The origins and consequences of bankers' power
This paper explores the origins of the extraordinary political power of the financial industry. It results from a centuries-old symbiotic relationship between private financiers and governments. Bankers obtained the right to issue money and the backing of central banks a lender of last resort, to bail them out as needed. If central banks would assume a larger share of the overall money creation rather than private banks, this would attenuate credit driven boom-bust cycles and provide governments with non-distortionary seignorage-income. Achieving such fundamental reforms will only be possible if the political clout of the banking industry is broken by judicial intervention or a voter revolt.
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Volume (Year): 1 (2010)
Issue (Month): 3 ()
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