Gold News

Central Banking's Evil Led Zeppelin Thing

Negative rates, the ECB obelisk, black magick for Euros...
TRIP to Frankfurt, Germany last week for work, says Adrian Ash at BullionVault in this quick tour of central banks around the world, first shared with BullionVault users in the Weekly Update.
Nice city. Great opera house. Lovely schnitzels. Weird cider.
I stayed next to the headquarters of the European Central Bank. So after a meeting in town, I walked back along the banks of the River Main to get a view of the ECB building from pretty much every angle.
Because, well, it's odd.
Three views of the European Central Bank building in Frankfurt, Germany
As my tourist snaps show from beneath that grey sky, almost as heavy as the German economy, the ECB tower...
...throbbing heart of Euro interest rates and monetary policy for 350 million people across 20 countries, but empty of any staff last week from what I could see...
...stands all by itself in the quiet Frankfurt suburb of Ostend.
That sets it apart from every other central-bank building I've ever seen. Because they're usually squeezed into the city centre, with an entrance straight off the street (or maybe reached by a grand footpath) rather than standing alone in a large, flat, grassy park edged with high metal fencing, security gates and cameras.
As you can also see above, the ECB never quite looks like the same building twice.
Walk around it, and each view looks like a different office block, as though the central banking shape-shifter is caught between 3 or 4 glass-clad versions of its boring glass-clad self.
That's because, as the ECB said when its policymakers chose the design in January 2005 (they had nothing else to do that day, leaving interest rates unchanged like they had for 17 months before and would do again for the next 10 months too), "the high-rise building consists of two polygonal office towers connected by an atrium."
The winning design came from Vienna architects Coop Himmelb(l)au. (No, the brackets aren't a typo. The firm is "not a color but an idea" apparently "of creating architecture with fantasy, as buoyant and variable as clouds"). And twisting the 2 towers together "satisfies two important elements of the competition brief," said the ECB when picking that shape, "namely that the new premises should 'foster interactive communication' and 'promote teamwork'."
So far, so ugh.
But up close (well, as close as you can get to the empty scrubland surrounding the base) and viewed from the east...
...away from the main-road vehicle entrance on Sonnemannstrasse (and nearer to the Grossmarkthalle memorial to the 10,000 Jewish people rounded up in Frankfurt by the Nazis and sent to their deaths between 1941 and 1945)...
...the 185-metre tower finally reveals its true form...
...the scary black obelisk from the cover of Led Zeppelin's 1976 album, Presence.
The ECB Building and its model (?) from Led Zeppelin's Presence
Designed by '70s marketing firm Hipgnosis, the gatefold sleeve for Presence featured 'The Object' in a series of photos...
" torn out of National Geographic magazines from the 1950s" in fact, according to the artist Aubrey Powell.
"We just painted in black that exact shaped object with ordinary people in ordinary situations. In other words: This was something you needed to live. It was food. It was a symbol of energy, of power. Which is what Led Zeppelin were."
Was this the model for the ECB tower? Is that what it says about the European Central Bank? That it's vital, essential, omnipresent, all powerful?
Neither Zeppelin nor Hipgnosis get a mention in any of the PR, news or reviews I can find around the ECB tower. Nor do most of the journalists and fans writing about Presence on the internet mention "the other thing about the black Thing" either...
...the fact that "It's clearly evil" as one comment puts it.
Occult most certainly (a big theme for guitar hero Jimmy Page), it's very possibly alien, like the obelisk in 2001: A Space Odyssey. Or perhaps it's simply surreal. Either way, The Object's presence among those "ordinary people" in "ordinary situations" has always felt threatening going on terrifying to me.
Savers in the Eurozone might agree.
The ECB has repeatedly paid a lower rate of interest than the pace of inflation since the Euro came into being on 1 January 1999. (Indeed, it even paid a lower rate of interest than 0% for 8 years starting in 2014!) That has turned €10,000 into less than €7,500 in real purchasing terms, with most of the harm done since the tower was topped out a decade ago.
How's that for black magick?
Chart of Eurozone deposit interest rate (blue) vs. consumer-price inflation (red). Source: St.Louis Fed
It's now almost 50 years since The Object appeared on the cover of Presence, 20 years since the ECB chose the same shape for its towering lair, and 10 years since the glass-clad "thing" was completed.
Yet the tower's blank stare remains "a modern building for a modern central bank" to quote the ECB's own website.
Again, that makes the tower very different from most of its counterparts among the rest of the world's reserve currencies and also-rans. Because the ECB is almost alone in not trying to look like something from ancient Greece, renaissance Italy, or aristocrat Europe.
Take the Marriner S.Eccles building in Washington DC, for instance. Built to the design of French 'Beaux-Arts' architect Paul Philippe Cret almost a century ago, it houses the Federal Reserve Board inside the white marble and sturdy columns of a classical temple.
A very 1930s' temple to be sure...
The US Fed's headquarters in Foggy Bottom, Washington DC
...and much more like a massive and threatening art deco cinema, shopping mall or even government bullion vault than the 18th Century country pile designed at the same time by Herbert Baker for the Bank of England in the City of London.
That was finished in 1939, two years later than the Eccles Building (and just in time for the Luftwaffe to try flattening it) with fluted columns and a giant portico.
But Cret's "stripped classical" style for the US Fed still centres on a huge door, reached by a wide flight of steps, which is almost lost in a massive frontage that bellows 'Ancient temple! Greek gods at work!'
So too, weirdly, does the Bank of Japan in Tokyo. Designed and built in the 1890s, the home of the Yen was conceived by architect Tatsuno Kingo on trips to Belgium, the USA and England, where he regularly went to survey the Bank of England's genuinely 18th Century manifestation, designed by John Soanes and finished after 40 years' work in 1833.
