Obsfucation?

Excellent Post from CHS Today

His opening paragraph states his thesis well:

The government's refusal to investigate financial crimes committed by the banking cartel and its Elites is nothing less than the willful destruction ofthe rule of law.

Barry Ritholtz is possessed by the same zeitgeist:

The fraud is rampant, self-evident, easy to prosecute. The only reason it hasn’t been done so far is that this nation is led by corrupt cowards and suffers from a ruinous two-party system.

We were once a great nation that set a shining example for the rest of the world as to what the Rule of Law meant. That is no more, as we have become a corrupt plutocracy. Why our prosecutors cower in front of the almighty banking industry is beyond my limited ability to comprehend.

The meme is spreading.  The trust in the current system is in tatters but holds on because there is still a large enough mass of people in "the center"-- between the unemployed and the 1%-- who are too frightened about losing their own livelihood to recognize the game is over.  Playing by the rules nets nothing for the regular guy. The game is rigged so that the house wins every time.

CHS Needs a Third Mind

Charles Hugh Smith shows his Austrian influence by declaring that the Fed and Bernanke are "Keynesian":

The Fed's knees are chafed from kow-towing to their banker masters, and worshipping the "magic" of their Keynesian Cargo Cult . .

But the Fed and Bernanke are NOT Keynesian in the least.  They are Chicago School monetarists.

Some people get this:

One year ago, I argued in Reason that Milton Friedman’s writings on the Great Depression inspired the Federal Reserve’s response to the current economic crisis. Friedman held that artificially induced inflation would have prevented the ordeal of the 1930s, so I inferred that Fed Chairman Ben Bernanke’s implicit goal is likewise to ramp up inflation as a cure to our present ills.

A year later, the Fed is beginning to make that goal explicit. Over the past few weeks, Bernanke and other Fed bigwigs have been dropping conspicuous hints that they plan to boost inflation and pump another round of conjured-up cash into the economy. One proposal is to inject $100 billion per month. It’s being called Quantitative Easing 2 (QE2).

And Robert Barro himself declared in 2007 that "we are all Friedmanians now."

So, what CHS is really decrying-- at least with respect to the Fed and Bernanke-- is the Friedman Cargo Cult, not the Keynesian Cargo Cult.  Krugman is clearly of the latter cult, but I'm not defending him or that cult here, only making the point that CHS has oversimplified his worldview: as much as he sometimes congratulates himself on being a free-thinker, his thinking is not all that free.  It is distinctly Austrian neoliberal.  Try as he might to distance himself from Chicago neoliberal economic thought, the core ideology is the same.

As I've said before,

How is it that the founders of two seemingly diametrically opposed schools of economic thought co-founded the neoliberal movement? Economics, more properly political economy, is really a political science, after all, so if their economics reflect their politics, doesn't that mean that their politics are diametrically opposed?

Only if you believe that each school's economics reflect its true politics. In the case of the founders of the Chicago School, that isn't the case.

Neoliberalism was founded by Hayek, Mises, Friedman and others as a multi-generational strategy to effectively eliminate public control of democratic governments in order to ensure governments would not interfere with the banks' creation and manipulation of boom bust cycles to their advantage. The end game is and always was to have a return of laissez-faire boom-bust cycle without governments stepping in to help their citizens during busts. As discussed previously, the neoliberals believed that classical liberalism had failed because it framed the goal of good governments and good economics as to promote the common good. Neoliberals removed the concept of the common good from their reforumulation of liberalism, recasting the concept of the market itself as an all-knowing, all-seeing god that could not be interfered without dire consequences.

