The key freedom lost via central banking (at least irresponsible central banking) is the freedom of those in the future to do anything other than meet debt obligations.
Debt and credit is obviously necessary, and making money easily accessible and keeping markets liquid is a good thing, but if debt obligations grow too large, people increasingly forfeit their future productivity and the future of their children’s productivity to paying interest.
No one can enjoy increased freedoms if they are spending all their time paying off individual and collective interest.
Countries can and do issue public debt in other currencies. If we all used gold or bitcoin, there’s no reason to think public debt would be lower. But the obligation to pay it back would, in a sense, be harder to dodge.
It’s worth noting, as an aside, that the trend line on cost of servicing public debt in the US has been downward (though I would expect this to change): https://www.piie.com/research/piie-charts/us-debt-has-increa....
For reference, public debt tends to be higher when based in currencies that can be more easily debased. This was true in Roman times as it is now.
I’m on my phone, so I’d have to look up the book, but it’s well documented.
I should have noted that this applies only when it’s your own currency.
It's a blatantly undemocratic power grab, effectively allowing a consortium of private banks to limit Congress's power of the purse. Or at least that was the theory. As we're seeing now, that one putative upside is nonexistent and the Fed is happy to cooperate with Treasury to spend trillions a year. The rentier class appears to be consoling itself with massive asset inflation, while still banking the seigniorage.
The United States could just as easily once again fund all of its spending by creating new U.S. Notes[2] (perhaps without the public debt clause) and then control inflation by extinguishing those liabilities through taxation.
China has a central bank, but it's fully publicly owned and is not politically independent of the CCP. The ECB, in comparison, is owned by the central banks of constituent banks. And on the other extreme, the Swiss National Bank is publicly traded and a minority of its shares are privately held (i.e., not by governments). (Perhaps related or perhaps not, the Swiss Franc also has historically had very high trust and very low inflation.)
My point is, there are multiple flavors of "central bank" ownership and independence; it seems odd to argue that the primary purpose of central banking is to allow private bankers to violate political oversight when, in some cases, the bank is fully public and not politically independent. Conversely, some examples of significantly more private central banks than the Fed seem to show a history of good management in the public interest.
Would you also consider triple bypass surgery done on morbidly obese patient as irresponsible? It enables bad behavior and arguably the patient may be better off dead than living in a life of pain, but it's undeniable that emergency heart surgery is a good thing.
The saver gets to decide whether to lend out his money, to spend it or to simply keep it forever. The money is no longer circulating within the economy, which means someone, usually the government, is forced to borrow the money back into the economy at an interest rate that is simply not sustainable.
I didn't mean to imply that.
Most of those things didn't come from Central Banking.
That said, modern finance has 'enabled everything' just like having a highly literate education 'enables everything' as well.
For me I'd like to not pay money for the "privilege" of having a central organization constantly and unapologetically spy on me.
Many of the "your not allowed to do that"s of the past are still in place for entire neighborhoods, only the words changed.
Only about 50% finished HS - now it's 95%.
Doctors were not very affordable by anyone - now it's >90%.
Most people didn't have running water and electricity yet now it's almost 100%.
The only thing that's not as nice as 'real estate' - housing was cheap, but the houses were crap, and often you were isolated.
If you want to go out of major US urban area, and build a small home to 1925 standards, then it's affordable.
But if you are young, then I am actually sympathetic to you: education and housing costs are 'worse' now than in then 1990's. Those are the two things I will say Gen Z 'has it hard' with. That, and having to grow up where everyone has social media, which is not a social benefit, it's dystopian if you ask me.
Higher education is far more necessary for even a middle class existence than it was in 1922, and the middle class is getting less and less affordable. One of my grandfathers worked a family farm. My dad was able to grind his way out of the lower classes by working at Friendly's and other odd jobs to pay for college (up to and including his PhD). My father in law's uncle was a high school dropout who started showing people around at the local hardware store and was such a good salesperson the owner hired him after a few weeks. None of those are possible for most Americans these days (good luck pulling the leave-it-to-beaver "prove my value to the local store owner" at Home Depot or Walmart).
