A central banker’s checklist for prosperity

[Editor’s note: Tim Price, Director of Investment at PFP Wealth Management and frequent Sovereign Man contributor is filling in from London, England while Simon is touring agricultural property today.]

If there was ever a policy manual on how to deal with recession, the Fed and ECB’s copies have fallen out of the ugly tree and managed to hit every single branch on the way down.

Indeed, if the world’s central bankers had wanted to perpetuate this recession until hell froze over, they couldn’t have done a better job:

  • Set interest rates to levels flatter than ten-day old beer? Check.
  • Stimulate consumption? Check. At the expense of savers? Check.
  • Push stock markets to all-time nominal highs at shaky valuations? Check.
  • Prevent widespread liquidation of financial assets? Check.
  • Keep lending money to shaky businesses? Check.
  • Keep that QE liquor flowing to ensure that banks never have to face their hangover whilst sober ? Check.
  • Ensure that bad banks– and let’s face it, they’re all bad– gorge on lousy government debt instead of lending to small and medium sized businesses? Check.
  • Keep on inflating base money? Check.
  • Interfere with the market to ensure that bad assets never reach a clearing price? Check.
  • Inflate retail prices? Check.
  • Seize funds directly from savers’ accounts? Check.

Ludwig von Mises comes to mind– There is no means of avoiding the final collapse of a boom brought about by credit expansion… Yet they keep trying to avoid it.

All in all, on this dismal list of failures there are more checks than at a Czech chess festival.

The only question is whether they stop the boom, or kill the currency. The way these central planners are behaving, we might even get both. So, enjoy the party, but dance very near the door. And load up on gold.

About the Author

Tim Price is a London-based wealth manager. While most of the investing herd crowds into dangerous, overpriced stocks, Tim Price lives and breathes value investing 24/7 as he searches for great investments all over the world for his clients.