Over the years the worlds’ central banks have operated in lockstep and with a unified front. Friday, the Richmond Fed put out a paper highly critical of the European central bank for not “easing” enough. This is curious because first off the Richmond Fed surely did not go “rogue” on their own and put this paper out without permission. So this was an “official” slap in Europe’s face. Secondly, this was highly public and highly critical. This looks to me like something has gone bad behind the scenes (which we are not privy to yet) and the fingers are starting to point.
What cracks me up is that the Fed is screaming PRINT at the top of their lungs. Can you imagine what they were to have done before 2008? “Printing” now is just “normal” and no one even thinks twice about it. Has it worked? The only question in my mind is how long it will be before sanity shows up uninvited and ruins the party. One thing that I really don’t understand is why do this publicly? If you want the ECB to get with the program and print to reflate, why not do it through back channels and privately? This in my view brings “questions” into play that I am sure the Fed does not want asked pertaining to inflation and intentional debasement.
Do you remember a little over a year ago when Europe was still talking about “austerity?” Austerity is obviously no longer a choice; it was maybe 10 years ago but is no longer because of the debt buildup and mathematical unsustainability. The only thing that austerity would do is to expose just how broke everything really is. No, printing is “way out” and the perceived road to riches. I can only believe that this finger pointing and public scolding of the ECB is to lay the groundwork to be able to say, “It would have worked if Europe had listened to us.”
Now one must wonder what comes next. Does the ECB cave in and monetize? Do they verbally fight back and point out the obvious, that printing doesn’t work AND destroys the currency? Will they respond publicly…or privately as WAS customary between central banks in the old days? Another thought to throw in is that the ECB has its strings pulled by Germany and the Bundesbank. Didn’t they just request that 300 tons of their gold be shipped back to them…and were told “no, wait 7 years?” Cannot getting their gold back lead to “unity”… or mutiny?
Unfortunately, the looming currency war is not confined to just the U.S. and Europe. Over the weekend Yau Yudong had more harsh words for the dollar as the world’s reserve currency and reported by Zero Hedge. The problem as I see it (other than the fact that the currency mechanisms are in fact broken) is that this has become public and they are arguing publicly. This can only eat away at confidence…which is the only thing left holding the system together.
It is clear that the currency wars are heating up and also clear that sovereign nations are chewing up available gold supply rapidly as they front run any systemic “change” that’s coming. History has shown us that actual war has been used as a tool for both retribution AND by the powers that be to retain their power. The fact that nations are pointing fingers at other nations and doing it so that commoners can see is a very bad sign. You must ask yourself a question, “If nations themselves are stockpiling gold…what is their reason?” These are all easy dots to connect and the disorder and distrust amongst nations and their central banks is a very important sign that should not be missed.