The world is facing a serious global debt crisis. Hardly any nation is following healthy economics and every nation is playing with the paper money to increase its national debt burdened on future generation. The Eurozone debt crisis is direct consequence of same Fabian socialism supported by John Maynard Keynes and as a result, the endeavors by government to rescue against this economic collapse is again a Keynesian policy of inflate the debt to create another boom.
Yesterday, the world’s central banks announced a “coordinated action to enhance their capacity to provide liquidity support to the global financial system”.
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank decided to take recuperative actions by providing liquidity support to global financial system. This means that now Eurozone banks will have enough money to lend and hence there will be much more mall-investment.
The Central Banks in Unison simply means a huge bailout for failing Eurozone economies. Obviously, the countries which were supposed to accept austerity before they may be provided any loan have now attained enough stimuli to keep their irrational spending on. However, is this right solution or will these move create further havoc?
Action in unison in general means a conspiracy and this is certainly a financial conspiracy.
Central Bank Intervention is Mysterious
This sudden action of world’s central banks in unison raises various questions. One of such questions is of whether major European bank was at the edge of defaulting yesterday? The unison of The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank is well augmented and supported by Bank of China which decided to cut bank reserve requirement ratio by 0.5%. It seems like this act of unison was aimed at protecting some major international banks from falling away because of liquidity crunch.
Another question raised by this action of unison was raised by Ron Paul, The Chairman of the Monetary Policy Subcommittee on the House Financial Services Committee. He released a statement today regarding the Federal Reserve’s latest actions coordinating with other central banks in an effort to intervene in Europe’s debt crisis. See below an excerpt of the statement by Ron Paul.
“Rather than calming markets, these arrangements should indicate just how frightened governments around the world are about the European financial crisis. Central banks are grasping at straws, hoping that flooding the world with money created out of thin air will somehow resolve a crisis caused by uncontrolled government spending and irresponsible debt issuance. Congress should not permit this type of open-ended commitment on the part of the Fed, a commitment which could easily run into the trillions of dollars. These dollar swaps are purely inflationary and will harm American consumers as much as any form of quantitative easing.”
Another question about this bailout by central banks is the fact that Germany has been opposing any easy bailout for Eurozone countries unless the governments of defaulting countries promise to accept austerity measures to reduce their national debt significantly. But central banks have already offered this easy bailout without any condition of austerity. Isn’t it a conspiracy against the demand of Germany for a better fiscal policy followed by defaulting nations?
Will the Central banks in Unison solve the Eurozone crisis?
Obviously, Ron Paul is concerned about American citizens and this is also true that the liquidity easing by Central banks in unison will create huge inflation across the globe and the worst hit will be the Eurozone nations. While Portugal, Ireland, Italy, Greece and Spain are already suffering debt crisis and hence will get a relief through this bailout package for a while, the other Eurozone countries like Germany, France and UK will suffer huge inflation. This conspiracy is worldwide and India, China and other Asian countries will also suffer similar inflation.
This isn’t the first time the governments are experimenting with their policy of quantitative easing. During the 2008 crisis, FED took similar actions and provided huge stimulus for failing sectors, companies and banks of America. The result was further deterioration of American economy with burden of huge debt while no positive effect was experienced as the unemployment rate remained well above 9% and the economic growth remained abysmally low. In short, the bailout of American economy in 2008 proved to be a failure.
This decision of Fed to act in unison with other central banks is nothing different that what Fed did in 2008 but this time, the central banks aren’t bailing out redundant and inefficient yet politically well-connected too-big-firms-to-collapse. This time, the central banks have conspired to bailout the extravagant government spending across the Eurozone.
But this will certainly not solve the main problem because the main problem is not liquidity crunch, but the extravaganza of governments following Fabian socialism. The social welfare programs of governments are so irrational and impractical that no amount of national debt seems to be too much. Instead of persuading government to ease out their intervention in markets, these central banks are offering them chances to maintain the grip on markets. Obviously, this will increase the problem and will create further economical quagmire.
Central banks are failing to accept their own faults. They are trying to deny the simple truth that Fiat money caused this European crisis and the financial crisis before it. More fiat money is not the cure. The global fiat currency system has proven itself a failure, we need real monetary reform. We need sound money.
This bailout by central banks will certainly not improve anything. Just two months ago on September 15th 2011, central banks took similar action and that bailout offered by central banks was meant to express how grave the situations are. Now suddenly, Eurozone governments and banks are suggesting that all of their problems will be solved out by this new bailout package. However, it isn’t the solution; it is rather creation of bigger problem. Markets are surging right after the announcement of central banks to bailout Eurozone. This surge will remain for some days. It lasted five days last time when on September 15th, Central Banks offered similar bailout package. But after that, the defaulting nations will realize that they are suffering larger burden, bigger debt.
Eurozone has no escape, nor do any other nation playing inflationary games with fiat currency.
What will be the consequences of this Bailout?
This is a global bailout and it will increase global debt and global inflation. The US is borrowing 40c of every dollar just to pay for its bloated welfare state. Britain is borrowing to pay for its even more bloated welfare state. It must be noted that these central banks are surely not acting independently. Just yesterday, President Obama promised US assistance in easing Eurozone debt crisis and today, the Fed declared an action in unison with all other major central banks. Obviously, it is a politically motivated action in unison and the Fed or any other central bank (RBI in India) is surely not independent, rather it conspires in collusion with the government to rob us, citizens. This huge bailout is meant to ease liquidity of money, which means increasing money or inflation and as this increased money will reach in global markets, it will cause huge ripples of price rise and who will suffer? The poor, the workers who works daily to eat daily will suffer the most because of inflation. Almost every government of the world works on the principles of Fabian socialism which is no different than fascism. While the motive of these Fabian socialists is assumed to help poor people and to reduce the economic gap between the rich and the poor, the real effect of all policies of these Fabian socialists following Keynesian economics often results in greater economic difference.
Conclusion: this bailout for Eurozone offered by Central banks in unison will fail again as it failed previously. However, share markets across the globe will surge for a few days as speculative will make the most of the profits and after that, the world will have to face the issue of debt crisis again.
It should be noted that the Eurozone debt crisis and the global debt crisis has been created by the governments and banks in unison as they played with Fiat currency to increase their social welfare state interventionism. Since Fiat money is the cause of the problem, more fiat money cannot cure the problem; it will certainly increase the pain. We, the tax payers will have to pay for this gross conspiracy to create money out of thin air. We will have to payback this debt, we all are getting poorer everyday and we have no rescue as government and central banks in unison are robbing the value of our saved money to protect their illusions of Fiat money, Fabian socialism and workability of government interventionism in market. I would dearly hope that the influx of dollars into eurozone does not translate to further excessive spending over there, but I strongly doubt it.