For the last 20 years, financial policymakers the world over have been educated, dominated and directed by the profit-extracting-finance sector while it managed to download risks and costs on to governments and taxpayers everywhere. We are all paying the price for this now, in a global mess of historical proportions: crushing debt levels, woefully under-priced financial risks, under-funded social promises, fragile institutions, zero and negative yielding options for savers. Just as in the 1920s, whole generations of people will be left with lasting damage from this era.
Today the Bank of England cut its overnight rate to a new crisis low of .25% (having been at .5% since March 2009) and increased its monthly bond buying program (QE); reminding yet again, that th
e same misguided ‘add even more debt and stir’ ideas which have already imploded the global economy, remain the only idea of central banks everywhere.
This cartoon on Twitter today, reminds about how inequitable and lenient the treatment of financial criminals relative to other offenders has been during this dark period. Indeed, jail time of any kind remains still nearly unheard of for the directing executives of financial crimes–especially at the largest, most politically protected firms.
But the point prompts an even larger discussion about central bank directors (financial academics who are also largely ex and future-employees of the largest financial firms) who have counseled and prodded the world down a self-destructive path over the past 20 years. Surely they owe we, the people, who have been relying on their expertise, a fiduciary duty to put our best interests ahead of their own career advancement and corporate sponsors? What will be the punishment for this massive failure of fiduciary obligation that has caused so much lasting harm to so many? This is a question that will be answered in the weeks and months ahead, as asset bubbles continue to burst and funding and capital deficits are revealed once more for as far as the eye can see.
As shown in this chart since 2006 of the Dow 30 Index(navy) and the Transport Index (black), the QE ramp (2013-2016), just like the subprime debt ramp (2005-2008) before it, wasted trillions of good money after bad in trying to maintain unsustainable borrowing and consumption habits. This most recent episode is rolling over, just as the last did in 2007-09, and the time before that in 2001-02. In the process, we, the people and our economy, have been left financially and socially weakened. How will present leaders and advisors be held accountable?
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