News & Analysis
Mr. Washington! ... Fed & Wall Street Are NOT the Same
Protests: Both Conservatives and Liberals Are Right ... Just Looking at Different Sides of the Same Coin ... The Occupy Wall Street protests are obviously targeting Wall Street, i.e. the giant banks. The Occupy the Fed protests – led by Alex Jones, the Oathkeepers and other conservatives – are targeting the Federal Reserve. While some are trying to weaken these two movements through a divide-and-conquer strategy, the truth is that they are two sides of the same coin. – Washington's Blog
Dominant Social Theme: Fed, Wall Street ... It's all money. Shut down one or the other for a better, more productive life.
Free-Market Analysis: The brilliant Washington's Blog has done it again – released an article that has made news all over the 'Net with its common sense perspective about what needs to be done to bring back a healthier American economy. The article is called "Occupy Wall Street and Occupy the Fed Are Two Sides of the Same Coin."
But here is the problem, from our humble point of view. Despite Washington's overall perceptivity and informed commentary, Wall Street and the Fed (central banking) are NOT two sides of the same coin. Central banking is infinitely more destructive than the intermediary and transactional businesses of Wall Street.
The French invented stocks back in the 13th century to fund a mill project, and the auction-style stock market was a later French invention. In America, stock trading took place under a Wall Street Buttonwood tree. Later the big brokers moved inside, forming the NYSE and trading became continuous because brokers made more money that way.
Those that stayed outside traded on the curb, forming the so-called curb exchange, which eventually became the American Stock Exchange, also eventually a continous trading facility. NASDAQ was formed out of the government regs put in place in the 1930s. It used to trade pink, white, blue and gray sheets. Now small issuances trade electronically. The market evolves.
Modern central banking, meanwhile, was formed in earnest about 500 years ago to fund the British Crown's wars. From the beginning, it was intended as a subterfuge. The goldsmiths and others involved traded their money for the royal imprimatur. From the very beginning, central banking was a kind of bait-and-switch, in which government enforced and supported a private money monopoly.
Central banking was created as a mercantilist dodge. Wall Street is part of a private market evolution that goes back at least a thousand years. To conflate Wall Street – as an industry, anyway – with central banking is simply wrong. One is an evolution of the free market. The other hides behind it.
Put central banking out of business and the worst excesses of Wall Street will almost immediately become a thing of the past. Put Wall Street out of business and central bankers will reconstitute over the weekend. Money Power lies with central banks, run by the Anglosphere power elite.
These elites are quite prepared to sacrifice Wall Street. They WANT to regulate the private sector. Regulate it until it is cold as a corpse so that they can re-animate as they choose. The more laws there are, the better they do. The process is called mercantilism. The powers-that-be CONTROL governments. Pass a law and you are only adding to their arsenal.
In fact, the leaders of Occupy Wall Street are DELIBERATELY turning the movement into a populist protest that looks to government for changes that will make societies work better. It is evident and obvious. Who knows who they work for – but evidently they are not who and what they say they are. We wish we were wrong.
Occupy Wall Street types call for a return to the "rule of law." Government must do certain things to make life livable again in the West, which is increasingly sinking into another great Depression. But these solutions were tried in the 1930s when the US government in particular capitalized on a wave of public disgust to create the SEC, NASD, public and private issuances and numerous self-regulatory organizations.
All this restructuring did no good at all. In fact, the regulatory mechanism inevitably results in centralization of power, making regulatory capture possible. And those doing the capturing are always the biggest of the big. Mature industries and the captains of industry that run them LOVE regulation. Bring it on.
And what's the result? Some 70 years later – after a massive government restructuring – the problems on Wall Street are worse than ever. Using government to make things better is a non-starter. Wealthy people and moneyed interests will ALWAYS take over government and its institutions, turning even the best planned laws to their advantage.
In any case, every law and regulation is a price fix, reducing prosperity by redistributing wealth. Eventually, this price fixing reaches a critical mass and everyone is impoverished – except those interests and individuals that the laws were supposed have an impact on.
Those targets somehow escape unscathed, as they always do. Monied interests are adept at turning laws and regulations to their advantage. They do it with Money Power. We are great admirers of Washington's Blog but no matter the narrative, Wall Street is an intermediary business, a transaction business. Wall Street and the Fed are NOT two sides of the same coin.
