Best Satire of Faux Austrian Economics Ever … Someone has created a fabulous, richly detailed parody of Austrian economics. They call it The Daily Bell and claim that its perspective reflects Austrian economics. In reality, it satirizes faux Austrian economics' sycophancy toward elite white-collar criminals. – New Economic Perspective/William Black
Dominant Social Theme: The critics are at fault. Blame them.
Free-Market Analysis: Mr. William Black has responded to an article of ours with one of his own, entitled "Best Satire of Faux Austrian Economics Ever." It touches on numerous dominant social themes of the power elite that we regularly analyze.
Overall Reaction: We were a bit surprised that Attorney Black would have such a strong reaction to an article that made many points that are made elsewhere with a good deal more vituperation. True, we focused on him, because he has been conducting a kind of "high-profile" campaign to clean up Wall Street the way he cleaned up the S&L industry. Here are point-by-point rebuttals.
S&L Industry Fraudulent Overall: Black is famous for "cleaning up the S&L industry." But Monetary Policy Disasters of the Twentieth Century, written for the Freeman (January 2007) by Kirby R. Cundiff, Ph.D., CFA, points out the following: "…The primary reason for the widespread failures in the Savings and Loans industry was irresponsible monetary policy at the United States Federal Reserve."
Unfortunately, the combination of a Fed-inspired boom plus massive litigation helped reduce an entire industry. The result was INCREASED centralization of power by government and its attached mercantilist (large commercial banking) institutions. Finally, you are left with a corporatocracy. That's where the US is headed, if it's not already there.
Federal Reserve/central banking: Unfortunately, the article does not grapple substantively (that we could see) with the main engine of economic destruction, which is central banking. The Federal Reserve, as the world's chief central bank, FIXES PRICES. It fixes the price of money by determining its value and volume.
When you fix the price of money, you transfer wealth from those who made it to those who didn't and don't know how to use it. This is why lottery winners often end up without money soon after winning large prizes. It's why government wastes so much money. The central banking system should be abolished. That should be FIRST on the agenda if people really want to get their lives, jobs and houses back.
Daily Bell and Austrian Economics: The article claims that the Daily Bell is an "Austrian" publication. As a general statement, the Daily Bell is not formally "Austrian." We defer to those who are more knowledgeable than we are when it comes to the philosophy and details of Austrian economics. We USE Austrian economics as best we can to analyze our world and how it works.
'Sycophancy to criminals': Criminality for the most part these days in the US is defined by law. The court system just sent Raj Rajaratnam of the Galleon Group to jail and fined him nearly US$100 million. Meanwhile, some intrepid (private) investigators have discovered that Congress has been engaging in "insider trading" on a regular basis.
So now we know: The US Congress is free to trade on insider information. The fight to make this known was led in part by Peter Schweizer, according to Daily Beast/Newsweek. "Schweizer had been struck by the fact that members of Congress are free to buy and sell stocks in companies whose fate can be profoundly influenced, or even determined, by Washington policy, and he wondered, do these ultimate insiders act on what they know? Yes, Schweizer found, they certainly seem to."
They also write: "Schweizer's research revealed that some of Congress's most prominent members are in a position to routinely engage in what amounts to a legal form of insider trading, profiting from investment activity that, he says, 'would send the rest of us to prison'."
It's also emerged that Congress CAN likely be prosecuted under existing laws. Will politicians be sent to jail for decades over insider trading? How many? Meanwhile, Wall Street RUNS on insider information.
Until the 1980s, no one had even been jailed for insider trading, so far as we know, and the markets worked just fine (for the elites anyway). Now the regulators are getting ready to prosecute people who use technology to trade. As we long ago predicted, soon it will be a crime to use superior technology. Eventually, as Kurt Vonnegut wrote, it will be a crime to have a high IQ and people will be compelled by law to "dumb down."
Data and Austrian Economics: The article explains that Austrians have a "disdainful response to adverse data – they ignore it." This is untrue. Austrians believe that "data" – certainly numerical data – does not provide a way to predict the future because every law and regulation changes human behavior and thus laws and regulations never work out the way they are intended. US policy is based on "econometrics," which is an entirely phony science. You can't predict the future with numbers. The USSR used to do it all the time.
