There is a reason why the cost of living seems to be increasing at an alarming rate and yet wages remain stagnant. It’s not just because of greedy corporations or a broken political system, but also because of the policies of our central banks. For years, they have been printing money and keeping interest rates artificially low in order to support the wealthy and powerful. This has led to an economy that benefits only a select few, while the majority of people are left behind.
Income inequality has been on the rise for decades, but it has exploded in recent years. The top 1% now owns more wealth than the bottom 99% combined. This growing wealth gap is not just unfair, it is unsustainable. Central banks are supposed to promote economic stability, but by propping up the rich they are creating an unstable system that is ripe for a crash.
Read on to learn more about how central banks are driving inequality and have been damaging global economies for centuries.
Table of Contents
Role and history of central banks
The history of central banking is long and complicated, but it can be boiled down to two key points. First, central banks were created to stabilize the economy by managing the money supply. Second, they were given the power to print money and set interest rates.
Printing money is inflationary, which means that it reduces the purchasing power of each dollar. This is bad for savers and retirees who rely on their savings to cover living expenses. It’s also bad for workers because it reduces their wages in real terms. Low interest rates are supposed to spur economic activity by making it cheaper to borrow money, but they also reduce the returns on savings. This is why we have seen such low interest rates for so long.
First central banks
The first central bank was created in 1494 by the Medici family in Italy. They used their position to gain political power and increase their own wealth. This set a precedent that has been followed by central banks ever since. This was considered one of the major causes of inequality in medieval Europe.
The Bank of England was established in 1694 to finance the war against France. It too was given the power to print money and set interest rates. This made it possible for the government to spend more than it could afford and led to high levels of inflation. The British people were not happy with this state of affairs, and in 1797 they rioted outside the Bank of England.
The same thing happened in France when it established its own central bank in 1800.
The first central bank in America was the First Bank of the United States, which was created in 1791. It was modeled after the Bank of England and given similar powers. However, it was not well-received by the American people and lasted only 20 years before being shut down.
The second central bank in America was the Second Bank of the United States, which was created in 1816. Once again, it was modeled after the Bank of England and given similar powers. It too was not well-received by the American people and lasted only 10 years before being shut down.
Federal Reserve
After the experience with the First and Second Banks of the United States, America did not have a central bank for over 60 years. Then, in 1913, Congress passed the Federal Reserve Act and created the Federal Reserve System. The Fed is America’s current central bank and it has been given even more power than its predecessors.
Since its inception, the Fed has used its power to print money and artificially manipulate interest rates. This has led to inflation and a devaluation of the dollar. It has also led to booms and busts, as well as a growing income inequality.
The Fed is not the only central bank guilty of these actions. Almost every central bank in the world has engaged in similar practices. They have all contributed to the inequality that we see today.
The Fed has been blamed for causing the Great Depression, as well as numerous other economic crises. However, it has also been credited with maintaining stability during difficult times. The truth is that the Fed’s actions have led to both good and bad outcomes over the years.
Debt issuance and debt-based systems
Debt issuance and debt-based systems are used to control the population by keeping them in debt. In a debt-based system, money is created as debt, which means that it must be repaid with interest. This creates a constant need for more money to be created, which leads to inflation. This system benefits the banks and the wealthy, who are able to lend money at interest, but it hurts everyone else.
The problem with our debt-based system is that it is not sustainable. The world is already $300+ trillion in debt as of 2021 and it is only getting worse. This debt can never be repaid, even if we raise interest rates to 100%, the interest on the debt would still be greater than the entire world economy.
Growing our way out of the debt is not an option either, as the world economy is only growing at a rate of 2-3% per year. This is not enough to keep up with the interest on the debt, let alone repay the principal.
Even if you taxed every citizen 100% of their income, it would still not be enough to repay the debt. The only way to repay the debt is to default on it, which would cause a financial collapse.
The debt crisis is not just an American problem, it is a global problem. Every country in the world is in debt and the situation is only getting worse. This debt crisis will eventually lead to a global financial collapse, unless something is done about it.
