â€œHere we are yet again in the midst of another â€˜global economic crisisâ€™,â€ says financial analyst, Nicholas Vardy, editor of The Global Guru. Vardy is not reporting, but mocking. For he is one of the establishment cheerleaders respected by Wall Street, and he does not look kindly upon those considered to be bears in todayâ€™s world. There was a lot of castigation in his latest missive to us in the hinterland (2/5/08). So what I wish to do in this essay is investigate some of Vardyâ€™s derisive barbs and see how substantive they really are.
His comments are in italics; my answers follow in regular font.
Before you liquidate your financial assets, buy gold bullion, and move to a cave in Montana, you may wish to consider that current predictions of global economic collapse may be simply hyperbole. It has happened before.
Yes, hyperbole accompanies all economic crises in history, most of which do not result in collapse. But the presence of hyperbole does not negate the disastrous policies that create the potential for a collapse. It is the policy sources of the potential collapse that we must investigate here, not the tenor of the voices exclaiming its coming.
Comparing economic statistics is inevitably a â€œglass is half emptyâ€ versus â€œglass is half fullâ€ kind of game. Both Pollyannas and Cassandras can marshal endless statistics to support their version of events.
True both of us can marshal support statistics. But we both cannot marshal credible historical, philosophical, economic and moral arguments to support our case. When we incorporate history, philosophy, economics and morality together, the Cassandras have the far better case. In the following, I will present these kinds of arguments.
The current din of criticism against Bernanke is a lot like baseball fans, screaming â€œthrow the bum outâ€ at the game or venting their frustrations on post-game AM radio talk shows. But itâ€™s a lot easier to criticize than to step up to home plate and swing the bat.
This is what investors will NOT be doing for a while — stepping up to the plate and taking lusty swings. In a recession, everyone pulls in their horns and goes to the sidelines. This is the natural, prudent, intelligent thing to do. Yet Vardy is trying to turn virtue into vice and make it look like all â€œbearsâ€ are a bunch of armchair quarterbacks with no stomach for playing on the field in the snow and cold. Donâ€™t buy it. The place to be in a raging blizzard is safely hunkered down inside a warm and well-stocked cave. Do we have a blizzard coming? Canâ€™t say for sure, of course. But when the temperatures are dropping to zero, and the winds are howling like the ghosts that haunted Ebenezer Scrooge, it is best to head for the cave rather than charge out to frolic in the night.
To assume that Fed policy is based on responses to such criticism would be as absurd as for baseball star Alex Rodriguez to walk over and hand his bat to an obnoxious, beer-swilling critic in the bleachers of Yankee Stadium to take his place at home plate.
On the contrary, we donâ€™t think noisy responses from bear critics are what drive the Fed at all. What drives the Fed is false Keynesian economics, authoritarianism, hubris, and the desire to drive around in black limousines. Itâ€™s pretty much the same thing that has driven all humans that have climbed the political and banking ladders for the past 3,000 years. Anyone who has read a modicum of history knows that the political elites and monetary elites have been conspiring with each other for centuries. It goes back to the ancient money changers playing up to the Kings of Judea, to the smelters of gold and the Caesars of Rome meeting behind closed doors. Conniving power lusters are common to the human race, and that is what we have in abundance in Washington these days — contemptible power lusters who have thrown out all sanity and common sense to govern our Economy as if it is the board game of Monopoly. Only in this case, the role of the bank has been rigged to favor its Wall Street cronies with lavish injections of â€œliquidityâ€ every time they throw a bad number on the dice.
The reality is that few of Bernankeâ€™s most vitriolic critics were even smart enough to make it into an introductory economics class taught by Bernanke at Princeton — let alone to run the worldâ€™s most influential Central Bank.
How naÃ¯ve! This is not a matter of â€œsmartness.â€ Bernankeâ€™s intellect will not be able to protect against the coming downturn if it is a full blown recession / stagflation period. This is a matter of Natural Law manifesting. It is like a Great Northern blizzard, and all the IQ in the world will be no better shield than a fish net against the freezing snow. Smartness wonâ€™t get Bernanke very far at all. Nature does not take kindly to humans driven by hubris instead of humility; and it is hubris that has driven Keynesians for the past 70 years in America. This is retribution time for Nature, while it is mea culpa time for Keynesians and their fellow travelers among the neo-con establishment (Kudlow, Cramer, et al come to mind regarding the latter).
