The Creature from Jekyll Island (7)

History of Central Banks in Europe

This partnership between the government and banks which we've been discussing was not new with the FRS. In fact, it was a concept that was created in Europe in the 16-th century. It was perfected with the formation of the Bank of England in 1694 and from that point forward all of the governments of Europe had used this Mandrake Mechanism. They didn't call it the Mandrake Mechanism, of course, they called it a "central bank," that's the technical phrase for this partnership.
From the Bank of England forward all the governments of Europe had central banks for a very good reason. The kings and prices of Europe had learned from hard experience that they could raise the taxes of their subjects only so high and then they had a revolt on their hands and they tends to lose their jobs (and heads). It appears that that natural level was about 40-43%; people will tolerate taxes up to about 40-43% and then they start digging in their heels and they just won't allow it to go any further. But with the central bank mechanism in place the lid was off. Now these governments could tax their people 50%, 60%, 70% and in some cases 80% of everything they produced and they did not have a revolt on their hands. They did not have resentment because the people didn't know that they were paying a tax. They knew that prices were going up, but they didn't understand why, they didn't know who was getting their lost purchasing power.