In the previous post, we discussed the Thompsonian view on central banks. In this view, central banks are needed to raise emergency war finance. However, with the emergence of the US nuclear umbrella and nuclear technology, nations have less need for emergency war finance. So do we still need central banks?
According to David Glasner, given this decline in the need for emergency war finance, policy-makers should consider introducing a competitive currency or free banking system. Click here for Glasner's book.
According to Thompson and Hickson, we may still need central banks due to internal threats (including natural disasters) and nuclear threats from rogue nations. However, central banks are no longer on the gold standard, with the result that their ability to raise emergency war finance is highly constrained. According to Thompson, writing 20 years ago, this ultimately means that “the increasing emergency usefulness of wealthy individuals relative to ordinary civilians will inevitably lead to a tortuous degeneration of our effective democracies back into elitist aristocracies such as those that had dominated our governments prior to the rise of the gold standard”. Might this explain why the 1% has become so powerful and influential over the past two decades?