Osservatorio monetario di Cardinale Gardel

La Banca Centrale come gestione di un Cartello

Cari miei venticinque, a giudicare da tutte le mail che ricevo vi state nascondendo sotto molti alias per farvi beffe del vostro umile estensore. Fino a un paio di anni fa scrivevo su questo sito lunghi e ponderosi articoli sulla insostenibilità del Truffone e non ricevevo tanto feedback. Forse nel frattempo la Crisi ha reso le mie analisi più credibili all’osservatore medio. Bene, si sintonizzi esso lui allora: la Crisi è lungi dall’esser finita! Quelle istituzioni criminali chiamate Banche Centrali possono solo diluire la moneta esistente con altra moneta creata dal nulla a beneficio dei Soliti Noti, non possono creare vera prosperità sociale che deriva, come sempre, da risparmio, innovazione, libertà, creatività, concorrenza, moneta d’oro, difesa dei diritti di proprietà , stabilità demografica, non guerra, investimenti sostenibili dalla domanda reale del consumatore, libero scambio internazionale. La Banca Centrale ha solo il potere di creare numeri sull’attivo di bilancio delle banche in cambio di asset tossici. Metto di seguito una parte di un articolo di Gary North che lo spiega bene. Alla fine si presume che l’esito finale sarà mass-inflation!

THE FEDERAL RESERVE SYSTEM

     The Federal Reserve System is the enforcement arm of the

American banking system's cartel.  A good account of this was

written by the Austrian School economist, Murray Rothbard: "The

Federal Reserve as a Cartelization Device."  It is free:

            http://mises.org/books/cartelization.pdf

     The fundamental task of the Federal Reserve System is to

keep the largest banks solvent.  This has been its primary

purpose ever since its founding, which is why the largest banks

cooperated in its creation.  A good account of this is found in

Rothbard's book, "The Case Against the Fed."  It is free:

                 http://mises.org/books/fed.pdf

     The FED has the power to control entry into the banking

system.  Through its control over the monetary base, which is its

balance sheet, the FED can set the short-term interest rate at

which commercial banks lend to each other overnight.  This is

called the federal funds rate.  This has been the FED's primary

tool of control over the economy.  It remains its primary tool,

but with the rate close to zero percent, the tool no longer

serves as a tool of market manipulation. 

     The FED now finds that it must purchase assets that no

longer can be sold at anything like the price that banks,

insurance companies, and investors paid for them.  It buys these

assets with newly created money or with swaps of its remaining

Treasury assets.

     The FED fears a write-down of the balance sheets of

commercial banks.  If the balance sheets contract, the banks will

have to demand payment of outstanding loans to offset the

contraction of the balance sheets.  So, the FED is buying these

assets with newly created money, or swapping liquid Treasury debt

for illiquid assets, which are called toxic.

     A contraction of credit by the banks would make the

recession much worse.  So, a bank's balance sheets must be kept

from falling. 

     The FED is engaged in a gigantic system of

misrepresentation.  It is misrepresenting the solvency of large

banks and financial firms in debt to banks.  It is

misrepresenting the supply of invested capital.  It is

substituting inaccurate prices for accurate prices.  These are

the most important prices of all: the price of capital.  These

prices inform investors and entrepreneurs of the condition of the

capital markets.

     The FED is doing its best to conceal the degree of risk and

uncertainty in the capital markets.  Central banks around the

world are cooperating with the FED.  This is an international

effort by central bankers to deceive the public. 

     To the extent that this deception is working, investor

confidence will increase. 

     On April 15, 2008, the FED held $866 billion in assets,

which served as the monetary base for the nation.  On April 15,

2009, it held $2.2 trillion. 

     On April 15, 2008, $549 billion of the FED's holdings were

Treasury assets.  That means 63% if the FED's holdings were

Treasury debt.  On April 15, 2009, the FED held $526 billion in

Treasury debt -- less than a year earlier.  That was 24% of the

FED's balance sheet.  (My thanks to ContraryInvestor.com for this

summary.)

     The FED has intervened into the private capital markets as

never before in history.  It did so in order to keep the reality

of the high risk of the American capital market from generating

prices that reflected the true conditions of supply and demand.