US citizens are now regularly advised to take Uber to the hospital if they can survive the trip, as it avoids the cost of an ambulance, which is often over a thousand dollars in a country where most can't afford a $500 emergency. I'm not sure how that qualifies as "affordable", and certainly not affordable to 90%+. Granted this is primarily an American issue.
More important to me than the quality of the house is the quality of the school district that it's in (see previous remarks about the modern necessity of education). I can fix/improve a house, I can't fix/improve schooling short of private school, which would probably be more expensive than fixing a house over the long term. Good look finding an affordable house in a good school district near any major metropolitan area with jobs.
Upward mobility is still available and just as rare. The health, intelligence, and drive that allowed someone in 1922 to better themselves are the same things that still allow someone to better themselves in 2022. It’s not easy, but it was never easy. Just look at how many people in 1922 where held back by the color of their skin.
As to getting a job at Walmart, have you ever actually applied? Their standards are incredibly lax.
I'm not arguing things are equivalent to 1922 on an absolute scale, but on a relative scale they're closer than they were in the recent past. The prosperity of the previous century has shifted the goal posts for what defines upper, middle and lower class. But after a long period of shifting the goal posts in a positive direction, we've had three or four decades of things shifting in the opposite direction, and that trend appears to be accelerating for the moment.
As for upward mobility, that largely only exists for people with college degrees these days. And even then only a few select degrees are really worth anything. And college costs are insanely inflated compared to where they were in 1980, let alone 1922. Is it possible to better oneself in 2022? Sure, but I'd argue there were much more opportunities for middle class people just 40 years ago. A Unionized coal miner with experience could make an upper middle class salary without the burden of higher education that costs as much as a house. Ditto for many factory jobs.
A job at Walmart making minimum wage that hasn't been adjusted for inflation for decades does not have anything resembling the same purchasing power as a minimum wage job 60 years ago. Walmart jobs are notorious for requiring food stamps despite working full time hours.
It’s similar to how new cars in 2020 are both substantially more expensive on average but also of vastly higher quality. In both cases the cheapest options represent a tiny slice of the overall market suggesting cost is generally less an imposition by outside forces than a choice.
That said, this stood out to me:
> A job at Walmart making minimum wage [...]
According to Glassdoor[1], a retail cashier at Walmart with no experience earns an average of $22,049 / year. Assuming 50 weeks @ 40 hours per week, that's $11.05 / hour.
That does not include cash bonuses or profit sharing, which Glassdoor says adds another ~$1k.
Indeed.com[2] shows the average wage for a Walmart cashier is $10.56 - so we're at least in the right ballpark above.
My own experience at Walmart was unloading trucks from 4pm-1am the summer after I graduated high school (2002). I made $7.25 / hour then, when the minimum wage was $5.15.
Trying to build a life on that kind of money isn't easy, and I'm not trying to say that it is; I do want to point out that even Walmart doesn't pay minimum wage as a rule.
That's not to say there aren't other "tricks" that employers use, like limiting hours to prevent employees from qualifying from full-time benefits and such. There are.
The minimum wage in 1982 was $3.25. Today it's $7.25. The purchasing power of the minimum wage has certainly decreased, but I strongly suspect that many more businesses paid minimum wage in 1982 than 2022.
McDonald's in my town of <15k people pays $13/hr with no experience, with a $500 signing bonus and a guaranteed $1/hr raise at six and twelve months. The largest manufacturing employer here produce stamped sheet metal parts, and they have a large sign and banners lining the road claiming $18/hr, a $1,500 signing bonus, and fully paid family benefits. My California-based "healthtech" company employer doesn't even have health insurance as good as theirs.
1: https://www.glassdoor.com/Salary/Walmart-Guest-Service-Team-...
The size of the group that benefits from modernization is indeed growing, as your numbers point out, but if you're not in that group you're just as stuck as you've ever been.
Never thought about this before: Suppose I’m Black, respond to a Craigslist ad for a $10k car for sale by owner, and am refused for my skin color. What law do I or the state prosecute the seller under?
Most of the anti-discrimination laws I know of apply to companies, usually companies with more than N employees.
