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By
most accounts, selling a central bank to an educated populace should be a
daunting public relations task, if not an impossible one. Think of trying to
convince the Pope to swear allegiance to the devil or getting a politician to
resign and get a productive job. Yet selling lies, even Big Lies, is an area
where power lovers have excelled throughout history with unsurpassed
brilliance. Even after the Great Meltdown of 2008, which came as a shock to
everyone except those annoying Austrians, the Fed is still regarded as
our economic stabilizer and savior, the pacemaker keeping the capitalist
system alive. Bernanke is not the villain, as a handful of troublemakers
claim; he’s da Man, the Person of the Year in 2009. And it was a well-deserved award - it takes genius to dream
up TARPS, TAFS, and massive taxpayer-provided bailouts to keep the house of
cards standing.
Central
banking is regarded as a natural process of evolution in the life-cycle of
capitalist economies. As capitalism begins to collapse from inherent flaws,
so interventionists of all stripes argue, it becomes necessary for the
pristine state to step in to keep it from cannibalizing itself. One such
intervention, invented by an Englishman, is the creation of a central bank to provide just the right amount
of money for an economy to grow at the right pace. Once established, the need
for a central bank is never again questioned, at least not by state-trained economists - central banking is as necessary and permanent as the sun in the
sky.
Oh,
sure, we find the occasional anomalies like the central bank of Zimbabwe and
the two dozen or so central banks of the twentieth century that hyperinflated their economies into temporary barter societies and wiped out the
savings of millions. But anyone can make mistakes, even central bankers.
Imagine how much more Zimbabweans would have suffered if their central bank
hadn’t raised the price of a hamburger to fifteen million dollars. Imagine if they'd developed a money on their own, as people once did in the Dark Ages
of economic development -- or during the emerging prosperity following the central bank’s breakdown.
Recall
for a moment what a central bank does. As a state-sanctioned banking cartel, it keeps alive the fraud of fractional-reserve banking by getting
its member banks to create money out of nothing at the same rate. By keeping
monetary inflation relatively uniform, the chances are slim that any one bank
will experience an embarrassing currency drain and be forced to close its
doors. Of course, by insulating bankers from market discipline, the boom
period can last much longer than it would without central bank protection. A
lengthy boom instills confidence in the claim that this time
we’ve entered a new era of permanent prosperity. Debt is our friend,
risk is passé, and saving is the enemy. All we have to do is believe,
borrow, and spend to keep the good times alive. When the bust comes and the
formerly attractive risks suddenly become a weight to bear, the big bank can
team with government to intervene massively, as we’ve seen - and are
paying for. Together, the team will prop up the biggest losers and start the
process all over again. The little guys who saw their 401Ks shrink now see
them come alive again. They feel thankful. Their attention turns to more
pressing problems than the existence of the banking cartel. They come to
accept things they feel powerless to change.
In
2006 Ron Paul told the House: “Everything possible is done to prevent the fraud of the
monetary system from being exposed to the masses who suffer from it.“ The fraudulent system benefits the power-holders
at the expense of everyone else. Those others will never get it until they
learn to challenge the Establishment’s propaganda.
George F. Smith
Read his book : The
Flight of the Barbarous Relic
Visit his website
Read his blog
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