Libera Voce

“There has now been created a world in which the success of others is a grievance, rather than an example.” Thomas Sowell

The word equity has traditionally referred to the amount of money the owner of an asset would be paid after selling it and any debts associated with the asset were paid off. An example is a mortgage that increases in equity for the home owner as the loan is paid off until eventually they’re fully vested. Politically it now means a guarantee of outcome; you can’t expect an equal outcome among people unless they’re the same in all respects. It is theoretically and empirically obvious that no two people are identical; it then follows that in order to guarantee an equality of outcome people must be controlled or you risk a variance in outcomes.

The sinister reality of equity in the political context is that it requires the malevolent manipulation of society to assure that no one exceeds the least common denominator; it is the antithesis of meritocracy wherein people are judged and rewarded based on performance. An example of this manipulation is the withholding of National Merit Scholarship notices by the Fairfax County school district, starting with the administrators of the Thomas Jefferson High School for Science and Technology, the top rated high school in the country, actually admitting to parents that they did this in order to avoid hurting the feelings of students that did not qualify. While the Virginia Attorney General is investigating this on the basis of a violation of civil rights, the harm was already done as it affected those students who qualified but could not include that in their college applications.

The genesis of equity begins with the misunderstanding of equality of opportunity; no two people, regardless of race, religion, sexual orientation or political association, can possibly have the same opportunities as anyone else because no two people are the same. Therefore, it’s empirically obvious that we should not expect an equal outcome among people unless each and every human being is the same in all respects. This equality of opportunity under the law is guaranteed by the 14^th Amendment, and repeated in the Civil Rights Act of 1964, which specifically forbids discrimination in employment. Under the law, opportunity does not mean the right to anything else, and certainly provides no equality of outcome.

It is this equity, this guarantee of outcome that is such a dangerous concept in a free society. As the great economist Friedrich Hayek explained, “From the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them differently. Equality before the law and material equality are therefore not only different but are in conflict with each other; and we can achieve either one or the other, but not both at the same time.”

What we actually have with this equity is a disdain of liberty because it does not yield an equality of outcome; except in regards to the law it can’t do so, which is the basis for the very concept of liberty to begin with. Of course there is the ultimate alternative to liberty known as slavery. That such evil ideas as equity originated among the university elite in society should not be a surprise, which led George Orwell to observe that “Some ideas are so stupid that only intellectuals believe them.”

“In a time of deceit telling the truth is a revolutionary act.” George Orwell

Daniel Ellsberg died yesterday, the man who committed one of the great revolutionary acts in American history that did more to expose the deceit of multiple administrations regarding the Viet Nam War with the Pentagon Papers than anyone else. His work was a direct link to what Bob Woodward and Carl Bernstein exposed later in the Watergate scandal. These guys were relentless pursuers of the truth regarding very sinister and destructive policies and practices. They all came under intense criticism and criminal charges for their efforts, which in the end did much to preserve the liberties and rule of law enshrined in our constitution.

What their work did is hold the government accountable for its actions by exposing the truth, and in politics, and now journalism, that is a revolutionary act. If someone is working to prevent people from hearing the truth, then that someone is likely not telling the truth. This is what Ellsberg discovered, both as a Marine in Viet Nam, and later a consultant to the government regarding that war. Ultimately Ellsberg was exonerated of all criminal charges basically because the judge found that the government had acted with egregious misconduct.

Unfortunately that is not the case with Julian Assange with Wikileaks on illegal activities in the Pentagon and Edward Snowden on illegal government surveillance. It’s apparent that both of these people are in prison or exile because they exposed the truth, and as Ron Paul so wittingly noted, “Truth is treason in the empire of lies.” Apparently the empire has never changed its evil ways as it continues to strike back against the exposure of the truth. Ellsberg was very vocal about his support for Assange and said “I’ve sort of been waiting for somebody to do this for forty years.” He was equally vocal against the Afghanistan and Iraq wars as another sad chapter in our government’s never ending false narrative to justify patently unconstitutional aggression, and equally so regarding the Ukrainian War that had no legitimate security benefit for the US but could lead to a nuclear confrontation with Russia.

