National currencies should be trusted as a public good because we all need and use payments, debt and savings every day.
We want that the price of money, goods and services behave in a stable and predictable manner without big jumps. We get paid for work with wages, pensions, and payments like unemployment insurance and various other public subsidies that must be sufficient for daily needs.
Central bankers are keen to emphasise that their mandate enshrines stability, without which there would be distrust and result in national currencies being unsustainable.
Central bankers want to be seen as solid trust-worthy civil servants who love talking about “trust” and “stability” of currencies, banking, and national economies.
However, their talk does not match the reality and now we have central bankers who have created wild swings in currency values and in the price of money:
- In Europe and in the USA the currencies are swinging by around 50% over time, up and down – look how the Euro has moved against the US dollar this last 16 years:
- House prices and stock markets have gone up like rockets after a prolonged period of ultra low interest rates. Many big banks in big countries like France, Italy and Germany are still in bad shape14 years after the financial crisis, and things are not getting any better because these central bankers are just now waking up to inflation. Now, they are increasing interest rates so fast and so late that stock markets have seen huge falls, while European banks that are heavily exposed to the real estate market will see huge losses as borrowers with oversized housing loans may start to default on their debt payments. They cannot afford to repay debts with higher interest rates and higher price inflation of food and energy.
- The price of food and energy have increased by huge jumps a long time before the brutal invasion of Ukraine by Russia. Now a normal tank of petrol costs €120 compared to a few years ago when it cost €70! Electricity has more than doubled in price, and bread, vegetables, fish, and meat have seen hefty price increases. Consumer inflation in the EU has increased by more than 8%!
When a central bankers speak, just look at their record over the past few years as seen above. There is little to justify their huge salaries of €300 000 and more, with the costs of central banks running into the hundreds of millions of Euros. The above numbers show that we have the wrong types of men and women occupying these places. Having politicians and former bankers holding such positions is not a useful policy.