The Daily Bell
October 11, 2011
Infowars Host Alex Jones and His Followers Occupy the Dallas Fed … Alex Jones amongst fans and followers. At Friday evening’s “End the Fed” rally, two groups of protesters, Occupy Dallas and Occupy the Federal Reserve, lined opposite sides of N. Pearl Street at Woodall Rodgers in front of the Federal Reserve Bank of Dallas. “We got sold out, Feds got bailed out!” Occupy Dallas protesters shouted in unison on the west side of Pearl. And, all around them, the Occupy the Federal Reserve crowd — consisting of fans and followers of Dallas-born, Austin-based radio-show host Alex Jones — had their own mantra: “End the Fed, End the Fed!” – Dallas Observer
Dominant Social Theme: What a shock. An interesting spectacle, though. What exactly is the Federal Reserve and who are these people?
Free-Market Analysis: Alex Jones and Occupy Wall Street both protested in front of the Dallas Fed on Friday and the result was unusual: Mainstream news coverage. The Dallas Observer ran a fairly significant piece on the protestors featuring Jones himself. What’s the Dallas Observer? Here a blurb from their website:
If you want to know what’s happening in Dallas, keep your eye on the Observer. Over the past eighteen years, the Dallas Observer has grown from a small weekly to a major force in this city, where the paper is known for its hard-edged investigative stories about government, politics and business, as well as its pointed, provocative coverage of sports, music and the arts. In recent years, the Observer has collected numerous journalism awards, including the Missouri Lifestyle Journalism Award for general excellence, which lauded the paper for the compelling package it puts out each week. And Dallas readers agree: Every Wednesday, 100,000 copies land on newsstands around the city—and disappear within hours.
That these protests against central banks are actually happening in the US is enough to create a shiver down the spine of those who compose the power elite and their corporate, military and religious enablers. Such a protest would have been unheard of in the 20th century.
Those who doubt the reality of the Internet Reformation might want to reconsider. The Internet is a process not an episode. Every day, there are more changes in the way people conceive of their reality thanks to the Internet.
Protests against central banks, and there are more planned by Jones and apparently by libertarian elements of the Occupy Wall Street movement, attack the elite’s most fundamental dominant social theme, which is the way the money is produced in the modern age.
No less a luminary than John Maynard Keynes said famously that not one man in a million understood how money was produced. But that was then – 60 years ago – and this is now. Thanks to the Internet many people understand that the central banks print money from nothing and then loan or give that fiat currency to their colleagues who populate the financial industry.
In fact, while the mainstream media is filled with articles about making sure that banks don’t founder, the reality is entirely different. The world is overbanked thanks to central banking itself. Banks are in the biggest bubble of all – and a bubble that is never, ever mentioned.
In every downtown of every major city are dozens of banks, many with towering headquarters. Row after row of commercial banks. Banking is the best business to be in because the people who “make” money (literally) will never ever seemingly let a bank go bankrupt.
Banks are the sacred cows of the modern age. In this age, banks can only be “recapitalized” so that they can continue to carry out their most important functions. Of course, we can’t quite figure out what those are. It’s a given that people need banks for business loans, but it hasn’t always been that way. In fact, many start-ups never use bank money at all.
In a lot of ways banks are fairly useless entities. In the modern era banks and securities trading firms have been downright detrimental to Western civilization. They’ve enshrined a system of destructive monetary stimulation andcorporatism (monetary gigantism) that has come to a crashing halt as the system increasingly severed the link between investment and price information.
That’s what monetary overstimulation does. Print too much money, “bail out” too many “important” businesses and gradually no one knows what business is solvent and what is not. No one wants to invest in anything of significance because no one can figure out what business is significant and what business is merely being propped up.
The solution to all of this may be a planned reconsideration of modern society and economics, but more likely what will happen is the system will simply unravel. It is obvious that the power elite that has built this system believes they can transition to global governance and a single currency, central bank, etc.
They may be overestimating the control they have over the situation in the Internet era. People are angry and growing angrier. And thanks to technology and the information it provides, people are far more sophisticated about the way the system works than they were in Keynes’s day.
Within this context it is important to mention not only what is going on with central banking but where people expect the system might end up – especially in the US. Many are eager to transfer the system of money printing from central banks like the Federal Reserve to PUBLIC central banks that would be under the control of federal and state officials.
For this reason the PRIVATE nature of central banking is often emphasized, though the Fed is not by any means entirely a private entity. In fact, it didn’t even come into being until an Act of Congress was passed in 1913 authorizing it. Central banks like the Fed are what we call mercantilist. (Mercantilism.)
That is they hide behind the power and authority of government to pursue private business goals. They use the color of government for private gain. Inevitably they are not entirely private entities. They cannot be.
Central bank apologists like Ellen Brown have campaigned to ensure that people believe central banks like the Fed are ENTIRELY private when they are not. This is because “Brownians” (and others) want to propose that central banks be owned outright by public entities.
But both Chinese and Indian central banks are owned by the state as we understand it and the abuses, corruption and inflation are no better in these countries than in America. The problem is CENTRAL BANKING and printing money from nothing. The problem is not who owns the bank. The problem is the paper it prints.
The only way to rationalize the money system is via a competitive money system that will doubtless resolve itself as it always has throughout history into a private gold and silver standard. Probably it would be one that would use both Real Bills and private fractional banking.
But the most important thing would be that supply and demand would moderate the money supply. When too much gold and silver circulated, the price of money would go down and people would begin to hoard and mines would close. As the price of money went up, people would dishoard and mines would likely open back up.
Thus, the private sector would moderate the money supply. What Brownians and others want is for central banking money-printing operations to be owned by the public. But this would not make any difference when it came to the money supply. A handful of people within the banking industry would STILL have to decide how much money to print.
Inevitably, when human judgment is used to determine the money supply, humans get it wrong. Usually too much money is printed and a ruinous business cycle commences. Brownians also argue that money would be issued into the community without debt, but this would not make a difference to the fundamental issue, which is one of overprinting money itself.
Gary North over at LewRockwell.com and on his own blogsite has provided a good deal of commentary on the Brownian solution. (It should be noted that Ms. Brown feels Gary North’s attacks are overly personal, and she has stopped responding to them.)
Anyway, too much money causes businesses to over-expand. And when the collapse happens it does not matter how much money is in circulation. If there is no demand for goods and services, no amount of money will make a difference. People will still go broke. The misery will still recommence.
The protests against the Fed and cental banking generally are encouraging. But we have noticed that Brownian ideas about public central banking are gaining in popularity, as we knew they would. Too bad. They are better than what we have now, but only marginally.
History shows us that gold and silver freely circulating are preferable to central banks, even public ones. The USfounding fathers understood this. The US itself was founded on gold and silver. To expect central banking to work in the future any better than it has in the past just because it is “public” rather than “private” is simply a delusion.
Conclusion: If it must be tried, it should be attempted within the ambit of monetary competition and without naming the central bank printed money as the sole legal tender. When it comes to money, private markets should have a chance to compete. Absent the force of law, they will win every time.
This article was posted: Tuesday, October 11, 2011 at 9:15 am