However there is little to no criticism in the press regarding the revelation of government secrets about the Ukrainian War. This was not actually an intentional whistle blowing disclosure but an almost comical display of inept security regarding classified U.S. intelligence by IT support technician Airman Jack Teixeira on a social media gaming and chat group platform. The focus was all about how it happened, but curiously little about the content of yet another false government narrative. Why the silent press?  While the disclosed documents show that Ukraine will inevitably loose the war without direct NATO involvement as the loss of life in Ukraine is so drastic that at the current pace of slaughter there will soon not be enough able bodied Ukrainians alive to fight Russia much longer, a case of attrition leading to annihilation.

It’s apparent that Putin could care less as he’s banking on the simple fact that there are more Russians than Ukrainians, so attrition works for him. It’s also apparent that such a scenario makes inevitable either a direct confrontation among nuclear powers or an eventual Russian victory. Either way, as Mark Twain said, “The truth hurts but silence kills.” While President Biden uses the Ukrainian War as an opportunity for virtue signaling as the protector of democracy, he seems either ignorant or dismissive of the fact that we are supporting a Neo-Nazi regime.

Ukraine is hardly a democracy, nor is Zelensky a beacon of liberty. The Ukrainian oligarchs Ihor Kolomoisky and Mykola Zlochevsky are the main source of funds for the Neo-Nazi Azov Battalion, funded and directed Zelensky’s presidential campaign, and own the media conglomerate that made him famous. They also control Burisma, the source of funds that paid Hunter Biden. It’s almost cartoonish that Zelensky is being nominated for a Nobel Peace Prize while actually declaring all other political parties illegal but his own, controlling Ukraine’s media, and suggesting the use of nuclear weapons against Russia.  While it’s true that Putin is an aggressive dictatorial autocrat, Zelensky has shown himself more like him than not.

One of the cruel truths that Ellsberg exposed about the US policy in Viet Nam was that the Pentagon knew the reasons for the conflict that it fed Americans were lies, that the war could not be won, and that the people of Viet Nam, and Cambodia and Laos, were suffering as much under the regime we were supporting as were those in North Viet Nam. Yet we continued to send our youth to die for nothing, to the tune of about 58K. We can only hope that someone in the government will do for the Ukrainian War what Ellsberg did for the Viet Nam War.

“It is error only, and not truth, that shrinks from inquiry.” Thomas Paine

“On the road from the City of Skepticism, I had to pass through the Valley of Ambiguity.” Adam Smith

Some time ago a friend commented to me that Fox News was not a reliable or truthful source during a dinner discussion about news reporting in general.  What provoked such a comment was not clear as he also said he never listens to Fox, which made it confusing as to how he came to his conclusion. I had written off Fox as just another partisan rag like MSNBC and CNN with little journalistic merit. However, this ambiguity got me looking for clarity. I am a long time viewer of Bloomberg and occasionally CNBC’s “Squawk on the Street”. The former is heavy on statistics, but either ambiguous or overly quantitative on analyses, and the latter is given to bombastic pronouncements with little context. I needed a new outlook.

My friend’s statement about Fox in the context of not being a viewer, and my focus being on economics and finance, prompted me to give Fox Business a try. The likes of Stuart Varney in the morning and Charles Payne in the afternoon were a revelation. Varney’s byline is “When you’re talking about money, you had better be clear.” Charles Payne is equally direct about the purpose of business and investing is to make money. It was refreshing to hear intelligent and knowledgeable people cut through all the noise and speak with directness and clarity.

I still listen to Bloomberg, but they are less inclined to call out the US Treasury and Federal Reserve on their often contradictory and/or ambiguous policies that anyone with reading comprehension skills is left asking what was it that they were trying to tell us? It’s clear that many in the news are fumbling to connect the dots while those in “control” were lost, their economic GPS clearly offline. Varney and Payne call that out for exactly what that is, but they do not dwell in the “City of Skepticism” and quickly pass through the “Valley of Ambiguity”. Like Bloomberg, they both have the charts, graphs and guests interviews to provide a context for the subject at hand, but in the end provide a positive attitude and clarity as to where they stand on the issue.

