In a newly released paper calling for the reformation of the “international financial and monetary system,” Pope Francis squarely places the blame for 2008’s financial crisis on an “an inflationary spiral” caused by “further expansion of credit” which could not be sustained:
“In recent decades, it was the banks that extended credit, which generated money, which in turn sought a further expansion of credit. In this way, the economic system was driven towards an inflationary spiral that inevitably encountered a limit in the risk that credit institutions could accept. They faced the ultimate danger of bankruptcy, with negative consequences for the entire economic and financial system.”
His solution, expressed in some of the most striking remarks by a Pope, is a world government and a world central bank. Towards such aim, he calls “universities and other institutions who educate tomorrow’s leadership… to prepare them for their responsibilities to discern the global public good” as well as “all those who are in a position to enlighten world public opinion… to help it to brave this new world.”
The new world the Pope envisions is a gradual transformation of current international institutions such as UN, ECB, IMF and G20, into strengthened and centralized world authorities to which nations and individuals give their sovereignty:
“The establishment of a world political Authority should be preceded by a preliminary phase of consultation from which a legitimated institution will emerge that is in a position to be an effective guide and, at the same time, can allow each country to express and pursue its own particular good. The exercise of this Authority at the service of the good of each and every one will necessarily be super partes or impartial: that is, above any partial vision or particular good, with a view to achieving the common good. Its decisions should not be the result of the more developed countries’ superior power over weaker countries. Instead, they should be made in the interest of all, not only to the advantage of some groups, whether they are formed by private lobbies or national governments.”
While the world seems to be going in the opposite direction, with a growing libertarian movement that aims to apply classic liberalism, demanding distribution of power from central governments to local semi-autonomous authorities, the Pope asks us to “conceive of institutions with universal competence.”
The Pope sees one world central bank as the solution toward a better global economic system.
How such universal institutions would be held accountable, where intellectuals would escape to if they abuse their power, how they would manage the needs of the Mongolian mountains, Africa’s deserts and the fields of Silicon Valley at the same time, what monstrous levels of bureaucracy with inefficiency held as a pride and decisions that take 10 years considered fast it would build or what would prevent it from being completely co-opted by multinationals potentially creating corporate fascism with no escape for anyone unless we suddenly colonize Mars, the Pope doesn’t say.
He does, however, imply by his words, even if he does not mean it or is not aware of its implications, that money printing should be taken to a completely new level with “an inflationary spiral” at a global level through the institution of a central world bank. The Pope states:
“[O]ne can see an emerging requirement for a body that will carry out the functions of a kind of “central world bank” that regulates the flow and system of monetary exchanges, as do the national central banks. The underlying logic of peace, coordination and common vision which led to the Bretton Woods Agreements needs to be dusted off in order to provide adequate answers to the current questions. On the regional level, this process could begin by strengthening the existing institutions, such as the European Central Bank. However, this would require not only a reflection on the economic and financial level, but also and first of all on the political level, so as to create the set of public institutions that will guarantee the unity and consistency of the common decisions.”
The tragedies of Greece apparently taught nothing to our Pope whose words many would find scary. Not because a utopian united world of no borders and lesser inequality where we all are productive and enjoy security as well as the rule of law with all intermingling in blissful co-existence is undesirable, but because the obvious abuse of such immense power as a world central bank or a world government would have is very much guaranteed. Where do the refugees go then? To the moon? Dive into the sea? Hide in the Mountains?
Localism Not Globalism
Since humankind began to think we have engaged in commerce. An apple for a pear, a ship for a train. The free flow of goods, services, information and trade has only increased our productivity, general well-being and happiness. Commercially, the world is more interconnected than it has ever been, and should be even more interconnected in free and fair trade, but since god did not make man perfect, there are some who break the rules, some who try to cheat, take advantage, earn without due effort. No easier way to do so than by co-opting centralized institutions.
Although they are necessary, we have within our lifetime witnessed their abuse, with the Iraq war a clear example. To give them more power, is to give them the right to even graver abuses. EU authorities, for example, have decided to create a database of bitcoin users. Why? They have instituted all sorts of regulation, but did they bother to have a public consultation?
There is another way, perhaps a better way. Instead of countries joining to create an unimaginable level of unaccountable bureaucracy, they can reduce the current unaccountable decision makings by empowering local authorities. In the United Kingdom, Scotland and Wales have their own parliament. London does too, but with very much limited powers. There are many countries smaller than London. Each London borough too should have the power to set taxation rates and other policies with the central government transforming into just a bit more than a talking shop.
Pope Francis’ comments are damning in his criticism of the current monetary system.
The Pope does, however, bring to attention a difficult problem that has found no solution, war between nations. One way for that to be resolved is by having a strong one world central government, but another way to resolve it is by having weak national governments.
The current way our system is designed is by giving Parliament absolute power. As English law students are taught, they can even declare driving to be illegal in France (although, of course, can’t quite enforce it). Another way for the system to be designed is by giving Parliament the bare minimum power, with cities, towns, villages, having great autonomy, allowing citizens to more easily engage in civics as well as keep power accountable.
The alternative, one mighty world Parliament, in practice translates to a completely out of touch bureaucracy which has no competition whatever or any real accountability unless aliens do finally make contact forcing the mighty parliament to be a little bit nice to its citizens in case it needs to send them to space trenches to defend their never-ending dynastical games.
A Central World Bank?
As for a central world bank, it’s unnecessary to highlight the contradiction between saying that money printing is to be blamed for the “1980s… 1990s, and… the 2008 crisis” on one hand, and calling for the most powerful money printer imaginable, a central world bank, on the other. Although one could excuse the contradiction by arguing that it is mere naivete, one would expect an individual who has risen so high to have some basic knowledge, if from nothing else then his experience of living for now 80 years, much of it in Argentina which continues to experience 40% inflation thanks to the mighty wisdom of its central bank.
The Pope seemingly wishes that wisdom to be imparted on the entire world so that its citizens do not even have the ability to see how money could be better managed, so having only one monetary system. Without, too, the ability to economically migrate and thus powerfully voice your displeasure at the monetary mismanagement of the central bank since there would be nowhere to go, except for Antarctica or the Himalayas.
It might perhaps be far too late for the current Pope to comprehend bitcoin, so likely hardly being familiar with the internet, but one does hope that a Pope eventually arises and once more gives voice to that immortal metaphorical message of Jesus:
“And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves, And said unto them, It is written, My house shall be called the house of prayer; but ye have made it a den of thieves.”
Then, at least, gold being wildly used, you were charged interest only when borrowing. Now, with fiat currency printable at will, your wealth leaves even while asleep. With a world central bank, it might do so while you blink.
Images from Shutterstock.
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