WND column
An Austrian in the Lion's Den
It may be one of the greatest and most courageous speeches ever spoken. It is arguably one of the most important speeches ever given in the United States, considering the current fragility of the national economy and the central position that the financial system presently plays in American society. Earlier this month, Robert Wenzel of the Economics Policy Journal spoke to the New York branch of the Federal Reserve. In his speech, he called the central bankers to account for their complete failure to provide the economy with either of their two responsibilities set by the U.S. Congress, price stability and full employment.
It may be one of the greatest and most courageous speeches ever spoken. It is arguably one of the most important speeches ever given in the United States, considering the current fragility of the national economy and the central position that the financial system presently plays in American society. Earlier this month, Robert Wenzel of the Economics Policy Journal spoke to the New York branch of the Federal Reserve. In his speech, he called the central bankers to account for their complete failure to provide the economy with either of their two responsibilities set by the U.S. Congress, price stability and full employment.
34 Comments:
The more I think about this speech, the more I am amazed by it. It's more than just telling the emperor he has no clothes, it's ripping off the rags everyone calls robes and revealing Cthulhu underneath.
The fact that he was allowed to give this speech was a monumental error on the part of the Fed. Several people will quietly lose their jobs. Policies will be changed to vet all speeches and speakers beforehand. This divergence from Holy Orthodoxy cannot be allowed to happen again.
I wouldn't be surprised at all if Ron Paul reads this speech in its entirely from the floor of Congress. Indeed he should bring Wenzel before the Banking Committee which he chairs and question him about it as a matter of public record. Bernanke should be present for this questioning of course.
I realize that I (most of the Dread Ilk) move in different circles than your average mommy blogger (except for Nate) but I'm seeing this all over the net. I'm seeing it on Twitter (find me @LibertyAlerts) and of course on Facebook shared in different forms here and there.
If there are any liberty awards given out this year, Wenzel should get one. If Ron Paul defies the odds and become President, he should nominate Wenzel to chair the Federal Reserve.
I'll be waiting and hoping that at least one of the 4 legged rats will screw up the courage to walk out of that place and make a public spectacle about it and even perhaps bring some "secret" documents with him.
Vox, there aren't any quotation marks on the WND article - making it difficult to follow.
I repeat what Jimmy said.
The ads on the side sometimes make it difficult to tell when the block quotes start or end.
No Jekyll Island reference? If you're gonna kind-of go for it, you might as well go all the way.
At least to this point Wenzel isn't Breitbart's coroner.
Yes, a great speech! The fact that it is being shared all over the place as noted by Difster, just goes to show that it is hitting the right chord and common sense isn't completely dead. I'm no economic genius and I can't explain all the differences between the competing economic theories - but I know b**s** when I hear it. When some "expert" comes along and insists that 2+2=10, too many people think, "Wow! I can't understand this, but he's the genius and he says it is so. It must be very profound indeed!" I tell myself, "Wow! This idiot must have received the best Ivy league education education money can buy!"
it is not really accurate to pin the entire blame for our current economic predicament on the federal reserve. there are plenty of guilty parties. it is even more ridiculous to blame all the ills of our economy on that body. from the very beginning of our republic there has been an ongoing argument about the establishment of a central bank. we have had times with a central bank and times without one. and bank runs and panics occurred under both instances
it is arguable that alexander hamilton's relentless arguments in favor of such a bank got the u.s. off to a solid start by establishing the good credit of the country. the very FIRST congress was determined to welch on the war debt and it was only hamilton's indefatigable efforts that managed to have the debt redeemed at par which resulted in beginning the country on sound economic footing. had the congress succeeded in repudiating the assumption of the debt at 100 cents on the dollar, the u.s. would not have been able to borrow for the war of 1812 and we would have been recolonized by britain at that time. their strength was such that they marched up to the white house and burnt it to the ground.
the other thing that people forget is that the subsequent history of the u.s is one of going from boom to bust and back again on a regular basis. it should be kept in mind that the forming of the federal reserve system came about in 1913 because the panic of 1907 was so severe that the entire public was screaming bloody murder for the government to do SOMETHING.
lastly, no economic or banking system can last indefinitely. there will always be those who are of superior intellect and they will always figure out a way to game the system at the expense of the majority. it has been ever thus. the downturn we're currently in cannot be "corrected" within the context of the usual business cycle paradigm nor by the implementation of austrian school principles. we are too far down the road. history will take its inevitable course and there will be much suffering which will last the rest of our lives. for this is not just a matter of economics. this is imperial necrosis.
Anon said: it is not really accurate to pin the entire blame for our current economic predicament on the federal reserve. there are plenty of guilty parties. it is even more ridiculous to blame all the ills of our economy on that body.
