I don't understand what that last sentence means.
Took me a while to figure out what I meant too. It was a matter of spacing and I made the corrections.
I don't want to sound like a conspiracy theorist but at some level the Fed and the banks have to know what they are doing right? Central Banks had to of been installed to solely benefit big corporations because they clearly don't benefit the people.
Well, the Central bank idea was a plan. The men who made the plan thought they could best serve society by preventing the devastating effects that bank failures had on people and the economy. Unfortuantely, in their glee, they neglected to address what the real problem was in banking and chose to try and meet any demands upon a banks reserves by being able to centrally hold reserves and shift them according to need. The real problem was of course issuing too many receipts in relation to deposits - the fractional reserve system which, if they didn't have, made banking a simple warehousing operation with simple profits. The fractional reserve system made banking a very profitable business - except when there was a loss of confidence in a bank that started a run. Very few banks had reserves that could survive a run on deposits.
What the central bank system offerred was an all around solution. The bankers could still make huge profits on issuing receipts or lending money they didn't have and the problem of bank runs was solved.
Governments endorsed the plan, of course. Keynes put the macromanaging of the economy altogether in his general theory. The use of interest rates, the manipulation of the money supply, price controls, tariffs and taxes and all those tools that could be used to stabilize an economy.
The whole idea was a stabilization of the economy, a policy of economic growth and limited inflation. The objectives were all honourable indeed - they were "good intentions". Because a few men had incidentally concentrated that power in their hands was just a small benefit to them. The whole society, the concern for the common good, was the bigger consideration - at least that was the justification.
The biggest mistake, besides not correcting ill-conceived banking practices, was ignoring human nature which is motivated to take advantage of any opportunity to improve one's position, individually or collectively. That these men, or any that followed, believed they would never abuse their privileged position by creating winners or losers in an economy was the major miscalculation. Today they can't escape what they have wrought. There is such an imbalance in the economy, and it is held up so artifically, that the necessary correction would be a devastation to, mostly government and those who have become dependent upon government or are paid out of the public purse, society as a whole.
The choices are clear, continue with business as usual and face inevitable collapse, make the hard choices and economically change course abandoning artificial manipulation of the economy, or take an authoritarian/military complete overtaking of the economy - China may make that the necessary choice because we can't go through a period of economic weakness in rebuilding the economy without a threat of takeover from the Chinese. That's how I see it.