Part 1 was here.
Xlbrl reports that Garet Garrett described our current state in The Revolution Was:
This is a method, and Roosevelt is the model. But the methods were not made by Roosevelt either. It is made in an unbroken line, intellectual and often by blood, from the early nineteen hundreds to now. Garrett, Hayek, and others provide details.
Roosevelt made things vastly worse for many years, and yet improved his standing and made four terms.
In a revolutionary situation mistakes and failures are not what they seem. They are scaffolding. Error is not repealed. It is compounded by a longer law, by more decrees and regulations, by further extension of the administrative hand....When you have passed one miracle you have to pass another one to
take care of it, so it was with the New Deal.
The revolutionary historian.... will be much less impressed by the fact that it was peacefully accomplished than by the marvelous technique of bringing it to pass not only within the (traditional) form but within the word, so that people were all the while fixed in the delusion that they were talking about the same things because they were using the same words. Opposite and violently hostile ideas were represented by the same words. This was the American people’s first experience with dialectic according to Marx and Lenin.
So it was that a revolution took place within the form. Like the hagfish, the New Deal entered the old form and devoured its meaning from within. The revolutionaries were inside; the defenders were outside. A government that had been supported by the people and so controlled by the people became one that supported the people and so controlled them.
To the revolutionary mind the American vista must have been almost as incredible as Genghis Khan’s first view of China–so rich, so unaware. Why should anyone fear government?
Its cruel and cynical suspicion of any motive but its own was a reflection of something it knew about itself. Its voice was the voice of righteousness; its methods therefore were more dishonest than the simple ways of corruption.
We have an unreal and bewildering situation whereby economixts do not seem to be able to – or through their self interest are unwilling to – see that there is very much collusion in the markets. For every denial by a Kaletsky, there is a quote as from this pdf on silver:
It’s ludicrous to suggest there is no collusion to fix prices, corner markets and gain insider information – history is littered with such things. If you persist with this ridiculous stance then I ask one question, by way of example – why the American Anti-Trust legislation, e.g. the Sherman, in Teddy Roosevelt’s time?
Sonus asks when collusion becomes conspiracy and it’s a good question.
GATA has this:
I have recently been reporting on how delivery notices at the COMEX cannot be reconciled with movements of metals from and into the warehouse. Clearly these are not going to match on a daily basis, just as orders into a factory will not match shipments out on any given day, as there is a time lag. But when averaged over a month, the "flow" of metal inventory should be comparable to the delivery notices issued.
This is just basic accounting. But I have observed that reconciliation is almost impossible with the COMEX data. The only explanation I could think of is that settlement of contracts must be bypassing the warehouse. But how could this be possible, as I thought all contracts had to be delivered via a COMEX registered warehouse?
… and:
A futures market is supposed to provide price discovery for a commodity. In the gold market this notion has been hijacked because settlement can be made with a derivative instrument, such as an unbacked or partially backed ETF share. If that derivative instrument is not backed by gold on a 1:1 basis the scheme allows an artificial apparent increase in the supply of gold and so distorting price discovery toward lower prices.
Such a scam would be in grave danger of becoming exposed if anyone knew the true inventory condition of the vaults of the ETFs. That problem is easily solved by having HSBC be the custodian of GLD and JPMorgan be the custodian of SLV.
Who allowed this situation to develop in the first place and who has a controlling interest in that body? The same question, over and over.
The Bloomberg wording of its report on Greenlight Capital reveals its own suspicions – the green shoots of understanding, perhaps and yet welcome form such a mainstream organ:
The firm’s Greenlight Capital LP fund gained 16.3 percent in the second quarter, bringing its return this year to 21.5 percent boosted by investments in Ford Motor Co. debt, according to the letter, a copy of which was obtained by Bloomberg News. The fund lost 23 percent last year.
One of my Anons wrote:
We can devalue. I believe that to be broon's target. Slow or sudden is the question. 99% of QE is still going on gilts because the madman will not stop borrowing for his Fabian Marxist utopia. He is barking mad!
Sonus quotes Gibbon:
When the rule of law collapses, and the self interest of the state dominates, capital cannot long survive. It flees. […] People began to flee from Rome during the reign of Commodus, and this trend was given a Latin name, - Suburbian.
The rights, privileges, and immunities disappeared, and the thrust of Roman Law became only the self interest of the state. Gibbon wrote that the Roman government prosecutors became “the most worthless of mankind who are not afraid to condemn in others the same disorder which they allow in themselves”. […].
