The Central Bank Effect: The Best Friend Of The One Percent

Authored by Tom Lewis via,

When it was created in 1913, the Federal Reserve was supposed to stabilize the US dollar. That was its stated purpose. The reality has proven to be quite different. The gap between rich and poor keeps widening. Today, more than half of US workers have less than $25,000 set aside for retirement. Thirty-six percent have savings of less than $1,000.

The Federal Reserve has almost limitless power to print paper money, extend credit and create debt, thus creating the illusion of prosperity where none exists. At one time, hard work could provide a secure future for generations. Now, a person is fortunate if hard work can help them get through the day. 

Like a painting by Manet, the Federal Reserve has shifted facts to blurry shadows of light and dark without clear shapes. It’s an illusion that matters, not the facts.

Central banks have placed great emphasis on bailing out mismanaged banks before their bad management policies cause them to fail and to prop up wall-street. Waving a magic wand, central banks can make it “all better” for banks at the expense of the consumer. A fairy godmother for the rich comes in handy. The dwindling middle class is slowly sinking under the brutal economic realities of today.

Powerful bankers know that once they become big enough, central banks will bail them out of trouble. They know they will be rewarded for their failure by being handed a virtually unlimited supply of more printed money but most importantly fat bonuses!

Better yet, in our era of advanced technology, printed money is no longer necessary. Money is created electronically and shifted to banks at the push of a button. Specifically, the money goes to large banks who must be kept adrift at all cost. Smaller, less powerful, banks sink or swim on their own accord without the benefit of a federal life preserver.

Banks are a part of the Wall Street establishment that manipulates money by behind-the-scene slights of hand. Wall Street can fail, as did Lehman Brothers, Merrill Lynch, Citicorp and other industry giants. However, the Federal Reserve has the power to save these Big Banks – if it chooses to do so. It can let a few failures become absorbed by larger banks, thereby creating even bigger giants. Wealth is no longer about earning and creating money; it’s all about shifting money around.

That is why the 1% love the Fed. They prosper from the Federal Reserve’s manipulation of paper while Main Street continues to struggle to hang on. The world of ZIRP enabled banks to offer cheap loans, while those same low-interest rates and low-yield bonds eroded Main Street’s assets through inflation. Savings accounts may be running at a deficit, thanks to Federal Reserve policies.

Logically, you’d think Congress would put an end to this financial manipulation. But logic doesn’t apply to the government. Congress is one of the largest beneficiaries of fiscal manipulation as banks make substantial campaign contributions. Big banks can support the best politicians fake money can buy. That is why the Federal Reserve will continue to hold up big banks. The collapse of one big bank could create economic chaos. The demise of a small, hometown banks would and will continue to go unnoticed…

In the Middle Ages, alchemists dreamt of untold riches by trying to turn lead into real gold. Modern technology has made that dream come true. Among the dreamers, the Swiss National Bank is one of the largest. It turned its $800 billion stock and bonds portfolio into $55 billion profit. Good banking? Not quite. While a central bank is supposed to be a regulatory agency, global central banks are becoming investors by buying up stocks and bonds, especially high-yield government bonds. How do central banks purchase these assets? By creating new money and manipulating the currency. It’s as easy as that. See the chart below.

Chart: Wall Street Journal

Other central banks have been busy purchasing assets, as well. Central banks have accumulated assets in excess of $21 trillion. See chart below.

Chart: Bloomberg

Creating wealth out of thin air would have been a medieval alchemist’s dream come true. But they were working with lead instead of worthless paper money. Of course, the end result of all this fiat currency is hyperinflation. Zimbabwe’s and Venezuela’s economic collapse are the logical consequences of magical fiat currency gone amok. Are we far behind?

According to the Oxfam International, global fiscal policies favor the wealthy. Eight out of every $10 dollars created ends up with the richest of the global population. Half of the global citizens do not see any increase in wealth. The capitalist system, which created wealth and prosperity for all workers is gone and has reverted to the feudal system thanks to central banks, where kings and queen bask in riches while the rest of the population struggle to find a morsel of cake to keep it alive.

Unless wealth is distributed more equitably, we may find ourselves living in a feudal system and bowing to the royalty that is the central banks.


Deep Snorkeler Sy Kloine Bee Wed, 04/04/2018 - 19:38 Permalink

The New Trump World

1. all good Americans must show reverence for our leadership class-

God's Elite Billionaire Christo-Caste

2. our nation's fraud carnival is for their benefit

3. our wealthy superiors cannot stop their predations which are sanctioned by the Lord

4. billionaires have never seen a real threat to their income stream

5. your lives are a part of a large asset stripping operation 



In reply to by Sy Kloine Bee

Fantasy Free E… Wed, 04/04/2018 - 19:42 Permalink

The human species suffers from some very severe misunderstandings.

One of these is the delusion of importance. So it is hard for folks to fathom that they are only a resource to be exploited.

But that is what an individual is in a large aggregation of people, or as a member of a herd if you prefer. The reptilian brain treats government as divine. The opportunities to exploit this are just to great for really smart people to pass up.

helloimjohnnycat Wed, 04/04/2018 - 19:50 Permalink

Let's get FROM the bottom of it :

Cast the mother-fuckking joos from our shores.