Case in point was Fed Chair Jerome Powell’s press conference this past Wednesday; as expected, he announced a “pause” in rate hikes, but expressed the Fed’s commitment to reduce inflation to the long stated 2%, and so the likelihood of additional hikes to come, but all the while assuring maximum employment. Varney and Payne were clear about that being a contradiction in terms and policy. The “pause” is pure politics as the Fed has been under extreme pressure from both major political parties to ease up on the rate pedal and softly touch the rate brake, that delusion of a “soft landing”, a term that is at best difficult to define, but ambiguity is an occupational requirement in politics.

A discomforting reality contrary to popular belief is that the Fed had paused and then resumed rate hikes before, with disastrous results. This happened during the Carter administration under Fed Chairs Burns and then Miller, who was forced to resign in favor of Volcker, who resumed rate hikes to an all-time high of 20.5%. Volcker reduced inflation to about 3.4% from its historical high of 9.8%, but it caused a major recession where unemployment exceeded 10%; history does tend to repeat itself, so why do we think this time is different?

This ambiguity creates all sorts of problems; it’s well known that markets hate uncertainty and this press conference was a clear indication that the Federal Reserve is flying blind. This has caused confusion to the extent that short term rates are higher than long term rates, known as an inversion, and indicates the market’s lack of positive conviction for the future. Further, what Varney and Payne at Fox, and Mike McKee at Bloomberg have pointed out is the obvious contradiction between the Fed’s monetary policies and the administration’s fiscal policies; while the Fed’s focus is on reducing inflation, the administration’s spending mania mitigates the effect of higher rates. While the rate of rise in inflation has slowed, which Powell cited as a consideration for a pause, inflation is still with us, which he also cited as a consideration for future hikes. In the same press conference he admitted to a slowing economy, with 2023 GDP falling from the projected 2% to 1.3%, and perhaps even lower in 2024. That’s some soft landing. As the old saying goes, you’re only confused when you’re paying attention.

I don’t support mandated rate hikes in any event as no one, least of all governments, should dictate interest rates. The most important metric in economics is price, and like anything in economics money has a price; we call it interest, the very simple and clear definition of which is the time preference for money. There are so many things that go into people’s preferences for anything; in general when people have clarity as to what’s going on, coupled with a positive outlook for the future, they tend to forego immediate consumption in favor of investing in production for the long term. This is true of families and businesses.

However, when interest is manipulated as the Fed constantly does, the price is distorted, and along with it the perception as to what is going on and the prospects for the future. It is an axiom of ethics that evil hides in ambiguity, hence the need for clarity. We need more like Stuart and Charles to bring clarity to this situation, showing not only how the free market is being manipulated and why people then tend toward consumption versus production, but also to provide a positive approach in this age of ambiguity.

Also, thanks to my friend for inciting me to look where I did not expect to find clarity.  

“Why have a national debt ceiling if it doesn’t really put a ceiling on the national debt?” Thomas Sowell

Since the debt ceiling was created via the Second Liberty Bond Act of 1917, Congress has raised it about a hundred times. To better appreciate Sowell’s quote above consider the fact that in 1980 the federal debt stood at $908 billion, an increase of $537 billion since 1970; in 1990 the debt reached $3.2 trillion, in 2000 $5.6T, in 2010 $13.5T, and in 2020 $27.7T. The US national debt currently stands at $31.4T; compare that to the GDP of the US at $23.3T. In summary, the US is now at a point where its total economic output is about $8T less than its debt, and that is federal only, not counting state and local governments, corporate or private debt.

The rate of increase in the debt has not been linear; if graphed, which you can readily find online, it is exponential, such that by the end of this decade the interest alone on the national debt will exceed the total of federal tax revenues. While we hear much about the SSA trust fund going broke, just think about the fact that a virtual bankruptcy of the US Treasury looms even sooner. In this context, the spending cuts that the House is seeking, while long term insufficient to meaningfully address this debt crisis, is at least a hopeful start, but even with an eventual and inevitable deal being made the debt ceiling will still rise again.