No one is saying they are to blame for all of our ills. In terms of our economic mess, they are very much involved, but it's a partnership between the government, the Federal Reserve, it's member banks and the large corporations, banksters, and social welfare programs that have caused this mess.
In short, it's fiat currency that has enabled the government to do things that shouldn't be allowed in a free society? Blame the Fed? Sure, but connect the dots and blame all the responsible parties as well.
And you're wrong about why the Federal Reserve was formed. The elite love central banking, it wasn't some new idea that popped up after 1907 to deal with that crisis. And it wasn't the public that was clamoring for it. Check your history.
Yes, any system can be gamed, but when you erect a system like the Federal Reserve, it sets up the most massive financial fraud ever known in the history of the world.
Lastly, use some capitalization would you? It's not that difficult.
All those welfare programs are there because the FEDs felt bad about making so much money. But then they found out that they could make even more money by making more welfare programs
fiat currency does not enable anything. it is an inert, inanimate object. WE are the government; we could have stopped all this any day of the week but we were too busy shopping. currency debasement has been going on since the invention of it. even gold and silver coinage was debased by means of a file first, then alloys, then plating. currency WILL BE DEBASED. period. the medium is irrelevant.
"the most massive financial fraud ever known in the history of the world." ????? hyperbole, thy name is difster. you're the one who needs to check your history. geeze. i don't think you appreciate the severity of 1907. i've studied it. what to you propose as the impetus to create the federal reserve? it didn't just fall out of the sky.
i'm trying to imagine the CEO of a large corporation inviting a social worker over for dinner. can't quite get there. there is no partnership. the electorate shirked its civic duty. and here we are.
as for capitalization, a) it slows me down, b) writing on forums is such a ridiculous waste of time i'm not going to spend one extra molecule of energy fiddling with the shift key. i wish i could stop altogether. it's an addiction.
At least we've now reached the point where you can claim to be an austrian without people shouting "NAZI!" at you.
Ok, someone else handle Anon, it's too early in the morning for me to deal with this sort of ignorance.
Good speech, but I wonder who was in the ironically named Liberty Room at the Fed to hear it?
Did he rain fire and brimstone down on the janitor and some interns or were senior economists and voting member in attendance?
@Difster -
Why? Can't fix stupid.
The system is flawed? Are you joking? It's working exactly how it was designed to work.
If you have any interest in Phillips curves, then you know that dual goals of price stability and full employment are incompatible. What is a more important statutory purpose of the Federal Reserve is to manage the national debt by keeping interest rates low....especially when piling on the debt by the trillions. This they seem to be managing very well.
" At least we've now reached the point where you can claim to be an austrian without people shouting "NAZI!" at you."
I don't really see how the economy of such a small landlocked country in europe is at all relevant to the economy of the united states...
Josh, if I didn't know better.
had the congress succeeded in repudiating the assumption of the debt at 100 cents on the dollar, the u.s. would not have been able to borrow for the war of 1812 and we would have been recolonized by britain at that time. their strength was such that they marched up to the white house and burnt it to the ground.
First, US (or at least some in Congress) was itching to go to war with Britain. Second, Britain was busy at war with France, so no, they would not have successfully invaded (or colonized as you put it). The major reason that the US didn't succeed in invading Canada (yes, I know it wasn't called Canada at the time) was that the militias refused to go on Canadian soil saying their purpose was to defend their home, not attack another's (plus rather inept leadership). English troops did invade DC, but left right away lacking strength to hold it and facing inclement weather. War of 1812 was a pointless war with no winners, so the Central Bank helped finance a war that didn't even need to happen in the first place. Hardly a winning argument in support of a Central Bank.
The panic of 1907, like most of the other panics, was due to government involvement in the economy. Many states allowed their banks to stop exchanging their banknotes for species, effectively bailing them out and creating moral hazards. Before the Fed there wasn't free market banking. On the contrary, it was a hybrid between a market and the fed because of the 1863 national banking act, which made the big money center banks of new england and new york more powerful due to the ability to leverage their deposits on a more shaky pyramid.
Still, the panic of 1907 was nothing compared to the early 1930's panics because bankers were more conservative. For one, many bankers faced a capital call on their personal assets if the bank went bankrupt. Also, banks couldn't inflate as much as they could under the fed system due to the limits on credit imposed by the gold standard.
@ Anon that doesn't capitalise: Then at least change your posting handle. May I suggest ......." Archie."
fiat currency does not enable anything. it is an inert, inanimate object. WE are the government; we could have stopped all this any day of the week but we were too busy shopping. currency debasement has been going on since the invention of it. even gold and silver coinage was debased by means of a file first, then alloys, then plating. currency WILL BE DEBASED. period. the medium is irrelevant.
