Central Banks and Competitive Currency
by ilene - September 11th, 2009 8:28 pm
Click here for a FREE, 90-day trial subscription to our PSW Report!
Follow up to Has Central Bank Management of the Economy Failed?
Central Banks and Competitive Currency
Courtesy of Charles Hugh Smith, Of Two Minds
Correspondent Eugene P. summarizes the history of central banking in the U.S. and suggests an alternative to our debauched dollar.
In response to Has Central Bank Management of the Economy Failed?, Correspondent Eugene P. cogently summarized the history of central banking in the U.S. and then posed a provocative alternative to the declining U.S. dollar: private-sector competitive currencies.
Eugene P.
A few thoughts on your most recent essay re: Central Banking.
Some of the Founding Fathers despised Central Banking, particularly Thomas Jefferson, who saw it as an engine for speculation, financial manipulation, and corruption. He said in 1816, "I sincerely believe…that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."
Some of the Founding Fathers loved Central Banking, particularly Hamilton. (Coincidentally, Hamilton also disliked the concept of a Bill of Rights, finding it unnecessary, and really disliked the fact that States had rights that the Federal Government couldn’t automatically override. Sound like anyone familiar?)
We had about 150 years of common sense (i.e., no central banking) here, with several blips on the radar screen: the first was the 1st Bank of the United States (1791-1796). The second was the 2nd Bank of the United States (1816-1836), which was created by James Madison (over Jefferson’s objections) because he needed a way to fund the War of 1812. It was later dismantled by President Andrew Jackson, who viewed it as a form of systemic corruption that benefited his enemies.
The third was the National Banking Act of 1863, which was created for, among other reasons, funding the Civil War. War is, after all, an expensive proposition, a lesson learned by the Egyptians, the Romans, the Greeks, the Carthaginians, the Mongols, et. al, but clearly, this lesson has not sunk into current humanity’s brain yet. Maybe sometime in the future. I can hope.
Still, despite this legislation, bank runs were occurring on a semi-regular basis, and this annoyed (and busted) bankers who made their money engaging in the enjoyable pastime of speculation. They wanted a lender of last resort (a central bank) to bail them out if their bets went bad. Seven men…
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
Facebook
Twitter
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(