Asia Times Online :: Banking Bunkem

Banking Bunkum

A critique of the role of central banks around the world
By Henry C K Liu (date)

Part 1: Monetary theology
From time to time in the history of economics, the purpose of a national banking system has been seen as improving the well-being of the nation and its people. Nowadays, however, we have central banking, which prioritizes the preservation of the value of money over the monetary needs of a sound national economy. This is the first in a series of articles which make a case against central banking.

Part 2: The European experience
Since the Amsterdam Wisselbank, the first modern national bank, fueled the successful Dutch economy of the 17th century, the evolution of European banking has culminated in the European Central Bank, which works at cross purposes against its member governments.

Part 3a: The US experience
In the United States, central banking was not born until December 1913 with the establishment of the Federal Reserve System. However, a long and colorful history led up to that event, which was pushed through by congressmen eager to start their Christmas holidays. This article is part of a series in which Henry C K Liu makes a case against central banking.

Part 3b: More on the US experience
From its founding in 1913, the US Federal Reserve System has gone through a bewildering array of changes led by an intriguing cast of characters who have been accused of everything from engineering the Great Depression to bringing down presidents.

Part 3c: Still more on the US experience
In October 1987, the New York stock market crashed in a drama more spectacular than the 1929 disaster. Yet the damage was far less dramatic than the Great Depression of the 1930s. Much of the credit for that fact went to Federal Reserve Board chairman Alan Greenspan, and the super-central-banker cult began.

Part 3d: The lessons of the US experience
As the US Federal Reserve has progressed through a series of policies whereby today's Nobel-winning economic theories explain "scientifically" last year's political expediency, one constant has stood fast: the Fed will protect the banking system at all costs, including human ones.

Part 4a: The Asian experience
The world's three leading economies, the United States, the European Union and Japan, have experienced a rare synchronous slowdown while much of the developing world, including Asia, has remained mired in economic and financial difficulties. As part of a series in which he makes a case against central banking, Henry C K Liu traces this phenomenon back to the Asian and Mexican financial crises and further, to the beginnings of the Cold War.

Part 4b: Japan's experience
The rapid change in global economics to a system driven by US dollar hegemony caught Japan, with its long-standing policy of a high-export regime and large trade surpluses, wrong-footed. The result has been a long period of economic stagnation. But a new factor has entered the equation: a growing symbiosis between the Japanese and Chinese economies.

Part 4c: More on the Japanese experience
Since the Central Bank Law came into effect in April 1998, the Bank of Japan has been struggling to revive the country's economy, stagnant now for more than a decade. The BOJ has failed because it cannot treat the disease, but can only mask the symptoms temporarily. It's just more evidence for Henry C K Liu as he continues to make his case against central banking.

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