The headline of a Bloomberg column in Mint today caught my eye: “Central bankers won’t be big stars in 2009.”
Oh, wouldn’t that make for a happy 2009, I thought, and clicked.
It was then that the sub-title emerged: “We are paying the price for years of Greenspan imposing his free-market ideology on the world’s biggest economy.”
Nonsense on stilts!
To understand that central bankers have nothing to do with the free market, consider this: Suppose in all market exchanges, you could get all that you wanted by giving away nothing, would you not be a happy man?
The idea behind irredeemable government “legal tender” fiat paper money is just that: A con game. They buy up everything they need giving meaningless papers in exchange. They get something for nothing.
Private bankers in a central banking cartel do much the same when they create credit out of thin air. They make loans of this credit from thin air, and their loanees find this “money” in their bank accounts. They then use this paper money to buy up what they want. The banker profits by giving away nothing that is tangible. Nothing is exchanged for something. Lew Rockwell calls them “banksters” (as in “gangsters”).
So what is free market money?
First, and most importantly, free market money is what people accept as money – like gold. Free market money can never be something that is the creature of government.
Second, paper money in such a free market is just a “warehouse receipt” – a property title – that the issuer is bound to redeem on demand.
Third: There is no banking cartel. There are competing private banks. All their paper notes are redeemable on demand – by the basic laws of contract.
The basic laws of contract also govern the relationships between banks and their customers. Thus, a “demand deposit” is exactly what it says it is, money given for “safekeeping,” so lending any portion of these deposits would be considered fraud. This would lead to a 100 per cent reserve. No bankster would be able to create “deposit money” out of nothing.
On the other hand, customers may deposit money in banks for fixed terms on interest, and these will be treated as “loans” to banks, from which they can extend further credit. Thus, there is always something tangible that backs credit. Credit is not created out of thin air. No banker can exchange nothing for something. No more banksters. Only extremely prudent private bankers doing a very serious job involving great trust in an extremely competitive setting (no centralization). And these extremely prudent private bankers are the “overseers of the market economy.” There is The Law: the “private law” of contracts. There is no “regulation.”
Ponder over this and do read the Bloomberg column to reflect on the huge amount of miseducation that mainstream economics departments the world over have fostered. The confusion in the mind of the columnist is apparent in his concluding para, where he says:
“The key is to build guardrails to keep markets from driving economies over the cliff again. Ending the excessive trust that governments placed in a few economists is a good place to start.”
Guardrails are required to prevent The State from driving nations off the cliff.
Note how they are already driving us into war. And they buy the services of soldiers with papers! Poor dumb soldiers.
Of course, we all need to end our trust in government economists.
2009 is a good time to start.
A very happy new year to you.
Song to begin the new year with: We Don't Get Fooled Again.
That's "my generation."
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ReplyDeleteRegulators are required to discipline banks. Excerpts from an article published in New York Times dated 19/12/08 titled "How India Avoided a Crisis".
ReplyDeleteBut there was also another factor, perhaps the most important of all. India had a bank regulator who was the anti-Greenspan. His name was Dr. Y. V. Reddy, and he was the governor of the Reserve Bank of India. Seventy percent of the banking system in India is nationalized, so a strong regulator is critical, since any banking scandal amounts to a national political scandal as well. And in the irascible Mr. Reddy, who took office in 2003 and stepped down this past September, it had exactly the right man in the right job at the right time.
The fact that Shashank cites a MAN to buttress his love for our The State shows that this is not the Rule of Law. On the contrary, it is the rule of men.
ReplyDeleteThe ideal of the Rule of Law is an "empire of laws, and not of men."