{"id":4117,"date":"2017-02-12T11:51:43","date_gmt":"2017-02-12T19:51:43","guid":{"rendered":"http:\/\/occupysf.net\/?p=4117"},"modified":"2017-02-12T11:51:43","modified_gmt":"2017-02-12T19:51:43","slug":"central-banking-capitalist-communist-concept-valentin-schmid-epoch-times","status":"publish","type":"post","link":"https:\/\/occupysf.net\/index.php\/2017\/02\/12\/central-banking-capitalist-communist-concept-valentin-schmid-epoch-times\/","title":{"rendered":"“Is Central Banking a Capitalist or Communist Concept?” by Valentin Schmid, Epoch Times"},"content":{"rendered":"
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Central banks look capitalist on the surface, but have their roots in communist literature<\/h2>\n<\/div>\n
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\"The<\/a><\/div>\n

The Marriner S. Eccles Federal Reserve Board Building in Washington on July 14, 2016. (Benjamin Chasteen\/Epoch Times)<\/em><\/p>\n

If you visit the Federal Reserve\u2019s Facebook page, you will seldom find a positive comment. That\u2019s because people who don\u2019t care about central banking won\u2019t go to the Fed\u2019s Facebook page. That leaves only the ones who are positive about it\u2014if they exist\u2014and the ones who don\u2019t like central banks.<\/p>\n<\/div>\n

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The right doesn\u2019t like central banks because of their centrality. The banks centralize power over interest rates, and the right doesn\u2019t like central control over pretty much anything. The left doesn\u2019t like central banks because they represent money, capitalism, and \u201ctoo big to fail\u201d banks.<\/p>\n

However, despite the confusion and complicated hybrid setup of the Fed and other central banks, these institutions are more communist and socialist in nature than capitalist.<\/p>\n

Contrast these two statements from two important historical documents.<\/p>\n

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One calls for the \u201cCentralization of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.\u201d<\/p>\n

The other one gives Congress the power to \u201ccoin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.\u201d<\/p>\n

Karl Marx and Frederich Engels penned the former statement in 1848 in their infamous \u201cManifesto of the Communist Party.\u201d<\/p>\n

Alexander Hamilton, John Adams, James Madison, and Thomas Jefferson were responsible for the inclusion of Article 1, Section 8 of the U.S. Constitution, the source of the latter statement.<\/p>\n

So which camp is the Federal Reserve in\u2014manifesto or Constitution?<\/p>\n

National Monopoly<\/h2>\n

The Fed is a national banking system and has an exclusive monopoly on issuing the U.S. dollar credit instrument in paper and electronic form.<\/p>\n

The Communist Manifesto furthermore calls for \u201cgradually substituting paper money for gold and silver coin.\u201d This objective was achieved, gradually, from the beginnings of the Fed in 1914 until the revocation of the Bretton Woods modified gold standard in 1971. Since then, the world has operated on a global paper dollar standard.<\/p>\n

Furthermore, the manifesto wanted the \u201cpaper issues [to be] legal tender,\u201d a principle dutifully incorporated into the Federal Reserve Act of 1913.<\/p>\n

Under the act, \u201cthe said notes shall be obligations of the United States and shall be receivable by all national and member banks and Federal Reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in lawful money,\u201d where \u201clawful money\u201d means legal tender.<\/p>\n

The U.S. Constitution, on the other hand, calls for Congress to \u201ccoin money,\u201d referring to the issue of gold and silver coins and the standardization of their measurements. The Department of the Treasury still issues American Gold and Silver Eagles, but the Fed neither coins money nor concerns itself with the standardization of weights and measures.<\/p>\n

Hybrid Ownership<\/h2>\n

What about ownership, capital, supervision, and credit? This is where the Fed does not meet the strict manifesto standard. Legally, the Federal Reserve System is a public\/private hybrid, with private banks owning the shares or capital of the system and the government providing some, though not all, of the supervision.<\/p>\n

So the Fed does not operate on state capital. However, it shares its profits with the Treasury and most of the important decisions are made by publicly appointed officials. The president appoints seven of the 12\u00a0members of the Fed body that decides monetary policy (the Federal Open Market Committee) and they\u00a0are then confirmed by the Senate. So it does sound like the \u201ccentralization of credit in the hands of the state,\u201d or at least the power to manipulate credit.<\/p>\n

Credit is not centralized in one bank, but rather in the one Federal Reserve System, which includes thousands of privately owned banks\u00a0that issue credit to their customers. This goes against the call for \u201csuppression of all private banks and bankers,\u201d because they still exist. However, the system has central control over credit due to regulation and tinkering with the interest rates.<\/p>\n

The Fed can control how many reserves the system banks must hold and how much money (credit) they can lend. The open market operations that determine the interest rate on the reserves also incentivize banks to free up or contract credit.<\/p>\n

In fact, setting short-term rates and manipulating long-term rates centrally through large-scale asset purchases, like the Quantitative Easing program, is akin to communist central planning.<\/p>\n

In the free market, private banks compete for savings, and the interest rate is set in a competitive bidding process between different economic actors. Not so in a centrally controlled system.<\/p>\n

Lastly, Marx and Engels got their wish written\u00a0in 1848: \u201cIn most advanced countries, the following will be pretty generally applicable,\u201d with \u201cthe following\u201d including centrally controlled credit and other demands of the manifesto.<\/p>\n

Today, the only countries without central banks are the micro states of Monaco, Nauru, Kiribati, Tuvalu, Palau, Marshall Islands, and the Federated States of Micronesia.<\/p>\n

Communism is estimated to have killed around 100 million people, yet its crimes have not been compiled and its ideology still persists. Epoch Times seeks to expose the history and beliefs of this movement, which has been a source of tyranny and destruction since it emerged.<\/em><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Central banks look capitalist on the surface, but have their roots in communist literature The Marriner S. Eccles Federal Reserve Board Building in Washington on July 14, 2016. (Benjamin Chasteen\/Epoch Times) If you visit the Federal Reserve\u2019s Facebook page, you will seldom find a positive comment. That\u2019s because people who… Continue reading → <\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/4117"}],"collection":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/comments?post=4117"}],"version-history":[{"count":1,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/4117\/revisions"}],"predecessor-version":[{"id":4118,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/4117\/revisions\/4118"}],"wp:attachment":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/media?parent=4117"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/categories?post=4117"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/tags?post=4117"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}