classical economics
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Global "New Republic"

End of National Democracies at Hand
By Wayne Jett © January 4, 2012
    Good news is hard to find, especially good news which is credible. One possible source is Robert A. Mundell, professor of economics at Columbia University, who was chronicled here as entitled to credit for such economic growth policies as were adopted in the U. S. during the past 50 years. 
     Mundell received the 1999 Nobel Prize in economics for putting the euro and the European Central Bank together in record time, although the award said it was due to “prescience” in research which seemed to solve problems before they occurred. His assistance to the euro seemed to engender sound monetary policy in both America and Europe.
Most Massive Money Increase Ever
    Mundell predictably is on the scene of the current European financial crisis centered around the euro. During the last week of 2011, he described the ECB action of December 21 pumping $645 billion (equivalent to 490 billion euros) into loans to European banks as “the most massive increase in money in a single day in the history of man …, a blockbuster, … a game changer …,” and “absolutely phenomenal.”
     Clearly Mundell supported the gross creation of fiat money, which he likened to “quantitative easing” by the Federal Reserve, despite its violation of the ECB charter. Carefully, though, Mundell did not call the ECB action a permanent solution to Europe’s bank capitalization or sovereign debt crises.
     In all honesty, Mundell’s praise for the ECB cannot truly be categorized as good news. Indeed, it may be reason to question what has become of the classical monetary theorist who once espoused, even championed, stability in currency value. Perish the thought that Robert Mundell may have become the John Maynard Keynes of the 21st Century, abandoning classical economic theory to aid the agenda of mercantilism.
   Forces which control the ECB have proposed a new treaty among the member governments to establish a European Stabilization Mechanism. The ESM would be immune to laws or claims of member governments, but would have unlimited power to demand support payments from member governments. Acceptance of the treaty, if it happens, will end republican democracy in Europe, even in its currently diminished rendition.
Shock: The Fed Did It!
    If the “most massive increase of money” by the ECB, with Mundell calling it “absolutely phenomenal,” seems no concern of Americans, consider the little-publicized role played by the Federal Reserve in the episode. The Fed actually supplied the money. "The money" was U. S. dollars – not euros. The Fed supplied $645 billion in a currency swap with the ECB, and ECB promptly loaned all of the money to European banks. 
    This was done within one week after Fed chairman Ben Bernanke assured Republican U. S. Senators the Fed would not bail out European banks. Such deception by the Fed chairman is not surprising, as previously Bernanke assured American television viewers of “Sixty Minutes” that “quantitative easing” did not involve “printing” money (he creates the dollars electronically by transmitting them to bank accounts).
    In light of such outright duplicity by private central bank officials towards federal elected officials, it is not much of an exaggeration to describe 2011 as “… a year … in which central planning finally took over everything.”  Within 100 years of its creation, the Federal Reserve is demonstrating openly its power over the U. S. government, not the other way around.
     Without truthfully informing Congress, much less getting a supportive vote, the Fed seized a massive portion of capital created by the American productive class and transmitted it to private European financiers. The Fed is incapable of injecting any value into dollars except value absorbed from dollars previously accepted for goods and services by American producers.
     In one day, December 21, the Fed created nearly as many new dollars as were comprised in the entire U. S. monetary base in July, 2008, and advanced all of them to foreign banks notorious for their financial instability. The Federal Reserve has exerted power to take the value of hard-earned private capital of Americans and give it to private, foreign interests. This violates the Taking Clause of the Fifth Amendment to the Constitution, which prohibits even the federal government itself from taking private property, except for public use and with payment of just compensation.
    The Fed’s massive transfer of capital from Americans to European banks has no public purpose in “saving the euro,” since the Fed itself has destabilized the European currency. Nor does the Fed have a proper public purpose in saving U. S. banks threatened by European instability – certainly not without so much as the fig leaf of a congressional vote. The money creation praised by Mundell does more to seal the euro’s fate than to save it, as others predict the euro’s demise in 2012.
    But the Fed’s transmittal of 645 billion new dollars to the ECB did more to assure the dollar’s demise than the euro’s. Surreally, the $645 billion sent electronically by the Fed to the ECB December 21 matched an essentially equal amount created by the Fed in eight months of QE2 during 2010-2011.
Fed Morphs into Global Central Bank
    The Federal Reserve Bank already acts as “global central bank” responsive to “global central government,” concepts endorsed by global religion hierarchies within the past month. [page link] Likewise, the U. S. president acts as if answerable, if at all, to a global authority rather than the U. S. Constitution when initiating acts of war in Libya after United Nations approval.
    Jim Rogers recently opined that the euro has been beneficial in improving commerce among nations, creating more production and wealth, and the ECB would do better to save the euro than to save the banks who have made bad investments in sovereign debt, among others. But that outlook - examining public interests rather than private financial interests – misconceives the nature and purpose of central banks.
     Central banks serve the agenda of their private owners. In every financial crisis created by their owners, central banks provide financing to the big banks which are also the tools of those same owners. Financing in such crucial times enables acquisition of still greater ownership and control at fire-sale prices.
Who Has M. F. Global Client Funds?
     When government is dominated by such pathological financial forces,  malfeasance by public officials is no surprise. Though evidence proves about $1.2 billion was stolen from client accounts of M. F. Global under management led by CEO Jon Corzine and he doesn’t really deny ordering the money taken (he says he didn’t “intend to” order the money taken), no criminal charges have been filed against anyone.
     That Corzine has not been charged criminally has more to do with who presently has the money than with Corzine’s political influence. Reports in the financial press indicate the $1.2 billion in client funds were either transmitted directly to J. P. Morgan Chase or to the Depositary Trust & Clearing Corporation as intermediary for transmittal to Chase and other big players on Wall Street.
     If Corzine is charged, prosecutors will have to prove what was done with the money, and whoever has it would have to give it up. As evidenced by long delay in meaningful action, whoever holds the funds is powerful and is unwilling to give them up. Such is the tenuous condition of the rule of law in America as 2012 begins.
     Economic depression continues with additional sources acknowledging true U. S. unemployment above 20%. Fundamental economic policies are not improved. Real output will continue to shrink, regardless of camouflage by currency devaluation. ~