75 Years of Funny Money

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A good start
to understanding the real nature of central banking is the libertarian
bumper sticker saying "Don’t steal! The government hates competition."
The whole purpose of the bureaucratic machine called central bank
is indeed to steal from us.

How does it
do this? By constantly printing money (or, nowadays, creating it
out of electronic bits on computers) and increasing the money supply,
thereby creating inflation.

When you get
to the Bank of Canada’s Web site, it says "We are Canada’s
central bank. We work to preserve the value of money by keeping
inflation low and stable." Do a little search on the same Web
site, however, and you discover that since the Bank started its
operations in 1935, the dollar has lost about 94% of its value.
A basket of goods and services that cost $100 in 1935 would cost
$1600 today. That’s some preservation!

is understandably illegal and punishable by law. But central bankers
do it all the time, the only difference being that they have a legal
stick – their dollars are the only permitted legal tender – and
they deploy a huge propaganda machine to force us to accept their
funny money.

There are big
stakes involved. Inflation is a way for governments to spend more
without having to directly impose taxes. A central bank is an essential
part of big government.

Central banking
operations also serve as a permanent bailout for debtors. Interest
rates are usually kept lower than they would be in a free financial
market. And by reducing the value of the money being owed, they
make life easier for debtors. So the modern era of central banking
is one where debt, public and private, inexorably grows, to the
point where the whole monetary edifice now threatens to collapse.

Finally, central
banks protect the reckless practices of financial institutions,
who lend money that they don’t have under the fraudulent fractional
reserve system. With government acting as a lender of last resort,
financial institutions are prone to taking greater and greater risks.
As we’ve seen recently, wads of cheap cash are always at their disposal
to keep them solvent and profitable.

the rest of the article

12, 2010

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