Europe Is In Recession, the U.S. Isn't Far Behind

The global banking system in 2012 has seen a marked transition from the monetary concept that gained universal traction nearly 100 years ago. The United States in 1912 was the only economic power without a central bank, but by 1913 one had been created, though its creators, both bankers and government officials, were very cautious about having the words "central bank" in the title of the agency. Instead the Federal Reserve System was born as a private corporation capitalized by individual regional banking interests, by far the largest being the banks in New York City. As we have navigated this current crisis, monetary policy is unmistakably a bank-first approach. In other words, banks are viewed as the mechanism whereby monetary policy should create economic success, to the exclusion of all other means.
Similarly in Europe, the European Central Bank (ECB) was created for and by the respective governments of Europe. The conflict of interest there is easily determined in the continued quasi-bailouts of sovereign states through price manipulation in asset markets. Both the Fed and ECB have engaged in forms of monetary easing that, in their essence, are distinct variations on the theme of money elasticity that launched the Fed nearly a hundred years ago. The manner of that change is, on the surface, seemingly minor - central banks create additional money and means of easing during crises. But below that surface lies a much more direct and significant paradigm shift that again calls into question exactly who central banks work for.

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