Blaming Wall Street Is Wrong
The Blame Wall Street meme is back. A popular movement called Occupy Wall Street is attracting attention by protesting in and around the US financial district. In this editorial, I want to examine what the protest means in a larger context.
The impulse of the demonstration is surely correct insofar as it goes. Today's monetary system is likely creating a kind of globalist society verging on feudalism. But are the fingers pointing in the right direction? I'm not so sure. We've written about this in the past, here:
In fact, we've been waiting for this subdominant social theme to make progress for some four years now since the economic meltdown of early 2008. People are very angry, and it's handy to blame stockbrokers and bankers for what's gone wrong.
It's not entirely right, of course. Wall Street, or much of it, provides an essentially transactional function. It wouldn't exist as it does without the larger economic system of the Western world driven by central banking.
There are very large centers of money power in Wall Street such as Goldman Sachs; and Goldman Sachs is certainly an integral and purposeful part of the modern corporatist system. But even much of what Goldman Sachs does is essentially transactional. It's fundamentally a business, an intermediary, and its employees are paid (a lot, admittedly) to perform certain functions. The real control, I'd argue, lies elsewhere.
To get at the root of the problem, one should be protesting, say, in London's City where central banking originated. Or protesting in front of the Federal Reserve in Washington DC. These are real seats of power. But the shadowy and excessively powerful and wealthy individuals who have created the modern economic system are quite satisfied no doubt to have Wall Street take the blame. It suits their purposes.
In fact, the handful of powerful Anglosphere families that control central banking have done everything they can to focus the blame on the financial industry (the evil intermediary part) since 2008. The record is plain to see. Just Google "banks" and "regulation" and you'll get an idea of how pervasive the attack on the securities industry and commercial banking has been.
It started right after the economic crisis took hold and it continues even now. America's regulatory system has been restructured and so has Britain's and Europe's. And the reforms have given government more power than ever (and thus provided more leverage to the central-banking families that have a hold over Western governments). Everything that was wrong with the current system has been reinforced.
The results of this restructuring have been ever-more massive centralization of power by federal governments and unelected bureaucrats. The increased regulation perversely will only benefit the powers-that-be who thrive on regulatory capture. Regulation ALWAYS benefits the largest players at the expense of the smaller.
What we call the Internet Reformation – the era of the Internet – has provided a good deal more information on the way the world works. It's helped people understand why government doesn't work and why regulations are generally pernicious and usually encourage the very trends they are supposed to prevent.
But education only goes so far; and it's an ongoing process. In response, the Anglosphere power elite that we write about regularly has fought back. It's been trying to crank up the "blame Wall Street" theme for several years now. Finally, it's catching on.
During the Great Depression of the 1930s, Wall Street came in for a great deal of criticism and then was comprehensively regulated. Fast forward to 2011. Things are worse than ever. The centralization is worse, the corruption is worse – and the economic system (call it "capitalism") doesn't work any better than in the 1930s.
Regulation doesn't work at all. Regulating Wall Street doesn't work. Using the Leviathan (federal government) to tame the abuses of the securities industry only makes things worse. Giving unelected bureaucrats power over banks and the securities industry centralizes the corruption and guarantees more of the same in bigger amounts.
Unfortunately, Occupy Wall Street has taken a (predictably) anti-free market turn. It's apparently being hijacked by the modern Left, and the rhetoric of individuals involved increasingly mimics the socialist heyday of the early 20th Century.
On purpose, they are creating a straw man. Free markets don't really exist these days. Today's corporatist capitalism, fighting for life within the ambit of regulatory democracy, has little to do with vibrant entrepreneurialism or even allowing people a chance to control the monetary and fiscal levers that dominate their lives.
Recently, the BBC made more news than they expected interviewing trader Alessio Rastani who said he "dreamed" of a stock market crash and a depression because he would make a great deal of money. The interview caused a sensation because it seemed to confirm what people thought about "money men" generally, who were happy to thrive on other people's misery and pain. Boy, did he feed the meme!
And just yesterday, the United Steelworkers (USW) put out a press release supporting Occupy Wall Street's activities and goals. "The United Steelworkers (USW) union stands in solidarity with and strongly supports Occupy Wall Street," it begins. Here's some more:
The brave men and women, many of them young people without jobs, who have been demonstrating around-the-clock for nearly two weeks in New York City are speaking out for the many in our world. We are fed up with the corporate greed, corruption and arrogance that have inflicted pain on far too many for far too long. Our union has been standing up and fighting these captains of finance who promote Wall Street over Main Street.
We know firsthand the devastation caused by a global economy where workers, their families, the environment and our futures are sacrificed so that a privileged few can make more money on everyone's labor but their own.
