What is Occupy Wall Street all about? What are their demands? Where is this going?
Why are the major news media playing this down?
The following video, in the tradition of Gulliver’s Travels, offers an insightful synopsis of the issues at the heart of this protest.
1 comment:
Fr. Geoff, as an attorney and econ. major, I can't agree with the video. It grossly misrepresents finance, which is not a dirty word but the foundation of our modern age.
First, banks, which began in the 15th century, democratized capital. They moved us away from feudalism by freeing and magnifying the uses of capital and allowing everyday people to leverage a fixed and limited base of precious metals. Because one gold piece could now be used by many different people, commerce and innovation exploded. Conversely, societies unable to follow suit suffered (like Islamic civilization, which began its sharp decline in 16th century due to Sharia).
Second, paper money is not synonymous with inflation. Rather, low inflation is a sign of robust demand and healthy supply. Inflation between 2-3% a year means slightly more demand than supply, which means business will continue to invest and grow to meet demand. Conversely, deflation, means supply has outstripped demand, usually because demand decreases. Business must thus reduce the value of goods and services to sell them (i.e., the purchasing power of the dollar increases because the value of assets decrease). The net result is that production stops, business seizes up and capital is horded because its comparative value to goods and service (that which can be invested in) is higher. Unsurprisingly, deflation often cycles into depression, including the Great Depression. (Also, the idea metal currency prevents inflation is false, as the late Roman Empire and 16th/17th century Spain proved. It does, however, promote deflation when precious metals decrease in supply or increase in value, because of hording.)
Third, the Federal Reserve is not unconstitutional, but falls squarely in the broad discretion of Congress to regulate currency and interstate commerce. Further, a central bank is essential to economic health. It stops panics by acting as the lender of last resort, and it directs monetary policy, which prevents over cooling and heating in the economy. Without a central bank, we’d have wild fluctuations in money supply, which leads to "swing effects" as cycling interest and inflation rates unpredictably wobble the economy. Not only does this make doing business much more risky based factors not directly relevant to the transaction (and thus introduces serious economic inefficiencies), but it also exposes the economy to crashes and depressions. Over the long-term, the Federal Reserve has proven important in stabilizing the economy, including in this most recent collapse. (Gone are the successive "great panics" and depressions that shook America before the Federal Reserve Act: 1819, 1832, 1836, 1837-1843, 1857, 1869-1871, 1873, 1893, 1901 and 1907. Conversely, we’ve had only one depression since the Act.)
Last, the conspiracy theories replete throughout the video have no foundation in fact. The Fed did not murder JFK. And certainly not over "Executive Order 11110," originally issued by Truman. The Order was designed to help prevent deflation in agricultural products (a lead factor in the Great Depression). The Order was never intended to supplant the Fed. In fact, by JFK’s time, the Order was a useless “gold standard” relic 20 years after FDR abolished it. By doing so, FDR allowed people to transact in dollars of U.S. GDP rather than dollars of gold, and to effectively leverage the value of the economy itself. Result, money supply was founded on economic need and economic strength and not on gold supply. All that money was put to good use, and fueled the post-War golden age.
I view videos like this, especially because they are just true enough to deceive, dangerous. Whether you believe in a large state or private investment, the idea we would return to a gold standard or, as the video appears to advocate, actual gold, would collapse the state utterly and return us to 16th century economics. This is hardly desirable and would impoverish billions.
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