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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Benjamin Tucker argued that if individuals were allowed to freely mobilize their own credit, to borrow, and to issue currencies outside of the State’s system, they could break the chains of bondage that held them in thrall to the capitalist system. With monopoly control of currency, credit, and banking in general, bankers could as a practical matter tax us for the privilege of living, making us substantively not much more than serfs paying tribute to titled overlords. Tucker and his fellow individualist anarchists therefore argued for the absolute most open competition and freest markets in money and banking. It was not the existence of competition that had subjected working people to the whims of monopoly, but its absence. “The Anarchists,” Tucker wrote, “are the extreme free traders; and they, to a man, favor free trade in money,—most of them, in fact, recognizing it as a necessary condition of free trade in products.” The panic of ‘08 demonstrated that the Federal Reserve does not exist to restrain and stabilize financial markets, but to capacitate exploitation by “Too Big to Fail” banks. Indeed, nothing could reveal less of a concern for economic inequality. When the federal government began deciding which banks it would save at the expense of taxpayers and consumers, some were more equal than others. It is the preservation of Wall Street privilege that truly concerns the Fed and the federal government.

The naive belief that the Federal Reserve System could reduce inequality rests on a profound ignorance of economics, politics, and history. Considered from a political perspective, the Federal Reserve System is a tool of elite interests, controlled at all times by a tiny but disproportionately powerful group of bankers no less subject to self interest or the influence of pressure groups than anyone else. To begin with, it is not at all clear that we should believe this small group behind the Fed to be more concerned about inequality than anyone else. What’s more, even assuming they are (for some reason) more concerned about inequality than the general population, it is even less clear that they could do anything about it without far-reaching unintended consequences. In any event, the Fed’s true economic purpose, contrary to statist misinformation, is and always was to concentrate power in an influential group of well-connected favorites, the Wall Street banks who stand to be bailed out at the next inevitable crisis. Given the Fed’s sordid history, such political and economic consequences are a matter of course. After all, it was organized financial interests that led the drive for a new national banking system, for an institution that would protect them from risk, with Progressive Era intellectuals gladly granting their stamp of approval.

Still, “increasing the supply of low-cost credit” sounds innocuous enough, and indeed individualist anarchists like Tucker predicted that such would be the outcome of allowing free banking. Other advocates of free banking (i.e., its right-libertarian advocates) have made contrastive predictions. Ultimately we can’t be certain of anyone’s predictions about genuine freedom of competition and exchange in banking, what it would look like, or its results. To believe that we could know beforehand what would happen is the most arrogant and ridiculous conceit, the kind that leads to coercive, centralized economic planning in the first place. Importantly, the State is unlike the market in any case. The State’s “supply of low-cost credit” is simply printed out of thin air, with nothing ceded or sacrificed. The free, mutual banking of anarchists like Tucker and William Batchelder Greene made land and all kinds of other property the basis for money, creating credit secured by that property just as a mortgage lien secures a home loan. As Greene wrote in Mutual Banking:

Ships and houses that are insured, machinery, in short, any thing that may be sold under the hammer, may be made the basis of mutual money. Mutual banking opens the way to no monopoly; for it simply elevates every species of property to the rank which has hitherto been exclusively occupied by gold and silver. It may be well (we think it will be necessary) to begin with real estate: we do not say it would be well to end there!

Unlike in the home loan examples of the present, however, such relationships in a freed market would be equitable, made between parties of relatively equal bargaining power. With competition between services, currencies and prices for credit (i.e., interest rates), and with no Federal Reserve System to guarantee bailouts, quantitative easing purchases, and the like, no financial institution could grow “Too Big to Fail.” Libertarian anarchists may disagree on the question of what exactly it is that defines money: Is specie money, or is credit/debt money? The author submits that we go forth and allow the voluntary exchanges and cooperative projects of free and independent people to decide that question. If it is individual choice that we really care about as anarchists and libertarians, then it seems counterproductive and even utterly strange that we ought to insist on, for example, gold or silver money.

