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Obama Fed Board Nominee Peter Diamond Discovers His Nobel Prize In Economics Is Worthless, Pulls Nomination In Disgust

Tyler Durden's picture


In a move that is sure to send the infamous Fed "economist" (Ph.D., never forget) Kartik Athreya over the edge, Obama's nominee for the Fed Board, after unsuccessfully trying to enter the one circle that is just less exclusive than the Goldman partnership ranks for over a year, has decided to pen an Op-Ed in the NYT titled "When a Nobel Prize Isn't Enough", and disgusted with the fact that his utterly worthless Nobel prize in something or another can't even buy him one seat with those who decide the price of money, has pulled his nomination in utter disgust. "Last October, I won the Nobel Prize in economics for my work on unemployment and the labor market. But I am unqualified to serve on the board of the Federal Reserve — at least according to the Republican senators who have blocked my nomination. How can this be? " How indeed: could it be that, gasp, Nobel awards are merely a honorary award in groupthink, presented to anyone who perpetuates the status quo with little regard for actual merit-based contribution (one needs only recall Obama's Peace prize just as the President is contemplating opening up a 4th, or is that 5th, war front?). Most importantly: nobody tell Krugman his one validation of his life's work, has just been downgraded to junk.

When a Nobel Prize Isn’t Enough


Lexington, Mass.

LAST October, I won the Nobel Prize in economics for my work on
unemployment and the labor market. But I am unqualified to serve on the
board of the Federal Reserve — at least according to the Republican
senators who have blocked my nomination. How can this be?

The easy answer is to point to shortcomings in our confirmation process
and to partisan polarization in Washington. The more troubling answer,
though, points to a fundamental misunderstanding: a failure to recognize
that analysis of unemployment is crucial to conducting monetary policy.

In April 2010, President Obama nominated me to be one of the seven
governors of the Fed. He renominated me in September, and again in
January, after Senate Republicans blocked a floor vote on my
confirmation. When the Senate Banking Committee took up my nomination in
July and again in November,  three Republican senators voted for me
each time. But the third time around, the Republicans on the committee
voted in lockstep against my appointment, making it extremely unlikely
that the opposition to a full Senate vote can be overcome. It is time
for me to withdraw, as I plan to inform the White House.

The leading opponent to my appointment, Richard C. Shelby of Alabama, the ranking Republican on the committee, has questioned the relevance of my expertise.
“Does Dr. Diamond have any experience in conducting monetary policy?
No,” he said in March. “His academic work has been on pensions and labor
market theory.”

But understanding the labor market — and the process by which workers
and jobs come together and separate — is critical to devising an
effective monetary policy. The financial crisis has led to continuing
high unemployment. The Fed has to properly assess the nature of that
unemployment to be able to lower it as much as possible while avoiding
inflation. If much of the unemployment is related to the business cycle —
caused by a lack of adequate demand — the Fed can act to reduce it
without touching off inflation. If instead the unemployment is primarily
structural — caused by mismatches between the skills that companies
need and the skills that workers have — aggressive Fed action to reduce
it could be misguided.

In my Nobel acceptance speech in December, I discussed in detail the
patterns of hiring in the American economy, and concluded that
structural unemployment and issues of mismatch were not important in the
slow recovery we have been experiencing, and thus not a reason to stop
an accommodative monetary policy — a policy of keeping short-term
interest rates exceptionally low and buying Treasury securities to keep
long-term rates down. Analysis of the labor market is in fact central to
monetary policy.

Senator Shelby also questioned my qualifications, asking: “Does Dr.
Diamond have any experience in crisis management? No.” In addition to
setting monetary policy in light of a proper understanding of
unemployment, the Fed is responsible for avoiding banking crises, not
just trying to mop up afterward.

Among the issues being debated now is how much we should increase
capital requirements for banks. Selecting the proper size of the
increase requires a balance between reducing the risk of a future crisis
and ensuring the effective functioning of financial firms in ordinary
times. My experience analyzing the properties of capital markets and how
economic risks are and should be shared is directly relevant for
designing policies to reduce the risk of future banking crises.

Instead of going to the Fed, however, I will go about my congenial
professional existence as a professor at M.I.T., where I have taught and
researched since 1966, and I will take advantage of some of the many
opportunities that come to a Nobel laureate. So don’t worry about me.

But we should all worry about how distorted the confirmation process has
become, and how little understanding of monetary policy there is among
some of those responsible for its Congressional oversight. We need to
preserve the independence of the Fed from efforts to politicize monetary
policy and to limit the Fed’s ability to regulate financial firms.

Concern about the (seemingly low) current risk of future inflation
should not erase concern about the large costs of continuing high
unemployment. Concern about the distant risk of a genuine inability to
handle our national debt should not erase concern about the risk to the
economy from too much short-run fiscal tightening.

To the public, the Washington debate is often about more versus less —
in both spending and regulation. There is too little public awareness of
the real consequences of some of these decisions. In reality, we need
more spending on some programs and less spending on others, and we need
more good regulations and fewer bad ones.

Analytical expertise is needed to accomplish this, to make government more effective and efficient.
analytical thinking should not be drowned out by mistaken,
ideologically driven views that more is always better or less is always
I had hoped to bring some of my own expertise and experience to the Fed. Now I hope someone else can.

Peter A. Diamond is a professor of economics at the Massachusetts Institute of Technology.


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Mon, 06/06/2011 - 08:13 | 1342786 jkruffin
jkruffin's picture

What politician or economist, other than the morons already around Obama, want to put their name on a depression?  I don't care how many economics degrees you have, when the PTB force you to lie to people, there is no way I want any part of that.  I wouldn't let these idiots put my head on the chopping block when this ponzi collapses in epic style.

Really, who would take this job? Only someone wishing to live in fantasy land...

Mon, 06/06/2011 - 08:34 | 1342853 trav7777
trav7777's picture

he doesn't believe he's lying...he believes the bullshit.

This is what I keep saying about economists.  They are in a fishbowl and won't acknowledge that there is anything outside of the tank.

As for this guy, hmm...with a surname like Diamond, anyone want to take a stab at whether he represents any "diversity" to the Fed board?

Mon, 06/06/2011 - 09:05 | 1342935 G-R-U-N-T
G-R-U-N-T's picture

"Analytical expertise is needed to accomplish this, to make government more effective and efficient."

LOL, as if this would ever happen. Ie: The climate change looting the living shit out of the  masses fraud. Analytics at it's best...

Mon, 06/06/2011 - 09:10 | 1342962 66Sexy
66Sexy's picture

This schmuck isnt qualified to clean up the shit on monday morning.. let alone lick my balls...


Mon, 06/06/2011 - 10:00 | 1343121 LowProfile
LowProfile's picture

True, but he's a white guy

Too bad Travis.  Perhaps one day you'll wake up.

Mon, 06/06/2011 - 10:14 | 1343144 trav7777
trav7777's picture

jfc you are stupid.

His ethnicity represents NO diversity from the Fed board.

And, no he isn't a "white guy."

What was it you said about waking up, dipshit?

Mon, 06/06/2011 - 10:57 | 1343268 Monedas
Monedas's picture

He looks kind of white ? Oh, you mean he's a Joooooooooo ? Monedas 2011 Unofficial Spokesman for the Jooooooish Peeple !

Mon, 06/06/2011 - 09:07 | 1342944 HoofHearted
HoofHearted's picture

The guy who played Screech was Dustin Diamond. Is this Screech's dad???

Mon, 06/06/2011 - 14:03 | 1343809 jmc8888
jmc8888's picture

Nobel Peace prizes are awards for the 'useful idiots' that believe TPTB bullshit, (said bullshit) created by former Nobel Peace Prize award winners in order to win THEIR awards.

