One year ago, I asked the smartest people I know a simple question: why can’t central bankers just buy all the debt?
Back then, we were faced with wobbling government bond markets around the world. Today we are faced with one of the consequences of those wobbling bond markets in the form of a bank crisis.
The policy to combat both is of course more central bank money creation. By buying up the government’s bonds, central banks can support their falling prices. Drops that put the solvency of both banks and governments, and indeed central banks themselves, at risk.
Which is what begged that big question in the first place. If too much debt is the problem in our economy, and the central bank can effectively remove and potentially even extinguish that debt, then why not solve the problem once and for all? Why not just have central bankers buy up the debt with their infinite balance sheet?
The Japanese have done so, to a great extent. Their central bank now owns more than half of the government’s bonds. Why not go to 100%?
Today, we publish the first in a series of responses from one of the interviewees I asked that question. As you’ll see, John Butler and I discussed the background to the whole shenanigans too. Tomorrow, we’ll be adding more responses from the likes of Jim Rickards and Jan Nieuwenhuijs…
Editor, Fortune & Freedom
PS Note from the publisher: For the first time in half a century, the British authorities are preparing to issue a new currency… and if you have ANY money in a British bank account, you need to know how it works. We’ve produced an urgent video bulletin to get you up to speed: