Are Central Bankers just Economic Make-up Artists, Sexing-up Prices?


Follow us @ twitter.com twitter.com Welcome to Capital Account. Reports are out that Spanish banks which have been the primary buyers of Spain’s debt have used up almost all the money they borrowed from the ECB so don’t have much left over with which to buy more sovereign debt…the same goes for Italy. This is according to the Wall Street Journal. So it looks like we are back to our usual question — what are policy makers going to do? Our guest for this show is economist Paul Craig Roberts, who is here to help us make some sense of an increasingly surreal world. In the west, we have been raised with certain free market principles at the core of our economic vocabulary. Price signals are about as fundamental to the operation of markets as you can get, but by constantly manipulating and propping up asset prices, central bankers and their too big to fail handlers have made it simply impossible for anyone to claim that we live in a free market. Price discovery, once deemed essential to a well functioning marketplace, is now seen as the fly in the central planner’s ointment. Prices are a nuisance, or so they appear, and the central planner deems it is his job to support them at ever elevated levels from now unto eternity. Europe’s LTRO was the central banker’s latest attempt at flooding the banking system with currency whose supply is now only constrained by the limitations of modern computing. But the real world, unlike the fiat one of money and credit, has its limitations …

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About Dr. Paul Craig Roberts

Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available.

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  1. > “..by constantly manipulating and propping up asset prices, central bankers and their too big to fail handlers have made it simply impossible for anyone to claim that we live in a free market.”

    The expression “free market” should be banned. Like “god”, does anyone really think everyone has the same understanding of the expression – and that merely using the expression “free market” is enough?

    If a market is truly “free”, then, in the nature of humanity, centres of influence and control will evolve to control the resources and values for the inerests of those in control. And if it’s absolutely “free”, then, as sure as water runs downhill, the “free market” will act as despotic government. And if the market demands it, maybe we’ll have slavery and culling of those deemed to be a drag on, or danger to, the free market.

    By: mijj . April 20, 2012 . 1:52 pm |

    • > “.. centres of influence and control will evolve to control the resources and values for the inerests of those in control.”

      oops! .. i seem to have created the ugliest phrasing of all time there .. sheer “control” madness there. My apologies for any distress caused. 8-)

      By: mijj . April 20, 2012 . 1:55 pm |

  2. I think Dr Paul Craig Roberts needs some better exposure. How can we make this happen?

    By: belfast bob . April 23, 2012 . 9:38 pm |

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