Mr. Hamou has an MBA from Boston University, an Engineering Diploma from Ecole Centrale de Lyon (Ecully, France, in French) a degree of Computer Engineer from Sivan Marchevim (Tel Aviv, Israel, in Hebrew).He has worked as a bond trader in Paris, France and as a NIP (Local) on the Paris MATIF.
This is part 1 of three part tract: "The Age of Turbulence: Plea for a New Economic Order." It explains the nature and causes of economic depressions and proposes a plausible alternative solution: The Adjusted Credit Free, Free Market Economy.
In fluid dynamics, turbulence or turbulent flow is a fluid regime characterized by chaotic, stochastic property changes. This includes low momentum diffusion, high momentum convection, and rapid variation of pressure and velocity in space and time.
Abstract:
I am going to show here that central banks have excessive powers which are coherent neither with democratic principles nor with morality. Their existence can not be justified from a mathematical point of view.
Worse, in light of the exercise of their extraordinary power by Ben Bernanke, Federal reserve chairman. I argue that the Federal reserve can pose a real threat to democracy, peace, privacy and individual freedom.
Money Supply:
In a capitalist system money is distributed when the central bank lend it to banks, which, in turn, lend it to their best customers, the wealthiest among them.
Why the central banks should loan our money to the banks is a mystery for me. The fact that it does proves that the central bank is not a public system but at the service of private vested interests.
Another mystery is the mandate of central banks, which is both to keep a low level of inflation and optimize economic output.
Any mathematician knows that it is impossible to optimize two parameters, you can optimize one under constraint of another but you can't optimize two variables at the same time. By giving the central banks an impossible mission the executive and legislative body in effect gives it the freedom of doing whatever it chooses.
Inflation is a illusory concept and that keeping it at a low level was only a way to preserve the scarcity of money and a high level of interest rates. However the mandate to keep a low level of inflation was the argument the bankers chose to justify the independence of the central bank.
Its choice to give predominance to inflation over growth, produced a much lower level of economic output than that would otherwise be possible.
The central banker although designed by the executive and/or legislative body gets a mandate. Over time the Federal Reserve has increased its independence.
In effect make the central bank a state within the state at the service of vested interest. They have succeeded in reproducing a feudal system in which the king is the chairman of the central bank, the systemic bankers are the marquis, the big corporations are the earls. Each decides arbitrarily and according to the hierarchy, who will get the money and how much money they will get. Until the Bernanke Rule that decision was made purely by setting discriminatory interest rates.
A kingdom can be a could thing with a enlightened king like Alan Greenspan, who restrained voluntarily his powers, used transparent rules for the exercise of his power, applied a policy, given the scope of his mandate, which was in the best interest of the people and succeeded in avoiding any major breakdown of the system.
Under Bernanke Rule the things have dramatically changed.
Bernanke has used economic breakdown as a weapon of global, systemic terrorism.
Terrorism is the systematic use of terror especially as a means of coercion. At present, there is no internationally agreed definition of terrorism. Common definitions of terrorism refer only to those acts which are intended to create fear (terror), are perpetrated for an ideological goal (as opposed to a lone attack), and deliberately target or disregard the safety of non-combatants.
Bernanke has overtaken both the American executive and the legislative bodies: by making them vote and sign the TARP, he made them the unwillingly accomplices of his crimes.
He has grown the amount of money he has distributed to high never heard about before.
Using extraordinary powers that were granted to the Federal Reserve after the Great Depression and never used since, he has included in the balance sheet of the Federal Reserve System an arbitrary amount of arbitrarily chosen assets purchased at an arbitrarily set price.
He has refused to let the people audit the Federal Reserve that Congressman Ron Paul advocates by suggesting an audit would cause the eventual breakdown of the value of the US Dollar because auditors threaten his independent power.
He is succeeding in getting the central bank a power that far exceeds its traditional mandate by creating the function of a 'systemic risk regulator.'
How and why he got extraordinary power from both the Bush and Obama administration is not something many economists understand.
The reach of Bernanke's power is not limited to the United States of America. By granting swap options to foreign central banks, options the Federal Reserve had to exercise in order to help them circumvent the collapse of their domestic banks, he has been able to increase their "systemic" dependency on the Federal Reserve System and influence their monetary policy. For example the European Central Bank (ECB), had to implement the unorthodox Bernanke Quantitative Easing policy which purchased mortgage-backed securities
Under Bernanke rule the Federal Reserve System has been transformed in an organization that openly transcends international boundaries, executive powers, legislative powers and judiciary powers:
"I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan.
Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively.
However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed."
source: http://blog.yield-curve.net/2009/08/tract.html
http://www.prlog.org/10165667-chairman-ben-bernanke-quantitative-easing-cant-work.html
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