Federal Reserve Chairman Ben Bernanke's (left) approach to stopping the financial crisis by printing money is wrong, as the private sector is still unable to pay its debts, Richard Duncan, the author of 'The Dollar Crisis: Causes, Consequences, Cures' wrote Friday. "Bernanke believes in the Monetary Theory of the Great Depression, which holds that the Federal Reserve could have prevented the Great Depression by stopping the US money supply from contracting during the early 1930s," Duncan wrote on his Web site. "The Monetary Theory of the Great Depression is incorrect, however. Consequently, the Fed's Quantitative Easing policy is more likely to exacerbate than resolve the global crisis," Duncan argued in an article. – CNBC
Dominant Social Theme: The tools of internationalism are the necessary ones.
Free-Market Analysis: Usually we present an article in the mainstream media that confirms a dominant social theme of the power elite, but in this case, we've chosen one (see excerpt above) that is not supportive of elite promotions. In fact, the article focuses on author Richard Duncan who blasts Ben Bernanke's monetarism, which is one of the shibboleths of the elite economic dialog. This is a significant trend in our view. Even in the mid-2000s the idea of attacking both fiat money and the main premises of the world's leading central banker would have seemed ludicrous. And yet here we are. CNBC is by far the only media outlet running anti-Fed articles.
The Internet, with its combination of narrow-band and broad-band presentation has allowed for the dissemination of blunt central banking critiques along with detailed examinations of the central banking problem. Central banking is price fixing of the quantity and price of money and price-fixing is an anti-market activity that must always fail, leaving lesser or greater ruin in its wake. The result has been that the hitherto leftist oriented intelligentsia is waking up to the enormous destruction of the global central banking economy. This sort of paradigm shift must eventually be reflected in the media as well; the mainstream media must track the evolution of a culture's intelligentsia or lose credibility.
Ironically, the author mentioned above, Richard Duncan, has presented the problem far more elegantly than the solution he proposed in his book (written in 2005), which was to allow the IMF to perform as international central bank – and even more strangely to set up an international minimum wage. However, the article excerpted above does not focus much on solutions, Duncan's or others'. It deals mostly with Bernanke's wrongheadedness when it comes to MONETARISM, the favorite philosophy of those who wish to bash central banking without proposing a free-market solution.
Milton Friedman, the founder of monetarism (the idea that fiat-money can be managed technocratically) provides a faux-libertarian antithesis to John Maynard Keynes. This allows the mainstream media Hegelian conversation to shut out the free-market, Austrian point of view. Until the advent of the Internet, it was a most effective strategy. But now that central banking is virtually imploding, the elite-dominated mainstream media must begin to acknowledge it.
In fact, this is the weakness of the dialectic as a tool. It must always include perspectives that the elite wishes to de-emphasize. But in such times as the present (rare, to be sure), the dialectic must expand to partake of views that had long since been jettisoned but are now much discussed once more. Here's something just published from Reuters (of all places!) summarizing the World Economic Forum's annual report on global risk, published during the run-up to the famous Davos annual meeting:
For the last several years, the World Economic Forum (WEF) has published an annual report on global risk, as part of the run-up to the storied annual meeting in Davos … For those who want the big picture to be even bigger, here are three-and-a-half major questions raised, but not answered by the WEF risk report …
Why do global institutions break down? … The WEF is very worried about the failure of "global governance." This is unsurprising, since the WEF is very similar in outlook to other global-reach institutions, like the IMF, World Bank, United Nations, etc. The report finds "a growing sense of paralysis in responding to global challenges," and cites as examples ineffective UN climate change negotiations; the stalled Doha round of trade talks; lack of progress on some UN Millennium Development goals; the ineffectiveness of Security Council reform and moves to curb nuclear proliferation. Yet the WEF is much less clear about what is causing these institutions to fail.
How can they be fixed? (Half question.) … Reading the report, you get the strong sense of a circular argument along these lines: "My tools are broken. How will I fix them? I will use my tools!" About as close as the WEF gets to a solution for broken global governance is "a well-informed and well-mobilized public opinion sharing norms and values of global citizenship." Yes, well … good luck with that.
Where does inequality come from? … This year's report makes a big deal about "economic disparity," which it helpfully defines as "wealth and income disparities, both within countries and between countries." … But wait — why is this happening? … At a minimum, global governance institutions have been demonstrably ineffective in addressing the economic structural issues that the WEF now worries about.
What's creating all the debt? … There's a really scary chart in the report showing the average government debt-to-GDP ratios of G7 economies over the last 60 years … The debt and inequality issues taken together strongly imply that capital has been shifted over the last 35 years or so from public treasuries and into the pockets of the wealthiest people in the wealthiest countries (and maybe the wealthiest people in poorer countries too, but that data isn't in the report). If that is the case, it only reinforces the impression that, at best, existing global governance institutions are useless when it comes to the economic issues the WEF wants us to worry about. At worst … well, maybe the breakdown of global governance, as practiced to date, isn't such a bad thing.
To have this sort editorializing provided in a Reuters' feed is surprising to say the least. It is a repudiation of the current fiat-money system and global governance in particular. It makes the point that the current system shifts capital into "the pockets of the wealthiest people" and then speculates that the "breakdown of global governance … isn't such a bad thing." The trend toward this sort of criticism is not restricted to the media, however. Ron Paul the libertarian-conservative congressman from Texas is now chairing the committee that overseas the Fed in the House, and he wishes to do away with the Federal Reserve altogether.
The Fed is being forced to release information about financial and industrial institutions that received Fed "funds" (money printed from nothing) over the past several years. The results reportedly show that the Fed provided trillions around the world to enterprises in dozens of countries. The Fed effectively reliquified the dollar reserve system. As these results become more widely known, the Fed (and central banking in general) become more difficult to defend from an institutional perspective. Like "global governance" itself, the results are increasingly seen as inequitable and ineffective in terms of stated goals.
It is as we have often pointed out a moral issue dilemma that confronts the powers-that-be. The reinflation of the world's dollar-reserve system occurred not only in back rooms but on the Internet itself. Unlike in times past, (when there was no outlet other than mainstream media) tens of millions who watched their savings slip away in 2008 turned to the Internet to find out why – and discovered that while they were bleeding, the Federal Reserve and the US government was in the process of handing out trillions to select institutions.
British and American media are in full fulmination-mode when it comes to bank compensation and other banking issues. The idea is that "next time" banks must face the moral-hazard of over-lending. Of course there won't be a next time in our view. The current system died in 2008 and the elite knows it. Criticism – horribly so for the powers-that-be – is being aimed directly at central banking and even at the evolution of the new world order itself. We are not sure how the elite will react when it becomes clear that popular opinion has turned against the golden-goose that is the ability for powers-that-be to print money from nothing. But we may well find out.