Problem solved.

Do I need to explain free rides would end ?

Do I need to explain the systemic process of dollar devaluation would cease ?

Do I need to explain the time value of money would return for savers ?

Do I need to explain the constant erosion of yesterday's savings effectively converts yesterday's work into acts of servitude.

Do I need to explain the benefits of eliminating joo-fuck lawyer crooks ?

JelloBeyonce Wed, 04/04/2018 - 20:02 Permalink

Blame the 1 percent or Fed all you want....the real problem lies with the people, the mindless masses themselves.

Humankind is completely lost.  People want stuff to satisfy the gigantic voids in their lives.....voids that exist because they've lost the ability to think, reason, understand, acquire true knowledge of the natural world around them.  Voids that exist because they've rendered themselves completely useless ('cept as slaves to the neo-feudal lords).

Big banks and corporate giants exist because few people can do anything for themselves.  People demand things like internet so that they can get infotainment, rather than explore and understand the natural world around them.

People want to be told stuff, tall tales, amusing anecdotes, rather than discover, and acquire true knowledge for themselves. 
People demand "celebrities" because they can't find relevant meaning in their own pathetic lives.

People demand "conveniences", and value those conveniences over innate qualities like freedom, individuality, independence, etc.
People are too frightened to do things on their own.

People demand "leaders" because they're too lost, too insecure to direct themselves. 

You, the consumer, the internet surfer/news reader, the tv watcher, the voter, are the real problem.

Others gain power simply because they're allowed to.  Others gain massive wealth simply because they're allowed to.
You want the Googles, the Apples, the Teslas, the GM's, the Monsantos, etc., yet you also complain about the same.  You need these entities to provide meaning to your wholly empty lives.


Judge thyselves first, fools!

ThrowAwayYourTV Wed, 04/04/2018 - 20:11 Permalink

Just their way of hiding the money in plain sight.

Cant let all that money out into the public now can we? If they do there will be 1000x more cars on the road, 1000x more houses being built and natural areas destroyed every day. Oceans, lakes rivers ponds and streams all polluted 100 years before they will be anyway. Nuke plants pumping out radiation trying to keep up with all the over crowded sports stadiums and cities.

Truth is, theres way too much money in the system and their way of trying to control spending is to put most of it in as fewer hands as possible.

If you had 100 million dollars how much would you spend? Maybe a few million. Now give 100 people a million dollars each and how much would they spend, 50 million?

And! The very rich are usually very environmentally friendly. While the middle and lower class are extremely environmentally destructive.

pitchforksanonymous Wed, 04/04/2018 - 20:14 Permalink

After watching the market today, you really have to ask yourself why we even watch the stock market?

it has no meaning when the numbers are decided before the open. 

Think I’ll go hit some golf balls. Masters week baby. Hey ... I need a distraction from this farcical bullshit. 

Oldguy05 Wed, 04/04/2018 - 20:21 Permalink

" When it was created in 1913, the Federal Reserve was supposed to stabilize the US dollar. That was its stated purpose. "


Yah but now we all know that's a bunch of lying shit.

Bankers make money by selling bonds, not by holding them until they are repaid. When financiers lobby to forgive debt, they are setting up more profits for themselves while asking the general public to eat the losses. The same trick is used today through the IMF, World Bank and their various off-shoots.

BustainMovealota Wed, 04/04/2018 - 20:32 Permalink

When we see articles like this why no mention of the Rothschild's,  Bilderberg's, Vanderbilt's, etc.  Not even in the chart graphics, polls, etc.  This article talks about Central Banks, Federal Reserve but not one word about these evil fucks who started the shit.  They are not mentioned on Fox News, MSLSD, CNN, OAN, local news, yet they control / involved in everything you see and do.  Very interesting.  Folks need to wake the fuck up and learn who is really in control.  They control more than Joe Six pack and ZH readers know!

BustainMovealota Wed, 04/04/2018 - 21:32 Permalink

“I believe that banking institutions are more dangerous to our liberties than standing armies. 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 the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.” — Thomas Jefferson, 1802

jin187 Wed, 04/04/2018 - 22:45 Permalink

I am technically poor, but I own a late model car, modern appliances, and many thousands of dollars in weapons and entertainment devices(not mutually exclusive), and pay this month's bills with last month's paychecks.  If some fucker has stock options someone thinks are worth a billion dollars, good for him.  So what if we're still serfs.  At least we aren't dying behind a wooden plow at 35 anymore.  Of course I make smart decisions with my limited resources, which result in a better outcome than most people achieve with much greater resources.  Nothing more hilarious than watching the middle 60% bitch because they can barely afford the payments on their $60,000 truck, because of the garnishments from their quarter mil in defaulted student loans.

Pi Bolar Wed, 04/04/2018 - 22:53 Permalink

Hey look the Dows down 700 points. Cue concerned frowns from the paid actors on CNBC. 

Hey look the Dows up 700 points off the low. Cue smiley faces from the paid actors on CNBC. 

WHATEVER!!!!!!!!!!!! IT's ALL BS!