Bernanke's Squeeze
By Staff News & Analysis - November 05, 2010

Notwithstanding the progress that has been made, when the Fed's monetary policymaking committee – the Federal Open Market Committee (FOMC) – met this week to review the economic situation, we could hardly be satisfied. The Federal Reserve's objectives – its dual mandate, set by Congress – are to promote a high level of employment and low, stable inflation. Unfortunately, the job market remains quite weak; the national unemployment rate is nearly 10 percent, a large number of people can find only part-time work, and a substantial fraction of the unemployed have been out of work six months or longer. The heavy costs of unemployment include intense strains on family finances, more foreclosures and the loss of job skills. Today, most measures of underlying inflation are running somewhat below 2 percent, or a bit lower than the rate most Fed policymakers see as being most consistent with healthy economic growth in the long run. Although low inflation is generally good, inflation that is too low can pose risks to the economy – especially when the economy is struggling. In the most extreme case, very low inflation can morph into deflation (falling prices and wages), which can contribute to long periods of economic stagnation. – Washington Post

Dominant Social Theme: We need to print trillions of dollars from nothing.

Free-Market Analysis: We have noticed that power elite promotions continue to churn along, no matter what kind of evidence is produced to derail them. Federal Reserve Chairman Ben Bernanke's (above left) odd editorial in the Post (excerpted above) is further evidence of this. He is not about to apologize. Instead, he is dumping a trillion dollars into the larger market and then going off to host a Federal Reserve party on Jekyll Island – where the Fed was founded about 100 years ago in a secret and conspiratorial meeting of some of the world's most powerful bankers of the day.

If WE were in Ben's shoes, we would not be holding a party. But that's the power elite for you. It is institutionally incapable of recognizing, apparently, any kind of tasteful boundaries. Forty million are on food-stamps in America but Bernanke et al. will be eating cake off the coast of Georgia. This is ample evidence, along with much else that the elites have still not adapted to the reality of the 21st century; that because of the Internet their every move has come under scrutiny and the important ones are commented on in thousands of blog-posts around the world. The Fed in particular makes PR gaff after PR gaff. Its representatives seem incapable of presenting it as an agency working on behalf of the larger society. Probably because it's not.

This goes for dominant social themes as well. The global warming promotion has been thoroughly debunked and yet the powers-that-be continue to flog it and articles asserting the validity of global warming still appear regularly in the elite-controlled mainstream press. Central banking is another dominant social theme, one of the most basic, and like other elite memes, it is continually pushed forward as if no opposition exists and no questions have been raised.

In this article we want to make a case once again for our favorite theme – that the power elite is neither immortal nor all-powerful. It is not even fully in charge at this point; in fact, what is going on today in the Western world and America in particular is not pre-ordained. The situation (economic, sociopolitical and military) in our view is so far from being "in control" that any solutions that the Western elite may have had in mind are going to be most difficult to propose (credibly) let alone implement.

Central banking generally and the Federal Reserve's additional stimulus (so-called QE2) are under tremendous attack in the US. Yet Federal Reserve Chairman Ben Bernanke continues to make policy decisions involving literally trillions of dollars. Only yesterday the idea that one man could wield the purchasing power of a trillion dollars would have been seen as fantastical and impossible. Now it has taken place on more than one occasion – and for far more than a mere trillion. Of course there has been push-back, too. Bernanke has already been grilled on Capitol Hill and the heat is likely to be turned up on both him and the Fed (which is going to be audited) now that Republicans have taken back the US House of Representatives.

But still the new round of stimulus continues. Bernanke prints another trillion dollars out of thin air and goes into the market to purchase securities, benefiting those institutions that hold the securities inordinately. Using this Keynesian approach, he could literally drop money from helicopters and probably achieves his purpose more quickly. But central bankers will rarely if ever distribute money directly to the hoi polloi as it reveals too easily what is really going on.

Only by distributing money through financial channels do central banks retain what mystery remains regarding the process. Nonetheless, as we have pointed out before, in this era of Internet truth-telling, the huge sums of money wielded by the banking classes has been well noted. It has (we have argued) stripped Western political and banking elites of considerable moral authority and illustrated quite clearly that there are two kinds of capitalism at work – one for the very wealthy and financially connected and the other for the working man and entrepreneur.

The effects of this realization are only now beginning to play out. But Western capitalism – regulatory democracy – has always been sold to the masses as a system in which the biggest and smallest have an equal chance at grabbing the proverbial gold ring. What the financial crisis and the "greater recession" have shown clearly is the amount of capital concentrated in a few hands. Were a visitor from say Mars to see how the system currently operates, where one man basically makes the decision whether or not to commit a trillion dollars to a buy-back scheme, what other conclusion could he/she arrive at but that regulatory capitalism is not what it appears to be? The real power and money is indeed concentrated at the very top and the scary thing is that Bernanke is merely a servant of money power, not a chieftain by any means.

