The Bank of International Settlements has produced a paper discussing the global shortage of safe assets and suggesting a solution. It's a fascinating paper, not least because of the glimpse it affords into the looking-glass world of finance. I've noted before that to the financial world, the real economy is simply a source of resources to support financial trading and investment. If the BIS paper is anything to go by, so are governments....
...if governments are banks, and are backstopped by banks, and exist primarily to serve banks and investors, then who is it who really runs this show?Coppolla Comment
When governments become banks
Frances Coppolla
Very insightful.
2 comments:
"if governments are banks, and are backstopped by banks, and exist primarily to serve banks and investors, then who is it who really runs this show?"
govts are NOT 'backstopped by banks'...
For the govt to set up and run the monetary/banking system is the most basic and important operation the govt can conduct...
the problem today is that there are libertarians who dominate both sides of the political spectrum and simply do not see this as an appropriate function of govt institutions.
libertarianism has slowly taken over a plurality of people over the last 100+ years and is out of control right now...
rsp
Matt, she is saying that the central banks exist for finance capital, not the economy or the good of the nation, and their purpose is to ensure that Govt securities are safe from inflation and devaluation, so they run their policy based on interest rates. It's the basis of monetarism. I think she has this right.
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