Posts tagged Occupy
Illogic in Fractional Reserve Banking
If there was one business venture the leftist and forgotten “Occupy” movement was right to distrust, it was the banking industry. In the wake of the 2008 financial crisis and subsequent bailing out of the world’s financial system by fascist states, taxpayers – especially the progressive types – were correct to feel amiss. But rather than take a scrutinizing look into the privilege afforded to the banking class, the outraged took to political action in the callow hope of correcting a wrong.
Like any popular uprising, the goal was quickly smothered in favor of further rent-seeking. Instead of aiming consternation at the incestuous relationship between government and the money-changers, occupiers wanted the quick-fix of redistribution. The cries of “this is what democracy looks like” might as well have been “this is what panhandling looks like.” Centralized banking went unquestioned. The nature of fractional reserve practices was ignored – or likely not understood by the pea-brained philosophers. Still, the radical levellers who set-up camp in Zuccotti Park were on to something by asking why their precious public officials voted to shore up the balance sheets of a disproportionately small member caste.
Banking is, to put it bluntly, a strange and unique business. The industry is centuries-old, and the legality of its operations has been questionable since inception. I am referring specifically to the practice of bankers lending out claimed reserves – a contentious issue among libertarian theorists. If the larger public were to become privy to this business model, it may spark a troubling curiosity in the less-moneyed class. But then again, this author never ceases to be amazed by the bounds of common apathy.
In banking, certain legal doctrines have guided the trade since antiquity, including the nature of contracts. The violation of these distinct forms of lawful guarantees once carried the weight of justice. But no longer; as the deliberately obscuring practice of loaning out deposits meant to be available on-demand has created such instability in the banking system, the incessant teetering on the cliff of insolvency remains an ever viable threat to economic tranquility.
Libertarians – specifically those schooled in the Austrian, causal-realist tradition of economics – are intellectually miles ahead of the Occupy folks when it comes to the study of currency. And while the students of Mises and Hayek are fervently opposed to any central bank management, there remains a sharp divide on the ethics of fractional reserve banking. In a recent missive in the Freeman, economist Malavika Nair questions the Rothbardian ethic that finds the practice of banks creating credit out of thin air fraudulent. The piece, which deconstructs the dean of the Austrian school’s original argument, frames banking away from the supposed cut-and-dry thinking model of anti-fractionalists.
Nair begins with a false choice by asking: “Would fractional reserve banking exist in a world without a central bank? Put another way: Is fractional reserve banking inherently fraudulent?” These statements are not one in the same; they reference two separate conditions. Absent central banking, unbacked credit expansion could still exist. Back in mid-to-late 19th century America where the Federal Reserve was still a twinkle in the centralizers’ eyes, fractional reserve banking and pyramiding credit were common practice. The question at hand is whether such business is based on a fraudulent understanding of the nature of goods.
Nair finds issue with the essence of contracts and how they relate to the duty of those individuals entrusted with safeguarding money. The contract – an extension of humanity’s self-ownership and free will – has been a recognized covenant enforceable by compulsion for as long as man first conceived of himself as an autonomous being. It finds legitimacy in the human understanding of bonds and keeping one’s word. The evolution of common law has dictated that any activity stipulated in a compact cannot entail unlawful activity. To enforce an illegal activity would thereby be a crime in itself – an ipso facto contradiction in reason.
The contract is key for banking operations. Nair argues that bank functions, both deposit and lending, are plainly justifiable; the discrepancy arises in the manner that customer funds are utilized. Currently, bankers freely lend out money that is available on command by both the borrower and depositor. In practice, this is the creation of two goods from one ex nihilo. In a totally isolated instance where a bank were to service only two patrons, the act of creating what Mises called “fiduciary media” would appear as the very perversion of intuitive law it embodies. It would simply come off as no more than a violation of the known rules of the world.
Nair counters by asserting that a “claim to money is not the same thing as the money itself.” This is a confusing affirmation as antagonists to fractional reserve banking hardly make that claim. The point of contention is that promissory notes for bank deposits represent real money, though they may circulate as mediums of exchange and fulfill the role of currency. Should two or more of these “I owe you” certificates be created to represent one unit of bank reserves available on-demand, there is a direct and unquestionable inconsistency. It is certainly true, as Nair points out, that the fungible quality of money dictates it be treated differently than non-substitutable goods. However, the fact that cash is interchangeable does not dismiss its limited character.
If the principle of unbacked expansion of credit were applied to other industries such as automobiles or condominiums, titles to the same good could theoretically be multiplied, but not without controversy. Having two titles for one car is not based on logic or a firm understanding of universal law. You simply cannot create real, definite material by declaration. Nair asserts that this is not true when it comes to the market of money. In his words, the over-issuing of redeemable bank notes “does not mean one thing is in two places at the same time” but that “two different things are in two places at the same time.” This is only so much sophistry, as the claims to bank reserves are still representative of real goods. There may be multiple slips of paper representing one unit of money-proper floating around in the economy, but that does not dismiss the plain and true fact that there are more claims than what is available.
As economist Jesús Huerta de Soto documents in his tour de force Money, Bank Credit, and Economic Cycles, government has played a leading role in fostering this banking fraud for centuries. The state is forever on the search for more resources to carry out its bidding. Cooperation with the leading money-lending institutions was an obvious route for subverting the moral means to wealth creation. Since the days of classical Greece, it was well understood that transactions of present goods fundamentally differed from those involving future goods. In practical terms, deposits for safekeeping were of considerable difference to those made for the strict purpose of lending out and garnering a return. Bankers who misappropriated funds were often found guilty of fraud and forced to pay restitution. In one recorded episode, ancient Grecian legal scholar Isocrates lambasted Athenian banker Passio for reneging on a client’s depository claim. After being entrusted to hold a select amount of money, the sly banker loaned out a portion of the funds in the hopes of earning a profit. When asked to make due on the deposit, the timid Passio pleaded to his accuser to keep the transgression “a secret so it would not be discovered he had committed fraud.”
The underlying chicanery behind fractional reserve banking has existed since the days of Plato. Modern technology has not negated the rationale used to discover and affirm natural law. Binary codes on a computer screen do not create a new reality. The governing doctrines of humanity are, in de Soto’s words, “unchanging and inherent in the logic of human relationships.” While fractional reserve banking could exist in a free market environment and regulate itself through vigorous competition, that theoretical scenario does not prove the entire fulcrum of the business rests on solid ground.
The truth remains, and will always remain, that an organic product is not replicable through any kind of witch doctoring. A thing is a thing is a thing. Any money substitute that represents a real piece of fungible currency cannot pertain to that which is not in existence. Such is the lawful understanding that goes back to the time preceding the Hellenisitc period.
Malavika Nair offers an interesting argument by trying to justify the practice of creating something out of nothing; but it ultimately fails. The free lunch of artificial credit creation is nothing more than slipping out of the baker’s shop without paying. It would have served the Occupy crowd well to have recognized this shaky foundation upon which the modern financial system rests. Perhaps their message of widespread corruption would have been better received – at least more so than by creating shanty towns and defecating on the street. Instead, we were gifted with a muddled and confused political message made by an irate minority who hadn’t a clue of the forces that govern their own lives.
James E. Miller is editor-in-chief of the Ludwig von Mises Institute of Canada. Send him mail
Image credit: http://mises.ca
Christina Tobin of Free & Equal interviews Amber Lyon, Emmy Award winning journalist and whistle blower. Free & Equal has been on the fore front against the limited choices that We The People have been stuck with thanks to the two party duopoly sitting in D.C. Please visit Free & Equal and support their actions as best you can. The lead in and interview to follow.
Emmy Award-Winning Whistle Blower Amber Lyon Broke Away from CNN; Here’s Her Side of the Story!
Free & Equal empowers people to demand liberty, honesty and integrity from those they vote for. Amber Lyon is encouraging Americans to demand the same from journalists. Together, honest journalism and open elections can transform America – and that change is already beginning.
Amber Lyon, a three-time Emmy award-winning journalist, became famous during the Arab Spring, when she reported on Bahrain’s human rights violations and couldn’t get CNN to air certain stories; she investigated further and discovered that CNN was in fact was taking money from dictators worldwide in exchange for content.
