Friday, March 23, 2012

Bernanke: Gold-Backed Money Is Not The Answer. He’s Right.

I have defended Bernanke on here before for not allowing the system to collapse and causing massive chaos in our society.  But I also said that after these corrupt Wall Street firms were saved, they should be broken up.  These “free market” (mythical) nut jobs who criticize Bernanke for saving us from complete chaos believe we need to let society collapse and pick up the pieces to absolve ourselves of the excesses in our economy, are completely wrong.   They generally seem to read an Austrian economics book and become a ideological bigot without actually understanding what they are talking about.  Letting the system implode was the prevailing economic view at the start of the Great Depression.  So, policy makers and the Federal Reserve sat back and watched society collapse.  Literally.   Thousands of banks failed and the deposits of millions of innocent people in those banks disappeared like a fart in the wind.   The Federal Reserve did nothing as recompense for those businesses and individuals who lost all of their savings.  This twisted perspective of wishing for collapse is held today by plenty of bloggers and radical fringe elements who are challenged to actually understand what they are talking about.

One of those with such a twisted view is seemingly Ron Paul and his religious followers who are generally quite economically-illiterate.   I suspect the exact same chaotic collapse would happen today were it up to Paul.  ie, Based on Paul’s comments, he would let the system collapse and anyone who was taken down with it was shit-outa-luck.  We already have an example of the auto industry where bad debts can be liquefied without letting the system collapse.  To the contrary, the American auto industry is in better operational shape than it has been in thirty years.  Unfortunately, these firms are still going to be left to suffer the coming crises created by politicians and Wall Street as the rest of us are.  And, I don’t appreciate the favoritism that certain corporations including the auto industry, GE, Wall Street  and others received during this crisis while Americans were left to rot.  But my point is that the system needn’t collapse in order for it to be saved and if you question that, the auto industry is a simple example if you need one to visualize it.   The same policies applied to Wall Street and the auto industry could also be applied to We The People as we noted in a solution to this housing mess years ago.  

It is the people who are the victims of predatory corporations.  It is the people who built this country.  It is the people who politicians should be concerned about helping.  

People who believe debt collapse is imminent are divining the future based on how the system is constructed today and was constructed nearly one hundred years ago.  That is not going to be the future.  That is why I have never, not once, written of a coming debt collapse as many others have.  A debt collapse would be a conscious decision on behalf of policy makers.  Deflation?  Yes.  Deflationary debt collapse?  No one can clearly make that call.  It is not an outcome that is guaranteed even if it appears likely.  Now, I have said the U.S. might default on its foreign debts, specifically to China, but that would be an act of belligerence rather than a necessity.  Looking in the rear view mirror,  debt collapse is most certainly a guaranteed outcome.  But, debt is a myth and the collapse allowed by the Federal Reserve during the Great Depression was a conscious act.  Using the past to divine the future or driving forward looking in your rear view mirror is a tricky proposition.  It is the very reason Wall Street is failing.  They are applying mathematics to the past to define the future.  History can be a very useful guide but rather than repeating, it usually just rhymes.   Debt collapse, especially in the U.S. where we still have sovereign money, is not a foregone conclusion.   But it is a conclusion if systemic incompetence prevails.

In addition to supporting Bernanke, I have also criticized him more times than not for not speaking out for reform of a massively corrupt banking system that uses the Federal Reserve to loot and prey on democracy, its citizens and society.  And, for having his head placed squarely where it shouldn’t be as it pertains to his views that I would often classify as dipshit economics.  As Thoreau noted in Civil Disobedience, "Others--as most legislators, politicians, lawyers, ministers, and office-holders--serve the state chiefly with their heads; and, as they rarely make any moral distinctions, they are as likely to serve the devil, without intending it, as God.”.  If Bernanke is guilty of anything, it is of serving a system without any moral distinction.   Of serving the devil without intending it.

There are many solutions that don’t involve watching the world collapse.   But both Washington politicians and these “free market” dunces are so blinded by their jihads that they can’t see beyond the end of their nose.  (Okay, so I used an Islamic term because the word had a greater effect than those that may have been termed by radical Christians; of which there are plenty.  You know, because some of the political and fundamentalist Christian radicals are so Islamophobic.  So these terms now have a special place of fear in our minds.  Fear put their by fear-driven, power-mad religious and political haters who derive illegitimate authority through messages creating divisiveness.    Personally, I don’t distinguish between hate derived in the name of an omniscient intelligence be it Islam, Christianity or any other religion; a view manifested completely within the unintelligible, unintelligent, fear-driven self and not of any form of omniscient intelligence.  Hey, what would a post on here be without some type of sidetracked rant?)

