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MONETARY POLICIES by Ellen Brown Do Central Banks Wield Too Much Power?


FX


Central Banks have steadily consolidated their powers. They are aggressively playing the stock market, they can create money at will, and they have declared their “independence” from government. They have become rogue players in a game of their own


Excluding institutions such as Blackrock and Vanguard, which are composed of multiple investors, the largest single players in global equity markets are now thought to be central banks themselves. An estimated 30 to 40 central banks have invested in the stock market, either directly or through their investment vehicles (sovereign wealth funds). According to David Haggith on Zero Hedge:


"Central banks buying stocks are effectively nationalizing US corporations just to maintain the illusion that their “recovery” plan is working . . . . At first, their novel entry into the stock market


was only intended to rescue imperiled corporations, such as General Motors during the first plunge into the Great Recession, but recently their efforts have shiſted to propping up the entire stock market via major purchases of the most healthy companies on the market."


Te US Federal Reserve, which bailed out General Motors in a rescue operation in 2009, was prohibited from lending to individual companies under the Dodd-Frank Act of 2010; and it is legally barred from owning equities. It parks its reserves instead in bonds and other government-


backed securities. But other countries have different rules, and today central banks are buying individual stocks as investments, with a preference for big tech stocks like Amazon, Apple, Facebook and Microsoſt. Tose are the stocks that dominate the market, and central banks are bidding them up aggressively. Markets, including the US stock market, are thus literally being rigged by foreign central banks.


Te result, as noted in a January 2017 article on Zero Hedge, is that central bankers, “who create fiat money out of thin air and for whom ‘acquisition cost’ is a meaningless term, are


FX TRADER MAGAZINE October - December 2018 11


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