It has been dawning upon the people of the West that central banking cartels have been draining away their wealth. That’s a significant movement forward, and not one I want to interrupt. And so I’ll ask you to use this information sparingly (presuming you agree with it); people can absorb only so much at once; beyond that they resent the teller.
The central issue here is that central banks were made practical only by the modern version of democracy. Given that “democracy” is a sacred dogma these days, that message can be a hard fit.
Nonetheless, the fact is that central banking, and giant banks in general, were impractical until democracy was instituted.
Prior to democracy, loans were undertaken by monarchs, who were personally responsible for their loans. As Meir Kohn of the economics department at Dartmouth University writes:
The debt of a territorial government was essentially the personal debt of the prince: if he died, his successor had no obligation to honor it; if he defaulted, there was no recourse against him in his own courts.
Sometimes princes paid their loans, and sometimes they didn’t. For example, the Peruzzi were a leading Florentine banking house in the 14th century. At one point, they lent Edward III of England 400,000 gold florins, which, for a variety of reasons, was never repaid. This led to the collapse of the Peruzzi Bank in 1343.
Deals were made quickly when a prince died, of course, but the bankers had a weak position. In order to get a decent settlement, they would likely need to negotiate the balances and promise more loans in the future.
On top of that, many rulers simply refused to pay loans they had taken. King Philip II of Spain refused to pay back his loans at least a dozen times.
Because of this, banking was seriously limited. Bankers developed techniques of dealing with sovereign defaults, of course, but central banking as we know it was more or less impossible.
The institution of democracies and republics, however, solved that problem:
Under democracy, loans are not debited to an individual, but to the nation as a whole.
This device of “public credit” makes all citizens, and their children, responsible for repaying the loan. From the institution of democracy and public credit onward, loaning money to a government gave the banker a legal and perpetual claim against the people. Whether instituted intentionally or not, this ended up as a very clever deal:
The person who signs for the loan ends up bearing almost no responsibility, and gets to spend all the money.
Millions of people who never approved the debt are left holding the bag, and passing the obligation to their children.
This is how 30 trillion dollars of debt can be piled up on top of an otherwise reasonable populace. Under a monarchy, this couldn’t have happened.
And just to establish this, here’s what the poet Percy Shelly wrote (in Philosophical View) as this set of arrangements was being put together:
The device of public credit was first systematically applied as an instrument of government… The rich, no longer able to rule by force, have invented this scheme that they may rule by fraud… The most despotic governments of antiquity were strangers to this invention, which is a compendious method of extorting from the people far more than praetorian guards, and arbitrary tribunals… could ever wring. Neither the Persian monarchy nor the Roman empire, where the will of one person was acknowledged as unappealable law, ever extorted a twentieth part the proportion now extorted from the property and labour of the inhabitants of Great Britain.
And so it has been, not just in Britain, but more or less wherever public credit has taken hold. Accordingly, the biggest bankers have organized themselves into a quasi-feudal system, controlling the world’s money as the opportunity permitted.
I’ll close with three quotes on the effects of democracy, not on the bankers, but on the people.
In order, these are from Alvin Toffler (The Third Wave), Alan Bloom (The Closing of the American Mind) and John Kenneth Galbraith (The Age of Uncertainty):
Voting provided a mass ritual of reassurance …. Elections symbolically assured citizens that they were still in command… Elections took the steam out of protests from below.
Sycophancy toward those who hold power is a fact in every regime, and especially in a democracy, where, unlike tyranny, there is an accepted principle of legitimacy that breaks the inner will to resist.
When people put their ballots in the boxes, they are, by that act, inoculated against the feeling that the government is not theirs. They then accept, in some measure, that its errors are their errors, its aberrations their aberrations, that any revolt will be against them.
Food for thought.