Games central bankers & politicians play…
(Bloomberg) -- Bank of Canada Governor Tiff Macklem led the Group of Seven in lowering interest rates, and his confidence may help reassure other central banks that they can launch into cuts before the Federal Reserve.
Macklem made it clear that Canada’s interest rate policy doesn’t need to move in lockstep with that of its southern neighbor, despite the potential for downward pressure on the loonie. It was a bold signal that divergence in rates isn’t a huge concern for one of the largest US trading partners.
- Bank of Canada’s Pivot Opens Path for Others to Diverge From Fed, BNN – Bloomberg
By Gregg Wall (6-8-2024)
Tiff Macklem, Governor of the Bank of Canada, moved big this week, kicking off a rate cutting cycle among the Group of Seven nations and effectively declared the war on inflation successful. The ECB followed suit in Euroland with provision/warning, that inflation is likely to remain elevated. Bourses, market mavens, the Wall St cognoscenti, the financial press, politicians, and central bankers were high-fiving, celebrating their ability to get the inflation monkey off their back. And return to the free money policies that ironically, had set in motion the rampant greed (masked as inflation) & monopoly price gouging that had bedeviled the economy and upset the public (since the start of the pandemic back in 2020 and 2021).
In the US an easily manipulated jobs opening number (JOLTS) seemed to spell out earlier in the week that the Federal Reserve would also be able to cast all doubt aside, cut rates, and declare ‘Mission Accomplished’ … only for that to come crashing down Friday, when the jobs and wage growth numbers came in much higher, much better than expected. Seems that the inflation monkey was very much alive and well.
By now, almost everyone is used to the gaslighting and lies central banksters, economists, politicians, scribes and pundits tell. We are told the economy is good, when 36% of Americans are dependent upon gig work to survive or not survive. We are told the economy is good when food bank usage skyrockets along with child poverty. The economy and growth are, indeed, good for the top 10%, but 70% of Americans cannot meet a $400 emergency. We are told, the economy is good, even though 50% of Americans are worried about seeing a doctor because they are afraid of the bills. And so it goes, the core inflation metric or core CPI (consumer price index) is often cited by elites for improvement in inflation … a number largely based upon fiction that excludes the essentials, food and fuel, and likely plays down another essential, catastrophically elevated rents. Core CPI is a bogus number, used by elites to justify policy changes that largely benefit themselves and the wealthy. Core CPI also is a snapshot that conveniently shows month to month and year over year… best not show the three, four, and five year cumulative inflation numbers, which might cause tempers to flare, torches to be lit, and pitchforks to march.
Why are food and fuel excluded? Answer: Because food and fuel have been commodified, are subject to outrageous Wall St speculation and taxation before retailers gouge the public harder still. It’s all part of the false narratives, word games, and statistical sleight of hand elites and economists play to slyly assure the public all is well: If you are not making it, it’s your fault.
Except, it’s not the public's fault. Here, in energy rich Canada a liter of gas is 40% higher than pandemic eve, January 2020. The BBC just did a piece on the outrageous cost of Canadian food and groceries, vis-à-vis, the UK and US… both countries, the UK and US, are no strangers to grocery price gouging. The BBC, correctly, blames grocery store monopolies, industry consolidation, and a complete lack of competition. Meanwhile, Canadian rents are flying higher to absurd, stratospheric valuations.
But rest assured, inflation is coming down the MSM, financial press, and politicians assure… which is a bald-faced lie. Inflation is not actually coming down, because if inflation was coming down, there’d be deflation, prices would actually drop. The lie the elites are telling the public is that the rate of inflationary increase is dropping (aka disinflation), but rest assured prices are climbing higher, and higher, and higher (otherwise, their own beloved core CPI number would be zero or negative). Meanwhile, Mr. Trudeau has opened the borders to record immigration to the delight of multinationals, Bay Street, Tiff Macklem, and wealthy donors… who exploit the influx of labor to keep wages down & enhance profits. So, at the same time the wealthy and the powerful are stealing from your purses & wallets at the grocery checkout, at the fuel pump, and when rent is due… the wealthy and the powerful are doing everything in their power to make sure your paycheck stagnates or rises as little as possible, thanks to Justin’s immigration blowout.
(Rest assured, as my family originally came from Europe, I am not anti-immigrant… I merely do not believe in an explosion of uncontrolled immigration with the sole purpose of suppressing wages, crushing labour, enriching CEOs and shareholders, and helping GDP and rents spiral ever higher. I also don’t believe that congress and parliaments should abdicate and punt to central banks to get them out of every jam that comes along.)
