Category Archives: Media

Hydra-Headed Commie Talking Heads

Business, Capitalism, Communism, Debt, Economy, Federal Reserve Bank, Inflation, Israel, Journalism, Media, Republicans

Last night I watched one of the many performances Stephen Moore and John Fund give on Glenn Beck’s show, talking up the bailout while making the obligatory noises about their free market credentials.

I wonder why Glenn Beck, whose instincts are generally good, and who disagreed with them, tolerates such obfuscation. Has Glenn done no research? Stephen Moore authored a book paradoxically titled Bullish on Bush: How the Ownership Society Is Making America Richer.

Here’s my truism, excerpted from “Bush & The Bailout Bandits”: “Bush’s ownership society, built as it was on quicksand, has metamorphosed into the bailout society.”

Is America ever going to fire its failed philosopher kings when they fail to predict anything?

Here is an excellent antidote (via LRC.Com) to the hydra-headed talking heads, exposing them for the philosophical commies they are. It’s written by the Canadian Austro-libertarian Martin Masse:

KARL’S COMEBACK

Martin Masse
Financial Post, September 30, 2008, FP13

In his Communist Manifesto published in 1848, Karl Marx proposed 10 measures to be implemented after the proletariat takes over power, with the aim of centralizing all instruments of production in the hands of the state. Proposal #5 was to bring about the “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.”

If he were to rise from the dead today, Marx might be delighted to discover that most economists and financial commentators, including many who claim to favour the free market, agree with him.

Indeed, analysts at the Heritage Foundation and Cato Institute, and commentators in the Wall Street Journal and in this very page, have made declarations in favour of the massive “injection of liquidities” engineered by central banks in recent months, the government takeover of giant financial institutions, as well as the still stalled $700-billion bailout package. Some of the same voices were calling for similar interventions following the burst of the dotcom bubble in 2001.

“Whatever happened to the modern followers of my free-market opponents?” Marx would likely wonder.

At first glance, anyone who understands economics can see that there is something wrong with this picture. The taxes that will need to be levied to finance this package may keep some firms alive, but they will siphon off capital, kill jobs and make businesses less productive elsewhere. Increasing the money supply is no different. It is an invisible tax that redistributes resources to debtors and those who made unwise investments.

So why throw this sound free-market analysis overboard as soon as there is some downturn in the markets?

The rationale for intervening always seems to centre on the fear of reliving the Great Depression. If we let too many institutions fail because of insolvency, we are being told, there is a risk of a general collapse of financial markets, with the subsequent drying out of credit and the catastrophic effects this would have on all sectors of production. This opinion, shared by Ben Bernanke, Henry Paulson and most of the right-wing political and financial establishments, is based on Milton Friedman’s thesis that the Fed aggravated the Depression by not pumping enough money into the financial system following the market crash of 1929.

It sounds libertarian enough. The misguided policies of the Fed, a government creature, and bad government regulation are held responsible for the crisis. The need to respond to this emergency and keep markets running overrides concerns about taxing and inflating the money supply. This is supposed to contrast with the left-wing Keynesian approach, whose solutions are strangely very similar despite a different view of the causes.

But there is another approach that doesn’t compromise with free-market principles and coherently explains why we constantly get into these bubble situations followed by a crash. It is centered on Marx’s Proposal # 5: government control of capital.

For decades, Austrian School economists have warned against the dire consequences of having a central banking system based on fiat money, money that is not grounded on any commodity like gold and can easily be manipulated. In addition to its obvious disadvantages (price inflation, debasement of the currency, etc.), easy credit and artificially low interest rates send wrong signals to investors and exacerbate business cycles.

Not only is the central bank constantly creating money out of thin air, but the fractional reserve system allows financial institutions to increase credit many times over. When money creation is sustained, a financial bubble begins to feed on itself, higher prices allowing the owners of inflated titles to spend and borrow more, leading to more credit creation and to even higher prices.

As prices get distorted, malinvestments, or investments that should not have been made under normal market conditions, accumulate. Despite this, financial institutions have an incentive to join this frenzy of irresponsible lending, or else they will lose market shares to competitors. With “liquidities” in overabundance, more and more risky decisions are made to increase yields and leveraging reaches dangerous levels.

During that mania phase, everybody seems to believe that the boom will go on. Only the Austrians warn that it cannot last forever, as Friedrich Hayek and Ludwig von Mises did before the 1929 crash, and as their followers have done for the past several years.

