Monday, July 2, 2018

Robert Pringle - The Necessary Illusionists

Whenever Robert Pringle offers up a new article on his blog, The Money Trap, I try to feature it here. Mr. Pringle has decades of experience in central bank policymaking and is well known to central bankers from around the world. He is a former Executive Director of the Group of 30

Because of his extensive background and contacts, he offers us somewhat of an inside perspective on these issues I don't find in either mainstream or alternative media that I monitor. Below are a couple of excerpts from his new article and then a followup quote he provided by email. 

Robert Pringle

From The Necessary Illusionists

"Funny thing about money. It is supposed to be a bedrock of stability but it feeds on illusions. So much monetary policy relies on trickery.  The elite know things that the unwashed masses do not. Such as money illusion. The success of devaluation rests on tricking the masses. But tell a central banker he or she is in the business of peddling illusions and risk a smack in the eye.

. . . . . . 

We have seen why money has to be for ever. But it is equally true that money has to change every now and then, or else it could never adjust to basic changes in society.

The upshot is this: a central bank obeys two imperatives. The first is that whatever is now must be for all time. Second, it must be ready at any time completely to change its practices,  its model, its ideology, its communications and its soul. Moreover, this must be done with an illusionists’ skill, all the time pretending that nothing has changed."

Added comments: My take from this article is that even though it may seem like a monetary system regime lasts forever, eventually major change does take place. Mr. Pringle offered me these additional thoughts by email along these lines:

"Now we are approaching an inflection point in the ideology of central bank independence -  CBI+IT (central bank independence + inflation targeting) - the mantra of CBs for years. 

In The Money Trap in 2012, I argued the model was unsustainable and dangerous, though the best available under the floating rates regime. Six years later it is still there….just about.  So was I wrong? I don't think so. 

I love it when central bankers use words like "critical" "central", "sacred" and even "sacrosanct" to describe it. Money always has picked up quasi-religious language. But until the model is officially abandoned, central bankers have to insist it will not only last for ever but is "sacred". "

This is why we should remain alert to any events that could lead to major monetary system change even in times when it does not seem like such change is likely any time soon. 

Added news note update: For an update on our earlier news note regarding a government issuing gold bonds, go here.

1 comment:

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