Beautiful Virgin Islands

Friday, Oct 24, 2025

The Mighty Central Bank

The Mighty Central Bank

The most powerful institution on earth is the Federal Reserve: here is why. Now, global financial stability from 2008 is owed to the power of Central Banks intervening at times of crises.
Then independent central banks are the one institution in the economy that have the power to bail out besieged markets, failing banks, and battered global corporations when the worst happens.

When markets crash, when financial meltdown threatens economies, at the horror of natural disaster, pandemic, or war, it is to the central banker the world turns for refuge.

Where does that huge power come from? The answer is complex.

The power of the central bank is a mix: a combination. Central bank power comes from the backing of powerful governments such as the USA and the European Union; the recognition of its supreme ability to steward the economy by global institutions from the World Trade Organization to the UN; and wealthy international investors.

The power of the central bank is also the result of business and consumer confidence in the power of these banks to underwrite the global economy and marketplace. The preceding allows the central bank to print currency, even without limit.

Central banks prop up the global economic order. And the rule of the super-wealthy – the 1% - is backed by the FED that will always intervene to safeguard the global financial order.

Some pundit referred to the central bank as the billionaire's bank. Why? Billionaires and wealthy investors view the central bank as the bank of last resort and the safe place to migrate when there is economic, political, and natural disaster. Investors prefer the safety of government-issued debt- bonds and associated instruments- in times of crisis.

Central banks are arguably more powerful than ruling politicians as history shows that central bankers are listened to by the establishment and society over and above any politician in time of crisis. This is a result of the confidence placed in central banking by ruling elites and society in general.

One great ally of the central bank in recent decades is low inflation.

Low inflation is one key reason why central banks have been able to pump stimulus cash into ailing economies without any fear of repercussion such as ruinous high inflation.

The reasons for low global inflation are not clear cut: frugal and cautious consumers post the 2008 financial meltdown; globalization and economies of scale; and the rise of China- the world's factory.

Digitization has lowered business costs and that is also a lid on inflation, add greater competitiveness in economies.

The evidence shows that in spite of printing over $30 trillion since 2009, inflation remains subdued.

Consequently, there is no reason to pull back from Quantitative Easing- QE and bond buying- as the economic wrecking ball termed inflation is far from being a problem, especially in a deflationary environment.

If anything, a small rise in inflation is pointer to economic recovery.

A rise in inflation may well herald the much desired Post Covid economic recovery.

It is indeed a paradox central banks are hoping for some inflation as a tool to stimulate economies.

Inflationary concerns remain, and a massive sell off in global markets at the very end of February 2021 was a signal investors are worried about inflation and the sustainability of ongoing stimulus spending.

Investors are fearful of a bond market meltdown and inflation, but not central bankers.

Central banks have near unlimited power to print cash.

And in a low inflation environment, that power will not diminish any time soon.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Porsche Reverses EV Strategy as New CEO Bets on Petrol and Hybrids
Singapore’s Prime Minister Warns of ‘Messy’ Transition to Post-American Global Order
Andreessen Horowitz Sets Sights on Ten-Billion-Dollar Fund for Tech Surge
US Administration Under President Donald Trump Reportedly Lifts Ban on Ukraine’s Use of Storm Shadow Missiles Against Russia
‘Frightening’ First Night in Prison for Sarkozy: Inmates Riot and Shout ‘Little Nicolas’
White House Announces No Imminent Summit Between Trump and Putin
US and Qatar Warn EU of Trade and Energy Risks from Tough Climate Regulation
Apple Challenges EU Digital Markets Act Crackdown in Landmark Court Battle
Nicolas Sarkozy begins five-year prison term at La Santé in Paris
Japan stocks surge to record as Sanae Takaichi becomes Prime Minister
This Is How the 'Heist of the Century' Was Carried Out at the Louvre in Seven Minutes: France Humiliated as Crown with 2,000 Diamonds Vanishes
China Warns UK of ‘Consequences’ After Delay to London Embassy Approval
France’s Wealthy Shift Billions to Luxembourg and Switzerland Amid Tax and Political Turmoil
"Sniper Position": Observation Post Targeting 'Air Force One' Found Before Trump’s Arrival in Florida
Shouting Match at the White House: 'Trump Cursed, Threw Maps, and Told Zelensky – "Putin Will Destroy You"'
Windows’ Own ‘Siri’ Has Arrived: You Can Now Talk to Your Computer
Thailand and Singapore Investigate Cambodian-Based Prince Group as U.S. and U.K. Sanctions Unfold
‘No Kings’ Protests Inflate Numbers — But History Shows Nations Collapse Without Strong Executive Power
Chinese Tech Giants Halt Stablecoin Launches After Beijing’s Regulatory Intervention
Manhattan Jury Holds BNP Paribas Liable for Enabling Sudanese Government Abuses
Trump Orders Immediate Release of Former Congressman George Santos After Commuting Prison Sentence
S&P Downgrades France’s Credit Rating, Citing Soaring Debt and Political Instability
Ofcom Rules BBC’s Gaza Documentary ‘Materially Misleading’ Over Narrator’s Hamas Ties
Diane Keaton’s Cause of Death Revealed as Pneumonia, Family Confirms
Former Lostprophets Frontman Ian Watkins Stabbed to Death in British Prison
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
Outsider, Heroine, Trailblazer: Diane Keaton Was Always a Little Strange — and Forever One of a Kind
Dramatic Development in the Death of 'Mango' Founder: Billionaire's Son Suspected of Murder
Two Years of Darkness: The Harrowing Testimonies of Israeli Hostages Emerging From Gaza Captivity
EU Moves to Use Frozen Russian Assets to Buy U.S. Weapons for Ukraine
Europe Emerges as the Biggest Casualty in U.S.-China Rare Earth Rivalry
HSBC Confronts Strategic Crossroads as NAB Seeks Only Retail Arm in Australia Exit
U.S. Chamber Sues Trump Over $100,000 H-1B Visa Fee
Shenzhen Expo Spotlights China’s Quantum Step in Semiconductor Self-Reliance
China Accelerates to the Forefront in Global Nuclear Fusion Race
Yachts, Private Jets, and a Picasso Painting: Exposed as 'One of the Largest Frauds in History'
Australia’s Wedgetail Spies Aid NATO Response as Russian MiGs Breach Estonian Airspace
McGowan Urges Chalmers to Cut Spending Over Tax Hike to Close $20 Billion Budget Gap
Victoria Orders Review of Transgender Prison Placement Amid Safety Concerns for Female Inmates
U.S. Treasury Mobilises New $20 Billion Debt Facility to Stabilise Argentina
French Business Leaders Decry Budget as Macron’s Pro-Enterprise Promise Undermined
Trump Claims Modi Pledged India Would End Russian Oil Imports Amid U.S. Tariff Pressure
Surging AI Startup Valuations Fuel Bubble Concerns Among Top Investors
Australian Punter Archie Wilson Tears Up During Nebraska Press Conference, Sparking Conversation on Male Vulnerability
Australia Confirms U.S. Access to Upgraded Submarine Shipyard Under AUKUS Deal
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
Brands Confront New Dilemma as Extremists Adopt Fashion Labels
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Erika Kirk Delivers Moving Tribute at White House as Trump Awards Charlie Presidential Medal of Freedom
British Food Influencer ‘Big John’ Detained in Australia After Visa Dispute
×