Tag Archives: Irish Central Bank

Jailing Banksters Will Not Resolve the Economic Crisis

Anglo Irish Bank

Last week, an Irish court sentenced three prominent banksters for their roles in the 2008 financial crisis. Judge Martin Nolan, who pronounced judgment, said that the bansksters had committed “a very serious crime.” He continued, “The public is entitled to rely on the probity of blue chip firms. If we can’t rely on the probity of these banks we lose all hope or trust in institutions.”*

A number have criticized the judge’s sentence for its mildness in light of the catastrophic damage that the banks have done to the economy. Irish taxpayers have bailed out the banks five times since 2011, while it has been estimated that it will take up to 15 years, if ever, to recover.

While Irish banksters and the political class who have enabled them are certainly deserving jail time and much worse, whether they or other banksters who have committed similar crimes are punished will not prevent a reoccurrence of further economic crisis, undo the harm done to the Irish economy, nor will it pull Ireland or the rest of the Western world out of its economic malaise.

The seminal cause of the economic crisis of 2008 and almost every one preceding it has been the fraudulent expansion of the money supply by the banking system through the practice of fractional reserve banking. Until this economy wrecking and social destructive scheme, along with the central banks that oversee and protect the nefarious practice, are abolished, the economic crisis will continue and deepen no matter how many banksters are jailed.

Simply put: fractional-reserve banking, for those who do not know, which includes 99.9% of the financial press, is the practice by which banks keep only a fraction of their deposits on hand and “invest” or loan out the rest at interest. Of course, if any other warehouse or storage facility engaged in such a practice it would be rightly considered fraud.

The process is augmented by central banks, which expand the money supply through the deposits that individual banks keep with them. In fact, the main purpose for the creation of central banking in the first place was to enable individual banks to engage in this fraudulent undertaking which leads to all sorts of monetary mischief.

The beautiful part of outlawing fractional reserve banking is that it requires no creation of regulatory agencies, commissions, or convoluted legislation. All that is needed is a simple universal prohibition of the nefarious practice applicable at all times and all places: any bank or financial intermediary which engages in fractional reserve banking or similar practices will be condemned and prosecuted with its perpetrators punished up to and including torture and death!

The judicial system is culpable too in this process. Courts that actually prosecute banksters are not trying to get to the root of the problem, but are merely saving face with the public by doling out prison time or uttering harsh rebukes at the banksters. Of course, as an arm of the state, the courts have a vested interest in not seeking the truth, since doing so would expose the actual method upon which nation-states obtain a good deal of their power. Fines, jail time (usually reduced or suspended) to placate the angry populace is as far as the judicial system will typically go.

Naturally, a financial order devoid of fractional reserve banking would, as Providence had intended, consist of gold and silver, where paper currency and notes would most likely be of limited if any use. The only significant hanky-panky which would occur with metallic money would be the old ploy of “coin clipping” which, although deplorable, was limited as compared to the inflations that have taken place under a pure paper, fiat standard. To keep coin debasement in check, however, the same punitive measures should prevail as with those who engage in fractional reserve banking.

Punishing banksters for their monetary transgressions years after their dastardly deeds have taken place is comparable to buying fire insurance after a house has burned down. If the Irish and the rest of the world’s populations want to eliminate the monetary chaos and the declining living standards which have ensued over the past half dozen years or so, they need to look at the ultimate cause of the crisis – eliminate fractional reserve banking and the central banks which condone and engage in the practice.

*Tyler Durden, “Ireland Jails 3 Top Bankers Over 2008 Collapse . . . Instead of Bailing Them Out.” Zero Hedge. 30 July 2016.

Antonius Aquinas@AntoniusAquinas

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Banksters Responsible for Irish Crash

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the Central Bank’s former head economist Thomas O’Connell has told the Oireachtas Banking Inquiry that Ireland’s banking and economic crash should never have happened.

In testimony before the Oireachtas Banking Inquiry, Thomas O’Connell, the ex-head economist of Ireland’s central bank, attempted to deflect blame for the part he played in the financial crisis of 2008 and the subsequent bust that occurred.

O’Connell had the nerve to say that “[It] should never have been allowed to happen with all the consequences of huge increases in unemployment, rising emigration, enormous debt, suicides . . . that we have seen.”* No kidding, Sherlock!

O’Connell believes that the financial crisis occurred not because of the policies of the central bank per se, but because it was the failure of the government and “regulators” to curb the excesses and bubbles that were forming mostly in the real estate sector, “any concerns or issues raised by staff for airing in the public arena were invariably watered down so as not to reflect adversely on matter of concern to Government.” He added that it was “difficult to get views through that might impinge on vested interests.”

Naturally, since O’Connell was a paid employee of the central bank, he would want to divert attention or critiques of its role in the calamity. O’Connell wisely (for his sake) focused on periphery issues, but failed to discuss the actual genesis of the crisis which rests in the explosive expansion of the money supply generated by the European Central Bank (ECB). The “new” money and credit was then facilitated by the Irish central bank and funneled through the country’s banking system that ignited the boom.

The graph below shows the dramatic growth in the money supply during the boom period. Unfortunately, Ireland adopted the Euro in 1999, but it did not begin to circulate internally until 2002.

From 2002 to the onset of the financial panic, the money supply almost doubled from €5 ½ trillion to nearly €10 trillion. The new “liquidity” drove up asset prices and inflated real estate markets, especially in Spain and Ireland. Despite this fact, O’Connell remained silent on the ECB’s reckless monetary policy in his address.

