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
- Norma Basch, pioneer in legal history, has died
- National History Day Helps 600,000 Kids Bring the Past to Life
- Finally some good news for history grads
- Historians issue statement in support of European migrants
- Conservative historian Arthur Herman slammed for saying Obama is highly submissive to Putin and other strong leaders