Stasi: The article mocks the idea that the FBI is America's Stasi, but these days the FBI can wiretap almost at will throughout the US and does so abroad as well, with or without permission. Homeland Security has launched its "See something, say something" program, basically encouraging US citizens to spy on each other. That sort of thing used to happen in countries like Cuba.
The FBI has also expanded abroad, apparently in preparation for expanding US taxing authority. Shortly, the US intends to enforce demands that foreign banks withhold up to 30 percent of American paychecks. In fact, the expansion throughout the world (in at least 90 countries) has been done so surreptitiously that few understand the FBI's modern, worldwide nature, supported by US tax dollars. Also, people in the US are terrified of the FBI, as is Congress. That's why it's not talked about more openly and why Congress is passing so many increasingly authoritarian bills.
When Congress was passing the first unconstitutional Patriot Act, armed men were reported to have roamed the halls. This has been amply documented. There is something very disturbing going on in the US today. Attorney Black might wish to turn his attention to the erosion of US civil liberties via government actions as well as Wall Street.
US Gulag: The article also mocks the statement "ever-expanding gulag of slave-laborers." But according to a Reuters article posted in December 2006, the US has the most prisoners in the world. " …Tough sentencing laws, record numbers of drug offenders and high crime rates have contributed to the United States having the largest prison population and the highest rate of incarceration in the world, according to criminal justice experts … A U.S. Justice Department report released on November 30 showed that a record 7 million people – or one in every 32 American adults – were behind bars, on probation or on parole at the end of last year." … "The more laws that are written, the more criminals are produced." – Lao Tse
Nom de Plume: The article claims that the "author" of the article "uses the nom de plume of Anthony Wile." This is untrue. Black has no insider knowledge about who writes what.
SEC Investigation: This statement is necessary, however, because now the article can bring up an SEC investigation. He writes, "The real Anthony Wile was the infamous subject of an SEC action for securities fraud."
'Infamous' Investigation: It was an infamous investigation, but not for stated reasons. The SEC pursued Wile on and off for a decade based initially on a single press release about a potential merger regarding a company going public. Finally, Wile had had enough. He agreed to the SEC's terms without admitting guilt. The whole idea of the SEC is to "name and shame" individuals and create regulatory barriers so that only the biggest players (who can afford the fines) can prosper.
Ad hominem argument: The article thus descends into ad hominem argument, which is a logical fallacy. The larger issues raised by Daily Bell articles have nothing to do with a particular SEC case.
Fraud: Black writes, "What a perfect accompaniment to an article demanding that the elites who grew wealthy through fraud not be prosecuted." But we have questions: Who are the fraudsters? Is it only the private sector? Many in Congress and the Fed grew rich from Federal Reserve money stimulation and insider trading. Black is not proposing to prosecute any of these individuals, so far as we know.
SEC: What exactly does the SEC do? Over and over, waves of white collar "crime" sweep the US and the Western world generally. The result is the SEC always gets more powers of some sort for the job it didn't do before. The Bernard Madoff case is only one example. The Social Security system is a kind of Ponzi scheme, but it is Madoff that is tagged with that label exclusively and sent to jail. In fact, here is the ultimate response to SEC inaction regarding Madoff:
Seven employees of the Securities and Exchange Commission have been disciplined, but no one has been fired, after investigations into how the agency failed to stop Bernard Madoff's massive Ponzi scheme despite repeated warnings that he was stealing billions of dollars from investors, The Washington Post reports. An SEC spokesman, John Nester, tells the Post that the agency considered "all factors relevant to the imposition of discipline, including the employees' performance before and since the Madoff events." The most severe punishment: one person got "a 30-day suspension without pay and a reduction in pay," the Post says. (PBS)
CFTC Corruption: Then there is this: "Retiring CFTC Judge: We Covered Up Market Manipulation".
