Federal Reserve Chairman Ben S. Bernanke (pictured left) defended the central bank's response to the financial crisis and recession in a forum to be televised this week, saying he sought to avoid a "second Great Depression." "The problem we have is that in a financial crisis, if you let the big firms collapse in a disorderly way, it will bring down the whole system," Bernanke said today at a town- hall-style meeting in Kansas City, Missouri, taped for broadcast on PBS television. "I was not going to be the Federal Reserve chairman who presided over the second Great Depression." – Bloomberg
Dominant Social Theme: Bernanke strikes back.
Free-Market Analysis: First an aside. This month, if all continues to go well, The Daily Bell will receive nearly 1.5 million hits. Growth rate is something like 15-20 percent month. We are both humbled and gratified. It is certainly a tribute to this modest newspaper's publishing leadership – a leadership we admire.
Then there is the editorial content. It was the Daily Bell not so long ago that declared the central banking era of the 20th century was over and that the most powerful central banking body, the Federal Reserve, was like a tree in the midst of a slow-motion toppling. Now we see Ben Bernanke mounting an "unprecedented" PR effort on behalf of the Federal Reserve that encompasses up to the three hour-long programs on America's public broadcasting channels. Here's some more of what the Bloomberg article had to say:
The Fed chief appeared on the CBS program "60 Minutes" in March, his first televised interview since becoming Fed chairman in 2006. Before that, a Fed chairman last gave a broadcast interview in 1987, when Bernanke's predecessor, Alan Greenspan, appeared on ABC's "This Week with David Brinkley." Greenspan later said he regretted the interview because he "made some inadvertent news." Stocks slipped after Greenspan suggested on the program that inflation could become a problem. Bernanke's comments are scheduled to air in three segments this week as part of "The NewsHour with Jim Lehrer" on U.S. stations affiliated with PBS, the Public Broadcasting Service.
The last time a Fed chairman was publicly available was in 1987. Now Bernanke is doing town hall meetings back-to-back-to-back that are being broadcast nationally. Did you ever think you'd see the day? Yes, the Federal Reserve has been chopped. Bernanke is hoping to avert a crash landing. But soft landing or hard the Fed is pretty well undone in its current form, in our opinion anyway, though these things do tend to take time, even a great deal of time relatively speaking.
No doubt many of our readers thought us rash to begin with. Certainly, the majesty and money of central banking makes the process seem impregnable. But we had done a lot of research into how the Gutenberg press affected society, thinking that the Internet was a similar technological leap forward. What we found out was that the Gutenberg press thoroughly upset the balance of power in the 1600 and 1700s. The corruption in the Roman Catholic Church was confronted, kings lost divine credibility, the new world was discovered and populated and a rainbow of new forms of Western religion, each one with a more intimate relationship with God, was created.
There were also a series of low-key wars, including the Peasant War that raged across Europe for some 30 years. And later on there was the Revolutionary war and the French Revolution. All of these events are, we came to believe, were a direct or indirect result of the Gutenberg press and its ability to print books on a variety of matters that people could read and digest. The age of mass literacy had arrived. Now you didn't have to listen to someone else tell you what was in a book. You could read it for yourself.
Over time, unfortunately, publishing in a variety of forms became more controlled and it started to be very expensive to distribute information. But now all of that has changed once again, and, still, for the foreseeable future. Information has been readily available for a decade on the social themes and memes that electronic papers like the Daily Bell deal with on a regular basis. The monetary elite and its central banking nexus has come under question as never before. The liberal-conservative paradigm that emphasizes state solutions is in the process of unraveling as people discover that libertarian thought emphasizing an absence of state control challenges both conservatism and liberalism.
Central banking is a fairly obvious form of price fixing and simply cannot be justified if one sticks to the issues. But now a whole host of other dominant social themes are starting to unravel (non-violently to be sure) – and the entire Western debate over statism versus freedom is shifting back in favor of freedom for the first time in over a century. There are continued questions about large entities such as the European Union and the United Nations. In America, a vocal minority questions whether that country ever landed on the moon and whether Barack Obama is a citizen of the United States and thus entitled to be president.
The mainstream press continually expresses its astonishment at such illogic. There are various names given to such obviously whacko points of view – truthers, birthers, tea-baggers, etc. But what is missing in this analysis is that the movements (outlandish or not) are not merely fostered by the Internet, they are the next wave of a predictable and evermore democratic communications upheaval. Yes, it is time, in our opinion for a second wave. And then inevitably a third and fourth. In a couple of decades, friends, for better or worse you will not recognize the landscape. It is inevitable. Technology trumps control to begin with. And Internet technology has a long way to run before it can be shut down. If you think the mainstream media is uncomfortable now, just wait.
Bernanke can make all the appearances he wants. He can campaign to his heart's content but reality is bringing him and central banking to a different place. Ordinarily it is foolhardy to bet against a monetary elite with so much wealth and power. But this is one of those times when wealth and power cannot immediately control an implacable information technology. That is why we are so confident the latest monetary crisis will result, again, eventually, in some sort of precious metals standard, perhaps even a market-based one. Bernanke is worried about an audit of the Fed. In the bigger scheme of things, that's among the least of his problems.