When Cassius Clay learned his olympic medal meant shit (i.e. segragation/racism still applied to him), he threw it into a river or some body of water.

Could this idiot do the same with his Nobel?

Only if he is capable of breaking with groupthink.


Mon, 06/06/2011 - 10:46 | 1343241 SRV - ES339
SRV - ES339's picture


What a bullshit angle to a story (good chance to lament anything Nobel though... very insightful)!

How about commenting on the group (of children) you helped send to Washington (throw the bums out) blocking any and all nominations regardless of qualification... yes, doing the peoples work again. But then, we wouldn't get the peasantry going like the good old tried and true Nobel (Obama) bashing would we... more "red meat" for the Tea Party crowd please!

Mon, 06/06/2011 - 11:11 | 1343304 A.W.E.S.O.M.-O 4000
A.W.E.S.O.M.-O 4000's picture

Ha! I wouldn't accept a Nobel Prize in Economics if you paid me!


(Please don't tell the Nobel Prize committee I said that)

Mon, 06/06/2011 - 08:10 | 1342787 ATM
ATM's picture


Mon, 06/06/2011 - 08:40 | 1342857 lolmao500
lolmao500's picture

And most Obamabots think that Krugman is god himself. Mwahahahaha.

Mon, 06/06/2011 - 08:51 | 1342898 GetZeeGold
GetZeeGold's picture


nobody tell Krugman his one validation of his life's work, has just been downgraded to junk.





Mon, 06/06/2011 - 09:35 | 1343029 shortus cynicus
shortus cynicus's picture

Krugman shares will rebound, it is long-term, for live investment.

We probably get a small fall back in dark ages of PM based money, but ongoing intelligence decrease of humanity is in a secular trend, so they will win in a long term.


Mon, 06/06/2011 - 09:41 | 1343044 StychoKiller
StychoKiller's picture

I have it on good authority that it only costs $5 to dig a Nobel prize out of the ground...

Mon, 06/06/2011 - 08:11 | 1342791 Dolemite
Dolemite's picture

Precious metals to present good buying oppurtunity after a near term correction?

Gold and silver showing signs of weakness, and oil is confirming.

Mon, 06/06/2011 - 08:47 | 1342821 g
g's picture

what a whiner this economist is. He is probably over at krugman's house crying .

Mon, 06/06/2011 - 08:46 | 1342890 Monedas
Monedas's picture

Troll patrol ! We meet again ?

Mon, 06/06/2011 - 08:16 | 1342796 williambanzai7
williambanzai7's picture

Shut the whole fucking quagmire down...a PhD in how workers and jobs come together. What a pile of useless horseshit. All of them, put them on a barge and sink it.

Mon, 06/06/2011 - 08:30 | 1342832 bronzie
bronzie's picture

so many PhD's that should never be awarded ...

economics is a pseudo-science to begin with - what does it mean to hold a PhD in a pseudo-science?  are PhDs in economics and PhDs in astrology equally valuable degrees?

psychology of religion? really? a PhD? WTF?

PhDs are just part of the higher-education circle-jerk and the Nobel Prize gives the holder entry into a more exclusive circle of jerkers

Mon, 06/06/2011 - 08:37 | 1342849 DarkAgeAhead
DarkAgeAhead's picture

Agreed.  Many PhD's are just a form of intellectual hazing, to conform individuals to a group.  Not much different than law school or a bar exam...etc.

Beyond intellectual hazing, these just create an illusion of intellectual superiority and a fiction for universities to monopolize billions in research funding.

That said, I'm considering one myself.



Mon, 06/06/2011 - 08:49 | 1342900 ElvisDog
ElvisDog's picture

I do not have a PhD, but almost all of the people I work with have them. A singular quality among them is they are really smart but get nothing done. Typically, I'm brought in to take charge of projects that are being run by a PhD. The project is way behind schedule and about to get its funding pulled.

Mon, 06/06/2011 - 09:44 | 1343054 bronzie
bronzie's picture

I'm in month 4 of a new job led by guess what - a PhD

this guy is the most challenging person I have ever worked for - he's smart enough to navigate the political environment at work without actually doing any work

not doing any work includes not giving any meaningful / actionable direction to the people who report to him for direction

the PhD was hired because 'PhD' looks good on proposals when the company is bidding for new work - evidently there are still people in the world that think 'PhD' means something of value ...

yes, this is a DoD project - our tax dollars hard at work ...

Mon, 06/06/2011 - 08:40 | 1342858 trav7777
trav7777's picture

these economists are part of a clan that has a long and distinguished history of self-deception.  They seem to like to hand out prizes to each other reminding themselves how indispensible they all are to the world.

That a prize in economics could have the same standing as one in physics is a joke.  Nobel in numerology should be next, then perhaps psychiatry, another dismal science from the same clan

Mon, 06/06/2011 - 08:46 | 1342893 Hansel
Hansel's picture

The prize in economics is not a Nobel prize.  The prize is called the "Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel" and was never mentioned in his will. From the Nobel Prize website

In 1968, Sveriges Riksbank (Sweden's central bank) established the Prize in Economic Sciences in Memory of Alfred Nobel, founder of the Nobel Prize. The Prize is based on a donation received by the Foundation in 1968 from Sveriges Riksbank on the occasion of the Bank's 300th anniversary.

A central bank bribed its way to the right to abuse Nobel's name. Economics was never mentioned in Nobel's will.


Mon, 06/06/2011 - 08:55 | 1342906 The Profit Prophet
The Profit Prophet's picture

How apropos.....they created false prestige for themselves by manipulating the Nobel market.

T.E.I.N. everyone!

Mon, 06/06/2011 - 09:01 | 1342918 Dixie Normous
Dixie Normous's picture

This nugget of info should be a disclaimer on any article where the term "Nobel Prize in Economics" is used.

It's a fucking bullshit "award" and was given to an asshat like Krugman, for example, as a political statement only.

Mon, 06/06/2011 - 10:18 | 1343158 Broder_Tuck
Broder_Tuck's picture

Here in Sweden nobody cares about the "nobel prize" in ecumentics or whatever. Its a bullshit award for bullshit people, a fake award that is like pissing on the grave of Alfred Nobel. And imagine that people still cares about it... surreal.

Mon, 06/06/2011 - 12:22 | 1343535 Chicken_Little
Chicken_Little's picture

Remember the Judge Bork nomination to the Supreme Court. He was a solid believer that the constitution was not a "living and breathing document". If someone of good moral character gets rejected by the elites, then to me that rejection is worth 100 nobel awards and 20 PHD's.

Mon, 06/06/2011 - 08:57 | 1342917 ibjamming
ibjamming's picture

PhD in religion is the biggest joke.  Let's have a PhD in "The Lord of the Rings" too!  They're both fantasy.  If they'd just change it to a PhD in "Mind Control" instead of "Religion", then I could agree it has a use.

Mon, 06/06/2011 - 12:05 | 1343468 bronzie
bronzie's picture

religion IS mind control so it's really just semantics, isn't it?

Mon, 06/06/2011 - 09:35 | 1342989 SoNH80
SoNH80's picture

Microeconomics is an enormously useful business efficiency tool.  "Mainstream" MACROeconomics is slowly being revealed for the bullshit scam that it is.  The "South Park" boys hit the nail on the head when they showed the Treasury honchos using a decapitated chicken to choose their next policy move.....

Mon, 06/06/2011 - 09:46 | 1343056 kridkrid
kridkrid's picture

Great episode.  Iconoclastically delicious.  When the truth tellers are Rolling Stone Magazine and South Park... the end may very well be near.