Thankfully, airline pilots guiding a plane through rough turbulence play to a less vociferous crowd.
This conveys the notion that Bernanke is a wise and benevolent operator that has been honorably given the job of directing his fellow citizens through economic blizzards and avalanches that are just â€œout thereâ€ and not of his and his ideological comradesâ€™ doing. These heroic chaps at the Fed are thus riding to the rescue of us know-nothings in the hinterland, and flying us off to the safe havens of Big Brotherâ€™s wonderfully planned Great Society.
Not so. The economic hazards that Bernanke is now facing are not just â€œout there.â€ They are of his and his ideological mentorsâ€™ own doing. It is the Bernanke-Greenspan-Burns-Keynes mindset that has created the Great Northern blizzard that Washington and its apologists are now saying they are going to fly us through in their ideological biplane. I say, â€œNo thank you.â€ I prefer Montana where they have steel structured storm cellars dug deep into the ground so as to ride out Great Northerns. They have loads of provisions and gold. Guns too. Theyâ€™re no nonsense people out there. They have watched the greed and stupidity of Washington / Wall Street types like Kudlow and Cramer for over 35 years now. They see their hubris, their blindness to the big picture, their lust for celebrity, their disingenuous twisting of criticsâ€™ complaints, their shallow understanding of ideologyâ€™s power, their ignorance of Natural Law, their imprudence regarding the next generation, their gullibility regarding â€œliquidityâ€ (e.g., if we call the counterfeiting of money by a fancy term, it will somehow not be criminality), etc., etc.
Hereâ€™s the reality… The Fed canâ€™t stop a downturn, but it can help it be short and shallow. This is a complex, fast-changing situation. Letâ€™s give the Fed and the U.S. government some credit for acting swiftly and decisively.
The Fed is not a â€œswift and decisive captain at the helm of the good ship Gibraltar.â€ It is a mafia gang of ideological thugs who have been handed a printing press that pours out green pieces of paper because 70 years of sham economics in the school system have bamboozled Americans into believing paper money is wealth if we call it wealth. But as any economist knows, money itself is not wealth. If money was actually wealth, then the government could just print up a million dollars for everyone and wipe poverty off the face of the earth. Money is just a substitute for wealth, a store of value for it. True wealth is the goods and services that we have produced. It can never be created with a printing press.
So are things really that bad?…The Fed has shown that it is willing to act quickly to reverse course and hike interest rates once it is clear that the economy is through this bout of weakness.
Yes, the Fed may be able to whipsaw us again into another bout of â€œboom times,â€ and then whipsaw us back to higher rates. Thatâ€™s the plan, Iâ€™m sure. But I doubt it will work this time around. The mortgage mess, the derivatives overload, the insidious termites of debt, the plague of protracted foreign wars, the cerebral decadence and fraud of our intellectual class all add up to the Lilliputians not just tying Gulliver down, but poisoning him in the process to keep him down for a long time. I would say the Fed is going to be whipsawing us into a long bout of â€œstagflationâ€ rather than â€œboom times.â€ And since the Fed will not want to assume responsibility for bringing on such fiscal insanity, it will cover its connection to the bad times with a lot of doubletalk and sophistry. The boys at the Fed are good at sophistry to cover up the ideological criminality that launched their cartel back in 1913 and which is the cause of this long train of monetary debasement promoted as â€œnew economics.â€ Unfortunately our establishment media are very bad at deciphering sophistry.
Here lies the real nature of the Keynesian economic paradigm. It is a grandiose endeavor in SOPHISTRY and IDEOLOGICAL CRIMINALITY. This, in a nutshell, is the economic history of the 20th century. A band of collectivist ideologues (with the philosophical prescience of John Law and the moral compass of a pack of wolves) hijacked Western civilization. They have not guided our airplane bravely through the treacherous storms of reality. They have created the treacherous storms themselves. This is what human beings get when they attempt to extract more from life than they are willing to put in.