Cost of living and real wages vs rate of inflation
One of the most important things to understand about inflation is that it’s a hidden tax. It’s a tax because it erodes the purchasing power of your money.
For example, let’s say you have a $100 bill and you use it to buy a pizza. 10 years later, that same $100 bill will only be able to buy you a smaller pizza because the cost of living has gone up. In other words, your money has lost value.
The government likes to use the consumer price index (CPI) to measure inflation, but this number is often manipulated. The CPI doesn’t take into account the real costs of living, such as housing and healthcare.
As a result, the CPI often understates the real rate of inflation. This is why your cost of living keeps going up, but your wages don’t seem to be keeping pace.
The real measure of inflation is the change in the cost of living index (COLI). The COLI takes into account a wider range of items, including housing and healthcare.
When we look at the COLI, we can see that the real rate of inflation is much higher than what the government tells us. For example, from 2000 to 2016, the CPI showed that inflation was around 2.5%. But when we look at the COLI, we can see that it was really closer to 4%.
The constant propaganda about the “low inflation” is just another way for the government to try to downplay the real costs of living. They don’t want you to know that your money is losing value because then you might start demand higher wages.
Relative strength of dollar vs absolute strength
One of the biggest myths being toted around by the central banks is that the dollar is still strong. They like to talk about the dollar’s relative strength, which is its strength compared to other currencies.
While it’s true that the dollar is still strong compared to other currencies, this is only because the other currencies are being artificially manipulated downwards. The euro, for instance, has been losing value due to the ECB’s quantitative easing program.
The real measure of a currency’s strength is its absolute strength. This is how much purchasing power the currency has. And when we look at the dollar’s absolute strength, we can see that it has been declining for decades.
How currency works
Most countries initially used a gold standard, which is where the value of currency was based on the amount of gold that a country had. The problem with this system is that it didn’t allow for much economic growth because a country’s currency couldn’t exceed the value of its gold reserves. This led to countries moving away from the gold standard and towards fiat money, which is money that has no intrinsic value and is not backed by anything tangible.
The U.S. dollar is an example of fiat money and it’s also the global reserve currency. This means that it’s used as a form of payment for international trade and it’s also held by central banks around the world as a way to stabilize their own currencies.
How the central banks benefit the wealthy at the expense of the poor.
The U.S. dollar is created by the Federal Reserve, which is America’s central bank. The Fed has the power to print money and it does this whenever it wants to increase the money supply. This new money is used to buy assets like bonds and stocks, which drives up prices and leads to inflation.
Inflation hurts everyone except for the wealthy, who are able to keep their purchasing power by investing in assets like stocks and bonds. The poor and middle class, on the other hand, see their purchasing power decrease as prices go up. This leads to income inequality and a growing wealth gap.
The value of the dollar
The value of the dollar is determined by its relative strength compared to other currencies. For example, if the dollar is strong, then it can buy more goods and services than a weaker currency.
While the U.S. dollar is still relatively strong, it has been losing value over time due to inflation.
This is what I call “The illusion of prosperity.” The U.S. economy appears to be doing well, but this is just an illusion created by the Fed’s printing of money. In reality, the economy is being propped up by debt and just like every other country that has tried this, it’s not sustainable.
Stealing value from existing currency holders
When the Fed prints money, it’s effectively stealing value from existing dollar holders. This is because the new money created by the Fed dilutes the value of all other dollars in circulation.
While this may not seem like a big deal, it leads to a transfer of wealth from those who hold currency to those who create it. This is one of the reasons why the rich keep getting richer and the poor keep getting poorer. The central banks are effectively creating inequality.
Trillions of dollars has been stolen from savers and retirees
The central banks have been engaged in a massive transfer of wealth over the past few decades. They’ve been robbing savers and retirees by keeping interest rates low.
For example, let’s say you have $100,000 in savings. If the interest rate on your savings account is 2%, then you’re earning $2,000 in interest per year.
But if the inflation rate is 4%, then your $2,000 in interest is actually only worth $1,960 in purchasing power. In other words, you’re losing money by keeping your money in a savings account.
