Desperate central bankers grab for more power

Conceding that their grip on the economy is slipping, central bankers are proposing a radical economic reset that would shift yet more power from government to themselves.

Central bankers are acknowledging that they are out of ammunition. Mark Carney, the soon-to-be-retiring head of the Bank of England, said in a speech at the annual meeting of central bankers in August in Jackson Hole, Wyoming, “In the longer-term, we need to change the game.” The same point was made by Philipp Hildebrand, former head of the Swiss National Bank, in an August 2019 interview with Bloomberg. “Really there is little if any ammunition left,” he said. “More of the same in terms of monetary policy is unlikely to be an appropriate response if we get into a recession or sharp downturn.”

“More of the same” meant further lowering interest rates, the central bankers’ stock tool for maintaining their targeted inflation rate in a downturn. Bargain-basement interest rates are supposed to stimulate the economy by encouraging borrowers to borrow (since rates are so low) and savers to spend (since they aren’t making any interest on their deposits and may have to pay to store them). But over $15 trillion in bonds are now trading globally at negative interest rates, yet this radical maneuver has not been shown to measurably improve economic performance. In fact, new research shows that negative interest rates from central banks, rather than increasing spending, stopping deflation, and stimulating the economy as they were expected to do, may be having the opposite effects. They are being blamed for squeezing banks, punishing savers, keeping dying companies on life support, and fueling a potentially unsustainable surge in asset prices.

So what is a central banker to do? Hildebrand’s proposed solution was presented in a paper he wrote with three of his colleagues at BlackRock, the world’s largest asset manager, where he is now vice chairman. Released in August to coincide with the annual Jackson Hole meeting of central bankers, the paper was co-authored by Stanley Fischer, former governor of the Bank of Israel and former vice chairman of the U.S. Federal Reserve; Jean Boivin, former deputy governor of the Bank of Canada; and BlackRock economist Elga Bartsch. Their proposal calls for “more explicit coordination between central banks and governments when economies are in a recession so that monetary and fiscal policy can better work in synergy.” The goal, according to Hildebrand, is to go “direct with money to consumers and companies in order to enliven consumption,” putting spending money directly into consumers’ pockets.

It sounds a lot like “helicopter money,” but he was not actually talking about raining money down on the people. The central bank would maintain a “Standing Emergency Fiscal Facility” that would be activated when interest rate manipulation was no longer working and deflation had set in. The central bank would determine the size of the Facility based on its estimates of what was needed to get the price level back on target. It sounds good until you get to who would disburse the funds: “Independent experts would decide how best to deploy the funds to both maximize impact and meet strategic investment objectives set by the government.”

“Independent experts” is another term for “technocrats”—bureaucrats chosen for their technical skill rather than by popular vote. They might be using sophisticated data, algorithms and economic formulae to determine “how best to deploy the funds,” but the question is, “best for whom?” It was central bank technocrats who plunged the economies of Greece and Italy into austerity after 2011, and unelected technocrats who put Detroit into bankruptcy in 2013.

In short, Hildebrand and co-authors are not talking about central banks giving up their ivory tower independence to work with legislators in coordinating fiscal and monetary policy. Rather, central bankers would be acquiring even more power, by giving themselves a new pot of free money that they could deploy as they saw fit in the service of “government objectives.”

Carney’s new game

The tendency to overreach was also evident in the Jackson Hole speech of BOE head Mark Carney, in which he said “we need to change the game.” The game changer he proposed was to break the power of the US dollar as global reserve currency. This would be done through the issuance of an international digital currency backed by multiple national currencies, on the model of Facebook’s “Libra.”

Multiple reserve currencies are not a bad idea, but if we’re following the Libra model, we’re talking about a new, single reserve currency that is merely “backed” by a basket of other currencies. The question then is who would issue this global currency, and who would set the rules for obtaining the reserves.

Carney suggested that the new currency might be “best provided by the public sector, perhaps through a network of central bank digital currencies.” This raises further questions. Are central banks really “public”? And who would be the issuer—the banker-controlled Bank for International Settlements, the bank of central banks in Switzerland? Or perhaps the International Monetary Fund, which Carney is in line to head?

