The banksters tighten their grip on monetary policy

Broadbent to replace Sentance on MPC

By Chris Giles, Economics Editor

Published: March 7 2011 14:55 | Last updated: March 7 2011 14:55

Ben Broadbent of Goldman Sachs was appointed to the monetary policy committee by the Treasury on Monday, a move that makes the anticipated first interest rate rise in nearly two years look less certain.

Mr Broadbent has been senior European economist at Goldman Sachs since 2000, joining the bank from Columbia university where he was an assistant professor. He has worked at the Treasury and the Bank of England, has a first-class honours degree from Cambridge university and a PhD from Harvard university, where he was a Fulbright Scholar.

source

Over at the ECB, the biggest hawk of all the European central bankers, Axel Weber of the German Bundesbank, has decided to step down for personal reasons.  This means he can be ruled out as a possible successor for Jean-Claude Trichet.

Stepping into the spotlight is Mario Draghi, the current governor of the Banca d’Italia.  What’s his background?  You guessed it.  From Wiki:

[Mario Draghi] was then vice chairman and managing director of Goldman Sachs International and a member of the firm-wide management committee (2002–2005).

It is a sad state of affairs but the banksters are being positioned to implement policy that will benefit the banks, not the broader economy.  It is therefore safe to assume that once consumer price inflation hits the G4 economies hard at the retail level, as we expect it to do in h2 2011 and h1 2012, economists and politicians will make this sound as if it has been there intention all along, and that this is a sign of a recovering economy.

Bear in mind what would have happened by then will be that banks, having been given free money by their central banks over 2009/10/11, will have lent this money and more to the public, and that principal and interest income on money that has been created out of thin air will be earned by them.  This is what will send consumer prices at the retail level higher as more money and credit chases after an unchanged number of goods and services.

Data overnight confirmed this is indeed happening as US consumer credit rose more than expected in Jan and non-revolving credit in particular jumped higher.  Demand for cash balances are falling, setting the stage for stronger consumer price inflation later this year in the US, Europe and UK.  We are still on track to see US CPI exceed SA CPI in the coming year or two.