It is bad enough, that the major money-printing central banks, with the Federal Reserve as driver, have again, and on an unprecedented scale, bailed out financial markets and City of London- and Wall Street-centered banks while real economies collapsed into mass unemployment. Worse than bad enough that again, none of the many trillions in “credit” thus created has gone into building a new healthcare infrastructure or even saving the infrastructure facilities of tax-starved municipalities across the United States and Europe — proving again, that what the People’s Bank of China emits as currency through its banking system includes credit, while that from the Fed, etc. is just fiat money.
The leaders of the Permanent Five UN Security Council members, if they go to a summit process now, as has been proposed by President Vladimir Putin and urged to all nations by Helga Zepp-LaRouche, are at a moment when they could force this criminally bankrupt trans-Atlantic financial system into actual bankruptcy reorganization. They can end half a century of “floating-exchange-rate” speculative casino gambling and central bank money printing. They can establish a new Bretton Woods credit system in its place. They can decide to break these banking behemoths up with Glass-Steagall Acts, and erect cooperating credit institutions in the major nations to fund new health facilities and infrastructure “great projects” in the developing nations.
If this moment is not seized, look at what those central banks are planning next. On Aug. 13 Federal Reserve Governor Lael Brainard announced that the Fed is now “studying” a central bank digital currency (CBDC) for “direct payments” to personal or business bank accounts. This takeover of government spending was given the name “regime change” by BlackRock LLP’s gang of central bankers at the 2019 Jackson Hole bankers’ conference. All major central banks are studying CBDCs since then-Bank of England Governor Mark Carney, at that conference, called for dumping the dollar, or any reserve currency, in favor of a CBDC. This past Aug. 7, in a Bloomberg News interview, two well-known long-time Federal Reserve economists, Julia Coronado and Simon Potter, proposed “recession insurance bonds” which the Fed would wire directly to Americans’ savings accounts in the form of deposit of a digital currency. With this CBCD, Potter said, “you could actually generate real inflation.”
in January 2020 the Becker Friedman Institute for Economics at the University of Chicago had published a report called “Central Bank Digital Currency: Central Banking for All?” The abstract said: “The introduction of a central bank digital currency (CBDC) allows the central bank to engage in large-scale intermediation by competing with private financial intermediaries for deposits. Yet, since a central bank is not an investment expert, it cannot invest in long-term projects itself, but relies on investment banks to do so…. During a panic, however, we show that the central bank’s contract with the investment banks has the capacity to deter runs. Thus, the central bank is more stable than the commercial banking sector. Depositors internalize this feature ex-ante, and the central bank arises as a deposit monopolist, attracting all deposits away from the commercial banking sector. This monopoly might endanger maturity transformation” — fractional-reserve banking where a bank loans out more than its total deposits. In other words, “you could actually generate real deflation“, too, if the Federal Reserve wanted to. (Emphasis added.)
It’s hard to decide which of these two conclusions is the more catastrophic. The first means: With a CBDC, all bank investments in the economy will be made by investment banks like Morgan Stanley and Goldman – the super-speculators, the derivative-trading artists — not to mention the non-banks led by BlackRock LLP. The second means: The commercial banking sector will disappear, and your personal or business accounts, and loan applications, will have to be made at the central bank! And those central banks will be running a tight money policy, except when they decide to “generate real inflation” by pouring new currency into investment banks. Do we see economic recovery or progress anywhere in that future? https://repec.bfi.uchicago.edu/RePEc/pdfs/BFI_WP_202004.pdf (The paper was republished in June 2020 as a working paper of the Federal Reserve Bank of Philadelphia Research Department.)
The alternative is a chorus of voices for a summit process: Nationalize the Federal Reserve and other major “Trilateral” central banks. Put their financial system through bankruptcy reorganization, and act along the lines of Lyndon LaRouche’s “economic laws” with the mission of industrializing developing nations and exploring space in an age of fusion power.