Mon, 06/06/2011 - 13:35 | 1343720 Cathartes Aura
Cathartes Aura's picture

*meh* in the past such social critics included Firesign Theatre, Monty Python crew, Spike Milligan, Village Voice, LA Weekly, Detroit Free Press, George Carlin, Richard Pryor. . . I could go on, of course - but the bottom line is there's always a group on the periphery pointing fingers at those who believe themselves the center of the universe, and usually the same percentage of cynically aware folk to acknowledge the finger pointer's "truths."

Mon, 06/06/2011 - 17:44 | 1344724 Bars and Stripes
Bars and Stripes's picture

You mind if I add Tom Lehrer?

Mon, 06/06/2011 - 09:29 | 1343010 Central Bankster
Central Bankster's picture

There are plenty of economists who have correctly predicted the inflationary effects of the stimulus, the lack of jobs it would create, and the lingering systemic risk.  Maybe you need to open your eyes a bit and realize not everyone is a "bought and paid for" Keynesian.

Mon, 06/06/2011 - 10:27 | 1343164 Bob
Bob's picture

Maybe--sometimes we certainly go overboard on both the "Keynesian" and eCONomist memes, imo.  It appears to me that in this case the "Keynesian" Fed and the RepubliCon congressional coven is taking no chances on a substantive and sustained dialogue about employment developing in their own house. 

That would be extremely dangerous to their program and goals.

Not to suggest, of course, that the DIMocrats are using this nomination as anything more than their usual feckless charade of giving a shit about the common man.

Mon, 06/06/2011 - 12:39 | 1343555 citta vritti
citta vritti's picture

And not to forget, Hayek shared one in 1974 for contributions to Austrian School economics (von Mises having died in 1973), to balance out, so Rothbard speculates, the grant to Gunnar Myrdal. 

Here’s the marvelous Hayek-Keynes smack-down, part 2:

Mon, 06/06/2011 - 12:38 | 1343583 Chicken_Little
Chicken_Little's picture

The ones in power are bought and paid for. Most of the good ones go elsewhere and are disregarded by the MSM as being incompetent. An example of where the good ones are is in Auburn, Alabama.

Tue, 06/07/2011 - 06:49 | 1346204 laomei
laomei's picture

There's absolutely nothing wrong with how Keynesian theory works.  The problem is in who is appempting to implement it and how they are going about that process.

If you take that money and dump it into make work projects which also greatly improve the nation (infrastructure), then you see a nice artificial boost in the short term and due to increased efficiency due to the investment it is all entirely worth it in the long term.  How much do you still rely on the old public works projects from the 30s? (hint: it's a lot).  


It worked out pretty damned good in China, we never really got hit by a "recession" here at all.  In the US however, all the money just got thrown at the banks, finance and rich in hopes of creating jobs... which of course it didn't.  Could have taken that same money and actually invested it in projects that would benefit America.... but that would be crazy socialism I guess.

Mon, 06/06/2011 - 09:31 | 1343018 gmrpeabody
gmrpeabody's picture


Mon, 06/06/2011 - 10:00 | 1343122 oogs66
oogs66's picture

economics is not a hard has enough math that it pretends to be, but in reality economics has more in common with psychology and english than chemistry of physics



Mon, 06/06/2011 - 12:17 | 1343520 bronzie
bronzie's picture

"in reality economics has more in common with psychology"

absolute truth

we don't have an 'economy' - we have billions of human beings interacting with one another throughout the course of their lives

it is too hard (impossible?) to model the interactions of human beings so economists develop economic models as a substitute

these models work at least 70 or 80% of the time which is enough to get the economists their PhD's, Nobel Prizes, 7-figure incomes in govt and on Wall Street, etc

when the models break down the economists always point to extinuating circumstances - it's not that their model is wrong, it's that 'this time is different because ...' or 'nobody could have forseen ...'

ie, the economic models are BS, the PhDs (both the degrees and the individuals) are BS, all of the rationalizations and justifications offered by the PhDs when their models fail is BS - am I successfully communicating the idea that granting PhDs in economics is BS?



Mon, 06/06/2011 - 09:06 | 1342915 g
g's picture

Agreed WB7. Perhaps you can do something graphically ;)

Mon, 06/06/2011 - 09:28 | 1343022 greenbear
greenbear's picture

It's a bit difficult to bring workers and jobs together when the productive sectors of the US economy are dead and gone.  Obviously this concept is not in this egghead's narrow area of expertise.  Sometimes I welcome what's coming.  Let it all burn.    

Mon, 06/06/2011 - 09:47 | 1343063 Oh regional Indian
Oh regional Indian's picture

Too funny. We have own World Bank President, Nobel Prize winning dude, Amratya Sen here in India. He is another student of Poverty. Funny how all these students of poverty have never been or lived poor. Ever. PhD needs to be abolished. That kind of vertical specialization stratifies and calcifies, obvious in the very edifices they have helped build.



Mon, 06/06/2011 - 12:30 | 1343556 Green Leader
Green Leader's picture

Time to listen to The Kinks:

Mon, 06/06/2011 - 08:20 | 1342800 TopOnePercent
TopOnePercent's picture

Amen, TD.


And it would also be nice to make academic types accountable for bad theory enactments ie such as globalization being good for US economics.


Academics need to understand the insular tenured must publish something world is not a qualifier.

The position requires a nonacademic real productive mind with real world experience.


Good riddance.


There are quite enough Obamas in office already that the real world players are already having to overcome.




Mon, 06/06/2011 - 08:14 | 1342802 ziggy59
ziggy59's picture

because one frat membership doesnt give you admission to all others..

they dont let you in if you dont wanna play their game..

Mon, 06/06/2011 - 08:28 | 1342826 euclidean
euclidean's picture

I can appreciate his confusion.

::partisan polarization? you don't say! It's a mens club, they discriminate. Man up.


::Does Dr. Diamond have any experience in crisis management? No.

Did man of the Century Greenspan? No f*cking way.


Consider the title of your Nobel Prize for God's sake man. These are the funds the boys are trying to rape. God forbid you get your hands on them and get equity back into those funds. If you can't imagine yourself in the esteemed and revered company of Greenspan and Bernanke, then get over it.

::we should all worry about how distorted the confirmation process

For an economist, you have a sense of humour. A few other things economic come to mind first. But thank you anyway, the world is already worried.

Mon, 06/06/2011 - 08:18 | 1342804 terryg999
terryg999's picture

Its a shame that Nobel committee has fallen from its lofty heights to just another group of liberals awarding its prize to other liberals.  I wonder what Krugman thinks of this?

Mon, 06/06/2011 - 08:21 | 1342814 weinerdog43
weinerdog43's picture

You mean that Liberal Milton Friedman?

Mon, 06/06/2011 - 08:31 | 1342836 HoofHearted
HoofHearted's picture

Has fallen from its heights...presumably after Nobels went to decent economists like Nash, Markowitz, Friedman, and Hayek.

Mon, 06/06/2011 - 08:42 | 1342869 firstdivision
firstdivision's picture

Friedman was a buffoon just as much as Krugman.

Mon, 06/06/2011 - 08:47 | 1342872 firstdivision
firstdivision's picture

*dup a derp*

Mon, 06/06/2011 - 08:41 | 1342875 The Profit Prophet
The Profit Prophet's picture

We should be careful with the Krugman bashing.  You never know when More Critical Thinking will show-up and start throwing a hissy fit....although he hasn't been around in a few months since I called him out...(coward).

T.E.I.N. everyone!

Mon, 06/06/2011 - 13:47 | 1343752 Cathartes Aura
Cathartes Aura's picture

and that peacenik Henry Kissinger?

Mon, 06/06/2011 - 08:20 | 1342805 Re-Discovery
Re-Discovery's picture

Waaaaaaaaaan!   (What a baby.)

