Criminals seriously harm people here and there, but to systematically harm people everywhere takes governments.
Organized Predation
The Fed disincentivizes working. It enables banks to create money, lend out the money, and transfer losses to taxpayers. As a result, over time the same nominal amount of pay buys less and less. People work less.
The Fed disincentivizes saving. Its new money reduces the interest earned by people who would save. People save less.
The Fed incentivizes borrowing. People find loans even harder to resist since interest is artificially low, and since payments and principal both are easier to repay after inflation. (On net, this is a bad deal. Loans still extract interest. Also, as elaborated below, the people who gain, on net, from money creation and the resulting lending are governments and cronies. Everyone else loses.)
Producers and customers both succumb. Producers borrow more, make riskier investments, pay more interest, get smaller returns on their investments, and suffer more losses. Customers borrow more, pay more interest, have less to spend on what they want, and get fewer products.
The Fed incentivizes government spending. The Fed buys national-government Treasury bonds, and government people spend this money. Also, the Fed enables banks to create money. This reduces interest rates, making government debts less costly to pay the interest on. Creating money also reduces the real value of the debts’ interest and principal, making government debts progressively get defaulted away. Since interest becomes a smaller consequence and debt becomes a smaller consequence, government people borrow more, charging the debts to future taxpayers, and spend more now.
Producers pay more taxes, so products cost more. Customers pay more taxes, so they have less to spend; and with the products also costlier, they get even-fewer products.
Governments and cronies take more of the value that people create. Everyone else still spends substantial time working—using up substantial portions of their liberty—but takes home less of the value they create.
Organized Corruption
Control of money has always provided opportunities to not add value that customers would choose to buy and to instead take advantage of others. The lure of not adding value and instead just taking other people’s money has always attracted criminals.
The original sin with money has been the fraud of accepting deposits and promising to return them on demand, and then not holding the full deposits in trust and instead turning around and lending out a fraction of the deposits to others.
No banker has perfect foreknowledge, so just as everyone else gets surprised by sudden turns of events, bankers have gotten surprised too. But since government people have let bankers hold in reserve only fractions of the deposits that people have entrusted them with, this sin has produced bank failures. And bank failures have visited the consequences of this action not on the government people themselves nor just on the bankers themselves but also on most all of the bankers’ customers.
The compounding sin with money, once some banks have failed, has been the true greed of the remaining bankers and lenders as a group.
When some banks have failed, the money which has been on their books but not on reserve in their vaults has been destroyed. As a result the remaining amount of money still in use has been less. Customers have had mostly the same needs they had before, but less money to spend.
To keep producing, producers have reduced their product prices, and ultimately reduced their employees’ wages.
Borrowers with existing loans have been saddled with contracts that have required them to make the same nominal payments and to pay off the same nominal balances, even though these nominal amounts have suddenly become far-more costly. For existing borrowers, this has been a sudden loss.
For the remaining bankers and lenders who have still been in business, this has equally been a sudden windfall. They hadn’t originally lent out such large real amounts, and they hadn’t originally contracted to be repaid such large real amounts, and yet they suddenly had gotten the opportunity fall in their laps to collect far more real value than they originally contracted to receive. Bankers and lenders as a group haven’t relieved these debts by renegotiating contracts that would restore the contracts’ original real terms.
Their cronies, the national-government people—who granted them the problematic permission to hold only fractional reserves, the permission that enabled the money supply to suddenly get smaller, making the loan contracts’ real terms suddenly more costly—haven’t rolled back the fractional-reserve privilege that had long ago been unconstitutionally granted to bankers.
The national-government people also haven’t relieved borrowers of the pressure of these unforeseeable sudden losses.
Instead, they have tripled down on their original sin and their compounding sin by also inventing and perpetuating the Fed.
The Fed is a cartel owned by bankers.
When it seems like the Fed does everything it can do to shake down the national government to protect banks, that’s because the Fed does do everything it can do to shake down the national government to protect banks. Because the Fed is a cartel of the banks.
Which means that the present financial system is crony-socialist central planning of money production that has been substituted for what by law are supposed to be our free and voluntary actions to produce and consume all products. Including money.
Free Customers to Choose Moneys, and Free Producers to Produce Moneys
The organized predation and organized corruption that are the Fed are immoral. They are criminally illegal (since they deprive persons of property without due criminal-justice or civil-tort process). And they are not only undesirable but also unnecessary.
A money can be produced, cleared between providers, saved, and lent out without creating it out of thin air and fraudulently making it unavailable on demand.
Gold money can be used without creating it out of thin air, and it will hold its value.
Equity-based money can be used. It would be legal ownership of fractions of businesses, including all their assets. Equity-based money could not be created out of thin air. Over the long run it would not just hold its value but increase in value, as the businesses’ productive assets are used by the businesses’ employees to add more value.
As usual with governments, what’s mandatory is to get the governments out of the way. To get the governments’ monopolistic operations out of the way. Here, to get the national government’s criminal corruption of the law out of the way. This is simple.
TL;DR. Want to end inflation permanently? Want to reclaim financial power as customers? Here’s how.
Two actions are required:
- Formally outlaw fractional-reserve banking.
- Formally repeal legal-tender laws and the Fed monopoly on money production.
Both actions together are the minimum action required to satisfy the rules in the Constitution. And as centuries of Constitution defiance on money have clearly shown, both requirements need to be made explicit.
And that is all that’s required. Fixed that for you.
Wherever we the people free ourselves from government predations, as customers we drive producers to work out the best solutions themselves. Including the best moneys, clearinghouses, and lending.
