Austerity, Unemployment - The Role of Central Banks.

For those trying to understand how and why austerity, unemployment and the decimation of public services is being undemocratically forced on the world's population, the role of central banks, such as the European Central Bank, the Bank of England and the US Fed, might be somewhat vague.
 
A recent paper by Norbert Haring, kindly supplied by Daniel Buckley, is very illuminating, as the selected quotes below make clear. 
 
May I suggest you make time to read and circulate the entire document (18 pages)
 
Central bankers never, ever talk about the hugely profitable privilege that the ability to create legal tender means for commercial banks.

Today, only a fraction of the money which circulates in the economy consists in cash issued by the central banks. We make by far the largest part of our payments without using any government issued banknotes. We pay by transferring deposits at commercial banks to someone else and we receive our paychecks in the form of deposits in the bank, i.e. in electronic money, created by commercial banks.

The look into the history of central banks and the mechanisms by which commercial banks create money has revealed that there is indeed an important element in the nature of central banks of serving the interests of the banking community. We have seen that leading textbook authors and central bankers are actively trying to disguise this. This should be kept in mind then assessing the appropriateness of letting independent central banks, which do not have to answer to the electorate or their representatives, wield wide ranging powers in economic policy and banking supervision.

The interest of central banks in making their influence on the economy less clear cut might go some way in explaining this aberration. However, there is also the interest of commercial banks in having something hidden. And this interest could be even more influential.

The authors of the most influential textbooks are highly recognized economists with very close ties to central banks and to the financial elite.

What is still lacking is a serious discussion of the even closer ties of many central bankers with the financial elite and about the undisclosed and unfettered conflicts of interest that arise from them.

The conflicts of interest arising for this are very relevant for the subject of this paper and might well explain, why leading central bankers and central banks seem to have tabooed talk and research about money creation by commercial banks.
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Comment by joe taylor on December 30, 2013 at 12:46

That info about the Group of Thirty (G30) was interesting. If you look at the membership of this lobby-group it turns out that it is packed with current and former central bankers with strong ties to the financial industry. Textbook-author Paul Krugman is also among the members, as is Mario Draghi (President of the ECB - formerly Golman Sachs), Mark Carney (President of the Bank of Canada–from July 2013 of the Bank of England – formerly Goldman Sachs)...

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