Now, what should be done when that pyramidal scheme starts crashing to the floor, because of a series of cascading failures or concern from the central bank that inflation is getting out of control? It’s obvious that credit will shrink, because everyone will want to get out of risky businesses, to call back loans and to put their money in safe places. Malinvestments have to be liquidated; prices have to come down to realistic levels; and resources stuck in unproductive uses have to be freed and moved to sectors that have real demand. Only then will capital again become available for productive investments.

Friedmanites, who have no conception of malinvestments and never raise any issue with the boom, also cannot understand why it inevitably leads to a crash. They only see the drying up of credit and blame the Fed for not injecting massive enough amounts of liquidities to prevent it.

But central banks and governments cannot transform unprofitable investments into profitable ones. They cannot force institutions to increase lending when they are so exposed. This is why calls for throwing more money at the problem are so totally misguided. Injections of liquidities started more than a year ago and have had no effect in preventing the situation from getting worse. Such measures can only delay the market correction and turn what should be a quick recession into a prolonged one.

Friedman – who, contrary to popular perception, was not a foe of monetary inflation, but simply wanted to keep it under better control in normal circumstances – was wrong about the Fed not intervening during the Depression. It tried repeatedly to inflate but credit still went down for various reasons. This is a key difference in interpretation between the Austrian and Chicago schools.

As Friedrich Hayek wrote in 1932, “Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion. … To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about…”

The confusion of Chicago school economics on monetary issues is so profound as to lead its adherents today to support the largest government grab of private capital in world history. By adding their voices to those on the left, these confused free-marketeers are not helping to “save capitalism”, but contributing to its destruction.

*Martin Masse is publisher of the libertarian webzine Le Québécois Libre and a former advisor to Industry minister Maxime Bernier

[Further recommended reading is here, scroll down, please.]

Updated: Prophet Paul & Good Guy Glenn (Beck)

Economy, Federal Reserve Bank, Inflation, Media, Ron Paul, Socialism

More TV traitors, who condemned and cussed Ron Paul, are calling on him to explain what he has been predicting vis-à-vis the consequences to markets of the government’s reckless squandering and its monetization of debts and deficits.

Glenn Beck is, naturally, no traitor, he’s a patriot—the only man on TV who gets it and is honestly grappling with the truth. Beck challenges the liars, and takes no nonsense from pols pretending to be good guys. He’s the only TV talker on whose show you’re likely to hear sentences and sentiments such as, “Where is that in the Constitution?”

Here is Beck’s latest interview with Paul, via New Liberty. The reality is BAD, but Paul is sounding better and better by the day. Transcripts are here.

Update (September 23): Sadly, Good Guy Glenn has joined the bad guys. He informed his devotees last night that, over the weekend, he had been beefing up on “editorials,” and had come to the conclusion that socializing whole industries was a necessary evil. Said Glenn:

“The $700 billion that you`re hearing about now is not only, I believe, necessary, it is also not nearly enough, and all of the weasels in Washington know it. … The bailout — I see this as just stopping the plane from falling out of the sky.”

Peter Schiff, President of Europaca, who is clearly libertarian (and Austrian on economics), tried to reason with Glenn:

“Now the problem is our pilot and our co-pilot, Bernanke and Paulson, don’t know how to fly. I mean, they’re blind. They’re drunk.
You know, they’re going to crash this plane even faster. You know, the bailout is actually going to make it worse because we don’t have the $2 trillion. We’re just going to print it up.
Instead of just the entire economy coming down, we’re going to take our currency and we’re going to have a much bigger crisis when our money isn’t worth anything and interest rates are double digits because nobody will lend us any more.”

AND:

“The government’s not going to save us. They did this to us. They’re the ones that created the greed by eliminating all the risks of mortgage lending in the first place. They say we have to do this, they say we have to go into Iraq because they had weapons of mass destruction. They were wrong. This plan is a weapon of mass destruction to destroy our economy and to destroy our currency.”

I say fire Treasury Secretary Hank Paulson, who, before joining the Byzantine bureaucracy, had a $40 million per-annum job on Wall Street. Hire Schiff.

More from wise man Schiff:

“The government is just borrowing and spending more money. They’re not letting the market fix the problem. And how are we going to get out of this mess with more government, with more inflation?
As bad as this collapse would be, this is going to make it worse. Doing something different would be shrinking government.”

