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(Created Federal Reserve page, covering first (my own) marxist theory of central banking as related to Crisis theory, then an overview of how the bank was created, followed by a brief overview of Open Market Operations, the mechanisms by which the fed effects the economy) |
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It is only a temporary measure, as it had to be, lest inflation be rampant, something undesirable at that time. The idea was that the 'elastic currency' would be self-liquidating as businesses and banks paid off their loans, returning it to the federal reserve where it would be retired from circulation. This allows capital to deal with crises on a case-by-case basis, but what of the falling rate of profit in general? In theory, the falling rate of profit should continue, and ultimately, however sophisticated the methods of dealing with individual crises become, the situation should become untenable. At some point, as the rate of profit goes on decreasing, the 'elastic' currency can't stretch anymore. But after WWI, the gold standard was effectively smashed, and since 1971, even the formal pretense of 'elasticity' (stretching with respect to gold) has been abandoned. As a distinguished assembly of bourgeois simpletons explained to a fiscally anxious congress during the 90s, failure to expand US debt: "could worsen the economic downturn, causing greater loss of jobs, production, and income."<ref>Congressional Record Volume 141, Number 27 (Friday, February 10, 1995) https://web.archive.org/web/20240208025511/https://www.govinfo.gov/content/pkg/CREC-1995-02-10/html/CREC-1995-02-10-pt1-PgS2457.htm</ref> In other words, US debt (the global money supply) must continuously expand - the alternative being prolonged global capitalist crisis. | It is only a temporary measure, as it had to be, lest inflation be rampant, something undesirable at that time. The idea was that the 'elastic currency' would be self-liquidating as businesses and banks paid off their loans, returning it to the federal reserve where it would be retired from circulation. This allows capital to deal with crises on a case-by-case basis, but what of the falling rate of profit in general? In theory, the falling rate of profit should continue, and ultimately, however sophisticated the methods of dealing with individual crises become, the situation should become untenable. At some point, as the rate of profit goes on decreasing, the 'elastic' currency can't stretch anymore. But after WWI, the gold standard was effectively smashed, and since 1971, even the formal pretense of 'elasticity' (stretching with respect to gold) has been abandoned. As a distinguished assembly of bourgeois simpletons explained to a fiscally anxious congress during the 90s, failure to expand US debt: "could worsen the economic downturn, causing greater loss of jobs, production, and income."<ref>Congressional Record Volume 141, Number 27 (Friday, February 10, 1995) https://web.archive.org/web/20240208025511/https://www.govinfo.gov/content/pkg/CREC-1995-02-10/html/CREC-1995-02-10-pt1-PgS2457.htm</ref> In other words, US debt (the global money supply) must continuously expand - the alternative being prolonged global capitalist crisis. | ||
'Elastic currency' was first seriously discussed at the 1902 meeting of the American Bankers Association. Prominent bankers, among them Charles Dawes, arrived in New Orleans that year armed with addresses dealing with the currency problem. The debate which ensued was not over whether something had to be done, but over what form this action should take. To investigate the matter further, those assembled formed a Currency Committee, and at the San Francisco meeting held the following year, this Currency Commission reported in favor of "an emergency circulation subject to a heavy tax, which, it was hoped, would insure the redemption of this currency as soon as the emergency which had called it forth had passed." | 'Elastic currency' was first seriously discussed at the 1902 meeting of the American Bankers Association. Prominent bankers, among them Charles Dawes, arrived in New Orleans that year armed with addresses dealing with the currency problem. The debate which ensued was not over whether something had to be done, but over what form this action should take. To investigate the matter further, those assembled formed a Currency Committee, and at the San Francisco meeting held the following year, this Currency Commission reported in favor of "an emergency circulation subject to a heavy tax, which, it was hoped, would insure the redemption of this currency as soon as the emergency which had called it forth had passed."<ref name=":4" /> | ||
=== American Banking Before the Federal Reserve: the National Bank System and the New York Clearing House === | === American Banking Before the Federal Reserve: the National Bank System and the New York Clearing House === | ||