Wall Street and its counterparts on Bay Street (Toronto), The City (London) and across the world tanked our economy in 2008. They caused a crisis that we're still suffering from – record job losses, home foreclosures, cuts to schools, public services, police, fire and so much more. They've gambled with our pension funds and our futures for far too long ...
It's time to hold those who caused our economic crisis accountable, to ensure they don't get away with it again, and to demand that everyone pay their fair share ... The USW is proud to join with the brothers and sisters of the Occupy Wall Street movement as we continue this important fight for a more just economy and a brighter tomorrow.
Notice the rhetoric. "Workers ... are sacrificed so that a privileged few can make more money on everyone's labor but their own." This is a purely Marxist formulation. The problem, as has been amply analyzed by the alternative press, begins with central banking and the current practice of producing fiat money – printing money from nothing – which creates first booms and then devastating busts. Austrian economics is quite clear on this point and its descriptions correspond to reality, unlike those of Keynesian finance.
The press release blames Wall Street, Bay Street and The City for the financial crisis, but it's obvious that the USW is pointing the finger at those individuals who are involved in the transactional business of high finance, not those who run central banks or control the modern monetary system.
According to Wikipedia, the aim of the Occupy Wall Street demonstrations is to begin "to draw attention to Wall Street's apparent misdeeds and call for structural economic reforms" especially as regards "wealth disparity."
If this is really the goal of Occupy Wall Street, then its organizers should move at least some of their protests to Washington DC and to the mile square City of London, for these areas contain the central banking mechanisms that cause the real damage.
It is too bad that the Occupy Wall Street movement seems to be obscuring the larger issues by apparently blaming the private (transactional) sector in entirety for what has occurred in the past few years. Perhaps I'm wrong, but this seems to be the case. And if it is, then the demonstrations are a step back rather than forward.
Posted by James Jaeger on 10/20/11 05:05 PM
Agreed. These Wall Street protestors are not targeting correctly. Their target should not be free-market, lassier-faire capitalism or the profit-motive, it's the ABUSE of capital and the abuse of democracy that's the problem.
Printing up fiat money in partnership with government-authority is abuse. Using fiat money and government hand-outs to unfairly compete is abuse. Using corporate power to purchase congress is abuse. With these abuses run wild, it was only a matter of time before we would see these mass protests.
And, of course, they will never go away . . . until the system has been reduced to a pile of burning rubber or it's reformed. Don't count on the reform.
Another thing one needs to consider is the automation of society through robotics and AI. Robotics has replaced many factory floor workers, but as AI advances, it continues to replace white collar professionals, such as accountants, lawyers, stock brokers, insurance agents and design engineers. We already have programs that utilize AI to prepare tax returns and make investment decisions, known as BLACK BOX trading.
By FAR the largest amount of the global currency market is traded by AI programs running in the BLACK BOXES. These BLACK BOXES are so secretive, NO ONE ever talks about them, yet AI computers decide where HUNDREDS OF TRILLIANS of dollars are allocated every day. Humans are expected to stay away.
In other words, the black boxes perform best without human intervention. Don't believe me, read a book called ALIEN INTELLIGENCE by James Martin. This professor has written over 100 textbooks and this one will BOGGLE your mind -- AND he wrote it 10 years ago. So it's impossible to fully evaluate economics without evaluating technology FIRST. ALL of economics is BASED upon TECHNOLOGY and MOST of politics is based on ECONOMICS. Even philosophy is meaningless unless viewed in the perspective of technology.
Of course politicians are usually very weak on technology, and math, science and engineering. So what do they really know? Almost nothing about the modern world or the universe. So why do populations elect and tolerate technology-challenged individuals to "govern" them? It's insane. Ron Paul is a scientist. He's a physician. That ONE (1) ability makes him infinitely more qualified to run a nation than all the memorized history the other idiots know or all the political science they spew.
And as proof of this: the reason the central bankers were able to take control of the world, starting 100 years ago, is because they invented a technology called FIAT MONEY and FRACTIONAL RESERVE BANKING. They have used these black technologies to enslave us. Thus, the ONLY way we will be able to counter these negative technologies is through a positive application of technology and reason . . . or we're all dead.
Reply from The Daily Bell
Posted by Wrusssr on 10/04/11 01:37 PM
You are not wrong Mr. Wile. Accurate insight and article, in my opinion.
Posted by turtle on 10/04/11 12:02 AM
This link to "Who owns the Fed" from one of today's article feedbacks may be of interest.
Click to view link
Can anyone suggest how out of date this might be and/or a more recent version?
Preferably before I embark on the pilgrimage of religion verification : )
Posted by rufus on 10/03/11 06:21 AM
I just wanted to suggest not to start a sterile conflict between those who blame central banking and those who blame commercial banking: I think they are two sides of the same problematic coin. True, central banking supervenes commercial banking, but it would be better for all who fight money power to join in the same front...
anyway, thank Anthony for another punctual editorial.
