• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Government Economic Leaders Surprised that Real World Isn't Responding to their Magic Pixie Dust

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Sun, 09/05/2010 - 00:40 | 564312 proLiberty
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Just a few days ago, CNBC carried an extensive live interview with a Federal Reserve high priest.  He stated proudly that the Fed must obey its "legislative mandate" of full employment and preserving the value of the dollar.  These two lies along with the third lie that it is in the public interest to have a positive rate of inflation should be enough to convict the Fed under RICO.  This is the grandest scheme of theft in the history of humanity, especially when coupled with a tax in nominal "income" however derived, by which I mean that the Fed, in collusion with government causes assets to rise in terms of inflated dollars, and then government gives itself the power to tax that as if it was "income", thus creating a "taking" entirely outside of Constitutional authority.

 

Speaking of preserving the value of the US Dollar.  in 1932, the gold was $20/ounce.  Today it is north of $1,200, a 60x change.  I think the Fed has disqualified itself.   This is like a the long line of proud hyprocricies, like being for inflation after being against it, or is it being against inflation after being for it.

 

Sun, 09/05/2010 - 00:27 | 564304 proLiberty
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" A theory as an internally consistent system is valid if the conclusions follow logically from its premises, and the fact that neither the premises nor the conclusions correspond to reality may show that the theory is not very useful, but does not invalidate it. In any pure theory, all propositions are essentially tautological, in the sense that the results are implicit in the assumptions made."

 

Which is exactly why I found Keynes to be so disturbingly wrong and von Mises to be so satisfying.  The first few chapters of his Human Action are amazing.

 

Fri, 09/03/2010 - 10:15 | 561803 blindman
blindman's picture

BettySoo "Things are Going to Get Worse"

http://www.youtube.com/watch?v=dElLEhHoESc

.

http://maxkeiser.com/

.

KR74] Keiser Report – Markets! Finance! Soupy Sales!

September 2nd, 2010 by
Fri, 09/03/2010 - 02:29 | 561264 Coldfire
Coldfire's picture

Government "leaders" surprised? Even non-PhD holder Madoff understood perfectly well when the jig was up.

Thu, 09/02/2010 - 22:25 | 561075 Bartanist
Bartanist's picture

Wow, I never realized how completely full of shit Greenspan is. He just seems to like hearing his own voice.

Also, one has to wonder on what planet (or under what mindset) the decisions that have been made can be considered rational. Is there some diabolical agenda that makes it all rational?

Fri, 09/03/2010 - 00:09 | 561236 Seer
Seer's picture

The Big Lie, classic execution!

Thu, 09/02/2010 - 21:10 | 560991 Silversinner
Silversinner's picture

Keep on telling the truth.

Tnx for this one,great article

Thu, 09/02/2010 - 21:00 | 560970 web bot
web bot's picture

I wonder down the road what the conclusions will be from subsequent Fed overlords when speaking about the 2010 Depression. Will they focus on what triggers led to hyperinflation, or factors that got out of hand regarding the monetization of the debt, or perhaps the tipping point at which the ratio of interest payments/GDP led to the USD default.

 

Fri, 09/03/2010 - 00:05 | 561232 Seer
Seer's picture

And they'll be sure to miss THE fundamental trigger- a system completley dependent upon growth, on a freaking finite planet!  Like no one could have seen this coming?

Thu, 09/02/2010 - 19:25 | 560836 tony bonn
tony bonn's picture

george washington for a 3d term i say

Thu, 09/02/2010 - 19:16 | 560819 Goldenballs
Goldenballs's picture

To me wages seem to be a very key point in all this mess.For most people wages have gone up by a small amount in maybe the last 20 years,if you put real inflation in the mix they have probably gone down,debt on the other hand has gone up,mainly due to living and speculation in the necessities of life.Corporations and banks have made huge profits over this time,25,30 & 40% not being uncommon,money has to come from somewhere but it also has to be returned to the economy in such amounts as to make debt repayable and keep the ponzi scheme going,in short it hasn,t been returning in sufficient amounts and we now look at the result.

Thu, 09/02/2010 - 19:07 | 560811 NotApplicable
NotApplicable's picture

I just read Hayek's 1944 speech "On being an Economist" this morning. It could not be more fitting today.

Here's an excerpt from Mises.org.

