STAFF NEWS & ANALYSIS
No Matter How Bad It Gets, Some Will Always Love Monopoly Central Banking
By Daily Bell Staff - April 27, 2016

Why the world needs more U.S. government debt … Are government-imposed restrictions holding back the U.S. economy? In a way, yes: The federal government is causing great harm by failing to issue enough debt.  The U.S. generates more income than any other country, and will keep doing so for many years to come. The federal government can generate a lot of revenue by taxing this income — a power that puts it in a unique position to issue the kind of extremely safe bonds that are in great demand among the world’s investors.  How is the U.S. government wielding its power? Not well. -Bloomberg

Hard on the heels of the Federal Reserve’s latest decision to leave rates alone, we discover this Bloomberg opinion article explaining why the US government ought to issue more debt.

Of course, this echoes Alexander Hamilton’s statement that “a national debt, if it is not excessive, will be to us a national blessing.”

However, it certainly runs counter to free-market economics. The Austrian model is one that emphasizes the individual’s “human action” – his or her ability to live without the manifold supports of modern government.

This is one reason Austrian economics is not popular with the public bureaucracy, the Western monetary and industrial elite – and their representatives in academia.

Bloomberg is run by Michael Bloomberg who probably qualifies as a double elite threat: He is a businessman but given his eponymous news network, he is a kind of associate Federal Reserve member. Bloomberg, the network, produces a steady stream of pro-central bank propaganda.

Calling for the issuance of more debt as this editorial does is not quite the same as endorsing the modern program of central banking. But it might as well be.

Central banks buy a good deal of public debt – and it’s not usually corporate debt either. In fact, the modern state is inextricably wedded to monopoly central banking.

And the US is indeed in the fortunate position of being able to print loads of debt because the dollar is yet in demand.

More:

The yield on a 20-year inflation-protected Treasury bond, at just over 0.5 percent, is nearly two full percentage points lower than it was 10 years ago.

This means that the price is near record highs, suggesting that the U.S. government’s supply of such safe investments is falling far short of demand. In other words, we’re starving the world of desperately needed financial safety.

The debt the US government issues should be used to “invest in infrastructure,” and to cut taxes or both, according to the editorial.

That’s an interesting statement given that modern central banking actually allows us to do away with taxes. Modern central banks could certainly fund government operations directly.

Instead, political forces have imposed artificial constraints on debt — constraints that punish savers, choke off economic growth and could sow the seeds of the next financial crisis.

The author of this editorial is Narayana Kocherlakota, who predictably enough served as president of the Federal Reserve Bank of Minneapolis from 2009 through 2015.

For people with such backgrounds, every public budget looks like a nail and every debt-based issuance seems a hammer.

How exactly, Kocherlakota arrives at the idea that the US is a place of ultimate investment safety is a mystery to us.

Total US indebtedness probably approaches $200 trillion – yes trillion with a “T.” Unrestrained issuance of credit has virtually bankrupted US citizens.

Wall Street’s involvement with derivatives is surely in excess of $500 trillion and perhaps a $1,000 trillion.

It just came out the other day that close to 50 percent of the general public don’t even have enough savings to fund a $400 trip to the emergency room.

There are upwards of a million who reportedly live on $2 a day, which mimics the worst poverty of third-world countries.

Economies wound round monetary elites inevitably discover that those elites grow wealthy, in aggregate, at the expense of everyone else.

The idea that a public debt, administered by a few on behalf of the many, is a blessing of any sort is yet another faux paradigm. Giving any single group control of value and volume of money is a terrible mistake.

Unfortunately, from earliest times in the US, the country has had proponents of monetary elitism. It is a mistake to think they will ever be vanquished, regardless of the growing debasement and misery that monopoly central banking predictably inflict.

Conclusion: The way to counter the pernicious effects of this cursed system is to minimize your contact with its most egregious effects. Stay out of debt, place a portion of your savings in money metals and try to make a living in a trade not directly exposed to the financial sector. Good luck.

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Do NOT…
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Posted in STAFF NEWS & ANALYSIS
  • esqualido

    “this Bloomberg opinion article explains why the US government ought to issue more debt. Of course, this echoes Alexander Hamilton’s statement that “a national debt, if it is not excessive, will be to us a national blessing.”
    The least the author have done would have been to state the arguments against government’s going into debt, among which are that no nation has the moral right to enslave unborn generations with it, a fact that was clear to the greatest proponent of a strong dollar and a balanced budget, Andrew Jackson, whom I suspect Mr. Bloomberg and the Klepto-Keynesians will be only too happy to see deposd from the $20. When FDR came into office, the nation was virtually debt-free. He chose to create money for an alphabet-soup bunch of govt. programs by increasing the money supply 68% by repegging the dollar from $20 to $35/oz. gold. This in itself created no new debt. However, he was persuaded by his Keynesian advisors that expanding the debt was also appropriate- it amounted to “pump-priming.” $20 trillion of new debt and counting, I think even Mr. Bloomberg would agree that what has happened is more like waterboarding- and with surprisingly little to show for it. But the debt money creators stand at the top of the food chain, and are the least to suffer by it.

  • Bruce C.

    BTW, to add to my thesis that everything is getting so complicated and interconnected that nothing is going to work out “as planned”, consider the race between “the elimination of cash” and “the changing of the faces on the US bills in 2020.” It’s crazy. Cash and currency has gotten more attention by more people probably than at any time in history. There’s talk of the irony of Jackson being one who hated paper/fiat currency ever being on a bill in the first place, and the justice there may be in replacing that slave owner with abolitionist Harriet Tubman. Jackson hated central banking and broke the Second Bank of the US, so he was replaced instead of the original idea to replace Alexander Hamilton who advocated both national debt and central banking and who helped start the first US government bank.

    Amazing. We shall see how all this plays out, but people are now on the qui vive about cash.

  • Praetor

    More U.S. debt, bah humbug, what joke! Bloomberg, on another website they would be calling him a lot of anti-Semitic names. Bloomberg is not a Progressive or Conservative, he just another Keynesian Nihilist Slug, who thinks the world cannot live without him, a demi-god of the collective, a Napoleonic dwarf, who needs to go live on an island, till the end of his days. More debt, what a load of Bull.

    The conclusion is the only way you will survive, this mess!!!

  • Bruce C.

    What’s ironic about the title of this piece is that – indeed – the worst things get the more people “like” central banking because that’s the easiest way to get bailed out.

  • chrisyew

    US can issue more debt if there are buyers. If there are no buyers, which is happening now, then QE (printing money) is the way to go. QE is causing asset price inflation and ultimately it will either destroy the asset market as well as the real economy or the money will flow into the real economy and inflation rises. Inflation is a monster and it is not up to the central bank to dictate that they want a 2% inflation and it will stay there. When 2% is reached, it may jump to 3 or 4% very quickly. The momentum may bring it to 5 or 6% and the speed of raising interest rate will have to match the speed of the inflation monster.

  • LawrenceNeal

    $00 is the minimum amount a trip to the emergency room can cost, dome have been charged tens of thousands of dollars This is a travesty.

  • Samarami

    “…Conclusion: The way to counter
    the pernicious effects of this cursed system
    is to minimize your contact with its most
    egregious effects. Stay out of debt, place
    a portion of your savings in money metals
    and try to make a living in a trade not directly
    exposed to the financial sector. Good luck…”

    Excellent conclusion.

    And please, Abstain From Beans.

    I’ll once again post a link to Gary North’s old essay outlining the nature of central banking: https://www.lewrockwell.com/2011/03/gary-north/those-lying-textbooks/

    Sam

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