Saturday, September 21, 2013

Once Again, Do Not Pay Attention to that Man behind the Curtain

Frederick J. Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession  (McGraw-Hill, 2009) and "The Coming Collapse of the Municipal Bond Market" (, 2009)

            It should be obvious by now that mass democratization over the past century demanded a steady flow of inflation. The inflation of self-esteem: This inspired rights and privileges. These were abetted by a spectacular rise in quantity (inflation) of money and equally sensational erosion of quality of everything: goods, services, education, speech, writing, words, phrases.

            This brings us to the rise of the professorate, over the past century, an obvious failure in quality defeated by hordes of pretenders. The professorate, unsure of its social status, especially in such empty fields as economics, infested the institutional bureaucracies with the twin accomplishments of maiming standards of merit and asserting (their own) accomplishment of reform and democratization. It was they who designed the blueprint for mass bureaucracy (which has smothered initiative, thus resistance, in the mass democracy), and defined official "policy." Today, policy is the assertion of the hour to stay one step ahead of the great, failed experiment of mass democratization for which the faux academics must be held accountable.

We come to the non-decision of Federal Reserve Chairman Ben S. Bernanke on September 18, 2013. Far too much, or not enough, thought is spent anticipating this man's intentions. His non-decision on September 18 was to not "taper" his Money-for-Nothing Policy that central banking bureaucrats have labeled "quantitative easing." An example of "tapering": if he had authorized his clerk to type "135" instead of "145" billion of dollars onto a keypad: that is the U.S. central-banking bureaucrats' elevation of circulating dollars each and every month. (The example may seem unnecessary to some, but Reuters or Marketwatch released a poll on September 18 about the ignorance of Americans. Seventy-three-percent do not know what "quantitative easing" means. It was one of those "ha-ha-ha" see-how-stupid-the-people-are stories. Yet the woman who replied "he does stocks and all that," had a perfect grasp of what Bernanke is up to, if not at the New York Fed, through the Hong Kong Monetary Authority, Chicago, and the two dozen other central banks that are now buying common stock.)

            Brokerage houses and the media offered different reasons for the Chairman's declaration ("the economy is weaker than he thought" and so on), but this all beside the point.

            Bureaucracies inflate. The rise of the bureaucracy goes hand-in-hand with the massing of the people. A bureaucracy will never make a decision that contracts its inflationary determination. This is as true for the Federal Reserve or the Bureau of Labor Statistics (where a "job" is defined as working one hour a week.)

            This is a matter of prestige, power, and cowardice. Never saying "no" permits bureaucracies from taking responsibility for action. They are generally successful at diverting blame for their policies. The recent fifth anniversary of "I remember when Lehman failed" stories did not touch the Federal Reserve or the various housing authorities; yet, they are the central reason for the credit and mortgage collapse.

            Keeping the inevitable inflationary tendency of bureaucratic policy in mind, it is no surprise the academics never thought of how they would reverse quantitative easing. Bureaucrats do not think like that. They whip up grand solutions to illusionary or misstated problems but leave the conclusion to fate. Think of all the grand schemes in housing, health-care coverage, race relations, urban redevelopment - never a conclusion, never an academic bureaucrat held accountable.

            From the moment Ben Bernanke was introduced in Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession, through this current diatribe, it has been stated and emphasized there would never be an end to money-for-nothing, the last hope after a century of academic and bureaucratic meddling. Bernanke or the court jester who succeeds him will expand paper (electronic pulses, if we must) currency until the collapse.

            This is the simple and direct reason that, all talk to the contrary, gold, silver, proficiency at carpentry or farming are worth one's attention.

            Although the media will run around with its head cut off looking for culprits and explanations, let us not lose sight of the current kingpin who is central to the awful battle ahead of us: Ben S. Bernanke.