Note: Another article that Washington's Blog produced recently was called "Do We Need Banks, Or Can We Cut Out the Middleman?" Washington seems to conclude that banks are NOT necessary in the scheme of things. We, too, have written about banks, explaining that banks and banking services constitute the world's biggest bubble. But this is different from writing that banks are entirely unnecessary. Banks began millennia ago as warehouses, storing gold and silver. From this point of view, banks retain their utility, never mind their other functions.
In times of economic stress, there is a tendency for what free-market thinkers call "middleman prejudice" to reemerge. In fact, middlemen (Wall Street included) serve a vital financial function. Middlemen are adept at bringing buyers and sellers together. Generally speaking, middlemen are ripe for abuse and their roles are easily misconstrued.
Back to the Fed. Washington writes that "given that the 12 Federal Reserve banks are private the giant banks have a huge amount of influence on what the Fed does. Indeed, the money-center banks in New York control the New York Fed, the most powerful Fed bank."
This is true, but the issue is not one of power but of systems. And systemically, Wall Street derives its power from fiat money and central banking, not the other way round. Get rid of central banking and Wall Street in its modern, abusive incarnation ends up gutted.
Get rid of Wall Street – which is at its heart a certain kind of free-market process – and central bankers under the guidance of the great Anglosphere banking families will reconstitute it without breaking a sweat.
Washington writes that, "[t]he Federal Reserve and the giant banks are part of a single malignant, symbiotic relationship. Conservatives and liberals should unite in breaking up both." His (or her) heart is obviously in the right place! And yet, still ... the emphasis is "a bit off" in our view for reasons we have described.
Conclusion: Start with central banking.
Posted by Angoose on 10/22/11 07:14 AM
Money governs everything. Once you realize this - it is easy to see that the Fed printing-money-from-nothing is governing how the system works.
Posted by tawny on 10/13/11 06:17 PM
Another good article, DB.
Since people are talking about what should be done, a couple of things I'd like to see explored are -
1. What is the deal with the Constitution? It is not being followed (at best is 'optional'), at all levels of government. How so? Why have people in 'the movement' not caught on? Why are they not addressing this obvious fact as a significant and central problem/issue? Why do people still speak of the Constitution as if it were in force and effect as the Supreme Law of the Land? (talking about Constitutional amendments, etc.) How and when and why did it become the case that the Constitution became 'optional'?
2. What about the on-going State of Emergency? How long has the USA been governed under a Presidentially declared "State of Emergency"? (It is AT LEAST since 9/11). What are the implications and effects of this "State of Emergency"? Is the country being run under on-going/effectively permanent 'state of national emergency'as a military dictatorship under the Pres. as top military commander,with the other branches of govt. reduced to lesser/advisory powers? DOES the acting POTUS run the country as a de facto military dictatorship when a national emergency is declared/in effect?
3. Who is empowered to declare a State of National Emergency and who is empowered to end one?
Posted by Levantine on 10/13/11 01:59 PM
I especially appreciate this article as well as your similar ones. In the market of ideas, you probably have the advantage over those who don't take care to explain their views.
Posted by Dave Jr on 10/13/11 09:10 AM
You're right. Our ponderings help me to see the hows and whys, and even how deep the manure pit runs.
Posted by Dilence Sogwood on 10/13/11 09:08 AM
Another way to think about Wall Street conceptually: Shouldn't we be free to trade our assets as we wish (physical or security form) and in the time frame we wish?
Just think about life without the ability to trade in security form.
You'd have to buy your wheat at the harvest and brew beer to make it through the winter. Of course this would take time away from your occupation.
Posted by rossbcan on 10/13/11 08:57 AM
@DB: In case you didn't notice, I find your term "transactors" to be quite apt. My definition is, those who transact according to faux, artificially decreed regulatory environments whose only point, so far as I am able to discern is to force all transactions to include a third party whose sole function is to collect a commission by faux pretext of adding some "value", where none is discernible.
IMHO, this is an assualt on "freedom of association" which, be definition, includes "freedom to NOT associate".
Posted by Dave Jr on 10/13/11 08:54 AM
"Ha, who is supposed to DO all this good stuff, Dave Jr? The current Congress?"
Commercial banks (savings & loan, credit unions) manage checking accounts.
