Western central bankers: they're God, they trust – a 10-part series on the QE economy

October 21, 2019 | 6 Comments | by Ramin Mazaheri for The Saker Blog

It's not that the West's central bankers are infallible – the similarity is that they cannot be held accountable. After all – who can call God to account for His decisions?

Like God, when things succeed it is They (central bankers) who deserve all the credit – when things fail it's because we failed to properly follow Their policies.

And like God, they don't need regulation – it is They who give the regulations, which must be accepted on faith alone and no matter how poor the results.

Central bankers are held partially accountable by only one sector – the markets of money. If markets go down based on any of their statements the bankers immediately reverse themselves, regardless of the situation. Countless times Bernake, Yellen, Trichet, Draghi and others have made statements purposely as clear as mud and then backtracked at the first lower lip quaver from the rich. Despite this exception, neoliberalism has proven to be the worship of bankers, as they rule and not markets – central bankers, of course, subvert and control the markets in many ways.

This idolatry is not new: for two centuries "capitalism with Western characteristics" has truly been "banker rule". The most impressive victory of neoliberalism – their ability to extend their unholy domain despite provoking the Great Recession – proves this: Central bankers in the G7 nations and the Eurozone have all been given the power to set fiscal policy, to decide social policy priorities and to render domestic elections irrelevant. Western nations are no longer democracies (and they were all, every one, merely the types of democracies which pointedly refused to evolve after 1917) but bankocracies.

The Great Recession has exposed modern capitalism to be not just banker worship but also banker governance.

This is not some wild-eyed lefty nonsense – they are deciding public policy. If we called them a "Politburo" instead of a "central bank" the West would rally up a posse of Nazis and send them to invade.

This multipart series will – as many of my previous such series have also done – use an exceptionally important political book as a jumping off point, which also allows me to humbly impart my point of view gleaned from my work as a daily hack journalist in the heart of the Eurozone. This point of view is rarely heard, yet has virtues which academics, think-tankers, specialists and authors cannot possibly contain – even we hack journalists must have some virtues, after all?

The book is 2018's Collusion: How Central Bankers Rigged the World by Nomi Prins, a former Wall Street executive who saw the light and is now informing on the crimes of Western imperialism-capitalism.

Quite simply, the book's primary virtue is chronological: Prins gives a historical account of central banker doings in key areas – Mexico, China, Brazil, Japan and Europe – ever since US banker crimes set off the Great Recession in 2007. Prins gives us all the key happenings in these regions (only China is the one which is undoubtedly not capitalist-imperialist), and that is not something you can find all in one place elsewhere.

And because central bankers run the West, it is like reading the daily itinerary of a dictator – “this is how things were decided”.

What Prins does a good job in reminding us is that this has all been done to keep US banks solvent. Every policy of the US Fed is about defending this goal, and not at all about the health of the global economy; the idea that the US would be militarily aggressive and culturally overbearing yet financially benevolent is preposterous and unsupported by evidence.

But the book is essentially conventional journalism – it is a recounting of historical decisions, facts and consequences. The only radical, non-Western change Prins really suggests is to move away from the dollar. The world "class" is used less than a handful of times. Her mentions of the negative effect of central bankers' decisions on the average person are clearly sincere but both sparing and brief. Few people get into Wall Street out of their love for poetry, after all. The book is a former Wall Streeter watching other Wall Streeters who have taken a brief detour into public service (except in China) – it is banker-centric. And this is quite useful in the 21st century.

Prins clearly and correctly views bankers as the problem, but her solution is essentially limited to hoping that China's central bankers will re-balance the status quo, and that their stewardship will allow developing countries to coordinate cooperatively instead of exploitatively. She does not believe that the entire system needs re-ordering upon new moral and political foundations (or even upon the very different moral foundations upon which Red China rests, and which account for their different policies).

But merely changing Western-centrism to Sino-centrism, with its obvious shift away from the US greenback (and even combined with her correct approval of cryptocurrency) cannot be enough. China is not insisting that Western capitalist-imperialist nations follow Beijing, but that they reform themselves – Iran does this too, but where Beijing uses a whisper Iran uses a megaphone amplified by a megaphone. Prins needed far more moral condemnation and to propose far more actual changes to the prevailing Western system, but – as I wrote – this is essentially a book of typical Western capitalist "objective" journalism, where moralising is supposed to be left entirely to the reader.

This series is advocacy journalism. What I have done is to take Prins' useful chronological, globally-oriented journalism on modern economic history and analyse it from a perspective very different from her own: a pro-socialist and anti-imperialist one.

It's a great book, but lacks a modern political viewpoint

Prins gets the main point across, though, and it's there in her title: G7/G20 central bankers have colluded since 2008 to (greenback) paper over the causes of the Great Recession.

Her book makes it undoubtedly clear how monetary policy has been coordinated to inflate and appease the 1%-dominated "markets" at different points around the world at different times. She doesn't use these correct political terms, but she shows that 21st century Western financial policies are fundamentally neo-imperialist: the world has slaved for the benefit of the former unipolar imperium since 2008 – even though said imperium provoked the financial crisis in 2008 – because of collusion orchestrated by the imperium to inflict policies on the global economy which were mainly to save their biggest, busted banks.

There you have it: three major points upon which the past 11 years of Western economic history have been resting. This also explains why the West’s financial foundation is even shakier than it was in 2008.

You don't need a PhD in economics to immediately grasp the correctness of these allegations: Nobody in their right mind would buy the securities of the top US banks… except for unaccountable central bankers. Central banks West-wide routinely bought $200 billion of such assets per month. Taxpayers were not enriched by buying bad investments, of course, but the busted banks in the US, Germany and France were.

The collusion Prins refers to in her title is the way the Fed used their influence to force other G20 banks to adopt the same policies. These policies are: massive money printing via QE, ZIRP (Zero interest rate policies) to persuade banks to take the money, and relaxing collateral standards in order to make sure banks got that money no matter how unsound everybody knew they were.

The problem comes down to a simple difference between capitalist and socialist views of finance: governments with policies dominated by the former give taxpayer money to private banks with no rules or accountability, whereas governments with policies dominated by the latter give this money with massive oversight, regulations and directives in order to ensure that it is used as efficiently as humanly possible. The irony for socialist-inspired nations is that they are the ones who are painted as corrupt!

Governments influenced by the former can rely on compliant, privately-owned Mainstream Media to repeatedly insist that these loans are for the benefit of all even though there is no such evidence for such a claim, nor any logical reason to expect such an outcome. Governments influenced by the latter really don't care what the Western MSM says – their own people don't need to be propagandized in favor of capitalist lies, and thus they mainly try to keep a low profile as regards international media.

(Cuba spends almost nothing on their media; Iran only recently started PressTV (and this service is more notable for its "different" viewpoint – "Voice of the voiceless" is the official slogan – rather than its scope and size); Xinhua seems to spend most of its time on soft news and certainly doesn't trumpet its own beliefs. Indeed, much can be said about that difference between Iran and China: the former is nearly screaming up to Heaven what it is thinking and doing, whereas inscrutability in China is not just a cliché but their government policy, which aims to avoid friction. But I digress….)

Please go to The Saker to read the entire article.
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