Central Banking Is Central Planning
Anthony Wile

A book review in the Wall Street Journal by associate professor of economics at San Jose State University Jeffrey Hummel entitled "The New Central Planning" tends to confirm the perspective that the Federal Reserve is under continued attack. The upshot may be a new monetary system, one way or another.

The new system, probably some sort of gold standard, will not merely inch into position but will be the result of various problematic failures of current monetary policy. It may be driven, in fact, by catastrophic failure. The seeds are being sown even now, and the review in the Journal examines some of them.

What is noteworthy is not the discussion but that it has appeared at all and that it is conducted within a historical context. In fact, this is the point we've been making here in the pages of The Daily Bell and long before, that the timeline is now sufficient to counteract any arguments that might support the institution. One hundred years of damage, economic ruin and institutionalized prevarication is enough. Here's something from the review itself:

What role should the Federal Reserve play in the U.S. economy? That question is at the heart of any study of the economic crisis that began in 2007 and any consideration of how to prevent further crises. A year ago the chairman of the Federal Reserve, Ben Bernanke, delivered four lectures at George Washington University, in which he argued that the Fed's response to the crisis—including its conspicuous and contentious bailouts—fell within the traditional role of a central bank. Those lectures and Mr. Bernanke's answers to some audience questions have now been edited and published in a slim volume. Pitched to a general audience, "The Federal Reserve and the Financial Crisis" is part of the chairman's praiseworthy effort to increase Fed transparency.

The first two lectures cover the origins and history of the Fed. Mr. Bernanke identifies three primary functions of central banks: to conduct monetary policy (i.e., controlling of the supply of money by setting interest rates); to serve as lenders of last resort (i.e., providing liquidity for important institutions to stave off financial crises); and to regulate the financial system (i.e., limiting the risks that banks and other players in financial markets may take). Yet he hardly discusses the quantity of money in circulation or the Fed's effect on it. The omission reflects the fact that Mr. Bernanke has dramatically altered the nature of central banking. Under his management, the Fed now tries to determine to which sectors the economy's savings flow, and monetary policy has become solely about setting interest rates.

To his credit, Mr. Bernanke considers the merits of the classical gold standard, in which the dollar was fully redeemable for a specific quantity of gold. He believes that its gains in long-run price stability were more than counterbalanced by the short-run economic fluctuations it caused. But as University of Georgia economist George Selgin pointed out after the lectures were delivered, the chairman's argument against the gold standard suffers from some severe weaknesses. For starters, it ignores the path-breaking research of Christina Romer, former chairman of President Obama's Council of Economic Advisers, which demonstrated that the frequency and severity of recessions weren't significantly greater before the Fed's creation in 1913 than after World War II. This casts doubt on the ability of the Fed with its fiat money to tame the business cycle any better than did the gold standard without the Fed's intrusions. Mr. Bernanke's case against gold also exaggerates the economic difficulties associated with the mild, long-run deflation of the late 19th century, a period of robust economic growth.

The review goes on to enumerate various Fed failures, though not in great enough detail so far as I am concerned, and inexplicably is not as vehement about current Fed-inspired disasters as past ones. The most interesting aspect of current central bank policy is the manipulated tightening of monetary policy in 2007. History may well examine that incident with greater interest than it now receives.

Of course, Bernanke made up for seemingly precipitating the Great Recession by subsequently screwing rates down disastrously. Whatever the real rates of interest are, you can bet that for the past five years the Fed, like other central banks, has held them lower than they ought to be.

The result is threefold. First, there are literally trillions locked away on bank books that can circulate if and when Western economies become more active. Second, when the money DOES begin to circulate, interest rates will inevitably begin to move up, causing countries like the US to devote more and more cash to interest payments.

Finally, so much money printing has almost terminally distorted the US's economic picture. Companies that should have failed have not and markets – especially stock markets – have moved up hard because so much paper and electronic money has been printed.

When one looks back at the current era of ruinous Fed policies, one will be struck by two things: The rashness of Ben Bernanke's actions and the surprising consensus surrounding him regarding perhaps the most egregious example of money printing ever launched within a modern establishment context.

The review's title alludes to Fed "central planning," and this may be the boldest and most straightforward characterization made about current Fed policy that has appeared in a mainstream publication in years. What the Fed under Bernanke has done is every bit as egregious as setting up a series of five-year plans. That plans are made via monetary policy instead of industrial policy is probably beside the point.

Central banks fix the price of money and its value. And price fixing never works. The Fed, controlling the world's reserve currency, is the most powerful central bank and the most destructive. The destruction accomplished under Bernanke will linger long after he slips away.

And as an article in yesterday's issue of The Daily Bell pointed out, once the reality of the destruction is entirely evident there will be many apologias appearing in the form of books, articles and media interviews. Those involved will admit ruefully to lapses of judgment or a lack of courage in not speaking up sooner.