Bernanke is on a public relations tour for the Federal Reserve.  There’s a paradox for you.  Rather than accept responsibility for the enablement of corruption and seeking substantial reform, we see the Federal Reserve attempting to rationalize and perpetuate a financial system of putrified rot and fraud.   By the way, one created by politicians, not by Bernanke.   Bernanke is simply the enabler of corruption.  Anyway, Bernanke rightly remarks during his tour that gold-backed money solves nothing.    Gold solves zero issues we are facing today.  Contrarily, as we have written, a return to the gold standard now would send us into a depression as far as the eye can see; showing us how little those advocating its return actually understand about money.  A return to the gold standard would serve no one better than the status quo to lock in their thieved gains stolen from society over the decades while denying democracy any semblance of opportunity to create democratic money that would drive human development, society’s needs and democratic institutions.   The flip side of that coin that Bernanke didn’t tell us is that the system as it is set up today, with centrally-planned interest rate moves used to control money supply, artificially limits economic opportunity and creates artificial unemployment.  It too puts control of our money in the hands of a few while denying democracy.  So, our system as it is constructed isn’t any great shakes either.  He is also correct that the Federal Reserve didn’t act as lender of last resort and that led to a massive loss of money that was completely unnecessary and made the Great Depression substantially worse.  

Bernanke serves a failed ideology on countless topics including free trade, trickle down economics, the Federal Reserve in its current form, saving a failed and corrupt monetary system, keeping capital markets in the hands of Wall Street, etc.    Bernanke is most assuredly more “book smart” than any of his critics.  The question is what did a failed pseudoscience of economics teach him in those books?  (While I am not a big fan of standardized tests, he essentially received a perfect SAT score and followed that up with excellence in his education.  The question is did he actually learn anything other than nontruths perpetuated by junk economics?  Are his test scores indicative of an ability to absorb what others believe rather than an ability to determine his own reality?)    So too might many gold money backers be book smart.  But, they too really don’t understand anything about democratic capitalism or how to create a monetary system that serves human development and a democratic society.  I will give Bernanke some benefit that he  knows more about money than most of his detractors.   Or, at least money as defined within the system we currently operate.  Although it seems he may have a few blind spots…. we all do.   But, we need someone who is more than supposedly book smart leading our monetary system.  We need someone willing to make the moral distinction that Thoreau so aptly identifies.   We need leaders willing to stand in the face of corruption and evil to fight the good fight on behalf of our nation and humanity.  And, most importantly, those who have no voice because they have been marginalized by corruption and evil.  

I have commented before on here that I support having a lender of last resort.  But that the Federal Reserve should be a part of the Treasury granted under constitutional authority rather than being this fascist comingling of half government, half private banking beast that it is.  Or even worse, an all private banking system as most gold money advocates desire.  Ignorantly desire, might I add.  And under that newly created role, we could create a much more granular monetary system and capital market structure that pushes some capital and monetary controls outward thus creating the concept of more of a “local” or more democratized money.   (The debate between the gold money advocates and the status quo is a little like the debate between Democrats and Republicans.  It’s a false choice and neither side is addressing the issues. ) 

I still haven’t put up an overall plan as a basis to redesign our money and our banking system to serve democracy and a democratic, merit-based economy but I have spoken of many components and dynamics.  It most assuredly would not be a tyrannical money as is today or would be if backed by gold which grants power to a very few while denying it to democracy.  I’ll get there in due time but I will say we are NOT going back to a gold standard.  That is exactly what many in the status quo wants; granting control and power over money to the very few who own all of the gold.    The status quo is far and away the biggest buyer of gold today.  What do they know that you don’t?  That gold money has been used as a weapon to defeat democracy and enable concentrated power and its corruption.   That is the history of gold money.  As I have said before, I wouldn’t be surprised to see the status quo attempt to re-institute gold money but, if so, they will almost certainly and ultimately fail.

posted by TimingLogic at 9:15 AM

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