Tuesday, March 02, 2010

Central banking means nationalization of the money supply. Even under the auspices of the purportedly free-market Chicago School--let alone under morally and fiscally bankrupt Keynesianism--that means socialism. Generally, it means socialism for the rich. There has to be a "countervailing philosophy" to central banking only if you care about human health, wealth, freedom, dignity and morality. Silly me. I thought those things mattered.

The Austrian School offers a countervailing position consistent with property rights and free exchange. It teaches that money is merely society's most marketable commodity. Producers and consumers can decide on what commodity best serves as a medium of exchange. None of this requires an enlightened and benevolent elite. Even if it did, no enlightened and benevolent elite exists.

There should be no legal tender laws. There should be no regulation of money or the banking industry. Regulation invariably puts the wolves in charge of the chicken coop. That's what gets us in trouble.

It's remarkable how often capitalism gets blamed for financial crises when the underlying cause is an absence of capitalism. Let consumers and producers decide what kinds and sizes of banks should prevail. Let consumers and producers bank with whomever they please. Let them employ whatever medium they choose to facilitate exchange. Let them bear the risks and reap the rewards.



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