Marxism Unmasked from Delusion to Destruction.pdf 7471KB

the public. For instance, a person who has sa\Td one hundred dollars could
hold them as doUars or invest them. But mstead of doing cither of these
things he can buy a new go\^eTnment bond; this purchase doesn't change
the amount of monev' in existence; the mone>- he pa\-s tor the bond passes
from his hands to those of the gmrmment. But it" the gowmment goes to
the central bank to borrow the fnonc>; the bank can buy government
bonds and lend money to the go\-ernment simpK b\' expanding credit, in
effect creating new money. Goxrrnments ha>T a loc of good ideas as to ho^^•
to carrv' out this borroumg.
There has always been a stru^e between parhaments and the
executive concerning the goxrrnmenis influence on the central banks.
Most of the European legislatures said \rr> clearH- that theu central banks
must be separate from the gosrrnment. that the> must be independent
And m this countn,-. \-ou know there is a connnual contlKl between the
Federal Reserve Board and the US Treasurv Thn is a lutural sitxunoii
caused b>- economic hw\ and ginTtninent legislation Some gofsrrnments
have found it vrry easy to \nolate the legisbcHKi %»ichouc \ioUang the
letter of the law. The (Jernun ginrrnineni. fi>r instance. borfo\%Td trom
the public during World Uar I because the Krichshank had pfomiscd to
give It loans. Privjic individuals vvht> btnight (k'rnun ginrrnment bomk
needed to pay out only 17 percent ot the anMHint ol the bond, and thn 17
percent gasT them a \ield ot'ft or 7 pen eni Hctkc. H3 penent ol'che pruc
of the bond was supplied In the Bank This meant that when the
government l^ornnvcd tnnii the puNu. it was o^txiallv bornnv^ing indiircdy
fn>m the (icrnun Keuhsbank I he rr^ult was that in (K'rnuns the U S
dollar went fn>m 4 2n Marks prr-U»>rld Uar I. ti> 4 2 KUnm Marks by the
cndof 1*>23-
Therc has alwasA been rrsistaruc t.» gising pin%rr lo the central hanks.
but in the last decadeA this rrsistanie has been b\ and larye lonipleteK
dctcatcil in all coiuitrics ot the \sx>rld The U S gtnrrnrnent ha* used the
ptmer ot the central bank, the federal Kevrsr. to bornn% tn*ni it to obtain
a considerable part i>t the nu»nes it neesh to hind its expenditurrs. The
consequeiu eN have been inflation and a tendency fm prices and wage rales
to rise.
1 lu-rr IS no dt>ubt that the irrdit expansion brings about a dnip m the
rate ot interest Whv then dt>cs this mx mean that the rale ol interest can
always remain Um and that intereM cinild reallv disappear comf4etely? If it
IS true that the rate of intercM is nt>t a monetars phetMnnenon but a ftrneral
2 |Scc LudvMg v-iin Mi>o. liimno* L'n*4rT (»