Incompetent Central Banks Should Be Abolished: Opinion
Bloomberg is emphatic:
"They sell at the wrong time and buy at the wrong time," said Walter "Bucky" Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama. "They aren't traders. They are looking at it as a long-term holding, as an ultimate reserve currency. With the benefit of hindsight, they tend to get it wrong more often than not."
It doesn't get more unequivocal than that. They sell at the wrong time and buy at the wrong time and generally tend to get it wrong more often than not. But note what "it" refers to here: trading currencies. Here I will be forced to challenge one of "Bucky's" assertions.
When Hellwig suggests that central banks "aren't traders" he's flat-out wrong. Central banks not only manufacture all of our currencies (except gold and silver), they are up to their eyeballs in trading this paper by the $trillions, every day.Bloomberg quantifies these recent losses in currency trading in just this one currency: Central banks are the biggest losers, with about $560 billion of value erased since gold reached a record $1,921.15 an ounce in September 2011... Wow! Over $500 billion in "losses" in just 18 months. So when Bloomberg and Hellwig assert that central banks are grossly incompetent currency traders, to the point where even Hellwig asserts they aren't "traders" at all, this is a very serious accusation. It's like walking up to a bull rider and saying, "He ain't no cowboy." Unfortunately, these cowboys are in charge of the entire, global monetary system and, by proxy, the entire global financial system. If they are all grossly incompetent when it comes to performing one of their primary functions they need to be removed -- now. Or should they be abolished together? Do we have any other "hard evidence" suggesting institutionalized incompetence among these banks? Obviously, we do: the gold-buying itself. The central banks are not only huge currency traders, they are the manufacturers of all of our paper currencies. These "manufacturers" are now dumping their own product at the fastest rate in history and, again, one must ask "Why?" Could we come up with any more examples of institutionalized incompetence amongst the world's central banks? Gee, I don't know. How about "competitive devaluation," the competition among these central banks to see which one can drive the value of their currency (our money) to zero the fastest?
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