| DON YOCHAM
The Back Door to Centralized Banking
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Unfortunately, banks are blowing up.
Unfortunately, the government is there to bail everyone out.
And, unfortunately, those bailouts have kicked open the back door to a nationalized banking system.
The damage wrought by the Fed’s interest rate increases on bank balance sheets is now permanent.
Either bond yields go higher because the Fed forces them up or bond yields go higher because the Fed backs off and raging inflation drives them up instead.
Depositor flight to higher-yielding alternatives will continue. And since the bonds bank’s own will be permanently worth less than the deposits they received to buy them, the only way to prevent the inevitable panic is to guarantee all deposits.
That guarantee will give the U.S. government all the authority it needs to dictate what happens at those banks.
Banks will be effectively nationalized.
And as any good commie knows, nothing helps turn a nation into voluntary slaves like nationalized banks.
From the Mouths of Commie Pigs
You don’t have to take my word for it when every good commie since Marx has made that point, time and again.
To wit:
| | • | | "Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly." - Karl Marx, The Communist Manifesto | | | • | | "The banking system must be fully centralized, under the control of the state, and used as a tool to promote the socialist economy." - Vladimir Lenin, The State and Revolution | | | • | | "The nationalization of the banks and the concentration of credit in the hands of the state are essential for the transition to socialism." - Leon Trotsky, The Permanent Revolution | | | • | | "A centralized banking system is necessary to ensure that the economy is controlled by the people, not by the wealthy elites." - Mao Zedong, On Protracted War | | | • | | "Centralized banking is a cornerstone of a planned socialist economy, as it allows for the efficient allocation of resources and the avoidance of market inefficiencies." - Che Guevara, Socialism and Man in Cuba |
And here’s why absolute control over money supply, credit, and payments is communism’s most powerful tool.
Pesky Choices
Without the totality of a centralized banking system, individual actors have a chance to make economic decisions.
Free markets emerge spontaneously at the unmonitored margins. Competition leads to wealth flowing to those that create value thereby abolishing any and all progress made towards a classless society.
When profit becomes possible, so the thinking goes, wealth and power accumulate to a small capitalist class. This renders it impossible to direct an economy towards meeting the needs of the working class.
Without complete control over the flow of credit and cash, you can’t control the means of production, distribution, and exchange.
Individual freedom makes it much harder to manage the money supply, set interest rates, and direct loans to specific industries or projects deemed important for the development of a socialist utopia.
Individual wants and needs are hard to predict, especially when individuals take it upon themselves to pursue them. This constant striving for a better life sews instability. And before you know it, booms and busts are back.
In short, unfettered choice and competition make it impossible to prevent the profit interests of a small capitalist class from undermining social equality.
But centralized banking kills capitalism by giving the state the means to exercise full discretion over economic activity.
No matter what schemes the Federal Reserve concocts to backstop the banking system, the final solution will be guaranteed deposits.
And from there, it’s just a short hop, skip, and a jump to killing American capitalism.
Think Free. Be Free. | | | | |
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