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Who Controls the Money?

December 31, 2008
Michael S. Rozeff

moneyIn their attempts to halt credit deflation, the government and the Fed are unleashing a torrent of corruption, inefficiency, misuse of funds, and fraud. If a bank is too big to fail and the government and/or the Fed make sure that it survives, despite the past mis-behaviors of its officers, then they invite those officers to misuse the funds that they infuse.

Any transfer of money (or funds) from stockholders and lenders to corporate officials is accompanied by methods of controlling the behavior of those officials. Transfers of money from taxpayers to governments also necessitate methods of control. Without such methods, officials, bureaucrats, and politicians have an incentive to engage in a range of behaviors that harm the interests of those who are supplying the funds. The control methods include audits, reporting requirements, boards of directors, independent committees, governance methods, arms-length dealings, ethical training, laws concerning fiduciaries, laws against fraud and malfeasance, freedom of obtaining information, and so on. All of these methods also require effective enforcement if they are to do their job.

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