Since Amber Lyon was fired after over a year of conflict with her bosses, she has been pursuing her vision of journalism by acting “as a watchdog of government and a muckraker, not a puppet.”
Free & Equal is dedicated to supporting integrity like Amber’s by uniting all honest media, musicians, authors, leaders, and providing support for grassroots movements and causes, including breaking the stranglehold of the two-party system.
Free & Equal’s next two podcasts will feature Intellectual Revolution’s Ty Loomis and Matt McKinney (www.intellectualrevolution.tv). Then 2012 Presidential Candidates -Gov. Gary Johnson of Libertarian Party (www.garyjohnson2012.com) and Jill Stein of the Green Party (www.jillstein.org). Stay tuned!
Creating honest media can only be done with the help of people who are tired of mainstream misdirection.
You can subscribe to the Free & Equal podcast through iTunes directly or through Podomatic at this link. You also can listen to the show through the Free & Equal mobile app currently available for the Android device and soon to be available for iPhone.
Unlike Romney and Obama, Ron Paul is neither a repeater of Republican Party platitudes about “America’s greatness” nor a mumbler of silly socialist platitudes that sound like they were paraphrased directly from The Communist Manifesto (“From each according to his ability, to each according to his needs”). Ron Paul is a seriously learned man when it comes to economics and political philosophy. He is very familiar with the writings of all the classical liberals, especially Austrian School economists such as Ludwig von Mises, Henry Hazlitt, F.A. Hayek, and Murray Rothbard. As such, he must know that Rothbard considered John C. Calhoun, the nineteenth-century U.S. Senator, Secretary of War, and Vice President of the United States to have been one of America’s greatest political philosophers as well.
Because of his educational background, Ron Paul would have articulated Romney’s truthful comment about how the moochers and parasites of American society (“the 47%”) are on the verge of overwhelming the producers politically. He would not have gotten involved in the mindless media “debate” over whether it is 47 percent or 49 percent of American adults who pay no income taxes but receive benefits from government. He likely would have quoted or paraphrased Rothbard’s favorite American political philosopher, Calhoun, from his magisterial 1850 Disquisition on Government instead.
“When once formed,” Calhoun wrote, a political community “will be divided into two great parties – a major and minor – between which there will be incessant struggles on the one side to retain, and on the other to obtain the majority . . . . ” Consequently, “some portion of the community must pay in taxes more than it receives back in disbursements; while another receives in disbursements more than it pays in taxes.”
The community is thus divided into “two great classes – one consisting of those who . . . pay the taxes . . . and the other, of those who are the recipients of their proceeds.” This will in turn lead to “one class or portion of the community [being] elevated to wealth and power, and the other depressed to abject poverty and dependence, simply by the fiscal action of the government.”
Anaheim Police Laugh At Citizens They’re Sworn to Protect
This is a clip from Timcast’s live stream which was up from about 8pm to 12:00am yesterday. Diane posted the live stream on Occupy America last night, but there’s one particular highlight I want to point out as evidence that there will be no peace in Anaheim anytime soon. I’ve marked it at 31:25 through 32:25. It’s short, but a fine example of attitudes that have no business in police uniforms.
These protests were sparked from neighborhood anger over police actions which have killed two people in just a few days, and five people since the beginning of the year. Anaheim PD has a problem, and that clip right there should tell you everything you need to know about what that problem is.
By Jeanine Molloff
During this summer of Occupy and subsequent police brutality, the subject of torture is hotly denounced by protesters and conveniently ignored by candidates. Like that ostrich diving head first into the sand of political expediency–Americans want to focus on the alleged debt crisis or gay marriage–anything that absolves us from the messy subject of tortures committed in our names by the Bush/Cheney administration and which continue under Obama to the present day. The entire Bradley Manning debacle speaks volumes to this accusation.
In spite of strong evidence identifying Dick Cheney as the mastermind behind this torture regime–the subject remains taboo, both in the ‘news’ business and in Hollywood–that is until Hollywood executives watched trailers for the anti-war documentary–The Last War Crime.
