Fed and ECB prepare a new party for the financial sharks

(ECB, 2019)

At the time of trillion dollar companies and global borrowing much above the 2008 crisis levels, and after nine years of continued swelling of values in all and every western capital markets, bankers decided there cannot be turning back to normality, interest rates and debt wise. They say the thing must not be stopped from continuing inflating.

If it does, a new financial meltdown will erupt and will largely surpass the abilities of the central banks to again save the financial system. So, it’s better to continue feeding the banking leviathans with zero cost money. Both the American and the European central banks have succumbed to the treat. We will learn soon where the thing leads to.

The Fed changes course

The proof that the crisis is already here first surfaced in the United States early this January. On the first Friday of this year, the American central bank (the US Federal Reserve), announced it decided to reverse its plan for gradually returning to normal levels of interest rates and less accommodating monetary policy.

All along 2018, the Fed’s new Chairman, Jerome Powell, was resolutely continuing his predecessor’s less accommodating monetary policy. Early last year he started a program of a series of small interest rates hikes (0.25% each time) in order to set the cost of money back at normal levels and make the banks start paying something for the Fed’s 4.5 trillion dollars they had received for free.

‘America first’ for…bankers

New York bankers though, thought differently and convinced the ‘America First’ President Donald Trump that the new monetary measures were not good. So, Trump threatened to fire Powell if he doesn’t change his policy lines.

Apart from Trump’s threats though, Powel must have realized that the banks were readying to inflict a new financial melt-down on the real economy. They have done this more than once in the past twenty years. So, on that Friday, Powell announced “the central bank was open to changing course on rate hikes”.

No end to ‘casino’ finance

This was the signal that the ‘Casino’ finance will continue for as long as possible. The American banks will continue holding the $4.5 trillion for free and ‘investing’ it wherever they like. At the same time, the real economy will continue producing poverty for the many and immense riches for the princes of the markets.

Last week, the syndrome of more and more free money for the market leviathans crossed the Atlantic Ocean and engulfed Europe. The threat of another recession in Eurozone, which materialized lately made the European Central Bank more susceptible to the new ‘ideas’.

The ECB

Some days ago, Benoît Cœuré, prominent Member of the Executive Board of the European Central Bank said, “The ECB would then be called on to increase its activities as an international lender of last resort”. He was speaking on 15 February at the right place, in the Council on Foreign Relations in New York City. No need for more evidence to prove that Eurozone’s central bank is following in the steps of its big sister, the Fed. Cœuré promises abundant finance for the financial sharks even on the other side of the Atlantic Ocean.

The problem is, though, for how long still will the real economy be able to carry the burden of all those free trillions in the hands of the financial leviathans?

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