The debt dilemma is not the creation of any one party, but both of our national political machines.  When Trump was given a brief on America’s growing debt crisis in 2017 and its impact on the future of the country, he callously responding that “Yeah, but I won’t be here.” Debt apparently is an addiction that transcends partisan principles, contradicting the belief that the GOP is more fiscally responsible than the Democrats; it’s only a question of degree, and it inevitably leads to the same outcome.

It’s not that politicians don’t recognize the problem; consider what Barack Obama said during the debt ceiling crisis in his administration that “There’s no doubt that we’re going to have to address the long-term quandary of a government that routinely and extravagantly spends more than it takes in. Without action, the accumulated weight of ever-increasing debt will hobble our economy, it will cloud our future, and it will saddle every child in America with an intolerable burden.” The problem and the consequences of ignoring it are well known, but little has been done about it.

So desperate is the current administration in its non-negotiable position that it entertains bypassing Congress all together with a dubious play on the 14^th Amendment. This post-Civil War amendment was enacted to assure equal protection under the law, but also included provisions to assure paying off the federal debt resulting from financing the Union’s war effort; invoking this as a way to bypass Article 1 of the Constitution, which reserves such powers to Congress alone, illustrates both the ignorance and cynical nature of our national politics.

While this debt ceiling crisis occurs during a time of so many other crises, all of which are self-inflicted, we should not be distracted from the root cause of the problem, which is the fraud at the heart of our contemporary financial system; it is the fraud of debt-based money, and the dire consequences that result if we refuse to change the way our money works. The US dollar is a fiat currency, meaning it is not commodity money so it has no intrinsic value; it has value only as long as people “trust” that it will be accepted by others as a unit of account and a medium of exchange. The moment that trust is questioned, such as in the case of a default, the US dollar’s value will fall drastically, even more than it already has. If we think that inflation has become entrenched now, imagine what it would be like with a default.

We always hear about some politicians justifying some draconian proposal as an issue of national security, when in fact it just another partisan power grab. Why don’t we hear more about the debt crisis as an issue of national security? How can the economic wellbeing of Americans be any less an issue of national security than TikTok, misinformation or Ukrainian Sovereignty? While the field of presidential candidates grows daily, who among them will make debt and budget reform a cornerstone of their platform? Many choose some culture war issue, or increased entitlements to harvest votes, but who has the courage to tell the American people that the debt party will end if they are elected, and that they will push for a balanced budget, and not the same old political game that will Rogers so wittingly described when he said “The budget is like a mythical bean bag. Congress votes mythical beans into it, then reaches in and tries to pull real ones out.”

“Going along with the rest and wanting to say ‘we’ were quite enough to make the greatest of all crimes possible.” Hannah Arendt

This post title is an excerpt from Hannah Arendt’s report for the New Yorker on the trial of Adolf Eichmann in Jerusalem in 1961. Her description of Eichmann as an ordinary man, “…terribly and terrifyingly normal…” struck many as odd considering his role as the chief director of the Holocaust. In her book “The Origins of Totalitarianism” she makes various observations that won her both acclaim and condemnation. Many found her conclusions about the evils of totalitarianism as deriving from both the presumed elite and the easily manipulated mob harsh, despite her astute observations as to how and why it occurs.

Arendt did not dwell much on the philosophical topic of moral responsibility; she was empirically inclined and focused instead on her observation of people who were not distinguished by any superior intelligence or sophistication in moral matters but “…dared to judge by themselves.”, thus deciding that conformity would leave them unable to “…live with themselves.” Sometimes even choosing to die rather than become complicit in evil, such ordinary people create “The dividing line between those who want to think and therefore have to judge by themselves, and those who do not; this strikes across all social and cultural or educational differences.”

What is not emphasized by Arendt is from where such evils as she wrote about arise. That is not a criticism as that was not the object or purpose of either her report about Eichmann’s trial or her book; it was already a question she understood answered by others, like Augustine, Aquinas, Aristotle, etc. who had concluded from empirical perspectives that evil arises from envy. It was Locke who defined that for humans a virtuous state of nature is devoid of such things as elitism, envy, or coercion; further, for a society to be considered to be in a virtuous state of nature it must embrace a polity that protects individuals against such things.

