[ExI] Bank of England

Rafal Smigrodzki rafal.smigrodzki at gmail.com
Fri Jun 19 22:00:49 UTC 2009

On Fri, Jun 19, 2009 at 10:05 AM, Dan<dan_ust at yahoo.com> wrote:
> --- On Thu, 6/18/09, Rafal Smigrodzki <rafal.smigrodzki at gmail.com> wrote:
>> On Thu, Jun 18, 2009 at 6:46 PM, Stefano Vaj<stefano.vaj at gmail.com> wrote:
>>> Critics say they are private entities mostly tied with
>>> the financial
>>> system (in fact, even legislators have more power on
>>> them than
>>> governments). Additionally, the Central European Bank
>>> does not really
>>> have any "government" to deal with.
>>> For sure, their "independence" in western countries
>>> means that no
>>> democratic control whatsoever on their functioning
>>> exists.
>> ### That's their one saving grace. Democratic control is
>> evil.
> I'm not so sure it'd necessarily be worse than the current system -- where, generally, the government (in the US, the president) appoints the board of the central bank or approves appointments but the bank kind of runs itself with little or no oversight.  In the US example, the FRB, IIRC, has no independent auditors and its members always come from the financial elite or from academics groomed for the role.  Would things be much worse were there, say, Congressional oversight and the GAO (or, better, some non-government auditor -- one unconnected with the FRB or the banking industry) had to look into the FRB accounts?  At worst, I think, the FRB's politicization would not be so much worse as clearly obvious.

### Recently my mind became tainted by reading Mencius Moldbug, and
the idea that a sovereign decision maker is at times better than a
committee seems to have taken hold. Say, we had a central bank whose
owner is rewarded according to long-term economic performance of the
economy (weighted to favor averaged growth, with the actual
remuneration dependent on decades of GDP measurements). The owner is
free to choose his successors and collaborators. He is even free to
relinquish his monopoly on the issue of currency. He (or she) can run
the presses, or elect to reinstate the gold standard - but always
knowing that his retirement package will depend on the outcome of his
decisions alone. Wouldn't that be better than a "democratic" overseer,
bent on extracting the greatest amount of political advantage in the
shortest amount of time, as needed to assure re-election?

Clearly, a free market in banking is likely to be the best solution,
just as it is in all other human endeavors. A monopoly controlled by a
sovereign not dependent on the approval of the masses would be
inferior but still better than a democratically controlled system.


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