Dear Friends:
The entire burden of fighting recession, financing deficits, and creating a significant and lasting economic stimulus will fall on each nation’s central banking system.
US Federal Reserve Chief Ben Bernanke and his counterparts in Europe will launch a second, even bigger round of money printing, possibly within the next year. Mr. Bernanke is concerned about deflation, so his enthusiasm for money printing knows no bounds. Sadly for all, this supposed deflation in the US is largely attributable for the lack of financing [the availability of easy credit used to push up the prices of many large-ticket items] for individuals and small to medium-sized businesses; the loss of income to make purchases of anything except the essentials and some diversionary frivolities (something akin to gambling with your last few dollars or going on a bender before the Sun goes out)
Expect major intervention by the central bank of central banks – The Bank for International Settlements (“BIS”), located in Switzerland -- to coordinate this effort amongst the central banks of Europe, the US, and all of the other bulwark “industrialized” nations throughout the world. You’ll be hearing a great deal about the BIS in the media for the first time in history.
The BIS is a little-known, largely understated clearing house bank for all of the major central banks – it is perhaps the most powerful entity in the world concerning the settlement of debts in multiple currencies among sovereign nations. It plays a major role in currency valuation, sovereign credit ratings, and interest rates on debts between nations (usually through their respective central banking systems.
The BIS will finally emerge from the shadows and enter the spotlight – expect to be hearing more about the BIS within the next 6 to 9 months. The sovereign debt crisis is merely in a temporary media “time-out.” It will be returning with a vengeance within the year.
The lesson here, which very few government policy-makers refuse to learn (or understand all too well, for those of you who are conspiracy theorists), is that printing currency and incurring debt and interest will never, ever substitute for productivity and profitability. You cannot borrow your way out of debt.
Nations full of borrowers will become the ultimate source of repayment for all of this debt (in the form of taxes) and have already become enslaved by the money printers.
Faithfully,
Douglas Castle
Douglas Castle
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