Central Bank

by Stephan Smith on November 15, 2010

I mention central banks all the time and I’ve noticed that I haven’t taken the time to explain to you want they are. What the heck is a central bank? Oh boy, where do I begin?

What is a Central Bank?

Honestly, a central bank is the most powerful entity in a country or economic political union. That’s right, you heard me. They are more powerful than any company, more powerful than any government agency, more powerful than a president, prime minister, king, emperor and even more powerful than a military. They are above all laws and answerable to no one. They fool a majority of people by hiding under the guise that they are part of government, when in actuality, they are completely independent from any government. They fool a majority of people by hiding under the guise that they are answerable to a government, but that, in truth, is inaccurate.

A central bank, also known as a reserve bank, is a financial institution that has the power to control the issuance of money and oversees and regulates the money supply of country. It also regulates all commercial banking that takes place within the country it has power in. A central bank also sets interest rates and monetary policy.

The main job of a central bank is to ensure price stability; to make sure the currency that a central bank issues maintains its value. Through various monetary policies, central banks do what they can to ensure that prices of goods and services remain stable within their country. High inflation, also known as hyperinflation, and deflation can cause major price instability and it’s the job of central banks to make sure that their country doesn’t experience it. Some central banks, like the Federal Reserve, have two jobs. The first job is to ensure price stability and the second job is to promote maximum employment.

Central Bank BuildingsOk, allow me to explain in more detail what I’ve stated above. When I said that a central bank is the most powerful entity in a country, I mean it. Because they have sole power to control the issuance of money, have sole power to regulate the money supply of a country, and have absolute power over all commercial banks and interest rates, they basically have 100% control over a country. In this world, the more money you have, the more influence and power you have. So if you have absolute control to create money, you have absolute control. I also stated that a central bank has more power than a military.

Well, if a military is controlled by a government and the money available to a government is controlled by a central bank, then I submit to you that a central bank has control over a government and thus control over a military. I stated that ‘they’, meaning the central banks, fool a majority of people by hiding under the guise that they are part of a government. One example of that is the Federal Reserve. The Federal Reserve is the central bank of the United States of America. Because they have the name Federal in their title, many people around the world assume that the Federal Reserve is a part of the federal government. That is inaccurate. The Federal Reserve, just like all other central banks, is independent from the government.

Why Would a Country Give Up the Power to Create Its Money to a Independent Central Bank?

I find myself asking that question every once and awhile. Do the heads of state really believe an independent entity, whom they cannot control, should have responsibility of handling the currency of their nation? Maybe I don’t know the whole story, but from what I can tell a central bank is a threat to a nation. They hold the keys to a nation’s prosperity.

When I say that, I’m being as fair as I can be. A central bank is a entity that is independent of government. Government is ran by the citizens of a nation; it is ran for the purpose of protecting the nation by the citizens of that nation. But a central bank is different. It is a foreign entity that is not of the nation. Citizens of the nation do not have a say or vote on any actions of a central bank. It is in that fact, where the threat lies.

Quotes about Central Banks

Thomas Jefferson, the 3rd President of the United States and the primary writer of the Declaration of Independence, acknowledged the threat of a private central bank when he said…

“I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.”

Thomas Jefferson, President of the United States of America

Andrew Jackson, the 7th President of the United States of America, also had ill will toward central banks when he said…

“You are a den of vipers. I intend to rout you out and by the Eternal God I will rout you out. If the people only understood the rank injustice of our money and banking system, there would be a revolution before morning.”

Andrew Jackson, President of the United States of America

Louis T. McFadden, a congressman from Pennsylvania, said this…

“The Federal Reserve banks (a central bank) are one of the most corrupt institutions the world has ever seen.
There is not a man within the sound of my voice who does not know that this nation is run by the International bankers.”

Louis T. McFadden, Congressman of Pennsylvania during 1915-1923

I could continue to provide more quotes, as I do have access to many more. However, I believe these three are sufficient in conveying the message.

