Should Banks be Allowed to Fail? by
Richard A. Werner
It is concerning that for the past decade or so central banks have steadily been working towards the introduction of CBDCs, while at the same time adopting policies that have killed thousands of small banks. In the eurozone, more than 5,000 banks have disappeared since the ECB started business a little over two decades ago. Once CBDCs are introduced, it just takes a bit of bank run, such as in the case of Silicon Valley Bank, and all deposits will be shifted to the central bank, driving banks out of business. Then we will have arrived at the most centralised form of banking: A Soviet-style economy with only one bank. While that may be the dream of any central planner, it is inefficient, does not work, as we have seen in the Soviet Union, and it also crushes the human spirit: Central planners get too much wrong, which is at the very least demotivating and frustrating, but is quickly much worse than that – it easily turns into totalitarianism…
Decentralised structures are more resilient and more successful than centralised ones, for one, because central planning crushes the human spirit. Central planners also can never get things right in detail. Decentralised forms of organisation improve motivation and boost creativity. Since money is at the heart of the economy, and banks create it, we need to ensure we have a decentralised banking system consisting of many small banks.
Shifting from Central Planning to a Decentralised Economy by
Richard A. Werner
For more than the past four decades, public policy discourse, especially when touching on macroeconomic and monetary policy, has been dominated by the views held and actively sponsored by the central banks, particularly in Europe and North-America, as well as Japan.
Their policy narrative has been consistent over time and virtually identical between central banks, which is why I shall refer to it collectively as the ‘central bank narrative’…
This central bank narrative (and hence also the dominant neo-classical economics, also known as ‘mainstream economics’) has at least five major pillars, which I shall list briefly…[Most central banks were created as cartels by big banking groups. Today, many central banks remain in private hands – such as the Federal Reserve Bank of New York, the Italian, Greek or South African central banks.
The solution to this concerted threat to our civil liberties and our freedom can only be to try to advance the opposite agenda: the decentralization of power.
We can decentralize power in our monetary system by abandoning the big banks and instead creating and supporting local not-for-profit community banks and ultimately a system of local public money issued by local authorities as receipts for services rendered to the local community.]
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