Central Banks Have Become Irrelevant

The article mentions at several point how the "financial repression" will be negative to investors. But what about for the majority of the population that holds little to no financial assets?

Are you expecting a repeat of the financial repression that dominated the decades after World War Two?

Weren't those decades also characterized by unprecedented economic growth and increase in standards of living? Isn't what the author says government will do perfectly defensible from a Keynesian perspective, not to mention from a democratic perspective (why should unelected central bankers have this sort of economic powers over duly elected representatives?)

I think central banks cause deflation by increasing money supply through lower interest rates. Here how that may works the newly created money does not flow to wage inflation they flow to investing in more automation software/robots/machines. More automation is deflationary products become cheaper to produce lowering their cost to consumers. Further more, wages are no longer local through globalization so local central banks cannot fully control wage inflation on a global market as cheaper wages products from foreign wages are imported. There has been a race to the bottom from central banks on low interest rates where countries has competed in lowering their currency by lower interest rates. This cycle is now somehow broken.

Interesting that the interest rate will go up and the potential effect on mortgages.

I think this is probably one of the more important/insightful articles that's been on HN in some time.

What a tortured logic this interview follow.

It's funny that the period from the second world ward to the neoliberal revolution in the 80's is considered by this guy a bad thing. It was a period of grow shared by a big part of the population. I suppose if you work in the City or Wall Street, something like that looks like the end of the world.

And he believe two contradictory things, he thinks that politicians control the central bank and that they need private saving institutions to control the bond yields. But if you control de central bank you already control the yields (see Japan), you don't need any private institution help.

Mainstream economics is arriving to what Modern Monetary Theory has been telling us the last 20 years. There are not insights in this article that have not been repeated again and again by the MMT people.

> Politicians have gained control of money supply and they will not give up this instrument anymore

The issuing of money is a key aspect of sovereignty. So, if anything, it's "restored control of money supply".

But even this is a misrepresentation, since most money in modern Capitalist states is created by commercial banks, through a Fractional Reserve mechanism:

https://en.wikipedia.org/wiki/Fractional-reserve_banking

in a nutshell - banks only hold a fraction of the money they give out as loans, i.e. when they make loans they literally create new money.

It's also a slight misrepresentation since governments are mostly not-really issuing their own money, just telling banks to issue a lot of loans. Having said that - the states may need to issue money to cover failing loans (or otherwise introduce stiff austerity programs).

When the state issues money, it is typically not debt-based like commercial money. (officially it may be registered as sovereign "debt" to the central bank, but that debt is just an artifice, and is never collected).

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> QE was a fiasco. All that central banks have achieved over the past ten years is creating a lot of non-bank debt. Their actions kept interest rates low, which inflated asset prices and allowed companies to borrow cheaply through the issuance of bonds.

But that's what they set out to achieve! That's the policy that government - or perhaps we should say, large corporations and financial institutions, through government - chose to enact. It is an aspect of the collective insanity of capitalism that millions of people lost their homes, and got no bailout or public housing etc. - but the financial institutions who had inflated the bubble of speculation and helped drive those people into ruin were showered with cheap money (after some of them having been bailed-out outright at public expense).

>Governments have taken control of the money supply.

laughable.

The economist Wolfgang Streeck debunks this entire premise in his book 'how capitalism will end.' after the 1993 financial crisis and 2008 market collapse financial power eclipsed the state through the introduction of debt and credit as the means of financial operation. First at the personal level, through blank-check irresponsible issuance of credit cards and mortage loans, then through the insistance that states and entire nations operate on a debt model, sacrificing traditional tax revenue from the top earners instead for a system of infinite term, low and even zero interest credit. all they have to do is prove their solvency through austerity measures, which absolve the wealthy from paying evermore taxes in the process.

Streeck even highlights how this happens in the EU, with northern nations routinely subsidizing obstinant southern nations in an uncomfortable exchange to push them toward a debt structure that only benefits the wealthiest. He makes a compelling argument that everyone knew what greece was doing, even encouraged it, and yet walked away blameless after the crisis.

the only way central banks benefit the political class is in their employment as a cudgel to punish the wicked. Central banks disarm valid opposition like Edward Snowden, Julian Assange, and Kim Dot Com. Or at least they did, until cryptocurrency.

X22 report had been talking about Trump taking control of the Fed since april. There’s a reason X22 get 100k-300k views per youtube is episode, he is constantly right on the money.

I’m glad the rest of the intellectual class are finally acknowledging that the government has seized control of the central banks.

X22 says we are going to see tremendous growth in our economy starting in Q4. His track record of being right on the money gives me optimism.

The amount of debt being created by governments, willy nilly, with lack of oversight due to 'COVID' is just scary. And that's just regular debt, not the broad-money creation problems articulated in the article.

Anyone with the power to 'invent money' is going to abuse it an fight to the death to keep it.

COVID was/is a fight, we're going to have to fight to rationalise finance, it may never happen.

Since 2008 we've been living in a weird kind of financial fiction.

FYI consumers have been 'paying' huge kinds of inflation on their homes. Having some degree of inflation would put that to bed quite nicely and it may not be so bad for quite a lot of people.