The central bank of the 21st century
Central banks hold the key to our economic recovery since they can afford to create money in unlimited quantities, without ever fearing bankruptcy. While they don’t do it deliberately to relaunch growth, it is true that – in their defense – they weren’t founded to regulate public consumption. Their raison d’être has historically been to act as an arm for their guardian State by providing cash through the issuing of banknotes and – further down the line – by attenuating banking panics and financial torments. However, having now come to the stage where the European Central Bank must recognize that Quantitative Easing doesn’t have the beneficial effects on the real economy that were expected, it must take the plunge and vanquish these political, ideological and sometimes legal resistances that prevent it from moving forward. Our politicians – incapable of understanding the urgency of relaunching growth – will never take the initiative of transferring cash to its citizens, except if they are forced to by a revolution which will surely come about if they maintain their elitist, wait-and-see position. In this respect, the traditional Right and Left of all Western nations have had real difficulty accepting the theoretical principal of this kind of this social credit. While the Right is entrenched in an ideology that is incapable of tolerating people receiving money in exchange for no work, and while they categorically refuse – because of this bias – to allow the State to be strengthened by this measure, the Left privileges fiscal measures that are most often too complex and inaudible for the average citizen and which therefore have no positive effect on the economy. It would, however, suffice to consider this social credit in the same light as an inheritance which is essentially a transfer of wealth which likewise has not been earned by its beneficiary. In absolute terms, inheritance gives rise to exactly the same beneficial consequences for its recipient as social credit, except that the latter proceeds from public powers and not from the death of a loved one. Since recessions have no therapeutic effect, since unemployment doesn’t train the youth and since we are not meant to live in a society where the most needy must atone for their sins, social credit is now the only path to take in order for the relaunch of growth to benefit the largest number of people possible. This could very quickly be implemented by central banks, without being hindered by inevitable delays and the tempests in a teapot that are parliamentary debates. It would, contrary to the reductive effects on interest rates and quantitative easing, have immediate effects on growth. It would therefore not generate speculative bubbles that go hand in hand with monetary creation. And it would relieve inequalities, without penalizing the rich. It is imperative that our central banks stop using century-old instruments and adapt to our new millennium.