- Black Friday to Avoid Red Ink; Greenback Gets the Blues
- Bankruptcies Jump, Hitting Highest Level in Four Years
- AIG, Ex-CEO Greenberg Reach Pact to Settle Disputes
- Bank of America CEO Search May Extend Into 2010
- Steepest Black Friday Discounts, Revealed
- Fed to Counsel Moviegoers on How to Use Credit Cards
- 'Cancer of Fraud' Permeates Health Care System: Critics
- Where Do Pardoned Turkeys Go?
- US Mint to Suspend American Eagle Gold 1-Ounce Coins
- 4 Thanksgiving Week Buys For Your Portfolio: Market Pros
- There's a 'Great Chance' For a Double-Dip Recession: Strategist
- Revenge of the Gangsta Nerds
- Will TCU See The "Flutie Effect?"
- Retail Earnings and Sales to Improve in Q4: Analyst
- Consumers Catching the Holiday Spirit
- It's Beginning To Look A Lot More Riskless
- Crescenzi: Claims Level Suggests End to Job Losses
- Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'
MOST SHARED
- The Executive Job Search
- S&P Stocks Trading at New 52-Week Highs
- Where Do Pardoned Turkeys Go?
- Salvation Army's Kettles Now Credit Card-Ready
- Activision Prepares to Double Dip on ‘Modern Warfare 2’
- Chinese Overcapacity is Worsening, EU Chamber Warns
- US Mint to Suspend American Eagle Gold 1-Ounce Coins
- Foreign Demand Boosts US 7-Year Treasury Sale
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
Text Size 
Central bankers are to blame for the current financial crisis, according to Andrew Smithers, author of "Wall Street Revalued" and founder of Smithers & Company. He suggests they employ different policies so further crises will be prevented.
"The major blame for the current financial problems lie in bad central banking," Smithers told CNBC Monday.
One theory that's been proven incorrect, Smithers said, is the idea that assets can't be valued and that if their prices should collapse, it wouldn't matter because "central bankers could cure the problems readily after the event."
According to Smithers, in early 2000 he warned that the policies that central banks, particularly in the U.S., were employing were going to lead to "very severe problems."
"If we are going to solve the problems — i .e. , not have a repetition of the sort of problem we're having recently — then what you need to do is change central banking policy to adjust to asset pricing," Smithers said. "Asset prices can no longer be ignored," he said.
Central banks need to target inflation, asset prices and ordinary day-to-day prices, he told "Squawk Box Europe."
He said there is a need for "another policy weapon" aside from interest rates and suggests using "variable ratios for bank equity" — "so that if you get a situation when asset prices are getting out of control, then you require higher equity ratios for banks."
- For nearly three decades, these on-call experts have been dishing advice on how to – and not to – cook turkey.
- Eric Schmidt pledges to create a virtual copy of the Iraq National Museum at Google’s expense.
- Bill Griffeth is taking a leave of absence from CNBC and Power Lunch for a year. Here's a message from Bill.
- More shoppers than ever plan to comparison-shop this season. Who will benefit?
- It may be the most unusual guide to business you'll read.
- How can you get out of debt and back on the road to recovery? Follow these ten steps.
Data is a real-time snapshot *Data is delayed at least 15 minutes