The BoJ thus mimicked its Western peers like Emperor Hirohito wearing a morning suit and starched collar. And to do that, it echoed Ancient Greece.
"Order and dignity are expressed in the classical exterior of the building," says the Bank of Japan about its main building today.
"The colonnade on the ground floor of the courtyard is in the Doric style, while the coupled columns extending from the second to third floors of the façade, courtyard, and west side of the building are Corinthian."
Outside today's rich-world economies, a similar story. 
The Reserve Bank of India in Mumbai was built in 1980, yet it channels the US Fed's 1930s temple in Washington more than anything else, with a couple of classical columns thrown in for good measure either side of the huge entrance.
China's central bank of course tends more towards "Communist chic". But even here (and with zero history available online that I can find) the PBoC's curved headquarters loom so large and monumental that the roundtable discussions inside are clearly open only to the very highest officials, the unelected elite.
More classical columns adorn the front of the Central Bank of Russia's HQ in Moscow, but heavy dollops of wedding-cake trim and light yellow paint make it a Romanov palace above all else.
And why not? The next best style after Ancient Greek temples for running a country's money is "aristocrat bling" as the Bank of England has shown for almost 3 centuries...
...both ruling high above the mob, if not quite so high and powerful as gods and goddesses.
Such a pity, then, when the spell is broken.
"It's a great business to be in, central banking," joked Adrian Orr, Governor of the Reserve Bank of New Zealand, to lawmakers in Wellington last week.
"You print money and people believe in it!"
Cue much chuckling from Orr and his fellow Kiwi money masters. Cue gasps of horror and 'Told you so!' from crypto fans everywhere, not least because the RBNZ (based, as it happens, in a bland 1960s office block no doubt looking as futuristic when it was first built as the ECB did a decade ago) also used its time before the Finance and Expenditure Committee last Monday to badmouth Bitcoin.
Sadly for the magic and mystery of central banking today, Orr is far from alone in coming across as a clown, rather than as a frock-coated aristo or a hooded adept tracing pentangles on the floor.
"At this stage, the board hasn't ruled out a further increase in interest rates, but neither has it ruled it in," says Reserve Bank of Australia chief Michelle Bullock (like her New Zealand counterparts, stuck in a very 'modern' office block), leaving no-one any the wiser.
"We don't need inflation to come back to target before we cut interest rates, I must be very clear on that," says UK Bank of England boss Andrew Bailey, clarifying nothing instead of trying to address the 3-way split among his policy team on raising, holding or cutting rates at their February meeting.
As for the USA, "[interest rate hikes] are not the base case anymore," said Fed chair Jerome Powell in mid-December, telling the world that cuts were "coming into view"...and unveiling Fed forecasts for three Dollar rate cuts in 2024...only to row back frantically ever since after the stock market leapt on his comments and US data continue to come in strong.
And in Europe? "79% of Euro area citizens [are] in favour of the single currency," said ECB president Christine Lagarde to lawmakers in Brussels last week, ignoring the 70 million people therefore unhappy with the first 25 years of monetary union.
Madame la Gaffe went on to deliver a word salad drizzled with nonsense, topped with croutons of inanity.
"We have remained unwavering in our commitment to our primary mandate of price stability," Lagarde said with a straight face, claiming that she has been "responding forcefully to the surge in inflation following Russia's invasion of Ukraine and the subsequent energy crisis" even though her team waited 15 months to raise deposit rates from below zero after Eurozone inflation punched up through the ECB's 2.0% target in spring 2021.
What's more, "We have taken steps to incorporate climate change considerations into our monetary policy operations," Lagarde continued, "[and] we are making progress in developing a digital Euro, which would strengthen our strategic autonomy and support our competitiveness in a digitalised world."
No, this vacuum of meaning isn't the worst thing in the world today. Nor is incompetence sold as 35,000-feet omniscience anything new ("the US house-price drop is contained" said Ben Bernanke in May 2007; "if you understand what I'm saying, you aren't listening" said Alan Greenspan at least twice in the decade before that).
As for the Led Zeppelin thing, we're just having a bit of fun. The ECB building? It simply "looks every inch the modern office block" as the Irish Times said when the Frankfurt tower finally opened... 
...a "new glass palace" according to Deutsche Welle.
But that all-knowing tone of Lagarde's. Patient bordering on manic. Imparting wisdom if only you would sit still for long enough.
Doesn't it remind you of something...?
Christine Lagarde and the ECB building at work on the cover of Led Zeppelin's Presence
The only photo on Zeppelin's Presence not ripped from a magazine, it shows "ordinary people" acting as though this weird (if not occult) behaviour is a perfectly "ordinary situation".
The children certainly don't seem to find it unusual. But clearly, whatever's happening is awful.
In global money policy, that might echo for savers and investors pushed through the looking glass of negative Euro interest rates from 2014 to 2022. Today, it might resonate for Euro borrowers instead, stuck with the highest interest rates ever in the currency union's 25-year history, even though No.1 economy Germany is mired in recession with overall activity across the 20-nation bloc shrinking for the 9th month running in February.
But this is the same central bank remember – now trying to find consensus for a single cost of borrowing among 350 million people represented by 20 national central-bank chiefs, albeit perched today high up in their modern glass palace – which raised interest rates going into the 2008 catastrophe phase of the Western financial crisis. After then rushing the other way, and then staying far too low, for far too long, it's now holding rates at record highs to fight an inflation in prices that began to evaporate precisely when it finally edged interest rates above 0% almost 15 months ago.
Still, every other central bank in the rich Western economies is doing the same. So it's nobody's fault at the ECB, of course.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn



Market Fundamentals