Central Banks Creep Toward Uncomfortable Role: Central Planners

Central Banks Creep Toward Uncomfortable Role: Central Planners, by James Mackintosh.

[A]s the central banks become more desperate to boost inflation and growth, they are starting to break one of the modern tenets of the profession by funneling that cash directly to what they regard as “good” uses.

Central banking is inching towards PC:

The past two weeks brought interventions by the Bank of Japan and European Central Bank, which would have been unthinkable just a few years ago.

The Bank of Japan’s conditions for companies to qualify for exchange-traded funds it would like to buy sound like they come from a well-meaning government minister, not a monetary authority concerned about overall growth and inflation. Companies could qualify by offering an “improving working environment, providing child-care support, or expanding employee-training programs.”

Bank credit going political:

“It’s a massive politicization of credit: Here are the legitimate things for lending, and here are the illegitimate things,” said Russell Napier, an independent strategist and author of “Anatomy of the Bear,” a study of 70,000 Wall Street Journal articles during major bear markets. “It’s capitalism with Chinese characteristics.”

The free market has been quietly dying in the last two decades, as the banks and central banks increasingly take over more and more. Funny, but this hardly ever gets mentioned in the media, which is  ever-so-friendly to banks and government.

In the longer term, it is lowering everyone’s living standard — just look at the Soviet economy versus the US economy, or Venezuela versus Chile. Some people are now noticing that growth has plateaued, income growth is going backwards for all but the top echelons (those connected to the banking money spigots), and living standards haven’t been going up for most sectors of society for quite a while.