In banking as in economics generally, the fundamental question asks which arrangement in is more likely to give us the results of fairness and stability that at least in theory we all desire. Is it a networked system in which decision making power is distributed and free agents compete without anyone benefiting from special privilege? Or is it a system in which competition is outlawed from the start and decision-making power is extremely concentrated in a very small group of politically appointed bankers, to whom still other bankers on Wall Street have privileged access? If we believe that laws are akin to magic, that politicians are omniscient in crafting them, and that bureaucrats are perfectly altruistic in their implementations of them, then perhaps we might consider the latter system. The fatal flaw in the narrative, though, is that the State has been the handmaid of the rich since its birth in conquest and plunder. As Albert Jay Nock taught, the State’s “primary intention is to enable the economic exploitation of one class by another.” Under capitalism, that exploitation is made possible by the State’s interventions to grant capitalists privileged access to the land and other shared natural resources, to the most remunerative professions, to ideas and technology (through absurd “intellectual property” laws), and to the distribution of money and credit, among many, many others. To believe that the State ought to intercede on behalf of the poor and working classes misunderstands both the State itself, as an actual historical phenomenon, and the capabilities and poor and working class people themselves. Well-meaning people on the mainstream, statist left must come to understand that workers and the less fortunate do not need the State’s help. We just need the State to stop intervening on behalf of the interests of capital. Tucker thought that we ought to start with banking, that this money most hobbled the self-directed activities of working people; perhaps he was right.

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.

Arguably the most powerful person in the United States (even rivaling the POTUS), Ben S. Bernanke, has left the Federal Reserve. Since 2006 he has sought to make the economy his marionette. Fed policies, under his direction, worked to manage a collapsed housing market, busted mortgage industry and the 2008 global financial crisis – a manufactured crisis of the command and control mentality over the “free” market. Bernanke engineered perhaps the largest redistribution of wealth in American (if not world) history with massive bailouts given to the financial sector – money stolen from the labor of millions and given to the “too big to fail” economic elite. Aside from the initial 700 billion dollar bailout, a Federal Reserve audit revealed the central bank provided a whopping 16 trillion in secret aid to support the corporate state apparatus. Bernanke has released his reign, transferring power to the first woman in United States history to head the Fed: Janet Yellen.

Yellen was confirmed by the United States Senate on January 6, 2014, further committing Washington to even more Keynesian policies from the central bank. As a Fed official, Yellen was a great advocate of keeping interest rates artificially close to zero, increased government spending, and the controversial Quantitive Easing measures sought by the Fed to direct the American economy. Her rise to power will continue to favor the corporate state, even with rumors of economic growth.

There have been numerous libertarian/Libertarian arguments against the central bank. It is not my wish to re-invent the wheel. Most of these arguments, however, stem from the political right – most notably Ron Paul and even greater arguments from his mentor, Murray Rothbard. There is surprisingly little noise from the traditional left – the libertarian or market left - about the central bank, however. Even the famous American leftist and anarcho-syndicalist/libertarian-socialist Noam Chomsky supports central banking. Rather than re-invent the wheel, with this essay I hope to add to the small but sound left-libertarian opposition to the Federal Reserve.

A Brief History of Central Banking in the United States

Alexander Hamilton, the first Secretary of the Treasury, was among the first American politicians to argue for, and help develop, a central bank. Hamilton thought it would be irresponsible to place much democratic or economic control in the hands of the American populace. Hamilton and other federalists believed the country should be ruled by the economic ruling class – the elite, the educated and the privileged. Federalist John Jay put it as bluntly as possible: “Those who own the country ought to govern it.” Hamilton and company favored a strong national government, a broad interpretation of the constitution and put national unity above individualism and states rights. Their economic model, of course, was centrally planned with strict regulation of state economies. From this mindset the first central bank was born in 1791.

