[ExI] Bank of England/was Re: Psychology of markets explanations
dan_ust at yahoo.com
dan_ust at yahoo.com
Thu Jun 18 12:57:30 UTC 2009
--- On Wed, 6/17/09, Stefano Vaj <stefano.vaj at gmail.com> wrote:
> --- On
> Wed, 6/10/09, Stathis Papaioannou <stathisp at gmail.com>
> wrote:
>> 2009/6/10 <dan_ust at yahoo.com>:
>
>> I don't have a rock solid explanation, but
>> recall my
>> mention David Glasner's essay "An
>> Evolutionary Theory of the
>> State Monopoly Over Money"?* In that essay,
>> Glasner posits
>> that states tend to interfere in and gain monopolies
>> over
>> money to deny financial resources being used to alter
>> or overthrow their rule.
>
> I am not following this thread, but my eyes fell on those
> lines, which were quite a surprise.
>
> In fact, as the argument goes, the problem originates on
> the contrary from the fact that, starting from the
> establishment of the Bank of England in 1694, States
> progressively *renounced* their power on money in favour of
> private institutions which operate under purely economic
> mechanisms and/or go after the exclusive interest of the
> financial system itself to the detriment of society as a
> whole and of "real" economy.
It's too bad that you didn't follow to my next paragraph:
"Also, I don't think his explanation need mean whenever we see a state it must needs have a monopoly over money. It would mainly apply to states that were threatened or felt their existence would be threatened by leaving money alone. States that aren't under and don't perceive such threats, probably won't feel any pressure to monopolize or, in more advanced economies, set up a central bank. (Note: a monopoly on money is not necessarily a monopoly on banking. This is no different than a state having a monopoly on the roads, but hiring out construction, repair, and even management to private firms.)"
To nail this point home with the Bank of England example, that Bank was created by an act of Parliament. Also, this sort of fits in with Glasner's view. The BoE was created to finance the government. As such, it was granted special privileges shielding it from competition. These privileges eventually included not just being the government's banker and debt manager, but also having a monopoly on note issue, first in the greater London area and then to the whole nation. The BoE remains closely tied to the government, relying on its privileged position to prevent competition and offering the government, in return, pretty much any level of inflation it seeks; it's not independent as the public relations BS would have anyone believe. (Nor is any central bank. These are political institutions. The pretend to economic expertise and policy independence, but these pretenses are just that.) This is a symbiotic relationship that doesn't speak against
Glasner's view.
> If one does not care much for re-reading Ezra Pound in this
> respect, Money as Debt or Zeitgeist Addendum offer indeed
> some food for thought... :-)
Regards,
Dan
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