Eleven hundred million Indians and a eleven hundred million Chinese are getting their individul economic acts together and are busy with Economic Development by Central Banking ( EDCB ). There is nothing three hundred million Europeans can do to change this...and it would be foolish wasting time and money trying. The scientific knowledge is there, technology has been transferred, the genie is out of the bottle and Pandora’s Box is wide open.

Only a few deluded fools isolated in intellectual backwaters like America’s Mid-West truly believe that it is possible to amass enough firepower to shut the lid and stop up the bottle. The economic problem has been solved in principle. Practice has pushed aside theory and got on with it. Nothing that has happened in India and China over the past decade was even hinted at in the Development Economics Textbooks of the 1970s and 1980s.

Milton Friedman was half right all along...though he preached the wrong half about Inflation instead of the right half about Output. Money does indeed work wonders. Make it available and everything goes five times as fast. Such a pity that two decades were lost...and millions of lives destroyed...because Reagan and Thatcher got the wrong end of the stick and never understood Hayek’s advice nor the implications of Ludwig von Mises scholarly tome Human Action.

Central Banking as a development mechanism can solve the money problem. Unfortunately it has a number of rather nasty side effects. Regrettably these have been neither addressed in theory nor mitigated in practice. Their presence remains invisible to those who administer the banking mechanism. And their impact is misinterpreted by the victims. Ignorance is bliss for the winners and sows confusion among the losers. It all began with a pretty piece of rascality...Thomas Robertson in The Facade of Finance...when the intrigues and secret manoeuvrings of the Whigs created a cunning plan that culminated with the formation of the Bank of England by the Bank Charter Act of 1694.

It started with William III claiming to be short of money. Big surprise! A king short of money! Kings were always short of money. It is in the nature of kingship to be short of money because they are always spending it on making war and buying off pretenders by marrying off their daughters…suitably endowed with a dowry.

This has the desirable effect...desirable for some...of recycling the golden lucre out of the Royal Coffers. Every time the money passes GO the Moneychangers grab a few ingots and trinkets and smuggle them away to safe offshore havens. To the Moneychanger the purpose of kings is to recycle money at a profit to themselves. How it was done was not their concern. Wars were as good a way as any. The important thing was to spend it...not how it was spent.

After the political upheavals of Cromwell’s Commonwealth in the 1640s there were new players entering the Banking Field. The Public...as we know it today...were not one of them. They had no money and no credit and were already being taxed to death. But there were an ever increasing number of private trading fortunes looking for safe placement.

As the 17th century drew to a close there was a twist to the everyday story of Royal Moneylending when William Paterson put together a cabal of financial adventurers after getting wind of some hanky-panky in Sweden surrounding a company called Stockholm Banco. The Swedish Court were less impressed and shut the operation down. But the wheeze popped up again in the Dutch Court so our happy band of brothers gave themselves the name of The Governor and Company of the Bank of England and came to try their hand at the Court of King William in England.

Here is how the scam worked. The company would collect from Public Subscribers the sum of £1,200,000 in cash which they would then lend to the King’s Government at 8% per annum...keeping £4,000 per annum for their own expenses. In return the Bank of England was to receive a number of privileges of which the chief was the right to issue notes equivalent in total amount to the £1,200,000 lent to the King’s Government. Notice that deception is afoot.

The Public Subscribers were anything but public. They were super rich private foreigners...who apart from a few token Englishmen...were of Dutch Huguenot stock. Three of them were brothers from the Houblon Family and cronies of the Chief Secretary of the Admiralty Samuel Pepys. The purpose of Pepys Diaries was not to illuminate but to obscure. They are not accurate accounts but disinformation. Like Pravda during the Cold War what is omitted is every bit as significant as what is included.

Thus the Bank of England was founded with the sanction of The King in Parliament...the new formula...to lend Cash to the King to spend on war while creating an equivalent sum of Financial Credit...funny money...for a private company to circulate behind a Royal Monopoly as legal tender. This is the origin of the banknotes that once promised to pay the bearer a constant amount of gold...until the promise was rescinded. The Act of 1694 effectively placed The Bank of England outside the law. The Bank of England acquired further powers by the Act of 1819 which rendered all Governments impotent and by the Act of 1844 which rendered the Joint Stock Banks impotent against the Bank of England. My instinct would be to repeal the Bank Acts of 1694, 1819 and 1844...and reopen the Local Mints.