The Central Banking System

The Central Banking system is at the core of why we feel so ripped of by our governments. As of 2011 there are only 3 countries in the world without Central Banking systems: Cuba, North Korea and Iraq. This will surely change. Why? Because this system is at the VERY HEART of corporate growth and control and places us under a system of debt and control in which we can never hope to come out of. This concept is convoluted and understood by few, but this is done on purpose so that we do not question its influence. It is broken down here in a few simply steps, but if you think this version is skewed or inaccurate, please look it up on your own. Investopedia has a nice explanation of it. You will see that the control placed on us is not hidden, in fact it is right in front of our eyes, yet because of our consumption habits and our misguided feeling of representation, it persists.

The Central Bank is designed to manage a state’s currency, money supply and interest rates. It is also designed to be a “lender of last resort” to commercial banks when they find themselves in trouble. Seems harmless, no? Well let’s take a look at what that really means. In particular, let’s look at the money supply function of the bank because that is the part that effects us most.

Essentially the Central Bank has the authority to expand and contract the money supply within the economy. It expands upon it by purchasing government bonds, which are a loan that accumulate interest. Essentially, the Central Bank, which in the US is referred to as the Federal Reserve, lends the government money with interest so that it can pay for all the things it does, whatever that is. Some of the stuff it pays for is good: healthcare, education, infrastructure; some of it is bad: military campaigns and state-led capitalism, which is Research and Development funded by the government in the name of corporations that we never see the profit from; and some of it we have no idea what is done with it: CIA, NSA, FBI, etc.

So what does this mean? Well, think when you hear in the news that there is a however many trillion dollar debt…there you have it. The government takes out loans to print money, and this adds to the debt. Now not all the debt comes from the Central Bank, some of it comes from foreign countries, but the result is the same: massive national debt.

So how does this affect us? Well it does so in 2 main ways:

  1. The interest on our national debt is serviced with Federal Income Tax money–since the interest on 17 trillion dollars is so high, the government can never hope to pay this off and provide the services we depend on. So what does it do? It goes further into debt.
  2. The Central Bank has incredible power over the economy. If it contracts the supply, the government, and any other banks who have borrowed money, must pay up on the loans. There have been numerous instances where this has happened in concordance with economic recession and even depression.

This is a very cynical view of how our government works and how it operates, but it is not far from the truth.

The moral of the story is that we are locked in perennial debt and that we do not have much control over the money that flows in and around the government. For this, we do not have anywhere near the influence over what happens that we think we do.