The corruption of modern central banking

It is time that the inherent corruption of our modern central banking becomes public knowledge for our own sakes. I certainly would not want this fascist crony-capitalism poison to be secret nor to go unnoticed by my neighbors. The leaders are printing money and giving it to their friends before it cycles through the economy to cause price inflation:

“The bottom line is that senior-level people in Washington, in the name of keeping in touch with their stakeholders, are tipping their hands,” says Adam Zagorin, a senior fellow at the Project on Government Oversight, a Washington watchdog group. “You can’t prosecute them for insider trading if they didn’t trade the shares. You may not be able to even reprimand them. What the hell are the rules?”

An official such as Paulson has no legal obligation to keep material nonpublic information to himself, says Phillip Kaplan, partner for litigation at Manatt Phelps & Phillips LLP, where he specializes in securities and class-action cases.

— SNIP —

Morgan Stanley and BlackRock Inc. both helped the Federal Reserve and OCC prepare the reports on Fannie Mae and Freddie Mac that Paulson told the New York Times would instill confidence the morning of the Eton Park meeting.

This is not coming from a gossip tabloid.

Canadian banks are running out of credit-worthy borrowers

Why is the governor of the Bank of Canada, Mark Carney, telling the commercial banks that they should be lending out more money??? [I wonder why he should be talking at all? but that is a different story.] I would hope that the bankers know their customers better than the central bank does — they just have to. That is their business. They make profits by lending money to people.

The banks can lend more money but they can not create credit-worthy customers out of thin air. The banks can stimulate production in the short run by extending credit but the banks can not create productivity. There is a huge difference between short run production and long term productivity. It is the long term productivity that is the ultimate deciding factor for a lender because the lender needs the regular monthly payments.

Maybe one day, people will wake up to the fact that government enforced monopolies are the best way to misallocate resources. A monopoly on the issuance of currency is not free of economic law nor of naturally selfish human behavior.

Jörg Guido Hülsmann sums our hopeless predicament quite simply in his recent article Deflation and Liberty:

A paper-money system is not beneficial from an overall point of view. It does not create real resources on which our welfare depends. It merely distributes the existing resources in a different manner; some people gain, others lose. It is a system that makes banks and financial markets vulnerable, because it induces them to economize on the essential safety valves of business: cash and equity. Why hold any substantial cash balances if the central bank stands ready to lend you any amount that might be needed, at a moment’s notice? Why use your own money if you can finance your investments with cheap credit from the printing press?