Mon, 06/06/2011 - 08:57 | 1342911 ElvisDog
ElvisDog's picture

That was my thought too. Of course, his friends and colleagues will nod their heads and applaud his "courage" for speaking out against the Republicans, who are clearly motivated only by their evil nature. The most predictable and disappointing thing about his letter is that he clings to the idea that the Keynesian approach will work if they just do it longer. It's stunning that a so-called expert in employment can't read the plot of total employment in the U.S. over time.

Mon, 06/06/2011 - 08:20 | 1342807 PaperBear
PaperBear's picture

Yeah, since when did Republican politicians ever care about reducing unemployment.

More unemployment means keeping workforce salaries low which means higher corporate profit.

Mon, 06/06/2011 - 08:19 | 1342810 tmosley
tmosley's picture

Hey, look everyone!  It's a guy who thinks Republicans and Democrats are different!


Mon, 06/06/2011 - 08:21 | 1342818 PaperBear
PaperBear's picture

I know the Repubs/Dems are playing a massive confidence trick on the electorate.

99% are owned by corporations.

Mon, 06/06/2011 - 08:26 | 1342822 PaperBear
PaperBear's picture

one giant psy op

Mon, 06/06/2011 - 08:26 | 1342831 Re-Discovery
Re-Discovery's picture

Yeah, it's like the Homo Sapien who spotted the last Neanderthal (if only on this site.  Unfortunately, political Neanderthals still dominate everywhere else.)

Mon, 06/06/2011 - 08:27 | 1342833 writingsonthewall
writingsonthewall's picture

Hey look everyone - here's a guy who thinks none of this crisis of capitalism has been caused by Capitalism (the hint is in the name)

You may laugh at the naievity of others - but I shall always be laughing at yours.

Mon, 06/06/2011 - 08:32 | 1342847 John McCloy
John McCloy's picture

Do not confuse free market capitalism with crony capitalism. That was Marx's greatest mistake.

Mon, 06/06/2011 - 08:38 | 1342867 trav7777
trav7777's picture

do not confuse reality with something that can grow forever

Mon, 06/06/2011 - 08:42 | 1342870 writingsonthewall
writingsonthewall's picture

Have we not been here before?

In Capitalism the 'goal' is to accumulate capital.

Those who are 'good' at it accumulate a lot.

They can then logically acquire more by issuing the capital and charging interest - thereby 'earning' without work.

They can also use their accumulated capital to influence Government and laws.

Consequently they grow so big they become dangerous to the economy if they fail (TBTF).

This is also required due to the diminishing profit (as pointed out first by Adam Smith) which means a constant 'economies of scale' has to be sought to stay profitable. can you tell me at which point I deviated from capitalism into kronyism?

The answer is I didn't - this is all capitalism, you just don't like the end result because you didn't see it coming.


If you can explain at which point these TBTF corporations should have collapsed and been reborn as nice little small businesses - then I'm all ears.

...and don't forget - you can't expect the Government to do it - that wouldn't be 'free market'.


I think you'll find your position is contradictory - which is why you will not be able to solve it.

Mon, 06/06/2011 - 08:49 | 1342901 overmedicatedun...
overmedicatedundersexed's picture

from writingonw:

"now can you tell me at which point I deviated from capitalism into kronyism?

The answer is I didn't - this is all capitalism, you just don't like the end result because you didn't see it coming."

hope you can apply same logic to socialism/ know we just didn't have the right people (angels)in power to make it work.  


Mon, 06/06/2011 - 08:58 | 1342919 Medea
Medea's picture

My God. Get your head away from the binary capitalism/socialism. Being against one does not mean being for the other.

Mon, 06/06/2011 - 09:20 | 1342974 TheTmfreak
TheTmfreak's picture

While I agree there isn't a "binary" existence, he did mention communism which makes it three systems all of which are vastly different.

Capitalism - Private ownership of property

Socialism - State ownership of property

Communism - Collective ownership of property

What is another besides all three, which is what we see today? As I see it, if you're against private ownership, you're for tyranny. (And by against I don't mean that you can't own things with other people in a group and so on, I mean that you personally do not own anything)

Mon, 06/06/2011 - 09:25 | 1343007 Medea
Medea's picture

He mentioned socialism/communism, linking them as one.

"What is another besides all three, which is what we see today?" Not sure I understand. If you're saying that all economies can be reduced to these three (entirely theoretical, mind you) models, then you're clearly trying to reduce complexity to simplicity. And you continue to do just that by uttering ex nihilo, "As I see it, if you're against private ownership, you're for tyranny." Utter nonsense.

Mon, 06/06/2011 - 09:30 | 1343026 TheTmfreak
TheTmfreak's picture

I'd respond to your post, but its obvious you're not willing to give any argument, but just call my arguments "utter nonsense."


Mon, 06/06/2011 - 09:35 | 1343037 Medea
Medea's picture

Why would I resond to a non-argument with an argument? Point out where you made an argument and I will respond with more than ridicule.

Mon, 06/06/2011 - 09:59 | 1343100 Medea
Medea's picture

And of course, silence.

Mon, 06/06/2011 - 09:31 | 1343017 writingsonthewall
writingsonthewall's picture

This is a misconeption about Communism.

There is a concept of property ownership in Communism (it's not a free for all) - it's defined by usage.

You continue to own your house because you use it - however you could not own 3 others which are vacant - simply because you can afford to.

This is an inefficiency in capitalism - there are homeless people and there are vacant properties and the law is used to enforce they stay like that.

Surely nobody will argue this is efficient - we spent the natural resources to build the house...but the 'market' decides it should remain empty to keep an order on the price of inhabited properties.


Americans will do a lot of thinking on this subject over the next 7 years - as the banks hold on to vacant properties....not wanting to crash the market and subsequently the price of what else they hold....but the number of homeless and overcrowded citizens will rise dramatically.


I think Americans will be understanding the difference between capitalism and communism over the next few years....and unlike previously it will be real life examples and not a definition handed down by the MSM - who now many people know they cannot trust.

Those who have foreclosed but remain steadfast in their property - without making payments on the mortgage - are enacting strands of communist theory - lets see how far it runs...

Mon, 06/06/2011 - 10:01 | 1343114 Blankman
Blankman's picture

"Those who have foreclosed but remain steadfast in their property - without making payments on the mortgage - are enacting strands of communist theory - lets see how far it runs..."


Personally I look at the people who stop paying and still live in their homes as modern day protesters.  Good for them.  Middle class has been absorbing the brunt of the economic climate change.  


We need either massive inflation/deflation to purge our economy of what ills it.  Let the whole thing collapse and rebuild itself.  Hopefully we can do better this time.

Mon, 06/06/2011 - 10:08 | 1343140 TheTmfreak
TheTmfreak's picture

I disagree. They made bad investment decisions, failed on them (they ended up being alot shittier investments than they thought) and are now gaming the slow system in their favor (by not paying and living rent free). Now obviously I'm not advocating that the banks are victims, nor the turds committing fraud at all levels. Home owners acted irresponsible and carefree, while banks committed fraud (through the packaging, and all sorts of other nonsense). Now obviously there are some who just flat out lost their jobs and CAN"T pay their mortgage, thats another situation all together. But then again alot of those people maybe had a month or two worth of savings to begin with. They have an obligation as part of their contract to pay for the house. That should be respected too.

I do agree with your last statement though.

The facts are people should be a hell of a lot more cautious what they do in their life. Unfortunately the one thing that has happened I think in the last 100 years is the complete removal of cautious nature when it comes to living in a society. Maybe call it the ultimate SHTF net. At the end of the day, the entire fucking system needs a reboot.

