A public central bank is not a new idea. It has been around for a long time. Social Credit under Aberhart in Alberta had the idea of a public central bank. And diehard social credit supporters still support the idea. Much be tter than the current system of central banking but in my view still the same idea supposedly run by honest public interests and when it comes to centralized power we know it corrupts.
Rushdoony has the presented the idea of a private system of banking and I have read two threads tonight where Ms. Poppins rails against him. The other was the dinosaur thread. I don't know what the problem is but take whoevers advise it was to just ignore people you dislike or be civil. Although I don't care to pursue the dinosaur thread Rushdoony is a little more informed on basic economics than most on this thread. There is nothing wrong with privately minted coins of gold or silver, as long as people will trade in them and they have confidence in them, they can be a valid currency.
What went wrong with banks in the past was they used, and still do today, an economic tool called fractional reserve banking.
Gold and silver or even platinum can be used to back currency. The currency can be paper but must be backed by a commodity so that wealth remains in the hands of the people. it then behooves banks to just be what they were intended to be - safe storehouses for people's gold and silver. The bank could issue currencies as a claim on deposits. Originally, that was the intent but it became corrupted by fractional reserve banking.
Nohope187 suggests there is a limited supply of gold and silver and that is a problem. it is only a problem if the gold price is fixed as it was before the cancellation of Bretton-Woods in 73 by Richard Nixon. I can't see hoarding as being a problem. People generally have needs and desires so they will always need to spend. They can't hoard it all. The only time I can remember when hoarding was a problem was after the civil war in America when greenbacks, originally printed to pay for the war became worthless for awhile because the government couldn't honor them. Then a few bankers got wind that the government was going to buy them all back and pay off that debt so the bankers started collecting them at ten cents on the dollar and then sold them back to the US Traeasury for their face value.
Economics is an interesting subject and the source of a lot of our social ills really. An honest monetary system would solve a lot of them and although a public central bank would be an improvement over our current structure, I wonder how long it would last before it too became corrupted. I think the best way to avoid corrupting the economic system is not to concentrate too much power in one agency.
I agree with you Pliny when you say: "I think the best way to avoid corrupting the economic system is not to concentrate too much power in one agency."
But don`t be troubled by the word "bank". A public Central Bank would in fact not be a "bank" as we understand this word usually and it would have no power at all. A public Central Bank would be only the part of the State Administration which:
- prints the money demanded by the Executive (government): technical function of money production;
- transmits the demanded money to the Executive as requested by the annual budget as democratically adopted: technical function of money transmission;
- recovers the money -it was authorized to lend by the Executive- to the enterprises and the private banks (the only real banks) as well as the interests of this money (1% -1,5%): technical function of recovering the loans;
- destructs the recovered money in order to avoid inflation: technical function of money destruction.
All this is done on the instruction of the Executive and these instructions originate from the democratic parliamentary decision process. The public Central Bank makes no benefit (its low interests on the loans to the private entreprises and the private banks are just to cover its costs) and is entirely submitted to the Executive in its functioning.
Interest is a problem,I agree. But fractional-reserve banking is the biggest evil. It allows banks to create interest on nothing.
World economists, of the leftest persuasion, see
nothing wrong with the economy and point to the fact that major capital projects, especially of a governmental nature, could not be accomplished any other way than through debt and borrowing against the future GDP. Of course, they argue that our standard of living is owed to the fact that we have been able to finance it.
The real crime is to, and it should be illegal, indebt a future generation that has no say in those debts. It is no less than economic slavery.
Sounds like a workable idea. The public has to understand though that democracy is not about opening the public coffers and voting themselves benefits. It is only about voting for representatives to govern. The style of government and definition of it and its mandate must be clear and not corruptable. The original American Constitution was a fantastic document until it was corrupted by men of government who thought it too restrictive on their activities and deemed it irrelevant and inapplicable.