Written, produced and directed by a new talent known only as ‘The Pen,’ this film documents the torture protocol ordained by the Bush-Cheney administration. Since it first circulated a trailer on the web; it has been heavily censored and cyber attacked. You Tube has removed it at intermittent intervals and MTV (which is owned by Viacom) has refused to sell air time for a commercial.
Mexican Presidential Elections: ‘I Am Number 132′ Movement Shows How Social Media Has Changed Politics
At a time when the Mexican government is attempting to demonstrate that it has everything under control, the social movement “I am number 132” has sprung up without warning, calling attention to the numerous injustices prevalent in Mexican society. Leading up to the G20 meeting, which will take place in Mexico on June 17, and the presidential elections that will take place in July, Mexican officials are determined to demonstrate that they have everything under control, and that the country’s economic development is one to be envied. Recently, however, a student group got together to create a video in which 131 young people denounced the precarious social and economic conditions experienced by the majority of Mexicans, and declared their opposition to the PRI (Revolutionary Institutional Party) presidential candidate, Enrique Peña Nieto. In a matter of moments, the video went viral.
Published on May 30, 2012 by Folkvar2012
Freedom informant network – FIN – http://www.freedominfonetwork.org
BROTHERS AND SISTERS UNITE!!!
***Visit channel for more videos***
A powerful production by Tim Watts, the co-host of The Freedom Link radio broadcast on The Orion Talk Radio Network.
We do not forgive.
We do not forget.
We are anonymous.
Government. Expect us
By Rand Paul Review
Rep. Ron Paul (R-Texas) is the last man standing in the Republican presidential race besides presumptive victor Mitt Romney, even after a strategy statement misunderstood by many as “dropping out.” Since that announcement, Paul has won his second state, Minnesota (Maine was the first), and is on target to end up controlling presidential voting delegations in such states asIowa, Louisiana, and Missouri. Far from fading as a cultural force, Paul continues to draw huge crowds, sometimes over five thousand students, on campuses as well.
As the presidential field has shaped up to a certain Obama vs. Romney in the major parties, the desire for a challenger championing either the serious right or serious progressive left grows. And Ron Paul—though he continues to deny any third party plans and his political machine has clearly hitched itself to the GOP for now—is strangely a viable candidate for either role, should he choose to accept it.
Paul is in many ways the rightest of right wingers, with his desire to kill the income tax, end governmentinterference in medical care, and get to a balanced budget in three years with no tax hikes. A third party Paul, should he make such a radical choice, would provide a choice for right-wingers dissatisfied with Romney’s small-government bonafides.
Yet despite Paul’s impeccable Tea Party credentials on tax and spending issues, he would be an even more appealing choice to progressives dissatisfied with President Obama. Even while running for the GOP presidential nod, Ron Paul has presented a political vision in many respects to the left of the Democratic Party.
President Obama wants to continue and expand every aspect of the war on drugs, including the war onstate-legal medical marijuana operations. Paul thinks government attempts to arrest people for actions that harm only themselves are inherently illegitimate. Obama’s administration has set records in deportations. Paul mocks border walls as un-American in Republican candidate debates.
Obama approves of enormous bailouts to huge financial institutions, and his administration’s high-level economic planning is run almost entirely by insiders from such institutions. Ron Paul is opposed to what he (and leftists) calls “crony capitalism.” Paul’s free-market policies would leave corporations with no more power over the American people than the corporations get by selling people things, things people choose to buy. (Unlike the products of the hated health insurance companies, which ObamaCare mandates that we all purchase.)
(Reuters) – Police detained dozens of opposition protesters on Sunday at an Occupy-style rally against President Vladimir Putin in central Moscow.
Activists gathered near Red Square in front of the Kremlin and walked toward the popular Arbat pedestrian district, but were detained upon reaching the sit-in protest which began earlier this month.
Witnesses said riot police treated protesters who resisted roughly. “One man in his 50s was grabbed and carried away by his arms and legs. It was terrible,” said Natalia Pozdnyakova, 73, dressed in white, the color which has become the symbol of the protests.
Police told Russian news agency Interfax 35 people had been detained.
Earlier in the day, dozens of people were detained when Russian Orthodox Church activists clashed with gay rights protesters in central Moscow.
