Central Banks, How The Rich Stay Rich Pt. 3
Photo From moneyfornothingthemovie.org
Of course I know of no central bank that actually creates money and distributes it directly to the people of the country it is supposed to represent. When these central banks create money they all do something else with it.
The better option is for a government to own its central bank. This is dangerous but can work out well, depending on the honestly and responsibility of the government involved.
In the best cases, of a reasonably honest and responsible government, when the central bank creates money it will simply hand it over to the government, which will use it for things like developing or maintaining infrastructure, for health care, education or to pay down debt.
By receiving Money For Nothing, directly from a central bank, honest and responsible governments would need less taxes from their citizens, or would be able to avoid having to borrow money in their name.
The problem is that not all that many governments are either responsible or honest.
Most of the propaganda media’s economic “experts” will regale you with the moral hazards of allowing governments to own central banks.
That is, these “experts” of the corporate- state media will tell you that once a government can take control of money production, it is very likely to run wild with this power, create way too much money, (so it can spend it), flood the garden, (economy) with water, (money) and harm it by creating massive price inflation, which is what usually happens when there is too much money in circulation relative to the goods and services that are actually available.
And of course there is the massive temptation that Money For Nothing will have when given directly to dishonest and corrupt politicians and bureaucrats, so that they might siphon off at least some of it to private accounts at home or abroad.
While none of this bad stuff has to happen, one does have to ask oneself how many responsible and honest governments exist in the world compared to dishonest and irresponsible ones?
For this reason I believe that under normal conditions it is best for central banks to simply distribute new money directly to the people whom they represent.
But there is a much, much worse alternative in Money Creation and Distribution (MC&D) than handing new money over to the public, or their government and that is handing the power of its creation over to private, especially banking interests.
While handing over Money For Nothing to governments can work out well or badly, handing the power of MC&D to private banking interests, guarantees a system that is, or should be criminal. It will always work against the public interest.
The very same propagandists, (masquerading as economists) after having warned people about the dangers of allowing central banks to belong to the government, (moral hazards- inflation etc.), will then tell everyone who will listen that the “solution” to all of this, is to have “independent” central banks.
As with other fake catch terms explained in Part 1 of this series, like “Open Market Committee” and “The Federal Reserve”, the term “independent” here is intentionally misleading and on its face utterly meaningless.
You can ask any scientist, in nature everything is interdependent.
What these propagandist “economists” mean when they use the term “independent central banks”, is that they want one that is independent of government.
Nothing exists in a vacuum however and a central bank will indeed be dependent on something or someone. And as per Part 1 in this series, the US central bank, (The Federal Reserve) whose banks are private institutions, are dependent on their owners.
The US Central Bank, made up of 12 regional Federal Reserve Banks, do indeed have owners, although those who know this will try and obscure this fact at every turn.
According to Wikipedia; “Nationally chartered commercial banks are required to hold stock in the Federal Reserve Bank of their region”. Stocks here means ownership.
There is nothing inherently wrong with banks in general, including ones for profit, as long as they are regulated in say the way the food industry should be.
That would be for safety, that banks actually have enough reserves to meet the likely needs of their depositors, so they can get their money back, plus promised interest, as agreed upon at the time that they made their deposits.
And that bankers don’t use their sophisticated knowledge to screw people whom they give loans to. That all loan agreements are clear and understandable to all parties.
But as with all industries, what no society should want are banks that collude to effectively fix the marketplace in their favor, where as a real matter there is no competition among them, where they can do dangerous and unsafe things with “other” peoples money and where they make scammy loan agreements with people who are encouraged to sign without really understanding them.
When a country turns over the MC&D process to a Central Bank like the Fed, which is in turn owned by other private banks, what is created is a central core of a banking cartel that does all of the rotten things that were mentioned in the last paragraph. A central meeting place of banking mafia Capos.
Once the banks get a hold of the MC&D process, they change it from one that can be beneficial, especially to the poor, (or at least to all citizens) to a Darwinian lending function in which only the mega rich can play,
And this turns the central bank from its MC&D function, as well as its non controversial function as a clearinghouse bank that facilitates money transfers between banks and financial institutions both within a country and abroad, to an, “at interest lender” and a guaranteed “Money For Nothing” profit making machine for those who own it.
Once a Central Bank takes on these real banking functions, of deposits, loans and reserves, it goes down the rabbit hole and enters a dark, very complex and ugly netherworld, (intended to only be understood by other bankers) where the ultra greedy can do their business without the glare of public scrutiny, as even when their actions are transparent, (which is not all that often) few will understand what they in fact do.
Here in part 4 we will see what the US Central Bank (The Fed) really does and how it turns over trillions of dollars to the rich while punishing the poor and the middle class.