Hamilton’s bank, the First Bank of the United States, was kept out of the public arena and operated as a private financial institution. Hamilton’s main argument for the First Bank was that it would help repay the new nations war debt (Morgan 2012). Throughout its existence, however, the bank was met with popular backlash. Objections to the Federal Reserve today echo what was argued against the First Bank: It served moneyed interests (northern corporations), was a threat to property rights and restricted real economic growth (Morgan 2012). Some politicians of the time, notably Thomas Jefferson and James Madison, argued the bank was unconstitutional, that only congress, not a private bank, had the power to tax and print money. In 1811 the Bank was deconstructed as congress voted not to renew its charter (Morgan 2012).

In 1812 the United States found itself in the midst of another war and more national debt.  To deal with a growing financial crisis, Congress voted to charter the (larger) Second Bank of the United States. The Second Bank, at the moment of inception, was poorly managed (Scur 1960). A year and a half after it opened it almost collapsed, and would have, if not for Langdon Cheves. Cheves was the second president of the new central bank and effectively administered its operations. Still, popular sentiment about such a powerful, private institution raised concerns about the Second Banks existence (Scur 1960). This sentiment, and Andrew Jackson’s political clout, would ultimately dissolve this Second Bank in 1836.

The United States was free of central banking until yet another major war erupted. The Civil War, and the need to pay for it, again began the quest for a National Bank. In 1863 the “national banking system” (not a central bank) was developed (MFED 2013). The new banking system, with a national charter, dictated that banks had to issue government-printed bills for their own notes, these notes had to be backed by federal bonds – the war effort was funded (Sylla 1969). In 1865, as the war waged on between the industrialized North and the agricultural South, state bank notes were taxed out of existence – a uniform national currency was established in the United States for the first time (MFED 2013).

With the civil war financed and “won” by the Union, and with a uniform currency, the United States experienced a bank panic in every decade afterward (MFED 2013), ah,”The Gilded Age.” Economic panic began in 1873 due to runs on the free banking system. A “run” occurs when a large number of customers pull their money from banks (MFED 2013). The runs would lead to more and more folks withdrawing their money, causing a system wide economic panic. With the depression of 1893, the Spanish-American War of 1898 and the deep recession of 1907, banking moguls and the United States Government again sought the establishment of a central bank (Sylla 1969), as opposed to letting the market equilibrate.

What followed was a series of Congressional acts that led to the establishment of the Federal Reserve Bank. The Aldrich-Vreeland Act of 1908 established the National Monetary Commission, charged with managing the nations finances, which called for government intervention in the economy, via currency development, during times of financial crisis (MFED 2013). The election of Democrat Woodrow Wilson brought with it the Federal Reserve Act of 1913, and American involvement in World War I. The Federal Reserve System was designed to be a government (not public) institution. The new central banking system was to work closely with the United States Treasury.

What followed the establishment of the Federal Reserve, after WWI, was the roaring twenties, further industrialization, the Great Depression, World War II, The New Deal, the rise of Keynesianism, explicit fiat currency, multiple recessions, the Korean War, the Vietnam War, multiple military interventions overseas, neoliberalism, the rise, fall and decay of the middle class, booms and busts, economic bubbles, artificial scarcity, artificial abundance and much more. In the wake of such history, the Federal Reserve has operated independently of the political process (MFED 2013). The Fed has become an independent centralized bank that is utilized to manage, and some would argue control, the United States economy.

The history of central banking is wrought with military conflict and depressed markets. States have long ignored moral objections to war, but economic restrictions have often halted violence. The printing press, however, allows governments to side step these restrictions. The century of the Fed has been a century of perpetual warfare. As Randolph Bourne wrote, shortly after the creation of the Federal Reserve, “war is the health of the state.” Central banking, Keynesian policies, and states are indeed dependent on jingoism and war. For in war governments flourish – allegiance to state blossoms, class struggle is stilled, spending keeps flowing, and worst of all, human beings, millions of us, die. Liberty is fundamentally opposed to this aggression, as noted here, by Anthony Gregory.

