[p2p-research] What is the Origin of our Money Supply?

[Kevin Carson]

On 7/16/10, Ryan Lanham <rlanham1963 at gmail.com> wrote:

> Lots of smart people in the past didn't understand money and banking.  They
> said many things about it.  The questions were valid, but no longer are so.
>  We understand exactly what is going on now.  There are many things
> misunderstood or even not understood, but the creation and operation of
> money is not one of them.

I don't think the quotes reflect so much a misunderstanding of how
central banking works as a difference over its moral significance.

A lot of libertarians object, on principle, to the creation of money
by a central bank.  My argument is that *if* you're going to have a
central banking system issuing fiat money anyway, there's nothing any
*less* statist about enabling banks to loan it into existence at
interest by tweaking their reserve requirements or increasing their
reserves through open market operations.

If anything, it would be *less* statist to follow the Social Credit
route of depositing the new money into existence in citizens' bank
accounts, or the greenback route of spending into existence an amount
of money equal to the Keynesian demand shortfall rather than selling
bonds to cover the deficit.  I say it would be less statist because
the exact same function would be performed, but without feeding an
entire separate layer of rentiers at taxpayer expense.

It's analogous to the kind of "libertarian" at venues like Heritage or
the Adam Smith Institute who thinks it's "less statist" to "privatize"
functions by outsourcing taxpayer-financed, state monopoly functions
to nominally private entities.  If the function is protected from
market competition by state regulations, and the people performing it
have a state-guaranteed revenue stream, I don't see how their nominal
"private" status makes things any less statist.  Their essence as a
branch of the state is just concealed, and the REAL state includes
another parastic layer of shareholders in addition to state
bureaucrats.  But for the worst kind of right-wing market
libertarians, the "free market" just means funnelling state loot to
nominally private corporate entities like Halliburton.
-- 
Kevin Carson
Center for a Stateless Society http://c4ss.org
Mutualist Blog:  Free Market Anti-Capitalism
http://mutualist.blogspot.com
The Homebrew Industrial Revolution:  A Low-Overhead Manifesto
http://homebrewindustrialrevolution.wordpress.com
Organization Theory:  A Libertarian Perspective
http://mutualist.blogspot.com/2005/12/studies-in-anarchist-theory-of.html