Paraphrasing the famous movie The Matrix, most people are too inert to be disconnected from the system. However, for those of you who managed to peek behind the curtain and to ask questions slightly beyond the answer everybody else is satisfied with, you came to understand that governments are not only useless but deleterious to your economic and physical health.
We know that governments impose their will onto us by means of brute force, albeit disguised as a so-called “fair” and “legal” system. You cross the line, their arbitrary line, and people with guns and badges comes after you. You are subsequently tossed into a meat grinding bureaucratic machine, with the bombastic name of Justice System. This is governments’ visible power. That much is a given. However, very few people understand where governments’ real power originates from. This is again so by design. This power, this ultimate power, is hidden in plain sight. It is the engine that makes everything else possible: fiat money. And who is the master counterfeiter and puppeteer of fiat money? Central Banks.
Today we are going to peek behind the curtain and unveil just a little bit of their make-belief world.
A CLARIFICATION
Before we begin, we must clarify one issue. The most well-known Central Bank in the world is arguably the Federal Reserve in US, or simply the Fed. This is so because the Internet is US-centric since US is a world-power. It is for this reason that when people read about Central Banks, they all imagine that the Fed is somehow the prototype of all other Central Banks. Also, so much overwhelming information is floating around about the history of the US and its Central Bank, that people believe that every other Central Bank has more or less a similar system and history. Wrong in both accounts.
The Fed is actually an exception and its history wildly different from anything else that is the norm anywhere in the world. It is because of this reason that we will not talk about the Fed, because most people are not affected by the Fed but by its own country’s Central Bank.
The Central Bank of the European Union also has a similar structure to other banks but not exactly.
In the end, the structure and history of Central Banks is irrelevant because they all operate in the exact same manner. Sure, they may call certain processes differently or certain documents strangely, but they all do the same thing. It is for this reason, the effects of the causes that are affecting our lives, that we will study them as a group and not as individual banks.
THEORETICAL AND REAL CENTRAL BANK STRUCTURE
Theoretical hierarchical structure of Central Banks
Central Banks are supposed to be institutions of the people, by the people and for the people. They are supposed to work for our mutual benefit. They are supposed to respond to the people through duly elected representatives. In other words, they are supposed to look like this:
Voters (you, me and everybody else) elects representatives, who once in session elect the Executive Branch (Prime Minister, President, Chairman, whatever) who in term selects the Minister in charge of the Economy who selects the Top Politician in the Central Bank. More or less (each country has a slightly different version of this process, but they are all similar).
And so the power to direct Central Banks is supposed to come from us, the people, through the electoral process. In the same manner, Central Bank benefits are supposed to return to us. Full circle.
Very heavy emphasis on supposed.
True hierarchical structure of Central Banks
As you may have already imagined, that is not how reality works. In reality a group of people, let’s call it the Power Elite, exercise the real power. They decide if a person gets elected to the head of the Executive Branch or not. They do so through what we call Election Power. This Election Power has many aspects. The most obvious is money. They control the money they give to political campaigns, but this power also controls the media and many other levers of power. In so doing, they bypass or skip over Parliaments or Congresses altogether.
Once their puppet is selected, then the trivial endeavor of getting this person elected is executed. As you can see, voters are nowhere in the picture. Once the anointed one is selected by the Power Elite, what the people want is irrelevant.
Of course, this Power Elite do not get it right all the time, just most of the time.
In any case, once the head of the Executive Branch is elected, this person chooses one partner in crime to become the next Minister in charge of the Economy (as if the Economy needed to be in charge of somebody). This acolyte then selects one of his acolytes to be in charge of the Central Bank.
And so, Central Banks respond primarily to the wishes of the Power Elite to a large degree and to the head of the Executive Branch to a lower degree. This is so because the Power Elite still controls ”their man at the top” so to speak.
There is yet another type of power, one that we call Middle Powers. These powers are people with direct contacts and influence with the acolyte in charge of the Economy. They have such influence because they got other politicians of lesser rank elected and these can exert influence on the Minister in charge of the Economy.
These Middle Powers do also exert some influence on Central Banks, but a rather marginal one.
In any event, we have again come full circle. The power originates in Power Elites and Central Bank benefits return to them.
Neat right? There is, of course, a small, tiny, almost imperceptible issue with this process; YOU are not in the picture. YOU do not get any benefit at all!
Are Central Banks public or private
Excellent question, and the answer is yes.
We guess this did not answer your question, well ours neither. The original providence (source) from where Central Banks came from, their funds, their bonds, their owners or influences and so far, is vast and extremely complex. A simple example. Central Banks of almost all Commonwealth nations (i.e. former British Empire) are theoretically and legally owned by The Crown (of England). Does this mean that such Central Banks are private? Yes. They belong to the monarch of England. But the monarch of England is also, at least in theory, the head of all those states. Does this means then that those Central Banks are public? Yes.
The truth is that some Central Banks are private indeed, some are clearly public and some are in the gray area. It is also true that in many cases the owners of such banks can do as they please with them, but in the vast majority of the cases, Central Banks respond to the political commands coming from the Executive Branch. This is the really critical information. How they behave and commanded by whom. This is so because it is this behavior that impacts us all the most.
Note: please see the Glossary if you are unfamiliar with certain words.
Continue to Central Banks - engines of the evil empire - Part 2