Closing Statement

No matter how you view central banks, they are the gatekeepers to a prosperous economy. Few argue that they do much good for an economy, many argue the opposite.

List of Popular Central Banks

    Federal Reserve
    European Central Bank
    Bank of England
    Bank of China
    Bank of Japan
    Bank of Canada
    Swiss National Bank
    Reserve Bank of Australia

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{ 7 comments… read them below or add one }

Hafeez November 5, 2013 at 7:37 PM

Hi Stephan Smith, I completely agree with you.The history of mankind is a controlled panorama.I suggest the people and the Independent Central Bankers to give the way to the common people to freedom and prosperity, which is their right.The People will get SUCCESS, it is just a matter of time.The gap in Understanding the crookedness will be filled by the intelligence of the people through out the world. Thank you for the accurate information.


Chris Rodda January 20, 2013 at 2:42 AM

Stephan – the answer to your question is History – the numerous and continued collapse of banks in the USA before 1900 in the USA – and the total loss of depositors money. I guess if you believe in totally free markets and that its OK for 90 year old widows to lose all their money in a legally constituted bank, and its their own fault for putting it there rather than under their mattress, then go ahead and abolish the central bank.


Louis-Charles February 26, 2012 at 11:07 AM

Thanks for this post.
It was quite informative.


Drew December 30, 2011 at 5:33 PM

All your statements about the Central Bank are false. The ‘entity’ or ‘institution’ the Central Bank answers to is the Fed. The Fed is what controls the money supply and practically the global economy as well. The Central Bank is just an actor for the Fed to manipulate the economy in order to control inflation. Sorry to burst your bubble, however, I’m not sure where you got your information from.


Stephan Smith December 30, 2011 at 6:07 PM

Hi Drew,

Thanks for visiting my website, reading and leaving a comment. I appreciate your participation in this discussion.

First you say…

The ‘entity’ or ‘institution’ the Central Bank answers to is the Fed.

The Fed, which is short for Federal Reserve System is the central bank of the United States. When you say the central bank answers to the Fed, you are in effect saying the Fed answers to itself since the FED is the central bank. If you answer to no one but yourself, you are in complete control.

If you are saying that other central banks, like the European Central Bank, The Bank of England and others answers to the Federal Reserve, can you provide evidence of this? I doubt they do but I admit it is possible. I am aware that central banks work together to achieve various goals, but I don’t believe one central bank has authority over others.

Next you say…

The Fed is what controls the money supply and practically the global economy as well.

I somewhat agree with you here. The Federal Reserve controls the money supply of the United States’ currency, the United States dollar. Since the Fed has monetary policy authority over the United States, which is the largest economy in the world, the FED has the most influence over the global economy as well. So I somewhat agree with your statement.

Then you say…

The Central Bank is just an actor for the Fed to manipulate the economy in order to control inflation.

I disagree with you here. The Fed is the central bank. It seems you are trying to state that the Fed (Federal Reserve) is not a central bank. That is incorrect. Also, it is through monetary policy where the money supply is manipulated/controlled.

Finally you say…

Sorry to burst your bubble, however, I’m not sure where you got your information from.

I’ve done countless hours of research; I visited libraries, book stores and utilized the information on the Internet. I feel my information is sound and correct. Now I don’t know everything there is to know and because of that, I am very open for correction. But your comments haven’t provided any evidence or even the slightly “feeling” that what I say is false. So with that, I will not revise the information on this page. Sorry.


Bob Foley November 17, 2010 at 1:15 PM

What’s the alternative???

Let the run the money system?

I suppose the difference is, if it is a government controlled bank we get to vote for for the crook of our choice and can only blame ourselves for the result.

The Peoples Bank of China is a good example of government control of the money. How are they doing?


Stephan Smith November 17, 2010 at 1:39 PM

Hey Bob,

An alternative I would suggest would be to let the government make the money it needed for its country and citizens and not an independently owned central bank. That way the people of a nation would have a say about their country’s economic future.

The People’s Bank of China is an independent central bank not a government owned entity.

Bob, thanks for dropping by.


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