Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

End the Fed? Or End the Market Economy?

Politics / Central Banks Dec 09, 2009 - 02:53 PM GMT

By: Shamus_Cooke

Politics

Best Financial Markets Analysis ArticleWhen Republican Congressman Ron Paul recently introduced legislation to audit the Federal Reserve, diverse sections of the political spectrum applauded. And rightfully so. The Fed’s role in the still-developing bank bailouts is one of utter secrecy; the total cost of which — as estimated by the bailout’s Special Inspector General, Neil Barofsky — could cost taxpayers $23.7 trillion. The fact that legislation needed to be introduced to raise the question of the whereabouts of these funds points to a larger breakdown in U.S. democracy.


Ron Paul’s legislative maneuver is consistent with his larger political philosophy, which he attributes to the Austrian school of economics. Central to this economic outlook is a focus on monetary policy, and the blaming of central banks for much of our economic troubles. Paul’s popularity has increased exponentially, rising in consequence to the bank bailouts and the Federal Reserve’s role in the Great Recession. The title of his recent book, End the Fed, was also used as the slogan of protests held around the country — many organized by Ron Paul supporters — outside of central banks.

As elite-controlled as the Federal Reserve system is, it’s “ending” cannot be the final goal of a progressive political movement. Larger social/economic forces must be considered too — and be dealt with.

For instance, a cursory glance at the history of the Federal Reserve shows its inadequacy as a goal for any social movement. After Andrew Jackson abolished the U.S. Central Bank in 1833, the market-economy [capitalism] continued to evolve; small companies out-competed and incorporated others, continued growing, and soon morphed into the giant corporations that we know today — driving down wages, boosting profits, and increasing social inequality.

Contrary to the beliefs of Ron Paul and Austrian economists, the lack of a national bank does not end the boom-bust cycle inherent in a market-economy. Four years after Andrew Jackson abolished the U.S. National Bank, a severe depression rocked the country, lasting seven years. The regular, capitalistic boom and bust cycle continued until the Panic of 1907, which pushed congressmen to re-institute the National Bank, re-named the Federal Reserve in 1913. The goal was to give the market economy extra stability. In 1929 the Great Depression began.

Recessions/depressions do not happen because of bad monetary policy, which can accentuate them. Instead, recessions occur naturally under capitalism, which produces a nearly unlimited amount of goods and services for a very limited market. As wages are driven down by the demands of profit-seeking corporations, the ability for the market to consume the produced goods shrinks (of course).

As wages continue their downward spiral, the demand for credit rises, as workers look to compensate for their lowered standard of living. But banks will issue only so much credit, and will shut off the money-valve when their loans come back unpaid (the “credit crunch”). When this happens, a recession begins. Austrian economics looks at the last stage of the economic cycle — the credit crunch —as its cause. Thus, the money lenders receive all the blame, while the other corporate culprits — functioning according to the “rules of the market” — are left unblemished. Bankers are blamed for what is ultimately the natural processes of capitalism: too many goods are produced to be consumed within the confines of the market.

Every major economic goal of Ron Paul would fail to alter the above dynamic. For example, if the U.S. were to return to the gold standard — another policy of Ron Paul — would giant corporations cease to dominate social life? Would the undemocratic power of the super-rich be somehow restricted? Would workers wages increase, enabling them to consume all the goods produced? Paul never asks such questions, but the answers are obvious — mega-corporations and the billionaires who own them will continue to wield more than votes to steer society in their favor, at the continued expense of workers’ wages.

It must be noted that a hero of Ron Paul, Austrian economist Friedrich Hayek, was also a hero to Margaret Thatcher, Ronald Reagan, and other founders of the neo-con movement. Workers will recognize these figures as natural enemies, who destroyed social programs, attacked unions, and drastically lowered taxes for the super-rich — helping to create the current budget deficits.

Austrian economics is simply one of the many variations of free-market capitalism. The goal being an un-regulated market economy, where there would be no limit to the mega-employers greed for profits, no minimum wage, no social security, no workplace protections, no social safety net, etc. The super-rich, however, would be “free” to do whatever they liked with their money, since the “free market” doesn’t levy income taxes.

Since Paul is for a “pure” form of capitalism, he lavishes god-like praise on the power of the market. For him, society must produce goods only if it can be sold on a market, and offer an individual (or corporation) a profit. Human needs thus belong to the realm of charities, churches, etc. The market remains the decider, and the super-rich who own the corporations control the workings of the market.

Ultimately, it’s unrealistic to focus on one aspect of our economic system in isolation, as if it were un-connected — and not subservient — to larger economic forces. In doing so, a simple cure-all is offered for the systemic breakdown of the international economy. But like all easy answers, ending the Federal Reserve is a false remedy. It thus serves as a distraction to the above workings of Paul’s revered capitalism, in the same way that his constant scapegoating of immigrants does.

The tremendous anger towards our economic system is currently directed at the banks, which deserve the hatred. But they are not the only giant corporations demanding that workers get paid less, have little or no health insurance, no pensions, no time off, etc. The mega-corporations in general deserve our attention, for they are every bit as undemocratic as the Federal Reserve, and benefit from its policies. The end goal is to boost profits by dominating the market, so that a very small number of people get incredibly rich at the great expense of the rest of society.

Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action (www.workerscompass.org).  He can be reached at shamuscook@yahoo.com

Shamus Cooke is a frequent contributor to Global Research.  Global Research Articles by Shamus Cooke

© Copyright Shamus Cooke , Global Research, 2009

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Ed Brenal
10 Dec 09, 11:56
Ron Paul

The crux of your argument against Paul is that he's a one trick pony, that ending the Fed is a cure-all. Paul believes no such thing. Paul's only assertion is the Fed is one of the bigger contributors (culprits) of the economic collapse. He's well aware and vocal on the fact that congress, wall street, ineffective wasteful programs, over the top regulations, two wars, etc., all contribute. Your attempts at schooling Dr. Paul in Austrian economics are in vain. To present Paul's overall position as a one dimensional narrow minded and shortsighted is disingenuous.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in