Sadly, as attributed to Nixon: “We are all Keynesians now.”

Liberty and the “Progressive Era”

United States history, like all history, can be defined as a race between social power and state power. It is outside the realm of this essay to describe all of the liberation movements that, in some context, sought the liberty of the true market form. Rather than try I will focus on the Progressive Era, which birthed the Federal Reserve.

The end of the Gilded Age was a period of great turmoil. It was good for business, the political class and those with a monopoly on capital, but the working class, people of color, women, political feminists, labor organizers, etc, realized they could not count on the national government to take their concerns, rights or liberty seriously. The Progressive Era did begin the Age of Reform, but this reform was not enacted to elevate the populace. Instead, reform was used to quiet popular uprisings, democratic social movements, and civil liberties – it was not intended to make fundamental changes to the established order (Zinn 2003).

The era has been termed “Progressive” because of the sheer number of laws that were passed. Upton Sinclair‘s “The Jungle” sparked a labor movement that accomplished passing the Meat Inspection Act, social movements engaged the system to pass the Hepburn Act which supported labor in railroads and pipelines (Zinn 2003), to name just a couple. Particular to the Federal Reserve, Woodrow Wilson’s presidency established the Federal Trade Commission and the Central Bank(s) itself. This was polished as progressive reform to control the growth of monopolies and to regulate the country’s money and banking system. Neither happened, in fact, power and influence of Wall Street only began to grow amidst giant surges of patriotism due to rising conflicts overseas. As noted by Emma Goldman (on patriotism and allegiance to government):

But when the smoke was over, the dead buried, and the cost of the war came back to the people in an increase in the price of commodities and rent-that is, when we sobered up from our patriotic spree-it suddenly dawned on us  … that the lives, blood, and money of the American people were used to protect the interests of the American capitalists.

Due to the work of early American libertarians such as Josiah Warren, Benjamin Tucker, Voltairine de Cleyre, Emma Goldman and others, movements developed that questioned the concentration of power. The labor movement began picking up steam and the marginalized voices in society were becoming amplified. It is true that working people benefited from some of the reforms of the Progressive Era – but the reforms protected the political and economic class from working people, giving just enough to stem off a major rebellion (Zinn 2003). A middle class cushion was manufactured to stem off class conflict as Howard Zinn (2003) explains:

Fundamental conditions did not change, however, for the vast majority of tenant farmers, factory workers, slum dwellers, miners, farm laborers, working men and women, black and white. Robert Wiebe sees in the Progressive movement an attempt by the system to adjust to changing conditions in order to achieve more stability. ‘Through rules with impersonal sanctions, it sought continuity and predictability in a world of endless change. It assigned far greater power to government . .. and it encouraged the centralization of authority.’ Harold Faulkner concluded that this new emphasis on strong government was for the benefit of ‘the most powerful economic groups.’

With the help of the Federal Reserve, Wall Street was able to take firm control of the political system. The market, as it existed, was not able to disperse protests at the grassroots level (Zinn 2003). The economic ruling class championed these reforms, to stabilize the state capitalist system in a time of uncertainty (Zinn 2003). These reforms gave rise to the corporation state that exists today. As noted by individualist anarchist Benjamin Tucker: “Laissez Faire was very good sauce for the goose, labor, but was very poor sauce for the gander, capital.”

Social power is still racing against state power.

The Liberated Market

Enter, Janet Yellen, a grand proponent of quantitative easing in a depressed economy. The Federal Reserve, under her leadership, will continue to serve the politically connected and do very little for the average American. Even Andrew Huszar, an ex-Fed official, in a piece for the Wall Street journal described the programs Yellen champions as the “greatest backdoor Wall Street bailout of all time.”

