stay out of the kitchen." We note that the late Harry Truman was very fond of this quote, and since he was one of the very few competent presidents of the 20th century, we deem it a privilege to be able to quote him. What we have reference to is, of course, the increasingly frenzied, frantic, and yes, hysterical efforts by a panicked Federal Reserve, Treasury, Congress, and a witless chief executive to stop the deflationary tidal wave which is rising ever higher and threatening... Whoa! Let us back up here for a moment and consider analytically precisely what this tidal wave is threatening. In order to do this we must leave behind all of the hyperbole, all of the emotion-freighted verbiage and "substantive" reporting and so-called "analysis." We are not too impressed or too edified when the prime minister of France says that "the world is at the abyss," or when sundry self-proclaimed and media anointed sages, ex-sages, and would-be sages issue dire pronunciamentos warning of "tsunamis" "financial Pearl Harbors" "catastrophe" "calamity" etc etc. This highly colored language makes for good copy, to be sure. Such attention grabbing has been a central feature of yellow journalism since its invention by the late William Randolph Hearst. Moreover, we do need to take note that the current Administration has, as its prime modus operandi, employed scare-mongering as a key tactic to secure the reluctant acquiescence of the Congress in various, all too well known enterprises of dubious utility, to put the matter mildly. As we see it, there are lots of axes being ground via the mechanism of this fear-mongering and this frightening scenario depiction. Above all, it is our belief that this wave of global hysteria has as its prime ultimate source the chronic tendency of one single individual to panic under stress. This individual, in our opinion, is our illustrious FED chairman, Dr. Bernanke. Of course, this is not to say that the chairman's intentions are not the noblest. However, we must perforce note the ancient wisdom: "The road to hell is paved with good intentions." It is our assessment that there is hardly a want of evidence supporting the hypothesis of the chairman's penchant for panic. During the last economic/financial "crisis" -- which in fact was the merest fraction of the current monster crisis -- Bernanke served as both Greenspan's point man to the outside world and, we infer, as a storng independent force aggressively supporting Chairman Greenspan's own panic at the perceived specter of deflation. This led the Greenspan/Bernanke team to reduce the FED FUNDS rate to the unheard of level of 1% and to flood the financial system with fiat money. This, in turn, constituted the necessary precondition for the real estate mania which followed, and which both Greenspan and Bernanke were pleased to allow to reach the Frankensteinian dimensions which constituted the necessary precondition for a crash which would be heard around the world (said crash CURRENTLY UNDERWAY). Now it is a banality to say that panic is a poor counselor, but it is a very important banality. Moreover, it is banality which both Greenspan and his anointed successor, Bernanke, have found it both convenient and characteristically congenial to ignore. The consequences, dear reader, ARE BEFORE YOU. Therefore, to Bernanke, and Greenspan before him, we invoke President Truman's wisdom: "If you can't stand the heat, then stay out of the kitchen." This theorem, however, has a much broader application. The CENTRAL HALLMARK AND ESSENTIAL MOTOR FOR THE MARKET ECONOMY IS: THE BUSINESS CYCLE. The business cycle is just that: A CYCLE. A cycle has a high point -- its apogee, if you will -- and a low point, its perigee. The apogee is great, tons of fun, money money everywhere. The perigee is misery: suffering everywhere (or ALMOST EVERYWHERE), money, wealth, income, security vanishing quicker than you can say HANK PAULSON OR GEORGE W. BUSH. Indeed, the brilliant, original mind of the eminent economist Joseph Schumpeter called the bust phase of the business cycle, from which arise new ideas, new creations, new forms of business organization, "CREATIVE DESTRUCTION." This appellation was accurate, and it provides much of the explanation for the LONG-TERM SUPERIOR PRODUCTIVITY OF THE MARKET ECONOMY. At the same time, it is PAINFUL, VERY PAINFUL. So, our bottom line is just this: applying Harry Truman's dictum, if a society cannot tolerate the pain of the bust phase of the business cycle, the destruction and agony which constitutes the indispensable prerequisite for the subsequent wave of creativity, then it has NO BUSINESS ORGANIZING ITS ECONOMY AND FINANCIAL SYSTEM ALONG THE LINES MANDATED BY THE CAPITALIST SYSTEM. Such a society, it seems to us, is only fit for a less productive economic and financial structure. In this regard, the Bernanke/Paulson/Bush moves toward socialism and state interference/control of the economy in a FUTILE EFFORT TO AVERT THE INEVITABLE LIQUIDATION are reflective of the ethos not only of the general public, but of failed capitalists and corporate bureaucrats. Moneysage 2008 © |
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