In short, the FED regarded its primary task as keeping the

investing public misinformed about the severity of the crisis in

the capital markets. 

     The FED's economists are doing their best to protect the

biggest banks.  The smaller banks are going under, one by one or

two by two every Friday afternoon, after the stock market closes.

The reality of toppling banks simmers over the weekend.  No one

pays much attention.  The FDIC intervenes, arranges a transfer of

the failed banks' assets to large banks, and pays off the

depositors by selling more Treasury debt.

     The consolidation of the big banks continues, unnoticed and

unchallenged.  The FED stands as the lender of last resort to the

big banks.  They will not be allowed to fail.

     The FED has conducted a stress test of the 19 largest banks.

The results of this test are supposed to be issued on May 7.  The

tests's full details will not be revealed.  The FED will say that

banks need new infusions of capital in the form of the sale of

shares.  Where this money will come from is not clear.  This will

water down the shares owned by existing investors.

     The share price of Citigroup was at $1 in early March.  It

is now at $3.  In mid-2007, just before the capital crisis began,

it was $55.  The investing public apparently does not believe

that Citi will go under, but people are not ready to imagine that

Citi will ever again see $55.

     Bank of America, at $52 in late 2007, fell to $4 in early

March, and is now around $9.  The public thinks the bank will

survive, but not recover. 

     These are our largest banks.  The FED kept them from going

under, but it did not restore public confidence.  Their share

prices indicate the power of the market to reveal the true costs

of capital, despite the intervention of the FED into the loan

market.  The FED has the ability to keep a bank's doors open and

its ATMs delivering pieces of green paper.  But it cannot

overcome the fundamental fact that the capital markets have

removed most of the wealth of these two behemoths. 

     The directors of commercial banks try to put a good face on

these enormous losses, but the stock market barely listens.  Bank

investors trust the FED; they do not trust the bankers. 

THE POWER OF THE MARKET

     It takes time for the true conditions of supply and demand

in the capital markets to be reflected in the stock market and

bond market.  These markets operate on the assumption that digits

are capital.  The reality is more complex.  Capital value is

reported in prices, and prices are reported in digits.  But

digits are not capital.  Capital is whatever wealth investors

surrender to entrepreneurs to invest in production.  Investors

surrender capital in the hope of gaining more capital.  But they

write their checks in the form of digits.

     The FED controls the supply digits.  It does not control the

supply of capital.  It buys bad assets a face value in order to

keep investors investing.  Investors see the result of these

newly created digits: keeping up the market price of a limited

number of investment assets -- the ones that banks lent too much

money to hedge funds to buy at naively optimistic prices. 

     The legal effect of high market value is preserved, but only

as book entries.  The banks' balance sheets do not contract,

thereby shrinking the supply of credit.  The FED's balance sheet

rises, but no one outside the FED exercises control over the FED.

     The counting rule governing bank reserves is preserved, but

at what cost?  At the cost of investors' future wealth.

Investors see that the prices of these assets are not falling,

digitally speaking.  Yet these prices should fall.

     Investors then take hope.  They assume that the source of

more funding is still intact.  They buy investment assets that

ought to be lower priced.  They bid up the price of these assets

in digits.  They transfer digits that could be used to buy

productive assets -- productive in a free economy -- to sellers

of ownership shares or promises to pay. 

     The sellers of these assets benefit.  They can then use

their proceeds to buy something else.

     The illusion of high economic value persists.  Why?  Because

of the illusion created by the FED.  This illusion rests on the

fact that the FED creates digits out of nothing and uses these

digits to buy assets that would otherwise fall in price and

thereby create a crisis for banks.  The flow of digits from the

banks would then contract.  Prices would fall.  Expectations

based on an illusion -- the boom phase of the boom-bust cycle --

would be shown to have been misguided.

     Over time, the market will assess greater value to those

assets that produce above-market rates of return, a return not

based on access to bank credit, but because consumers are willing

to purchase the output of this capital.

     Consumers will regain control of the markets at some point.

If the Federal Reserve continues to fund the illusion that digits

are wealth, then mass inflation will arrive.  Mass inflation will

reveal to millions of people that Federal Reserve digits are not

wealth.  They will buy less and less.


Fabio Gallazzi