The story of the year was a weak economy that could have been much, much weaker. Thank the man who runs the Federal Reserve, our mild-mannered economic overlord … A bald man with a gray beard and tired eyes is sitting in his oversize Washington office, talking about the economy. He doesn't have a commanding presence. He isn't a mesmerizing speaker. He has none of the look-at-me swagger or listen-to-me charisma so common among men with oversize Washington offices. His arguments aren't partisan or ideological; they're methodical, grounded in data and the latest academic literature. When he doesn't know something, he doesn't bluster or bluff. He's professorial, which makes sense, because he spent most of his career as a professor. … He just happens to be the most powerful nerd on the planet. Bernanke is the 56-year-old chairman of the Federal Reserve, the central bank of the U.S., the most important and least understood force shaping the American – and global – economy. Those green bills featuring dead Presidents are labeled federal reserve note for a reason: the Fed controls the money supply. It is an independent government agency that conducts monetary policy, which means it sets short-term interest rates – which means it has immense influence over inflation, unemployment, the strength of the dollar and the strength of your wallet. And ever since global credit markets began imploding, its mild-mannered chairman has dramatically expanded those powers and reinvented the Fed. – Time Magazine
Dominant Social Theme: A good guy in times of need.
Free-Market Analysis: By the time you are perusing this, dear reader, this story will be all over the Internet – and beyond. We try to avoid analyzing such ubiquitous stories on the whole because we try to direct you to important elements of the global-promotional dialogue that have been, to a degree, overlooked on any given day. But in this case we can't resist. More than any other story since Barack Obama's Nobel Prize, this mainstream media endorsement again shows clearly the mechanism of power-elite promotions and also why, in the era of the Internet, these promotions may be failing.
The article itself, first of all, is an apologetic jumble and one that reads more like a press release or a failed argument for a bad economic system (central banking). But more importantly than that, the controversy surrounding the Fed and Bernanke too, calls for a reasoned explanation of what's really going on in the economic world. This article isn't it. In fact, here's how the writer wrote the article, according to the Time introduction:
Senior correspondent Michael Grunwald's magisterial piece about Bernanke and the economy is also a lively explanation of things we all talk about but don't always understand: the importance of the money supply, what the Fed does, how banks work, why loans are vital. Grunwald spent two months writing and reporting the story, including his own extensive crash course on the Fed. He had three long interviews with the Fed chairman, including one in St. Andrews, Scotland, at the G-20 summit in November. Bernanke's sit-down with Grunwald, assistant managing editor Michael Duffy, Time Inc. editor-in-chief John Huey and me was his first full on-the-record interview with a print publication. Duffy, who knows the ways of Washington as well as anyone, expertly supervised the cover package. Dan Winters shot the evocative images of the Fed chairman, including some on the Fed squash court, where he shoots baskets to let off steam.
But why did they give the article to Grunwald to write when he needed "an extensive crash course on the Fed?" And why in fact would he need one? There is no excuse for top journalists in this day and age not to understand the huge economic debate simmering just below the surface of Western economies. As we have pointed out countless times, there are literally millions of articles about free-marketing thinking, the Austrian free-market economic school and other pertinent issues on the Web. All one has to do is sit down and look. Grunwald may be a fine writer, but it would seem he must be a fairly incurious person if he hasn't tried to understand this, the greatest issue of his day.
Anyway, this article, like Barack Obama's Nobel Prize, is bound to raise as many questions as it attempts to allay. The awarding of the Nobel to Obama before he had done anything notable regarding "peace" was from our point of view a PR disaster. It was then compounded by his decision to send an additional 30,000 troops to Afghanistan and an acceptance speech that reads like it was cobbled together by a team of dyslexic Pentagon veterans. To read previous Daily bell coverage of this issue, click here.
It's been our contention that the power elite simply doesn't know how to deal with the Internet or the growing free-market movement. To accept our argument, of course, one needs to internalize the idea that there is a power elite. The power elite, in simplest terms (from our point of view), is a generational amalgamation of wealthy families and individuals that continually promote dominant social themes intended, we believe, to frighten people into giving up wealth and power to authoritarian instrumentalities created by the elite itself. Many, if not most, of the techniques used this elite have been developed in the past century and apparently tested through a wide variety of think tanks and other avenues.
But the Internet is proving a formidable hurdle. Those who are involved with the power elite apparently are no smarter than the rest of us despite their resources and when they hit a speed bump like the Internet it takes them a while to adjust. And by a while we mean years or decades or even longer. Five hundred years ago it took the power elite literally centuries to cope with the torrent of information let loose by the Gutenberg press. And in the process, the Reformation happened, the New World was discovered and populated and a new, free nation (actually numerous new nations) were created.
