The BoE Will Be Graced with a Superhuman Governor
Yesterday the financial press was aflutter with reports about the nomination of the current chairman of Canada's central bank, Mark Carney, as the new governor of the Bank of England.
Most of the reports were gushing about the alleged ability of this central planner, to, well, plan better than his peers. Apparently he is needed now to 'rescue' the UK. A good example for this is , from which we quote a few excerpts below:
“Carney is a fantastic central banker,” Edmund Clark, chief executive officer of Toronto-Dominion Bank (TD), Canada’s second-biggest by assets, said in an interview yesterday. “He’s clearly been recognized around the world for that, and so Britain, from its point of view, did a smart thing.”
A day after watching one of his four school-age daughters play ice hockey in downtown Ottawa, Carney, 47, was named yesterday by U.K. Chancellor of the Exchequer George Osborne as the first ever foreigner to run the 318-year-old Bank of England and its youngest boss in more than half a century.
“We needed the best, and in Mark Carney we’ve got it,” Osborne said at the end of a 10-week official search after the Canadian’s virtually unique blend of experience in banking, policy making and regulation beat out other contenders.
Carney “is head and shoulders above the other candidates,” David Blanchflower, who helped set U.K. interest rates until May 2009 and now teaches at Dartmouth College in Hanover, New Hampshire, said yesterday on Bloomberg Radio’s “The Hays Advantage” with Kathleen Hays and Vonnie Quinn. “He’s going to come in with a big broom and sweep clean at the Bank of England, which is what is needed.”
“In an environment of international financial regulation, having somebody who has a strong track record in that is clearly important,” Donovan said. “The nationality is entirely incidental.”
Well, we do believe that 'nationality is entirely incidental' when someone has been with Goldman Sachs for 13 years. Ex-Goldman employees have taken over important regulatory posts all over Europe after all, including the presidency of the ECB.
Hundreds of articles in style and tone of voice akin to the above have appeared in the financial press yesterday. We have yet to come across even a single critical remark. It astonishes us to no end that central bankers have become such exalted figures in our modern society. How can bureaucrats inspire such unrestrained awe? Consider some of the statements above.
See, he is human (watching his daughters play ice hockey), but in reality, this bureaucrat is a regular super-human. What would we ever do without irreplaceable, exalted personalities like him? How could the market economy ever function properly without such people 'directing' it?
Allegedly Carney has left Canada in ruddy economic health. No-one deigned to mention that Canada owes its seeming economic health largely to high commodity prices these days, which to be sure owe far more to the actions of Ben Bernanke and the PBoC than to Mark Carney. What is 'incidental' is that Carney happened to occupy the post of central bank chairman in Canada just as this phase of high commodity prices occurred.
However, what will this 'giant of central banking' (he was voted 'central banker of the year' by some magazine a year or two ago) really leave Canada with?
How about: the biggest credit bubble in the country's history, one result of which is that over 30% of Canadians confessed in a recent survey that they have trouble sleeping due to worries about their huge debts?
How about a real estate bubble that has in places grown to such proportions as to stand as almost unique in human history? A bubble that absolutely dwarfs the real estate bubble that has come to such ignominious grief in the US and elsewhere?
His 'great feat' consists of having nudged the central bank's administered interest rate to all of 1%. Well, BFD. We realize of course that in order to arrive at this carefully planned, 'just right' one percent interest rate, countless meetings had to be held and reams of economic statistics had to be poured over. And yet, it is almost certain that this interest rate deviates from the natural rate indicated by society-wide time preferences and therefore distorts prices across the economy and causes malinvestment– which as it were should be blindingly obvious considering the real estate bubble.
We should not cower in awe before these bureaucrats, who have on the whole probably held back economic progress by decades and created untold misery in many regions of the world, while in the main greatly benefiting the banking cartels over which they preside.
That Mr. Carney's stint at the Bank of Canada is today fondly remembered and destined to become part of its lore of 'success' is a complete coincidence. Had Mr. Greenspan vacated his post at the Fed just five or six years earlier than he did, he would today also be remembered as one of the 'greatest central bankers ever', simply because his chairmanship coincided with a big boom.
This has nothing to do with the 'planning abilities' of these men. This is not to say that Mr. Carney is not an intelligent and talented man. He undoubtedly is that, which is already proven by where his career has led him. However, it is the height of conceit to believe that anyone can 'plan' the economy, or know what the proper interest rate and the proper height of the money supply should be. These are things that can only be optimally determined by the market. The reality is that we have a socialistic monetary system that is in the process of failing – we are witnessing what are probably its death throes. Carney will now head a central bank that has bought up almost one third of the government debt in issue, not surprisingly to no discernible positive effect. He will likely find out that this sinking ship will prove more difficult to steer than the one he is leaving.
Even Canada's finance minister Jim Flaherty stares in awe at the super-human bureaucrat who is now leaving his employ …
(Photo by Fred Chartrand / The Canadian Press)
You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.
Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke
4 Responses to “Mark Carney – Exalted Central Planner”
Most read in the last 20 days:
- Gold - Ready to Spring Another Surprise
Sentiment Extremes Below is an update of a number of interesting data points related to the gold market. Whether “interesting” will become “meaningful” remains to be seen, as most of gold's fundamental drivers aren't yet bullishly aligned. One must keep in mind though that gold is very sensitive with respect to anticipating future developments in market liquidity and the reaction these will elicit from central banks. Often this involves very long lead times. Blackbeard's...
- Modi’s Great Leap Forward
India’s Currency Ban – Part VIII India’s Prime Minister, Narendra Modi, announced on 8th November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender. Linked are Part-I, Part-II, Part-III, Part-IV, Part-V, Part-VI and Part-VII, which provide updates on the demonetization saga and how Modi is acting as a catalyst to hasten the rapid degradation of India and what remains of its institutions. India’s Pride and Joy Indians are...
- Global Recession and Other Visions for 2017
Conjuring Up Visions Today’s a day for considering new hopes, new dreams, and new hallucinations. The New Year is here, after all. Now is the time to turn over a new leaf and start afresh. Naturally, 2017 will be the year you get exactly what’s coming to you. Both good and bad. But what else will happen? Image of a recently discarded vision... Image by Michael Del Mundo Here we begin by closing our eyes and slowing our breath. We let our mind...
- The Great El Monte Public Pension Swindle
Nowhere City California There are places in Southern California where, although the sun always shines, they haven’t seen a ray of light for over 50-years. There’s a no man’s land of urban blight along Interstate 10, from East Los Angeles through the San Gabriel Valley, where cities you’ve never heard of and would never go to, are jumbled together like shipping containers on Terminal Island. El Monte, California, is one of those places. Advice dispensed on Interstate...
- A Trade Deal Trump Cannot Improve
Worst in Class BALTIMORE – People can believe whatever they want. But sooner or later, real life intervenes. We just like to see the looks on their faces when it does. By that measure, 2017 may be our best year ever. Rarely have so many people believed so many impossible things. Alice laughed. "There's no use trying," she said: "one can't believe impossible things." "I daresay you haven't had much practice," said the Queen. "When I was your age, I always did it for...
- Pope Francis Now International Monetary Guru
Neo-Marxist Pope Francis Argues for Global Central Bank As the new year dawns, it seems the current occupant of St. Peter’s Chair will take on a new function which is outside the purview of the office that the Divine Founder of his institution had clearly mandated. Neo-Papist transmogrification. We highly recommend the economic thought of one of Francis' storied predecessors, John Paul II, which we have written about on previous occasions. In “A Tale of Two Popes” and...
- Trump’s Trade Catastrophe?
“Trade Cheaters” It is worse than “voodoo economics,” says former Treasury Secretary Larry Summers. It is the “economic equivalent of creationism.” Wait a minute - Larry Summers is wrong about almost everything. Could he be right about this? Larry Summers, the man who is usually wrong about almost everything. As we have always argued, the economy is much safer when he sleeps, so his tendency to fall asleep on all sorts of occasions should definitely be welcomed....
- Where’s the Outrage?
Blind to Crony Socialism Whenever a failed CEO is fired with a cushy payoff, the outrage is swift and voluminous. The liberal press usually misrepresents this as a hypocritical “jobs for the boys” program within the capitalist class. In reality, the payoffs are almost always contractual obligations, often for deferred compensation, that the companies vigorously try to avoid. Believe me. I’ve been on both sides of this kind of dispute (except, of course, for the “failed”...
- Money Creation and the Boom-Bust Cycle
A Difference of Opinions In his various writings, Murray Rothbard argued that in a free market economy that operates on a gold standard, the creation of credit that is not fully backed up by gold (fractional-reserve banking) sets in motion the menace of the boom-bust cycle. In his The Case for 100 Percent Gold Dollar Rothbard wrote: I therefore advocate as the soundest monetary system and the only one fully compatible with the free market and with the absence of force or fraud...
- Silver’s Got Fundamentals - Precious Metals Supply-Demand Report
Supply-Demand Fundamentals Improve Noticeably Last week was another short week, due to the New Year holiday. We look forward to getting back to our regularly scheduled market action. Photo via thedailycoin.org The prices of both metals moved up again this week. Something very noticeable is occurring in the supply and demand fundamentals. We will give an update on that, but first, here’s the graph of the metals’ prices. Prices of gold and silver...
- Trump’s Plan to Close the Trade Deficit with China
Rags to Riches Jack Ma is an amiable fellow. Back in 1994, while visiting the United States he decided to give that newfangled internet thing a whirl. At a moment of peak inspiration, he executed his first search engine request by typing in the word beer. Jack Ma, founder and CEO of Alibaba, China's largest e-commerce firm. Once he was a school teacher, but it turned out that he had enormous entrepreneurial talent and that the world of wheelers, dealers, movers and...
- Side Notes, January 14 - Red Flags Over Goldman Sachs
Red Flags Over Goldman Sachs Just to prove that I am an even-handed insulter, here is a rant about my former employer, Goldman Sachs. The scandal at 1MDB, the Malaysian sovereign wealth fund from which it appears that billions were stolen by politicians all the way up to the Prime Minister, continues to unfold. The main players in the 1MDB scandal. Irony alert: apparently money siphoned off from 1MDB was used to inter alia finance Martin Scorcese's movie “The Wolf of...