Do We Need Central Banks?

Tim Price at the Sovereign Man asks why the need for a central bank? (bold emphasis original)

A typical if feeble answer is that we need a lender of last resort. To which the answer is… Why? Why do we need a government-appointed entity to support banks that get in over their heads?

A typical answer is that if our banks start failing, our society starts going down the toilet. (It already has, but never mind.)

So now we have the worst of all possible worlds. Our banks are already failing, in the sense of no longer functioning according to the principles of offering an economic rate to depositors and offering economic funding to borrowers.

Plus, now we have ended up with a handful of quasi-nationalised banking group zombies that appear to be being run for the sole purpose of being granted dollops of money that they are free to hoard whenever the central bank deems it appropriate to depreciate our currencies some more.

If our banks were free to fail, a) we would have no need of a central bank, and b) we would have no need for banking guarantees.

Banking deposit agreements would simply come with a giant ‘Caveat Emptor’ on them, and depositors might be able to start earning a positive real interest rate on their savings again.

Abolishing central banks and their core functions would have the happy and non-trivial side effect of reintroducing something akin to sound money into the world economy, rather than live with permanent inflation and have the entire economy held hostage by banking interests.

In reality central banks exists as backstop financiers to the welfare-warfare state. For instance, wars has been facilitated and enabled by the existence of central banks.

Professor Gary North explains

The sinews of war are strengthened by central banking. This is why textbooks praise the Bank of England. It let the British fight longer wars and more destructive wars. The message: get a central bank for your nation, so that your politicians can declare war more readily and stay in that war far longer.

Central banks signify as central planning and the politicization of money. They are part of the 10 planks of Karl Marx’s Communist Manifesto.

Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.

Yes it's a delusion to equate capitalism with 'communist' central banking.

Central banks also promote the interests of the banking and political class at the expense of society through inflationism which not only causes boom bust cycles, but importantly has been diminishing the purchasing power of our currencies. This why a huge amount of the public’s resources have been funneled to insolvent “zombie” banks and bankrupt states.

And this is why once zombie institutions become desperate they resort to other measures of financial repression and take the political route towards despotism. And this is also why the private sector will always become the scapegoat for policy errors. That's until people don't understand the essence of central banking.

Yes, I agree Mr. Price, we need the de-politicization of money or the return to sound money through the free markets.

End the Fed. End all central banking.