Either Fed or Gov may do themselves in. That could provide a good reason to get back to the basics of the Constitution.
Posted by Agent Weebley on 10/13/11 08:23 AM
I'm not on one!
Whatever do you mean? I'm not stringing everyone along . . . that would imply that I know more than others, which is not really true. I am searching for truth through conversation.
Farthing? You mean the Harington "for profit" venture?
Click to view link
That was just an extension of the current ARG system, not a new one, was it not?
Posted by rossbcan on 10/13/11 07:54 AM
"I forgot, and a balanced budget ammendment is needed."
Dave, your faith in the absurd astounds me.
How are the irresponsible (unproductive, those who do not trade voluntary value for their survival) EVER going to be responsible (earn value) when their only tools / skills are force and coercion and, their very survival depends on continued exercise of them? And, how or even why should they "balance the budget" when their very survival demands appeasing other unproductive forces so they can maintain their perks?
I will repeat a part of the answer to your "what is money" question:
"where money should NOT end up"
In the hands of the unproductive (thieves) who will use it to coerce society towards forms more amenable to the unproductive (barbarians), thus, destroying civilization which is a creation of the productive and, cannot exist long without productivity and, predator control.
Civilization is OVER because the barbarians are not only past the gate, they are the gate. They firmly believe in "something from nothing" and, steal something which is contrary to all proven laws of physical reality. "Something" is real, so must come from somewhere. It comes from the productive, the only possible source. The productive have shrugged (economy collapsed) because, what's the point, and, stored wealth is a survival risk, making you a target of state predators armed solely with false rationalizations and very real guns (ours). And, money is no longer a measure of stored productivity, it is a measure of the debt accumulated by long running, escalating crimes against civilization of "private profit, socialized loss".
"Mathematics of Rule" PROVES what happens to civilization as a function of degree of productive versus unproductive "in control":
Click to view link
"balance the budget"? Surely, you jest. Laws are just optics, pretexts to fool the marks that they have any applicability to any but those they are intended to control (enslave, prey upon) and, laws most definitely are of "no force and effect" to those who write, interpret, coerce and control "the law". The "law" will be the last meme to fall, when it should be the first (apparently out of ignorance and inability to do root cause analysis, we must destroy all pawns and transactors enabled by rationalizations to "rule of some men" first.)
Well, remedying our ignorance and personally and collectively insisting on the "rule of law" will AGAIN solve ALL of civilization's woes by clearly identifying and enforcing the line between civilized and barbarian:
Click to view link
Posted by Agent Weebley on 10/13/11 05:26 AM
Hello Dave. I'm afraid I didn't miss anything you said.
Ever trade football cards . . . oh, sorry, you are an American . . . ever trade baseball cards when you were a kid?
While chewing on the cheap gum, the wrapper being long gone, I would never ponder the face value of that package of a few football cards . . . containing . . . a Georgie Best!
OMFNG . . . the mother of all lodes! Mint condition.
Only on trade would I discover what it was worth compared to a one-eyed Gordon.
F the constitution . . . F tender laws . . . F fractional reserve lending . . . F the "masters."
We have no masters except ourselves.
Stick that in your mouth and chew it. Just kidding. I needed a tie in to the cardboard chewing gum that would only last a few minutes.
Posted by amanfromMars on 10/13/11 01:33 AM
"Yes, the money power cartel protects themselves, mostly by keeping a low profile. That shield is slowing being eroded by the internet and sites like DB. It is a slow process." ….. Posted by Leave me be on 10/12/11 11:27 PM
It WAS a slow process, Leave me be, but as it is exponential, does it speed up increasingly rapidly, and it is well past the point of no return now. The money power cartels are no longer in control of their futures or of future derivatives. That has been passed on to Others more into IT and AIR&dDevelopment with much more than just Simple Savvy of Complex Corrupt Markets and Elite MetaDataBase Power Control Systems.
Quite what beds/directions any perceived-as-a-leading-establishment-figurehead and global puppet will now choose to jump into, will define and decide whether they are delivered of fate or destiny, which although similar in aspect, are poles apart in nature, with only the one having any bright future prospects.
Posted by Hoss on 10/13/11 01:07 AM
Are you going to pretend you've never heard of a farthing? Quit stringin' everyone along.