The IMF already issues Special Drawing Rights to supplement global currency reserves, but they are merely “units of account” which must be exchanged for national currencies. Allowing the IMF to issue the global reserve currency outright would give unelected technocrats unprecedented power over nations and their money. The effect would be similar to the surrender by EU governments of control over their own currencies, making their central banks dependent on the European Central Bank for liquidity, with its disastrous consequences.

Time to end the “independent” Fed?

A media event that provoked even more outrage against central bankers last month, however, was an August 27 op-ed in Bloomberg by William Dudley, former president of the New York Fed and a former partner at Goldman Sachs. Titled “The Fed Shouldn’t Enable Donald Trump,” it concluded:

There’s even an argument that the [presidential] election itself falls within the Fed’s purview. After all, Trump’s reelection arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives. If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020.

The Fed is so independent that, according to former Fed Chairman Alan Greenspan, it is answerable to no one. A chief argument for retaining the Fed’s independence is that it needs to remain a neutral arbiter, beyond politics and political influence; and Dudley’s op-ed clearly breached that rule. Critics called it an attempt to overthrow a sitting president, a treasonous would-be coup that justified ending the Fed altogether.

Perhaps, but central banks actually serve some useful functions. Better would be to nationalize the Fed, turning it into a true public utility, mandated to serve the interests of the economy and the voting public. Having the central bank and the federal government work together to coordinate fiscal and monetary policy is actually a good idea, so long as the process is transparent and public representatives have control over where the money is deployed. It’s our money, and we should be able to decide where it goes.

This article was first posted on Ellen Brown chairs the Public Banking Institute and has written thirteen books, including her latest, Banking on the People: Democratizing Money in the Digital Age She also co-hosts a radio program on PRN.FM called “It’s Our Money.” Her 300+ blog articles are posted at

