A History of Central Banking in Great Britain and the United States (Studies in Macroeconomic History)

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I would … recommend this book as a central reference to evolutionary economists (and evolutionary institutionalists, by extension) to make more thoughts on and build analytical models of central banking functions from an evolutionary point of view.” (Burak Erkut, Journal of Evolutionary Economics, July 4, 2020) The ‘scam’ of the money-lenders is the ability to literally create money from nothing, and then lend and accumulate interest on “credit,” and then re-lend that interest for further interest, in perpetuity, that creates pervasive, worldwide debt, from the individual, to the family, to the entire state. The so-called Global Financial Crisis raised the profile of central banks around the world. While books about central banks were, of course, published prior to the events of 2008-2009, none captured the attention of the wider public until the monetary authorities intervened on a massive scale and continue to do so well over a decade since the near collapse of the global financial system. A new set of books emerged, with titles like The Only Game in Town, or After the Music Stopped, which used a chronological approach to describe what central banks did as well as contemplating the implications of the shift from conventional to unconventional monetary policies. The approach of these books is largely descriptive and the analysis is largely rooted in depicting the evolution of central banking activities in select countries over time. Both authors mention that no meetings are ever transcribed or recorded, no agendas and no minutes are taken in the board rooms and meetings of the top banking sector. Both had years of experience in this matter. Both are straight shooters. The truth is money is fake, people will trade with whatever medium of exchange the perceived authority wants them to, and as long as this authority borrows money only from itself debt can be cleared without issue, and the nation can remain independent, answerable only to itself, and with a population entitled to a share of what the whole can provide.

Central banks are in another crisis: the return of inflation after the COVID-19 pandemic. Inflation is close to or above 10 percent in the United States, the United Kingdom, and the eurozone, a development that no central banks foresaw. Such levels of inflation have not been seen in forty years. As time went on, the Romans took to using, instead of cattle, irregular lumps of copper or bronze. These lumps were called aes rude (rough metal) and had to be weighed for each transaction. All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means including photocopying, recording, or information storage and retrieval without permission in writing from the publisher. The first money used in Rome was the cow. This was not true money, but a barter system. Many early peoples used cattle as a medium of exchange. According to the legend of Herakles and the Augean stables, the cattle kept there, over 3,000 in number, represented the treasury of King Augeas. THE COPPER AGE (753 – 267BC) The solution is simple and self-evident. If we wish to obtain our liberation and sovereignty from the enslavement imposed by the private bankers, we must dismantle their fractional reserve system of banking and supporting central banks, or we ourselves shall be destroyed and consigned to oblivion.The cultural and material progress of a civilization will often relate to the degree by which it is free from the influence of debt, and the degradation that results when the money-lenders are permitted to abuse their power. Hence, Goodson shows that both World Wars, the Napoleonic wars, the American Revolution, the rise and fall of Julius Caesar, the regicide of Charles I of England, the overthrow of Gaddafi in Libya and the revolution against Tsar Nicholas, among much else in history relate to this “Hidden Hand”. Stephen Mitford Goodson recently passed away and something about his eulogy inspired me to find this book. Rudyard Kipling’s poem If was included in the eulogy at his funeral and it immediately triggered my curiosity.

The discussion blends a history of events that reflect the growing importance of central banks in the global economy together with the history of thought about the balance between public and private roles in carrying out central banking functions. As a result, private banks and their connection with monetary authorities play an important role in the depiction of the evolution of central banking. For example, we see how the emergence of clearinghouses led to the creation of “conventional” central banks via the centralization of this function at the public level. Hence, this function is treated as a “natural monopoly.” The same is true of the evolution of many of the other functions examined. Nevertheless, the author is careful to highlight how in some countries, such as the United States, the tension between a role for government versus a preference for a strong role by the private sector in carrying out certain financial functions can explain certain cross-country differences in how central banks evolved when viewed through the lens of the functional approach. It may also be noted in passing that the experiences of Venice and Naples figure prominently in the discussion. Books on economics and banking are generally viewed as being abstruse, whose readers are confined mainly to academia and the business world. In this case we have a notable exception.Financial stability. While early central banks helped fund the government’s debt, they were also private entities that engaged in banking activities. Because they held the deposits of other banks they came to serve as a banker’s bank, facilitating transactions between banks. They became the repository for most banks in the banking system because of their large reserves and extensive networks of correspondent banks. These factors eventually allowed them to become a lender of last resort in the face of a banking panic. A later wave of central banks, e.g., the Federal Reserve in 1913 and the Swiss National Bank in 1907, were founded explicitly to provide financial stability. Stefano Ugolini, The Evolution of Central Banking: Theory and History. London: Palgrave Macmillan, 2017. xiii + 330 pp. €135 (hardcover), ISBN: 978-1-137-48524-3. The Hidden Origins of the Bank of England ...all great events have been distorted, most of the important causes concealed…If the history of England is ever written by one who has the knowledge and the courage, the world would be astonished. - Benjamin Disraeli, Prime Minister of Great Britain

