STAFF NEWS & ANALYSIS
'Tea Party' Movement Is 'Unhealthy'
By - April 20, 2009

Senior White House adviser David Axelrod (pictured left) on Sunday suggested the "Tea Party" movement is an "unhealthy" reaction to the tough economic climate facing the country. Axelrod was asked on CBS's "Face the Nation" about the "spreading and very public disaffection" with the president's fiscal policies seen at the "Tea Party" rallies around the country last week. "I think any time you have severe economic conditions there is always an element of disaffection that can mutate into something that's unhealthy," Axelrod said. Axelrod appeared to backtrack when pressed on whether the movement is unhealthy. – CNN Politics

Dominant Social Theme: An uncomfortable movement?

Free-Market Analysis: In fact, the tea party movement is an expression of a certain economic perspective. There are only two economic paradigms in play, just as there are only two halves of the business cycle no matter how anyone tries to gussy it up. The first economic perspective is the leveling approach to economics that calls for control of society and money by the few on behalf of the many. The second trusts the free-market and the wisdom of the individual.

The free-market approach to economics supports the idea of human action, putting money to use via the individual's perspective of local, regional and even, on occasion, global demand. There really is no other way that wealth can be invested, according to free market economists. Progress within the social order is incremental and depends on the vision of free people putting their money to work in unconstrained venues.

Contrast this approach with a more centralized approach that is utilized today throughout the West. Money is put into circulation through commercial banks, courtesy of central banks that print the money. The commercial banks may then lend the money or not as they see fit, but ultimately the banking system becomes the arbiter of much of the capital in the system.

This idea that money can only be raised by central banking and then distributed through banks, one way or another, is essentially a hollow mimicry of how the banking system developed. To begin with, individuals deposited gold or silver in bank "warehouses" that then may have used the funds to generate income from lending. It is this idea, that banks lend money, that remains in force today, but the rest of the transaction – the individual nature of the funds – has been stripped away, leaving the banking system in charge of the creation and dispersion of capital.

Western businesspeople may not necessarily understand today that banking once served the community and those with wealth who chose to entrust it to banking establishments. Today, the banking community is the tail wagging the dog. And funds thus generated through central banks and then distributed through commercial banks will not necessarily reach the places in the community that need the funding.

Wouldn't it be better to leave the money in the hands of individuals who know how to spend the money locally and have a need of the money? Today however, the system bars individuals from putting money into circulation via gold and silver, prints paper money instead via central banks and then only releases the paper money through banking establishments.

After Thoughts

Through the process described above, the system further reduces the amount of money individuals have at their disposal through taxation. Individuals cannot put money directly into the economy via gold and silver. They can only receive capital if the bank extends the offer (and most are not offering these days) and finally the capital they receive is subject to numerous constraints and costs. Additionally, any profits are taxed at various governmental levels.

The tea parties are focused on this latter point — taxation — but the entire system is set up to ensure that individuals cannot easily control money nor keep it. This is not a helpful stage of affairs during a severe economic downturn (or at any time in fact) and it is natural in this age of Internet monetary information that many are increasingly dissatisfied. Will the dissatisfaction "mutate" into something "unhealthy." One could make the argument the system has already mutated.

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