In my last blog we described the seeds of the next American revolution. See You Say You Want a Revolution Part I. Paul Farrell outlined the incompetence of the Republican and Democratic parties and the greed of Wall Street. One institution targeted for dissolution is the Federal Reserve:
…the Fed cannot survive. Why? Not because the Fed is at the center of America’s economic problems, beyond repair, a dying institution. But because the Fed is a pawn of Wall Street’s Happy Conspiracy, which is incapable of seeing the train wreck that it set up.
This out-of-control, conspiracy of greedy Wall Street bankers, corporate CEOs, corrupt politicians and Forbes 400 billionaires will, in the near future, trigger the third catastrophic meltdown of the 21st century, a collapse that paradoxically can transform America into a new, stronger post-capitalist economy … but only after a revolution and brutal class warfare. But few will talk about what’s coming. The Fed is Dead, Maybe by 2012
You Should Always Tell the Truth
Nassim Taleb, author of The Black Swan, believes that the Federal Reserve will not exist in 25 years. Mr. Farrell demurs, warning that it will happen much sooner as fallout from the second American Revolution.
It’s inevitable: Wall Street banks control the Federal Reserve System; it’s their personal piggy bank. They’ve already done so much damage, yet have more control than ever.
Warning: That’s a set-up. They will eventually destroy capitalism, democracy, and the dollar’s global reserve-currency status. They will self-destruct before 2035 … maybe as early as 2012 … most likely by 2020. The Fed is Dead, Maybe by 2012
Taleb uses two simple formulas to determine the veracity and competence of our politicians, business leaders and academicians: do they tell the truth (not half truths or other deceptions) and prior to 2008 did they foresee the financial crisis?
Taleb’s view is that you cannot trust anyone in government. He cites two US Treasury Secretaries: Timothy Geithner and Henry Paulson. Geithner cherry picks dates and misleads about the economic recovery. Paulson warned President Bush about the financial crisis in 2006, but failed to warn the public. Worse, Paulson’s public declarations in 2007 and 2008 led the investing public to believe in the strength of the US economy and that the housing bubble was well contained. The Fed Chairman, Ben Bernanke, made the same deceptive statements.
Turning to economists, Taleb focuses on Paul Krugman who never anticipated the financial crisis. Moreover, his economic proscription of exchanging private debt for public debt only creates moral hazard. Our grandchildren will be burdened with our debt.
He heaps special scorn upon President Obama and the Senate for reappointing Bernanke after his miserable track record. Bernanke remains in his position despite failing to revive the economy. Taleb believes that Bernanke is a shaman, “whose methods make ‘homeopath and alternative healers look empirical and scientific.” The Fed is Dead, Maybe by 2012
A Recipe for Collapse
Charles Hugh Smith in The Recipe for Collapse, supports Mr. Farrell’s proposition that we are heading for another collapse. The following mixture all but assures a coming collapse: central planning (the Federal Reserve); encouraging speculation through reducing the safe return on capital to below the inflation rate (zero interest rate policy); creating bubbles in real estates, stocks, bonds and commodities (e.g., nine million vacant homes); corrupting the power elites to continue financial skimming and speculation (watering down the financial reform bill); concentrating wealth and power in a small elite; promoting debt and leverage so that the economy will collapse with ever increasing amounts of debt; continuing to promote failed economic remedies (stimulus, zero interest rates); making corruption, cronyism, embezzlement, insider trading and fraud endemic; concentrating media in a few hands; devoting an increasing share to internal security or military adventures; making an ever greater number of laws hampering productive enterprise, and raising the hopes of the general population that they can get rich quickly (housing, stocks) only to have their dreams deflated or dashed.
So You Want a Revolution
The Administration, the media and the financial elite are unwittingly marching down the path to revolution. What I find most disturbing is that we re-cycle and give prominence to the same public figures that got us into this mess: Ben Bernanke at the Federal Reserve, Timothy Geithner formerly of the Federal Reserve Bank of New York and now Treasury, Barney Frank in Congress, Paul Krugman at the New York Times and a host of others. We need some new thinking and directions, not a repetition of the same tired nostrums which have not, and probably never, worked.
So we are at the crossroads of a revolution. Revolutions do not have to be violent. But it would take revolution to upset the smug, intellectually and morally bankrupt status quo. We need some leaders who regularly speak truth. Only when we make a complete break from the past, do we have the possibility of a brighter future.
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