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  • As you may know already, Hungary passed new law in December that allow more regulation of central bank actions (not really too much).

    After they refused to hear real world rulers, they got problems with bonds, downgrade, all IMF and EU talks had been cancelled and multiple TV guys started attacking them.

    So called "central bank independence" is one of the core principles of liberal monetarism. And for quite long time it can't be discussed making it axiom. Completly removing such independence from elected goverments must be one of the first things required to dismantle current system.

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  • But the parliament of Hungary at the same time installed censorship for media. So the worlds reaction might not only be on the regulation as an isolated topic.

  • They eliminate the word republic from the constitution, the give to the government all the three powers... i mean, the regulation issue is just one of the few big things that bothers europe

  • If the Government had a positive constitutional alternative for their monetary system, this might have been good. But they haven't. I predict they will have hyperinflation very soon.

  • But the parliament of Hungary at the same time installed censorship for media.

    This just tells how smart they are. If you can't punish mass media they'll translate opinion of real world rulers. Just because it brings more money and it is safer.

  • I predict they will have hyperinflation very soon.

    Big thing is that all preparations that they are making are exactly to fight this :-)

    But they have very big advantage as they can allow much higher inflation contrary to EUro countries.

  • It'll be interesting to see where this goes.

  • I'm with Vitalliy on this. Who would you rather have your central bank accountable to – the guys who got us into this mess, or your elected parliamentary representatives?

  • It could work OK. But they have to have constitutional limits on what they can do. For example, they must be sufficiently transparent for investors, and make it illegal to emit unbacked currency. Without this, there will be capital flight. Even if they do this, other central banks (who are responsible for the biggest cross border currency transactions) might gang up on them

  • must be sufficiently transparent for investors

    Why? I know this is common word on mass media.

    and make it illegal to emit unbacked currency

    Again, why? And that you understand under "unbacked currency"?

    Btw, you already formulated two rules of monetary liberalism.

  • Hungary runs a deficit so needs to raise money from international investors. Whatever form of monetary policy they choose, it has to retain investor confidence or else there will be capital flight, bank runs and hyperinflation (investors won't buy bonds if they believe the monetary policy will debase the currency)

  • Bonds downgraded to junk yesterday, after struggles with the IMF. It was to be expected. Whole nations being robbed by speculators.

    @onion there's no such thing as unbacked currency, unless you're talking about the dollar :) (the latter one is a joke)

  • Hungary runs a deficit so needs to raise money from international investors.

    You have big problems with logic. If you have deficit you need to improve real sector inside country and cut deficit, not to "raise money from international investors".

  • True, either cut spending or sell debt. Is Hungary cutting spending to close the deficit?

  • True, either cut spending or sell debt

    Again logic problems. You don't need to cut spending, quite opposite, as you need to build real sector, so, you need fully contolled central bank. And especially not to sell debt.

    Liberal monetarism invented aftremely effective measure to control other countries and elslave them:

    • make independent central banks
    • control mass media
    • have foreign banks and their respresentatives inside country
    • use controllable insurers to enslave agro sector and manufacturing sectors

    So, to allow any normal development (not via debt), you need:

    • total mass media control, with will money flow made via state bank
    • full closure of all independent banks leaving state bank only
    • full closure of all independent insurers leaving state insurer only
    • inposing strict restrictions on capital flows
    • full control of central bank and state bank by goverment
  • Your logic has a flaw, "Government". Who fund candidates? Who lobby officials? It's not like officials care much about long term perspectives beyond their terms. Or are you suggesting a form of long term dictatorship?

  • Government spends more than it earns. The net saving rate for Hungary is not enough to buy the difference (unlike Japan up until last year). So currently, Hungary has to sell bonds to international investors.

    @Vitaliy_Kiselev - if your monetary system were implemented, presumably this would happen with default on pre-existing bonds to foreigners? If not, how can the Government earn enough to pay them off and do all the other things you mentioned? If Hungary does default, the forint will sink in value so imports become a problem. I like the idea of money that is not debt-backed - I think the USA had this for a while.

    @johnnym - there may not be unbacked currency at the moment but if Hungarian politicians dictate central bank policy, we don't know what they'll do. They may refuse Vitaliy's plan, print money and not control capital flows. The track record for Governments that usurp central bank operations in modern times is that they do it to spend on short-term bribes to the electorate or to steal money.

  • Or are you suggesting a form of long term dictatorship?

    Normally, you need extremely controlled state to make any improvements in real sector. Most probably it'll be implemented by strong one man guidance backed by strong goverment with real patriots. You are free to call this dictatorship, but it is wrong.


    Money are just a tool. It is monetary liberalism who make them similar to real goods. Normal country development works as follows: Goverment show carrot to workers and feed them enough, but mostly stumilate by showing carrot. As soon as new garden is made you can give them carrot and start again. With each new turn all people become richer and more and mroe workplaces are greated.

    Current system works exactly the opposite. As banks sell carrot grown outside your country to you by credit. And afterwards throw you out and close all existing gardens, as they are declared "uncompetitive". So, on next turn all becomes even worse.

    So, again. Money is a tool to guide and reward.

  • If there is anything to be called a dictatorship it's the corporate control we have now, the inverted totalitarianism as it is called. If you would hand all those powers, like the press, like politics, .. back to the people (instead of leaving it with the monopolithic companies these powers now reside), like Vitaliy says, in financial terms by means of state bank, all troubles would be solved rather quickly. Only corporate control will not go away by itself.

  • Most interesting thing is that many people state that it is impossible to live without bunch of banks, insurers, lawyers and accountants.

    I am sad to say, but it is possible. I personally saw it :-)

    All of them are good, but in small amounts and normal salaries.

  • Why sad? It seems such a place is heaven?

  • It looks like Europian guys become more and more pissed off.

    As for now general bankers plan is still going quite well.

    But few things are not in place still. And any such precedents don't help.