Headline April 12, 2012/ Central Bank & Coral Reef

CENTRAL BANK & CORAL REEF

Respectful Dedication Carla Bruni,First lady France - Susilo Bambang Yudhoyono, President of Indonesia -

Yossou N'Dour / Senegal 

---

Carla Bruni First Lady of France

President of Indonesia Susilo Bambang Yudhoyono

Youssou N'Dour/Senegal

The bitter and ineradicable truth is that by and large 'Central Banks' have totally failed in controlling inflation!!? I am totally skeptical that any government is likely to provide any satisfactory resolution to the problem of inflation. Therefore planning for the future is the confident expectation that we know what the general level of prices will be, is just plain stupidity!!!

The future course of inflation is shrouded in mystery! The political market is generating just one thing : Roadblocks to productivity and growth! What you all must must understand is that we in Pakistan, and in the world generally have just no inkling of our surrounding fogs. Samuel Brittan sums up the moment brilliantly : "we have sized on policies with temporary and fleeting effects, resulting from the slowness of human beings to adapt to changing opportunities and elevated them into fundamental economics."

So on December last, the ECB offered to lend Europe's banks as much money as they wanted for three years at an astonishingly low interest rate of 1%. In fact ECB printed 600 billion dollars in just a day. Mario Draghi then went on to suggest that he might do it again., possibly at a larger scale!!!??

Europe stopped dead in its tracks! A short term master tactic! But then, after the Japanese Tsunami, Japan's Central Bank printed trillions of Yen to stabilize the economy!! Modern economies as it is, are not only very volatile, but very very fragile. And the political meddling to which a Central Bank is subjected to in the developing world, flaws and inhibits the work of the Bank. Never forget that the Central Bank's primary role is as "The lender Of The Last Resort!". Its only option in crises is to act wisely. A late or a unwise action can send the economy into a unfathomable depression resulting in addition towards a systemic disaster.

But having said that the world ought to consider a system of checks and balances so that the way the large economies use this power of pumping huge cash must be with due deliberations. It is a high wire special skill act, later, when this cash has to be withdrwn. The future I assure you is likely to be Comedy Central!

Goodnight and God bless with a plea to share us forward.

SAM Daily Times - the Voice of the Voiceless