OK, Gold's Not Money. How About This One Ben: Is the Fed a Bank?
by Arthur M.M. Krolman
by Arthur M.M. Krolman: Accidentally
Conceived in 1971, Gold Money Baby Now Due
As you prepare
for your special double-feature meeting in a few days, I thought
you might want a helping hand in reducing uneasy feelings of puzzlement
that you and others are experiencing these days. Last week, when
said you were puzzled by weak consumer spending, I'll bet you
felt the same way I did. Neither of us could care less about what
or how much other individuals decide to spend their hard-earned
money on, but the being puzzled part is really yucky. What an anxiety-fueling
feeling of uneasiness!
I'll bet a
lot of people in the world are puzzled too about what a central
bank like the Fed really is and why it's called a "bank". And I'm
sure neither of us want someone else being puzzled any more than
we like it. OK, I guess you did want people to be puzzled about
all those secret Fed loans went, but I've got to believe that
deep down, you're a decent man and you'd never make folks puzzled
on purpose again. So let's work together here.
As a wise man
said, every human action is initiated in an attempt to reduce a
felt uneasiness. I thought I'd take action myself in this note to
see if you and I could reduce just a little piece of the uneasiness
puzzlement when people ask: is a central bank really a bank?
When I was
young and foolish, I thought that a bank with nice big Greek columns
was a solid institution that would keep my money safe in their vault.
Ha, ha. Later I thought that the Federal Reserve Bank was a bank's
bank like in
those awesome 1920s posters. I guessed that meant that my bank
would take my money out of their vault and put it into the Fed's
vault to keep it REALLY safe! Ha, ha, ha! It's funny, don't you
think Ben, to look back on a time when you were so puzzled! Folks
have some funny times to look forward to.
As you and
I know, a central bank isn't a bank at all. It's actually a government-sponsored
counterfeiting enterprise. Right, kind of a super charged GSE...
a GSCE! Shocking news for a lot of folks, I know Ben. But let's
remember about all that felt uneasiness we're dispelling here! It's
really not a puzzle: the central bank creates money out of thin
air just a like a counterfeiter at his printing press. If folks
have trouble really believing that a GSCE is not a bank, they should
think about James Stewart in that
wonderful bank run scene in It's
a Wonderful Life. They just need to imagine people making
a run on a counterfeiting enterprise like the Federal Reserve asking
for their money. Priceless. No money, no problem, right Ben?
I sure doubled over and slapped my knee when you made that "printing
machine" joke in 2002. You son of a gun.
our glasses to at least one less puzzle. And have a great meeting.
Martin McCannell Krolman [send
him mail] is the founder and president of a medical device company
based in Boston, MA. Visit his
website. He is also the author of The
Scary Story of the Three Little Pigs and the Big Bad Box of Free
© 2011 by LewRockwell.com. Permission to reprint in whole or in
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