Thanks to Carmen Segarra, however, we now have some keen insight to the inner operations of the Federal Reserve System.

Segarra was recently employed at the New York Fed as a bank examiner, charged with ensuring the bank followed internal regulations and conducting “oversight” of the economic powerhouse. During her tenure, Segarra grew suspicious the Fed was rather lenient with powerful, well-connected investment banks — notably Goldman Sachs (a key player in the 2008 financial crisis). To document her concerns she recorded 46 hours of private meetings and conversations. Her recordings reveal the Fed is, in fact, rather cozy with the financial institutions it’s supposed to regulate.

With evidence in hand, Segarra voiced her objections.

She was soon fired.

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Qualche tempo fa, la Segarra è stata assunta dalla Fed di New York come esaminatore bancario, cioè con il compito di controllare che la banca seguisse tutti i regolamenti interni e di “supervisionare” questa centrale di potere economico. Durante il suo lavoro, la Segarra ha cominciato a sospettare una certa condiscendenza della Fed con le banche d’investimento che avevano buone amicizie; soprattutto la Goldman Sachs, protagonista chiave della crisi finanziaria nel 2008. Per confermare i suoi sospetti, ha registrato 46 ore di incontri privati e conversazioni. Le registrazioni rivelano un atteggiamento piuttosto accomodante della Fed con le istituzioni finanziarie che avrebbe dovuto controllare. Prove alla mano, la Segarra ha dato voce alla sua protesta. È stata subito licenziata.

La donna è andata ad aggiungersi ai ranghi di altri informatori e ha passato le registrazioni a Jake Bernstein, un giornalista investigativo di ProPublica, e al programma radiofonico This American Life. In un’intervista con l’emittente Npr, Bernstein nota: “Questa è gente che lavora dentro le banche. Incontra queste persone tutti i giorni, ha bisogno di informazioni dalle banche. È più facile ottenerle se si hanno amici e buone relazioni, ma a volte si scade nell’ossequio.” Le registrazioni rivelano molte cose, come gli accordi segreti definiti “oscuri” dagli stessi rappresentanti della Fed, e rivelano la cultura corrotta che regna nella banca centrale.

“Scadere nell’ossequio” non è il termine appropriato. Meglio chiamarlo furto. La popolazione è derubata della propria libertà di agire e della propria sicurezza. Un furto sotto forma di salvataggi bancari e di una politica economica basata sul “troppo grande per fallire”, a vantaggio del capitalismo di stato.

Dopo le rivelazioni, il senatore democratico Elizabeth Warren, del Massachusetts, ha invocato un’indagine sulla corruzione della Fed. Assieme a lei il suo collega democratico Sherrod Brown. Illusioni.

Sono tantissimi anni che le grandi aziende e il settore finanziario godono di privilegi economici garantiti dallo stato con la premessa che queste istituzioni sono indispensabili alla società. La finanza è separata ma allo stesso tempo legata profondamente allo stato. Questo significa che l’economia della nazione è connessa direttamente con queste istituzioni. Questi legami danno forza ad un’economia politica corporativa in cui lo stato ha interesse diretto a far sì che queste concentrazioni di capitale, oggi definite “troppo grandi per fallire”, abbiano successo. Se vuole conservarsi in salute, lo stato deve garantire la stabilità del capitalismo.

Le normative appaiono così come uno spreco di tempo, energie e denaro pubblico.

Noi che apparteniamo alla sinistra di mercato siamo contrari a queste concentrazioni di potere e capitali, che in primo luogo permettono l’esistenza di istituzioni “troppo grandi per fallire”. Crediamo che spetti al potere della società, liberato dalla simbiosi stato-capitale, guidare il mercato. Immaginiamo un sistema economico e di governance decentralizzato e partecipativo. In una società basata sulla libertà personale e di associazione non c’è posto per il potere.

Chi è a capo della Fed, così come gli altri presunti controllori, crede di poter programmare l’economia. Il loro problema è che il mercato, come tutto ciò che dipende dal comportamento umano, non è fatto per essere programmato: il mercato è spontaneo. La volontà di controllare l’economia porta necessariamente all’ingabbiamento dell’attività umana e dell’innovazione. In un mercato liberato, al contrario, il potere sarebbe diffuso tra tutti, e questo richiederebbe libertà di agire e di seguire le proprie inclinazioni. È tempo di chiudere la Fed e di mettere in pratica un’economia basata sulla libertà.

Traduzione di Enrico Sanna.

