• 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!

    Counterfeiting
    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.

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    the rest of the article

    March
    12, 2010

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