I guess you can figure out I am not a big government lib-left fan.
that's a great point.. fractional reserve banking is a great evil.. I wonder whether it is possible to have fractional reserve banking w/o a central issuing bank? (i.e., I guess what I'm asking is, even if we eliminate the central bank, have we solved all the problems? What happens if we dissolve the central bank, but allow private banks to continue the practice of fraactionalizing their reserves?)
It seems there are really two problems we're dealing w/ here: (a) debt-based currency; and (b) fractional reserve banking;
This is an excellent discussion, and I am hearing great ideas and analysis from all corners.
I agree that fractional reserve banking is a large part of the problem.
So is the privately controlled Central Banking System. John puts forth an excellent plan and explanation for government takeover of the Central Banking system, but like Pliny, I am not sanguine of delegating too much power and authority to government, since they are controlled through the same evil elitists that currently run the Fed. It would be a small adjustment for them to gain control of the government bankers and revert to the same old debt-laden system.
Finally, I don't personally like debt-based currency at all. Perhaps we even need to limit economic growth and government funded projects as many have postulated, and what better way than to limit our currency to the value of real wealth currently in the system, rather than borrowing against a future standard of living that is guaranteed to enslave future generations with onerous tax burdens.
Finally, I concur with sablefish that our most effective strategy in the short run may be to free ourselves as much as possible from the Fed's "funny money", even if we have to revert to some basic bartering.
I also agree with Pliny that price adjustments could atone for the limited supply of gold, silver or other precious metals to back up currency. There is even a theory that the warmongering of Bushco and the neocons in the Middle East right now is a desperate, last ditch effort to rescue the American economy by controlling the world's oil and utilizing that as the new currency.
Since banks have no real wealth to lend they are
today simply creating tokens (not money), as required, or for other reasons such as to resolve a sluggish economy. Besides the evils of fractional reserve banking and unbacked fiat currencies the government manipulates the economy with their various economic tools rather than depending on the natural forces of the market to flow.
This has resulted in inflation of course and the dollar being a debt instrument means that no one is saving. It makes no sense to save money when inflation eats away at it. Savings are a good indication of wealth in a nation but no one is actually saving wealth if they are saving fiat dollars. Saving for retirement is an almost hopeless task. Inflation will eat away half your savings by the time you are ready to retire and there is always the danger of hyper-inflation and currency devaluation if not outright collapse. Voltaire said that, "all paper currencies will eventually return to their intrinsic value", and I believe him correct.
I think the USD's strength is based on oil. All oil in the world is sold in USD. Saddam tried to sell some in Euros. Every country relies on oil so it must have USD reserves. This keeps the international community interested in the USD and its health(value). The strengthening of the Euro has also made nations take an interest in having some stock of Euros. It is an exciting time for currency traders at the moment.
psholz: Fractional reserve banking started long before their were central banks. Private banks started the practice and their ofttimes collapse brought in government regulation on the matter
that prevented runs on banks and their collapse by limiting the amount of percentage and by guaranteeing or insuring deposits.
I am not an economist but am a big fan of Austrian economics. A free market style with little government intervention. Keynesian economics was embraced by governments because it meant they could meddle in the economy and have their hands in everyones pockets. Supporters of Keynes argue for the political necessity of governments to save markets from themselves through intervention by the use of tools such as interest rates, money creation, taxation, tariffs, debt-management, inflation, wage and price controls. Note deflation is not a tool but considered by government an evil to be avoided - prices must always go up.
Someone mentioned Jekyll Island. I haven't read the book but I guess it really gets into the actual conspiracy of bankers to control the US economy. I think it is called, "The Creature from Jekyll Island" and i forget the authors name.
I think the Federal Reserve Act and the Income Tax act of the US had the bankers thinking they now controlled the worlds economy and it started nine decades of experimentation, which continues today, to subvert all nations and their citizens toward accepting legitimacy for global government.
