The acquisition of equities by central banks, government pension funds and sovereign wealth funds amounts to enormous power to sway markets the state’s way; all that’s required is a bit of inter-departmental cooperation and $29 trillion (and rising) can be fully utilized to this end.
This intervention could increase until governments end up as significant shareholders in most major companies. Norway’s Government Pension fund alone is buying 5% of every major listed European company.
So do not under-estimate the potential scope for further government intervention. Politicians and crony-capitalists will relish this new state-sponsored capitalism, which promises to tame bear markets and enhance share options. Unfortunately such idealist thinking is in defiance of economic reality with all the eventual consequences that entails.
Both Keynesians and monetarists believe that increased government spending, or more money injected into the economy, is sometimes necessary. The intervention is in the form of unfunded government spending, artificially low interest rates to boost demand for money and bank credit, or a drive to make the currency “competitive” by lowering it. These methods have been tried unsuccessfully time and again, and they must be denounced if we are to understand our true economic condition.
Submitted by Deepcaster:
The proposed forced Investment of Present and Prospective Retirees 401(K) Assets in U.S. Treasury Paper about which we earlier wrote, is now followed by yet another prospective attack on Retirees’ Security, and indeed on the Wealth Security of those who hold $US Denominated Assets.
The Prospective Rigging of the CPI Calculation Protocol would , yet again, make the “Official” CPI even further removed from The Inflation Reality. The Reality is that the current U.S. Inflation Rate, 9.82%, is already Threshold Hyperinflationary.
Absent manipulation, Gold and Silver would be the monetary “Canaries” of the Financial World, whose prices would long ago have warned of Excessive Monetary and Credit Creation. Well, in the past decade their price appreciation certainly has “warned” of that, but not in the past few months. Gold and Silver prices are subject of ongoing Price Suppression by a Fed-led Cartel. But Gold and Silver Price Suppression, cannot last forever.