The Emerging Global Fed

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The Federal
Reserve has been a nightmare for the American people. It inflates
the money supply, thereby devaluing already-existing money and placing
a massive hidden tax on the people via rising prices. It also uses
its monopoly power to cause interest rates to go up or down, usurping
the rightful place of the market and causing massive malinvestment
and generally an improper and unproductive allocation of resources.

The Fed also
causes the boom-and-bust cycle through its manipulations of the
currency and credit supply. It serves as the government’s partner
in perpetually expanding the “welfare-warfare state,”
allowing the state to spend far more than it could ever hope to
reasonably raise through direct taxation. And of course, the fact
that all Federal Reserve notes enter the economy as debt with interest
attached (but never created) has led to a situation where it is
literally mathematically impossible to pay off the debt. In sum,
the consequences of such a system have been disastrous for average
Americans – hence the growing calls to audit and even end the

But now, imagine
such a system at the global level. And it isn’t just a mental
exercise; the global central bank is already emerging. As bad as
the Fed has been for America – and indeed the world –
a similar system at the international level would be far worse.
Disaster might even be an understatement.

Liquidity and Inflation

One of the
most serious threats posed by a global central bank and world fiat
currency is the fact that it would allow the emerging planetary
regime to print its own money and finance its activities independently.
That means wealth could be secretly siphoned away from all of humanity
to pay for armies, tax collectors, courts, bureaucracies, law enforcement,
wealth redistribution, propaganda, and much more. With no limits.
But to advocates of such a system, that is one of its primary benefits.

“A super-sovereign
reserve currency not only eliminates the inherent risks of credit-based
sovereign currency, but also makes it possible to manage global
liquidity. A super-sovereign reserve currency managed by a global
institution could be used to both create and control the global
liquidity,” wrote Chinese central-bank boss Zhou Xiaochuan
in his public paper calling for a world currency. “The centralized
management of its member countries’ reserves by the Fund will
be an effective measure to promote a greater role of the SDR [Special
Drawing Rights, the International Monetary Fund’s first effort
at a world currency] as a reserve currency.” Of course, communists
have always supported control of “liquidity” (Karl Marx
was a strong advocate of central banks with a monopoly on currency
and credit). But to people who care about freedom and prosperity,
the communists’ support should be a huge red flag.

The United
Nations has also backed global currency proposals for the same reason.
In a report earlier this year calling for the end of the dollar’s
status as a reserve currency and a new monetary regime controlled
by the International Monetary Fund, the UN’s World Economic
and Social Survey for 2010 points out that, “Such emissions
of international liquidity could also underpin the financing of
investment in long-term sustainable development.” The term
“sustainable development” – especially when used
by the UN – is often used to refer to stronger central planning,
population reduction, more land in government hands, and other ideas
repugnant to average Americans and the U.S. Constitution. Other
schemes for “international liquidity” could be even worse.

Hiding behind
the passive voice, a separate report by the UN Conference on Trade
and Development adds in the concept of wealth redistribution: “It
has been suggested that in order for the SDR to become the main
form of international liquidity and means of reserve holding, new
SDR allocations should be made according to the needs of countries.”
It then promotes worldwide central planning to “stabilize global
output growth” by issuing more SDRs or retiring them as the
emerging global government deems necessary. As it stands, wealth
redistribution around the world is bad enough. Surrendering that
power to a global institution would be a nightmare.

In its report
published earlier this year, the IMF also recently came out in favor
of allowing it to print its own money to provide “international
liquidity.” “A global currency, bancor, issued by a global
central bank would be designed as a stable store of value that is
not tied exclusively to the conditions of any particular economy,”
the paper says. “The global central bank could serve as a lender
of last resort, providing needed systemic liquidity in the event
of adverse shocks and more automatically than at present.”
In laymen’s terms, the IMF, with its power to “emit liquidity”
out of thin air, would be empowered to “bail out” companies,
governments, and whomever it wished. If you thought the Fed handing
out trillions of dollars to the big banks and other insiders was
bad, just wait until a global central bank exercises that power.

Allowing the
emerging global government to supply its own money would free it
from the constraints of having to raise money through national contributions
or direct international taxation. But of course, printing all of
this new “liquidity” and financing all of its ambitious
projects would be inflationary by definition. And this inevitably
would represent a massive problem.

Even John Maynard
Keynes, the original proponent of the world currency called “bancor,”
understood the concept well. In 1919, he wrote in his book The
Economic Consequences of the Peace, “By a continuous process
of inflation, governments can confiscate, secretly and unobserved,
an important part of the wealth of their citizens.”

the rest of the article

17, 2010

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