Central Bankers Are Upsetting God’s Applecart

Today’s the big day…

Mario “whatever it takes” Draghi is expected to goose up stock markets with more stimulus measures.

On the table is more QE… and further cuts to the key lending rate.

The Chinese feds are also supposed to come forward with another gift to asset holders.

According to the Wall Street Journal, the expectation is for something targeting property purchases and another interest rate cut (which would make it cut No. 7 since last November).

And yesterday, Fed chair Janet Yellen told the Economic Club of Washington:

Were the FOMC [the Fed’s policy setting committee] to delay the start of policy normalization for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals. Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession.

In Europe, Asia, and America, central bankers, we are told, have the situation in hand.

Fools or Knaves?

But these policies – in fact ALL central bank policies for the last 30 years – are either a mistake or flimflam.

…they are perpetrated by either fools or knaves… depending on how you look at it.

…and they are either an intentional transfer of wealth from the people who earned it to the world’s elite insiders. Or the transfer of wealth is an unintended consequence of botched policy.

We lean toward the larceny explanation.

QE may have been a mistake when it was first tried by Japan 20 years ago. But after so many years of trial and error, we now know how it works: It takes wealth from some people (mostly middle-class savers) and gives it to others (mostly wealthy speculators).

This is a problem. Because we know from both theory and experience that trying to rob the rich to make the poor better off doesn’t work. The rich duck and dodge. And the poor lose the incentive to make it on their own.