When asked about how the crisis could have been avoided, O’Connell suggested (apparently with a straight face) that there were too few economists employed by the regulatory agencies and the government and that those that were on staff were largely ignored: “This would have been less of an issue if there was a willingness to listen to the view of economists. In addition, the Financial Regulator employed very few economists.”

Yeah, right, that is definitely what Ireland needed – more economists such as the likes of O’Connell who are nothing but apologists and spinmeisters for the global financial elite who enable them to continue their endless rounds of money printing for their own enrichment and power to the detriment of the poor and middle classes!

Instead of more economists as O’Connell ridiculously recommends, the financial crisis could have been avoided, or more accurately would have never taken place, had Ireland and the rest of Europe followed sound economic theory long spoken of and taught by real economists, and ignored monetary cranks like O’Connell, Benjamin Bernanke, Mario Draghi and Janet Yellen. The financial crisis of 2008, and the far greater one to come, would never have occurred if Ireland was devoid of the plague of central banking, and money was once again a commodity.

If Ireland ever wants to get out of the financial quagmire it now finds itself in, it must stop listening to or give any credence to the very people that are responsible for the creation of the mess in the first place. Instead of recognition, the likes of Thomas O’Connell should be ignored, ridiculed, or, better yet, prosecuted for the incalculable economic and social damage that he and his fellow banksters have perpetrated.

Before economic recovery can occur, there must first take place intellectual change and the acceptance of policies and institutions that have stood the test of time. Gold and silver have been monies for some five thousand years, their re-adoption as the medium of exchange in Ireland will go a long way in the Emerald Isle’s economic and social restoration.

*Claran Hancock, “Banking and Economic Crash ‘Should not Have Happened.'” The Irish Times. 10 June 2015.

Antonius Aquinas@AntoniusAquinas

Monetary Quackery in Ireland

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Ireland’s Central Bankster, Patrick Honohan

If Ireland is ever going to leave PIIGS status (the acronym for Europe’s most indebted and financially challenged economies – Portugal, Italy, Ireland, Greece, Spain), it must stop listening to, and then criminally prosecute the monetary authorities which have brought the country to financial ruin. It can start this most necessary process with the nation’s central bank governor, Patrick Honohan. Not only must Professor Honohan be hauled away, preferably in chains, but the sinister institution in which he heads, Ireland’s central bank, Banc Ceannais na hÉireann, must be eradicated.

In comments before the Irish finance committee (Oireachtas) on the European Central Bank’s (ECB) latest round of “bond buying” (in actuality, the monetization of debt), Honohan praised the ECB’s action saying “it has been an unmitigated plus for the Irish economy.”* He added that the ECB’s money printing extravaganza had a “broad distributive impact” throughout the economy. In his most accurate statement (unbeknownst to Honohan) the ECB’s money printing would be of great benefit to Irish public finances.

No doubt, that at least for a time, Ireland’s public finances will gain, but such benefits will only be derived at the expense of consumers who will be paying higher prices as the ECB’s new round of inflation percolates through the economy. The nation’s debt burden is also certain to widen which now stands at a staggering 114% of GDP.

To praise the ECB’s action shows that monetary quacks like Honohan have learned nothing from Ireland’s recent financial history. For it was the massive credit bubble created by the ECB and the nation’s financial institutions, most notably the Anglo-Irish Bank, which created the artificial boom of 2001- 08 that led to the inevitable bust which has devastated the economy. It has been estimated that over this time period, lending for mortgages rose from €44billion to €128billlion. Overall, Irish financial intermediaries from 1998 to 2007 increased lending some 466%!

Of course, when the bust came none of the culprits had to suffer the consequences of their nefarious behavior, but instead were bailed out by the Irish government through the creation of the National Assets Management Agency (NAMA) to the sum of some €70billion. The public is footing the bill for the banksters fraud through “austerity,” a crushing debt burden, and hefty tax increases.

While Honohan believes that the ECB has brought the Irish economy “unqualified benefits,” the facts, even by untrustworthy government statistics, belie such an assertion. The unemployment rate remains stubbornly high at nearly 10% while “youth unemployment” is a catastrophe with levels at some 20%! Worse, these numbers will not improve since policy makers remain clueless on how to remedy the situation.

Ireland’s household saving rate has plummeted to 6.45% for the fourth quarter of 2014. Personal savings from 1999 to 2014 had averaged 9.77%. Such a drop shows the pinch that citizens have remained under since the beginning of the crisis.

Honohan’s comments must be seen for what they really are. Heads of central banks are as much spinmeisters as the talking heads and teleprompter readers of the dominant news and television industries. Honohan’s main task is to protect the “integrity” of the Irish central bank. The solvency of the banking system and the government is what counts for the central bank. Jobs, price inflation, public debt are all secondary concerns for central banksters.

The only just and financially sound action for Ireland to rebound from its bankster-induced economic malaise is to outright repudiate its public debt and let the institutions and governing bodies that were responsible for it collapse. Hopefully, in the wake of such a scenario a new monetary order will arise without the scourge of central banking where money is once again a commodity – gold and silver. For Ireland’s future, anything less will only mean continued economic decline, social disintegration and debt slavery despite the optimistic words of central banksters like Patrick Honohan.

* Arthur Beesley, Irish Times, 28 May 2015.

Antonius Aquinas@AntoniusAquinas