Reply from The Daily Bell
Yes, you have a point, but until a few days ago the DISTINCTION WAS NOT BEING MADE. Now it is better, for the first time in about 100 years ... And they are not two sides of the same coin. One is subservient to the other, and the both of them are subservient to the larger, familial Anglosphere money power.
Posted by Levantine on 10/03/11 04:56 AM
And also, can we get ideas about how to confront the power of the central banking families?
I guess that all it takes is an election of a president firmly committed to abolishing the Fed ... not. It's hard to imagine multigenerational oligarchs would relinquish their powers on the basis of popular election results.
Reply from The Daily Bell
Likely, the system will topple ... eventually. It is not sustainable and a world war is hard to implement in this era of nuclear weapons.
It is not politics that you must to look but a gradual and then rapid decline and eventual re-establishment of some level of republican principles, along, perhaps, with private justice by people who have benefited from the education of the Internet Reformation.
Posted by turtle on 10/03/11 01:49 AM
I would like to hear DB suggest some names too. Whenever I suggest them I am criticised for being an anti-zionist and off target.
Reply from The Daily Bell
The names may be correct. We quibble with the term Jew or even Zionist. They are vastly powerful intergenerational banking families and their enablers, and we have called them "Pharisees."
Posted by rossbcan on 10/02/11 06:03 PM
"Jeez, who did we threaten? "
I think your comment regarding, the way things are going, I might be banned again by the National Post was misconstrued. Irrelevant to me, I have taken their measure.
Reply from The Daily Bell
It was a joke.
Posted by ultraman on 10/02/11 02:30 PM
You are hands-down my favorite website and will always continue to be so.
I comment very infrequently, but every time I do you manage to take offense where none was given.
I don't really understand.
Reply from The Daily Bell
Gee, Ultraman, you made the littler elves cry. We weren't trying to be mean - we were just responding to your point, agreeing actually. Sorry you took it the wrong way!
Posted by MetaCynic on 10/02/11 02:19 PM
If government passed a law banning all locks, who should carry the primary blame for a surge in home invasions and car thefts? The front line criminals or those who banned locks? Furthermore, who should be blamed if the crime wave is amplified because the police failed to investigate property crimes?
Central banking and the ensuing fiat money system is analogous to a law banning all locks (gold backed money). Unlimited credit creation resulting in the collapse in lending standards and the securitization of subprime mortgages as AAA rated bonds is analogous to the crime wave. Regulators failing to investigate and prosecute all kinds of obvious frauds as the real estate bubble caused by credit creation grew over the years, is analogous to the police failing to investigate the crimes resulting from the lock ban.
Under a gold standard there would be very little reason for the average person to speculate in real estate or the securities markets. He could keep his savings locked up in gold and be confident that its purchasing power would be protected, even increased over the years. But a fiat money system forces the average person to, out of necessity, invest his inflation threatened fiat money savings in alluring "investments" temporarily goosed up by central bank credit creation.
Yes, the financial and securities industries did engage in fraud. For years during the boom, fraud was evident in real estate appraisals, lending standards, rating of bundled mortgages and now in foreclosures. Yet, despite all kinds of regulatory powers, the regulators failed to protect the public from ordinary fraud. They looked the other way because everyone, including the speculating public, was in the short run profiting from the central bank's credit creation.
Now that we are all living in a world of hurt, there are calls for criminals on Wall Street to be punished and for the police (regulators) who failed to investigate earlier crimes to be further empowered to investigate future crimes resulting from the ban on locks. Yet, the role of the lock ban (central banking and fiat money) in making all this crime and suffering possible is ignored by most everyone other than libertarians and Austrian School economists.
So, I think that DB is right on in arguing that the Wall Street protesters are barking at squirrels for stealing peanuts while allowing the foxes to escape with their prey from the chicken coop.
Posted by Gpond on 10/02/11 12:03 PM
Excellent article and comments/discussion.
DB, please thicken your skin regarding commenters. Your articles stand up to scrutiny without recourse to threatening commenters. We readers are all adults. We can ferret it out. No offense, just my personal wish.
Reply from The Daily Bell
Jeez, who did we threaten?
Posted by timoore on 10/02/11 11:49 AM
Please identify by name those individuals that comprise the Anglosphere power elite. To know one's enemies is one of the first steps in defeating those who believe that central banking and one-world government is the way the people of the world will prosper.
