A History of Central Banking in Great Britain and the United States (Studies in Macroeconomic History)

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This work provides not only a broad sweep of the history of economics over almost two millennia, but insights into how the problems of usury have been confounding and enslaving mankind since its civilized existence first began. Financial stability. While early central banks helped fund the government’s debt, they were also private entities that engaged in banking activities. Because they held the deposits of other banks they came to serve as a banker’s bank, facilitating transactions between banks. They became the repository for most banks in the banking system because of their large reserves and extensive networks of correspondent banks. These factors eventually allowed them to become a lender of last resort in the face of a banking panic. A later wave of central banks, e.g., the Federal Reserve in 1913 and the Swiss National Bank in 1907, were founded explicitly to provide financial stability. The foundations of the Great Moderation were undercut at the beginning of the twenty-first century by fears of a Japan-style deflation and of being trapped in the zero lower bound. This set the stage for the Global Financial Crisis. The crisis was triggered by the collapse of a major credit-driven housing boom in the US and Europe, fostered by financial innovation, lax financial regulation, and loose monetary policy. It was allayed by enhanced lender-of-last-resort and credit policies and aggressive monetary and fiscal policies. A consequence of the crisis is that some central banks extended their financial stability mandate from lender of last resort to the prevention of credit-driven asset price booms (“leaning against the wind” policy)—which has not been proven to be successful ( Svensson, 2017) and to the use of preventative macro prudential policy. The Fed and others continued to worry about the zero lower bound and followed quantitative easing and forward-guidance policies with limited success in reaching their 2 percent inflation targets. The truth is money is fake, people will trade with whatever medium of exchange the perceived authority wants them to, and as long as this authority borrows money only from itself debt can be cleared without issue, and the nation can remain independent, answerable only to itself, and with a population entitled to a share of what the whole can provide.

Alan Greenspan, chairman of America’s Federal Reserve from 1987 to 2006, is one of the most controversial central bankers of all. His tenure included one of the longest periods of low inflation and solid growth in American history—later called the “Great Moderation”. But he also presided over the buildup of risks that led to the financial crisis of 2007-09. Sebastian Mallaby (a former Economist correspondent and husband of our editor-in-chief) provides a deeply critical but ultimately sympathetic portrayal of this polarising figure.

Stephen Mitford Goodson recently passed away and something about his eulogy inspired me to find this book. Rudyard Kipling’s poem If was included in the eulogy at his funeral and it immediately triggered my curiosity. Both authors mention that no meetings are ever transcribed or recorded, no agendas and no minutes are taken in the board rooms and meetings of the top banking sector. Both had years of experience in this matter. Both are straight shooters. Up to 300BC there was an unsurpassed increase in public and private wealth of the Romans. This may be measured in the gain in land. After the conclusion of the Second Latin War in 338BC and the defeat of the Etruscans, the Roman Republic increased in size from 2,135 square miles (5,525 sq km) to 10,350 square miles (26,805 sq km) or 20% of peninsular Italy. In tandem with the expansion of its land area the population rose from about 750,000 to one million with 150,000 persons living in Rome itself. This book is bound to be controversial and engender strong reactions. Why would a seemingly arid subject matter such as the history of central banking and of the monetary system give rise to such strong reactions? The ‘scam’ of the money-lenders is the ability to literally create money from nothing, and then lend and accumulate interest on “credit,” and then re-lend that interest for further interest, in perpetuity, that creates pervasive, worldwide debt, from the individual, to the family, to the entire state.

The Great Depression of the 21st Century Appendix I Appendix II An Analysis by Matthew Johnson Bibliography Foreword Central banks learned to be lenders of last resort and provide financial stability but the pursuit of “too big to fail” led to the development of fiscally resolved banking crises. The Global Financial Crisis was a major departure from the post–Great Depression experience for many advanced countries, but the lessons learned then prevented another financial crisis in 2020. However, the expansion of banks’ toolkits to include credit policy, a form of fiscal policy, threatens central-bank independence.

I would … recommend this book as a central reference to evolutionary economists (and evolutionary institutionalists, by extension) to make more thoughts on and build analytical models of central banking functions from an evolutionary point of view.” (Burak Erkut, Journal of Evolutionary Economics, July 4, 2020)