This explains why the powers-that-be are looking so clumsy these days, from our point of view, when it comes to protecting and pursuing the dominant social themes they are promoting. Before the era of the Internet the "back story" was literally impossible to obtain. If major media asserted it was so, especially in the past 100 years, there was literally no way to get out a competing word. This explains why, over the past century especially, there has arisen a false history of the West, especially when it comes military and economic issues. For those of us studying this issue 20 years ago, it was most puzzling (and yes we were puzzled). But today what has occurred is much clearer.
We think what has happened is that the powers-that-be grew fairly arrogant about their ability to present the history that they wanted. They didn't ever count on an alternative narrative being comprehensively expressed and available through a medium they did not control. And yet that is just what has happened. The elite has no way of confronting this problem short of a wholesale takeover of the Internet. But that's hard to do.
We can see the dilemma writ small in this Time Magazine story naming Bernanke as the person of the year in the US. It is beyond question that Time-Life, as created by Henry Luce, was the flagship of the Anglo-American establishment. Time-Life reporters supposedly used to travel to foreign lands with US intelligence agents so that the narratives that were developed would be appropriately calibrated. But Time's credibility has disintegrated and so has much of the magazine's clout. Publishing articles like the one about Bernanke don't help any.
Such articles are what Time magazine was created to purvey. But because of the Internet, the articles and their narratives are easily disproven. Like punch-drunk fighters, those at the magazine get to their feet ready to continue the contest. They don't realize they have already lost the fight. Rupert Murdoch, as we have amply traced in these pages, is not one to give up – but his Hamlet-like dialogue at acknowledges, in mainstream media at least, the fix is in. Time, in articles like these, doesn't even bother to acknowledge it.
Here is the dilemma then …
Time's version of the Federal Reserve, as it is presented to us, glosses over the creation of the Federal Reserve and treats the Fed's ability to fix the prices and quantity of money as a necessary evil. The article even uses the word "overlord" for the Fed and means for the description to be taken positively. The article ignores the subterfuge surrounding the creation of the Fed and states that the problem that the Fed had in the 1930s was that it tightened the money supply, thus causing the depression. The honor given to Bernanke is being bestowed because he supposedly didn't repeat the mistakes of the 1930s and thus saved America from another depression.
And yet … there is an alternative Internet history, easily available now and imbibed by millions. It is much different. In these darker history, a secretive group of immensely powerful and wealthy individuals donned disguises and met on an island off the coast of North Carolina to set up the elements of the Federal Reserve, which is a really a central bank that fixes the price and quantity of money. The act authorizing the Fed was passed by Congress under suspicious circumstances and the first thing the wise men of the Fed did, according to financial historian Ed Griffin, was to agree with the head of the Bank of England to debase the dollar so as to boost the pound back to its pre-war status.
It was this secret agreement that caused the Roaring 20s. The monetary stimulation was so great that those running the Fed abrogated its dollar-gold ratio almost immediately. As a result, Franklin Delano Roosevelt had to declare a series of bank holidays so that people wouldn't go to their banks and try to cash in their greenbacks for gold – and find out that there wasn't enough gold to go around. The delinkage of the dollar from gold, illegally at first, was and is the real crime at the heart of the central banking era. We think it is coming to a close, not only because of the Internet, but because central-banking-based fiat money is simply an insupportable phenomenon.
The Great Depression was actually a result of the great run-up of the Roaring 20s. And as we live through this corresponding recession-depression we can see that Murray Rothbard was probably right and Milton Friedman was probably wrong. It wasn't the Fed tightening that caused the deflation of the 1930s but the NATURAL contraction of the economy following monetary hyper-stimulation. Bernanke, in printing trillions, may have avoided the natural contraction, but is that really such a good thing? The current system will stagger along in all its ruin and instability. The fiat money experiment will continue and the middle class will continue to shrink. And for this, Ben Bernanke is being lauded.
NOTED: Gulf petro-powers to launch currency in latest threat to dollar hegemony. "The Arab states of the Gulf region have agreed to launch a single currency modeled on the euro, hoping to blaze a trail towards a pan-Arab monetary union swelling to the ancient borders of the Ummayad Caliphate. ‘The Gulf monetary union pact has come into effect,' said Kuwait's finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait. The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to a regional superpower with a GDP of $1.2 trillion (£739bn), some 40% of the world's proven oil reserves, and financial clout equal to that of China." – UK Telegraph
You may not choose to believe the Internet narrative dear reader, but that is not necessarily our point. Our point is that the promotions of the power elite are increasingly suspect and are actually getting harder to pursue. We are not so foolish as to say that such extraordinarily wealthy and powerful people don't have tremendous resources and won't eventually figure out how to combat the Internet and the free-flow of alternative information. But honors such as the one that Time has just given out, or the award of the Nobel peace prize to Barack Obama, probably don't have the quite desired effect anymore. Too many people have seen behind the curtain.