Arendt’s view of evil as a banality is quite insightful and unique, devoid of any fantastical concept as some kind of Marvel Comics’ evil superpower character. What it takes for someone to unwittingly embrace evil is simply not to think, just to accept and conform to whatever those in power, the elite or the mob say to do, that mindless desire to be part of the “we” and not be one of those that “…dared to judge by themselves.” This phenomenon seems to persist despite the resulting horrors like the Holocaust; it does not always result in such horrific extremes, but usually starts off with those seeking power to manipulate the mob to focus on someone to blame for whatever the crisis of the day happens to be, real or imagined.

What needs to be created is a sense of envy in order to create blame. Those who have this insatiable thirst for power usually rely on the pretense of providing some form of social justice, the ultimate anti-concept as Thomas Sowell so eloquently put it when he said “I never cease to be amazed at how often people throw around the lofty phrase ‘social justice’ without the slightest effort to define it. It cannot be defined because it is an attitude masquerading as a principle.”

This attitude creates all sorts of societal distortions as envy is a feeling of discontent and resentment of someone else’s possessions, qualities, or simply luck; this is exactly what the power monger wants to arouse, an irrational desire for that which belongs to someone else without the necessity to earn it. The target of the envy created is often a minority, like the Jews in Europe, the ethnic Chinese in SE Asia, prosperous African Americans, Armenians in Turkey, and now successful Asian and Hispanic Americans, or anyone who has achieved success or fortunate enough to benefit from their family that has. Again, Thomas Sowell has succinctly identified this trend when he observed that “There has now been created a world in which the success of others is a grievance, rather than an example.”

Consider the Seven Deadly Sins, which are pride, greed, wrath, envy, lust, gluttony and sloth; while the news is filled with stories about people who became overwhelmed with most of these sins, envy seems to go unnoticed while it in fact has become a virtue under its disguise as social justice. It’s alarming that much of the public buys into those narratives that seemingly on a daily basis promotes some new example of oppression by anyone deemed “privileged” in some way; it’s that “Going along…” that Arendt speaks to, the desire to be part of the “we” and to avoid being different for fear that you will be condemned as extremists, racists, homophobes, or whatever is the derogatory label of the day.

This lock step trend is supported by a supplicating media and defunct academia, suffocating any real civil discourse. While such behavior is trite, boorish and just plain “banal”, it is exactly what Arendt meant for people to understand; this attitude of envy that morphs into a social and political movement becomes the origin of totalitarianism. One of the consistent and perhaps most dangerous elements of such movements are the attacks and suppressions of free speech. We must never be afraid to speak out against such things because we modestly think of ourselves as just ordinary people, but remember that even ordinary people need to understand what George Orwell meant when he said “Even if you are a minority of one it does not make you wrong.”

“Journalism is printing what someone else does not want printed. Everything else is public relations.” George Orwell

The recent disclosure of classified documents by U.S. Air National Guardsman Jack Teixeira was only part of the real scoop; he had been doing so since February of 2022, yet it took more than a year for the intelligence community to realize it.  While the NY Times and Washington Post made much of the fact that it was they who discovered who was doing it, few focused on the content until afterward, as if the real story was just about the security failures; the majority of the documents were mostly about the war in Ukraine, exposing facts, analyses and evaluations that were contrary to what the administration and the media had been telling the American people.

This is not new stuff as we have the ongoing case of Julian Assange, founder of Wikileaks, who in 2010 published a series of leaks provided by US Army intelligence analyst Chelsea Manning, which included the infamous April 2010 “Collateral Murder” video of US soldiers fatally shooting civilians and journalists from a helicopter in Iraq. Assange remains at Belmarsh Prison, UK pending extradition to the US; the charges basically are for exposing war crimes.