But all of it will be beside the point. Those in charge likely now know full well what they have done and undone. They have planted the seeds for a new economic system and no doubt initiated it with a cold-blooded and even globalist perspective. The idea is that once catastrophic failures afflict the current system even more internationalist solutions can be applied.

I tend to doubt the strategy of this program and I think that the Internet Reformation is making it increasingly difficult for the architects of such program to generate believable deniability. Maybe, therefore, a decision has been made in certain circles to be more forthright about the reality of the terrible and manipulative money system under which we currently live and labor.

When examined clearly, it is indefensible, and eventually this illumination will doom it.

Anthony Wile is an author, political analyst, financial markets commentator, entrepreneur and founder of several successful free-market oriented Internet sites including Free-Market News Network (FMNN) and The Daily Bell. In founding these sites, Anthony brought a perspective based on more than 20 years of financial and business experience working with growth-oriented companies in a variety of sectors. In aggregate, these free-market educational websites have reached millions of viewers and have remained on the cutting edge of alternative news publishing.

In 2004, while running FMNN, Wile was among the early adopters of video-Internet news programs. The programs included: This Week in Liberty with Harry Browne and Weekly World Report. In that same year, Wile secured the exclusive Internet broadcast rights for the third-party debates for the presidency of the United States. The debates, covered by the FMNN team of broadcasters including former two-time Libertarian candidate for US president, Harry Browne, were an enormous success, with more than 500,000 people logging on.

In 2008, Wile founded a Swiss-based publishing firm and started publishing The Daily Bell. Today, Wile continues to be the publication's Chief Editor. In 2009, Wile launched a non-profit foundation – The Foundation for the Advancement of Free-Market Thinking (FAFMT). Wile serves as FAFMT's Executive Director and has established an experienced advisory board consisting of some of today's leading free-market thinkers.

In 2003, Wile published his first book as Yang, entitled The Liberation of Flockhead. Wile's second book, High Alert, published under his own name in the summer of 2007, has been well received by the hard-money community and alternative media in general. In fact, Congressman Ron Paul says, "High Alert should be read by everyone who wishes to educate themselves about the dangers fiat money poses to American liberty and prosperity. I wish I could get every member of Congress to read this book."

High Alert is currently in its third edition and in addition to its native English edition, is available in German and Chinese as well. Wile has assisted with the completion of over a dozen additional free-market oriented books, working as a collaborative editor to several leading free-market thinkers.

Anthony Wile invented a term – dominant social theme – to encapsulate the process by which a powerful money elite deceives citizens into giving up their liberties. The process usually invokes the use of fear-based messaging that targets the bottom two levels of Maslow's heirarchy of needs, where the larger percentage of citizenry is trapped. Those are the people that Wile and FAFMT are focused on educating about the importance of accepting personal responsibility for their own lives and not selling their freedoms to elite peddlers of baseless economic and social dreams.

Wile also invented the term Internet Reformation, which describes the process by which the Internet, paralleling the impact of the Gutenberg Press before it, is challenging the modern structures erected and under the control of a power elite intent on implementing global governance. 

Background: Anthony Wile was born in Bridgewater, Nova Scotia, Canada, in 1968. Wile graduated from Saint Mary's University (SMU) with a degree in business in 1991. Wile worked in the Canadian investment industry with Scotia McLeod (Bank of Nova Scotia) and Nesbitt Burns (Bank of Montreal). In 1994 Anthony Wile was made a Fellow of the Canadian Securities Institute, which is a designation awarded to financial services professionals who attain advanced education and experience in the Canadian securities industry. Following his career in the mainstream Canadian securities industry, Wile co-founded a Bahamian-based offshore brokerage firm specializing in private asset management. The firm launched several funds, including a venture capital fund of which Wile was the manager. The firm was sold in 1999.

In 2000, Wile experienced a brief role as the CEO of a start-up junior mining company that became the subject of a civil attack by the SEC. Wile and others fought for more than seven years at great personal and financial expense before eventually settling the case without admitting any wrongdoing. The assets of the company in question were subsequently purchased by a New York Stock Exchange listed company and the properties have now produced more gold than was initially suggested. Hundreds of investors lost literally tens of millions in deserved future profits because the SEC accused the company of over-promising a merger that was actually taking place. Perhaps this experience adds to Wile's fervor to expose the power elite and their societal manipulations.

Anthony has visited every state in the US and every province and territory in Canada. Additionally, he has lived in several countries in several continents over the past three decades and has visited or done business in more than 60 countries. He currently resides in Toronto, Canada with his wife, Hillary, and their three children, Gabrielle, Jesse and Julian.

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