What Is Money? Part 9: Monetary Reform

By Gary North, GoldSeek

An obvious response to the information that I have presented in the first eight parts of this series is this: “What should we do to reform the system?” This is a nice sentiment. It ignores the obvious: “we” have nothing to say about monetary reform.

Central banking is the most brilliant device of profit-seeking monopolists and oligopolists in human history. Nothing else comes close. Hardly anyone understands it, so there is no organized opposition.

In the case of the grandmother of all central banks, the Bank of England, a group of profit-seeking counterfeiters persuaded Parliament and the king to let them take control over the central economic institution: banking. The Little Old Lady of Threadneedle Street has controlled Britain’s monetary policy ever since. The Bank was officially nationalized in 1946. Monetary policy in Great Britain since 1946 has been no worse than it was from 1914 to 1946. That is, it has been inflationary. Central banking is an extension of state power. It functions much as a state bureaucracy does.

Few people understand fractional reserve banking. Even among those few specialists who do understand it, few of them are in favor of a free market in money, governed by contract law. Banking is mysterious to most people. So, it has been easy for central bankers to gain control over money, nation by nation. The legislators do not understand or care. The voters do not understand or care. The academic economists are favorable to central planning, just so long as it is central planning by central bankers. This is central planning for economists who call themselves free marketeers.

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