Menzies House

Let’s open up the books at the Reserve Bank

Henry Ford, the American automobile manufacturer, once said that “It is well enough that the people of the nation do not understand our banking and monetary system for, if they did, I believe there would be a revolution before tomorrow morning”, writes Sukrit Sabhlok.

Indeed, if there’s one thing central bankers have been successful at, it’s using obfuscation and jargon so the public finds it difficult to understand what exactly it is they do.

Even when experts try and figure out what central bankers do, a range of legal barriers prevent a complete accounting of their activities. When former Congressman Ron Paul tried to audit the US Federal Reserve System a few years ago, for example, he faced opposition from a range of economists and politicians keen on preserving the Fed’s secrecy.

In Australia, the opaqueness of the Reserve Bank’s discretion doesn’t seem to trouble many people. But it should, because the RBA wields a significant power that influences the level of prices in the economy and consequently affects the hip pocket. The inflation it creates hurts the poor – and if more people knew the RBA was the culprit behind rising prices, and that much of the erosion in purchasing power we have seen over the past 100 years was unnecessary, there is little doubt that there would be protests on the streets.

Review Essay: The Evil Princes of Martin Place.

Sukrit Sabhlok reviews Chris Leithner’s new book, The Evil Princes of Martin Place: The Reserve Bank of Australia, the Global Financial Crisis and the Threat to Australians’ Liberty and Prosperity

It might have a long title, but is also extremely lengthy in number of pages. At 654 pages, a casual reader interested in understanding the recent financial crisis might wonder whether it’s worth buying Leithner’s extremely hefty work. My answer is a resounding ‘yes’. Every Australian should read this book to understand how the government’s involvement in money and banking has diminished their living standards.

Leithner’s goal is simple: to challenge conventional wisdom in the field of monetary economics. Along the way, he also demolishes a variety of other fallacies surrounding the State and its interventions. Harvard-educated academics – the same people who did not foresee the crisis – have blamed the crisis on capitalism and greed, but Leithner is here to defend the free-market perspective against the Keynesian onslaught.

According to Leithner, government intervention, not market failure, is the underlying cause of recessions and depressions. Government’s interventions are manifested through such measures as fractional reserve banking (FRB), legal tender laws, and central banking. Leithner argues that these forms of meddling in monetary affairs create economic turmoil. Though few people discuss the merits or otherwise of FRB and legal tender laws, central banking is already prominent in mainstream debates.

Why illegal drugs should be legalized

The war on drugs is an enemy of civil liberties, writes Sukrit Sabhlok.

John Stuart Mill’s classic work, On Liberty, examines “the nature and limits of the power which can be legitimately exercised by society over the individual” and concludes: “The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it.”
 
In a democracy, however, the tyranny of the majority often tramples individual freedoms. If 51% of the people agree on a proposed measure that is oppressive towards some minority, in the absence of any constitutional limitation, that measure will become the law of the land.