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Topic: Do we Need Central Banks? (Read 2941 times)
vit05
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Do we Need Central Banks?
June 05, 2018, 03:17:33 PM
Last edit: June 06, 2018, 07:04:40 AM by vit05
#1
Shifting from Central Planning to a Decentralised Economy: Do we Need Central Banks?
by Professor Richard A. Werner, D.Phil. (Oxon)
I. The Central Bank Narrative
For more than the past four decades, public policy discourse, especially when touching on macroeconomic and monetary policy, has been dominated by the views held and actively sponsored by the central banks, particularly in Europe and North-America, as well as Japan.
Their policy narrative has been consistent over time and virtually identical between central banks, which is why I shall refer to it collectively as the ‘central bank narrative’. It has been mirrored in the type of economics that central bankers have supported and that has indeed subsequently become dominant in academia and among the economists selected as the experts of choice in the major newspapers and television channels: the theoreticians advancing neo-classical economics.
This central bank narrative (and hence also the dominant neo-classical economics, also known as ‘mainstream economics’) has at least five major pillars, which I shall list briefly:
The truth of the matter is: We don’t need central banks
. Since 97% of the money supply is created by banks, the importance of central banks is far smaller than generally envisaged. Moreover, the kind of money that commercial banks create is not privileged at law. Legally, our money supply is simply private company credit, which can be created by any company, with or without banking license.
Eurozone countries, having given up the right to their own currencies, can still create money and reflate the economy: the government, for instance in Spain, simply needs to stop the issuance of government bonds, and fund the entire public sector borrowing requirement from the domestic banks that create it out of nothing – and can do so at more competitive rates as the bond markets: this policy of Enhanced Debt Management (Werner, 2014b) not only would make it obvious that Spain does not need the ECB, but it would also put the national debt profiteers – the bond underwriting firms such as Goldman Sachs and Morgan Stanley – out of business.
This reality of private money creation also means that we can, without legal obstacles, create a decentralized system of local currencies, without central bank involvement.
The key principle of such decentralization is local autonomy, self-determination, self-responsibility and self-administration. These are in fact the fundamental principles of the co-operative movement, as championed by Hermann Schultze-Delitzsch and Wilhelm Raiffeisen over 150 years ago. This co-operative movement early on realized that a crucial role for co-operatives is in the creation of co-operative banks controlled by the local communities. Sadly, in the UK credit unions are not banks, since they are not allowed to lend to firms in meaningful amounts, and don’t have a banking license. Thus we need to create true community banks.
Lord Action pointed out:
“It is easier to find people fit to govern themselves than people fit to govern others”.
“Towns were the nursery of freedom.”
The German banking system is dominated by 1,500 community banks, which are also the majority of banks in the entire EU. This means that 80% of German banks are not-for-profit, which has strengthened the German economy for the past 200 years. A banking system consisting of many small banks is also far less prone to boom-bust cycles and it creates more jobs per given amount of loan than large banks. Thus community banks also result in a more equal income and wealth distribution.
Local banking is highly popular in Germany, because SMEs get access to finance that would not be serviced by large banks. The community banks provide their services at competitive rates and support their customers also during recessions. With community banks, the wider community gets a bank whose goals are aligned with theirs, banks that pay taxes, banks that support local growth and jobs. At the same time community banks offer customers a place to put their money where it can benefit the local community, not far-flung projects or speculators.
Can we tackle this challenge?
Until the 1970s, there has been much optimism in economics and there have been high expectations that many of the problems of mankind would soon be solved.
Was this a reasonable expectation?
While it has not come true, it was a reasonable expectation. This is because
“Our problems are man-made, therefore they may be solved by man. And man can be as big as he wants. No problem of human destiny is beyond human beings”
John F. Kennedy
The network tries to produce one block per 10 minutes. It does this by automatically adjusting how difficult it is to produce blocks.
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Re: Do we Need Central Banks?
June 06, 2018, 12:33:07 AM
#2
Well, central banks and fiat currencies are only a pretty new concept to humankind. The economy, as well as the currency, can definitely function without a central bank, as demonstrated by the days where paper currency did not exist and we used gold and silver as main forms of currency.
These are essentially the most basic forms of decentralized currencies, and they certainly worked well to serve their purpose - to store value, and to serve as a medium of exchange in transactions.
It's up to debate whether or not society would function better without a central bank, but all I know is that if I wanted to save my net worth in something, I would not put the majority of it in something which value is based on a central organization's trust, and they essentially can inflate the supply of as much as they want to.
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Re: Do we Need Central Banks?
June 06, 2018, 03:36:53 AM
#3
Of course Yes. Almost all the countries do have central banks to perform these functions. Central banks are autonomous bodies that work independently keeping economic growth priorities in view.
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Re: Do we Need Central Banks?
June 06, 2018, 03:39:41 AM
#4
Humanity go in the chaos if we dont have central control unit.
Dont believe to the freedom by some young crypto enthusiast
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Re: Do we Need Central Banks?
June 06, 2018, 03:49:47 AM
#5
This post belongs to the Economy forum board,not the Bitcoin discussion board.
In the beginning of modern capitalism,central banks were private companies,who have the government`s permission to create paper money.They are created by a bunch of bankers,who were giving loans to governments.
They were created as a some sort of financial monopoly.Later,the private central banks were taken under the government control and became public institutions.Now,we don`t need them,but we can`t destroy them.
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firewa
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Re: Do we Need Central Banks?
June 06, 2018, 04:00:53 AM
#6
Need not
Because Bitcoin was dug out by hard power, it could not be sent by a fixed organization.
Then the role of the bank for us is only storage or investment, but if it is stored, if Bitcoin cuts prices or raises prices, can we operate in time, and investment, he can guarantee how much our annual interest rate.
senin
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Re: Do we Need Central Banks?