Rome collapsed because the rule of law became corrupted. Rome became “corrupted by the multiplicity of laws”, that the judges, “being pro-government, (as today) merely interpreted the laws, according to the dictates of private interest” [...]”
Capital flees.
There is a distinct difference between the collusion, the conspiracy if you insist, which ensures that the people in the government appoint and are appointed by the usurers, thus continuing the unholy alliance which causes the misery of poverty and war which is so profitable – there is a difference between that and the rule of free enterprise whereby your wife can set up a coffee shop up the road, is encouraged by society to give it a go and is welcomed by the council, without crippling concession fees.
One is the Statism of the global socialists masquerading as capitalists and the other is the small “c” capitalism of the truly free market.
Again – look at history, this time the history of usury in the United States and the one common element throughout the whole sorry affair is the dishonesty of those who have colluded to wrest and maintain power from the people, something they briefly had a sniff of in the days of Andrew Jackson.
What we’re up against is the incredulity of the population, the inability of people to think ill of the nice banker down the road or those friendly investment advisors.
The incredulity of the population
Anonymous commented on one of my reasonably well researched posts on the matter:
It's not just the lack of understanding but the wilful refusal to try to. This is the thing which frustrates those who bring the horse to water and then watch it steadfastly refuse to drink. It's the frustration of watching, from the next hill, a wolf approach a flock of sheep, blithely unaware of the danger until it is upon them.
The lack of comments on this post is significant, compared to comments on other posts. The problems seem difficult to convey. "The incredulity of the masses is their best defence". "Animal Farm" again, in real life this time!
As my mate said the other day, on another issue and i hope he reads his own quote here - how come I can see these things and others can't?
I answered him that perhaps their brain is not wired that way.
The plethora of explanations not based on fact or historicity
Millions of bloggers, thousands in the MSM, everyone and his dog, is formulating theories on who's to blame and what to do, as was shown in part one.
Read your history - please read your history and you'll see, as Krugman does, that "most macroeconomics of the past 30 years was spectacularly useless at best, and positively harmful at worst”.
It is harmful because the wolves are thereby hidden, pick us off, retire to the forest, appear again, pick us off and so on.
Part 3 is here.
It seems to me you are searching for a general template that should expain and predict these vexing events which are in fact common to all eras, and therefore natural.
ReplyDeleteMy sense is that it can be done, but it has not quite been done. The parts are there waiting to be put together. But simplicity may often require discovery made complex through the twisting of this path. There is so much in economics that is accepted wisdom that is entirely wrong, or worse, partially right.
For example, your understanding of Teddy Roosevelt's anti-trust legislation. Garrett would disabuse you of that opinion. As Madison borrowed from Adam Smith, 'the policy of supplying, by opposite and rival interest, the defect of better motives, might be traced through the whole system of human affairs, private as well as public.'
'Ambition must be made to counter ambition'-in the absence of better motives. The Founders went straight to the heart of it and assumed the absence of good motives. Why waste time?
One of the great peculiarities of the American Revolution was that its leaders pinned its hopes on the organization of factions against one another, rather than the default position of man–good versus bad--Thomas Sowell
That was the governments job in America, not providing a government plan to rearrange business--which vastly grew the power and role of the government. This marked a major leaving point for limited government. Teddy Roosevelt was no Founder conservative. What followed in 1913 would not have been possible except by this softening of perceptions of the role of government.
'Powers once assumed are never relinquished. Bureaucracies, once created, never die.' They morph, and assume new powers. Ambition must be made to counter ambition only. The government has its own ambition, and that is to protect itself.
Whatever we think of Bill Gates, he had old-fashioned opinions of the role of government in business. That cost him years in the anti-trust yaw of Government under Clinton. It was the Cowboy who cut his case loose, for which that autistic dick of Microsoft never thought to thank him.
Why, REALLY, was the case brought? Companies far smaller than microsoft employ hundreds of lobbyist, not to curry favor as we fools are made to think, but offer protection as the storeowner pays the mob. Microsoft kept three lobbyists. You do not disrespect the mob.
Economics are not math, whatever boys from Wharton think, not science, not even money. Economics are people and politics by other means. That is what Adam Smith understood. But that is what makes it vexing. People are vexing.
I have had it in mind for some time to attempt this general template through Hayek and friends, with Garrett, and a little help from Charles Mackay's Extraordinary Popular Delusions. That will be my delusion, but it will take a while.