When the U.S. Federal Reserve bought an 80% stake in American International Group (AIG) in September 2008, the unprecedented $85-billion outlay was justified as necessary to bail out the world’s largest insurance company. Today, however, central banks are on a global buying spree not to bail out bankrupt corporations but simply as an investment.
Central banks have the power to create national currencies with accounting entries, and they are traditionally very secretive. It took a Reuters lawsuit and a Congres sional investigation to get the Fed to reveal the 16-plus-trillion dollars in loans it made to bail out giant banks and corporations after 2008.
What is to stop a foreign bank from printing its own currency and trading it for dollars to invest in the U.S. stock market or real estate? What is to stop central banks from printing up money in a mad rush to own the world’s largest companies?
Apparently not much. Central banks are for the most part unregulated, even by their own governments. As former Federal Reserve Chairman Alan Greenspan quipped, “Quite frankly it does not matter who is President as far as the Fed is concerned. There are no other agencies that can overrule the action we take.”