Already, tens of trillions of dollars’ worth of debt-based currency has been created out of thin air by the Federal Reserve, the BoE, the European Central Bank, and other central banks to prop up private mega-banks and wild spending sprees by government amid the economic crisis. With help and guidance from the BoE’s new governor, Mark Carney, analysts say all of that appears set to accelerate.
Charged with conjuring currency into existence at interest and centrally planning broad swaths of the economy, the controversial British monetary-policy institution is currently overhauling its policies to make it even easier for banks to tap the people’s wealth on demand. BoE boss Carney, a Goldman Sachs veteran from Canada with impeccable establishment credentials who has vowed to keep interest rates at rock bottom, announced some of the radical reforms during what was described in media reports as his first major speech on British financial regulation.
Among other changes, the central banker said that the BoE would start accepting lower-grade collateral from banks in exchange for fiat-currency loans. In other words, after Western central banks already came under fire for such wealth-redistribution schemes throughout the most recent financial crisis, the BoE will soon allow lenders seeking cash to unload even more dubious assets on the public. “None of this means financial institutions are excused from the need to manage their balance sheets prudently,” Carney claimed, denying that he was serving as a “cheerleader” for big banks.
Indeed, “enabler” might actually be a better word than cheerleader to describe the role Carney expects to play for Britain’s financial sector. On top of accepting riskier collateral, the BoE will be charging big banks even lower interest rates to access its funds. As occurred under the U.S. Federal Reserve’s crisis gimmicks, lending out freshly created fiat currency at artificially low interest rates will help the mega-banks profit at taxpayer expense by, for example, allowing them to purchase government bonds with higher yields.
“Five simple words describe our approach: We are open for business,” Carney told bankers at an event organized by the Financial Times last week, adding that central banks had to “keep up” with developments in the financial markets. “Banks can be confident that, when they want to use our facilities, they will be allowed to access them.”
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