Posted by Dave Jr on 10/12/11 11:54 PM
I forgot, and a balanced budget ammendment is needed.
Reply from The Daily Bell
Ha, who is supposed to DO all this good stuff, Dave Jr? The current Congress?
Posted by Dave Jr on 10/12/11 11:45 PM
You completely missed the entire point of my posts in this thread.
We don't need to possess gold or even certificates redeemable in gold to transact. Giving up anything of agreed value gives one the right to accept created money for the transaction (to accept a check). But to define a unit of value, we need a defintion. You don't need 100 yardsticks to purchase 100 yards of rope. The yard stick is the defined unit of measure. You don't need to possess the physical gold for two parties to use the definition to determine the value of anything in dollars, and to trade on account. Writing a check is a draw on your account.
This isn't any different than what we are doing already, and it is Constitutional. Just repeal legal tender laws and ban fractional reserve lending and things will improve. The masters will become powerless.
Posted by Leave me be on 10/12/11 11:27 PM
Probably not in my lifetime but we have to start someplace. Central banking is the devils spawn.
I do my part where I can. Educate my children and the interested friend or two. Respectfully decline to participate in activities that feed the money power cartel. Demand payment in lawful money in exchange for my labor. I generally try and be live my life as a free man in a very low key manner.
I do not expect to see a full collapse unless there is some kind of horrific natural disaster. Humans are very adaptable and as the current system circles the drain, many of us will adapt and learn.
Yes, the money power cartel protects themselves, mostly by keeping a low profile. That shield is slowing being eroded by the internet and sites like DB. It is a slow process.
As you have noticed, few want to really know at this time. That begins to change as folks are negatively impacted by the money power cartel. I have a very "liberal" friend who until recently worshiped the state in all its forms. Even she is waking up to reality.
Reply from The Daily Bell
Posted by Agent Weebley on 10/12/11 10:42 PM
There's only 0.75 oz of gold per person in the world . . . that's hardly a hardly a workable system.
Actually it's much less than that because because I have 5 oz and the PE have tons . . . plus, I lost a gold chain under the deck, so take that out of the equation too!
Oh . . . the PE have "tons of it," so you had better ask them what system works best, eh? That's right, we are in their ARG (system) right now . . . pity. We're not thriving, are we? [note to self: segue to other thread now, Agent Weebley]
If you are alluding to other "money" begin redeemable against gold, then you need to speak to my other friend, Tatu.
No man is an island. As long as we are all on the same page, we can change the page whenever we want. I want to be on page 7.
[this is comment 77, I believe]
Posted by Dave Jr on 10/12/11 10:14 PM
Your right. I should have clarified that I was refering to a gold standard. The government certifies the weight and purity of gold in the unit, call it the dollar. Which then becomes a base that all other values (money) can be measured against.
I didn't state it that way because I didn't want to confuse the idea that government should declare gold to be money (legal tender) and set its value against anything else.
Posted by Agent Weebley on 10/12/11 09:54 PM
You just said: ". . . let the government certify its weight . . ."
You're kidding, right?
Anything has value that is deemed to have value by those that want to trade it, judged as "good money" by its supply (i.e. rarity or stability.) It can easily have no face value, such as a piece of wood, split down the middle, or a cigarette, or a piece of paper . .
Dang, paper's too easy to counterfeit . . . back to the drawing board!
Where's Fatbeard when I need him? Fatbeard . . . come back?!?!?
Posted by Dave Jr on 10/12/11 09:49 PM
It is not my plan, it is the plan we have been using. Fractional reserve has supplanted itself on top of it and sucking our blood sweat and tears out of us. The producer needs to be the first and only spender.
Everyone but the disabled has something to offer in the market. Maybe not at their price demanded. They don't need to lower their demand or improve their ability because the welfare state tells them they don't have to.
Granted we will have to rebuild our network of charity for the truely disabled.
We have two choices. We can all (the 99%) be materially equal in destitude and misery, or we can be free. We can't have both. Reality tells me we can't have both. But we all need to reconcile that if we want things to improve.
Posted by Agent Weebley on 10/12/11 09:43 PM
Oops, that would be "innate."
In need a new computer. A Tecra . . . yeah . . . a tosh i baaa.
Down with Sony, up with Toshiba!