Mish: Instead of having dinner with those that caused the problem and have no idea how to fix it, the powers that be should have instead sat down with the top 20 economic bloggers as to what to do. We have been warning about these problems for years.
Volcker, for his part, says the current crisis has its roots in the lack of restraint inherent in the highly leveraged system that evolved, one in which winners were rewarded exorbitantly but the inverse didn't seem to hold.
"The first panacea for a mismanaged nation is inflation of the currency; the second is war."
-- Ernest Hemingway, Esquire magazine, September 1935
"Price stability is something which is essential for the poorest and the most vulnerable of our citizens. They cannot protect themselves against inflation. It is extremely important that we understand that moderation today is necessary if we want to deliver price stability in the medium term."
- European Central Bank president Jean-Claude Trichet, April 2008
Economic Censure
As I read any of great men writings, those on economics, show unmistakable traces of censure and repression. Wether it is Mises, or Schiff or anyone in between, I expect to see an explanation that the FED "mistakenly" thought this or that, G. "mistakenly" expected this or that.. and so on.
I think I am pretty regular as far as intelligence goes, and yet, I am able to quickly grasp what Mises or Schiff is trying to convey. I am asking myself, is it really possible, that men who had achieved gigantic power and titles were less intelligent than I? I find this easy to answer. Of course not. We can not assume that Roosevelt was of regular intelligence, nor was Hoover, nor Nixon. I doubt that Greenspan is anywhere near to my level. This is vividly indicated by their personal achievement.
So why then, it is commonly assumed that such a high powered men made simple mistakes that even regular mortals like us do not make?
Apparently Roosevelt believed devious promises of Keynes, and did not desire to impoverish the nation under his command. But you do read Keynes crap and you do see through it, right? What shall we conclude then?
Or Alan Greenspan, again apparently, having all the advice and knowledge he could possibly desire being "where buck starts", just couldn't understand that his lowering of rates and bailing out creates moral hazard and will eventually culminate in catastrophe?
There is only one answer that would explain this - repressive censure. We are afraid to even suggest that it can be easily seen that none of those economic measures can be counted among mistakes, and all among intentional actions designed to destroy the nation. These men were and are traitors and anti-americans.
Am I speaking "too loudly"? Well, it is either that, or those men shall rightfully be called what they were then, - below average intelligence. Your choice. It can't be both. Nor can it be neither.
Great power comes with great responsibility. So far, I have only seen power, and no one willing to accept the other part of the deal. I think, it is a big mistake. People like Roosevelt, Nixon, Hamilton, Greenspan, Wilson, should forever "loose their face". Because when they have everything, they desire one thing only and that is legacy. They should have a scorn one, if they had chosen to bend to their corrupted wicked desires and not to their oath and acted against what they knew was good for the nation.
Interesting Points
cRavias,
You raise some interesting points, as always.
The "system" forces people to compromise. When I see people like Bernanke and Greenspan, I see people who are highly willing to compromise to get ahead. They are geniuses, but they understand there is a system that is much greater than themselves. If they want to move up, they need to do as it says and wants. They quickly learn that speaking one's ideals only antagonizes certain people. While Schiff and Mises make sense to me, they take extremely uncompromising positions, and therefore are very controversial. They could never be in positions of power that the require the skill of consensus building.
To me, the problem is the role of the Fed and how its mandate has been defined and come to have been interpreted. The Fed should be the responsible stewards of the U.S. currency and conservative guarantors of the banking system. They should be the voice of reason encouraging a more sound financial sector and a longer-term viewpoint. Instead, they are short-term-focused worrywarts intent on preventing even the smallest recession and preventing any major bankruptcy.
Clearly, they are way off course, but to call the leaders traitors and anti-americans I think might be a little harsh. Conformists in a broken system, yes. Intentionally trying to sink the U.S. economy, no. Honestly, I look at Bernanke and see a sincere but sincerely misguided person.
Conscious evil thesis + Greenspan
I don't agree with the view that these high-level government officials were consciously doing evil.
I think they had very high-level communication and people skills, but just average intelligence in the fields of economics and political philosophy. The exception is of course the enigma of Alan Greenspan.
His writings on antitrust and money in the book Capitalism: the Unknown Ideal were incredible...
Roderick Long (a rare consistent libertarian) just had article yesterday on LRC with his take on the man. I thought it was really good.
How Alan Greenspan Learned To Stop Worrying and Love the State
the crisis
I knew that if analyst X wasn't von Mises he certainly was a disciple. But I am getting on in years and each crisis seems to be papered over. The theory seems sound but it may take an entire life to complete the cycle. I would like to think a generation would be time enough but it is not. Glib remarks like "in the long run we are all dead" and "the dollar may be our currency but it is your problem" always seem to carry the day. Perhaps the rise of the euro will make us less cocky but I doubt it. The pound sterling was surrendered as the world's reserve currency and somehow there it still is. I think we have thrown in the towel and will be happy to function as a member of a currency basket. The boom will end. The dollar will fade from glory with a whimper. If we are lucky. A worst case scenario is not very pretty.