Though Russia’s protest movement began in response to accusations of voting fraud in a parliamentary election last year, Moscow protests have broadened the movement’s demands, reflecting anger over a range of issues from human rights to high-level corruption.
Putin’s return to the presidency on May 7 and a demonstration marred by violence before his inauguration added to resentment and sparked sit-in protests in the capital.
Putin’s top human rights adviser said on Sunday he would look into the reasons why people who were wearing white ribbons as a show of solidarity with the protest movement were being detained.
“By itself, wearing a white ribbon, just like a ribbon of any other color or white clothes or wearing clothes of any other color, is not a violation of administrative law,” Mikhail Fedotov told the Itar-Tass news agency.
“We have to understand on what grounds police are detaining people.”
(Reporting by Steve Gutterman and Thomas Grove; Writing by Thomas Grove; Editing by Pravin Char)
By Jack Hunter
“The Ron Paul Revolution Won’t Stop Here”
I have made the case that Ron Paul is not only changing the Republican Party, but is catering to a new, emerging electorate that eschews the big government aspects of both parties. Writing today at CNN.com, Timothy Stanley makes some of the same observations:
Paul’s campaign represents a message that is bigger and perhaps more popular than the candidate himself. As it continues to collect small numbers of delegates and capture control of local GOPs, Paulism is proving itself to be in rude health. Long after Mitt Romney is nominated, feted at the convention, beaten by Obama and recycled as a question on Jeopardy (“In 2012, he lost every state but Utah.” “Who is … Britt Gormley?”), Paul’s philosophy will still be a factor in national politics — something to be feared and courted in equal measure…
I have to declare a great deal of affection for Paul. Unlike other politicians, he seems motivated by ideas — and he communicates his passion with the zeal of a nutty professor detailing the thrilling possibilities of quasars and black holes. This is a doctor who refused to accept Medicare payments but lowered his prices for patients who couldn’t afford him, who declined a government pension and never voted for a tax increase, who told Republicans they need to end the War on Drugs (and most other wars, too). He’s pure…
Paul’s 2012 candidacy has had certain hidden successes. Aside from all the money he raised, Ron Paul also attracted an unusual coalition of young people, libertarian Republicans, and disaffected Democrats — a coalition large enough for him to run even with Obama in some polls. The pull among the kids was big enough to fuel talk of a new generational voting bloc. In Iowa, he took 48% of the under-30s, compared with Santorum’s 23% and Romney’s 14%. In New Hampshire, he got 47%, while Romney took just 26%…
Within the GOP, the Paulites are still the unbeaten masters of the administrative procedure. Last Saturday, they swept a confusing ballot process in Louisiana to give themselves control of 70% of delegates attending the state’s nominating convention, which could mean they end up numerically “winning” Louisiana. Similar things have happened in Minnesota and even Romney’s home state of Massachusetts.
Combine this administrative brilliance with generational politics and you get a silent grass-roots revolution that is putting many Paulites in positions of power. In 2010, more than a dozen of them won elections as Republicans, including Rep. Justin Amash of Michigan and Sen. Rand Paul (son of Ron) of Kentucky. This year, two dozen active Paul backers are seeking election to Congress, along with more than 200 running for local office. The Paulites have effectively taken over the Iowa GOP. The state central committee now has six members who are passionate for Paul, and the head of the local party is now a Paulite. Given the importance of Iowa to the 2016 nomination, this is a coup in every sense.
All of this means the GOP can no longer ignore its libertarian “fringe.” On the contrary, it will have to reach out to a new generation of activists who don’t regard religious piety or continual warfare as sacred tenets of conservatism. Even Romney will have to take Sarah Palin’s advice not to “marginalize” the Paulites if he is to emerge from the nominating convention with a united party.
Whatever happens in 2012, we are living through a significant moment in the history of conservatism. The age of Bush and Obama — twin specters of lavish spending and imperial design — have birthed anti-government movements of right (tea party) and left (Occupy). The one that will last longest and have the most impact is the one that has been the most pragmatic and politically savvy.
The Ron Paul revolution won’t stop here.
The time is NOW to take back our personal liberties and freedoms!
Ron Paul 2012: Restore America Now
Please visit Ron Paul’s official campaign site by following the link below and donate today!