Drawing Parallels: Central Bankers and the Russian Mob

Comparing Central Bankers to the Russian Mob

Updated Aug 2023

It is not in the world of ideas that life is lived. Life is lived for better or worse in life, and to a man in life, his life can be no more absurd than it can be the opposite of absurd, whatever that opposite may be.
Archibald Macleish

Here are some ways central bankers are similar to the Russian mob. At least with the mob, the end is usually quick, but with central bankers, they slowly bleed you dry.

1. **Enriching the Super Rich**: Central banks, through their monetary policies, often benefit the wealthy more than the poor. For instance, Quantitative Easing (QE), an approach used by central banks to stimulate the economy, involves buying securities to increase the money supply and encourage lending and investment. While this can boost the economy, it also inflates asset prices, benefiting those who own assets – typically, the wealthy. This can exacerbate wealth inequality.

2. **Creating Inflation**: Central banks control the money supply, and increasing it – as they do through QE – can cause inflation. While moderate inflation is a sign of a healthy economy, high inflation can erode purchasing power, particularly affecting those with fixed or low incomes.

3. **Triggering Boom and Bust Cycles**: Central banks’ control over interest rates and the money supply can lead to economic boom and bust cycles. When central banks lower interest rates and increase the money supply, it can lead to economic expansion. However, doing this excessively can create economic bubbles that eventually burst, leading to recessions. This cycle can lead to economic instability and uncertainty.

4. **Lack of Fiscal Discipline**: The criticism by Mark Carney, Governor of the Bank of England, of the proposal for QE for the people highlights a perceived lack of fiscal discipline among central banks. The argument is that central banks have been instrumental in creating economic cycles through their monetary policies without sufficient regard for the long-term consequences.

In conclusion, while central banks play a crucial role in managing economies, their policies can have unintended negative consequences. These can include wealth inequality, inflation, economic instability, and a perceived lack of fiscal discipline. These issues are akin to the disruption caused by the Russian mob in the sense that they can lead to societal harm and instability.

Russian Mob Intrigues: A Blend of Old and New Tactics

However, consider a scenario where central bankers have an ulterior motive for implementing negative rates—could it be a form of Quantitative Easing (QE) for the masses? This intriguing proposition raises the question of how such a goal could be accomplished. The key to this puzzle lies in the strategic use of negative interest rates. Making saving an expensive endeavour could potentially nudge the masses towards speculation, which forms the core of the ongoing negative interest rate debates.

The idea of being charged interest by banks on one’s own money, while the same banks profit from lending it out can stir up a sense of rebellion among the masses. This effectively translates into a double taxation: initially by the government on earnings and subsequently by the banks for merely holding funds they would later lend to others. This questionable practice creates a perfect scam, incentivizing people to seek higher returns through speculation and potentially giving birth to the concept of “QE from the masses.”

Now, let’s introduce the Russian Mob into this equation. The Russian Mob has historically been known for its innovative and ruthless tactics. They have always found ways to exploit loopholes in the system, and this situation could be no different. With the masses being pushed towards speculation, the Mob could seize this opportunity to manipulate the market, blending their old tactics with new strategies to maximize their gains. This fusion of the old and the new could lead to a new era of Russian Mob antics, further complicating the hostile interest rate battles.

Let’s add a bit of historical context to this topic so you can see how the Fed and central bankers, in general, take advantage of the working poor.

Negative rate wars gaining traction

Sweden has recently taken the step of further reducing its rates from -0.35% to -0.5% in pursuit of its ambitious 2% inflation target. Following in their footsteps, Switzerland and Japan have also embraced the trend of negative interest rates, while other nations are increasingly considering this option.

It seems inevitable that our central bankers will eventually be compelled to join this bandwagon. In an era characterized by the mantra of “devalue or die,” resistance becomes futile, leading us to believe that it’s only a matter of time before the Federal Reserve reverses its course and initiates rate cuts. To prepare the masses for this shift, the Fed will likely enumerate a plethora of negative factors that have necessitated a reassessment of the situation.

There are indications that the general populace might be compelled to turn to speculation out of sheer desperation, given the demanding circumstances that the Fed has already imposed upon the average person. The hardships experienced by individuals could potentially drive them towards speculative ventures as a means of survival.

Hardships mounting

Hardships are on the rise, with 76% of families living from paycheck to paycheck. According to CBS, this phenomenon affects even 33% of families earning $75,000 per year; it’s not limited to just the so-called working poor. While the official unemployment rate is below 5%, the unofficial rate is close to 23%, as per shadow stats.

We find ourselves in the midst of a full-blown currency war, as one nation after another joins the negative interest rate trend. Swiss National Bank President Thomas Jordan confirms that damaging interest rate conflicts are here to stay, stating, “Our monetary policy is clear. It is based on two pillars: negative interest rates and the willingness to intervene in the currency market if necessary.”

The image above vividly illustrates the rapid adoption of negative interest rates by numerous European nations, hinting at its impending spread to North America and Asia.

The driving force behind these market trends is rooted in the collective mindset of the masses, who have strong faith in the Federal Reserve and the government’s ability to tackle their challenges. As long as this sentiment remains unchanged, the current state of affairs will persist, and the outlook is poised to worsen.

How To Deal With The New Russian Mob (AKA The Fed)

If you wish to engage in speculation, it’s crucial to comprehend how financial markets function and what influences them. The primary driving force behind market movements is emotions, often referred to as Mass Psychology. Understanding this aspect can provide you with insights into market operations, eliminating the need to rely on individuals on Wall Street who present themselves as experts.

Here is a list of blue-chip stocks or stocks exhibiting robust growth rates. Two key metrics to consider are strong quarterly earnings growth rates and solid quarterly revenue growth rates. Some companies to consider include HRL, PPC, OCLR, CIEN, AMZN, RTN, OA, and more.

How will Gold fare in a hostile interest environment?

Conventional wisdom states that precious metals trend upward when rates are rising. We live in strange times, and central bankers are breaking the left, right and centre rules, so this old paradigm might not hold. If the masses are forced to speculate, they could decide that Gold is a better storage of wealth. However, for that to pass, the average Joe would have to understand the real meaning of the word inflation and that Gold is a currency, not some ancient relic that has no place in the 21^st century.

This will not be an easy feat, so while we expect Gold to trend higher in future years, the next bull run will not begin with a bang. Another possibility to consider is that if the cost of holding money in a bank becomes prohibitive, it could trigger a run on the banks. We will examine this issue in more detail in a follow-up article.

How does one become a butterfly?” she asked pensively. ”You must want to fly so much that you are willing to give up being a caterpillar.”
Trina Paulus