Monday, February 15, 2010

Is Glenn Beck a Bailout-and-Fed Supporter?

The biggest and most corrupt of big government scams surrounds the banking system, the Federal Reserve Bank, their connection to Wall Street, and the recent bailout. If you read my blog you already know this. The Fed was established to support the banking system; it does this through the legal tender law that the Republicans passed in the 1860s to ensure the viability of greenback inflation. The Fed subsidizes the banking system and Wall Street by keeping interest rates artificially low. This in turn leads to misallocation of resources and transfer of wealth to stock holders, Wall Street and the banking system. The banking system's monopolization of credit is re-enforced through income and other high tax rates that decimate personal saving and eliminate small scale private capital formation, effectively ending widespread entrepreneurship.

It is safe to say that if you favor the Federal Reserve Bank you are a friend of big government, and if you oppose its existence then you are a friend of small government. There is little in between. Without the Fed there might not even be big government because the federal government would be forced to raise tax rates to cover government spending, and there would be tax revolts.

The friends of big government have always favored central banking. This began in the US with Alexander Hamilton and continued on through Henry Clay, Abraham Lincoln, the Progressives (with Woodrow Wilson re-establishing the national bank in 1913), Franklin Roosevelt and Richard M. Nixon. The opponents of central banking were the Anti-Federalists like Sam Adams, Jefferson, Andrew Jackson and Grover Cleveland. Between 1900 and the 1960s the Progressives and their New Deal cousins destroyed the Lockean American freedom movement that Sam Adams and Jefferson had led. The freedom-oriented Democrats of Andrew Jackson's time were replaced by a new version of Whig elitism that claimed to favor the poor: social democracy. But both social democracy, which claimed to favor the poor, and Progressivism, which claimed to favor the rich, had the same effect of subsidizing big business. Both favored Hamilton's elitist philosophy, and both still do.

Since the 1960s there has been a rebirth of the liberty movement. This has come about because of the failure of the big government model. Despite large amounts of media and academic propaganda, thinking people have seen the Progressive model repeatedly fail and have begun to organize themselves. However, the interests that support central banking, namely financial institutions, corporations, real estate interests, and of course, big government, have gained ever greater power. The media and academia are both responsive to these interests and have refused to tolerate questions about the existence of the Fed. Academics who have questioned the Fed, such as Ludwig von Mises, have been refused employment. In von Mises's case he was allowed to teach at NYU but outside parties such as the Foundation for Economic Education paid his salary. No television station has discussed Fed issues (the center of American political debate in the 19th century) until...Glenn Beck.

I do not watch television news, including Beck, nor do I listen to the radio. However, the issue has come up recently because of the Tea Party's move to support national Republicans like Sarah Palin and because of Beck's attacks on Debra Medina. While it seems worse than absurd to me to claim that the US government institigated 9/11, I would rather have a conspiracy theorist who opposes the bailout like Medina than a big government apologist like Rick Perry. Perhaps Beck doesn't see it that way, but then we need to see whether he really takes opposition to the Fed, to the bailout and hence to big government seriously. Why would he focus on this admitted peccadillo of Ms. Medina's?

The 2008 bailout was closely linked to the Fed. Wall Street depends on the Fed in several ways. It obtains enormous amounts of credit which it uses for speculative purposes from banks that the Fed funds and regulates. The stock market increases since the 1940s have been dependent upon Fed stimulus. In a free market, interest covers the cost of capital and the stock market does not rise. In a semi-socialist state like the US, the stock market goes up whenever the Fed reduces interest rates.

Century-long stock market increases are not a free market phenomenon. In a free market, if a firm is able to earn excess profits, causing its stock price to rise, other firms will enter the industry and compete (such as Burger King and Wendy's entering the hamburger market because of McDonald's success). Because of the competition, the stock price will fall. But if the Fed creates money, pushing down interest rates over 100 years, the stock "averages" like the S&P 500 rise.

The collapse of 2008 was the product of Wall Street's incompetence and greed. The same kinds of collapses, incompetence and greed existed in the 19th century, for instance, the failure of Jay Cooke & Co. in the 1870s. The failure of Jay Cooke, the largest investment bank of the period, was followed by a period of rapid innovation and creativity in the economy at large. Nikola Tesla invented A/C electricity in the same decade, and he invented the framework for radio and television in the 1890s. The pace of innovation in the 1870s was much, much greater than today. So the failure of Jay Cooke led to economic progress. There will be no such progress in the face of the Fed's and the Bush-Obama administration's subsidization of Wall Street.

In the video below Glenn Beck states that he favors the bailout. This is in September 2008. In the video below that Glenn Beck decries Fed policy but does not say that the Fed should be abolished.

Mr. Beck cannot have it both ways. Either he is for the Fed or against it. Either he is for the bailout or against it. He is either for big government or against it.

I would be happy if Mr. Beck or his listeners could provide evidence that in fact Mr. Beck is for small government; for the abolition of the Fed; and against the bailout.


"GLENN: We're talking about this bailout package and as I have told you before, I am for the bailout package, however that is getting weaker and weaker as the days go on because it is getting more and more caveats and it is becoming worse and worse"

In this video Beck discusses the Fed, but does not discuss the underlying dynamics of Fed subsidies to Wall Street and the banking system through monetary expansion.

I have stopped listening to television because of the lies. Can one of Beck's listeners explain to me: Is he dancing the two step or does he have something to say about big government?

1 comment:

Cindy said...

I believe that all of these excerpts come from when Beck was on CNN... Which may or may not have anything to do with the content of his show - but speaks volumes to me... I believe that Mr. Beck has educated himself extremely well in the time since - and if you were to listen to him now - and in the past several months - I don't believe that you would have the same questions in your mind. Keep in mind - Mr. Beck, like O'Reilly and Limbaugh all make their living from "entertaining" us - and writing books - I just happen to think that of the three, Beck is the one that is closest to being on-track about what is happening.