Will Synchronized Rate Cuts Solve International Financial System Problems?

Will the synchronized rate cuts solve the problems in the international financial system? Our correspondent in Buenos Aires wants to know.

“Developed economies spent the last decades criticizing decisions made by developing economies in the midst of crisis,” notes Horacio Pozzo. “Today, the world’s leading countries take the same measures without considering the consequences…”

And here we return to the scene of a crime that has not yet been committed. An explanation: all sovereign governments have the power to steal. They do it openly – through taxation. They also do it clandestinely – by means of inflation. Each country controls its own money (with the exception of the countries of Europe, who have decided…perhaps temporarily…to use a common currency). Since this paper money can be created at negligible cost to the creator, countries are tempted to create more of it than they should – especially in times of war or financial crisis. Historically, what has kept this from happening was that the paper currency was tied to gold. More recently, currencies are tied to the dollar. And since countries trade with one another, a sin by one country – printing too much money – is punished by the others. They mark down its money.

But now, all the world’s major countries are conferring, colluding, and conspiring. They’re all going to do the same thing. They’re all going to take over their banking systems, support their financial industries, bail out important businesses and rescue their citizens from their own mistakes. Where will they get the money for all this? Will they borrow it from each other? Don’t be silly; they will print it.

Bill Bonner
for Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.
Bill Bonner

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