Mon, 06/06/2011 - 10:21 | 1343157 SilverRhino
SilverRhino's picture

You missed the most popular 21st century economic system: 

Fascism:  Private nominal ownership of property, but with effective ownership exercised through the State through excessive regulation and law.  

China, EU, the USA are all practicing this system.

Mon, 06/06/2011 - 10:38 | 1343209 TheTmfreak
TheTmfreak's picture

Well yeah sorta.

I'd argue that fascism isn't necessarily an economic system rather purely political. I'd say "fascism" is what can warp capitalism from a everybody can benefit to a some can benefit system. The only that benefit in that system are the elites.

Mon, 06/06/2011 - 12:52 | 1343635 Chicken_Little
Chicken_Little's picture


Mon, 06/06/2011 - 12:53 | 1343626 Chicken_Little
Chicken_Little's picture

You forgot a very important one: Fascism. Google it and then realize that this is us.

Mon, 06/06/2011 - 09:24 | 1342995 writingsonthewall
writingsonthewall's picture

"hope you can apply same logic to socialism/ know we just didn't have the right people (angels)in power to make it work. "


Socialism a.k.a. communism is defined by a dictatorship of the proletariate. I can point to times in history when Capitalism was agreed to be working - but I cannot point to a period of a working class dictatorship. Maybe the USSR had one for a time....but it was removed by Stalin and became corrupt.

However I'm not here to support communism - I am merely pointing out that Capitalism is doing exactly what Marx said it would.

Mon, 06/06/2011 - 09:28 | 1343020 TheTmfreak
TheTmfreak's picture

Have you even read Marx? The communist manifesto is horrendously written and clearly was intended to incite emotional rage to create blind obedience. If one is feeling quite emotional I can see how the communist manifesto might be appealing.

It reads like this.

"You are being exploited. The Capitalist uses owns and uses everything against you. The first thing you need to remove private property as that is what the capitalist uses against you"

Right. Remove private property. So become slaves for the bidding of others? Yeah right.

Mon, 06/06/2011 - 09:34 | 1343034 writingsonthewall
writingsonthewall's picture

Private property imposed by the law of the capitalist.

I wouldn't use the manifesto as a good example - it was directed at people who did not and could not understand the 3 volumes of Das Kapital.

The same problems can be seen today - how do you explain to everyone that the banks are benefitting from the 'solution' and the people are going to be made to pay....without delving into complicated economic matters?

You are a classic anti-Marxist - driven by a misconception that under communism a nasty man comes from the 'state' and takes away all your 'stuff'.


...the truth is nothing of the sort.....I couldn't speak for Blankenfied of Jamie DEMON....but rest assured that if you merely took the trappings of the top 1% - this would make a huge imapct on the other 99%.

Mon, 06/06/2011 - 09:48 | 1343076 overmedicatedun...
overmedicatedundersexed's picture

writeon wall= graffiti..but i digress..

You are a classic anti-Marxist - driven by a misconception that under communism a nasty man comes from the 'state' and takes away all your 'stuff'.


well if experience is any teacher, that is exactly what my family from Eastern Europe learned about Marxism. we fled it to the old USA were lives were much better under the heal of capitalist.

of course nothing good ever lasts.

Mon, 06/06/2011 - 10:01 | 1343102 TheTmfreak
TheTmfreak's picture

"Private property imposed by the law of the capitalist"

I'm not entirely sure where you are going with this other than saying, "look around you this is capitalism." The law is, and has always been the tool of oppression. Those who generally respect others and their space do not require the law.

I shouldn't use the manifesto as a good example? So I should just completely ignore that he wrote an emotional piece to charge people into acting without being rational? I cannot accept something like that. While I'm sure there is more depth to his statements, he still wrote it, and wrote it with intention. Ends justify means? (I would argue perceived ends, because you're very unlikely to get the ends you thought you would, through your means)

Banks are benefitting from legalized theft. That doesn't mean it still isn't theft. Thats why people say "corrupt capitalism." Where some can use their capital in a certain way and others cannot. The elite use law to oppress or to force others into their submission. Do not mix what is right and what is law.

Look I don't mind, and enjoy, arguing with you on points, but do not make assumptions about what I believe. I do not play in the realm of people fit into nice neat little packages and groups, which it would appear you have pinned me. I'm not a "classic" anything. I'm an anti-marxist, because he advocated oppression.

I have no misconception about communism. First of all, there is no "state" in communism.

You're arguing ends justifies means by taking the top 1% and giving it to the bottom 99%. I will not ever accept communism or anything of the sort because of the private property issue. You say that I have misconceptions about communism by saying the nasty man comes and takes my stuff away and then in the very next sentence argue for taking the stuff away from 1% and giving it to 99%. Communism arguments stem that the many plunder the few, you state (with assumptions) that capitalism is the few plunder the many. I argue nobody should be plundering anybody. No law should apply to me that shouldn't apply to everybody else. We live in a system where that isn't the case.

You say it is the inevitable conclusion of capitalism. I argue it is the inevitable conclusion of a government. Regardless of the system, governments oppress for the sake of those who "have power." Hence why I am anarcho-capitalist. I can understand the communist because they do not argue for government (although marx argued that eventually socialism will happen, which i state is utter pure oppression), since everyone is the "government". I can actually respect a communist's view that "we're all in this together" and everyone should have the same "rights." Where I vehemently disagree with, is the view that I should not be able to own my body and private property. This is a fundamental right which I can boil all the way down to the "point of life." You don't live your life for others, you live your life for you and your "bloodline." One way or the other a pecking order (edit) will be established. I argue it should come from the brain (innovation, and skillful maneuvering) rather than force. A common argument for communism (perhaps you have it) is looking beyond that where there is a higher order of living so that your life isn't more precious (to yourself) than your neighbors. I consider that argument to be mental decadence only brought on by living in societies.

Mon, 06/06/2011 - 10:02 | 1343119 trav7777
trav7777's picture

Marx wasn't entirely correct here.

Capitalism, once it reaches late-stage, aka, economic saturation due to inability to maintain growth, devolves into socialism where the State acts not as a true "owner" FBO of true State employees or the people, but rather as gatekeeper and enforcer for capital interests.  There is little effective difference to a prole; what it looks like from the cheap seats is that the "man" runs shit, owns shit, and can do as he pleases.  I see no material difference between this system we call "capitalism" and most socialist systems.

The State, for whatever reason, comes and takes shit.  When economies saturate, there is little growth in capital and there are shrinkage factors.  Capital uses the State to enforce rentier policy onto the economy.

Feudalism was socialism as well, just not terrifically equitable, but neither are/were ostensibly communist societies such as the former USSR and present China.

Marx's theme was that the "people" should force equitable policies via the State.  The problem is that the State and capital are interlocked.

Mon, 06/06/2011 - 10:03 | 1343126 TheTmfreak
TheTmfreak's picture

Well said.

I would never argue what we have today is "capitalism that I love and cherish." This "capitalist" society doesn't respect private property whatsoever.

Mon, 06/06/2011 - 10:29 | 1343171 writingsonthewall
writingsonthewall's picture

"This "capitalist" society doesn't respect private property whatsoever"

Oh yes it does.....just not your private property!


The property of GS, JPM, Citi etc. is very well respected - so much so that all efforts have been made to allow them to keep it!

You're trying to split hairs and allow capitalism off the hook - the fact is that this you see all around you is the inevitable consequence of capitalism. It has not mutated into somethign else when you were not looking - what you're now seeing is how unfair Capitalism is.....but this time you're on the wrong side of it - so you have something to moan about.

Mon, 06/06/2011 - 10:37 | 1343190 TheTmfreak
TheTmfreak's picture

The not respecting private property argument, was intended to be taken as you just stated. "Not yours" I'm in agreement.

