On August 25, President Obama announced that he was reappointing Ben Bernanke to a second four-year term as Chairman of the Federal Reserve. The media hype accompanying the nomination reinforced dangerous illusions aiding a subversive agenda.
Managing Money and Markets
Following the Obama announcement, Time.com issued a puff piece, “Why Obama Reappointed Bernanke to the Fed,” extolling the heroic accomplishments and talents of “Fireman Ben.” In particular, Time.com (along with Obama and others) praised Bernanke’s deep study of the causes of the Great Depression:
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So when the financial markets melted down in 2008, [Bernanke] vowed to avoid the errors of omission the sluggish Fed had made in the 1930s and do everything possible to prevent the crisis from becoming a calamity. He blasted a fire hose full of dollars at the U.S. economy, exercising unprecedented powers and sidestepping the democratic process, figuring that desperate times called for desperate measures.
But, we might ask, what caused the desperate times? And why was blasting “a fire hose full of dollars at the U.S. economy” an appropriate response or function of government?
The primary victim of such monetary and economic meddling has been the middle class. On August 6th, CNNMoney.com warned: “Nearly half the nation’s mortgage borrowers will soon owe more on their mortgages than their homes are worth, according to a new report.” One of the researchers for the report noted: “That’s a dramatic shift from the past several decades when housing was the foundation of middle class wealth.”
For those interested in an honest history of the Great Depression, uncontaminated by central banking mythology, we highly recommend America’s Great Depression. In this classic 1963 analysis, free market economist Murray N. Rothbard showed that conventional “wisdom” had the cause and cure of the depression backwards. The Insiders promoting this same “wisdom” today insist that the free market causes these problems and that enlightened government intervention is the essential cure.
Time.com is far from alone in promoting the idea that a modern economy must be managed to avoid disaster. But now we are told that in a crisis even such management may not be enough, unless an extremely clever, courageous individual sits at the helm:
A July 6th report by CNNMoney.com, entitled “Bernanke’s $1 trillion hangover,” examined the challenge of weaning “the economy off the $1 trillion of new money created by the Fed when disaster loomed last fall. ‘Your timing has to be perfect,’ said David Jones, former Fed economist and president and CEO of DMJ Advisors LLC in Denver. ‘If you do it too soon [i.e., stop inflating the money supply], you keep us in recession. And if you do it too late, you get inflation.'”
What few media reports mention is that in the process of spreading new money all over town, the Fed dilutes the value of all money, just as does a counterfeiter. And in the process it confiscates and redistributes wealth. The new money enriches some Americans [the earlier recipients] at the expense of those on fixed incomes and later recipients of the new money. And the value of all savings is eroded.
The Establishment media are presenting Bernanke as not tied to Wall Street (“a financial overlord from Main Street rather than Wall Street” – Time.com). And President Obama suggests the same:
“We have already seen how lax enforcement and weak regulation can lead to enormous wealth for a few and enormous pain for everyone else,” Obama said. “And that’s why even though there is some resistance on Wall Street from those who prefer things the way they are, we will pass the reforms necessary to protect consumers, investors, and the entire financial system.”
But it is an illusion to believe that anyone is selected to head up the Fed unless he has the confidence of the international bankers. In fact, before anyone is too comforted by the president’s assurances, we should recall the clever deception used to pass the Federal Reserve Act in the first place.
The Federal Reserve Act was originally presented to Congress as the Aldrich bill. The bill, which had been drafted by the international bankers at the J.P. Morgan estate on Jekyll Island, was defeated in 1911, because Senator Nelson Aldrich was too closely identified with Wall Street.
So when Woodrow Wilson was elected, with strong J.P. Morgan support, the bill was simply reintroduced as the Glass Act (named for Senator Carter Glass, a critic of the Aldridge bill). But this time it was presented as a tool for fighting Wall Street, and it passed both Houses of Congress on December 22, 1913!
During the debates, Congressman Charles A. Lindbergh, who had courageously opposed the schemes of the international bankers, warned his colleagues: “This is the Aldrich bill in disguise…. This new law will create inflation whenever the trusts want inflation….”
What few Americans realize today is that it was the advent of a centralized banking system (The Federal Reserve) controlling our money supply (and the value of the dollar) that has enabled federal spending to explode. Politicians could henceforth spend beyond their willingness to tax Americans directly. Government simply sells its debt to the Federal Reserve, which purchases the debt with new money. Taxpayers still bear the brunt of government spending (when the value of the dollars they hold erode and prices go up in the marketplace), but they are less likely to attribute their pain to Washington.A sweet deal for big-spending politicians, but a big drain on America’s vitality and an invitation to disaster!
A Convenient Scapegoat
In trying to claim moral superiority while trashing constitutional limits on federal power, the Obama administration likes to paint its opponents as opposed to progress and wedded to the status quo. We offered one example above from the president: “And that’s why even though there is some resistance on Wall Street from those who prefer things the way they are….”
But a few days earlier, David Axelrod, Senior Advisor to the President, used very similar words in defending the administration’s plans for expanding federal control of the entire health care industry (through national universal health insurance):
We knew going into this effort that accomplishing comprehensive health insurance reform wasn’t going to be easy. Achieving real change never is. The entrenched interests that benefit from the status quo always use their influence in Washington to try and keep things just as they are.
It is deceptive to portray those who oppose the radical socialist transformation of society and the building of unlimited government as forces opposed to progress. Many who oppose Obama’s idea of change do not revere the status quo. They want a different kind of change – get the government out of the way of real progress and stop the collectivist stranglehold on American industry, ingenuity, and the economy.
We understand that the American revolution of 1776 established a new principle – that government power must be limited in order for the people to enjoy the fruits of freedom.
What Obama is proposing is a return to the “glories” of state power that mired Europe for centuries and from which America fortunately escaped.
We have pointed many times to evidence that the Insiders control the administrations of both of the major political parties. The media perpetuated notion that modern presidents march to the tune of the people who elected them is simply a useful myth that camouflages the real power brokers. Nowhere is a president’s subservience more solid than in his relationship to one of the Insiders’ most important creations – the Federal Reserve. As CNNMoney.com pointed out:
Over the past three decades, the country has had only three Fed chairmen. New presidents have tended to keep Fed chiefs in place regardless of political party to maintain continuity in monetary policy and confidence in markets. Paul Volcker was appointed by President Carter in 1979 and retained by Ronald Reagan. Alan Greenspan, a 1987 Reagan appointee, served under four presidents including President Clinton. Bernanke, 55, was appointed to the top job in 2006 by President George W. Bush, after serving as Bush’s chair of the Council of Economic Advisors.
One might expect this evidence of bi-partisan “cooperation” and same-thinking to raise suspicions regarding “Wall Street” influence – particularly, in light of the Fed Chairman’s massive authority and independence. According to the Time article:
The Fed chairman is often described as the second most powerful U.S. official; the main check on him is the first most powerful official’s power not to reappoint him.
If you are one of those concerned about this exercise of unaccountable power we highly recommend reading The Marxist Attack on the Middle Class.