Anger at the banks is justified, Mervyn King (left) says … The Governor of the Bank of England, Mervyn King, has expressed "surprise" that the public is not more angry with the bankers who caused the recession … In some of his strongest language yet, Mervyn King today claimed the fall in households' living standards was the fault of the financial services sector and he expressed sympathy that innocent families are paying the price. "The people whose jobs were destroyed were in no way responsible for the excesses of the financial sector and the crisis that followed," he told MPs on the Treasury Select Committee. – UK Telegraph
Dominant Social Theme: It's the bankers fault and their's alone. We can fix it though!
Free-Market Analysis: We've often tried to point out that a fundamental dominant social theme of the power elite is that the private sector is at fault for economic ruin. The intergenerational, familial power elite located in the City of London uses mercantilism to generate its extraordinary wealth, creating as much governance – regulatory democracy – as possible in order to use such regulatory levers to its advantage. Mervyn King's statement to the UK Treasury Select Committee is a textbook case of how the elites that run the West's banking system attempt to deflect blame from central banks by pointing fingers at the private sector. In this article we'll examine his statements further.
King, Britain's top central banker, is charged with protecting the elite's most important asset: central banking, which in the modern era involves printing money-from-nothing without any underlying asset base. The power elite has successfully installed central banks in almost every country around the world and these central banks are coordinated by the Bank for International Settlements out of Switzerland, a mysterious entity that is evidently and obviously under the control of the powers-that-be.
It is a measure of the power of the BIS that its couriers travel under blanket immunity throughout the world and that personal searches or searches of their cargoes is forbidden. In order for this to be so, laws have to be on the books in countries throughout the world confirming these privileges. That these laws apparently exist indicates the incredible and subtle reach of the Anglo-American elite and its ability to influence legislation globally.
King's statement to the Treasury Select Committee as reported in the UK Telegraph is a pitch-perfect defense of central banking using the meme of private-sector blame. This fear-based promotion was used most successfully in our view during the Great Depression in America when "Wall Street" was exclusively blamed for the market crash (rather than reckless Federal Reserve inflation) and the entire modern apparatus of regulatory finance was initiated: the SEC, the NASD and self-regulating exchanges (NYSE, AMEX, etc.). This is the other side of the private-sector blame meme; regulatory solutions.
The meme of "regulatory solutions" is a clever one because regulation inevitably leads to "regulatory capture" by the industry's biggest players. What this means in practice is that central banking blows up economies, leading to more regulation which further concentrates power in the hands of a few, allowing government and society to be even more efficiently run by the elite via mercantilism. It's kind of a closed feedback loop. The more chaos, the more regulation, the more leverage the elite has to reignite the process. Power is continually being centralized and the middle classes themselves (the elite's ultimate target) will actually clamor for the regulation that facilitates the process.
In order to initiate the process, blame must be cast. There has not been enough anger at the private banking sector, especially in Britain where wrath has been focused – most alarmingly from the elite's point of view – at central banking itself. This is a direct result of the Internet, which has explained via blogsites and the alternative media how the central-banking economy really works and how the business cycle actually unfolds within this environment. As an aside, the model that has been disseminated throughout the Internet is Misesian business-cycle theory.
People often say that Austrian economics even today is not influential but the entire debate over central banking is being driven by Austrian analysis. Millions of ordinary people who have come to understand the malign effects of central banking are utilizing Austrian business-cycle theory, even if they have never heard of the school. This is a remarkable development in our view.
Popular acceptance of Austrian theory must be alarming to the elites; just as alarming is the idea that popular wrath remains stubbornly focused on central banking both in the US and Britain – where the elite's most important central banks are located. (In Europe, anger seems more generally focused on the entire elite class as represented by the EU leadership). One can see evidence of this logically-directed irritation even in the comments section below the Telegraph article itself, which is full of criticism of King. Here's one example:
Mervyn King's stubbornly gormless irresponsibility never ceases to amaze me. He is the most guilty man in Britain, as far as the economic crisis is concerned. His explicit policy was easy money and it is this that caused the entire crisis. Now he sits there in front of the Commons and the nation saying 'it wasn't me guv, it was them over there'. Inflation has always destroyed economies, throughout history whenever its been tried. This charlatan tried to pull the same stunt and it blew up in his face. What a surprise, he tries to shift the blame… Dan Downes / Today 12:55 AM
To combat these alarming perceptions, King addresses the Commons with a host of arguments. The Telegraph article describes his testimony in some detail, beginning with his claim "in some of his strongest language yet" that the fall in households' living standards was, as the Telegraph puts it, the fault of the financial services sector. "He expressed sympathy that innocent families are paying the price."
