debate was forged on Sept. 12 by one of the world’s leading economist.
And the issue proposed by the analyst known as Dr. Doom is that should central banks move full bore into purchasing equities like has been done in Japan over the past few years, then at a certain point these private entities will own the majority shares of any and all corporations, making them able to impose policies on the companies themselves, and by default turn a capitalist economy into a socialist or even communist one.
Epoch Times: How long can the central banks manipulate markets?
Mr. Marc Faber: This is an issue that will be decided by central bankers and I don’t have control over the manipulation of central banks. Haruhiko Kuroda of the Bank of Japan (BoJ) expressed the view that there is no limit to monetary inflation. That they can keep on buying assets and they can keep on buying equities and real estate.
So the madness in the present time may go on. In a manipulated market, it won’t end well, but you don’t know when it will not end well, and how far the manipulation can last.
Epoch Times: And then at one point, the central banks own everything.
Mr. Faber: They could essentially monetize everything, and then you have state ownership. And through the central banking system, you introduce socialism and communism, which is state ownership of production and consumption. You would have that, yes, that they can do. - Epoch Times
In 2010 central banks began their uncharted policies of buying bonds and other securities from the banks, eventually leading to many of these institutions becoming the primary landlord in their respective country’s since many of these bonds were mortgage backed securities (MBS). And over the past six years this has lead to central banks buying government debt, corporate debt, and in the case of both Switzerland and Japan, stocks and other equities.
There is an old adage that goes, who is truly one’s master? The one who rules them, or the one who pays their salary? And as Thomas Jefferson once opined hundreds of years ago, “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…. I believe that banking institutions are more dangerous to our liberties than standing armies…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
And if the people and the government allow the central banks to implement their next phase of QE, then there may soon be few assets left that they do not own, and will become by proxy the masters of the American, European, and Japanese peoples.
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.