QE is the determination of Wall St not to share in the misfortunes of Main Street. This they are doing by steamrolling commodity prices and other financial prices higher, using the futures markets, and pump-priming any world market that is willing to be pumped, keeping interest rates on the floor.
The attempt will work while it works, but it hides another problem, besides inflation of a sizeable though minority proportion of the inflation ‘basket”. Inflation in Britain is not too much money chasing too few goods. It is nothing other than cartelised inflation, with government and corporations determined not to suffer any decline in profits and asset values, while ordinary folk increasingly struggle to make ends meet. They are ramping up prices, in the face of falling demand.
The battle to control the world’s energy resources is another reason demand for assets is so high. It is not consumption.
The real economy is gradually easing down, with real estate, employment and real job-creating investment falling away. The surging of commodity prices is increasing the effects of the downturn, and is not a symptom of a consumer boom.
Once the financial game of pumping money around the world runs into resistance, and prices naturally turn down, things such as oil which might have already peeked, then the facts of life from Main Street will take over.
The turn could be swift when it comes. British cartelised energy and banking markets will ensure our economy is unable to adapt to such a change of direction. The economy is in the final stages of a game of monopoly where one or two people become amazingly rich while the majority, the public, crawl away from the board. Raising interest rates will merely ensure the endgame of the commodity wars comes a little earlier than otherwise. Interest rates like commodity prices are set by the big players as part of the game, who know when they want prices to fall, not to protect the public from inflation.
We are watching a financial bar room brawl between corporate super-heroes. The chaff are just sent scattering, waiting for the smashing of the scenery to stop. Those who see a rise in interest rates as a responsible reaction to rising prices, like John Redwood, don’t see that the world is now run in the context of a vast corporate game, where prices are manipulated for the purpose of empire-building by those who aspire to controlling everything that moves.
Only when they are ready for a downturn will you get one. The game this year seems to be aiming at stirring up as much of a rush upwards in prices as they can. Maybe they will cash out and see a nice crash next year, where they can buy back their sold assets for a song, leaving governments holding all the losses, just as they did in 2008, and taxpayers will carry the burden of the vast profits the manipulators will have made.
The financial war being waged is between the old world and the new. The old intends to win, but as they operate unseen and out of sight, the battle is only visible from its financial effects. The fact is that the robber barons of the 1920s never went away. They kept quiet as they became bigger and stronger throughout the post-war era. Only now are they visibly flexing their muscles to ensure they win the next round of the game for world domination. The corporations rule the world and decide what paths are taken, not governments or Prime Ministers. They are the puppets who carry out the instructions of the real masters. Unlike in the 1920s, today they are hidden from view. The public watches the theatre provided to keep them entertained, and unaware. And so too are many politicians apparently also unaware of how the real game of power is fought.