Manipulating Interest Rates

Manipulating interest rates in any degree, one is considered to be committing legal plunder. Though, the law is no less immune to manipulation than are interest rates. The law could not organise interest rates without disorganising justice, the resulting transmission of wealth through intended inflation is a violation of property. Legal plunder: “[The word plunder is used when] a portion of wealth passes out of the hands of [one having] acquired it, without [consent nor compensation,] to [another], whether by force [or] artifice, [property] is violated [and] plunder is perpetrated.” (Bastiat, 2007) Any law is criminal if it outlaws cash altogether, like the US Gold Reserve Act of 1934 which outlawed most private possession of gold. Or to “[have] laws on the books empowering the president to compel delivery, that is, to confiscate privately owned gold bullion, gold coins, and gold certificates in time of war.” (Paul & Lehrman, 2007)

Where the treasury borrows money from the central bank which creates additional banknotes or credit. “Legally the bank becomes the treasury’s creditor.” (Mises, 1949) Placing much focus toward the continued increase in credit or notes rather than the quality in weight and karat of the treasuries gold. And so the money stock keeps expanding, here is a major concern that troubles the agenda and management of the central bank and its operations. To counter the default problem the central bank used the law to ensure banks and insurance companies have enough reserves now however, some central banks no longer uses reserve requirements and reserves can vary between different sized banks. “If [central banks] blunder in their conduct of affairs, the government forces the consumers, the taxpayers, and the mortgages to foot the bill.” (Mises, 1949)

It is inefficient to suggest high investment helps society to prosper, as if this were true this doctrine should also follow that taxes decrease investment and uninvest toward helping society to prosper. It is absurd to direct capital through justified credit expansion from employments satisfying more urgent wants to correct for unsold commodities and services of employments whose prices and wages asked for are currently too high. (Mises, 1949) One could not adjust asking prices where wage laws set wages too high causing unsold labour purposefully benefiting labour unions, or price ceilings and floors purposefully cause unsold commodities and services. 

Reference List

Mises, M. 1949 (2010). Human Action, Scholar’s ed. United States: Yale University Press, Ludwig von Mises Institute.

Bastiat, F. 1850 (2007). The law. United States: The Ludwig von Mises Institute. Retrieved [19/02/16] from <>.

Rep. Paul, R., & Lehrman, L. (2007). The case for gold: a minority report of the U.S. gold commission. (2nd ed.). Alabama, United States: Ludwig von Mises Institute.

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Copyright © 2016 Zoë-Marie Beesley

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