The Occult Technology of Power – 5

Templars ChessThe Occult Power of Technology

Part -> 2, 3, 4

— PROFESSOR M. ON THE ECONOMICS OF CENTRAL BANKING

As you have a doctorate degree in economics from a great university, I will touch as lightly as my verbosity allows on facts accepted by economic “science” and proceed to occult aspects of Central Banking.

Since the division of labor is the key to all human achievement and satisfaction, a system of exchange is crucial. Barter is hopelessly complicated. A command economy, in which each does and receives what he is told, is also hopelessly cumbersome and fails to take advantage of individual initiative, ability, and concrete knowledge. A medium of exchange, money, is the obvious solution. (Even our highly centralized economies on the socialist model now enthusiastically embrace money as an indispensable simplifying tool in their economic planning.)

When left to themselves, people of a given geographical area settled upon a durable luxury commodity, usually gold or silver, to use as money. Because money is a store of value as well as a medium of exchange, people saved part of their gold income rather than spending it all. This gold was often stored in the vaults of a local goldsmith, the precursor of the modern banker, for safekeeping. The depositor received a receipt that entitled him to an equal quantity and quality of gold on demand from the goldsmith. At some point the goldsmith realized that there was no reason he could not loan out some of the gold for interest as long as he kept gold on hand sufficient to meet the fairly predictable withdrawal rate. After all, he simply promised to pay on demand, not hold the gold as such. Better yet, he could simply issue more receipts for gold than he had gold and the receipts, renamed notes, could circulate freely among the populace as money.

However, he soon found that there was a definite limit set on this process by reality. Not all the extra notes issued circulated forever among the public. The rate of note redemption began to increase rapidly as the receipts passed into the hands of people unfamiliar with his reputation and especially when competitive goldsmiths, always eager for more gold reserves, came into possession of his notes. To prevent a disastrous run on his gold reserves, note issuance had to be kept within bounds. But the spending power of over-issuance was a grave temptation. Especially relished was the power over governments, industry, and merchants that the miraculous loan power of the goldsmith could obtain. Many succumbed to temptation, overextended themselves, and brought ruin to their depositors while others slowly became wealthy bankers by pursuing conservative loan policies.

At this point, according to economic “science,” Central Banks are instituted to protect the public from periodic financial catastrophe at the hands of unscrupulous fractional reserve bankers. Nothing could be further from the truth. Central Banks are established to remove the limitation on over issuance that reality places on competitive banking systems. As early as ancient Babylon and India, Central Banking, the art of monopolizing the issuance of money, had been developed into a perfect method for looting the general public. Even today many bankers copy the traditions of the earlier exploitive priesthood and design their banks to resemble temples! Defenses of Central Banking are simply part of the deception that lies at the heart of all power elites.

Let us look at the way a new Central Bank is created where none has existed previously. We bankers approach the Prince or ruling assembly (both of whom always want more money to fight wars or to curry favor with the people and, typically, are ignorant of economics) with a compelling proposal: “Grant our bank a national Charter to regulate private banking and to issue legal tender notes, that is, force our notes to be accepted as payment for all debts, public and private. In exchange we will provide the government all the notes it prudently requires at interest rates easily payable with existing taxes. The increased government purchasing power thus created will simultaneously assure the power and prestige of the currently precarious nation and stimulate the sluggish, credit-starved economy to new heights of prosperity. Most important the violent banking panics and credit collapses caused by unscrupulous private bankers will be replaced by our even handed, beneficent and scientific management of money and banking. Our public-spirited expertise will be at the disposal of the state, while we remain independent enough of momentary political pressures to assure sound management.”

For a while this system seems to work remarkably well with full employment for everyone. The government and public does not notice that we issuers of the new notes are using the notes we create out of thin air to surreptitiously build economic empires at the expense of established interests. Because of the legal tender laws, few of the new notes issued by the Central Bank are returned for redemption in gold. In fact, private banks and even a few foreign banks may begin to use the Central Bank’s notes as reserves for further issuance of credit. Soon enough, though, prices begin to rise as the added notes increase demand relative to the quantity of goods and services. As the value of their savings decline more and more, foreigners in particular begin to question the value of the Central Bank’s notes and start to demand redemption in gold. We, of course, do not take responsibility for the rampant inflation when it comes. We blame inflation on evil speculators who drive up prices for personal gain, as well as the greed of organized labor and business who are promptly made subject to wage and price controls. Even the consumer can be made to feel guilty for agreeing to pay the high prices! Mistaking symptoms for causes the government accepts the banker’s analysis of the problem and continues to give the Bank free reign in monetary policy.

By slowing the rate of note issuance periodically the ultimate crisis vantage is postponed until many decades after the original Central Bank Charter was granted. Before the rapidly dwindling gold reserves on which faith in our Bank depends is exhausted we abruptly contract our loan volume to private industry and government as well. With the contraction of the money supply a great deflationary crash begins in earnest with all its attendant unemployment, bankruptcies, and civil strife. We do not take responsibility for the depression. We blame it on evil hoarders who are refusing to spend their money and the prophets of doom who are spoiling business confidence. The government accepts this analysis and leaves monetary policy in our hands. If things go well we bankers channel the fury and unrest into puppet movements and pressure groups that carry our agents into full control of the government. Once in charge we devalue our outstanding bank notes in terms of gold and make them inconvertible for all but possibly foreign Central Banks and begin plans to restore a “prosperity” that will be totally ours.

When lucky, we are able to confiscate the gold of private citizens as punishment for hoarding during the climax of the depression.

Once the old order is subdued during the chaos of the crash and desperation of the depression, the field is open for our full finance capitalist system to be realized. If the money lords behind the Central Bank can avoid lapsing into political and economic competition among themselves a new and lasting order can be established. A war timed for this period of consolidation provides the perfect excuse for the regimentation required to crush all opposition.

Professor B., a former Chairman of a Central Bank, will explain the functioning of the Central Bank in the typical, fully developed finance capitalist system.

Part -> 6

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