June 06, 2018, 05:04:56 AM
#7
Maybe you personally do not need a central bank, but it is necessary for every state, at least to support the course of national money and develop a common policy of monetary relations in the country and develop a unified approach to banking. Therefore, I believe that central banks are needed and they will continue to exist.
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Re: Do we Need Central Banks?
June 06, 2018, 05:38:48 AM
#8
That local banking is still a centralized one. Though what people want is true freedom, but take also in consideration things like inflation and balance. If there is no central bank there would be chaos in monetary system. Rich will get richer and poor gets poorer, because rich can hold as much money as they want while poor can't do it since they need it for daily expense. Also, no money would produce because how people can trust something that is man made with out convention.
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Re: Do we Need Central Banks?
June 06, 2018, 08:40:53 AM
#9
If we approach this issue from a human point of view, I believe that central banks are a product of modern society, or rather a group of people who want to control the popular masses and are not needed for ordinary people. But the modern world is so arranged that without the presence of controlling bodies in the world there will be chaos, people do not know how to organize themselves. A decentralized financial system within the framework of existing states is not possible.
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sunlitit654
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Re: Do we Need Central Banks?
June 07, 2018, 05:29:57 PM
#10
Thank you for the informative article. I think we need central bank. As all the countries of the world has a central bank and this central bank regulates some functions which is very important for a country.
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Re: Do we Need Central Banks?
June 07, 2018, 05:46:21 PM
#11
If the central bank will work on artificial intelligence, then we need this bank Because now central banks enrich the people which lead it
senin
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Re: Do we Need Central Banks?
June 08, 2018, 05:18:14 AM
#12
The fact is that central banks are an integral part of the current state system. Each state is a complex system that can no longer do without central banks, which, first of all, form the monetary policy of the state and support the course of national money with monetary measures. Therefore, in fact, no one will ask us if we want to continue to exist central banks. They will continue to exist, regardless of whether we want it or not.
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Re: Do we Need Central Banks?
June 08, 2018, 05:26:38 AM
#13
If there is no central bank it is obvious that problems will create in the monetary system. Things like inflation and balance is very much necessary. In that case, the rich will become richer & the poor will become poorer, because the rich can hold money as much as they want but the poor need daily expense so it becomes quite impossible for them.
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Re: Do we Need Central Banks?
June 08, 2018, 01:52:58 PM
#14
The government of every country has some different rules. Yes according to those five pillers it shows that, there is no need of central banks. But it will be varies how the governments of each country will think.
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Re: Do we Need Central Banks?
June 08, 2018, 03:08:40 PM
#15
I think cental banks are sores on our society's body. They are usually main causes of economic depressions and crises. Monopoly on money gives governments carte blanche over money supply, so they can fiddle with the economy in a way they wish. For instance, they can boost it for the election cycle knowing that negative consequences would follow only several years later.
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Re: Do we Need Central Banks?
June 08, 2018, 03:32:05 PM
#16
of course , we need bank central for withdraw FIAT money from exchanger cryptocurrency.
we need bank central for Deposit FIAT money.
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Re: Do we Need Central Banks?
June 08, 2018, 03:47:56 PM
#17
Quote from: senin on June 08, 2018, 05:18:14 AM
The fact is that central banks are an integral part of the current state system. Each state is a complex system that can no longer do without central banks, which, first of all, form the monetary policy of the state and support the course of national money with monetary measures. Therefore, in fact, no one will ask us if we want to continue to exist central banks. They will continue to exist, regardless of whether we want it or not.
I agree with you, the central bank also functions as an atribute and guardian of value and existence of national currency. therefore I predict that in the future, the central bank and cryptocurrency will be part of a legal transaction tool.
but I'm not sure the central bank will survive if it does not innovate, the meaning is the central bank must include the blockchain system element as a transaction tool.
and ultimately the central bank will exist but the transaction will be dominated by bitcoin and gold.
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Re: Do we Need Central Banks?
June 08, 2018, 09:07:52 PM
#18
From my perspective i think every country need central bank. Because central bank monitor all the financial market and they also issue note. They are the controller of all commercial banks also. Absence of central bank economy will collapse.
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Re: Do we Need Central Banks?
June 08, 2018, 09:13:04 PM
#19
Quote from: gary_57 on June 08, 2018, 09:07:52 PM
From my perspective i think every country need central bank. Because central bank monitor all the financial market and they also issue note. They are the controller of all commercial banks also. Absence of central bank economy will collapse.
Yes you are right. What you mentioned is exactly what some people ignore that. They think making transactions is the only thing banks do. And a decentralized system like bitcoin can completely replace banks.
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Re: Do we Need Central Banks?
June 08, 2018, 09:15:11 PM
#20
Quote from: gary_57 on June 08, 2018, 09:07:52 PM
From my perspective i think every country need central bank. Because central bank monitor all the financial market and they also issue note. They are the controller of all commercial banks also. Absence of central bank economy will collapse.
Why would the economy collapse in the absence of a central bank though? You provide no reason for it and I sincerely doubt that would be the case. We don't need a private organization to give us and create money, that is essentially futile. All they are doing is lining their own pockets with money by taxing us through inflation. If the monetary policy was reasonable I would welcome central banks, but they are far from it. Bitcoin's monetary policy however is reasonable and can't be created out of thin air. If people trust the Bitcoin system then that is all we will need worldwide, but it would have to be legal tender everywhere, which is something I don't think governments and nation states want to relinquish the power on just yet.
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=====> Anunturi Monede Alternative
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===> Konu Dışı
===> Yeni Başlayanlar & Yardım
===> Buluşmalar
=> Other languages/locations
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