Posted by Avatar on 10/02/11 10:50 AM
Perhaps the elite were/are behind its Wall Street Storm Troopers but we know Wendy Gramm appointed by Ronald Reagan and wife of Phil Gramm was the first to fight for self-regulation for investment banks which about 10 years later came to pass in with the repeal of Glass-Steagall and replaced by the Phil Gramm sponsored Monetary Reform Act. This led to an explosion in derivatives trading, predatory lending, sub-prime mortgage packaging, the housing bubble and the crisis of 2008. So on its surface it looks like a simple-minded idea led to its logical conclusion when acted upon. However we know Goldman-Sachs was supporting this "reform" every step of the way. President Clinton was clueless about this banking reform and relied on Wall Street to tell him how it was necessary to keep US investment banks competitive. Nothing sells like fear in economics and war.
Posted by John Danforth on 10/02/11 10:47 AM
Use Firefox and get the Lazarus form recovery add-on. Never lose a post again.
Posted by WorkingClass on 10/02/11 09:58 AM
I listened to the Ratigan thing. I think the Citizens United decision is an absurdity. What do you think? I wouldn't worry. Democrats and Republicans would have to sign off on this and they are bought and paid for.
Posted by ultraman on 10/02/11 07:52 AM
Dear Anthony and Daily Bell,
This new pervasive meme which is apparent in the "occupy wall street" movement and its encouragement of "fuzzy thinking" within the freedom movement is as you point out an elite promotion and a definite move of evil intent.
This morning, on The Excavator Click to view link
I encountered this post:"Dylan Ratigan - Get Money Out of Politics".
I disagree with what I saw here on so many levels that I can't list them.
Also, I have lately seen quite a bit of subtle injection of Greenbacker/Brownian ideas by various guests on Alex Jones. This seems to go unchallenged making me wonder if I can even trust AJ. Also this Max Keiser character is very questionable.
Some new rants by you on these subjects would be very much appreciated.
Reply from The Daily Bell
Honestly, Ultraman, we cannot think of a single major website other than maybe Rockwell that we have NOT had doubts about at one point or another. Since many of them pick up our articles from time to time, it's not good to point fingers and we have no conclusive proof anyway ... So we won't be taking that one on anytime soon.
Posted by WorkingClass on 10/02/11 04:40 AM
@ Daily Bell
"You are wrong about libertarians and collective bargaining. Unions have insisted on using GOVERNMENT POWER to enforce collective bargaining."
Are you suggesting that employers do not use government power to crush unions? I am a blue Republican for Ron Paul. I was sorry to hear him talking to a sympathetic interviewer about the progress (union busting) being make by Wisconsin Governor Scott Walker. There was no mention of the Koch Brothers influence in Wisconsin politics.
Reply from The Daily Bell
Of course the wealthy and powerful use government levers. And that is the crux of the matter. The wealthy can use government far more effectively on the whole than individuals. Thus you will always be at a disadvantage. Much better to REDUCE government than to try to imitate the mercantilism of the wealthy.
Posted by WorkingClass on 10/02/11 04:20 AM
Good for you Steve. Libertarians should show up passing out copies of The Creature From Jekyll Island. Occupy Wall Street is planning by consensus. Add your voice. Educate the left about the Fed. The movement needs you.
Posted by stolly on 10/02/11 04:04 AM
as with the October15 in London, clearly there is a socialist Marxist undertone here, as is often the case with civil protests, but looking at this from the broader perspective it may be worth allying with these world wide protests, in so far as making the voice louder. Yes there is an attempt to demonize maybe the wrong people, but put that down to ignorance on their part. By doing nothing and staying away from these protests serves no real purpose.
The simple fact is in order to liberate ourselves, our voice needs to be louder and our numbers larger.
Posted by kebozaarth on 10/02/11 02:37 AM
If time, please advise what happened to my post?
Reply from The Daily Bell
If it was a very long one it may have been ejected into the ether. With long posts, you may need to split them up.
Posted by steve on 10/02/11 02:37 AM
I am no political strategist. But any new political movement that has a chance at being succesful will have an element of populism in it. It seems to me that it may be worthwhile for the Libertarians to show up at the ralies with whatever numbers they can muster chanting End the FED. After all if co-option works well for TPTB, why shouldn't the Libertarians try it even though their chances are slim.
Personally, I believe that if the Libertarians are going to have any chance they are going to have to peel off elements from both the Democratic and Republican parties. Or more likely, inject their positions into one party and then the others platforms one at a time. Ron Paul has had some success with this in the Republican party.
If the price of Ending the FED is that some bankers lose their bonuses or even pay higher taxes, I can live with that. No I don't think Wall Street should be demonized, or prosecuted with the many existing laws that could undoubtedly be turned against any one of them. (Lets stick to fraud) But, I don't see anything inapropriate or evil about trying to inject a positive message into a sea of mistakes.
If you think it is wrong to associate ourselves with a crowd containing many admitted socialists, then look around at all the war mongers the next time a Republican debate occurs. I do not consider it wrong to associate yourself with confused or even evil people in an attempt to convince them of what is right.