Snowden vs. Bernanke
Column by George F. Smith.
Exclusive to STR
From the regime’s viewpoint only, who is the greatest threat, Edward Snowden or Ben Bernanke?
The government’s defenders would likely turn their backs on the question, but they ought to look closely at it. Here’s their take: Snowden has broken the law and exposed sensitive government snooping operations. At the very least, he should be in prison. Bernanke is keeping the economy’s engine running with prodigious amounts of digital money, all of it backed by the full faith and credit of the U.S. government, and by most indicators, he’s doing a stellar job. Bernanke is a hero, Snowden is a traitor. It’s not even an open-and-shut case because it doesn’t deserve to be opened.
But if they did open it, what might they find? Snowden made headlines with his Glenn Greenwald interview, but he’s revealed nothing new. James Bamford started writing about the NSA’s warrantless eavesdropping back in 1982. At worst, Snowden is reminding the public of something they should already know. But that’s it. If what he’s done has created a crisis, it’s only a crisis of confidence--confidence in the trustworthiness of government. Congress will continue funding the NSA, and the NSA will continue doing whatever it wants. Americans thought they had constitutional protection from prying government eyes, but it turns out they don’t. If they had been paying attention, they would’ve known this years ago. A lot of people are outraged, but this too will blend with countless other government misdeeds and will fall off the radar.
Bernanke, on the other hand, recently tested the waters, perhaps inadvertently, and the result was terrifying to investors.
Gary North described the results in picturesque terms:
Stocks fell, bonds fell, gold fell, oil fell, commodities fell. All over the world, markets tanked.
Why? Because Bernanke hinted that the U.S. economy is recovering, and the Federal Reserve may cut back sooner than expected on its trillion-dollar-a-year pump-priming operation.
Bernanke is the equivalent of the head of the international drug cartel. He is the pusher. He is the man supplying the daily “fix.” Around the world, addicts depend on his supplies of digital “snow.” The fix is in. Bernanke is the fixer.
When the pusher hints that the supply of the investors’ drug of choice — digital money — is likely to be reduced, they panic. The fear of withdrawal discomfort spreads through “the street.”
There was a rush to the exits on June 20. People run to cash, especially the dollar, when they think the markets are going to lose their supply of counterfeit money. The world is dependent on the continuing supply of digital money, which is supported by government IOUs.
Bernanke’s hint has exposed a fatal flaw in the alleged economic recovery. If the influx of fake money is ever slowed or stopped, it’s over. If the Fed stops printing, investors go back in their shells. If investors even get a hint of a slowdown, the indicators so supportive of a recovery will reverse, unless Bernanke holds a press conference to stop the bleeding.
It’s highly unlikely that a whistleblower like Snowden can seriously impair the regime’s expansionist aspirations. Revelations of snooping aren’t monetary issues. The Fed’s QE programs are. If they don’t work, the government’s grandiose aspirations, based as they are on confiscated wealth, are seriously threatened. If the Fed can’t keep manufacturing money at will while keeping the economy at least stable, the regime will be in serious trouble. The Fed was created by and for the big bankers, but it can’t exist without government protection. In return for this favor, the Fed buys government debt, directly or indirectly, to augment its tax revenue. In recent years, the government has been doing a lot of augmenting--in the range of a trillion dollars per annum. If this racket proves defective--if the economy can’t shoulder the burden--then government will have to turn to more overt forms of confiscation. And that, in turn, could threaten the perceived legitimacy of the state.
People think they can live while being spied on in all their communications. And most of them can. Many of them think it’s a necessary freedom to surrender if they don’t want to be murdered by terrorists, even if they’re four times more likely to be killed by a lightning bolt, and even if they have no choice about surrendering their freedom. They’ve been pawns of the government for so long, “political freedom” is little more than a collection of nonsense syllables, so they don’t miss it. They can learn to hate Snowden and love their government herdsmen.
What they can’t live without in a modern economy is sound money. They don’t know what sound money is, but they do know what they earn and what it costs to live. If the former is not in a good relationship with the latter, they suffer, and they know who to blame for their pain. Historically, government has gotten away with attacking speculators, hoarders, and of course the free market when their schemes blow up. Thanks to the Internet, Ron Paul, and Austrian economists, their schemes are now more transparent to more people. The co-conspirators--the Fed and the government--will take the heat when the next crisis arrives.
Bernanke has given the world a sneak preview of the soundness of his counterfeiting program. Counterfeiting theory says counterfeiting favors the counterfeiters and his pals, which in this case is the banking cartel and the government. It also says that in the long run, it doesn’t favor anyone because the money becomes worthless, but they’ve forgotten this. If the bureaucrats are in the mood to identify threats to their power, they should forget Snowden and bring Bernanke in for some in-depth questioning--preferably by someone trained in Austrian economics.