Free Markets Will Never Happen As Long As There Are Central Banks ????

[libertad]

http://www.zerohedge.com/article/guest-post-interview-jskim



J.S. It’s impossible to have free markets and central banks at the same time. The free market will dictate what the interest rate should be, but central banks keep altering it and causing boom bust cycles. They created the housing bubble because interest rates were so low for too long. Whenever central banks artificially suppress interest rates to serve their purposes, a real estate or stock market bubble is inevitable. And a bubble always bursts. Without a central bank, the fed-induced cycles would be very much muted. Artificially set interest rates cause bubbles and are clearly not consistent with a free market. When we put an end to the central banks, people will have a chance to have free markets. In my mind, the greatest gift in the world would be to have a free market and to shut down all of the world’s central banks.



J.S.: Implement sound money again. All people, no matter where in the world we live, are debt slaves to the central banks. If you have strong moral opposition to the concept of slavery, then you should be strongly opposed to the very idea of central banks. We have little power in retaining our wealth, since the banks devalue our wealth at will. Alan Greenspan himself stated in 1967 that “gold and economic freedom are inseparable,” and that “under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade.” Of course today, a dual bi-metal gold/silver standard is probably more realistic to implement as a sustainable solution than a gold standard. But Alan Greenspan’s former comments grant a narrow window into the mentality of central banker’s today. This is why the U.S. and the U.K. are always denigrating gold. Gold is the anti-US dollar, the kryptonite to central bankers per se. In order to keep people slaves to a fraudulent monetary system, people must not own gold or silver, for it is the only means people have to protect themselves against the theft of their wealth by central banks through inflation and devaluation of paper currencies.

 

[libertad]

http://www.theatlantic.com/doc/200905/imf-advice


But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

Top investment bankers and government officials like to lay the blame for the current crisis on the lowering of U.S. interest rates after the dotcom bust or, even better—in a “buck stops somewhere else” sort of way—on the flow of savings out of China. Some on the right like to complain about Fannie Mae or Freddie Mac, or even about longer-standing efforts to promote broader homeownership. And, of course, it is axiomatic to everyone that the regulators responsible for “safety and soundness” were fast asleep at the wheel.

But these various policies—lightweight regulation, cheap money, the unwritten Chinese-American economic alliance, the promotion of homeownership—had something in common. Even though some are traditionally associated with Democrats and some with Republicans, they all benefited the financial sector. Policy changes that might have forestalled the crisis but would have limited the financial sector’s profits—such as Brooksley Born’s now-famous attempts to regulate credit-default swaps at the Commodity Futures Trading Commission, in 1998—were ignored or swept aside.

The financial industry has not always enjoyed such favored treatment. But for the past 25 years or so, finance has boomed, becoming ever more powerful. The boom began with the Reagan years, and it only gained strength with the deregulatory policies of the Clinton and George W. Bush administrations. Several other factors helped fuel the financial industry’s ascent. Paul Volcker’s monetary policy in the 1980s, and the increased volatility in interest rates that accompanied it, made bond trading much more lucrative. The invention of securitization, interest-rate swaps, and credit-default swaps greatly increased the volume of transactions that bankers could make money on. And an aging and increasingly wealthy population invested more and more money in securities, helped by the invention of the IRA and the 401(k) plan. Together, these developments vastly increased the profit opportunities in financial services.

 

[OTCkrak]

http://en.wikipedia.org/wiki/Regulatory_capture

 

[libertad]

Here it is....

"Buy and Hold" is not a reliable strategy....

One can only "trade" assets....

Why ????

Too many unknowns for "Buy and Hold"....

ie The arguments for extremely low rates versus China walks
and rates possibly skyrocket....etc....

What CAN one do ????

TRADE

................................................................

To view a currency as 3 cents vs a $1.00 over a long period of time.....is a valid view...."the ultimate buy and hold failure"....
There were long periods where precious metals returned nothing and so on....

There is nothing so certain as change....

One must learn how to trade assets.....

The CB is just another Xi in the equation....


Perhaps the biggest risk of all is "not to trade"....

With or without the CBs....