I do not have the expertise to say whether Goodson’s findings are accurate, but I do know that the raw nerves he touches are on account of central banking and the monetary system created thereunder being at the core of the persistent profound and inhumane differences in wealth distribution within any given country, and among countries. For this reason, for several years, my Party and I have argued that South Africa should reform its central banking and monetary system, even if that means placing our country out of step with iniquitous world standards. The cultural and material progress of a civilization will often relate to the degree by which it is free from the influence of debt, and the degradation that results when the money-lenders are permitted to abuse their power. Hence, Goodson shows that both World Wars, the Napoleonic wars, the American Revolution, the rise and fall of Julius Caesar, the regicide of Charles I of England, the overthrow of Gaddafi in Libya and the revolution against Tsar Nicholas, among much else in history relate to this "Hidden Hand". This work provides not only a broad sweep of the history of economics over almost two millennia, but insights into how the problems of usury have been confounding and enslaving mankind since its civilized existence first began.

Around 600BC Latium came under the control of the Etruscans. This lasted until the last king, Tarquin the Proud, was expelled in 509BC and the Roman Republic was established. The Etruscans, a people of Aryan origin, created one of the most advanced civilisations of that period and built roads, temples and numerous public buildings in Rome. This book is bound to be controversial and engender strong reactions. Why would a seemingly arid subject matter such as the history of central banking and of the monetary system give rise to such strong reactions?

This often-cited short paper lucidly explains how commercial banks create money and central banks influence that process. It dispels many common misconceptions about money. For instance, most introductory economic textbooks say that commercial banks lend out the money that savers deposit in them. In fact banks can lend money and create corresponding deposits even without savings flowing in–in other words, banks are quite literally creating “new money” when they make a loan and a corresponding deposit. This does not mean banks can lend with abandon. There are other constraints, such as the creditworthiness of borrowers, the interest rate at which banks lend which is influenced by the central bank and regulations on lending. Consider a consumer who buys an item from a vendor using money borrowed from a bank. The bank must settle the transaction with the vendor’s bank using reserves held at the central bank. If the borrower never repays the loan, then the bank’s reserves will not be replenished, reducing its ability to lend further. So yes, it is an informative, yet contentious book to read, but well worth the time. I do not agree with everything in the book and for this reason am indulging in the rebel-rouser, Yanis Varoufakis's, books as well. However, I expected some big differences, but I only encountered remarkable agreements between two authors who never met. But I'm still digging.Ugolini has written a compact history of the critical functions of central banks emphasizing how the forces of centralization spurred or prevented financial innovations. The approach taken is a fresh one and will be useful, especially to scholars who are interested in specific areas where central banks have played an important role in economic development over time. That said, does the book provide new insights into central banks and their functions? This is debatable. For example, while financial stability is often mentioned it is not treated as a separate function. This is a shame in light of the ongoing debate about whether central banks are possibly over-burdened with responsibilities. It is also relevant for the question of the degree of centralization of the various functions considered at the level of a single institution. Stated differently, greater emphasis by the author on governance matters might have helped. Alan Greenspan, chairman of America’s Federal Reserve from 1987 to 2006, is one of the most controversial central bankers of all. His tenure included one of the longest periods of low inflation and solid growth in American history—later called the “Great Moderation”. But he also presided over the buildup of risks that led to the financial crisis of 2007-09. Sebastian Mallaby (a former Economist correspondent and husband of our editor-in-chief) provides a deeply critical but ultimately sympathetic portrayal of this polarising figure. If you wish to have a real understanding of history - look for the influence of the bankers. This is the key to understanding the past, the present and the future. It also provides a record, both ancient and modern, of societies and civilizations that have flourished in an environment free from the burden of usury. The author offered the economic history behind the murders of Julius Caesar, Napoleon, Muammar Qaddafi (Real spelling Mu’ammar Muhammed al-Qathafi as the author provides it), JFK, and United States Congressman Louis T. McFadden after delivering a speech (fully included in the book) on the floor of Congress in which he exposed the Federal Reserve System in 1932.