Then we have the case of Eric Snowden who in 2013 exposed a global surveillance program by the NSA, of not just criminals and terrorists, but also American citizens and US allies; he’s a guest of Russia who has given him asylum. Despite the fact that a US appeals court has found the NSA program unlawful, it continues, even though the US says it’s ineffective. The news has focused more on Snowden, and his whereabouts, than the unconstitutional government-run surveillance program of its own citizens.

The question arises as to why, unlike journalists of the past, do we have the legacy media so complacent, if not alarmingly accommodative to the corruption and deceit of the political class. The prosecution, if indeed the persecution, of whistleblowers exposing the misrepresentations and outright lies about the illegal actions by our government should be the real scoop, headline news blasting such misdeeds as we had back in the 1970s. 

Most relevant are the Pentagon Papers, leaked by intelligence analyst Daniel Ellsberg to the press in 1971 that exposed US actions in not only North Vietnam but also Cambodia and Laos, an expansion of a “war” that was never even declared, constitutionally illegal regardless of the Congressional abdication of its responsibilities; none of this had been reported by the American media prior to this. Subsequently this revelation ignited a journalistic tsunami that eventually led to the Watergate investigations.

Journalists Bod Woodward and Carl Bernstein of the Washington Post began an investigation of the 1972 break-in of the Democratic National Committee offices at Watergate in Washington, D.C., eventually exposing the involvement of President Nixon and leading to his resignation. Fittingly, the focus was on the documents found that exposed the criminal actions and who was ultimately responsible.

These are great examples of how a free, objective and insightful press serves the best interests of the American people, an essential element of liberty; the complacency and accommodation by our current legacy media does nothing of the kind. The old newspaperman’s hound dog persistence to get the real scoop has been replaced with advocacy journalism, which is nothing more than the very absence of getting the facts in print should those facts not support a preferred narrative.

Now back to Jack Teixeira, an IT geek who is no Daniel Ellsberg, but whether wittingly or not exposed facts about a war that is illegal, misrepresented by our government, and likely will result in a similar outcome, if not worse. Ellsberg had conducted intense research into US activities in Indochina from 1940 to 1968, the conclusion of which was detailed analyses and evaluations that the war was illegal, a waste of both capital and human resources, unwinnable, and therefore detrimental to the interest of the America people.

While Ellsberg was indicted under the Espionage Act of 1917, all charges were eventually dismissed given the evidence of gross governmental misconduct. Hopefully similar justice awaits Jack Teixeira and the American people with an end to the US proxy war in Ukraine, which has nothing to do with defending democracy, and everything to do with corruption and yet more deceit by our government, with whom, as Ron Paul so succinctly observed, “Truth is treason in the empire of lies.”

“We have now sunk to a depth at which restatement of the obvious is the first duty of intelligent men.” George Orwell

This is a follow-up to my 03.17.23 post, “Deception”. For those that didn’t see the deception it spoke to for what it was, they are welcome to their illusions. I find that disturbing if that’s what they’ve done as seeking refuge in illusions is a denial of reality, a forfeiture of your existence as a sentient human being, the consequences of which exposes you to deceptions; alternatively, let’s look again at the facts.

The simple fact about the SVB and Signature Bank bailout is that it’s a fraud presented as a virtue. It is a fact that the FDIC, with support from the Fed and the UST, openly and admittedly made good on all of the debts of banks so grossly mismanaged as to be a case of financial criminal negligence. Unless we call it for what it is, we don’t have the right to complain about the consequences; as Orwell stated above, not to do so makes us delinquent in our duty as intelligent people.

The excuse for such behavior on the part of those that are supposed to be the guardians of our economic wellbeing was to avoid “contagion”; another instance of deception by misrepresenting a simple case of fraudulent behavior in order to create an illusion of a crisis. The SVB was a club for rich techies to play games with other people’s money, and paying political contributions for getting-out-of-jail-free cards. Months before the collapse there were red flag warnings that this bank was headed for disaster, yet nothing was done. Then it tanks and in comes all the usual suspects to not only provide FDIC insurances, but helicopter money rescue for all. We are told not to worry, it’s all covered, no pain for the American taxpayer – but the facts tell us otherwise.

