An Open Letter to Central Bankers: We Do Not Need Them

Dear Reader,

Are you proud of what you’ve done?

Do you have any shame over your laziness…just turning down the interest dial to produce debt-fuelled GDP growth?

Why do you have such disdain for savers?

How could you not think about the obvious limitation of your ‘growth’ model?

Even with rates at zero, there’s only so much debt the system can support, or weren’t you there for this basic lessons in maths?

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Where to from now?

Are we to expect more (and more) of the same hocus pocus stimulus nonsense that clearly hasn’t worked, but has taken us to (a much higher) brink…again?

These and a host of other questions are what I would pose to you if given the opportunity.

However, just being in the same room as you would require a level of restraint I’m not sure — at this stage — I’m capable of exercising.

My anger with you and your ilk is palpable.

And it’s not because I’m going to be affected by your fundamentally flawed economic management.

I am debt free. I am cashed up.

I did not buy into your patently ridiculous ‘growth’ model.

Yes, I’ve had to endure paltry earnings on my savings.

However, when this is all over and markets finally come to a rest at much, much lower levels, that cash will be mobilised to take advantage from the misfortune of others.

And it’s the plight of those unfortunates — the ones who believed your BS — that has me so fired up.

Yes, COVID-19 was an unexpected shock to the system.

True, nobody could have foreseen a health crisis of this magnitude.

However, the lunacy in your pursuit for more and more growth has made a bad situation much worse.

Why, after the debt crisis of 2008/09, did you actively and aggressively pursue a policy of adding more debt into the system?

This, from what are supposed to be the conservative pillars of society, was an act of gross negligence.

If you suffer from chronic emphysema, should you smoke more cigarettes or less?

Those who are obese, should they eat more fatty, artery clogging food or less? What do you think?

Or is it a case that you don’t think?

Solving a debt crisis with more debt…

How on Earth you could even contemplate solving a debt crisis with more debt is beyond comprehension.

Yet, you managed to convince people — thanks to your banking and political buddies — that this was the best course of action.

In your echo chamber of fellow academics, the only thinking you seem to apply is…groupthink.

Then you radiate this blatant stupidity to the rest of the world.

I find your arrogance both galling and sickening.

Sorry, if you were looking for respect, you lost that a long time ago.

You conduct your press conferences with an air of superiority…as if you and you alone can decide what’s appropriate for society.

Well, here’s a newsflash…your track record says otherwise.

How many more bubbles do you need to bust in your face before you get it?

The answer to that question I already know.

You’ll never get it.

Your overinflated egos will never permit you to say ‘we were wrong’.

The problem with having your academic pedigree is that you’re so smart you’re stupid. Yes. Stupid.

How else can you describe your actions?

Only stupid people keep doing the same thing over and over and over again, and expect a different outcome.

Your zero-bound and negative interest rate policy — designed to put lipstick on the debt pig — punished savers to the point that TINA became an accepted mantra.

There Is No Alternative.

Get your money out of the bank and start chasing yield.

Junk Bonds. Over-geared real estate trusts. Over-priced shares.

Doesn’t matter what it is, so long as it’s NOT cash.

Forcing retirees to abandon the security of the bank for assets with risks that are not easily quantifiable.

In propping up markets for so long, you have convinced investors to believe risk assets no longer pose a risk.

Are you happy now?

Silly question.

The plight of the ordinary folk matters little to you anyway.

Your taxpayer funded salaries and pensions are safe.

After your days of being a useless central banker are finished, more useless institutional and/or tertiary consultancies await.

Why anyone would want to consult with people who have failed so badly, so often, is beyond me.

What are you going to tell them?

When times get the teensiest bit tough, just dial interest rates down and turn on the printing machine.

Do everything in your power to keep the debt machine operational.

Pure genius.

Well, it’s that one-eyed obsession with debt that’s made the world far more vulnerable to any hiccup in the supply and demand chain.

Actively encouraging credit over savings, is why so many households are experiencing significant stress. There is no buffer to fall back on.

Your role was to act with prudence.

Keep rates higher to achieve an acceptable balance between debt and savings.

If rates were higher, people would have borrowed less.

If rates were higher, retirees might not have been forced to go so far out on the risk curve.

But not one of you displayed any foresight and asked ‘what happens if this goes pear shaped?’

It was all about the next quarter’s GDP number.

And if your gross mismanagement is not enough to contend with, you use your position of authority to preach to us about the risks climate change.

Yet, you remain ignorant or dismissive of the hypocrisy in your ‘holier than thou’ stance.

It was your debt-fuelled growth model that fired up the factories of the world.

If people holstered the credit card/buy now pay later apps/ home equity loan, there would be less CO2 in the atmosphere.

Did you not make the connection between debt-fuelled demand and coal-fired supply?

Was this (rather obvious joining of the dots) not part of your groupthink MIT (Massachusetts Institute of Technology) PhD thesis?

With the world going into a forced slowdown, you must be delighted with this slump in demand? Clearly, it’ll result in lower CO2 emissions.

However, when I look at your over-the-top stimulus responses, your ‘fire up the economy’ actions speak louder than your ‘green’ words.

Your incompetence and hypocrisy appear to know no bounds.

You’re inability to responsibly manage the economy is evident for all to see…or at least to those who want to see.

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Bubble after bubble after bubble

Please stop now.

Let the market decide the appropriate level of interest rates.

Willing saver negotiates with willing borrower for a win/win outcome.

Sure, growth will be slower.

But in the greater scheme of things, what’s wrong with that?

Your ‘pedal to the metal’ debt-funded growth model has hardly coveted itself in glory.

In the fullness of time, this model has proven that it grossly over-promises and seriously under-delivers.

With your appalling track record, it should be evident that you do far more harm than good.

But then again, when you believe you’re greater than the universe, this type of introspection does require some humility. Not a quality central bankers are endowed with.

We do not need central banks.

If you have one shred of dignity left, for the greater good of society, please resign.


Vern Gowdie,
Editor, The Rum Rebellion

Vern has been involved in financial planning since 1986.

In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners.

His previous firm, Gowdie Financial Planning, was recognised in 2004, 2005, 2006 & 2007, by Independent Financial Adviser magazine as one of the top five financial planning firms in Australia.

In 2005, Vern commenced his writing career with the ‘Big Picture’ column for regional newspapers and was a commentator on financial matters for Prime Radio talkback.

In 2008, he sold his financial planning firm due to concerns about an impending economic downturn and the impact this would have on the investment industry.

In 2013, he joined Fat Tail Investment Research as editor of Gowdie Family Wealth. In 2015, his book The End of Australia sold over 20,000 copies and launched his second premium newsletter, The Gowdie Letter.

Vern has since published two other books, A Parents Gift of Knowledge, all about the passing of investing intelligence from father to daughter, and How Much Bull can Investors Bear, an expose on the investment industry’s smoke and mirrors.

His contrarian views often place him at odds with the financial planning profession today, but Vern’s sole motivation is to help investors like you to protect their own and their family’s wealth.

Vern is Founder and Chairman of The Gowdie Advisory and The Gowdie Letter advisory service.

The Rum Rebellion