Yesterday, the saints at central banks in China, Europe and the UK said they would perform what could only be described as a miracle. The world economy wheezes, rattles and shakes because it has been poisoned by too much debt. So, what do the central bankers offer as a cure more debt!
"Central banks take action", is the headline in today's Financial Times. "Moves to stimulate global economy," the FT described them.
Interest rates have been cut. Another batch of money is going to be printed. This is all news we are beginning to get bored of. It's the same story.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
But here is something new. And it really grabbed our attention, of course I'm talking about the God Particle' story. Without it, say the scientists who tracked it down, we wouldn't exist.
Of course, you could say that about a lot of things. Without air, we wouldn't exist. Or water. Or sunlight.
Could we exist without Homeland Security? Without Twitter? Without rap music?
Apparently so. We did for many thousands of years. Happily.
Could we exist without a central bank? Many people would reply no'.
Some would say no just because they are ignorant. Others would say no because they are just plain stupid. But any sensible person would admit that human life could exist without a central bank.
The US had no central bank before 1913. It had higher rates of GDP growth back then. It had a stronger currency too the dollar of 1913 was worth about the same as a dollar of one hundred years earlier. Now, it's worth about three cents and disappearing fast.
On the surface of the argument, it would appear that America's central bank has actually made things worse. Maybe that is a coincidence; post hoc ergo propter hoc and all that. But maybe there is a cause and effect relationship. Maybe a central bank CAUSES the economy to produce less wealth and CAUSES the currency to lose value.
But central bank apologists insist that times have changed, they claim that modern economies can't exist without them. Maybe. But we are not convinced here at The Daily Reckoning. All we can say for sure, is that without thebenefit of a giant particle collider, or a know-it-all economist, the Fed is not the same as the god particle'. The former is a fairly recent innovation but the latter has always been with us.
The Higgs boson is very small. And very short-lived. No one has ever actually seen it. However, the scientists who get paid to do this sort of thing assure us that it is a big deal, despite what the Financial Times may think. The FT put the god particle' below the Libor story yesterday, which perhaps shows that the paper has its priorities wrong or that finance now IS actually more important than God.
According to reports, the Higgs boson is the thing that gives mass to other things. For us, this just raises more questions than it answers. It does not explain why other things need mass, nor why they didn't have it in the past, nor where the Higgs boson got it, nor what the recipients plan to do with it.
Which merely deepens the mystery for us. God himself would not seem to require mass. He is not like a block of wood, after all. He is more a part of the spirit world, which sounds a bit like the world Higgs boson inhabits.
And while we accept that He can do what he wants, we also feel justified in assuming that He's not out to get us with some nasty trick or merely looking out for NUMERO UNO.
This is very different from the Libor story or the central bank story. In the Libor scandal we found Barclays bank insiders setting interest rates to suit themselves rather than letting willing buyers and sellers set rates for themselves. This is, of course, more or less what we'd expected them to be up to, manipulating interest rates for their own benefit. Both the chairman of Barclays and its chief executive have been forced out as a result.
But wait Isn't manipulating interest rates lower exactly the subject of the central bank story too? The BoE, the BoC and the ECB are all pushing down rates, just like the Barclays boys. They think they have the right. They say it will help stimulate growth.
Could the universe still exist without these interest rate manipulators? We don't know; but we'd like to find out!
Don't miss Bill's next Daily Reckoning. To receive the next article straight into your inbox as soon as he's written it, sign up to the email list here .
Information in The Daily Reckoning is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment decisions. Appropriate independent advice should be obtained before making any such decision. Your capital is at risk when you invest in shares - you can lose some or all of your money, so never risk more than you can afford to lose. Always seek personal advice if you are unsure about the suitability of any investment. The Daily Reckoning is an unregulated product published by Fleet Street Publications Ltd. Customer services: 020 7633 3600. Fleet Street Publications Ltd is authorised and regulated by the Financial Services Authority. https://www.fsa.gov.uk/register/home.do FSA number: 1152 34
8 of the best riverside properties for sale
Will “Liberation Day” strike again?