One Response to Desperate central bankers grab for more power

  1. Lawrence Milby

    We are looking everywhere but at the source of our currency problem. One of the communist manifesto planks calls for a central bank not a national or public bank owned by We The People. For over 100 years America had it’s private bank and a corporation named the Federal Reserve had the exclusive contract to print all paper currency for our National Bank. We The Peoples currency was backed by silver or gold, real value. In the early 1900s that all changed with the Federal Reserve Act. Few understand what actually took place or changed.
    To simplify, We The People are to be secure in our property. Gold and Silver are property. Silver certificates are property of the holder. Our property can not be taken from us or taxed without certain constitutional safeguards followed.
    Under the Federal Reserve Act the Federal Reserve Corporation was free to issue worthless paper notes backed up by nothing but the Fed’s word or We The People’s property. This was the actual beginning of what we now call the Federal Government. Not the first of our founding documents established the Federal Government. The Fed is a private corporation owned by the World Bankers of England for the most part.
    With the introduction of worthless paper, there had to be a methodology to redeem or take out of circulation these worthless promissory notes. If you or I give some one a note or IOU, the holder of the IOU signed by us can demand we make good the note. That does not apply with these Federal Reserve IOUs. To take these Fed IOUs out of circulation the Fed created it’s own private collection agency called the Internal Revenue Service. For the most part, not one dollar note collected by the Fed goes into the US treasury. (there are exceptions to this) The uses misleading definitions and words to coercive the American public to pay a “income” tax on our use of the Fed’s private IOUs. Charging usury to remove the IOUs from circulation dates back to the Old Babylonian Money System. It is how Egypt placed the Hebrew children into bondage. When you read the Bible don’t read over this fact.
    The Supreme Court has ruled over and over our earnings are not income. Income is defined as profit or gain. We exchange one hour work for one hour pay. Where is the profit or gain. It is a break even exchange if we can call worthless IOUs a fair exchange. Long story short, our usury payment to the Federal Reserve Corporation is named “income tax” but it is actually usury.
    So why such a system of currency? What is it’s purpose? It works like this to over simplify. The USA borrows the IOUs from the Fed Bank at a interest rate. Then the USA spends those IOUs into circulation at an alarming rate of over or around 7 trillion per year. How these IOUs are spent into circulation is the political agenda of both the Republican and Democrat parties. We are lead to believe it is the Republicans who spend the IOUs into circulation by purchasing war machines and manufactured equipment and services to power the Police State. At the same time we are lead to believe it is the Democrat party who spends these IOUs into circulation in social programs such as welfare. Truth is both parties spend these IOUs into circulation almost identically and in about the same amounts in all departments of the Government.
    Bottom line is this, regardless of how it is spent, it is taken back out of circulation by taxing We The People’s paycheck each and every week at a rate of about 20% not counting State Income taxes which is another scam of it’s own.
    Example I own a war machine factory. The USA buys a army tank off of me. I pay you $10 for one hour’s labor to help me build the tank. I write you a check for only $8. I send the Fed’s private collection agency $2 of your pay. That is your usury payment to the Fed for using the Fed’s worthless IOUs. Now you have $8 to take home. You spend the $8 on your bills such as food, utilities, loans etc. The $8 IOUs that you spend will be placed into the accounts of your service providers who intern will pay their employees out of your $8 and everyone else’s $8 that come across their cash register that week. All of their employees receive a % of your $8 and out of all their pay checks their employer withholds their 20% usury payment to the Fed Reserve Bank. So it sort of looks like this; Out of your $10 you get $8. Then the $8 is spent or used and out of that $8, $1.60 is sent to the fed leaving $6.40. Out of that $6.40 when used, $1.28 is sent to the Fed as payment for usury. This process is continued until your original $10 has been paid to the Fed in the form of usury. These IOUs are never printed currency and most are nothing more than bank leger entries. The Fed maintains enough actual paper currency to provide enough paper money for those who use paper or coins today.
    So what is wrong with this plank of the communist manifesto? The IOUs that the USA borrowed from the Fed and spent into circulation have now been successfully removed from circulation without the Fed having to redeem the first worthless note with real gold or silver or anything of substance. The Army tank I sold the USA was actually stolen from me because the USA has never redeemed the IOUs it paid me with. I stole your labor because I paid you with worthless IOUs and you stole from all those people you spent your weeks earning with. It was said when this scam was perpetrated upon the people that not 1 in 10,000 people saw what was wrong with using worthless IOUs instead of real gold and silver currency and coins. Number one the USA can not tax our gold and silver the Supreme Crt has confirmed this. But it appears the USA taxes our Fed IOU notes but in reality the USA simply spends the worthless IOUs as it desires at our expense. What would your life be like if you could receive all of your pay and nothing taken form it?
    There is many problems in the Old Babylonian money system spoken of in the Bible. First we forget the USA borrows all these IOUs from the Fed Bank with a interest payment. It is stated today that the USA is in hock to the World Bankers in excess of over 40 $trillion when we add both pubic and our private loans. That the USA is just paying the interest each year. Where does the USA get the interest payment?? From timber sales, from mineral rights on public lands and some for export and import taxes.
    Carney’s new game can not and will never work for many reasons. This Babylonian money scam works best if the worthless IOUs are kept inside the borders of the USA and inside countries that allow the Fed to Tax their population much as they do the Americans. But what happens when the majority of these IOUs are spent in China. At end of each trade year all countries balance their trade surplus or lose. China holds trillions of our worthless IOUs and the Fed has no means to impose a fabricated income or usury tax upon China when they use these worthless notes and when China does spend some of the IOUs they still have trillion remaining.
    For Carney’s plan to work China would be the primary currency holder of funds that back the new currency so nothing changes. So why is the World Bankers so worried. What has been taking place is this. The USA both our Government and the population have been borrowing these IOUs from China rather than borrowing more from the Fed. To complete the Fed lowers the interest rate in hopes of obtaining some of the loans but China only lowers their interest rate and loans out Fed Reserve note for less than what the Fed loans them out originally to the USA. The Babylonian Money system scam is in a spiral down fall that can only fail. No one was watching when Obama took office, but our worthless dollar collapsed and the banks were refusing to loan out IOUs and elected to hold what they had so they could buy into the new currency which was named at that time Ameros. Some banks actually was holding this new currency and some how Obama called the bankers bluff and kept the USA a float another decade using the current Fed scam.

    The Carney game changer proposed was to break the power of the US dollar as global reserve currency, by issuing a international digital currency backed by multiple national currencies, on the model of Facebook’s “Libra.”
    There is no way to pull this scam off without bankrupting the US dollar and declaring it worthless. To do otherwise would leave all current world currency that are backed by the USA Fed IOUs still in the market place and to be exchanged for the new currency. Who would determine the exchange rate of one worthless paper for another worthless paper. With the internet being what it is today I don’t think this scam be be successful a second time on the American people, but then again we are dumb or ignorant about worldly matter involving the World Bankers of Old………