Keith's NO EMPIRE Blog

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Wednesday, January 05, 2011

Money, Power and Financial Control

“Allow me to issue and control a nation’s currency, and I care not who makes its laws.” (Mayer Rothschild, 1791)

Money is power. Economic power in fluid form. The primary means of social control. Our society has been developed in such a way so as to establish economic dependencies which require money in order to satisfy our needs and wants by engaging in monetary transactions in a marketplace largely controlled by those who have concentrated economic power. It is, in my view, the most effective system of social control yet devised, one which relies significantly upon the population not understanding the system, the levers of power largely invisible.

The ability of financial power to more or less camouflage itself is quite unique. Once upon a time, in the not too distant past, Kings and other nobility ruled by divine right, the myth of divinely sanctioned legitimacy. While the mythology justified voluntary compliance with the social order and the hierarchy of control (reinforced by coercive force), nonetheless, there was little doubt as to who was in charge and making the decisions effecting society. This is no longer true. While there are elected officials and corporate executives to blame, there is no real sense of how financial power creates, alters and shapes the social environment within which individual decision making occurs. Somehow, the use of money to direct economic and other activity is seen as natural, the result of beneficent market transactions where individual actions are subsumed to the collective wisdom of the economic rationality of the free market.

When it comes to money, there is a pervasive form of collective ignorance. Most folks cannot even conceive of the arbitrary nature of money creation. Or how it is more or less a social contract and nothing more. It does not seem to be widely known or widely understood that our financial system is privately owned and controlled, or that money is created as a debt obligation between banks and borrowers, hence, the very existence of money in our present system represents a lien on future earnings. Furthermore, the very nature of the system requires unsustainable systemic growth (or inflation) to meet unsustainable compound interest obligations. The tendency is for money to flow from the real economy to the financial sector.

There are other systemic problems as well, such as the emphasis on socially dysfunctional high yield investments (oil exploration, luxury goods, narcotics, money laundering, financial speculation, etc) to achieve competitive advantage. The role of narcotics trafficking and money laundering are highly instructive. The sale of illegal drugs involves the transfer of huge amounts of currency which needs to reenter the financial system for the drug trade to be viable. The currency reenters the system via banks which more-or-less know the source of the funds, but which process the transactions to make money and remain competitive. In other words, the multi-billion dollar international drug trade is only possible with the active collusion of the international banking system. The one thing our globalized, privatized financial system does not do well is to support the real economy or sustainability. It once did, back when financial controls were in place. Now, uncontrolled capital finds it more profitable to engage in financial speculation and fraud.

What must always be kept in mind is the extent to which our society has been monetized, with control primarily residing with those who control and direct the flow of money. Things which don’t get funded usually don’t get done. Things which get funded usually do get done. We don’t have a command economy, per se. Royalty and commissars don’t issue decrees, rather, capitalists (and others) spend money and things get done. The money is the authority for directing activity, and whoever spends money or commits to spending money is exercising economic power, at least to some extent. Those with little or no money have little or no economic power. Those with a lot of money, or who organizationally control and direct the flow of a lot of money have a lot of economic power.

Because we all need to secure a minimal level of money to survive, many are forced to work at jobs and do things they would rather not do in order to acquire money. In a somewhat similar vein, the prospect of making a lot of money and acquiring a lot of economic power is highly motivating to some people who may wind up doing things which they would not otherwise do if not for the prospect of financial reward. The corrupting influence of monetary gain and recognition is clearly seen in the Western trained financial elites of Third World (and other weak) countries, where “success” is contingent upon fealty to neo-liberal dogma and acquiescence to IMF diktats. In short, the power of money to achieve compliance is unique, and, to a significant degree, accounts for the success of capitalism, the first truly monetized system of social control. In the long run, money overcomes all opposition.

Our present system suffers from a double sided dysfunction, a consequence of the systemic tendency to concentrate wealth and power. The first aspect is the concentration of political power corresponding to the concentration of economic power. Concentrated economic power buys the propaganda needed to shape the public mind, and is the source of funding for politicians to purchase campaign advertising, without which they will not get elected. Hence, successful politicians are those which accommodate their source of funding, while their wealthy sources of funding reap the benefits of favorable legislation, frequently at the expense of the general population. That much is obvious. Less obvious is the extent to which concentrated wealth disrupts the social distribution of goods and services, that is, the very function of the real economy. If large numbers of people are insufficiently funded, a highly monetized system is incapable of responding to their needs and wants, resulting in both deprivation for the people and a stunting of the general economy. An additional consequence is asset inflation as the well-to-do “invest” their excess money into existing assets, frequently paper assets, resulting in “bubbles” which eventually crash. Depressions are mainly the consequence of a dysfunctional financial system.

At the national level, global financial dependencies have been created which necessitate nations becoming part of the global financial system in order to enable their trade-dependent economies to function. Local autonomy has been actively discouraged so that nations are dependent upon global finance to purchase the essentials for economic and physical survival within the context of the global market, dominated by the economically powerful. The populations of weaker nations essentially held hostage by the power of finance capital, which contributes negligible economic value, yet is richly rewarded for its role as a middleman in trade relations, financial arrangements becoming the equivalent of invisible chains, a more effective and efficient form of social control than coercive force.

The core of the problem is that the local, national and global political economy is effectively managed by directing the flow of money, and that the world’s capital is in private hands who utilize their financial power for private gain which is both economically and politically dysfunctional. The transition to a just and sustainable society absolutely requires public control of the financial system, and the elimination of debt-based money. From a technical perspective, this is relatively easy to do and long overdue. Unfortunately, the money power of the financial oligarchs combined with the financially linked interdependencies of the nation-states has to a significant degree locked the world into the present system which is headed for collapse. For any good to come from this, people need to understand the present system and why and how it needs to change.


Anonymous Anonymous said...

Your Rothschild quote is a well known fraud. I love that you provide a date with it too!

12:37 PM  
Blogger Seattle Keith said...

"Mayer Amschel Bauer Rothschild is quoted as saying in 1791: 'Allow me to issue and control a nation's currency, and I care not who makes its laws'" (p332, THE GLOBAL ECONOMIC CRISIS: THE GREAT DEPRESSION OF THE XXI CENTURY, Michel Chossudovsky and Andrew Gavin Marshall, Ed)The quote is contained in an essay by Ellen Brown, who references Dr. Carroll Quigley, who was a professor of history at Georgetown University.

2:27 PM  

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