Given that socialism and Keynesianism were responses to the great damage produced by laissez-faire economics had produced, there was no way to return directly to it in the form of the Austrian School of ecnomics. The Chicago School of economics was therefore created to provide an incremental move away from Keynesianism economically and an incremental move towards neoliberalism politically. The Chicago School exists to prove once and for all that government intervention into the money supply and the economy can never work and will always lead to disaster (but not until after eliminating the gains the common people reaped due to government intervention). Once the Chicago School's economics do their work and flame out spectaculary into a truly Great Depression, the answer will be and must be the Austrian School's economics. After all, we know from Milton Friedman's revisionist history that the Great Depression was caused by the "government" interference of the Federal Reserve, so what's left but to bend over for the all-knowing god of the market and hold your ankles (and never mind that man behind the curtain).

And the neoliberals will label Chicago School economics as "Keynesian." In fact, they already are.

The underlying assumption in CHS's post is that his idealistic view of capitalism is reality.  Unfortunately, what we are seeing IS capitalism as it always has been and always will be.  His idealized view of capitalism is what is sold to the masses, the bleating sheep (who think they are free thinkers), to explain why they always wind up losing in the "free market."  The folks who peddle capitalism are not and never have been subject to capitalism, which is a rigged game that they run for their own benefit and to the detriment of others.

While I agree with CHS that Bernanke's policies have been "disastrously wrong" by my own standards, I equally believe that Bernanke's policies have demonstrably achieved everything he was assigned to accomplish.  The man is in place to assist in the banks' looting of the real economy and to hasten the enslavement of the masses.  By that yardstick, Bernanke is a genius and a winner that will be canonized by those he serves.

And then people like CHS will applaud when we go full Austrian, which will preserve the gains the banks achieved through looting.

The Return of "The Project"

Over the Thanksgiving weekend I had something of an epiphany, which is that "The Project," the initial impetus for embarking on what is now a three year journey into understanding the depth and breadth of human nature, remains a valid idea and something upon which I must focus my non-working hours.

The basic idea of the Project was inspired by one of the worst books ever written: The Da Vinci Code.  Actually, the Project was inspired by the fact that such a horrible book could cause people to question their religion (and the leaders of their religion to undertake massive efforts to debunk a bad work of fiction).  My takeaway is that the willing suspension of disbelief that takes place whenever we sit down to read a work of fiction allows even unshakeable beliefs to be questioned when otherwise doing so would create a defensive reaction.

For the Project, I planned to create a rich fictional universe within which it was safe to question all sorts of widely held and "unshakeable" beliefs.  So I set out to develop a multi-cultural understanding of human nature and the themes that run through every culture and civilization throughout time.

My only problem was that this journey crumbled my own unshakeable beliefs down to their very foundations, and I was left feeling that I had nothing left to say within the scope I envisioned for the Project.

So I abandoned the Project and focused on engaging in the political directly.  And that was disillusioning in its own regard.  I found many fellow travelers, or thought I did, but most of them stopped their journey when they found a new comfort level, which I view as unwarranted as the last comfort level.  Yves Smith is a perfect example of this phenomenon, as is (to a much smaller extent) Barry Ritholtz before her.    Both seek to work completely within the system to effect change, to reform the system to make it fair.  This is impossible, and as Russ said today, nothing short of abolition is required.  Incrementalism has been and always will be doomed to failure.  Unfortunately, people like Yves and Barry fail to see how the "now-opia" of "progressive" rationalism bogs them down, forcing them to make the same arguments over and over again, all the while legitimizing the counter-arguments against them.  After all, you wouldn't be arguing if there wasn't a legitimate difference in opinion, right?

But I'm restarting the Project now, and I think it will actually be better and more successful than I had previously imagined.  The turning point for me was realizing that what I have discovered about the truth of humanity and human systems offers the makings of a far richer, much more far-reaching tapestry than I realized.  While I still owe people like paper mac responses on my "fractal theory of human cognition," the bottom line for me is that human beings do not experience reality.  Instead, they constantly interpret it, comparing what they observe to what they accept and reacting accordingly.  This comparison is subject to positive feedback-- i.e., reinforcement or cognitive biases-- that creates hysteresis and make it harder for people to leave a state of belief once they have reached it.  The study of propaganda, aka marketing or public relations, relies on this simplistic view of human cognition to great effect, successfully manipulating public opinion and "consumer" sentiment.  And the power structure has long known that the values espoused by social institutions are critical in shaping opinion and sentiment, although they did not have empirical evidence of this fact until cognitive science and behavioral economists came along.

