Wednesday, May 26, 2010

Central Banks as a Branch of Government

As we learn from an early age, our Founding Fathers designed a system of checks and balances designed to safeguard liberty. From our contemporary vantage point, we can pinpoint a number of weaknesses and outright failures of their system.

One major failure was their failure to anticipate the rise of the supremacy of the judicial branch. The Founders were heir to a centuries-long political and military struggle that firmly established the Supremacy of the Commons, meaning the ultimate authority of the representative body of the common people. Today, the unelected, unaccountable, and permanently seated judges routinely throw out laws, as well as directly supervising legislatures and executives with various judicial orders. Were a new Constitution written today, the friends of liberty would need to reign in judicial power to prevent our current situation of Judicial Supremacy.

A good analogy for the power of the contemporary Judicial Branch is the medieval power of the House of Lords. The Lords were unelected and immune from popular censure, yet all laws had to be approved by them before they could be implemented. The commoners were simply petitioners to the Lords, they could do nothing without their approval. Such is our status vis a vis the judges today.

The other major failure of the Founders was their failure to anticipate the rise of the power of the banking class. Although the Founders failed to adequately limit the power of the judiciary, at least it was conceived as a branch of government that needed to be balanced. As we can see today, the Banking Branch is a real wing of power, exemplified in the Federal Reserve Banking system.

Unfortunately, their failure to limit its power has allowed the Banking Branch to grow into a "shadow government" that essentially controls the outlines of the entire political process, but without any checks or balances on its power. Central Banking policies are set and implimented with almost complete autonomy from oversight, even indirect oversight. They operate in almost total secrecy, with total immunity to any policy input or control.

Perhaps a good analogy for the power of the contemporary Banking Branch is the medieval power of the Church. The Church stood as a nominally separate power, yet was a repository of tremendous wealth and power. The siphoned a regular percentage of the people's money to themselves, enabling them to live in luxury as parasites on the working class. They had their own parallel power structure and hierarchy, which was internationalist in perspective, though they often interfered in the affairs of state. They invariably sided with the nobility and kings to preserve the status quo against commoner attempts at reform and empowerment.

Just as medieval commoners were forced to contribute their tithe to the church through forced taxation, we are forced to contribute our wealth to the Branking Branch through interest payments on perpetually floating debts. Popular government is an expression of the people's will, how could it possibly require "extra" financing? The concept is abhorrent, as well as abberant to a free-thinking mind that hasn't been brainwashed by the Banking Powers.

Creation of money and credit is a sovereign power, as has been recognized since the founding of the first central banks. As that renown scholar of banking history George Selgin demonstrates (, central banks have one purpose: the nationalization of credit and money creation for the advantage of the central government. Long gone, destoyed by the inauguration of central banks, is that superstitious era when men believed national wealth was measured by its stock of precious metal.

When used for the public welfare, such monetary power is a great blessing. When used to enrich the private interests of the Banching Class, such power is a curse, nothing short of a yoke of perpetual servitude chained around the common neck. The power to create and extinguish money is perhaps the greatest of all governmental powers, providing government almost unlimited power and influence.

If we were to design a Constitution again today, we would certainly need to specify and limit in greater detail the powers of the Banking Branch. Reformers now and in the future will find this a more daunting task, as their powers have been allowed to grow some pervasive and entrenched.

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