A Racket Called Central Banking

Marx and Keynes weren’t the first to recognize the relationship between money and labor, although they remain the most prominent faces among macro-literati to note the changing value of money relative to time.  Even Ibn Khaldun’s work in the early 14th century mysteriously referenced Islamic jurists puzzling over the social impact of the time value of money (inflation). It was Khaludn’s insight that provided the Laffer curve, a social insight that new regimes procure higher rates of revenue that permanently decline over time.  Nevertheless, bean counters and gnomes throughout the distinguished world of econometrics need to note something:  they’re failing miserably and domestic regime change is badly needed if the U.S. is to emerge from permanent decline.

For some, a lost decade is permissible.  This cynical attitude reigns throughout D.C. and the halls of bureaucratic power throughout our nation.  What’s missing is any real measure of how far gone our governing institutions are.  Its isn’t a social contract that’s constitutive here, for if politics is applied ethics we’re in far deeper territory.  The founders hued our Constitutional Republic from the social impact of Christian revelation.  Any brief reading of the Federalist Papers demonstrates profound insight to governance, namely the moral foundations of liberty.  The founders wrote of the constitutive role virtue had in Republics, even regarding the coinage of money.

Today’s effort is more prosaic in that our governing institutions are dependent, influenced by the balance of institutions and personalities.  Given the gravity of our moral (political) challenges, I’m not so sure the Republic believes in those that govern anymore.  What I mean is this:  the exaggerated role governing officials have placed on central bankers to conjure growth has failed.  Central banks determine nominal exchange rates, nominal interest rates and inflation targets.  Viewed synchronically, previous successful central bank policy was determined not so much by positive, favorable environmental factors, but engaged effective adults deeply involved in applied effort.  The spheres of institutional autonomy that underwrote our Republic worked!  Today they don’t.  We’re free falling.

We should remember that even Keynes himself knew that interest rates were extraordinarily limited, he believed in activist fiscal policy working in tandem with monetary policy, Keynes knew of using variations in the budget to secure growth.  Reagan and his team had a term for this kind of institutional comity.  Its called a policy mix.

Given the profound failure global central bankers have had in conjuring growth (the infamous multiplier), all that’s left for them to do is tinker with exchange rates.  Arbitrage is all we got!  This partially explains the rage animating much of our Republic.  Gone is the value of exertion that characterized manliness and the honor of earning a living.  Gone is the perennial insight of a Judeo-Christian ethos that secured Western Civilization since Patristic times; the requisite embodied need prudence had in the application of resolution. The rail splitting prairie lawyer and Shakespeare knew it; the inevitable comes to pass through effort.  

About William Holland

Systematic Theologian/International Relations
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1 Response to A Racket Called Central Banking

  1. Pingback: A Racket Called Central Banking - Affluent InvestorAffluent Investor

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