Financial Crisis: The Printing Presses Set to Roll Again

As the worldwide credit crisis continues, the annual symposium of international central bankers, held annually in late August at Jackson Hole in the Rockies, seems set to signal another round of quantitative easing, i.e. the printing of banknotes that are then used to repay part of the national debt of the individual nations concerned, and thereby stave off financial collapse.

Public faith in central banks as guarantors of macro-economic stability has been massively shaken by the events of recent years, with a financial crisis that they apparently neither foresaw, nor were able to prevent, and which they now seem unable to put right.

The common misconception fostered by the media is that quantative easing amounts to a measure employed by government to inject more money into the economy with the aim of stimulating economic growth, when in fact it is simply a desperate measure designed to prevent government bankruptcy and the consequent collapse of our banking system.

If we are to learn anything from this crisis, it must be that we should not place our faith in central banks nor our current debt based system of banking.

Central banks may be able to ‘wallpaper over the cracks’, but as the continuing credit crisis and the alarming floundering of the European Central Bank has so ably demonstrated, the international banking system is seriously flawed and in its present form is inadequate as an instrument of monetary and economic stability.

The time has come for us to move away from the current prevailing system of fractional reserve banking, a system that is inflationary and has a tendency to promote both public and private indebtedness, and to replace it with a system of full reserve banking, in which the exchequer has full control of the money supply.

By Max Musson © 2012

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