A reader has been communicating with me about the ownership of the Fed. He or she points out that the President and the Congress have the right to appoint the chairman and board of governors of the Fed. Therefore, the member banks' subscription to Fed stock does not mean that they own the Fed. Power, in this view, is the President's, Congress's and the public's.
This argument overlooks the implications of stock ownership. By definition, ownership of stock in a corporation constitutes ownership of the corporation. It is true that the President's appointment of the board of governors and the chairman modifies some implications. However, there is another point that is more important. The stock ownership creates a fiduciary relationship. Any corporation must be operated in its owners' interests. Therefore, calling the member banks' holdings in the Fed "stock" rather than "loans" or "subscription fees" suggests that the framers meant to vest the crucial aspect of ownership in the banks, namely, that the Fed should be operated in their interest and not the public interest.
Bankers work with trusts all the time. The basic relationship of banks to their depositors is fiduciary. Hence, they instinctively understand what the reader has trouble accepting, that appointment of a trustee on behalf of a beneficiary does not change the beneficiary's underlying ownership. The appoint of a guardian for a minor orphan's assets does not change the orphan's owning the assets. Likewise, the president's appointment of a Fed chairman does not change the fiduciary relationship the Fed bears to its stockholders, the commercial banks.
Recently, Congress voted down Ron Paul's bill that would have required public audits of the Fed. This is significant evidence that Congress and the public have never believed (to believe that two groups of knuckleheads have any beliefs at all on the subject) that the Fed serves the public interests. What owner would refuse information about his assets? One of the fundamental rules about trusts is that the trustee must disclose all relevant information. That Congress does not want the information means that Congress does not think it or the public would benefit from the information. Hence, Congress and the public do not think that they are the Fed's beneficiaries.
Wednesday, December 29, 2010
Monday, December 27, 2010
New York and the Legacy Media
In a recent e-mail, Jim Crum uses an excellent moniker for the Democratic Party media: the legacy media. The phrase is embedded in Jim's important discussion about demographic trends that may undermine the legacy media's influence. Jim links to a LifeSiteNews.com article which notes that the Republican states are growing in population relative to the Democratic states:
"...states that went for Obama saw population declines that will result in fewer electoral votes and states that did not support Obama in 2008 saw their population increase and, as a result, the number of electoral votes they will allocate to a presidential candidate next time.
"The census found the United States population bumped up from approximately 281 million in 2000 to 308,745,538 as of April 1. Regionally, the northeast grew 3.2 percent while the Midwest grew 3.9 percent, the South grew 14.3 percent and the West grew 13.8 percent — making it so states that typically go Republican experienced more growth than predominantly Democratic areas.
"On the Republican side, Texas picked up four seats, Arizona, Georgia, South Carolina, and Utah will gain one seat each while Louisiana loses one thanks to population declines following Hurricane Katrina and Missouri loses one as well. On the Democratic side, New York and Ohio lose two electoral votes each while the Obama-supporting states of Illinois, Iowa, Massachusetts, Michigan, New Jersey, and Pennsylvania lose one and the pro-Obama states Nevada, and Washington gain one and Florida gains two.
"Ultimately, states voting against Obama in 2012 gained six electoral votes while states supporting him in 2008 lost six — a total shift of 12 electoral votes."
Jim contends that one-sided, pro-Obama media coverage will counteract the population trend in the presidential election. While this may be, I'm not convinced that the Republicans in '12 will do better than they did with John McCain in '08. McCain would not have been much better than Obama. As we stand now, the nation is putting band aids on the dike which, Jim notes quoting Edmund Burke, is being eaten away by rats. Many Republicans are as much rats as Democrats and, besides, the Republican band aids are too small.
For instance, New Yorkers for Growth forwarded to me John Faso's Op Ed in the New York Post, a Republican newspaper. I met Faso at a fundraiser last spring. Faso makes some good points but fails to address the underlying cause. Faso observes that New York is going to lose two congressional seats (I hope my Congressman, Maurice Hinchey, is one of them) because of the census. As well, he notes that more than one million New Yorkers have exited during the past ten years. He says that Governor Cuomo (once more that horrible sound) ought to declare a fiscal emergency. He notes that the Tax Foundation ranked New York 50th in hospitality to business.
I wonder what that does to my students' job prospects...the same students who support regulation 10 to 1. And there's the rub. New York's problems are so psychologically entrenched that the economic wizardry that Faso proposes will not help. My students, like the majority of New Yorkers, are brainwashed to believe in socialism. The population believes that economic goods like health care and housing are rights. Therefore, anyone who works must be taxed to subsidize anyone who doesn't. New Yorkers will favor that to the maximum extent possible until they learn that there is no such thing as a "positive right." A right can only exist in nature. You do not have a right to housing in nature. You have to build housing. If you dig your spot in a cave, I don't have the right to force you to dig my spot in my cave. But New Yorkers believe that I do. Therefore, there is no hope for New York until it collapses or until the education system is revamped.
I wonder what that does to my students' job prospects...the same students who support regulation 10 to 1. And there's the rub. New York's problems are so psychologically entrenched that the economic wizardry that Faso proposes will not help. My students, like the majority of New Yorkers, are brainwashed to believe in socialism. The population believes that economic goods like health care and housing are rights. Therefore, anyone who works must be taxed to subsidize anyone who doesn't. New Yorkers will favor that to the maximum extent possible until they learn that there is no such thing as a "positive right." A right can only exist in nature. You do not have a right to housing in nature. You have to build housing. If you dig your spot in a cave, I don't have the right to force you to dig my spot in my cave. But New Yorkers believe that I do. Therefore, there is no hope for New York until it collapses or until the education system is revamped.