What an unmitigated load of horseshit. The fact that gold coinage has been debased in the past does not make a fiat system acceptable. Moreover, it is far, far more difficult to debase gold in this day and age than it is to debase fiat. CTRL-P much? Your statement is akin to saying that, since theft has always occurred, there is nothing wrong with employing a system that makes theft as easy as possible. Now FRB plays its role as well, but the fiat system has enabled FRB to achieve levels of leverage previously undreamed of.
Question Anonymous (pick a name BTW): If the monetary medium does not matter, why do the Fed and Chairman Bernanke insist that gold cannot be money and only fiat can be money?
> ...the electorate shirked its civic duty. and here we are.
And can you point to more than a handful of times in history where that hasn't been the case. The goal is to build systems which will work in spite of voter apathy, not because of it.
> ...as for capitalization, a) it slows me down, b) writing on forums is such a ridiculous waste of time i'm not going to spend one extra molecule of energy fiddling with the shift key.
Oh, poor poor pitiful you.
> Moreover, it is far, far more difficult to debase gold in this day and age than it is to debase fiat.
Didn't they find a gold bar in the UK that had been hollowed out and filled with tungsten?
Ah, zero hedge: http://www.zerohedge.com/news/tungsten-filled-1-kilo-gold-bar-found-uk
Didn't they find a gold bar in the UK that had been hollowed out and filled with tungsten?
Yep. It's still far more difficult than devaluing fiat and it is not too difficult to discover the fraud.
> It's still far more difficult than devaluing fiat and it is not too difficult to discover the fraud.
Agreed, but it does illustrate just how great the incentives to devalue are. In that, our Anonymous poster has a point.
There is a huge difference between debasing instances of a physical currency and debasing a whole monetary system. If physical gold were the standard,
1. Anyone--not just the lords and masters--could indeed try to file down their coins or hollow out bullion.
2. They are easily caught by anyone applying just a little due diligence.
3. There is still a physical limitation. It takes work on actual things to accomplish this.
Whereas when an organization has complete control over the supply of paper money, debasing is as simple as a computer entry, and instantly affects the whole system, rather than just individual instances of it. And of course, there is no legal mechanism to take them to task.
Agreed, but it does illustrate just how great the incentives to devalue are. In that, our Anonymous poster has a point.
I understand what you are saying, James, but that's not a point so much as saying that the water is wet. The point he was actually trying to make is that the current system is fine because it is human nature to try to find a way to game any system. This is untrue because all monetary systems are not equal. Even given incentive and opportunity to debase gold, it still does not carry the counterparty risk of a debt based fiat.
Is this part of the "glasnost" phase of the end of an empire? Reading tea leaves of Fed policy has been US version of Kremlinology for a while. Just that they let Wenzel give a brutally honest homily, with its own form of altar call (exit call?), means Fed groupthink wasn't on lock-down and like glasnost can't be easily unlearned. Bernanke can't put everybody at the Fed on double secret probation.
> The point he was actually trying to make is that the current system is fine because it is human nature to try to find a way to game any system.
Trying and failing miserably. :)
So I didn't seen any reason not to grant the one point he did get right.
I really don't know how the man was able to stand there and speak for so long. The putrid stench of sulfur must have been absolutely overwhelming. It had to be done and I salute his courage. It was surely as futile as delivering a sermon to a room filled with venomous snakes, spiders, scorpions and vampire squids.
I still wonder how much time he has before he ends up like Breitbart.
Because Burn-the-bank-e & his fellow Khazars have most the gold, that's why!
The system is flawed? Are you joking? It's working exactly how it was designed to work.
Agreed. The source of Robert Wenzel's puzzlement appears to be his assumption that the Fed means well by the United States.
Vox,
Comments on your column this week included the following:
RGallatin
"Wenzel's lunch at the Fed was not a “speech” in the sense that Robert Wenzel was holding forth in front of large room full of Federal Reserve policy makers and analysts. I spoke with Richard Peach at the New York Fed: the “speech” was just Robert Wenzel having lunch in the dining room with two people — Richard Peach and one colleague — during which Wenzel read his speech to the two of them over lunch. This was not Netanyahu at the UN."
Robert Wenzel's title for the speech said,
"My Speech Delivered at the New York Federal Reserve Bank
At the invitation of the New York Federal Reserve Bank, I spoke and had lunch in the bank's Liberty Room. Below are my prepared remarks."
It would seem that the possibility the the speech delivery and supposed audience may have been somewhat less than assumed by the average reader. For me, if the comment by RGallitan is true, represents a serious detractor to me regarding Mr. Wenzel's character though I laud the content of the words written in the speech.
@civilServant,
Only Wenzel knows what he believes--but I consider his argument more effectively passed to the public if based on "I may just be a small tohwn countrah lawyah, but this Federal Reserve system makes no sense to me, suh" than an argument that presumes they are a bunch of Satanic thieves who are a critical component to the destruction of the United States.
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