Judy Shelton: The Soviet Banking System—and OursRoundup: Media's Take
Ms. Shelton is senior fellow at the Atlas Economic Research Foundation and the author of Money Meltdown (Free Press, 1994) and The Coming Soviet Crash (Free Press, 1989).
Many in America today fear that our nation is going the way of Europe—becoming more socialist and redistributionist as government grows ever larger. But the most disturbing trend may not be the fiscal enlargement of government through excessive spending, but rather the elevated role of monetary policy.
Our central bank, the Federal Reserve, uses its enormous influence over banking and financial institutions to channel funds back to government instead of directing them toward productive economic activity. For evaluating the damaging effects of this unhealthy symbiosis between banking and government, the more instructive model is the Soviet Union in its final years before economic collapse.
We can draw lessons from the fact that the Soviet Union went bankrupt even as its fiscal budget statements affirmed that government revenues and expenditures were perfectly balanced. Under Soviet accounting practices, the true gap between concurrent revenues generated by the economy and the expenditures needed to sustain the nation was obscured by a phantom "plug" figure that ostensibly reflected the working capital furnished by the Soviet central bank, Gosbank...
comments powered by Disqus
- Ken Burns argues that Vietnam is to blame for much of our current alienation and polarization
- Ilan Pappe says Israel Is Not a Democracy
- Drew Gilpin Faust discusses free speech in Harvard commencement address (video)
- Military Journalist Calls on General McMaster to Step Down—And Let Trump Be Trump
- Historian David Kaiser says the most exciting day of his life was JFK’s election