The National Audit Office will next week publish its definitive account of the banking crisis, including details of the emergency liquidity assistance given out to RBS and HBOS between October 2008 and January 2009. The news casts a new light on the Bank and Treasury's decision to reveal details of the £62bn loans to Parliament this week, more than a year after they first took place. Edward Leigh, Conservative chairman of the Public Accounts Committee, and John McFall, Labour chairman of the Treasury Select Committee, indicated that the prospect of this information being "outed" had been the primary reason why the news was finally released this week. In a letter to Alistair Darling (pictured left), Mr. Leigh said he demanded to know whether the decision to publicize the loans "had more to do with the timing of the NAO work on the banking support measures" than their stated judgement that the two banks were now healthy enough for the news to be publicly-known. Mr. McFall said: "The Bank and the Treasury have been caught with their fingers in the till." – UK Telegraph
Dominant Social Theme: Naughty, naughty.
Free-Market Analysis: One of the nice things about understanding free-market financial history is that it gives you an opportunity to step back and see things as they really are. And what the Western world has done in the 20th century especially is institutionalize via its burgeoning socialist law a kind of free-floating and voracious mercantilism.
The above article, excerpted from the Telegraph, provides us with a jumping-off point to better examine this concept. It shows us (as if we didn't already know) that there are deep relationships between the UK's largest banks and the governmental authority at the UK's Treasury Dept. and of course at Bank of England. The language used to describe these relationships is various and has been on parade during the past several years. "Moral hazard," is one nomenclature that has been used to describe the process. Another of course is "too big to fail."
Being in the business of examining monetary elite promotions from a free-market standpoint, we realized a while back that the vocabulary being used to describe the crumbling of the fiat money system (and the desperate attempts to prop it up) was designed to steer perceptions in a certain direction. Central banking – and the subsequent mopping up efforts that occur cyclically – is a good example of one of the elite's most important dominant social themes. Without money, other promotions are rendered moot.
Why is central banking obviously a power elite promotion? Because it is unworkable, destructive, a contradiction in terms, and yet a program when implemented that creates enormous wealth for a handful of people along with bestowing tremendous control on the same players. You cannot put a few fairly elderly people in a room together, ask them to fix the price and quantity of paper money using unworkable econometric projects and have anything good come of it. It is what it is: price fixing. And fixing prices does not work, as these same individuals might amiably admit when confronted with concepts such as marginal utility and the invisible hand.
Central banking is a PROMOTION. It exists despite all its contradictions. It is taught in schools, despite the economic illiteracy of the concept, and commented on in the media. It is institutionalized in government. No, it is not an economically literate activity, and cannot logically provide the results that are claimed, but that doesn't matter. A promotion is not meant to be a logical conversation, only a persuasive one.
The editors of the Bell (and our readers, we believe) are interested in the most widespread and well-thought out promotions of all – those generated by the elite to create additional wealth and social control. If one has enough power, influence and funding, one can indeed create truth out of fiction, reality out of fantasy, black out of white. The Internet has given us the ability to examine this mechanism more closely and to arrive at the conclusion that a monetary elite exists (it is obvious) and that its promotions exist substantively as well.
We have pointed out the signifiers of these promotions. They are illogical, usually contradictory, and they are designed to create great fear in order to focus people on an authoritarian solution – usually the bigger the better. In modern history the solutions have tended to focus on international bodies (the UN, etc.) because globalism has become the desired outcome of the current generational elite (a kind of Holy Grail, if you will.)
Why is globalism so important to the elite as part of the promotional landscape? Because history shows us something that you will not find in the philosophy books. We have mentioned it several times already. Organized and applicable human creativity of the deepest, cultural sort has been historically propelled in spurts. These spurts usually take place when citizens of various nation-states spoke the same language and have the ability to move contiguously from one small country to the next in a restrained geographical ambit.
Brilliant free-market economist Murray Rothbard, one of the deepest thinkers of the 20th century was flummoxed, we read once, by the Athenian Golden Age. He couldn't figure out why the Greeks at that time in 50 years or so created science, architecture, certain kinds of math, academies (Groves of Academe), etc. It seemingly came from nowhere.
But actually, the reason is simple .The Greeks of that period, for a brief moment, had the freedom to build intensively on a deep, cultural heritage. If they didn't like the state they were in, they could move to another city-state that spoke the same language and pick up their lives and go on. This pattern is observable, we would argue in every efflorescence of the human spirit and intellect. Rome, during its Republican days had its seven hills and outlying communities. China at one point apparently had similar competing city states. The Italians during the Renaissance had city states. The American exception was based on competition among 13 states, each providing refuge from the other and all speaking the same language.
The monetary elite, in their quest for greater globalization are either factually or intuitively aware of this pattern and perhaps that is why "one world" is such a valuable end-point. It would preclude these inconvenient bursts of spontaneity.
We have discussed in this article the larger methodologies or signposts that allow one to analyze a monetary meme. But the article excerpt above gives us the opportunity to provide you with one more such. It is not the toolkit itself, but part of the toolkit. It is the idea that repetition reduces logic. It is what has been called in the recent past the Big Lie.
The Big Lie methodology is certainly a ubiquitous part of the monetary elite tool kit. It is the process whereby logical contradictions are negated. Central banking is a contradiction in terms. It is a Big Lie. And so is the idea of "too big to fail." Our name for it – the proper name, we would argue – is mercantilism. But what is mercantilism? Here is an Austrian, free-market definition:
"Mercantilism, which reached its height in the Europe of the seventeenth and eighteenth centuries, was a system of statism which employed economic fallacy to build up a structure of imperial state power, as well as special subsidy and monopolistic privilege to individuals or groups favored by the state." (Murray Rothbard, "Mercantilism: A Lesson for Our Times?")
Social promotions (themes and memes) pursued by the monetary elite can easily blind us to the reality of what is occurring. In fact that is what they are supposed to do, we would argue. In the case of "bailouts" of "too big to fail" financial entities, what is going on is not the salvaging of a financial system (it is failing anyway) but the enshrinement of an official explanation intended to justify what has already been discredited historically.
Mercantilism, the "subsidy and monopolistic privilege to individuals and groups favored by the state" is alive and well in the 21at century. It a perfect promotion from our point of view. A Big Lie. Everyday, these "bailouts" are paraded before a public as yet seemingly cowed by the idea that without them, life as we know it would disappear from a bankrupt planet. Wiser heads than ours have decided what is necessary to preserve our prosperity and lifestyles. But in fact, nothing ever changes much. The practice is merely mercantilist. It was discredited long ago. It has arrived in fancy new wrappings, with a new justification. But it is the same old thing.
Now perhaps for you, dear reader (being an elite intellect of the kind the Bell attracts), the above exegesis was merely a restatement of the obvious. But we don't think so. We find the re-wrapping of mercantilism in a new and compelling argument to be symptomatic of the way these promotions operate. Those in charge of these programs will likely assure you, in fact, that mercantilism has long been proven both destructive and ineffective – a non-starter. Yet the programs being applied throughout the West right now are mercantile to the core.
Such activities have long been proven economically unviable. Mercantilism as an economic philosophy has long been discredited. It can only remain truly viable in the 21st century so long as the breadth and depth of its activities remain hidden, and it is not identified for what it is. Which is one reason, perhaps, a main one, why the Federal Reserve is so fearful of an audit.
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