NEW DEVELOPMENTS IN THE CFTC SCANDAL: On September 17, 2010, CFTC Administrative Law Judge, George H Painter, issued a "Notice and Order" announcing his retirement from his position. In this notice Judge Painter wrote of a conspiracy at the highest levels of the CFTC (within the ENFORCEMENT DIVISION) where a long time judge of 20 years has been conspiring with past CFTC Chairs to RIG THE ENFORCEMENT OF THE LAW by NOT finding ANYONE guilty of market manipulation. Here are Judge Painter's own words:
"There are two administrative law judges at the Commodity Futures Trading Commission: myself and the Honorable Bruce Levine. On Judge Levine's first week on the job, nearly twenty years ago, he came into my office and stated that he had promised Wendy Gramm, then Chairwoman of the Commission, that we would never rule in a complainant's favor. A review of his rulings will confirm that he has fulfilled his vow. Judge Levine, in the cynical guise of enforcing the rules, forces pro se complaints to run a hostile procedural gauntlet until they lose hope, and either withdraw their complaint or settle for a pittance, regardless of the merits of the case"
A copy of Judge Painter's letter can be found below with a stamp proving that it was received and filed by the CFTC on October 13, 2010. (The Daily Bell)
Power elite: The article points out that Ludwig von Mises and Friedrich Hayek hated fraud. But here is related discussion of a warning from Hayek about the kind of regulatory capture that is occurring today in the US and throughout the West:
Regulatory capture is exactly one of the things Hayek explicitly warned of. He called it "corporatism," and recognized it as destructive of liberty and prosperity. Furthermore, Hayek's work in business cycle theory specifically addressed the kinds of monetary and fiscal manipulations that led to our current crises. These are not examples of the "unfettered free market" nor "unregulated finance," but of government intervention and so-crony capitalism (better called corporatism or mercantilism). – Hillsdale College
Conspiracy: The article states that a favorite motif of the Daily Bell is that there is "an international conspiracy of the top bankers that caused the ongoing global crisis [and that they are] using the Occupy Wall Street (OWS) movement to demand that the fraudulent top bankers that caused the crisis be prosecuted."
Huh? The entire panoply of world government was the work of a relatively few individuals after World War II; these elites set up the UN, the World Bank, global trade associations, and the International Monetary Fund. This has been amply documented. Now there is an International Criminal Court. This is all what? Coincidence?
Inflation: The article states, "A true Austrian-school economist, however, would never admit that central banks could create over $300 trillion in money (over 15 times the GDP of the U.S.) without producing even material inflation over the last 30 years." The article seems to be confusing inflation with "price inflation" here, a common mistake. Much of the money produced by central banks has been trapped by its distributing banks and not yet circulated. Other trillions have been trapped by Japan and China. The money WOULD circulate if it were handed out to individuals. But the Fed will never do something like that.
Bankers' Trillions: The article asks, "Where do the Rothschilds invest or deposit their over $300 trillion?" For the record, we do not know how much the Rothschilds "own." There is a difference between "control" and outright wealth. A quote, supposedly from John D. Rockefeller, explains it well: "Own nothing, control everything."
Other loopiness: The article accuses the Daily Bell of making up other "loopiness" such as the idea that SEALS did not kill bin Laden or that Gaddafi was attacked for his plan to create a pan-African gold dinar. Well … here is a video of Benazir Bhutto telling David Frost that Bin Laden was murdered early in the 2000s, as just one example of why people would question the May 2011 assassination story: Benazir Bhutto: Bin Laden Was Murdered. Maybe David Frost is "loopy," too.
The point of our articles on Occupy Wall Street has been to point out that the elites are doing what they always do when it comes to deflecting attention from the larger injustice of a central bank that can issue out US$16 trillion to its cronies and colleagues under the fiction of "saving the system."
The idea is always to blame systemic flaws on individuals and protect the larger players who are creating the problems behind the scenes. One does this via "populism" – getting people worked up over Wall Street bankers, etc., and then putting enough of them in jail to distract people from the REAL issues.
It seems to us to be an elite dominant social theme intended to direct attention away from central banking. This is exactly what happened in the 1930s when the massive regulatory bureaucracy supposedly overseeing Wall Street was first created. it left the Fed basically untouched, however, and even provided it with a new structure. It didn't work then and it won't work now.
Ed note: We noticed the article (basically) accuses DB of asserting, "the World Trade Center towers were blown up by the U.S." We would challenge anyone to find where we have written these words. We've written over and over there are substantial – enormous – questions about 9/11. We are not alone in this. In fact, certain members of the 9/11 Commission itself have virtually disavowed the official narrative. The Commission's lead counsel, Rutgers's Law Dean John Farmer even wrote a book, The Ground Truth: The Untold Story of America Under Attack that accused the Washington intelligence and military establishment along with the Bush administration of lying serially about aspects of 9/11.
Edited, updated on day of publication (first hour of posting) for accuracy and brevity.
Put every single horrid Wall Street banker in jail and if the money system itself is not changed then NOTHING will change.