Thu, 09/02/2010 - 18:56 | 560794 lindaamick
lindaamick's picture

It feels to me like there is a silent revolution unfolding the US.  There are not too many amerikans that are not at least aware now that the financial class and coopted government live by a set of "no rules" where fraud is acceptable behavior whereas mainstream amerikans are expected to follow and obey all laws related to finances.   This awakening has brought about several occurrances: 1) people do not feel morally obligated to repay their debts.  They are following the lead of the elite class now. 2) people can not trust institutions, corporations nor government.  Therefore, people are reluctant to take chances and start/expand businesses or their holdings. 3) people are doing more and more financial transactions "under the table" using cash. 

I agree that the amerikan people by and large have a herd mentality but they are human and humans ALL have intuition which operates subconsciously and affects behaviors and choices. 

The system is rotten to the core.  It can not be fixed easily.  It is like a marriage when a spouse has an affair.  How long does it take for that relationship to "return" to normal?

Thu, 09/02/2010 - 18:53 | 560792 lindaamick
lindaamick's picture

It feels to me like there is a silent revolution unfolding the US.  There are not too many amerikans that are not at least aware now that the financial class and coopted government live by a set of "no rules" where fraud is acceptable behavior whereas mainstream amerikans are expected to follow and obey all laws related to finances.   This awakening has brought about several occurrances: 1) people do not feel morally obligated to repay their debts.  They are following the lead of the elite class now. 2) people can not trust institutions, corporations nor government.  Therefore, people are reluctant to take chances and start/expand businesses or their holdings. 3) people are doing more and more financial transactions "under the table" using cash. 

I agree that the amerikan people by and large have a herd mentality but they are human and humans ALL have intuition which operates subconsciously and affects behaviors and choices. 

The system is rotten to the core.  It can not be fixed easily.  It is like a marriage when a spouse has an affair.  How long does it take for that relationship to "return" to normal?

Thu, 09/02/2010 - 22:12 | 561085 Hang The Fed
Hang The Fed's picture

In the context of how badly rotten the system is right now, I'd wager that it won't renormalize until it's completely dead and replaced by something built anew by the people who fuel it, and therefore the rightful beneficiaries of it.  In the context of America, we should probably demolish the Fed, the electoral college, and every piece of legislation written since the Constitution and the Bill of Rights.

Since that probably won't happen, I'm going to guess that the more likely avenue of change will be via the emergence of local black markets in the face of ever-greater corruption in our current markets.

Thu, 09/02/2010 - 18:32 | 560758 DosZap
DosZap's picture

Put this in the GF, but most won't see it there.

Worth a read, and pay esp attention to the ending.

http://www.24hgold.com/english/news-gold-silver-winter-is-here.aspx?article=3097530056G10020&redirect=false&contributor=Nathan+Lewis

Thu, 09/02/2010 - 18:31 | 560755 whwood75
whwood75's picture

"More importantly, as Nassim Taleb repeatedly points out, financial experts who don't plan for rare events are like pilots who don't know about storms."

Yeh, well maybe. Or maybe airline pilots don't have a friend in the skies as loyal and protective as either Alan Greenspan or Helicopter Ben.

Thu, 09/02/2010 - 18:24 | 560742 Rotwang
Rotwang's picture

Non-redeemable tickets work just fine. As long as there is another seat left open on the train. Standing room only is what crashes it.

The illusion/delusion that you could somehow stockpile these tickets in your own private matress (the housing or SM), to keep for a rainy day, is what is truly breaking down. Break that illusion, and have it propagate towards the day-to-day transactional environment, and the problems show in spades.

(sarcasm on/off)

 

Thu, 09/02/2010 - 18:12 | 560723 Frank Owen
Frank Owen's picture

Keens is keen and so are you GW.

Thu, 09/02/2010 - 18:11 | 560719 mrhonkytonk1948
mrhonkytonk1948's picture

I will know that our economic problems are being solved when Economics is moved under the Psychology Department, zero graduating class of the Harvard Business School go to Wall Street because it is "so boring", all IBs convert back to partnerships, and white shoes return to style.

Thu, 09/02/2010 - 17:16 | 560609 Rusty_Shackleford
Rusty_Shackleford's picture

Interesting.

Infinite creation of non-redeemable paper ticket currency doesn't work out in the long run.

 

Hmmm.

Who wouldda' thunk it?

Fri, 09/03/2010 - 00:00 | 561231 Seer
Seer's picture

LMAO!

