Saturday, 4 July 2009

Who is really against the Federal Reserve.

There is a growing community of people that adopt an anti-Federal Reserve position in the United States.

The first community (that I will refer as "the libertarian") object the institution of the Central bank from an economics analysis.

Austrian Economics teaches that an increase in the quantity of money does not confer any social benefit, that the central bank causes price inflation, redistributes wealth massively from the poor and middle class to the entrepreneurial and political class, is the cause of the business cycle that plagues western economies since the last 200 years(1), and is an indispensable instrument in financing the state wars and growth.

As such, it does not matter exactly who controls the central bank (being politicians, bureaucrats, or outsourced to private banks, or a mix of the 3), what are its institutional details, how it was created, or whether it is constitutional or not. A central bank that lowers artificially the interest rate by expanding bank credit will causes the negative consequences mentioned above.

The second community (that I will refer as "the primitivo-socialists") is a diverse crowd that oppose the Federal Reserve in the United States (you rarely hear them complaining about other countries' central banks) because it is allegedly part of a general secret conspiracy of elites, bankers, and/or Jews.

The main primitivo-socialists are the following:

  • The FED was established under false pretences - that's true, but who cares? If liberty was achieved under false pretenses, it would still be good.
  • It is Federal as much as Federal Express - as if being Federal as in USPS is better?
  • It is "owned" by private banks -how many "private" companies do you know that their chairman is appointed by the president?
  • They are charging interest on loan created out of thin air - true, but they give almost all of the interest back to the US Treasury each year - minus its lavish operating budget.

Basically, the FED is, according to the primitivo-socialists, a private owned institution controlled by a secret elite motivated by greed and profit, that only honorable, democratically elected, politicians can save us from. Sounds like a socialist rant against Wall-Mart, isn't it?

Because it is.

Primitivo-socialist often portrait themselves as being anti-socialists and as being in favor of freedom, but because of the fundamental lack of understanding of economics and political economy, they believe, in the end, in the same fundamental socialist ideology (but at a primitive level), that only the government can save us from those powerful individuals.

The primitivo-socialists have produced numerous material, such as the movie Wake Up Call - New World Order Documentary.

That movie blames every thing on elite, "secret" individuals, and avoids carefully to criticize politicians. Very little is said about the actual impact in the economy of the FED, but there is endless rants about its establishment, the bankers involved, their meeting, etc, etc, etc...

I would resume that movie with the following quote from it:

Globalism, essentially, is the desire for one world government, one world military, one world economy. Which, on a broad philosophical basis, may not be that bad. But, the problem is, is it, we are being pushed in globalism by secrecy and by deceit and nobody's got a chance to actually consider the ramifications or consider the methodology that is being used to push us into this globalism. - Jim Marrs
So democratic globalism is fine and dandy: Socialists to the core.

Other primitivo-socialist work include:

The primitivo-socialists are basically a giant straw-man that promotes ever bigger government to save us from the government we have now.

Libertarians have to distance themselves from the primitivo-socialist, since any pro-FED attack will unavoidably merge both anti-fed positions into one, and easily dismiss it by demolishing the primitivo-socialist arguments.

Now more than ever, we must oppose the FED for the right reasons, and educate the public about why they should too.

(1) Note that even without a central bank, fractional reserve banking is sufficient to cause a business cycle.


  1. I'm against the Fed and I'm neither one of the two brain dead sheep you chose to list as the only options. By the way, Hegel would approve of your dialectical propagandizing method.

  2. So, I'm curious, why are you against the FED then?

  3. There are a plethora of reasons I'm against the Fed, it being a private, for profit institution and the issuance of debt as money are just two. But what I really object to is the Johnny come lately, libertarian ideological whore's attempt to hijack liberty as their own and in the process, drag every freedom loving American into yet another ideological conformist, scripted thought, black hole. I hate ideologues with a passion, I don't need your damn label and I damn sure don't appreciate your attempts to hang it on me by hijacking liberty.

  4. (correction of the previous comment)

    First, I guess you are best to ignore this blog if you are anti-intellectual.

    Second, if you are against a institution because it is private and for profit, then I'm afraid these are not pro-freedom arguments, but statist-socialist ones.

    Private is good. Profits are good.

    Ideas matter, those who refuse to study and think for themselves are condemned to be lead by propaganda.

  5. Contrary to libertarian-foisted myth, Libertarianism is not synonymous with Liberty or being intellectual, I mean, how hard is it to follow a script and pigeonhole everyone who doesn't conform to your rote ideological norms as being antithetical to liberty.

    Secondly, if you believe government enforced, private monopoly control of the money supply issued as debt, is pro-freedom and exemplary of private enterprise then one has to wonder why you bothered to bring the subject up unless your intent was to see if you could pigeonhole people who would dare to bulk at your preconceived notions.

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  7. The primary argument against the Federal Reserve is that it is a price-fixing cartel. Interest rates are literally the price of work in the future, compared to the price of work in the present. By tampering with interest rates, the Federal Reserve makes it difficult to make rational economic decisions and plan for the future.

    Inflation steals the savings of productive workers. The beneficiaries are financial industry insiders, who get to print and spend brand new money.

    The US monetary system is incredibly complicated. It's set up this way on purpose, to allow big abuses to occur without people noticing the scam.

  8. I must say I like the name of your blog. I ran a series of posts called "Paul Krugman is a douche-bag" last year, which of course still applies.

    Also, on the list of things that people should avoid when discussing the problems with central banks, there is one important point to add :

    Web of Debt, by Ellen Brown

    This book, hyped as it is, is junk. The proposed solution is to have the government print any money it needs - and even worse - this is said to not be inflationary. From the woman who claims that Weimar Germany had hyperinflation not because of money printing, but because of foreign currency speculation ....

    Anyways, like the blog - busy reading HHH's "Democracy - the god that failed" but there is much to say on that book.

  9. Thanks for the comments.

    I agree with you, there's a lot of misguided publications out there, and libertarians needs to help sorting through them.