Central banks have pretty much reached the end of their tether, with the world having very few bonds left for them to buy to keep their stimulus and quantitative easing schemes afloat. In fact, last week the European Central Bank head, Mario Draghi, stated that by the end of October he will have run out of bonds to buy, which include sovereign, bank, and even corporate debt instruments.
And while central banks like the ECB and Federal Reserve have yet to go full bore into buying other assets like stocks and equities such as Switzerland and Japan are already doing, a move into this arena will suddenly create unintended consequences that will resonate at the heart of economics in the Western hemisphere.
This is because an entity that can print out of nothing infinite amounts of currency to buy assets will not only make them the nation's biggest landlord, shareholder, and bondholder, but open the door to that institution having the power to then dictate to companies as well as governments their future economic, financial, and political agendas.
In essence, as the owner of the means of production, central banks will have changed an economy from a capitalist to a socialist one.
Epoch Times: How long can the central banks manipulate markets?Mr. Marc Faber: This is an issue that will be decided by central bankers and I don’t have control over the manipulation of central banks. Haruhiko Kuroda of the Bank of Japan (BoJ) expressed the view that there is no limit to monetary inflation. That they can keep on buying assets and they can keep on buying equities and real estate.So the madness in the present time may go on. In a manipulated market, it won’t end well, but you don’t know when it will not end well, and how far the manipulation can last.Epoch Times: And then at one point, the central banks own everything.Mr. Faber: They could essentially monetize everything, and then you have state ownership. And through the central banking system, you introduce socialism and communism, which is state ownership of production and consumption. You would have that, yes, that they can do. — Epoch Times
We have seen in ancient and recent times where individuals like Carl Icahn and Bill Ackman are able to force changes to companies simply by being large or majority shareholders in that business. Now imagine this on a nationwide scale if the Fed or ECB owns controlling interests in the majority of industries on their respective continents, and can then dictate who sits on their boards, the hiring and firing of company personnel, and even implement political changes such as forcing them to move towards climate change policies no matter if its unprofitable to the business.
Additionally, as a large debt holder of U.S. Treasuries the Fed already has power over government officials as seen by the fact that during the Government Shutdown battle of 2013, the first individuals invited to the White House were not the Speaker of the House, or the Majority Leader of the Senate, but 15 bank CEO's who instructed President Obama on how raising the debt ceiling would affect not only the economy, but them as a whole.
Thomas Jefferson once opined, "If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the content their fathers conquered." And as the Federal Reserve, ECB, and Bank of Japan continue down a course of printing money out of thin air to buy every asset that isn't nailed down, Jefferson's dire prediction may soon come to pass, and the economic model of capitalism that helped make Europe and America into two of the greatest success stories in history will fall prey to fascism, socialism, and perhaps even communism at the hands of un-elected officials bent on owning and controlling everything.