STAFF NEWS & ANALYSIS
Mr. Washington! … Fed & Wall Street Are NOT the Same
By Staff News & Analysis - October 12, 2011

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.

After Thoughts

Start with central banking.

Posted in STAFF NEWS & ANALYSIS
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