The thesis of the myth that will drive the Project is that all major changes to society have been driven by the relative pathological few who seek to employ usury to control the masses.  From monotheism, to feudalism, to  classical liberalism (and the corporatism it spawned), to the current neoliberalism that dominates, all can be traced back to the drive to establish and maintain usury as the primary social control mechanism.  Indeed, given Islam's outright ban on usury, the "Clash of Civilizations" that has resulted in the West targeting Islamic nations takes on a whole different light.

Of course, the Project is set within a fictional universe, and I will have to take certain liberties to fill in gaps that will make the myth complete and flow.  Nothing will be sacred but the human spirit itself.

As an aside, DownSouth is somebody I have not heard from since he was cast out from the Garden of Yves, but one thing he was harping on prior to his expulsion was "ponerology."  I have the book that he was citing, and it is quite dense and ponderous to wade through, but this related site is more accessible and, I think, consistent with the "mythesis" at the heart of the Project.

The Single Most Cogent Statement of What We Face

The folks at the Automatic Earth say all that needs to be said.  And I'm just talking about the lead-in to the main article . . .

Personally, I believe we will see something akin to a 10x Lehman moment in the next week or so, and I'm moving to protect my assets by taking my money out of a TBTF bank and put it into a local bank (something I've been contemplating for quite some time but now feel is imperative).  The actions of the central banks (the alleged bailout of the Euro zone) and the Obama administration (goosing the unemployment number by disappearing 1.5 million unemployed) smacks of desperation intended to get the sheep into the markets for one last fleecing.

Robert Viennaeu's Thoughts on Economics

I've been a big fan of Robert's since stumbling upon him a couple of years ago.  He has taken up economics as a hobby and with gusto.  He has reached many of the same conclusions about economics as I have, but he still believes in it as a science that has something meaningful to say.

Today's post is a good one, and it has its own link to a piece by Gavin Kennedy, somebody who has studied Adam Smith extensively and reached a very different conclusion about what Smith actually meant by his Invisible Hand.  This quote from a paper by Getty Lustila comes from Kennedy's latest post:

For Smith, all human beings are naturally ‘in-tune’ with one another through the faculty of sympathy; which, acting as a mirror for others, allows us to take part in their suffering and joy. The ability to sympathize with our fellows is not a virtue (in the traditional sense). Instead, the faculty of sympathy is a constitutive part of human agency: devoid of sympathy, we are not human.

And that's neoliberalism's aim: dehumanization.

Karl Denninger Sees the Real Enemy, Inadvertently Previews A Paradigm Shift In The Political Spectrum

In a post entitled "Nail, Meet Hammer," Karl posts up this interesting video:



I do not agree with everything that Christopher Greene says in this video, and I doubt that Karl does, either.  But  there is a great deal that I do agree with, and I'm sure that Karl wouldn't post it if he didn't agree with a lot of it, as well.  While I doubt that Karl and I would agree about what where we agree with Mr. Greene's video, I am sure that we would agree more than we disagree.

The point here is that a new political center is being created before our eyes.  Denninger proclaims himself as an original member of the Tea Party.  But he has pretty much washed his hands of it and now supports the Occupy movement.  He even makes a pretty good observation about it here.

NOTE: Where Karl and I probably disagree with Greene is the conspiracy theory that drives Greene's narrative.  Karl probably doesn't believe in it, as he prefers to think of people as stupid instead of evil.  I don't agree with the details of the conspiracy implied by Greene's narrative, but the documented history of neoliberalism demonstrates a concerted, multi-generational effort to shape and control public perception in order to rip off the public.  If you're willing to have a looser conception of a conspiracy theory, one that does not require secretive back room meetings between villains, then it is hard to not view neoliberalism as one giant conspiracy.