How Private Banking Interests Promote The Political Independence of Private Central Banks

ByShaun Snapp

Executive Summary

  • Private banking interests tell a number of lies to capture the government’s money-creation function for themselves and their cronies.
  • The idea of political independence of central banks is one of these.

Introduction

A major part of getting people to accept the status quo of a private central bank is by providing a false history of banking and money. A perfect example of this is provided by the Bank of International Settlements (see entry in this website), which is a private banking interest. Observe what they say about the history of money the reason for the rise of central banks.

“Banks are meant to transform risks, and therefore, under certain extreme scenarios, confidence in privately issued money can vanish overnight. Government-backed arrangements, where assuring trust in the instrument is a centralised task, have not always worked well either. Far from it: a well known example of abuse is the competitive debasement of coins issued by German princes in the early 17th century, known as the Kipper- und Wipperzeit (clipping and culling times).8 And there have been many others, up to the present-day cases of Venezuela and Zimbabwe. Avoiding abuse by the sovereign has thus been a key consideration in the design of monetary arrangements. The quest for solid institutional underpinning for trust in money eventually culminated in the emergence of today’s central banks. Formal central banks, as we know them today, also often emerged in direct response to poor experiences with decentralised money. For example, the failures of wildcat banking in the United States eventually led to the creation of the Federal Reserve System.” – BIS

The fact that the BIS can point to governments controlling the central bank running into problems should not be used as a pretext to switch the central bank to private interests. Notice that the BIS (a private bank itself) only points to issues with the government or sovereign running the central bank. When the BIS says the “quest for solid institutional underpinning for trust eventually culminated in the emergency of today’s central banks,” evades the question of who runs that central bank. It is true that there were failures of wildcat banks and decentralized money, but those were not banks controlled by a government. The BIS continues.

“The tried, trusted and resilient way to provide confidence in money in modern times is the independent central bank. This means agreed goals: clear monetary policy and financial stability objectives; operational, instrument and administrative independence; and democratic accountability, so as to ensure broad-based political support and legitimacy. ” – BIS

Independent from whom…from the government or from private bankers? Because there is no central bank that is independent from both. Also “democratic accountability” means a public central bank, but in the previous quote, the BIS pointed to the Fed. However, the Fed is not “democratically accountable,” and is entirely controlled by private banking interests. This is the type of fake and massaged history that private banking interests present.

Wight Patman critiqued the faulty understanding of banking in the following quotation.

This quote is from Wight Patman. “There are many reasons why the general public doesn’t really understand our monetary system. In the first place, money is something that people tend to get emotional about. After all, money involves, and always has involved, something closely akin to faith-which probably explains why in many past societies the money system has been in the hands of a priesthood, the subject of magical rites, and the ceremonial services of the tribe’s medicine man.” – AZ Quotes