For all the discussion in the United States today about the proper function and role of our federal government, how to manage the economy, how to battle poverty, how to create jobs and so on and so on, what seems to be missing from national discussion is the true beauty of markets. A banking system, or piece of economic legislation, cannot fix the economy.

Economic systems are developed by the spontaneous order of society. The market is a product of inclined labor, derived from the dreams, aspirations, desires, passions and activities of free people. The market encompasses our places of exchange, but also the rest of human labor – social movements, federations, institutions, decision-making and all of human activity. This behavior cannot be managed from a centralized authority. The work of human beings, our inclined, creative labor, cannot be directed – it can only be realized in liberty.  The liberated market mechanism is the only cure for our past, current and future ills.

Today, in the era of too big to fail, it is corporate monopolies and financial institutions that benefit from the public. As George W. Bush said: “I have abandoned free market principles to save the free market.” What he meant was: “I have again exploited the middle and working classes to serve our economic ruling class.” While Bernanke, with the power of the Federal Reserve, was redistributing wealth to the upper tiers of society, organized people, from a diverse history of social movements, began developing the tools for market liberation.

The true market form, how people engage their labor, exists outside of the state.  The market left speaks of exchange and labor in human terms. The liberated market allows for economic, social and environmental justice. Liberation champions a society that allows the free flow of information, science and progress, democratic values, and the fruits of  labor so these principles can spread without restriction. The liberated market allows us to determine how great we can be. The liberated, free(d) market allows plans by the many, not by the few – it renders Yellen, Bernanke and all bureaucrats of the political class obsolete.

With booms and big busts, giant bubbles, manipulation of the market, a giant national debt and a decaying dollar accompanying promises in future spending, a full economic collapse of the United States government is a very real possibility (see Thomas L. Knapp: Government Spending: Two Steps Sideways, One Half-Step Back). This is scary, we all live here, we all have families here, we all have bills to pay and mouths to feed. Our way of life, however, is not at the mercy of the Federal Reserve or a conglomerate of folks in Washington. Though this realization is indeed scary, it should also be exciting. The market will finally have a chance to equilibrate. As witnessed in Detroit, free people can accomplish much with very little – and free people are already working on the solutions.

If we are to be serious about living in a peaceful and prosperous society, then we must also be serious about competing forms of currency, competing markets and the abandonment of the command and control mentality. Perhaps the Keynesians are right and government spending is the only way to prevent the collapse of state capitalism. What’s ignored by fans of the printing press is that state capitalism is unsustainable. If we all march off to battle there will be full employment, but nothing to eat. The only way out is the liberated market. In the words of Kevin Carson: “In the end we’ve got to find some way off the hamster wheel.”

Instead, may we work together and exchange services to co-ordinate and cultivate markets. The emergence of peer to peer currency, like Bitcoin, and the rise of voluntary exchange are sources of hope. The more we work around traditional power structures, the more we advance social power in our all too important race against the corporate state.

The creative labor of human beings will build markets, mutual aid, relief, decent societies and finally peace.  We can and will build a real and lasting peace that will make life on Earth worth living — a peace for every child of humanity. Free human beings will no longer die for governments and/or capital. The greatest moment in human civilization is within our grasp. It is time we reach out and attain liberty.

As Yellen continues, perhaps even enhances, the disastrous policies of the Fed, may we find solace and peace in the liberated market. May we soon, in liberty, say triumphantly: “We are all Agorists now.”

References:

Chandavarkar, Anand G. Keynes and Central Banking. Indian Economic Review / Volume XX, No.2

Federal Reserve Bank of Minneapolis. (2013) A History of Central Banking in the United States.  http://www.minneapolisfed.org/community_education/student/centralbankhistory/bank.cfm

Morgan, H. Wayne. (1956) The Origins and Establishment of the First Bank of the United States. Business History Review / Volume 30 / Issue 04 / December 1956, pp 472-492

Scur, Leon M. (1960) The Second Bank of the United States and Inflation After the War of 1812. Journal of Political Economy/Volume 68, No. 2

Sylla, Richard (1969). Federal Policy, Banking Market Structure and Capital Mobilization in the United States, 1863 – 1913. The Journal of Economic History/Volume 29, No. 4

Zinn, Howard (2003). A People’s History of the United States: The Socialist Challenge. Harper Perennial.

