Former
Wall Street trader and market commentator Bruce Krasting, in analysis
publicized by Zero Hedge, argues that the Swiss National Bank's repudiation
today of its pledge to peg the Swiss franc to the euro forever will mark the
beginning of the end of central bank power.
Krasting
writes: "The Federal Reserve, Bank of Japan, European Central Bank,
Swiss National Bank, and other central banks have repeatedly made the same
promises over the past half decade: 'Don't worry! We are here. We will do
anything it takes to achieve the stability we desire. We are stronger than
the markets. We can overwhelm all forces. We will never let go. Just trust
us.' ... Anyone who continues to believes in the all-powerful central bank
after today is a fool."
Well,
maybe.
But arrogant
as the Swiss National Bank has been and as humbled as it is now amid the
devastation it has wrought, it is actually one of the smaller central banks
and its influence has been vastly inflated by an outdated reputation for
probity.
And while central bank power suddenly does looks shaky tonight, central banks
are not alone in their never-ending war against free markets. No, central
banks may be allied with the rest of their governments -- indeed, to a great
extent central banks control
their governments by financing them -- and governments may claim even greater
power than central banks do.
Because
of their power of infinite money creation, central banks can not only
manipulate markets and thereby arbitrarily set the value of all capital,
labor, goods, and services in the world. As lately has seemed to be their
objective, central banks also can prevent markets from happening at all.
But
central banks can't prosecute and imprison people and confiscate their
property for perpetrating markets. Only the remainder of government can do
that -- and some governments seem to consider themselves empowered to do that
already even in nominally democratic
countries. For example:
http://www.gata.org/node/5606
http://www.gata.org/node/13573
That's
why any slippage in central bank power, like today's humiliation of the Swiss
National Bank, is less likely to result in the liberation of markets than in
an increase in what even some central bankers themselves call "financial
repression":
http://www.gata.org/node/10839
That
is, when central banks fail at market manipulation, governments may resort to
wage and price controls, capital controls, rationing, and even confiscation
of property and limits on travel.
But if
things come to that, at least the pretense of free markets that Western
mainstream financial news organizations play along with will be exploded and
even people who couldn't distinguish a derivative from an asparagus will know
where they stand, know that something has happened to their democracy. Even
the Financial Times might feel compelled to report it.
Krasting's
commentary is headlined "End of Central Bank Power -- Swiss National
Bank Folds" and it's posted at his Internet site, BruceKrasting.com,
here:
http://brucekrasting.com/end-cb-power-snb-folds/
