News & Analysis
India Falters? Global Depression On Tap?
Struggling coalition leaves Indian economy in the doldrums ... Foreign investors are rejecting India in favour of rivals ... As India's once 'miraculous growth' story took a dark twist – Standard & Poors downgraded its outlook to 'negative' while Moody's blamed the ruling Gandhi family for the political paralysis behind faltering growth – the country's Met Office offered one silver lining. It ruled out the possibility that the monsoon rains would fail ... According to S&P and Moody's, the root cause of the disappointing performance lies in the country's government. S&P said last week that India's rating could deteriorate further if "the external position continues to deteriorate, growth prospects diminish or progress on fiscal reforms remains slow in a weakened political setting." – UK Telegraph
Dominant Social Theme: These glitches happen from time-to-time, but the Indian economy, run by a public central bank responsible to the people, is solid.
Free-Market Analysis: There is a big argument in the Western world, and especially in the US and Britain over the issue of public versus private monopoly-fiat (central banking) money.
In this article excerpted above we can see that in one of the top countries where the central bank is putatively controlled by the government (India), this argument is faltering. Public ownership of central banking is no panacea.
This is not fashionable right now. The idea among those who are so-called "greenbackers" is that if government can only mandate its "own" money then the "people" will ensure that nothing can go horribly wrong.'
But we have argued that the best money is free-market, competitive money, not monopoly-fiat paper money, no matter whether the government prints it outright or whether it is printed via mercantilism. Within this context, we believe gold and silver would find a place, as these money metals have done so for millennia.
We are not afraid of gold and silver economies. Private gold and silver is not purely controllable by the elites, and for the past century, the power elite has fought to sever the link between gold and silver and paper money. This is an indisputable fact.
The preferred tool of the elites is mercantilism. And mercantilism is the preferred form of central bank money printing these days in which top private elites controlling central banks around the world use government as shield to hide their own interests behind.
Greenbackers and others who want to use the public sector purely to print money often make the point that there is nothing wrong with government central banking that control by voters shall not fix.
The BRICS – Brazil and India especially – have been used as examples of countries where the government controls central banking. These countries, the argument goes, have better results because of people power.
But we argue that in the current environment, people power is nothing but disguised Money Power. Until money competes freely, Money Power – elite dominated as it is – will rule. Here's some more about the staggering India economy, excerpted above:
Deepak Talwar, a leading lobbyist and investor in India's hotel sector, says the government is in denial. Official measures to curb inflation have made finance prohibitively expensive and brought infrastructure projects to a standstill. His own hotel investments have been affected.
"The Reserve Bank of India kept raising interest rates and the government doesn't have the strength to say this is wrong for the economy. If you are not a group A borrower you are probably borrowing at 16pc – every project will be affected by that," he says ...
Poor co-ordination between the Congress Party's political leadership and the government and lack of clear direction is creating a power vacuum. Mr Talwar's solution is to fill it with a Gandhi. "The political leadership must take over the executive. If Sonia Gandhi was prime minister, everyone would fall into line. Or Rahul Gandhi could become prime minister and get this story over with."
Every bad aspect of modern monetary modernity is touched on in these few paragraphs. We can see, admittedly, that it makes no difference whether the central bank is public/private as it is in the West, or whether it is purely public as in India.
The problems persist. The aggravation of the problems caused by central banks – the endless inflation and ruin they present – is inevitably greater authoritarianism. We can see that expressed as well in this article.
What is the banal conclusion this article comes to? That only one family, the Ghandis, can salvage India now. Of course, when an economy of one billion people is reduced to the salvation by a single clan, you no longer have an economy. You have fascism, to put it mildly.
An Argentine default threatens the South American economy, including Brazil, which is struggling with its own inflationary issues. China, too, has such issues and trades extensively with Brazil.
Ironically, Argentina's central bank is "publicly" controlled as is Brazil's, India's and China's. As we enter the second wave of apparently planned central banking ruin, the BRICS are starting to falter.
For a long time its been argued that private central banking is what's caused disaster. But now it turns out that public central banking is not immune to exactly the same troubles that afflict Europe and America.
Conclusion: The trouble is monopoly fiat-paper money printing. Not who's doing it.