Then we get the contradictory assurances that there’s no need for concern as the banking system is stronger than ever as banks are highly capitalized against the kind of failures we saw in 2008.  If that were the case then it contradicts the narrative supporting bailouts to prevent contagion. Having such contradictory explanations about what was done has created confusion and speculation, causing many to put their hard earned money in money markets, CDs, or just plain and ready cash. The result is just what either of the government’s explanations was meant to avoid since what we need for growth is investment in order for businesses to expand.

In order for the FDIC to guarantee up to $250,000 of depositors’ money, it maintains a cash reserve called the Deposit Insurance Fund (DIF), and all banks are obligated to pay an insurance premium based on the FDIC’s assessments into that fund. As was the case with the 2008 Financial Crisis, and again with SVB and Signature Bank, the FDIC guaranteed all deposits. There was not then, and there was not now any legislative process for this, a blatant unconstitutional act as only Congress has the legal power for such actions. In order to replenish the DIF, the FDIC will issue a “special assessment”; while what this will amount to remains to be determined, as with the 2008 bailouts the result will be a per-share hit to earnings for shareholders and increased bank fees for customers.

Like inflation, such corporate welfare is not for the benefit of the American people, but a poorly disguised illusion to benefit those that support the current power brokers; payback is our burden to carry for their benefit.

“If the facts say otherwise, then the facts must be altered.” George Orwell

There’s a word going around, used so incessantly against anyone who disagrees with the progressive ideology and said so mind numbingly often that we tend to dismiss it as just more political mudslinging; such use of the word fascism underlies an important fallacy, one that exposes it as nothing more than a distortion of facts. In order to understand what this word means, where it came from, its political genesis, and who its supporters actually are, we need to put aside the political spectrum defining right and left wing politics, which is at best misleading.

If you walk into a current college classroom for the study of political science and ask the simple question as to who was the founder of fascism, there would be few if any students or professors who would say the name Giovanni Gentile, historically credited as the “Philosopher of Fascism.” Most would say Benito Mussolini, some maybe Francisco Franco or Adolph Hitler, but they would be wrong. The word itself was not coined by Gentile; it’s the anglicization of the Latin word fasces, a tied bundle of rods with a protruding ax, the ancient Roman symbol of state power. It also became the symbol of the Partito Nazionale Fascista, Mussolini’s party, and that put the word fascism into the lexicon of political science.

Gentile, together with his mentor Karl Marx, were two of the world’s most influential philosophers in the early twentieth century; he believed in “true democracy”, i.e. the subordination of the individual to the state. It was however Karl Marx who first observed that “Democracy is the road to socialism.” Gentile was a committed socialist as fascism, like communism, is socialism. Common to both these ideologies is a strong emphasis on national identity. While Gentile has faded into historical obscurity of late, we all remember Benito Mussolini, the fascist dictator of Italy; in his day, he was considered Gentile’s ultimate disciple, who wrote the doctrinal of early fascism, “Dottrina del Fascismo”, in which he stated that “All is in the state and nothing human exists or has value outside the state.” We don’t talk in such blatant terms today but with rhetorical bromides like “We’re all in this together!”

There is one methodological difference between Gentile’s and Marx’s versions of socialism, and it’s economic. Marx was forthright against free markets, advocating for the state as a substitute. Gentile, and his disciple Mussolini, were more manipulative, promoting a corporatist economic system consisting of syndicates of labor and management, collectively with the state to set economic policy; as Mussolini stated, “Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.”

So much in high esteem was Mussolini held in his heyday that other nations sent delegations to Italy to observe and study his methods and accomplishments. Which brings us to the title of this post, and some inconvenient historical facts that progressives distort, willfully ignore or are ignorantly unaware; one of those admiring national leaders was FDR, who sent his close advisor Rexford Tugwell to Italy; upon his return, he reported that “Fascism is the cleanest, neatest, most efficiently operating piece of social machinery I’ve ever seen. It makes me envious.”

