Centralized Money Systems

"Some people think the Federal reserve banks are United States Government institutions. They are not Government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers, foreign and domestic speculators and swindlers, and rich and predatory money lenders. ... Every effort has been made by the Federal Reserve Board to conceal its power but the truth is the Federal Reserve Board has usurped the Government of the United States."     Louis T. McFadden, Chairman of the US House Committee on Banking and Currency 1920-1931

Centralised money systems gather all the decision making in a single place. They therefore require the highest ethical standards from their operators. In the light of this, it may seem strange that they are run by unelected, largely unaccountable businessmen, whose actions are obscured by laws to protect the anonymous nature of modern money.

"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States"     Senator Barry Goldwater

The origins of money lie in exchanges (and especially, gifts) within a local community. Money circulated within a locality, amongst people who knew and cared for one another, much as it does in today's community currency systems. As nation states formed, these were gradually replaced by national currencies, in which money assumed a more anonymous role. It began to be issued centrally, under the authority of a king or other absolute ruler.

In 1694, an enterprising group of private financiers obtained a royal charter to start the Bank of England. In exchange for financing the government in times of war, they were granted the first national monopoly over the creation of money. It was highly lucrative. As capitalism was spread worldwide, privately controlled central banks were set up along similar lines, effectively monopolising issuance of credit within a country. Control of the money system ensured not just huge profits from interest, but also huge profits from the ability to inflate the money supply, engineering predictable economic booms and busts.

"Give me control of a nation's money and I care not who makes it's laws"     Mayer Amschel Bauer Rothschild

In USA, however, the situation was different. The importance of sound money was well understood after a series of high profile bank failures in the late 19^th century. Control of the United States' money system was the subject not only of heated debate, but of intrigue and assassinations.

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs."     Thomas Jefferson, US President

After a pitched political battle, the interests of private capital triumphed in 1913, when a private credit monopoly in USA was granted as the Federal Reserve Act was passed into law. This created the Federal Reserve, the largest and most influential of the central banks - sold to the American public as a means to provide economic stability.

Downloads Title Author(s)         Date        Reference  Shelling Out - The Origins of Money  Nick Szabo  2002  How Money is Created  Smithy  2004-04-24 Wizards Of Money 1  Banking on Poverty  Smithy  2001-09-30 Wizards Of Money 3   How Money is Created  Smithy  2001-07-29 Wizards Of Money 1   Banking on Poverty  Smithy  2001-09-30 Wizards Of Money 3  The Great Cookie Jar - Taking The Mysteries Out Of The Money System  Edward E. Popp  1978  Beyond Money  John Taylor Gatto
FURTHER READING	» Altruistic Economics
	» Money Downloads

The system of central banks has proved a remarkably long-lasting political expediency, and its beneficiaries have used a mixture of strategies to divert attention away from its means of operation. A few groups, such as Prosperity UK have publicly questioned the system of central banks, calling for the profits from credit to be given back to the taxpayer. We are conceiving a more far reaching change to the money system - the implementation of a fully decentralized, friend-2-friend gift economy.

Alternatives to Centralised Banking: Downloads Title Author(s)         Date         AE204: Avoiding Centralised Money  Robin Upton  2005-10-01