So why all the dissembling, the financial & statistical trickery, the lies? Why the games central bankers and politicians play? Answer, per the usual, follow the money. That is to say, aside from the monetization of life and death, and the cornerstone of systemic racism … the key characteristic of Western economies is that they have been financialized, that is to say, have grown highly dependent upon cheap debt, with low debt service loads and ultra-low interest rates. Cheap debt, of course, is not for you, dear reader. But free money welfare - provided by the FED, the BOC, and ECB – is for bankers, governments, the oligarchy, private equity, monopolies and cartels, financial engineering, M&A, and the perpetuation of crony government and war itself. Free money, low yield government debt masks a lot of bailouts, crimes, malfeasance, government corruption, boardroom and C-suite fraud and mismanagement… it perpetuates endless war, funds colonialism, and finances the consolidation of the economy into a totalitarian nightmare. Free money, especially in America, props up the house of cards.
And North America is staring down the barrel of several catastrophes, presently, and we very well can’t have the rich failing now, could we? Hence, the BOC and FED coming under tremendous pressure to bailout several industries - and yes, federal governments themselves - during these precarious times with the return of free money. Hence, the somber assurances that the economy is doing well, that terrible inflation has gone away… best to get back to central bank free money policies, posthaste. And the industries in trouble, in need of a backdoor central bank bailouts? First, there’s private equity, which is having trouble repatriating money back to investors. Things don’t work so well for private equity when they can’t levitate and flip zombie companies, loaded to the gills with debt … investors get upset when investment dollars, or principal, aren’t returned in full. Then, there’s the commercial and residential real estate markets. Looks like a lot of the failed financial shenanigans of the 2008 financial crisis, never truly went away. Yup, Wall St is up to the same old bag of tricks with derivatives, CDOs, and MBS or like instruments. Then, there’s the governments themselves, which are hugely dependent upon low interest rates and central banks. The US now, is said to be accruing interest on the national debt to the tune of a trillion dollars approximately every three months. Even Canada’s debt service loads are skyrocketing. Wall and Bay Streets also expect easy money so that investors channel greater sums of money into investment vehicles other than bonds and cash, like the stock market.
Boy, oh boy… some free money welfare and backdoor bailouts from central bankers - Jerome and Tiff - sure would come in handy right about now. There’s just two problems. As mentioned, free money is the root of all evil. Free money fuels our hyper financialized, ultra-leveraged economy, free money mints oligarchy, elevates stock markets & asset classes of the rich to nosebleed valuations, fuels M&A and monopoly creation, funds endless wars, empire. Free money, courtesy of central bankers, printed money at low yields funds corporate welfare and the aforementioned Wall St bailouts. Tax cuts for the rich need financing? See your friendly neighborhood central banker for some of that printing press love. Backdoor bailouts, in the form of free money, fuels government corruption, encourages day trading in the halls of congress… free money quickly papers over crisis, after Wall St crisis, so politicians don’t have to make tough choices on whether or not to fund America’s empire, another Wall St bailout, or Social Security for us mere peasants. Free money from central banks receives little or no press attention… seemingly, it’s all sub rosa. Central banks, seemingly, give gravitas to bankruptcy, corruption, looting, and lies.
And the second problem… there is no such thing as free money. In America, our failed duopoly, the oligarchy, and the deep state have rung up $40 trillion in national debt and there appears to be no end to it, w/ Biden & Trudeau spending like drunken sailors. And the taxpayer is, in theory, on the hook for all of it… endless welfare for the rich, endless wars for the DOD, MIC, & Wall St, and endless austerity for Canadians and Americans. It’s not that I object to deficits spent on The People, but it’s all the transfer of wealth that I object to: Making the rich and multinationals obscenely wealthy, while robbing our children, grandchildren, futurity, even grandma and grandpa. (Interestingly, you’ll find no central bank mandate for any of this insanity: whether its financing & funding genocide in Gaza, endless wars globally, the American empire, systemic corruption and fraud in congress & parliaments, endless corporate welfare, or stripping retirees and savers of interest income… so that private equity and Wall St can use low yield debt to leverage up and loot companies, leverage up returns, and consolidate entire industries into predatory cartels and monopolies. Nope, not a peep in the FED’s charter.)
And now you know, dear reader, why central bankers and politicians lie, constantly. Billions and trillions are on the line. If only they can persuade you the failed status quo… our rotted out nercro – neolib – neocon economy… is working exactly as planned: With central bankers, the political class, and wealthy donors stealing nation-states, and the public, blind.
Nice.
Copyright JM Hamilton Publishing 2024
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