The problem with your statement about GS and JPM is they are gaming the system created by the government. They end up not respecting private property. So the problem is, that some are being protected and not others.

You're completely ignoring the governments role in protecting some private property and not others. I'm letting capitalism off of the hook because you can't "blame capitalism." In my view capitalism is. Everyone seeks to better themselves and their position. The problem is the government blinds the populace and removes the tools and weapons needed to protect themselves. By creating this nice peaceful society where the law works only on the "middle and lower class" it creates a passive stupid populace. Its really that simple. If you didn't have the government pretending to be watching out for your interests you would be letting these turds take your private property. It really is that simple.

Mon, 06/06/2011 - 08:55 | 1342914 Medea
Medea's picture


Mon, 06/06/2011 - 09:12 | 1342967 TheTmfreak
TheTmfreak's picture

Rather than getting into this debate again, I'll leave my comment as a description of what capitalism is, and what you're implying/advocating/forced to accept.

Capitalism is a system where the means of production is privately owned, and used for profit. Meaning, someone has private property, they voluntarily use/lend that property to earn a profit through its use. What constitutes private property and therefore capital is quite numerous. Money, land, machinery, ideas, or even the body is private property that a person can voluntarily use. This system admits that there are people who have talents, knowledge, and access to information or markets that can be combined together to make effecient and very competative business approaches. I may have profitable land, but don't have an ounce of an understanding of how to maximize its use for MY benefit. Therefore, by bringing in a partner who has experience doing mining/farming they can make productive use out of the land where we both benefit.

You're arguing that both the land owner and/or the person who doesn't have land but has experience (or machinery and so on) are wrong. Why? Do you believe that people should not be allowed to trade talents and private property for mutual benefit?

By denying the fundamental nature of capitalism (private property and people deciding what they will and will not do with their own private property, to include their own bodies) you're accepting the lowest form of human existence. If you deny that somebody can do what they will with their bodies (both producer and consumer) then you believe that slavery or tyranny are the best options.

I'm not going to formulate exactly what you believe is the case, since in my opinion, you don't even know what you're actually advocating. "Capitalism is bad because of exploitation" Then what is your system of choice? I've seen you numerous times bring up this and bash capitalism with absolutely no intention of giving your system. Capitalism rewards those who are innovative and capture the demand of its customers. The bold assumption that "just those who have, are the ones who win" is wrong considering that thinks the "formula" for success is tangible object plus tangible object = success, which is false.

Mon, 06/06/2011 - 09:21 | 1342988 Medea
Medea's picture

And... not this. Your "argument" is laughably flimsy.

Mon, 06/06/2011 - 09:24 | 1343003 TheTmfreak
TheTmfreak's picture

Ok? I'm supposed to be impressed that you would rather make ad hoc ridiculous statements then present an argument? You're extremely intelligent right and I'm just a dirt peasant right? You on your mountain high, so observant and knowledgeable. I guess you've got it all figured out that any imparting of any of your precious wisdom might be a waste of your precious time?

If you're not going to post anything with any remote amount of thought behind it, why post at all? So everyone can see what a moronic elite snob you are? Go fuck yourself.


Mon, 06/06/2011 - 09:30 | 1343012 Medea
Medea's picture

Aww, so cute when you're angry.

Mon, 06/06/2011 - 09:37 | 1343033 TheTmfreak
TheTmfreak's picture

Actually I'm not angry. Angry would be resorting to name calling and dipping to your level. I clearly showed how you post, which is name calling, without arguments.

I'm just not going to waste any time responding to your posts that bring absolutely no debate or discussion. You'd rather shut out dissidence through brute unintellectual "force." I don't deal with people like you, so again, go fuck yourself.

Mon, 06/06/2011 - 09:41 | 1343043 Medea
Medea's picture

"Angry would be resorting to name calling." And you wonder why I call what you write nonsense.

Mon, 06/06/2011 - 09:35 | 1343028 Medea
Medea's picture

"I guess you've got it all figured out that any imparting of any of your precious wisdom might be a waste of your precious time?"

If imparting my wisdom means trying to explain things to people who are stuck in archaic modes of thought, then yes, it is a waste of my time.

Mon, 06/06/2011 - 09:39 | 1343038 TheTmfreak
TheTmfreak's picture

Why keep responding, or post at all? I guess you could just hang out with people just like you and post about how much you want to circle jerk each others ideas, then well by all means, post on their "arguments". I guess you get kicks out of trolling.

Mon, 06/06/2011 - 09:39 | 1343048 Medea
Medea's picture

Slow your breathing. You're becoming unintelligible.

Mon, 06/06/2011 - 09:49 | 1343068 writingsonthewall
writingsonthewall's picture

1) I cannot tell you what the best system of choice is.....but I can assure you that an alternative will never be found because the market will not look for it until it's too late. It stifles education and progression by diverting resources into 'profitable activities' - like drilling for oil.

2) Communism does not demand the abolition of private property - merely private capital and the use of that private capital to accumulate further private capital and expand your empire - to the cost of others.

3) Profit is a sign of excess value in the production process - this is NOT a good thing. The value comes from labour - it cannot come from anything else, value is absolute - only a fool believes it's in the eyes of the beholder (especially as the beholder can be easily fooled). I mean how many people paid an extra 20% to get their x-box 360 a day earlier? - did the x-box 360 change in it's build costs in that time? - no - the purchaser was deceived by advertisers tapping into their emotional frailties.

When this profit is redistributed in Capitalism it's done by the capitalisy - the owner - his goal is not to enrich the human race - but to fnd another activity which can produce further profit - i.e. an activity where he can find surplus value.


Imagine a world with no labour required - a fully automated one - how much would you be prepared to pay for your new car....over and abover the material costs?

How long before the price was 'the price' and all (but one) manufacturers went out of business because all their rivals had the same tools, technology and costs of production - squeezing profit out of existence.


Profit comes from surplus labour value - once you establish this - the rest becomes totally logical. As yet I have not seen any theory which explains this away.

Mon, 06/06/2011 - 10:31 | 1343177 TheTmfreak
TheTmfreak's picture

1. Drilling oil is just profitable? Oil production and refinement has completely revolutionized living standards across the world. Remember the plastics make it possible commericals?

2. Private capital is the same thing as private property. You do not understand private property if you are making this argument. Private property means that you own something and can do as you see fit. Therefore if you want to use it in any way shape or form (so long that you aren't using it to oppress another) then so be it. How do you define cost of others?

3. Excess value in the production process? You're making the assumption that value is somehow universal. How I value something isn't the same as somebody else. The value of a product is what the purchaser is willing to pay for it. Its really that simple. While I understand you're feelings about the labor making the value and more "profit sharing" so to say, I do not believe that makes any relevant argue if people go into a trade deal (labor for money/food whatever) agreeing to the terms. If you trade your work for 10 dollars an hour which when funneled through another persons machinery or whatever, and makes 12 dollars an hour, you have no right to that 2 dollars because you didn't agree to that deal. You could always do a new deal with the person so that you might earn 11 dollars, but deals must be agreed upon by BOTH people. Other wise is oppression. If you don't agree to somebody making money off of your work, then don't agree to the deal. The marxist worker says "I demand to not be exploited for my work" and then turns around and says "I demand that somebody give me a job." So the worker demands to exploit the business owner/corporation. Forcing the owner to make a deal they don't want to make (employ for more than they are willing to pay) is denial of private property no matter how you slice it.

Can you define enrich human race?


I'm not oblivious to the argument of surplus labor value. I deny though, that value can be defined as such. If the worker believes that the deal that they are making is no longer in their best interest (the value of their work is worth more than the money they are being given) then they have an obligation to renegotated or to terminate the deal.


