Friday, September 19, 2008

When Unregulated Capitalism Does Not Apply

Recycled post from 9/1/07:

Republicans and wealthy businessmen love to promote unregulated capitalism labeling anyone that questions the "invisible hand" -- the metaphor coined by the economist Adam Smith in his book, The Wealth of Nations -- as a communist. What they don't tell you is that they only believe in unregulated capitalism when it applies to the "working class". In other words, Wall Street loves unregulated capitalism when its gouging the average citizen, but demands government intervention when the crème de la crème anticipate the "invisible hand" might tug at their purse strings.

The Federal Reserve is not part of our government the way we have been taught to believe; it is more powerful than government, the President, congress and the courts, yet most of us think of the Federal Reserve as an institution that operates in "our" best interest when that is only true if "our" best interest happens to coincide with the best interest of the affluent.

The Federal Reserve, chartered by an act of Congress,-- Federal Reserve Act of 1913 -- on December 23, 1913, could best be described as an, independent, privately owned and locally controlled corporation, although it is not a governmental institution, it does have substantial governmental ties.

The bottom line is that the Federal Reserve controls the money and their main objective is to bailout the wealthy. If the "invisible hand" is doing its job and assisting the rich get richer the Fed allows unregulated capitalism but if the "invisible hand" is working against the interest of the moneyed citizens capitalism will be regulated and no one will have to worry about being labeled a communist.

2 comments:

Increasing Politicization of Monetary Policy 11:50  

Over the past 55 years, the politicization of monetary policy has required the evisceration of formal institutional constraints on monetary excesses, namely the elimination of the gold reserve ratio, a reduction in the (decentralized) power of the Federal Reserve banks, and a diminution in the strength of private-sector representation’
within the Federal Reserve system.
Correspondingly, over the same time span, power within the system
has shifted to the Federal Reserve Board and particularly to its chairman. The authority to contain monetary excesses that typically stem from political pressure on our central bank now resides largely in the strength of the anti-inflationary persona of the chairman. Thus, our society’s traditional defenses against inflation have been transferred from formal institutions to the will power of a single person, the Federal Reserve chairman. In exchange for greater influence over monetary policy...

Roth's stepchild 17:39  

Thanks for the link!

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