STAFF NEWS & ANALYSIS
Madness of Markets
By Staff News & Analysis - October 10, 2012

Romney Is Unwise to Believe in Wisdom of Markets … Judging from the preponderance of his utterances, presidential candidate Mitt Romney has a classic Republican approach to financial regulation: Get government out of the way, because markets are inherently wise. If only it were right. – Bloomberg

Dominant Social Theme: Free markets do not exist.

Free-Market Analysis: Almost everything that appears on Bloomberg supports the idea of market failure. The animating perspective of Western mainstream media is that markets need "supervision." But rarely do we find this meme so bluntly presented as in this article excerpted above. It is written by Mark Buchanan and his bio is also included as follows:

"Mark Buchanan, a theoretical physicist, is the author of 'The Social Atom: Why the Rich Get Richer, Cheaters Get Caught and Your Neighbor Usually Looks Like You' and two other science books. A former editor of Nature and now a columnist for Nature Physics, Buchanan writes about efforts to use physics concepts to understand dynamics of biology and the social sciences, and is at work on a new book about the physics of finance."

Exactly what in all this qualifies Buchanan to provide an analysis of economics and politics is hard to figure. Obviously, he is an intelligent person and as an individual who covers complex topics, he can be presented as someone who sees clearly the ins and outs of the West's socio-political system.

Here's some more from the article:

It's hardly surprising to see Romney repeating the wisdom-of-markets mantra. His chief economic adviser is R. Glenn Hubbard, dean of the Columbia University Graduate School of Business. Eight years ago, Hubbard co-wrote a paperpaid for by Goldman Sachs (GS)proclaiming the arrival of a veritable heaven on Earth through market expansion and deregulation …

Given the central role such thinking played in the financial crisis, it's a wonder that Romney can support it and poll at more than 15 percent. Where did such fantasy-based policies come from, and why are they so alluring? …

Now let's think again about whether markets know best about anything. It's hard to imagine a more socially influenced environment than modern finance, with rumors flying through the business press and corporate boardrooms, fund managers herding like cattle to fashionable investments, financial analysts mostly making the same predictions as other financial analysts. We have a host of reasons to expect very little wisdom in the verdict of the crowd as expressed in the market.

Whoever wins the presidential election, the market will react. If we have to give it a personal spirit, it will "render its verdict." It won't be inherently wise or anything else. Up, down, left, right or inside out, the result won't tell us much about the wisdom of current policies. It's just the market, not a miraculous machine for good governance.

Wow. The argument made here is that because people are irrational, markets are, too. But this is a truly crazy argument. PEOPLE do not determine the efficacy of markets – competition does.

Over time, people's crazy, biased choices are winnowed by markets themselves. This is why markets "work." They are NOT dependent on individual biases but on what is profitable. Profit is all that is left in the long run.

If something is unprofitable it will not last long – or at least, not long within the scheme of things. It can be subsidized but eventually subsidies wither away. This is, in fact, why countries fail in the long term. As wealth confiscation continues, countries themselves become dysfunctional. The same will happen with world government if it ever arrives. Over time it will fail.

Now, one could question within this context whether an intergenerational power elite can long survive. But as long as government in one form or another survives, so will elites.

Elites profit from mercantilism, the usage of public power for private purposes. This is why the bought-and-paid-for mainstream media constantly advances the government-is-necessary meme.

What is certainly true in this era of what we call the Internet Reformation is that the powers-that-be are worried about a diminishment of government credibility.

After Thoughts

The dominant social theme that they rely upon above all others – central banking – is losing its hold. The result will almost inevitability be a loss of Money Power. You see … the elites themselves are not immune to the power of the markets …

You don’t have to play by the rules of the corrupt politicians, manipulative media, and brainwashed peers.

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