The charade of “low inflation” has allowed the central banks to steal trillions of dollars from savers and retirees. This is one of the reasons why the wealthy have been getting richer while the middle class has been struggling.
Petro dollar and the US military
The U.S. dollar is the global reserve currency, which means that it’s used for international trade. In 1971, the U.S. government decided to no longer back the dollar with gold, which led to a floating exchange rate.
This made the dollar more valuable than other currencies and led to America becoming the world’s leading economic power. The problem is that this also gave America a lot of influence over other countries.
For example, most oil is traded in dollars, which gives America a lot of control over oil-producing countries. In order to buy oil, these countries must first purchase dollars, which they do by selling their own products or services to America.
This gives America a lot of leverage and it’s one of the reasons why the U.S. military is stationed in so many different countries. By controlling the global reserve currency, America is able to exert its influence around the world.
Debt Jubilee
It may seem like an insane notion, but the only way to break out of this debt trap is for the world to go through a massive debt Jubilee. This would involve forgiveness of all debts and a resetting of the financial system. Of course, this would be opposed by the banks and the wealthy, who would stand to lose a lot of money.
A debt Jubilee is the only way to fix our broken system, but it is unlikely to happen anytime soon. In the meantime, we must continue to deal with the negative effects of central banks and our debt-based system. These include inflation, economic crises, and growing inequality.
The first Jubilee was in the year 594 BC, when all debts were forgiven and the financial system was reset. This was done in order to prevent an economic collapse. Maybe it’s time for another one. What do you think?
Sound money
Sound money is money that has intrinsic value and is not subject to inflation. Gold is an example of sound money and it was used as a form of currency for thousands of years.
The problem with gold is that it’s difficult to transport and it’s also difficult to divide into smaller denominations. This is why paper money was created, which can be easily transported and divided into smaller denominations.
While paper money doesn’t have intrinsic value, it can be backed by assets like gold or silver. This system is known as the gold standard and it was used by most countries until the early 20th century.
Most countries start out with a sound money system, but it eventually breaks down due to government intervention. The government intervenes by printing more money, which leads to inflation and a loss of value for the currency.
Do we have any other option?
After reading this, you might feel like there’s no hope. The central banks seem to be in control and there’s nothing we can do about it.
But that’s not necessarily true. There are things we can do to fight back against the central banks.
For example, we can support candidates who want to audit the Fed and bring more transparency to its operations. We can also support organizations like the Mises Institute which is working to educate people about Austrian Economics and the problems with central banking.
We can also take our money out of the banking system by investing in gold and silver. These precious metals have been used as money for thousands of years and they’re not subject to the whims of the central banks.
There is always Bitcoin, the digital gold. Bitcoin is a decentralized cryptocurrency that is not subject to the control of any government or central bank.
Bitcoin has been used by citizens in countries like Venezuela to protect their savings from inflation. And it can be used by anyone in the world to safeguard their wealth from the central banks.
Perhaps we can create our own localized economies where we trade goods and services among ourselves. This would help to insulate us from the problems caused by central banking.
The bottom line is that we don’t have to take this lying down. We can fight back against the central banks and their inflationary policies.
Conclusion
The alternative to a debt-based system is a cash-based system. In a cash-based system, money is created as cash and not as debt. This means that there is no need to repay the money with interest. This system would be much better for society, but it would not be beneficial for the banks and the wealthy.
The chances or the banks relinquishing their power are slim, but we can try to build a parallel system that would be beneficial for society. We can start by using alternative currencies such as Bitcoin and by creating our own localized economies. We can also support candidates who want to audit the Fed and bring more transparency to its operations.
The central banks are the engine of inequality. They have been responsible for creating an unequal society by supporting the wealthy and powerful. By printing money and keeping interest rates low, the Central Banks have created an economy that benefits only a select few.
It’s time for a change. It’s time to end the central banks’ control over our money supply. It’s time to put an end to their inflationary policies. It’s time to take back our power and create a new system that works for everyone, not just the wealthy elite.
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