"The people whose jobs were destroyed were in no way responsible for the excesses of the financial sector and the crisis that followed," he told MPs on the Treasury Select Committee, according to the Telegraph. In most aspects, he said, the economy had been on a sound footing before the crisis. Previous downturns were often caused by inefficiencies or weak management and were useful opportunities to improve systems. "None of that applied in this crisis," he added. "We had quite a successfully operating economy."
What? The idea that the mid-2000s Western economy was a "quite successful one" can only be accepted if one ignores the considerable evidence that stresses and strains were building up throughout the system. Mortgages were being offered at zero percent and even with "money back." Western stock markets were zooming; house prices were on a steadily ascendant trajectory. Presumably this is what King means when he speaks of a "successfully operating economy" – but others saw it for what it was … a central bank inflated bubble.
King plunges on, however, with his main mission – apparently to make common cause with the average individual now suffering through the the latest economic catastrophe (which King has just denied existed). His sympathies are even deepened, he points out because these sufferers, "did not get bonuses of the scale people in the financial sector got". The financial crisis happened 24 months ago, but as austerity bears down, "the cost is now being felt."
We can see in this statement how intently King is focused on the private sector and its apparent greed. This also explains why the British press especially has been in full war cry over "banker bonuses." Not a day goes by without the press reporting on UK bank bonuses, bemoaning bank bonuses and warning, generally, that "the people" won't stand for it.
This orchestrated campaign is intended to have two results. First, it is supposed to inflame people's anger against the private sector; second, inevitably, it is intended to set the groundwork for additional regulation of private sector banks. King hammers home this point again and again. The bonuses, the Telegraph reports him as saying, are "a big political problem … I'm surprised the real anger hasn't been greater than it has."
King then sets up his next argument, that living standards may not return to previous levels any time soon. "The evidence of the past is that the impact of a [financial] crisis like that persists for many years," he said. "You may not get it back for very many years if ever. It's a very real hit on living standards. That's why it is important to take the issue of financial stability very seriously." Financial stability in this case is a code for increased regulation and bank "stress testing" and all the other bureaucratic paraphernalia that Western powers-that-be are currently inflicting on the banking sector.
King obviously intends for his testimony to be both emotional and personal. He stated that it was his "personal commitment" to ensure the banks would never again be allowed to generate the kind of damage that took place post-2008. "I joined the Bank of England 20 years ago today," he said. "I don't want to leave until we have a framework in place to ensure we don't have to go through this again."
Having set the groundwork for additional regulatory encumbrances, King indicated that rather than having legislation granting regulators additional powers as regards bank supervision, he would prefer an entirely new Act. The biggest change to banking supervision, Mr King said, would be to "move to a regime that does countenance failure but does not cause havoc with the financial system." In any event, he said, regulators must focus on whether a bank can fail safely "rather than continue with excessively detailed scrutiny of the big banks".
Here, we see yet another focus of the elite's "blame the private sector" meme, which is that the smaller players ought to pick up the brunt of additional regulatory enforcement. This happens in any case as regulations are expensive and tend to drive smaller entities out of business, further centralizing power in the hands of a few large players – which are inevitably controlled by the elite itself – a process AKA mercantilism.
The arguments that King makes in this testimony are a perfect example of a kind of elite dominant social theme. The opinions he advances have absolutely nothing to do with any real economics but exist entirely on a promotional level. His crocodile tears for the average man who is suffering now but who has not been paid a big banking bonus are purposefully intended to inflame public sentiment against the banking sector.
At the same time he leaves out any discussion of the real problem, which is central banking price fixing of the volume and value of currency. Price fixing always leads to economic distortions and over time the relentless mishandling of money printing and rate setting generates economic implosion and endless hardships for all of those save a few who are responsible to begin with. It is really a terrible system. In this testimony, King shows exactly how manipulative it is as well.
Perhaps with all the "color revolutions" that are happening around the world today, we may soon see one where the focus is on removing the destructive and manipulative system of Western central banking and its stranglehold over the wealth and prosperity of its subjects. Of course, the revolutions are being manipulated by Western intel; thus we won't be holding our collective breath for that to transpire any time soon. Would the powers-that-be have an interest in formenting anti-central bank sentiment? Does the hunter stalk himself?