Wednesday, February 17, 2010

Do I Have Egg on My Face?

Do I have egg on my face? Sort of. Half an omelet. Chris Johansen forwarded the above video after my diatribes about Beck over the past couple of days. Glenn Beck is a hero for talking about the 2008 expansion of the monetary base. He is one thousand percent ahead of virtually the entire news media, which has tap danced around the financial system's exploitation of the average American.

But Mr. Beck can do more. For example, he attributes the monetary expansion to the government, and that is only partially true. Ultimately, monetary expansion is attributable to the banking system, not to the government. As Beck himself pointed out elsewhere, the Federal Reserve Bank is privately owned. Hence, the value of the dollars in your bank account are determined by private interests, not by the government and not by an objective standard.

As well, Mr. Beck could be exploring how the monetary system has been used to exploit the poor and working class to the benefit of the wealthy, especially the financial system itself which Americans have permitted to control their money. I had referred Beck to several books that examine this, such as Murray Rothbard's Mystery of Banking.

The subject of money is simple. In the 19th century most Americans, including those with first grade educations, were aware of the issue and it was publicly debated. Today, television and newspaper reporters attribute some kind of mystical aura to it.

It's good to talk about the monetary expansion, but omitting the redistributive effects of pumping up the stock market and of causing real wages to stagnate leaves the story incomplete. How the money supply pumps up the stock market is evident. More money means lower interest rates. Lower rates means higher stock market. Higher stock market means more trading. Nothing complicated. More money means more inflation. More inflation means lower inflation adjusted wages. Nothing complicated.

Fancy talk about a new world order is unnecessary to tell this story. The Whigs advocated central banking going back to Hamilton and before. Hamilton based his ideas on the philosopher David Hume, who was incidentally a mercantilist economist who set forth the basic Keynesian concepts that are in use among Progressives today. "Progressives" are "Progressive" because they rely on 18th century ideas.

So, Mr. Beck, you're doing ok, but you could be doing better. B-. But "A" for courage.

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