Segarra was recently employed at the New York Fed as a bank examiner, charged with ensuring the bank followed internal regulations and conducting “oversight” of the economic powerhouse. During her tenure, Segarra grew suspicious the Fed was rather lenient with powerful, well-connected investment banks — notably Goldman Sachs (a key player in the 2008 financial crisis). To document her concerns she recorded 46 hours of private meetings and conversations. Her recordings reveal the Fed is, in fact, rather cozy with the financial institutions it’s supposed to regulate. With evidence in hand, Segarra voiced her objections. She was soon fired.

Segarra joined the ranks of other whistle-blowers and leaked her recordings to Jake Bernstein, an investigative reporter from ProPublica, and to the public radio program, This American Life. In an interview with NPR, Bernstein notes: “These are people who work inside the banks. They see these people every day, and they need to obtain the information from these banks, and it’s easier to obtain the information if you’re friendly and if you have a good relationship, but sometimes that can slide to deference.” The tapes reveal much, such as back-room deals described as “shady” by Fed officials, but at their heart, the recordings tell the story of a corrupt culture within the central bank.

A “slide to deference” is not the proper description. Theft is more accurate. The theft of labor, property and security from the populace, in the form of bailouts and “too big to fail” economic policy, for the benefit of the state capitalist system.

Because of the leaks, US Senator Elizabeth Warren (D-MA) is trumpeting the call for a corruption investigation into the Fed. She is joined by her Democratic colleague Sherrod Brown. Such calls are folly.

State-sanctioned economic privilege has long been granted to big business and the financial sector under the premise that these institutions are necessary for social organization. The financial sector is separate from, but intimately related with, the state. As such, the economy of the nation-state is directly linked to these institutions. This relationship forges a corporatist political economy where the state has direct interest in the success of these now “too big to fail” concentrations of capital — the state must keep capitalism stable for its own preservation..

Regulation is thus a waste of time, energy and taxpayer dollars.

Those of us on the market left, however, oppose the very concentrations of power and capital that allow “too big to fail” institutions to exist in the first place. We believe social power, liberated of state-capital symbiosis, should steer the market. We envision decentralized and participatory systems of governance and economics. There is no room for archism in a social order of liberty and free association.

Those that head the Fed, and other would-be regulators, imagine they can design economic systems. The problem is markets, like all human behavior, are not structured for the command and control mentality — markets are spontaneous. The desire for control of economic systems necessarily requires the restriction of human labor and innovation. The liberated market, in contrast, with power diffused to the public arena, requires liberty and the inclined labor of human-beings. It’s far past time we end the Fed and actualize the economics of liberty.

Translations for this article:

• Italian, Chiudete la Fed: L’Economia della Libertà.

She writes:

By 1987, Ayn Rand acolyte Alan Greenspan had taken over as head of the Federal Reserve, and free market fever was unleashed upon America.

Alan Greenspan was indeed one of the original acolytes of Ayn Rand, but he deviated from pure laissez faire by becoming head of the central bank called the Federal Reserve. The notion that a “free market fervor” emanated from a statist institution like the Federal Reserve is absurd. It may have been in the direction of relatively more freed market freedom, but a fervor implies a massive revolutionary shift. Something I highly doubt occurred, but I am open to evidence otherwise.

The next thing worthy of discussion she wrote was:

People in U.S. business schools started reading Ayn Rand’s kooky novels as if they were serious economic treatises and hailing the free market as the only path to progress

Ayn Rand’s novels do touch on economic themes like corporatism and government management or regulation of the economy. It may not be a full blown economic treatise, but it doesn’t deserve to be dismissed. This left-libertarian market anarchist doesn’t believe the free market or freed market is the only path to progress. A healthy dose of civil society is essential to my theory of political economy and positive change.

Since the ‘80s, the top salaries and pay packages awarded to executives of the largest companies and financial firms in the U.S. have reached spectacular heights. This, coupled with low growth and stagnation of wages for the vast majority of workers, has meant growing inequality. As income from labor gets more and more unequal, income from capital starts to play a bigger role. By the time you get to the .01 percent, virtually all your income comes from capital—stuff like dividends and capital gains. That’s when wealth (what you have) starts to matter more than income (what you earn).

Wealth and income are related. You can also be said to earn wealth too. It doesn’t simply refer to what you already have. I agree that more wealth being acquired through capital rather than labor is a problem, but I don’t see government or the state as the solution. Freed markets will ensure that the only way of getting an income or obtaining wealth is through labor. They will also ensure that the wage of labor is its full product.

