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Free Market Farce

Jarl Jensen | May 3, 2019

It only seems appropriate that the land of the free should have free markets. The idea behind free markets is to keep the government from intervening in business matters.

Free markets create competition between companies. Consumers are free to shop at the businesses that meet their needs — quality products, best prices, or a combination of both.

By definition, a free market economy exists if the government plays a minimal role in regulating it. What people fail to consider is that there is a hidden third party that determines the great majority of economic activity. That hidden third party is the banks.

free market farce

A Third Party in Our Free Market System

Governments around the world have outsourced economic activity to banks through the creation of central banks. These banks are influencing the companies and consumers in our free market system much more than most people realize.

In America, the Federal Reserve is the central bank. The Federal Reserve is owned by commercial banks — not the federal government as many people believe.

Banks approve and disapprove loans which means that they determine what gets done. While the economy is ‘Free’ from government intervention, it is not ‘Free’ from the motives of banks.

Banks have a very basic motive. They want to make money on loans. The great majority of economic activity is therefore determined by the decisions of banks.

The Influence of Bank Loans

The world’s economy is driven by commercial banks — not governments.

  • It is banks that grant loans to drill for oil.
  • It is banks that approve loans for a polluting factory.
  • It is banks that fail to approve a loan to finance the building of a water purification facility.
  • It is banks that fail to reduce the burdens of debt on third world countries throughout the world.

There is no such thing as free markets or free-market economies. There only bank driven economies.

And it should be no surprise to anyone that banks are not motivated to make this a better world, banks are only motivated to make money on their loans.

So, as the world hurdles toward apocalypse, many believe that free markets will save the day… a little nudge will clean things up… perhaps a carbon tax will make things better.

Meanwhile, other ‘Free Marketers’ buy land in Greenland as the ice melts. They are using bank loans that can be paid back by drilling for oil in the newly exposed ground.

Free markets are a false narrative. It’s the banks that are free to grant loans to rain down destruction without concern for those that get hurt. It is a free-banking economy — the market has nothing to do with it.

There is very little upside to this construct. There are very few winners.

wealthy businessman

The Wealthy are a Bank’s Only Customer

Wealthy people certainly benefit from low-interest loans that the banks grant them for even the most frivolous of purposes. Wealthy people are, after all, the bank’s only customer.

Banks do not grant loans to poor people. Banks do not consider their overall impact on society for one simple reason — they don’t have to. And because wealth is in the hands of the few, banks only do business with the few.

The economy is the total work of all the people. The work that the people do is directly correlated to the loans the banks approve. In other words, work is made available as the money granted by banks through loans trickle’s down to the people who work for it.

It’s the wealthy people who get loans and they can use it for the dumbest of purposes simply because they can pay back the banks by selling their assets.

Governments are Responsible for the Aftermath of Bank Decisions

It’s the governments that wind up cleaning up and fixing all the problems caused by the free-bank economy.

  • When money does not trickle down to the poorest, it’s the governments that have to build shelters.
  • When not enough jobs are created by bank loans it’s the governments that have to pay for unemployment.
  • When the pollution from a factory built by bank loans makes people sick, it’s the government and the health care system that suffers.
  • When global warming goes into high gear, the banks will be doing business as usual, even though it was the bank loans that built the coal mines, dug the oil wells, and sold gas guzzling cars to the masses.

There is a Better Way

There is no free market economy. But there’s definitely a better way.

Central banks like the Federal Reserve should not be owned by commercial banks. Central banks have a much more important role to play then simply playing the supporting role to the commercial banks.

The central banks of the world are responsible for our future, efficiency, and productivity of the work that everyone does. Central banks need to be more like planning boards that architect the future of our world.

The government should remain on the sidelines when it comes to the functions of central banks, but so should commercial banks.

The planning of society’s future, the number of jobs, what type of jobs, and how much they pay can all be controlled by the central bank. Central banks can also make income inequality and wealth disparity irrelevant.

To find out more, read my book.



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