Thu, 09/02/2010 - 16:58 | 560567 william the bastard
william the bastard's picture

One of the conditions of a asset bubble is easy credit. The housing bubble was the MacDaddy, uber-democratic, i.e., open-to-all mega-scale bubble that can't be exceeded. What asset could supersede housing as housing supplanted tech stocks? Where is today's bubble? Tommorrow's? If no new bubble can be formed then we enter fail conditions according to the theory.

Thu, 09/02/2010 - 17:11 | 560597 william the bastard
william the bastard's picture

One of the conditions of social revolution is a strong perception of irreparable income/wealth disparity. Better gin up a distractive bubble pretty fast or we'll be living in the Republic of South Florida or somesuch thing.

Fri, 09/03/2010 - 00:00 | 561228 Seer
Seer's picture

Yeah, and someday we'll all be [Glenn] Beck-ians!  About as bleak a picture as I could possibly foresee.

Thu, 09/02/2010 - 16:58 | 560562 Sudden Debt
Sudden Debt's picture

Pixie dust is useless without the sorcerers book of spells. Everybody knows that.

Politics: The reason why banks are still doing whatever they want in Europe is because of the political instability in almost every European country.

England: right wing

Netherlands: extreme right wing

Belgium: separatist government (Keep a close eye on this one, it might split up in the next 24 months, capital of Europe remember)

France:extreme right movement coming up

Germany: separatist movement towards Europe

Italy: extreme right wing

...

Remember when the Germans became nazi's in WO2? Now half of Europe is on the verge of becoming like it.

I'm from Belgium myself, and what I've seen these last 2 years is terrible.

Most people I know always used to be Liberal or left wing. Now everybody is turning Right wing and very separatist. East and West want to split up and most people I know have turned into... racists. And it's not like they are keeping it to themselves. Most are proud to say they are racist.

And this is all upper class! Not the kind of people you'd suspect it from.

And you see this all over Europe. NOBODY wants the other ones mess!

 

 

Fri, 09/03/2010 - 11:24 | 562028 Ripped Chunk
Ripped Chunk's picture

I like your post Sudden. Whoever junked you is a coward and a tool.

But the post below it referencing Fascism is really part of the evolution you describe. When the chips are down, Fascism and totalitarianism will creep in. When you see an engineered "chips are down" situation like we currently are experiencing, you know the engineers are Fascists.

Mussolini was hung up side down and shot several times. Our engineers should keep that in mind.

Thu, 09/02/2010 - 21:50 | 561056 Hang The Fed
Hang The Fed's picture

What I personally find amazing is that, in light of everything that we know about how we're being screwed by the usury of a small bunch of assholes that employ a somewhat larger pool of assholes to extort every piece of value from the lives of the rest of the population at large, the automatic solution is to revert to divisions in political ideology (irrelevant...mainstream liberal and conservative are two sides of the same dildo that's lodged firmly in your ass), racism (also totally irrelevant...I think we're all bleeding the same colors as we're gradually crushed into the lube that keeps the gears running), and about a thousand other trite and meaningless distinctions and distractions that only allow the thieves to keep plundering.  What's even more horrifying is that there would appear to be a fair number of people who are more than happy (grateful, even) to wallow in the ideas that replacing a democrat with a republican, or that ejecting or "getting rid of all of those goddamn (insert skin color or nationality of choice here)" will fix a fucking thing.

On that note, I think I might just move to a nice, quiet cave somewhere and let this foolishness die of the cancer with which it's apparently infected.  Either that, or just bash my head against a wall until the deepest thought that I can contemplate is whether or not I "want fries with that."

Thu, 09/02/2010 - 23:51 | 561223 Seer
Seer's picture

I look at the likes of Glenn Beck and I feel like bashing my head in!  We really ARE going backwards!  Amazing how well the masses are programmed by the elites to turn on themselves (thanks Edward Bernays!).

Thu, 09/02/2010 - 20:42 | 560940 ExistentialSkeptic
ExistentialSkeptic's picture

Fascism is not "right-wing" -- that is a lie promulgated by leftists.  Anarchism is "right wing."

Thu, 09/02/2010 - 23:48 | 561219 Seer
Seer's picture

Yeah, Chomsky is a right-winger, I forgot!  Dumbass!

