Are Central Bankers just Economic Make-up Artists, Sexing-up Prices? - Capital Account with Paul Craig Roberts

Reports are out that Spanish banks which have been the primary buyers of Spain's debt have used up almost all the money they borrowed from the ECB so don't have much left over with which to buy more sovereign debt...the same goes for Italy. This is according to the Wall Street Journal.
So it looks like we are back to our usual question -- what are policy makers going to do?

Our guest for this show is economist Paul Craig Roberts, who is here to help us make some sense of an increasingly surreal world. In the west, we have been raised with certain free market principles at the core of our economic vocabulary. Price signals are about as fundamental to the operation of markets as you can get, but by constantly manipulating and propping up asset prices, central bankers and their too big to fail handlers have made it simply impossible for anyone to claim that we live in a free market. Price discovery, once deemed essential to a well functioning marketplace, is now seen as the fly in the central planner's ointment. Prices are a nuisance, or so they appear, and the central planner deems it is his job to support them at ever elevated levels from now unto eternity.Europe's LTRO was the central banker's latest attempt at flooding the banking system with currency whose supply is now only constrained by the limitations of modern computing. But the real world, unlike the fiat one of money and credit, has its limitations. Wealth, unlike credit, cannot be conjured out of thin air. There are limits to what can be created and in what period of time. We have already reached those limits, and central banks are doing everything they can to prevent the overdue onset of reality. They are no longer the overseers of free markets, if they ever were. They have taken it upon themselves to act as make-up artists, hell-bent on sexing up global asset prices beyond their substance and years, in the hopes that the rest of us, wasted on easy money for decades, won't know the difference.But not everyone in this world is so blindly inebriated. Some are looking to escape from this centrally planned nightmare of diminishing economic returns. In the Greek town of Volos, they are using a currency barter system. Spanish towns of Villamayor de Santiago, Mugardo, and Salvaterra have reportedly reintroduced the old Spanish currency, the Peseta, alongside the Euro. Joining us to discuss all of this is economist and former assistant treasury secretary Paul Craig Roberts.

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