Imagine: a universe without central banks
“[T]he dollar of 1913 was worth about the same as a dollar of one hundred years earlier. Now, it’s worth about 3 cents. . . .”
Bill Bonner writes for the Daily Reckoning:
Yesterday, the saints at central banks in China, Europe and the UK said they would perform what could only be a miracle. The world economy wheezes, rattles and shakes because it has been poisoned by too much debt. The central bankers offer a cure — more debt!
“Central banks take action,” is the headline in today’s Financial Times. “Moves to stimulate global economy,” the FT described them.
But what really got our attention was the ‘god particle’ story. Without it, say the scientists who tracked it down, we wouldn’t exist.
Of course, you could say that about a lot of things. Without air, we wouldn’t exist. Or water. Or sunlight.
Could we exist without Homeland Security? Without Twitter? Without rap music?
Apparently so. We did…for many thousands of years. Happily.
Could we exist without a central bank? Many people would reply ‘no’…
Some would say so because they are ignorant. Others would say so because they are just stupid. But any sensible person would admit that human life could exist without a central bank.
The US had no central bank before 1913. It had higher rates of GDP growth back then. It had a stronger currency too — the dollar of 1913 was worth about the same as a dollar of one hundred years earlier. Now, it’s worth about 3 cents…and disappearing fast. On the surface of the argument, it would appear that America’s central bank has actually made things worse. Maybe that is a coincidence; post hoc ergo propter hoc…and all that. But maybe there is a cause and effect relationship. Maybe a central bank CAUSES the economy to produce less wealth…and CAUSES the currency to lose value.