Thu, 09/02/2010 - 16:45 | 560531 Ripped Chunk
Ripped Chunk's picture

Where's Augie?  I wanted to ask him to be my date at the opening of "inside Job" next month.

http://www.youtube.com/watch?v=HRYhXE6aPmA&feature=player_embedded

Thu, 09/02/2010 - 16:50 | 560414 Edmon Plume
Edmon Plume's picture

Is Rivero right?  I would wager that the public understands little about money.  And unlike the middle ages where knowledge was hidden, there is no excuse.  Plenty of material has been written over the decades on how the ponzi works, and they haven't exactly dented the opinions of the sheeple.  I think the pixie dust has worked very well.  It may have lost its edge, but not its effect.

Sadly, I don't see any great awakening going on in the USA.  Conditions will need to get much worse, and be coupled with a distinct aversion to dependence on government + pravda for their nightly installment of turkish delight.  Otherwise the sheeple will seek a[nother] shepherd in a political idol, instead of turning to the self-determination that built the USA.

Thu, 09/02/2010 - 19:35 | 560851 dcb
dcb's picture

George,

I think you are being too kind. I think they know exactly what they are doing,

Now imagineyou are the head of a criminal organization that has managed to make the rules and the laws such that the system is rigged to your favor. ylou have the strings of power. economic political. Do you really think it is going to be given up or changed. No the system has to collapse before it can change. this has happened through all time and history.

we pretend we have a democracy, but we don't ragardless of whome we elect the policy options always benefit the same people (see Obama). It doesn't matter what they say while runnig.

We choose between two parties that are where the same group of people choose whom we can vote for in each party.

Obama reappoints Bernanke and appoints Geithner. That can't happen in an honest system. These people would be in Jail. hell even under communism such masssive failures had to be dealt with.  But not in the United states

 

There was overhwhelming popular support for an audit the fed. It didn't happen. Why. How do we manage to elect people over ande over who can ignore the very people who voted for them.

 

Look what happens when you try to disrupt the power structure. Blanche Lincoln. The Oligarchy had to have their chosen candidate. Progressive who buck the white house. Look at what Gibbs said about the "professional left"

Look how both sides use social issues to divide up the very people who should be voting for similar economic issues. These are carefully constructed methods of divide and control. The entire structure of our sysrem is nothing more than theater.

Thu, 09/02/2010 - 20:16 | 560904 dcb
dcb's picture

this article abut making sure it is the person  oligarchy's choice:

http://www.huffingtonpost.com/2010/09/02/christine-odonnell-hammered-by-republicans_n_704128.htmle

Thu, 09/02/2010 - 18:49 | 560778 traderjoe
traderjoe's picture

I was in a meeting recently with an accountant. I discussed the fundamental issue of fractional reserve credit creation (not enough money is created to cover both interest and principal). He asked what fractional reserve banking was...

Fri, 09/03/2010 - 11:16 | 562000 Ripped Chunk
Ripped Chunk's picture

Did that accountant go to U Chicago by any chance?

Thu, 09/02/2010 - 17:18 | 560617 Rasna
Rasna's picture

Edmon,

I used to believe that there would be an awakening to begin the process of righting the ship, but over the years it seems to me that the US population has become so lazy and complacent that the corporate plutocracy now acts with impunity and without regard for what is good or right for the country with the banksters being the most egregious example.  Our Congress, President and Supreme Court are bought and paid for by the corporatocracy...

As an example, how could any sane voter take Sarah Palin seriously and a potential presidential candidate... How could any voter be so naive as to believe that Obama was really going to change the way our government operates... People get sidetracked  by meaningless bullshit and are either to lazy or dumb to seek out the facts of a situation and hold people accountable...

The only possible salvation is to continually vote out incumbents and reform our political systems and force the politicians to reform the financial systems... If the don't deliver, vote them out again...  It will take generations... If indeed the financial system is so corrupt that it will fail because of its hubris, and this is the only way to excise the cancer, then so be it...I'm not optimistic though.  The Financial and Political cancer goes to deep and has metastisized.

Fri, 09/03/2010 - 11:15 | 561978 Ripped Chunk
Ripped Chunk's picture

+ 10,000  Excellent comment.

People have ridiculed me on ZH for stating that we should vote out all incumbents.

That is just step #1 to take back our country. It will take 3 or 4 general election cycles to get rid of the shit bags and make our point.

Along with this voter action needs to be new vigilance amongst all of us to watch and monitor what our legislators do and that means thousands of letters, e-mails and physical activism to get our point across and make "real" change happen. Not "slogan change" which is a hollow joke. Real change.

There are 2 other alternatives to the actions I describe above and neither is very attractive.

 

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