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on the Federal Reserve and classical liberalism

From JHo, via email:

“Interesting use of “neoliberal”, although this piece is couched in technical, even passive language.  I’ve been ranting about this for years.

Ben Bernanke was an academic, not a banker but sufficiently brainwashed in neoliberal, pro-Wall Street ideology to be trusted by the banks to flood the economy with credit in an attempt to re-inflate the bubble economy so as to pull real estate prices out of negative equity – thereby saving the banks from their bad loans. Instead of writing down debts, the Fed made sure that no bank would lose, or even be prosecuted for the financial fraud that has risen to epic proportions over the past decade. My UMKC colleague Prof. Bill Black calls this phenomenon “criminogenic.” So in effect, Mr. Bernanke is as much a bank lobbyist as Mr. Greenspan.

In this sense, both Mr. Greenspan and Mr. Bernanke were successful in steering U.S. financial policy to benefit Wall Street by loading down the economy with debt, and then using public credit to bail out the banks and pass the losses onto taxpayers. But this “success” is leaving the U.S. economy debt-ridden and uncompetitive internationally, because its industrial producers face such heavy debt charges that they are priced out of world markets for most products except for military arms, agriculture and high-technology monopoly goods and patented motion pictures and entertainment.

The existence of the Federal Reserve: does it match with the ideas of the classical liberalism? How liberal is this institution?

The Federal Reserve is antithetical to the classical liberal aim of using financial and tax policy to minimize the economy’s cost of production. From the Physiocrats and Adam Smith through Ricardo, John Stuart Mill and the Reform Era, the aim was to minimize land rent (by either taxing it away or nationalizing the land), monopoly rent (by price regulation or by keeping natural monopolies in the public domain) and interest or other financial charges that were payments for special privilege.

Acting on behalf of the banks, the Fed has sponsored the un-taxing of real estate and monopolies, as these have become the major bank customers. And by deregulating Wall Street, the Fed has underwritten the overgrowth of unproductive credit – credit extended not to finance industrial capital formation, but simply to speculate and to transfer ownership of assets already in existence.

The guiding philosophy of the Fed is to inflate prices of assets in order to expand the market for real estate loans (which account for some 80 percent of bank loans in the United States), corporate takeover loans and speculative “casino capitalist” loans for foreign-currency and interest-rate arbitrage.

“Gets more teeth when this simple clip is considered.”

Discuss.

18 Replies to “on the Federal Reserve and classical liberalism”

  1. sdferr says:

    Substitute Jews for banks and we’ve got a perfect piece of hitlerian propaganda there.

  2. JHoward says:

    There are none so blind as…

    …those who wish themselves seers.

  3. bh says:

    “[…] their wages remain largely unchanged.”

    Not according to the Heritage Foundation.

  4. entropy says:

    Video removed by user on the youtube link.

  5. bh says:

    Banks make money by lending money. What’s Bernanke done with those return rates? He’s dropped them through the floor and said they’ll stay there.

    Compare BAC against the Dow since 2007 or 2008.

    Strange, huh?

  6. bh says:

    Surely Goldman has done better.

    Nope.

  7. bh says:

    Citigroup?

    Nope.

  8. bh says:

    You’d sorta expect better returns from these Jews Gypsies Boogiemen these villains.

  9. bh says:

    Apparently I can’t do the strikethrough.

  10. leigh says:

    For a bunch of Jewboys (Nixon™), they aren’t very good with the gelt.
    \
    Bh: bracket strike bracket text bracket backslash strike bracket

    Hope that helps.

  11. leigh says:

    I mean foreward slash, of course.

  12. bh says:

    I shall try that, leigh.

  13. geoffb says:

    Same video here I believe.

    Test strike

  14. bh says:

    This helps us with “UNDERSTANDING NWO ECONOMICS” then.

    Great.

  15. bh says:

    Fucking bankers. Or Jews. Or big business. Or something.

  16. JHoward says:

    So screw it then. A central, rigged, inherently unstable, inherently taxing, liberty-sucking, monopolistic, quasi-private but wholly unrepresentative globalist entity taking the dollar on a 97 cent downhill ride and being paid a half trillion a year for the privilege. No worries.

    An entity buying US bonds in imaginary dollars so as to keep the whole mess afloat. Hey, cool. The polar, debt-monetizing opposite of classically liberal economics? Let’s see it as the very height of Nixonesque Republican virtue.

    The single finest means to impliment the Socialist State — should it rest there, which it won’t, of course? So what.

    If it can be seen as private sector commerce and especially if we can cartoon criticism of all this as Jew-hate then it is that thing and it shall always be that be. Or something.

  17. JHoward says:

    …as history has shown repeatedly, power centers frequently shift. The world is now witnessing yet another transition of power, this time from west to east, as the US-led western hierarchy suffocates within its own debt-laden Keynesian fiat bubble.

    Nah.

  18. palaeomerus says:

    Yeah Japan in already where we are headed. China’s economy is festering despite their cheap labor bubble. Russia seems doomed to a mafia style civil war.

    East is not looking that shiny. A global economy contracts when the enabling or stabilizing hegemony can’t afford to guard the trade routes and invest in emerging markets. China is not the miracle they advertise themselves as.

Comments are closed.