But Glenn let the wise guys—the State’s stool pigeons—have the last word, which he then seconded.

Updated: Prophet Paul & Good Guy Glenn (Beck)

Federal Reserve Bank, Inflation, Media, Ron Paul, Socialism

More TV traitors, who condemned and cussed Ron Paul, are calling on him to explain what he has been predicting vis-à-vis the consequences to markets of the government’s reckless squandering and its monetization of debts and deficits.

Glenn Beck is, naturally, no traitor, he’s a patriot—the only man on TV who gets it and is honestly grappling with the truth. Beck challenges the liars, and takes no nonsense from pols pretending to be good guys. He’s the only TV talker on whose show you’re likely to hear sentences and sentiments such as, “Where is that in the Constitution?”

Here is Beck’s latest interview with Paul, via New Liberty. The reality is BAD, but Paul is sounding better and better by the day. Transcripts are here.

Update (September 23): Sadly, Good Guy Glenn has joined the bad guys. He informed his devotees last night that, over the weekend, he had been beefing up on “editorials,” and had come to the conclusion that socializing whole industries was a necessary evil. Said Glenn:

“The $700 billion that you`re hearing about now is not only, I believe, necessary, it is also not nearly enough, and all of the weasels in Washington know it. … The bailout — I see this as just stopping the plane from falling out of the sky.”

Peter Schiff, President of Europaca, who is clearly libertarian (and Austrian on economics), tried to reason with Glenn:

“Now the problem is our pilot and our co-pilot, Bernanke and Paulson, don’t know how to fly. I mean, they’re blind. They’re drunk.
You know, they’re going to crash this plane even faster. You know, the bailout is actually going to make it worse because we don’t have the $2 trillion. We’re just going to print it up.
Instead of just the entire economy coming down, we’re going to take our currency and we’re going to have a much bigger crisis when our money isn’t worth anything and interest rates are double digits because nobody will lend us any more.”

AND:

“The government’s not going to save us. They did this to us. They’re the ones that created the greed by eliminating all the risks of mortgage lending in the first place. They say we have to do this, they say we have to go into Iraq because they had weapons of mass destruction. They were wrong. This plan is a weapon of mass destruction to destroy our economy and to destroy our currency.”

I say fire Treasury Secretary Hank Paulson, who, before joining the Byzantine bureaucracy, had a $40 million per-annum job on Wall Street. Hire Schiff.

More from wise man Schiff:

“The government is just borrowing and spending more money. They’re not letting the market fix the problem. And how are we going to get out of this mess with more government, with more inflation?
As bad as this collapse would be, this is going to make it worse. Doing something different would be shrinking government.”

But Glenn let the wise guys—the State’s stool pigeons—have the last word, which he then seconded.

RIP, George Putnam

Celebrity, Conservatism, Ethics, Ilana On Radio & TV, Media

George Putnam, the “greatest voice in radio,” has died at the age of 94. Mr. Putnam’s was the greatest voice not only because of its sonorous quality, but because of how incisive, smart and principled the man behind the voice was.

“Former President Nixon, speaking on videotape during a 1984 roast of Putnam given by KTTV to celebrate his 50th anniversary in broadcasting, said of the outspoken newscaster: ‘Some people didn’t like what he said; some people liked what he said. But everybody listened to George Putnam. That is why he has been one of the most influential commentators of our times.'”

Read about Mr. Putnam’s inspiring life, and life’s work, here.

I was immensely privileged to have been a guest on Talk Back, George Putnam’s nationally syndicated show, on October 9 of 2007. I came away feeling I had been graced by a great American.

At the time I wrote the following: “Mr. Putnam is a national treasure, who should be on TV to remind Americans how incisive, sonorous and super smart some of their media mavens used to be. (Now none of them are.) I was also touched by Mr. Putnam’s graciousness about me and my work. This is a man whose counsel Nixon and Reagan sought, and who ‘has a star on the Hollywood Boulevard ‘Walk of Fame.’ Again, an honor.”

Our good friend Chuck Wilder has been doing a splendid job of hosting the syndicated show on CRN Digital Talk Radio. Chuck continues the tradition of reasoned, civil, politically incorrect debate. I wish wonderful Mr. Wilder continued success.