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Free market proponents will often talk about the dangers of central planning, and they make a good point. Having a central body do all of the central planning is dangerous. They do not have access to all information and thus cannot maximize economic efficiency. For instance, how do we know how many resources to devote to shoe making versus how much we should spend on auto making? This is why profits are important. They tell us where resources need to go.
But there is a problem. We can easily point to socialist economies as having these problems, but WE HAVE THE SAME PROBLEM. We do not have a decentralized capital allocation system. Capital is allocated by banks, and we have a central banking system. Since all capital for new projects originates from banks, they are effectively doing all of the central planning.
What's worse, they also do this while demanding repayment of principal and interest, and they do this while lending out money that they do not even have! Thanks to fractional reserve banking, banks can lend out money and effectively increase the money supply. They then get to collect principal and interest. They get a claim on all gains, and for what? They lent out what they don't have and demand payment for it!
This system is ludicrous. Banks get a cut of all gains for lending out what they don't have. They increase the money supply to help their friends and get rich for providing nothing to society. Even our government is beholden to the central bank. The Fed buys treasury bills with money that they make up, and they expect interest on those payments! The Fed holds more than $2 trillion in government debt, and we're paying interest on that. Why? Why does an unelected, privately owned bank control our money supply? Why don't we instead take control of our money supply, owe debt to no one, and pay interest to no one? Why should interest be benefiting private stock holders? We could instead be benefiting all of society instead of rich plutocrats.
I understand there are dangers in the system, especially with regard to uncontrolled money printing, but let's not act as if the alternative is without problems. We can talk about those problems and solutions, but we have to deal with the issues of our current system if we're going to have an honest discussion.
Thoughts?
But there is a problem. We can easily point to socialist economies as having these problems, but WE HAVE THE SAME PROBLEM. We do not have a decentralized capital allocation system. Capital is allocated by banks, and we have a central banking system. Since all capital for new projects originates from banks, they are effectively doing all of the central planning.
What's worse, they also do this while demanding repayment of principal and interest, and they do this while lending out money that they do not even have! Thanks to fractional reserve banking, banks can lend out money and effectively increase the money supply. They then get to collect principal and interest. They get a claim on all gains, and for what? They lent out what they don't have and demand payment for it!
This system is ludicrous. Banks get a cut of all gains for lending out what they don't have. They increase the money supply to help their friends and get rich for providing nothing to society. Even our government is beholden to the central bank. The Fed buys treasury bills with money that they make up, and they expect interest on those payments! The Fed holds more than $2 trillion in government debt, and we're paying interest on that. Why? Why does an unelected, privately owned bank control our money supply? Why don't we instead take control of our money supply, owe debt to no one, and pay interest to no one? Why should interest be benefiting private stock holders? We could instead be benefiting all of society instead of rich plutocrats.
I understand there are dangers in the system, especially with regard to uncontrolled money printing, but let's not act as if the alternative is without problems. We can talk about those problems and solutions, but we have to deal with the issues of our current system if we're going to have an honest discussion.
Thoughts?