I do not have the expertise to say whether Goodson’s findings are accurate, but I do know that the raw nerves he touches are on account of central banking and the monetary system created thereunder being at the core of the persistent profound and inhumane differences in wealth distribution within any given country, and among countries. For this reason, for several years, my Party and I have argued that South Africa should reform its central banking and monetary system, even if that means placing our country out of step with iniquitous world standards. If we are to achieve real freedom, it is imperative that monetary reform be pursued with the same vigour and intensity as was displayed towards political reform during the struggle years. But that requires understanding the complex issues of how money is created, whom it belongs to and whose interests it serves. Stefano Ugolini, The Evolution of Central Banking: Theory and History. London: Palgrave Macmillan, 2017. xiii + 330 pp. €135 (hardcover), ISBN: 978-1-137-48524-3. SARB) وله خبرة طويلة في الأعمال المصرفية ، أو بعبارة أقل تعبيرا ، كان مراقبًا مباشرًا لأعمال التداول من الداخل. كيف من الممكن أنه في ما يسمى بالعالم الديمقراطي الأفضل لدينا ، عالم يتسم بالشفافية والقضاء الحر ، لا يمتلك معظم المواطنين أدنى فكرة عن المساهمين في البنوك المركزية الكبرى ، مثل بنك الاحتياطي الفيدرالي في الولايات المتحدة والعديد من البنوك الأخرى في جميع أنحاء العالم؟ يوضح جودسون كيف أن الاحتياطي الفيدرالي الأمريكي الشهير لا علاقة له في الواقع بممتلكات الدولة أو معنى الديمقراطية في الولايات المتحدة ، ولكنه يعمل بدلاً من ذلك كشركة مجهولة ، كنقابة إجرامية من أصحاب النفوذ الماليين. ليس من قبيل المصادفة أنه منذ انفجار ما يسمى بفقاعة الإسكان في الولايات المتحدة الأمريكية عام 2008 ، المصرفيين الكبار ، سواء كان ذلك من بنك جولدمان ساكس ، سواء كان ذلك من جيه بي مورجان ، لم يتم استدعاء واحد منهن بسبب طباعة نقود مزيفة أو تقديم قروض سريالية. يد تغسل الأخرى -كما قد يقول المرء. History is the most crucial subject of any educational system superseding science and the humanities in importance. Within its fabric, it holds the culture, traditions, beliefs, ethos and raison d’etre necessary for the continued existence of any people. If history is compromised by falsifications and omissions, which are frequently imposed by outsiders, then that civilisation will decay and finally collapse, as may be observed in the slow disintegration of Western civilisation since 1945. George Orwell expressed a similar sentiment in ‘1984’ when he wrote: The most effective way to destroy people is to deny and obliterate their own understanding of history.Ugolini concludes as follows: “central banking is deeply rooted in the economic and political context in which it happens to operate, and that the evolution of the former closely depends on the evolution of the latter” (p. 271). Readers of “institutionalist” style books of central banking would have reached the same conclusions. Hopefully, this is welcome as it means that the functional and institutional approaches yield similar results but this also means that no fundamentally new insights about the evolution of central banking are generated.

Ugolini has written a compact history of the critical functions of central banks emphasizing how the forces of centralization spurred or prevented financial innovations. The approach taken is a fresh one and will be useful, especially to scholars who are interested in specific areas where central banks have played an important role in economic development over time. That said, does the book provide new insights into central banks and their functions? This is debatable. For example, while financial stability is often mentioned it is not treated as a separate function. This is a shame in light of the ongoing debate about whether central banks are possibly over-burdened with responsibilities. It is also relevant for the question of the degree of centralization of the various functions considered at the level of a single institution. Stated differently, greater emphasis by the author on governance matters might have helped. The approach taken is a fresh one and will be useful, especially to scholars who are interested in specific areas where central banks have played an important role in economic development over time.” (Pierre Siklos, EH Net, eh.net, November, 2019) This often-cited short paper lucidly explains how commercial banks create money and central banks influence that process. It dispels many common misconceptions about money. For instance, most introductory economic textbooks say that commercial banks lend out the money that savers deposit in them. In fact banks can lend money and create corresponding deposits even without savings flowing in–in other words, banks are quite literally creating “new money” when they make a loan and a corresponding deposit. This does not mean banks can lend with abandon. There are other constraints, such as the creditworthiness of borrowers, the interest rate at which banks lend which is influenced by the central bank and regulations on lending. Consider a consumer who buys an item from a vendor using money borrowed from a bank. The bank must settle the transaction with the vendor’s bank using reserves held at the central bank. If the borrower never repays the loan, then the bank’s reserves will not be replenished, reducing its ability to lend further. Money Creation in the Modern Economy. By Michael McLeay, Amar Radia and Ryland Thomas of the Bank’s Monetary Analysis Directorate. Bank of England Quarterly Bulletin. Q1, 2014. The solution is simple and self-evident. If we wish to obtain our liberation and sovereignty from the enslavement imposed by the private bankers, we must dismantle their fractional reserve system of banking and supporting central banks, or we ourselves shall be destroyed and consigned to oblivion.Modern central banks evolved from the seventeenth to the twentieth centuries to satisfy several public needs: A Monetary History of the United States, 1867-1960” by Milton Friedman and Anna Schwartz. This classic, published in 1963, provided the intellectual foundations for monetarism, a popular school of economic thought. Also included were these words: “Goodson was a remarkable economist, reformer, researcher and author. Stephen provided a tremendous service for future freedom and prosperity by lifting the veil of secrecy of so many facts and facets of the history of central banking and the enslavement of mankind.”