Even many brainwashed ideologues among New Yorkers find that the positive rights theory in which they have been indoctrinated does not work. Some of those who work leave the ones who don't. But I suspect they take their socialist ideologies with them and then aim to destroy the states to which they move. Thus, New York has become a state made up of people who don't work: welfare cheats; Wall Street stock jobbers; lawyers and college professors. Those who leave aim to destroy the futures of states around the country. New York is a venomous disease.
As far as the legacy media, the value of not consuming it cannot be overstated. The reason is framing. A frame is how you conceptualize a situation. If you listen to the Wall Street-owned legacy media you are induced to frame issues as they wish. They do not wish you to frame issues in realistic terms of monetary policy and special interest brokerage. The issues in the United States revolve around these two concerns. If you believe the news media there is no such thing as a special interest lobby and no such thing as the Federal Reserve Bank. Putting Americans to sleep intellectually is necessary to manipulate them.
Framing determines how you think and therefore the decisions you make. The legacy media frames issues in a certain way. It claims that there is a national consensus, when in fact few Americans have the first idea of what the issues are. Consuming the legacy media is a sure way to lose track of the real issues. Why waste your time?
Saturday, December 25, 2010
Ownership of the Federal Reserve Bank
An anonymous poster asked me about the ownership of the Federal Reserve Bank and without doing a lot of research I found an interesting post by Professor Edward Flaherty of the University of Charleston. Flaherty debunks the claim that foreigners or the Rothschilds control the Fed. That is silly. But equally silly is Flaherty's claim in the following sentence:
"The New York Federal Reserve district contains over 1,000 member banks, so it is highly unlikely that even the largest and most powerful banks would be able to coerce so many smaller ones to vote in a particular manner. To control the vote of a majority of member banks would mean acquiring a controlling interest in about 500 member banks of the New York district. Such an expenditure would require an outlay in the hundreds of billions of dollars. Surely there is a cheaper path to global domination."
While coercion is a loaded term, Flaherty displays a lack of understanding of basic political and interest group processes. Typically, democratic processes yield a small number of controlling or influential parties. Robert Michels first called this process the iron law of oligarchy in a book on political parties (specifically the Socialist Party of Germany, which at the time was considered highly democratic) and it has been examined by Mancur Olson on the public policy level in his book Rise and Decline of Nations.
While it is silly to claim that the Rothschilds or some cabal of Jewish or British bankers controls the Fed, it is equally silly to claim that the big money center banks do not influence monetary policy. Since 2008 we have witnessed Goldman Sachs largely dictate national spending policies. Flaherty's claim that ordinary political processes do not apply and that the large banks lack influence on the nation's monetary policy, given the trillions of dollars just printed and handed to them, is wrong.
Monetary policy favors the commercial banks and by definition the big commercial banks get the most juice from the Fed's monetary expansion. That doesn't mean that there's a conspiracy of international bankers, Jewish, British or otherwise, nor does it mean that there is a a conspiracy of big US banks. It just means that money center banks control a disproportionate share of a monetary system that is designed to subsidize banks in general. The bigger banks benefit more than do the smaller banks, and they do more damage because they tend to be more speculative. The Mexican and Latin American debt crisis; the Hunt silver speculation; Enron; Long Term Capital Management; and the sub-prime crisis as well as the century old merger mania that has reduced American business's creativity are all due to the money center banks.
The banks and financial interests benefit and you lose. That is built into the system that American voters have supported. If you insist on voting for one of the two major parties every time, you are supporting the system. Voters have themselves to blame, not a conspiracy.
"The New York Federal Reserve district contains over 1,000 member banks, so it is highly unlikely that even the largest and most powerful banks would be able to coerce so many smaller ones to vote in a particular manner. To control the vote of a majority of member banks would mean acquiring a controlling interest in about 500 member banks of the New York district. Such an expenditure would require an outlay in the hundreds of billions of dollars. Surely there is a cheaper path to global domination."
While coercion is a loaded term, Flaherty displays a lack of understanding of basic political and interest group processes. Typically, democratic processes yield a small number of controlling or influential parties. Robert Michels first called this process the iron law of oligarchy in a book on political parties (specifically the Socialist Party of Germany, which at the time was considered highly democratic) and it has been examined by Mancur Olson on the public policy level in his book Rise and Decline of Nations.
While it is silly to claim that the Rothschilds or some cabal of Jewish or British bankers controls the Fed, it is equally silly to claim that the big money center banks do not influence monetary policy. Since 2008 we have witnessed Goldman Sachs largely dictate national spending policies. Flaherty's claim that ordinary political processes do not apply and that the large banks lack influence on the nation's monetary policy, given the trillions of dollars just printed and handed to them, is wrong.
Monetary policy favors the commercial banks and by definition the big commercial banks get the most juice from the Fed's monetary expansion. That doesn't mean that there's a conspiracy of international bankers, Jewish, British or otherwise, nor does it mean that there is a a conspiracy of big US banks. It just means that money center banks control a disproportionate share of a monetary system that is designed to subsidize banks in general. The bigger banks benefit more than do the smaller banks, and they do more damage because they tend to be more speculative. The Mexican and Latin American debt crisis; the Hunt silver speculation; Enron; Long Term Capital Management; and the sub-prime crisis as well as the century old merger mania that has reduced American business's creativity are all due to the money center banks.
The banks and financial interests benefit and you lose. That is built into the system that American voters have supported. If you insist on voting for one of the two major parties every time, you are supporting the system. Voters have themselves to blame, not a conspiracy.
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