Darling to throw lit matches on petrol

Darling sets out new Bank remit

It's amazing to me how people in the public eye, particularly politicians get away with stuff.

Firstly we have Ben Benanke talking up the dollar without actually doing anything to support his rhetoric. Obviously some people see through it, but actually it seems for a tiny period after, the market picked up. That could have been the "Plunge Protection Team", the presidents working group on financial markets at work to try and encourage investment. After all, we don't actually have real functioning markets anymore, just manipulations.

Then, we had Barack Obama in the US, talk about boosting the dollar by tackling fundamentals such as the housing market. How exactly, is never mentioned. The housing bubble was created by cheap credit and an even cheaper dollar, tightening up would make the large investment banks and other wall street miscreants sink like a stone, so how likely is that, considering how much they've contributed to his campaign?

Then we have Darling, effectively mimicking the Americans by announcing plans to hand over more control to the central banks. In our case, the Bank of England. Well, they've done a bang up job so far! The problem in this case is that having stronger fiscal policies when the Federal Reserve is ensuring the dollar disappears from history, pulls you down with it because of intertwined risk and because of the downside risk to exports.

The real problem is the system of endless money created from debt. They keep printing and printing and bailing and bailing, and the public foot the bill through inflation. Don't look for a solution any time soon. Even if the banks decided to shrink the money supply and let the big boys implode, massive inflation is already baked into the cake for at least the next 18 months. Also, the resulting steep recession that responsible banking would cause while our economy healthily corrects just isn't politically viable. Most of our populace don't understand what. who or why regarding our monetary system. It's a bit like the impending pensions bomb, it get's shuffled around like hand-grenade pass the parcel.

Inflate, inflate, inflate and hope you're not holding the pump when it finally pops.

That's the problem with Keynesian economics. You pump up the money supply during low growth to kickstart the economy but you're meant to slowly contract the supply when growth is heating up. The problem is, politicans can't subtract. Or won't.

The strategy is clear. To provide as much money as is needed to stop any "favoured", large financial institution from failing, hoping that will cause stability and then more lending, the lifeblood of a debt based money system. In a vacuum it may just work. But, recipients of the money are using it to cover debts and speculate on commodities, very little reaches the public. The inflation taxes the people through less purchasing power, and people tighten their belts and stop lending. We have deflation fighting inflation, the worst scenario.

Bob Chapman, the international forecaster sums it up in his last report:

Quote: "What the Fed is doing is extending the time line for collapse to save as much of Wall Street as possible and allow the dollar to fail as a consequence. This is being accomplished by giving banks unlimited funds, which the US taxpayer is responsible for. This is killing the US overall, economically. These funds are going to the very same people who committed colossal fraud and got our economy in the mess that it is in. The scenario is called helicopters over Wall Street. As a result both two year and ten year Treasury yields are rising at a threatening rate. When the 10’s yielded 3.50% we told you by the end of the year they’d be 4.50%. They are already at 4.26% only 6 weeks later. They are telling you foreign investors want a substantially higher yield to hold US dollar denominated paper and it also tells you this yield has to rise in order to reflect the erosion from inflation. This time the short end, the 2-year is rising with velocity as well. Asset deflation is being offset by the massive creation of money and credit. This is the worst of all worlds. The values of assets of an entire nation are falling, as wage gains are miniscule and inflation rages. As the long end yield climbs the Fed monetizes the short end. As yet inflation is winning and will continue to do so until borrowers stop borrowing. That is when deflation will gain the upper hand and we believe that is 2 to 3 years away, but it will come. As we said before what the Fed and other central banks are doing insures a depression."

And as for the title of the entry, well, if a bunch of thugs had poured petrol all over your car, would you hand them a box of matches...