“Na mais recente manifestação de uma economia viciada em estímulo artificial,” escreve Colin Barr, daFortune, “o Sistema da Reserva Federal divulgou, na segunda-feira, lucro recorde de $81 biliões de dólares em 2010.” Barr destaca que a bolada do banco central é “mais dinheiro do que área bancária inteira ganhou ao longo dos últimos três … anos.”

Observa, também, que a maior parte desse dinheiro veio de juros dos empréstimos hipotecários podres que o Fed assumiu para aliviar seus compadres bancgsters quando a exploração, por estes, do mercado subprimário começou a dar errado. Pessoas leigas em economia podem ser desculpadas por se perguntarem como, no meio dos presentes problemas econômicos, o Fed está conseguindo resultados tão favoráveis, e poderíamos até olhar isso como prenúncio de recuperação mais vasta.

Isso, contudo, seria um equívoco. Do mesmo modo que o dinheiro que imprime, os lucros informados pelo Sistema da Reserva Federal não são o que parecem, representando retornos de investimentos precários que nenhum investidor com juízo faria. Esses investimentos pútridos incluem não apenas os títulos lastreados em hipotecas estratificadas que se tornaram o foco do desastre financeiro como, também, títulos do tesouro que patrocinam a dívida do governo federal. Mesmo essas participações gerando, agora, renda, a compra delas com dinheiro imaginário “impresso” eletronicamente significa que pessoas livres, financeiramente responsáveis, nunca tiveram a oportunidade de descobrir qual o preço de equilíbrio delas(*). (* clearing price – http://www.investopedia.com/terms/c/clearingprice.asp)

Como o Fed não pode atribuir a um ativo valor que ele não tenha de fato, o preço de mercado finalmente prevalecerá, mas não sem antes nós pagarmos a conta. O furto pelo Fed é um processo discreto e impessoal por meio do qual o homem comum anônimo “contribuinte” é destituído “a fim de manter os fundos fluindo pela economia.” E esse objetivo  — a administração da economia — é o motivo pretenso do Fed para sua loucura, embora mal não faça todas as estruturas institucionais apoiarem o “Grande Demais para Falir.”

Não importa o modo pelo qual você guie nele, o processo político é uma avenida conducente a beco sem saída, com toda a atividade interna a tal processo representando, fundamentalmente, desperdício. E isso não se deve a qualquer ausência de pessoas bem intencionadas e moralmente sensíveis, nem a superabundância de maléficos cometedores do mal. Não; o resultado da política decorre, isso sim, do fato imutável de as leis dela não terem o poder de anular ou de alterar leis mais elevadas — situemos sua fonte em realidade natural, em Deus ou onde mais seja — que tornam impossível obter resultados positivos por meio da violência.

“A intervenção hegemônica,” escreveu Murray Rothbard, “substitui a ordem pelo … caos,” sendo essa ordem “o mecanismo de harmonia, ajustamento, e precisão” que ele situou na conduta consensual de indivíduos administradores de si próprios. O caos sintomático do “princípio hegemônico” é evidência não apenas da impraticabilidade de controlarem-se pessoas e a sociedade livre como, em verdade, daimpossibilidade de fazer-se isso; o estado — as pessoas e instituições que, por meio de agir agressivamente, o constituem — simplesmente não pode saber todas as coisas que teria de saber para “administrar” de modo bem sucedido as interações dentro da sociedade.