Mon, 06/06/2011 - 08:48 | 1342876 writingsonthewall
writingsonthewall's picture


Mon, 06/06/2011 - 09:02 | 1342937 The Profit Prophet
The Profit Prophet's picture

Actually, Marx's greatest mistake was not recognizing the power that organized labor would be able to wield over the owners of production. This led to a multi-decade delay in the ability of the Oligarchs to extract the higher percentages of wealth that Marx theorized (rightly I might add) would ultimately lead to a revolution of the workers over the Capitalists (soon to come).

T.E.I.N. everyone!

Mon, 06/06/2011 - 10:04 | 1343132 trav7777
trav7777's picture

he made other mistakes but how could he have known?

We have no capitalists.  Who the fuck is a capitalist anymore?

EVERYONE is a socialist.  Corporations are socialist animals now.  Who is ownership?  The people...the 401ks, the pensions.  Look at the landscape of production and you see that the people own it.

But who RUNS it?  The CEOs, the executive class, the "Party" members.  And they run it to aggrandize themselves, not the proletariat who owns.

Corporations devolved into the same type of animals as "communist" nations where Party seniority leads to wealth.  The executive class we have now are not risk-takers nor innovaters.  They are merely placeholders whose sole goal is self-enrichment.  Same as leadership at all levels of the CCP.

It turns out that de jure ownership of something is effectively useless.

Mon, 06/06/2011 - 10:36 | 1343202 TheTmfreak
TheTmfreak's picture


Well I'll say there are capitalists but they're at the much lower rung of the ladder and I don't think anybody even really considers them with these discussions. They use the straw men of corporations and the "ceo."

With the further removal of ownership comes the further removal of taking accountability and responsibility. You can't blame anybody for corporations. You certainly can't blame the owners also known as "the people."


Mon, 06/06/2011 - 11:05 | 1343296 The Profit Prophet
The Profit Prophet's picture

Agreed. This is why wasting one's breath arguing Capitalist vs. Socialist is akin to the Democrat vs. Republican debate. Human nature dictates that the "Haves" will become so morally corrupt through the ever increasing levels of power they possess that they will invaraibly manipulate the "system" to favor themselves over the "Have Nots" - regardless of what political/social system is currently being employed.  As revolution inevitably ocurrs and power balances are temporarily restored, the new political system chugs along until the inevitable corrupt imbalances manifest themselves again in the new politcal system.  It's just a big circle really....wash, rinse, repeat....only on a multi-decade/century timeline.

That is until the entire world becomes involved in the moral corruption.....

T.E.I.N. everyone! 

Mon, 06/06/2011 - 13:24 | 1343694 Chicken_Little
Chicken_Little's picture

100 DINGS Prophet. This is about human nature and our old cave man instincts that are still in us. Someone said that until humanity changes, history will continue to repeat. Just look at the South American countries for the past 100 years. They start off well with a capitalist government and the wealth goes to the elite 5% and the other 95% are poor. Then they have elections and the 95% vote the elites out. They then print money and bankrupt the country and the military has to take over. The military junta gets high on power and doesn't want to give up his power, but he eventually has to. Then back to stage one of democracy. wash, rinse, repeat. Humanity hasn't evolved enough to stop this cycle. Probably the most evolved humans that could break this cycle are here on ZH. Be fruitful and multiply people :)

Mon, 06/06/2011 - 15:09 | 1344081 Cathartes Aura
Cathartes Aura's picture

Probably the most evolved humans that could break this cycle are here on ZH.

phew, thanks for the hearty laugh!

Mon, 06/06/2011 - 09:18 | 1342973 PaperBear
PaperBear's picture

Yep, GATA has proved that we are operating under a rigged (f**ked) capitalist system not a free market capitalist system.

Those damn unregulated derivatives are influncing the price of the underlying asset.

Derivatives should be called asset rapists.
My take on the points made in this advertisement:
The Treasury Department's Exchange Stabilization Fund should really be called Market Manipulation Fund
If the gold leased by central banks when they perform a gold swap is sold for fiat paper dollars then the leasees now have liabilities that increase with the fiat paper dollar price of gold increasing year-on-year.
Gold hedging at $300-$500 made Barrick/AngloGold shareholders come out BIG LOSERS when covering at $1k-$1.3k - the BIG WINNERS were the guys who they bought these hedge contracts from.
Wealth is hardly ever destroyed rather wealth is transferred.
"the provision of international credits and joint efforts to influence asset prices - especially gold and foreign exchange." - 'influence' you should consider to mean 'rig'.
The supreme law of the USA (aka Constitution) says do not issue bills of credit. And it goes without saying that fractional reserve banking and leverage are also unlawful.
The capital markets that are constantly moving funds from one fiat paper currency to another and with the fundamentals of all fiat paper currencies being bad has been metaphorically characterised as moving from one room to another in a burning building. To complete the metaphor, when the building is fully ablaze these funds will be jumping out of the windows.
Warren Buffett in 2002 described derivatives as financial weapons of mass destruction.
Derivatives are unregulated and interest rate swaps are derivatives and the value of all IRS contracts is approximately $600 TRILLION.
So what do you think will happen to whoever has a liability exposure to these contracts when interest rates rise out of control ?
Massive financial instability is ahead meaning the Treasury Department's Exchange Stabilization Fund will have failed in it's mission.

Mon, 06/06/2011 - 08:33 | 1342838 John McCloy
John McCloy's picture

They are just adorable aren't they?
Meanwhile one could make an argument this is being politicized by the White House now that the Federal Reserve is being scrutinized, read about and rightly blamed for the cause of all our economic despair to enrich the elites.
Now if they can imply the Fed is a collection of Republican chosen old boys handshake club then we help divide the peasants even further. So where is the logic that the evil GOP would care if another raging socialist was added to the Keynes gone wild Fed?
Theater games and talking points for morning talk.

Mon, 06/06/2011 - 08:58 | 1342920 ElvisDog
ElvisDog's picture

I don't buy it. The peasants aren't sophisticated enough for that subtle a thought process. The state of the economy is always attributed to the President for good or bad.

Mon, 06/06/2011 - 09:28 | 1343015 TaxSlave
TaxSlave's picture

The Repubs (except a very few) love central economic control every bit as much as the socialists.

We live under a fascist regime sold with communist slogans.

Kinda reminds me of the Cheech and Chong episode with the piss jar and powdered soap in a bag. 

Mon, 06/06/2011 - 10:45 | 1343225 topcallingtroll
topcallingtroll's picture

The republicans are going to force.cuts in government and they will not raise the income tax.

That is a big enough difference for me.

Vote republican.

Mon, 06/06/2011 - 08:17 | 1342808 Jim B
Jim B's picture

LOL.... Wan, wan...

Mon, 06/06/2011 - 08:21 | 1342809 bugs_
bugs_'s picture

those waskaly wepublicans!

Mon, 06/06/2011 - 08:23 | 1342811 The Butchers Dog
The Butchers Dog's picture

I got a gold star once in Kindergarden, why can't I go to MIT?

This is the kind of dork ass hole I used to love kicking the shit out of on the playground.  What a Fucking baby.....

I want to see some tears...

Mon, 06/06/2011 - 08:26 | 1342824 the not so migh...
the not so mighty maximiza's picture

YEAH!! Nuclear wedgy time!!!!!!

Mon, 06/06/2011 - 08:19 | 1342812 PaperBear
PaperBear's picture

"Gold and silver showing signs of weakness" ?

We need Ben to say some easy money words the next time he delivers a speech.

