Bill Bonner’s take on yesterday’s Central Bank action was similar to the one I expressed in the preceding post. Mr. Bonner has an ability with words that few others possess. When he combines that with his ability to cut through the nonsense that passes for media wisdom, he is a delight to read.
Here is an excerpt from his article:
Stocks are bits of businesses. And businesses do not make more money just because the central banks print money. If this were not so, a few years ago, Zimbabwe’s companies would have been the most profitable on earth. Under the leadership of Gideon Gono, the central bank of Zimbabwe was printing up trillion-dollar notes and handing them out all over town. Trouble was, you couldn’t even buy a cup of coffee with them. In fact, you couldn’t buy a cup of coffee anyway…the whole economy was in such disarray nobody could get any coffee. Or anything else.
To the extent that Central Bankers pretended to stand for anything but inflating the currency and enabling wastrel governments, this action has thrown that pretension out the window:
Printing money is easier than raising taxes. It is also easier than borrowing…especially when lenders get wary. All that stands in the way is the integrity of the central bankers themselves.
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