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New Scheme To Inflate Credit?

serfserf Member Posts: 9,225 ✭✭✭✭

Those sneaky central banks with goverments have a new play on undermining the value of fiat currencies. The German government should know better.

serf

https://themarket.ch/interview/russell-napier-the-world-will-experience-a-capex-boom-ld.7606

Germany has come up with a huge new guarantee scheme to cover the effects of the energy crisis. This is the new normal. For the government, credit guarantees are like the magic money tree: the closest thing to free money. They don’t have to issue more government debt, they don’t need to raise taxes, they just issue credit guarantees to the commercial banks.

They’re impotent. This is a shift of power that cannot be underestimated. Our whole economic system of the past 40 years was built on the assumption that the growth of credit and therefore broad money in the economy was controlled through the level of interest rates – and that central banks controlled interest rates. But now, when governments take control of private credit creation through the banking system by guaranteeing loans, central banks are pushed out of their role.

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