Judy Shelton: The Soviet Banking System—and Ours
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
- T. rex fossils arrive at Smithsonian’s National Museum of Natural History
- Quote of the Day -- Time Magazine's Top 100 People
- Investigation: The Resegregation of America's Schools
- 5 Explosive Revelations Leaked from Senate Report Exposing CIA Torture
- In Parts of the South, Glorifying Slavery No Longer Pays the Bills
- UC Berkeley professor emeritus Robert Harlan dies at 84
- She Came All the Way from Melbourne to Attend the OAH
- The 7 Most Popular HNN Videos from the 2014 OAH
- Jesse Lemisch’s up-from-below history is still strikingly original
- U.Va. Historian Alan Taylor Wins 2014 Pulitzer for Book on Slaves and War -- His second Pulitzer!