The philosopher, Richard Weaver, wrote in 1948 in his great classic, Ideas Have Consequences: â€œAre you ready, we must ask them, to grant that the law of reward is inflexible and that one cannot, by cunning or through complaints, obtain more than he puts in? Are you prepared to see that comfort may be a seduction and that the fetish of material prosperity will have to be pushed aside in favor of some sterner ideal? .These things will be very hard; they will call for deep reformation.â€
That life is largely inscrutable is the conclusion wise readers of history come to once they get past fifty and have rid themselves of the callow ignorance of their youth. But thankfully despite this mysterious aspect to life, there still are numerous and profound realms of truth that are perceivable. One of these truths, which so many of us have such difficulty remembering, is that all men and women come into this world with a tendency to wickedness. Itâ€™s what the ancients in biblical days referred to as â€œoriginal sin.â€ Modern intellectuals donâ€™t buy into biblical wisdom anymore, and as a consequence are having a tough time explaining why their social institutions are such grotesque and fraudulent affairs. Perhaps if they were presented with the above biblical wisdom in the words of a modern philosopher, it would sit better with them.
Richard Weaver referred to original sin in this way: â€œThere is no concept that I regard as expressing a deeper insight into the enigma that is man. Original sin is a parabolical expression of the immemorial tendency of man to do the wrong thing when he knows the right thing. The fact of this tendency everyone should be able to testify to, not only from his observation but also from his personal history.â€
This is what our politicians and media of the present day need so desperately to rediscover about the human condition. Men and women are born with a tendency to do wrong even though they know the right. No one escapes this tendency. This is why Jefferson and Madison tried to tie down our government with the chains of the Constitution. They knew that men and women could never be angels. They would always be naturally and relentlessly â€œself-serving,â€ and if they were not given a moral compass in their youth along with a Constitution in their adult years, they would regress to their barbaric beginnings. Is this not what we have wrought today? Is this not what our bevy of Keynesians and fellow travelers are all about? Are they not merely serving themselves with a lot of sophistry, a lot of â€œdoing wrong when they know what is right?â€
After all, Kudlow, Cramer and friends certainly know that paper money is not wealth. They know that cranking up the printing press and â€œinjecting liquidityâ€ is not a genuine cure for what ails the nation. But perhaps they have been able to con themselves into believing that somehow Bernankeâ€™s dross can be gold if we call it gold. If thatâ€™s the case, then they and their comrades are indeed guilty of â€œdoing wrong when they know the right,â€ for self-con is the first and greatest sin. So itâ€™s either that Kudlow, Cramer and the establishment media are embarrassingly stupid, or they are crudely sinful. My guess is that itâ€™s the latter.
Not that this writer is any great shakes in the virtue department. He is, like all humans, afflicted with many failings. But one of his failings is not blindness when it comes to observing our financial media prancing around Wall Street these days and our Washington mountebanks wallowing in capitol graft.
The grafters and sophists have won over the modern world; that is for sure. In the universities, in the corporations, in the legislative halls, and in the courts, these despicable humans prevail. The clear thinkers and freedom advocates are definitely outnumbered. We donâ€™t have bevies of pulchritudinous babes to act as shills for us on the big television networks. We donâ€™t have billion dollar advertising budgets. We donâ€™t have connectivity to the Washington corridor. We have only one thing going for us. We have the truth on our side. But that, in the end, will be the determinant, for truth is the real power infused so mysteriously and majestically into the universe.
Tyrants have never understood this throughout history, which is why their lives are such ugly and ruinous affairs. The real glory of life is to find the truth, muster the integrity to accept it, and then summon the courage to fight for it. This is something about which our establishment media havenâ€™t a clue. They are, no doubt, sitting in their watering holes tonight fashionably sipping their cocktails and wondering if the bears could possibly be right. But they will quickly dismiss such apprehensions as childish boogeyman-under-the-bed fears. Theyâ€™re not interested in truth as the glory and the meaning of life. Theyâ€™re interested in celebrity as a means to strut in front of the chattering classes.
Nelson Hultberg is a freelance writer in Dallas, Texas and the Executive Director of Americans for a Free Republic www.afr.org. His articles have appeared in such publications as The Dallas Morning News, the San Antonio Express-News, Insight, The Freeman, Liberty, and The Social Critic, as well as on numerous Internet sites.