And yet despite the vast power and wealth available to the intergenerational and familial banking elite that runs the Western world, we detect more than a whiff of panic in the air. The creaky mechanism of counterfeiting that animates the heart of the central banking conspiracy has been wielded in full view of the Internet. Anybody who wishes to understand what is really going on can read about it in detail on innumerable electronic pages.

But there is more. If there were no need for Bernanke to try to stimulate the US economy once again, he would not do so. This is evident and obvious. The money is being hurled at a moribund economy that is producing neither jobs nor wealth. It is as we have long pointed out an economy built on a century old Dreamtime – so distorted and speculative that it is impossible to sustain. But the elite are desperate to try.

Bernanke does not make major moves by himself of course. He is evidently and obviously a functionary of the power elite that installed the West's central banking system and still runs it. If Bernanke is committing to more stimulus it is because there is a larger consensus (at a higher level) that it is necessary. The idea, as we pointed out yesterday, is to lower the dollar abroad and increase corporate profits – which will then supposedly drive a stock market recovery and finally a larger, American industrial recovery.

It is an incredible complex and foolish way to generate wealth for society-at-large, but it suits the elite as the wealth is seemingly generated through institutions and corporations it ultimately controls. Stock exchanges and multi-national corporations are "promoted" as the ultimate providers of economic security, even though they are not. Human action is what drives wealth, and individual economic decisions. The current system is designed to obscure this fact and even to deny it. QE2 will likely not make much of difference and will surely aggravate what is already a severe monetary problem.

Additionally, QE2 has the influential BRIC club up in arms. A brief look at the news today confirms that China, India, Brazil and Russia have all reacted to US moves with concern, irritation or even outright anger. When the US launches such large currency programs, the results are felt around the world. Other countries value their competitiveness as well and are not likely to sit passively on the sidelines while the US inflates away its economic incompetence.

The current massive stimulation is not only alienating the BRICs (and other countries as well), it is likely to undermine any possibility of comity at the larger G20 meetings that are upcoming. The IMF – already seen quite rightly as an organ of the Anglo-American elite – was making a bid to turn itself into the world's central bank complete with a world currency, the bancor. American actions will probably make this improbable evolution more difficult still.

Ultimately, the move is tremendously inflationary and will further undermine the dollar and introduce at some point a dangerous amount of price inflation into the world and the American economy in particular. The result may be, either sooner or later, a fuller unraveling of the dollar as the world's reserve currency. While some, especially in the alternative news community, continue to maintain that this is indeed the plan of Western elites (to entirely undermine Western economies in order to introduce world government), we wonder how exactly such chaos benefits Western elites.

From our point of view the BRICs and other countries are not likely to agree this time around (at a fundamental level anyway) to whatever Western elites have in mind regarding global governance or a global currency. Whether or not the Chinese economy collapses in the near term, the larger ramifications of global chaos are likely to be entropy not further centralization. We see the emergence of various forms of gold and silver standards, maybe controlled at the state level and maybe not. But this is a far cry from a gold-based monetary system organized and controlled by the West.

Everything that emerges from the latest round of money stimulation is probably negative from our point of view from a power elite perspective. The stimulation is not in the short-term going to make the American economy or the dollar any healthier. It IS going to further alienate the BRICS and paves the way for a go-it-alone mentality when it comes to monetary policy. It may even hasten the day (as a result of price inflation in particular) when currencies are backed by gold and silver once more.

We would argue for these reasons that the Bernanke monetary moves are driven by desperation. What is that desperation? It has to do with a knowledge that the Internet itself has fully revealed the scam of the financial system, worldwide, that has been put into place. The Western elites, we understand, are terrified of only one thing: civil insurrection. They neither welcome it nor wish it.

There are some who argue that the terrible moves that the elite has made in the past decade are actually an invitation to insurrection. But if so, why did the elite bother with its fear-based promotions throughout the past century? The elite operates behind the scenes and does not expose itself for very good reasons.

We opened this article by asking why elite promotions continue even when they are evidently and obviously exposed and increasingly dysfunctional. We close by advancing the argument that the reasons are twofold. First, the elite in aggregate is arrogant and it is hard to believe that methodologies of control that worked for 100 years do not work well today. Second, the elite is increasingly desperate to implement its programs and agendas and is forging ahead on a kind of autopilot.

After Thoughts

What people mistake for strength and mystery may merely be a lack of imagination and a lack of well-thought-out alternatives. It is most difficult to switch off the kinds of promotions that the Anglo-American axis has generated over the past 100 years. It is very possible that the program will have to play out, even though it makes less and less sense today and will not in the end accomplish elite objectives. Or course there may be other explanations for what is going on – including (according to the most paranoid among us) the eventual genocide of three-quarters of the human race. But these sorts of speculations are difficult to discuss reasonably. As for others, we cannot see them clearly. Can you?