How are central banks affected by systemaccounting?


Systemaccounting eliminates the role of a central bank from an economy because it 1) enforces a scientific definition of money, thus distinguishing and separating it from the risk-bearing financial instruments held on the balance sheets of banks (see monetary inflation, money-supply hacking), and 2) recognizes the measurement & publication of unmodified prices in a conserved system to be the only legitimate means of establishing a stability criterion in a free market.

Contrary to popular belief, economic inefficiency and instability is not ultimately caused by a central bank since its function is to serve as a control-mechanism* for any action taken by a government to centralize a borrowing and lending function (see central planning). In the case of the United States, it is the U.S. Department of the Treasury that both i) authorizes and issues money to increase the efficiency of trade, but then ii) compromises this efficiency by centralizing a borrowing and lending function through the bank chartering process. When lending firms are granted the legal privileges of 1) bundling the services of storing, moving, and borrowing money from the public—which inappropriately subsidizes their cost of competing for capital, and 2) redefining the money supply to include their notes receivables, the demand for a central regulating authority to intervene by a) mitigating the effects of monetary inflation and b) preventing money shortages is unavoidably created.

Once the role of government in financial markets is corrected through the aid of science and technology (see role of U.S. Treasury), the private financial sector will no longer find in government a willing bedfellow who is open to compromising its scientific integrity in exchange for economic privilege. The days of exploiting government authority to i) charter technically-absurd business models, ii) falsify rates, iii) bend the rules of accounting, and iv) force the public's acceptance of financial risk will end once the economy comes to depend on a purely scientific measure of value & cost of capital.

*Note: False information is used as feedback in a control loop intended to secure the stability of a system in a constant state of disequilibrium (markets are prevented from clearing when the objects defined to communicate this event are mixed with instruments containing financial risk). Since the setpoint is defined to favor only a fraction of the system's inputs (cost of borrowing), it is this same false-setpoint-dependency that causes the accumulation of entropy to persist until the system is lead to failure.

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