Consideremos o exemplo de uma família encarregada de administrar todos os outros lares de sua rua. Mesmo a família melhor organizada e metódica não terá comosaber todos os fatos indispensáveis para gerir todas as atividades de todas as outras casas, alocar eficazmente os recursos delas ou compreender os problemas específicos delas. Ainda assumindo-se que a família pudesse compilar os fatos relevantes, não seria capaz de interpretá-los de maneira que lhe permitisse empregar fundos e materiais adequadamente.

O controle político de nosso sistema econômico pela elite é mais tortuoso e menos direto do que aquele de nossa rua hipotética, mas o princípio fundamental e seus problemas concomitantes são os mesmos. Organizações hierárquicas como o Sistema da Reserva Federal, as enormes burocracias no timão de nossa sociedade, gozam de presunção a seu favor dentro de nossa estrutura conceptual. Se contudo escrutinarmos o que fazem, descobriremos que efetuam um conjunto de insanidades a que nunca nos permitiríamos em nossas vidas.

Artigo original afixado por David D’Amato em 10 de janeiro de 2011.

Traduzido do inglês por Murilo Otávio Rodrigues Paes Leme.

He also observes that most of the money has come from interest on the garbage mortgage loans the Fed took on to relieve its Bankster buddies when their exploitation of the subprime market took a turn for the worst. Economic laypeople could be forgiven for wondering how, in the midst of the present economic malaise, the Fed is achieving such favorable outcomes, and we might even regard it as heralding broader recovery.

That, however, would be a mistake. Like the money it prints, the profits reported by the Federal Reserve aren’t what they seem, representing returns on precarious investments that no sane actor would undertake. Those putrid investments include not only the storied mortgage-backed securities that became the focus of the financial debacle, but Treasury bonds that sponsor the federal government’s debt. Even while these holdings generate income now, their purchase with imaginary money that was “printed” electronically means that financially-accountable, free people never got the chance to discover their clearing price.

Since the Fed can’t assign to an asset a value it doesn’t actually have, that market price will ultimately have its way, but not before we pay the piper. The Fed’s theft is a discreet, impersonal process whereby the anonymous everyman of “the taxpayer” is depleted “to keep funds flowing through the economy.” And that goal — managing the economy — is the Fed’s ostensible reason for its madness, although it doesn’t hurt that all of the institutional structures favor the “Too Big to Fail.”

No matter which way you drive on it, the political process is an avenue leading up to a dead end, with all activity within the process fundamentally a waste. And this isn’t for a lack of well-intentioned, morally-sensitive people or an overabundance of malefic evildoers. No, the results of politics follow instead from the immutable fact that its laws cannot nullify or alter the higher laws — whether we source them in natural reality, God or anywhere else — that make it impossible to achieve positive results through violence.

“Hegemonic intervention,” wrote Murray Rothbard, “substitutes chaos for … order,” that order being the “mechanism of harmony, adjustment, and precision” that he located in the consensual conduct of self-managing individuals. The chaos that is symptomatic of the “hegemonic principle” is evidence of not just the impracticality of controlling people and free society, but indeed of its impossibility; the state — the people and institutions that, through acting aggressively, comprise it — simply can’t know all of the things it would have to know to successfully “manage” the interactions within society.

Consider the example of one household charged with managing every other home on its street. Even the most well-organized, methodical family couldn’t possess all of the facts necessary to conduct all of every other house’s business, to allocate their resources efficiently or master their particular issues. Even assuming that the family could compile the relevant facts, it wouldn’t be able to make sense of them in a way that would allow it to dispense funds and materials appropriately.

The political elite’s control of our economic system is more circuitous and less direct than that on our hypothetical street, but the fundamental principle and its coinciding problems are the same. Hierarchical organizations like the Federal Reserve, the huge bureaucracies at the helm of our society, enjoy a presumption in their favor within our conceptual scaffolding. If we probe what they do, though, we’ll find that they perform through a combination of insanities that we would never entertain in running our own lives.

Translations for this article:

• Portuguese, A Administração do Inadministrável.