Another thing she writes is:

Wealth gathering at the top creates all sorts of problems. Some of these elites will hoard their wealth and fail to do anything productive with it. Others channel it into harmful activities like speculation, which can throw the economy out of whack. Some increase their wealth by preying on the less well-off. As inequality grows, regular people lose their purchasing power. They go into debt. The economy gets destabilized. (Piketty, and many other economists, count the increase in inequality as one of the reasons the economy blew up in 2007-’08.

There are ways to address the above problems without using government or state power. In a left-wing market anarchist society, the productive would be able to keep the product of their own labor. The disconnect between labor and results would not exist, so it would be more difficult to make a ton of cash to hoard. One would have to be continually innovate or rely on the cooperation of newly empowered fellow workers to make staggeringly high levels of money to put away. Speculation can also refer to forecasting the future direction of things, but I see the author as talking about speculation in the context of finances.

Which brings us back to Friedman’s view that people naturally get what they deserve, that reward is based on talent. Well, clearly in the case of inherited property, reward is not based on talent, but membership in the Lucky Sperm Club (or marriage into it). That made Uncle Milty a little bit uncomfortable, but he just huffed that life is not fair, and we shouldn’t think it any more unjust that one person is born with mathematical genius as the other is born with a fortune. What’s the difference?

Actually, there is a very big difference. It is the particular rules governing society that determine who amasses a fortune and what part of that fortune is passed on to heirs. The wrong-headed policies promoted by libertarians and their ilk, who hate any form of tax on the rich, such as inheritance taxes, have ensured that big fortunes in America are getting bigger, and they will play a much more prominent role in the direction of our society and economy if we continue on the present path.

She is partially right that inherited property or wealth has nothing to do with talent. I’d only add that it might represent talent in the form of manipulating the person who gives the wealth away. The rules of society do indeed determine who gets a fortune, and those rules deserve to be changed in the direction of left-wing market anarchism.

What we are headed for, after several decades of free market mania, is superinequality, possibly such as the world has never seen. In this world, more and more wealth will be gained off the backs of the 99 percent, and less and less will be earned through hard work.

Which essentially means freedom for the rich, and no one else.

We don’t live in any society with free market mania. I otherwise agree with her assessment. Look to my next blog post for an explanation and justification of the economic perspective underlying this assessment of Lynn Stuart Parramore’s article.

What’s missing from the political discussion is any mention of the Federal Reserve at all — even as  new executive  Janet Yellen takes the reins of arguably the world’s most powerful economic institution. Even worse, the very political ideology that has created systemic poverty, the top down approach to economics, guides the current conversation.

That discussion needs to shift to the mechanisms of poverty and how to liberate ourselves from them. Until we do so, we will continue to witness a precipitous increase in wealth disparities.

Income inequality restricts market opportunity. Extreme inequality — characterized by rampant poverty — chains our inclined labor. Economist Amartya Sen describes the persistence of poverty as the robbing of human potential, stating “poverty is not just a lack of money. It is not having the capability to realize one’s full potential as a human being.” Poverty, then, is the reduction of human contributions to the market, to the commons and, ultimately, to the human condition.

Systemic poverty exists because people are not able to access or create markets. In order to alleviate poverty we need to struggle for market liberation. This calls for the rejection of authorities who wish to direct economic systems. As witnessed in bailouts, corporate aid/welfare and their subsequent restrictions to economic diversity, it is the political class that benefits from the top down approach. In the liberated market, the populace will labor to create new ways — alternative institutions and new federations — to serve one another. Outside the current system, in the true public arena, markets can create a new mutualism, social goods, common interests among market actors and individual prosperity.

Centralized authority steers our creative output away from the dreams, aspirations, ethics and labor of individuals and to the benefit of the politically connected. In the halls of power, economic policy is decided upon, announced to the populace and defended against popular protest. In this model, outside knowledge is imposed upon us. But the individual and the collective know how to better the community. The decentralized, networked, stigmergic revolution works around command and control to co-ordinate and cultivate markets.

If we are serious about tackling income inequality and systemic poverty, we must first realize that any authority over the market is illegitimate. Then, on an individual basis, we can decide to directly engage or work around the current political system to dismantle such authority. Liberated economic systems will arise out of the old order, granting each individual sustainable agency over his or her own labor.

The key to success and actualization of human potential is, as always, liberty.