If you look from that period forward, 1913 to be exact, WWI occurred less than a year later and the October revolution, funded by western interests, occurred in 1917. The great expansion of communism had started. America was rather recalcitrant regarding socialism. It was an individualistic country that believed in small government for the most part, even though the Marxist concept of graduated income taxation had been adopted. The great depression allowed a ballooning of government under FDR in the States and a more warmer feeling toward socialism through his new deal. Unionism was in full swing as well on the business front.
After that, world war II, the cold war, Korean war, Vietnam war, the recession of the seventies and eighties. Then terrorism developing in the nineties.
Well, gotta go. I think that's enough grist for the mill. Getting deep into conspiracy country now. :-)
>>1. On behalf of the government, the public Central Bank is printing as much money as necessary for :
- the annual public budget;
- the private economy investments.
What would this budget include ? Expenses of any government (the true cost of government, not every kind of re-distribution programs) must be paid by some form of tax. You can't just print up money to pay for the legislature, law enforcement, garbage removal, sewage and water.
The Bank of Canada is 100% publicly owned -- so is the National Bank of Hungary; but it makes no difference. Both of these countries has an irresponsible, marxist government which spends other people's confiscated earnings like drunken sailors. And both of these governments allows money changers to issue their own paper based on 5% (government bond) fractional reserve. The whole entire leninist eastern block had publicly owned central banks, but they had irresponsible and incompetent leaders so the people did not benefited from their banks and paper money.
The government should own the central bank (like the State of Nevada has, or some Canadian provinces used to have, or some people wanted the US Treasury to be), but you need responsible and competent management to run it, not spend-thrift politicians.
If you lend/borrow money into circulation and existence (even if from a government bank) you always have the problem of having to pay back 105 for 100, when there is only 100 in existence. Paper money has to be spent into circulation against useful projects. Just as, first work is expanded to get gold, silver, or copper.
Democracy (mob-rule) is a corrupt idea to begin with, invented and brought to you by the private bankers, in ancient Athens as in our days. If you rob Peter to give some to Paul and pay yourself handsomely, you will always have the vote of Paul, and Peter is out of luck and never has a chance to free himself from this yoke because he is always out-voted.
Timothy Leary, the great admirerer of Alister Crowly ?! Now, there is somebody to look up to if you are opposed to the new world order.
You say: "You can't just print up money to pay for the legislature, law enforcement, garbage removal, sewage and water."
From where do you think money is coming, from the clouds? Also in the actual private Central Bank system, money must be printed before put in circulation. In the USA it`s already governmentally printed on the instruction of the FED. The problem is that even if this money is printed by the government, it is sold to the same government by the private bankers who own the FED, the interests charged by these bankers being the price of this money. These (high) interests correspond to no real productive service from these private bankers and that`s why we can speak about usury. Every US$ in circulation was printed at the costs of the US people AND sold to this people by the private bankers who own the FED. Funny situation isn`it? Just like if you were constructed your own house and paid for it to somebody who didn`t even help you to construct it...
Concerning Hungary, its Central Bank isn`t "owned" by the government but is indeed completely independent of this government and receives all its orders/instructions from the European Central Bank which in turn is under the absolute control of bankers like the Rothschilds. By the way, the present Hungarian government is a 100% ultra-liberal one, even if he calls himself "socialist": he serves exclusively the giant multinationals just as do the other Eastern European governments today and was doing the "communist" government of the sinister Yeltsin in Russia during the 90`. Don`t trust in words such as "socialist" or "communist", they aren`t worth even the ink used to print them.
>>>From where do you think money is coming, from the clouds ?
Today money is borrowed into circulation. Printed in a government mint.
But money issued against nothing by a publicly owned central bank, as your scheme would suggest, causes inflation just the same as money created by a private bank based on 5% reserve.
>>the present Hungarian government is a 100% ultra-liberal one
Isn't that what I said ?
usury means interest low or high