I concluded my last post with the observation that the contradictions, which have been building gradually for years, are becoming outrageous.
We can assume a certain degree of ‘chicanery’ has gone on from the get-go and certain ‘holders of the public trust’ have had to pull off increasingly more elaborate cover-ups to shield the guilty from scrutiny. So they could preserve the administration’s ‘illusion of honor’ …people could suspect they were ‘dirty’…so long as they couldn’t prove it.
Well, as the cover-ups became more fantastic, a simple truth became apparent…that even if the truth did come out, there wasn’t anything anyone could do about it.
Well, good citizen, this ‘realization’ (and it really is a recent development) has resulted in more ‘daring’ (as well as decadent) schemes…like robbing the US Treasury right underneath the public’s nose!
You may have noticed that nobody has cried ‘halt thief’; never mind lifted a single finger to stop them. Naturally the ‘theft’ appears legitimate (even though Congress did not approve or oversee the Fed’s multiple ‘rescue programs’ that funneled trillions of taxpayer dollars directly into the coffers of people who remain billionaires.
What seems mighty fishy is how…after 80 years, suddenly somebody ‘remembers’ an obscure clause in the Fed’s charter THAT HAS NEVER BEEN USED BEFORE! Well, who’s to say for sure if that clause even existed a week before it was ‘discovered’ but that doesn’t matter either…because the name of the game has changed to ‘prove it’.
We could go a considerable distance walking down this road good citizen…and perhaps more disturbing is how delving into these ‘mysteries’ makes me sound like a ‘conservative kook’, but, what are you going to do?
Chasing Chimera isn’t always a fruitless effort…sometimes there really is a Chimera!
So we arrive at tonight’s offering where you might be better served by following the link so you can see the accompanying charts and pictures.
[purloined from: Jesse’s Crossroads Café ]
Conscience of a Liberal
The story so far, in one picture
By Paul Krugman
November 3, 2009
World industrial production in the Great Depression and now:
Jesse here. This chart is a bit deceptive because it compares two periods of time based on the start of the crisis. It would be interesting to compare the two crises from the start of the Fed's expansion of the monetary base. As I recall, the early 20th century Fed did not react this way until 1931 and did so in two stages. Ok, Ben was quick out of the starting gate with a massive quantitative easing. Score one for the Fed. They are quick on the draw when it comes to monetization.
And there is little hazard that Ben will tighten prematurely out of fear of inflationary forces, having learned at least that lesson from what might prove to be a simplistic historical comparison.
It would be unjust not to note that the 1930's Fed struggled a bit with the difficulties of an entirely different type of commercial banking structure and regulatory structure, and the restraints of a gold standard.
But at the heart of it, the comparison may be irrelevant. The genuine challenge in this era of fiat currency will be to avoid the 'zombification' of the economy, the appearance of vitality with none of the self-sustaining growth.
It may be discovered that the key to coming out of a crisis permanently is not how quickly and dramatically one inflates the money supply, or even how long one maintains it, and how many stimulus programs one can create, but rather how quickly and capably a country can reform, can change the underlying structures that caused the problem in the first place.
Japan has been doing it slowly because of its embedded kereitsu structure and government bureaucracy supported by a de facto one party system under the LDP. In the 1930's the impetus for reform was overturned by a strict constructionist Supreme Court and an obstructionist Republican Congress. The story of our time might be the perils of regulatory and political capture.
Before this Administration declares "Mission Accomplished" and high fives its victorious recovery, they may wish to consider that they have done the obvious quickly in one dimension, but have done very little to change the dynamics which created the crisis in the first place, choosing instead to support the status quo to a fault, partly out of ignorance and to some extent because of a pervasive and endemic corruption of the political process.
There are three traits that make a nominal bounce in production fueled by a record expansion in the monetary base a success: sustainable growth without subsidy, sustainable growth without subsidy, and sustainable growth without subsidy. And this can only be achieved by changing the game, reforming what was wrong with the system in the first place, if this is what caused the crisis.
Our forecast is that Ben and Team Obama are failing badly because they are fighting the last war, in the almost classic style of incompetent generals who lost the early stages of the Second World War because they were using the game plan from the First. And plans for a Vichy-style government establishing l'état financière seem to be well underway, in a general surrender of the goverance of the nation to the econorati.
For all its flaws, at least the Clinton Administration used to conduct polls to see which way the public was leaning, and took its cues from that. The Obama Administration blatantly ignores public outrage, and takes its calls from Wall Street, literally, and forms its policy and laws around what they want, or at most, will grudgingly accept.
Posted by Jesse at 5:13 AM
Category: financial engineering, monetarism, monetary inflation
Even our friend Mr. Krugman stops just short of calling for the resignation of Obama’s financial team. Elsewhere on the net, others are being less coy on the subject...
Again, none of that matters…because we are still in no position to DO anything about it. Worse good citizen, ‘the guilty’ won’t stand aside and let the wheels of justice operate…which means there is but one way to restore civilization and that is revolt.
Sadly, the perps know this and will resist the ‘restoration’ of justice with every fiber of their being. It’s silly to even contemplate regime change without first marshalling our resources and formulating a plan. Chances are excellent that anyone already ‘prepared’ to undertake such an action is doing so for their own reasons and not the public’s ‘best interest.’
It’s bad enough to suffer one revolution without having to fight two of them back to back; but that’s the way it will most likely go down. A quick, ‘improbable’ coup that unseats the current government without a shot being fired (these are the criminals acting to ‘protect themselves’) followed almost immediately by a steadily more organized ‘resistance’…which will likely be heavily ‘infiltrated’ by elements of the criminal regime.
The ‘rebels’ will initially suffer horrendous losses due to ‘bad intel’ provided by agents of the enemy. After a serious number of ‘witch hunts’ the rebels will get their act together and start to gain the upper hand on the smaller, but better armed and organized criminal forces. Who will ironically continue to claim the ‘mantel of legitimate authority’ by dint of their overthrow of the prior government.
Those of us lucky enough to survive the ‘back to back’ struggle for the restoration of the ‘rule of law’, those children will enjoy one of the greatest things social upheaval has to offer…true equality.
And maybe this time our children will be wise enough to institute policies that will keep things that way…
On that happy thought…
Thanks for letting me inside your head,
Gegner
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