If
it looks as if we’re focusing a lot on money lately . . . it’s because we are. With the annual Rally at the Federal Reserve
only a few days away, it’s a good idea for people to know what money is and why
we think monetary (and tax) reform are key to the implementation and
maintenance of an economically just society.
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| A properly run central bank is essential to an advanced economy. |
And
when we say reform, we mean reform,
not abolition or deform. “End the Fed”? Hardly.
A central bank is essential to an economy that has moved beyond
subsistence. The problem is that central
banks have been egregiously misused from the very beginning to finance growth
of government instead of private sector growth.
Governments’
control of future savings to finance itself left private sector initiative for
economic growth with the rich who by definition control past savings. This is capitalism, a system in which a
relatively small private élite
control capital.
In
reaction, people demanded that some form of the State take over control of
capital — keeping in mind that, as Louis Kelso said, ownership and control are
the same in all codes of law. This is
socialism, the abolition of private property in capital.
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| Kelso: ownership and control are the same in all codes of law. |
In
both capitalism and socialism, a relatively small élite controls capital, leaving most people with wages and welfare
as their only source of income. Both
capitalism and socialism are direct results of relying on past savings to
finance new capital formation. Both
systems concentrate capital ownership, and both offend against the dignity of
the human person.
By
changing the way we finance new capital formation, however, we can get away from
the slavery of past savings that capitalism and socialism impose. We can do this by shifting to future savings:
instead of using past reductions in consumption to finance new capital, finance
with future increases in production, creating new capital that pays for itself
out of its own future profits. In this
way, everybody can own capital without taking anything from anybody else,
because anybody with a financially feasible project can own new capital, not
just the rich.
That
is why Capital Homesteading is so important, and why we are demonstrating at
the Federal Reserve this Friday.
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