Mon, 06/06/2011 - 08:23 | 1342813 topcallingtroll
topcallingtroll's picture

Considering how obamao showed the nobel prize committee to be utterly foolish I personally wouldnt use a nobel prize as some kind of VIP pass to the Fed.

Mon, 06/06/2011 - 08:24 | 1342815 j0nx
j0nx's picture

Wah wah my pussy hurts, they won't let me on the FED board even though I gotz a Nobel prize. Wahhhh. What a puerile rant.

Mon, 06/06/2011 - 08:24 | 1342816 monximus
monximus's picture

Here's a simple multiple choice question for Nobel Prize winning economists. If you do not like Bibles and we force you to pay $10,000 for a Bible, are you:


A) economically better off


B) economically worse off


C) economically indifferent


D) both economically better off and economically worse off


E) all of the above

Mon, 06/06/2011 - 08:24 | 1342817 Manthong
Manthong's picture

So go cry in your beer with that other esteemed MIT gift to the world, Noam Chomsky.

Mon, 06/06/2011 - 08:29 | 1342829 FrankIvy
FrankIvy's picture

Love Noam.  Saw his bit on Clinton and E. Timor.  Corporatism.  Man. Consent.  One of the handful of men on the planet who have helped me achieve whatever state it is that I currently find myself.

Mon, 06/06/2011 - 09:57 | 1343110 Matto
Matto's picture

"One of the handful of men on the planet who have helped me achieve whatever state it is that I currently find myself."


hahaha comment of the day

Mon, 06/06/2011 - 09:07 | 1342951 Medea
Medea's picture

You're seriously confused, huh?

Mon, 06/06/2011 - 10:22 | 1343153 Manthong
Manthong's picture


He often seduces libertarians because he sounds so anti-everything, but this sums it up:

"Noam Chomsky thinks he's the Moses of this age and even those on the Left who don't agree with him on everything accept his moral authority. But Chomsky is a socialist who practices capitalism, and an anti-militarist who has made millions off of Pentagon contracts. --Peter Schweizer, Do As I Say (Not As I Do): Profiles in Liberal Hypocrisy, October 25, 2005 [239]"

Follow the money.

From Wikipedia,

Mon, 06/06/2011 - 08:24 | 1342825 PaperBear
PaperBear's picture

Waiting patiently for the next short squeeze in silver to begin.

Mon, 06/06/2011 - 08:29 | 1342827 BlackholeDivestment
BlackholeDivestment's picture

MIT will pay for this Pussy?

Mon, 06/06/2011 - 08:32 | 1342828 Catullus
Catullus's picture

This is an important article from a lot different perspectives.  Not only is it failed economic thinking (the Fed causes unemployment by creating asset bubbles that direct labor and capital into malinvestment), but it's a washing of the hands by the economic academic establishment.  Never mind that Ben Bernanke is a Princeton economist. Mainstream academic economics is becoming aware of a few things: (1) they're wrong and their prescriptions for fixing what's wrong have failed fantastically for well over 30 years, (2) the elite don't actually listen to them but use them to validate their largess, and (3) people are going to look for someone to blame.  The incompetence meme that they stroll out in times like these is to criticize those in government without criticizing central planning itself. 

Though to Dr. Diamond's point: there is a critical misunderstanding of the role of monetary policy and unemployment.  Perhaps it would have behooved a lot of Congressmen (esp. those democrats on the Committee who have been boycotting the hearings) to actually attend the Ron Paul subcommittee hearings on monetary policy.  May Dr. Paul will invite Dr. Diamond to share his thoughts. 

Mon, 06/06/2011 - 08:43 | 1342881 trav7777
trav7777's picture

calling this guy a Doctor in the same manner as Paul is a joke too.

Mon, 06/06/2011 - 08:29 | 1342830 bigdawg
bigdawg's picture

What a Douchebag.  It goes without saying that whoever they eventually stick in the empty seat at the FR board will be a worthless sack of shit...but this whiny POS needs to STFU and go home.

Mon, 06/06/2011 - 08:27 | 1342834 Translational Lift
Translational Lift's picture

With all the junks it looks like Peter Diamond has been reading our comments. 

Shades of DSK and the obscene rapture of ones unlimited sense of entitlement.

Mon, 06/06/2011 - 08:28 | 1342835 oldmanagain
oldmanagain's picture

It is obvious that education is not welcome among PUbs.  To blame the educated speaks even more to ZH fail.

Mon, 06/06/2011 - 08:45 | 1342877 Flakmeister
Flakmeister's picture

Yeah.... but here at ZH where almost everyone is a know-it-all libertarian whose grasp of reality is limited to what is in arms reach and whose expression of  political economy is naive to the extreme, what do you expect?

Mon, 06/06/2011 - 08:49 | 1342903 oddjob
oddjob's picture

Education?...thanks for the laugh...more like pre-K for a life of white collar welfare.The 'educated' are in for a world of serious hurt, be productive or starve...ponder that with your splendid academia.

Mon, 06/06/2011 - 09:18 | 1342987 Flakmeister
Flakmeister's picture

This is like shooting fish in a barrel with a shotgun....

Ditch diggers can be very productive and still starve....

Let me guess, you managed to finish K-12 and not much beyond that...

Mon, 06/06/2011 - 09:27 | 1343011 oddjob
oddjob's picture

Hey,no probs...I'd be worried too if I was a unskilled hack with no practical contribution to society.

Mon, 06/06/2011 - 11:14 | 1343324 Flakmeister
Flakmeister's picture

Contribution to society? Pray tell how do you value that?

Mon, 06/06/2011 - 11:59 | 1343455 oddjob
oddjob's picture

Why ask me?....I don't have a PHD.

Mon, 06/06/2011 - 14:18 | 1343871 Flakmeister
Flakmeister's picture

You seem to have an opinion that you are willing to share about things you know nothing about, so what is stopping you now?

Mon, 06/06/2011 - 08:53 | 1342909 Confucious 222
Confucious 222's picture

Oh, but there's your confusion right there, old man. Who says this guy is educated???

Possessing 25 Phd's in economics doesn't mean you are EDUCATED. Having a Nobel Prize doesn't mean you are EDUCATED.

A high-school dropout who ran a hot dog stand for 4 years would have much more worthwhile education about the ECONOMY than some jack-off ivory tower idjit like DIAMOND.



Mon, 06/06/2011 - 09:17 | 1342970 Medea
Medea's picture

This is the kind of either/or thinking that get tiresome in these comments sections. Many/most academic economists deserve extreme ridicule. This DOES NOT MEAN that Johnny Hot Dog Stand is a paragon of right thinking homo economicus.

Mon, 06/06/2011 - 09:19 | 1342975 Flakmeister
Flakmeister's picture

My comment above is validated in spades....

Mon, 06/06/2011 - 09:19 | 1342992 TaxSlave
TaxSlave's picture

If Johnny Hot Dog Stand lasts more than a few months, he knows a helluva lot more than any asswipe central economic planner ever did.

Mon, 06/06/2011 - 09:28 | 1343019 Flakmeister
Flakmeister's picture

Nice... Take the example of a guy slinging red-hots and extrapolate to a centrally planned economy... are you capable of any critical thought and expressing it coherently?

Mon, 06/06/2011 - 10:30 | 1343172 Blankman
Blankman's picture


I get what the redhot guy was trying to say and I understand your point.  It is the small business vs. large business mentality.  Could a small business owner run a large business - could a ceo of a fortune 500 company run a small business.  I say yes and yes depending on the individual.  Some small business owners would easily take advantage of the gross ineffeciencies of large business and likewise a large business owner could easily right some of the ma and pa thinking of the small business owner.  I would put a number of 10% (pulled that # out of my ass) of ceo's and small business owners could exchange roles and profit from it.  



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