Saving the Free Market From Itself
This morning, President George W. Bush announced further "unprecedented and aggressive steps" that will help to "shore up" financial institutions and the U.S. economy during this time of crisis. He's delighted that globally, governments are moving to "strengthen" market institutions by providing more "liquidity," that is, by "purchasing equity" in major banks worldwide. The Federal Government will now purchase equity shares in this country's banks as part of its "$700 billion financial rescue plan." Oh, the banks will be able to buy back these shares with money from "private" investors when they get back on stronger financial footing. And, in addition to stepped up efforts by the FDIC, the Federal Reserve Bank will become a "buyer of last resort for commercial paper."
Inflate, inflate, inflate! And let's coordinate this on a global scale, if our national efforts are too puny!
Finally, Bush said that his economic advisors, led by Treasury Secretary Henry Paulson, will provide further details on how this "rescue plan" will take shape:
They will make clear that each of these new programs contains safeguards to protect the taxpayers. They will make clear that the government's role will be limited and temporary. And they will make clear that these measures are not intended to take over the free market, but to preserve it.
Up is Down. Right is Left. Freedom is Slavery. We come not to bury the "free market," but to save it... just the way FDR saved capitalism!
But, to paraphrase another Savior of the Free Market, who enacted wage and price controls to save "capitalism" from itself... "Let us make one thing perfectly clear": There is no free market. And the "capitalism" they are "saving" has nothing to do with "free markets." Call it "state capitalism," or "corporatism," or "neofascism." Call it whatever the hell you want... but don't call it a "free market."
As I argued recently, the state and the banks are virtual extensions of one another, two aspects of the same structure, a "state-banking nexus," if you will. The effective nationalization of financial institutions in this country is just a continuation of a long history of government intervention.
Cross-posted at L&P.