Foul Weather Friends … The financial repression thesis (FRT) imagines a state of nature in which the market exists, but the state does not. This view implies that the market is natural and the state artificial. But if this is the case, any action by the state in the financial markets falls under the expansive definition of financial repression. – Jacobin
Dominant Social Theme: There are no free markets without government markets.
Free-Market Analysis: We've often pointed out that a national socialist (Nazi) meme is gaining strength in the West. It is promoted by often charming individuals like Ellen Brown (Web of Debt) and many, many others who are far less charming and often truculent and hypocritical.
The meme basically defends central banking as "private" and wants us to believe that if central banks were more controllable public entities that all would be well with Western economies.
Part of the meme involves mutual credit and social credit solutions that call for radical wealth distribution via the state as well as formal demurrage whereby money loses value and must be revalidated every month by the state.
This article, written by a Wall Street executive and business professor, does not fully recommend mutual credit and social credit but the thrust is similar. We can see in the excerpt above that the general argument is one insisting that an economy include state price fixing as well as free-market entrepreneurship.
Central bank independence was never what it was cracked up to be. During "normal" times, central banks protected the interests of the owners of capital. Paul Volcker is often cited as the epitome of the independent central banker, but surely his tight monetary policy, justified in terms of some technocratic money supply target created winners and losers. The owners of capital were among the winners, while those who did not own capital were losers (through such things as higher unemployment and downward pressure on real wages).
Moreover, most central banks have only one goal: price stability. Some central banks are given an inflation target, like the Bank of England, which incidentally only recently was granted what many would call independence. Other central banks are given a goal of price stability, but choose how precisely to define it.
The definition of price stability is itself not a value-free technocratic decision. Some central banks focus on core inflation and others on headline inflation. If, for example, the ECB focused on core inflation rather than headline inflation, it arguably would not have hiked rates in July 2008 as the euro area economy was already contracting.
In addition, many central banks have defined price stability as around 2% annual inflation. Yet there is no material difference between 2% inflation and 2.5% inflation or even 3% inflation.
This argument can be pushed further. The fact that most central banks have price stability as their sole mandate is a reflection of a certain set of values and, dare one say, an ideological bias. Only the US Federal Reserve (and perhaps soon the Bank of Japan), has a full employment goal. While inflation hurts the owners of capital, it eases the burden on those who don't own capital. From a purely technocratic and neutral point of view, it is not clear why monetary policy should not target nominal GDP or asset prices.
The article is called "Foul Weather Friends" because after explaining that central banks are as integral to the free market as government is, the conclusion informs us that both government and central banks are indeed these sorts of friends.
The concentration of wealth and income has become so great that it threatens social stability. A more balanced distribution of productivity gains can serve to minimize the chance of financial crises. This is the proper aim of a democratic and representative government. A stable society requires that the levers of policy — security, fiscal and monetary — be accountable to the people. It is the absence of that accountability, not low interest rates, that is the true repression.
This fellow is from Wall Street, but he has arrived at the same conclusion as Ellen Brown and perhaps Karl Marx, for that matter. The means of monetary production must be controlled by a hypothetical "people."
We've done our best to expose this meme despite a good deal of aberrant hostility. All that the blowback tells us is that we've touched a nerve.
The powers-that-be are very worried about the loss of credibility of central banking. They are thus doing what they always do in such cases. They are planting a dominant social theme that seems to be hostile to the facility of their concern but will actually provide additional advantages.
Currently, there are three fallbacks that we have identified. One meme is aimed at creating a worldwide (statist) gold standard. Another involves the IMF and SDRs as a global currency.
A third meme, perhaps the most important and persuasive, seeks to migrate central banking from "private" hands to public ones.
The whole idea that central banks in the US and England are "private" is ludicrous, of course. Central banks have plenty of public exposure even if they are not entirely controlled by governments. But placing "private" banks under government control will do nothing to solve the basic problem of monetary debasement due to central bank price fixing.
What it WILL do is ensure that central banking's globalist controllers will continue to run central banking behind the scenes – under the guise of "the people."
It is no coincidence, in our view, that Wall Street types are now providing a chorus for Ellen Brown along with the Fabian Silvio Gesell and, of course, Major Douglas.
The whole idea is to preserve central banking and run it behind the scenes.