Start your research with Title VII of the Civil Rights Act of 1964.
> The term "employer" means a person engaged in an industry affecting commerce who has fifteen or more employees [...]
I suppose the root of my question is this: Where is the law stating that an individual cannot act with prejudice against another individual, outside of an employment context? I've always assumed such a law exists, but never asked exactly where it is.
Workers have always had the freedom to strike. And employers should have the freedom to terminate striking employees. I don't see the need for regulation here. The "freedom" to attend college has created a mountain of student debt and an overeducated workforce. I fail to see the benefit.
All in all, directly, I'd like to live in a society where people are entitled to only what they can negotiate for, not more. And one that does not strive to protect people from the consequences of their own misfortune or inadequacy.
It leads to a small elite being in control of trillions of dollars in national capital allocations every year, with virtually no democratic oversight.
It leads to financial institutions capturing 42% of corporate profits since 1973, with all of the growth in wealth inequality that goes along with that.
It leads to gigantic corporate welfare programs, like the government mortgage guarantee program, where financial institutions buy $1.5 trillion worth of government guaranteed mortgage backed securities - where profits are 100% privatized, and risk is 100% socialized - every year.
>>And you now have the 'freedom' to strike and sue your employer,
You always had that freedom. Now you have the power to get the state to force the employer to keep you employed, and not replace you, while you strike.
This power has given public sector unions total control over public finances.
For example, New York has nearly 300,000 unionized public sector employees receiving over $100,000 a year:
In California, emergency workers can retire at 55 with 90% of their pension, that averages $108,000 per year.
California now has $1 trillion in pension obligations for its unionized public sector workers. That is where all the social welfare spending is going.
>>Well, there's more taxation.
Yes, the state now forces you, under pain of imprisonment, to work 40% of the year to pay a bloated bureaucracy.
>>And you have to sell your car to a Black man if he wants to buy it from you.
And every one has to suffer higher costs, and less advancement, as a specialized caste of anti-discrimination lawyers extract billions of dollars per year from corporations for their failure to comply with impossible-to-comply-with anti-discrimination laws [1] while forcing the private sector to 1. spend billions more in "anti-racism" training, that includes lessons on the supposed omnipresence of "white privilege" [2] and 2. institute affirmative action programs, that waste resources and lead to less competent work forces, respectively.
>>And you have to prove drugs work before selling them.
Yes, you need the approval of a centralized regulatory gatekeeper, which is often incompetent, and prevents people from accessing life-saving medical products/services in a timely manner [3][4] or denies people access to a vaccine due to a risk from side effects that is orders of magnitude lower than the risk the vaccine mitigates. [5]
>>women have the 'freedom' to actually have a job,
Women had jobs back then. The jobs available to women have improved due to the cultural impact of much higher per capita productivity, which makes people far more independent and assertive.
>>you have the 'freedom' to attend college which only about 5% did at the time, you have the 'freedom' to do almost anything in life.
That is entirely due to higher per capita productivity, which enables more people to be supported through their post-secondary schooling years.
The massive per capita productivity growth seen since 1922 could soon be a thing of the past in the advanced economies, as the growing repressiveness of the state has steadily reduced per capita GDP growth rates over the last several decades, and this trend sees no signs of abatement or reversal.
[1] https://richardhanania.substack.com/p/wokeness-as-saddam-sta...
[2] https://indianexpress.com/article/explained/explained-why-co...
[3] https://www.propublica.org/article/this-scientist-created-a-...
[4] https://www.nytimes.com/2020/03/10/us/coronavirus-testing-de...
[5] https://www.nytimes.com/2021/04/13/us/politics/johnson-johns...
And you now have the 'freedom' to strike and sue your employer, women have the 'freedom' to actually have a job, you have the 'freedom' to attend college which only about 5% did at the time, you have the 'freedom' to do almost anything in life.
And what 'freedoms' have you lost?
Well, there's more taxation.
And you have to sell your car to a Black man if he wants to buy it from you.
And you have to prove drugs work before selling them.
You have to pay workers a minimum wage, and make sure they don't die on the job.
What other 'freedoms' were are you keen to regain?