FDR was even more effusive in his admiration for this dictator, telling journalists that “I don’t mind telling you that I am keeping a fairly close touch with that admirable Italian gentleman.” Again, writing to his Italian ambassador that “There seems no question he is really interested in what we are doing and I am much interested and deeply impressed by what he has accomplished and by his evidenced honest purpose in restoring Italy.” This is not an appropriate position for an American president to take about a fascist thug; true, he became Italy’s dictator in a plebiscite, but a despot nonetheless.

The infamous National Industrial Recovery Act (NRA), known as the Blue Eagle Campaign, was modeled on Italian fascism; it created and enforced an alliance of industries, which were required to write “codes of fair competition” that effectively fixed prices and wages, established production quotas, and imposed restrictions on entry of other companies into the alliances. The NIRA was overseen by the Industrial Advisory Board, answerable only to FDR. General Hugh Johnson, an avowed admirer of fascism, ran the NIRA; his guide book was “The Structure of the Corporate State,” written by one of Mussolini’s aides. While the NIRA was at that time almost universally recognized as a fascist project, there was a purposeful great effort for disassociation following WWII; after all, how embarrassing would it be to have the patron saint of liberal democracy associated with the evils we had just defeated?

Americans need to understand their history or be subordinated by the ignorance of it; the US came dangerously close to fascism under FDR, yet most don’t realize the clear and present danger he represented. He is worshiped to this day as a great president with an unprecedented four term plebiscite; however, like today we should also understand the times he ruled in when 15,000 to 20,000 people came out to honor and mourn the deaths of the notorious killers Bonnie Parker and Clyde Barrow. As George Orwell observed, “The most effective way to destroy people is to deny and obliterate their own understanding of their history.” 

So before progressives hurl this derogatory slur at those that stand by the US Constitution and its Bill of Rights as fascists, they need to understand what that word actually means, and to remember that Franklin Delano Roosevelt was the closest thing we have had to date as a fascist leader. Further, that their support for obvious socialist policies as our current administration represents are in the tradition of Gentile and Marx. It is curious that Marx, who was Gentile’s mentor, failed to understand what his disciple and Hayek did, and that is “Fascism is the stage reached after communism has proved an illusion.”

“With a gun a man can rob a bank; with a bank a man can rob the world.” Carter Glass

Admittedly, this post’s title is a pun, but not meant to be so much humor as exasperation. I wrote a post on 09/25/20 titled “Remember Hyde?” for how this cabal of manipulation was created. Given the horrors of QE in the 2008 Financial Crisis, I could not imagine how much more damage this insidious institution could inflict on the American people, and I have been told that I have a very active imagination, but obviously not active enough.

As to the quote, funny how the man who co-sponsored the Federal Reserve Act, and served as both Secretary of the Treasury and Chairman of the Federal Reserve Board could say something so prescient.  But life is funny, unless you’re on the receiving end of the joke.  For today, I’m still muddling through the confusion created by Jerome Powell in his press conference regarding yet another rate hike.

I almost felt sorry for the poor schlub, caught between inflation and credit crises, but not quite; he played the old QE game that created these problems, the consequences of which were apparent to anyone who took basic economics, and predictable based on historical records. The problem is that in the musical chairs of that game, he’s left standing alone. Yes, there is Janet Yellen, but she’s a useful as a rubber crutch, so it’s poor Jerome on his own, literally. When asked why the administration promotes fiscal policies so antithetical to the Fed’s monetary fight against inflation, he basically said he had to deal with whatever arrived at his door; translation, no comment.

On one hand you can’t fault Powell for saying so as he’s not the President or Congress, but then there’s the Fed’s decision to bailout the likes of SVB with loans and assumption of debts, the very essence of QE, which is also antithetical to the Fed’s monetary fight against inflation. The message is that the Fed has no policy; in essence, its “Forward Guidance” is reactions to headline news, so tune in tomorrow. The reality is that the Fed is stuck in the quicksand of economic planning, an impossibility that statist never understand. No matter what you plan, based on whatever your theory is, the infinite number of individual choices people make, called the market, will ultimately prevail; when you attempt to dictate against that, bad things happen, and we have that in the real world now.

The market’s reaction to this was predictable; there was so much uncertainty created in the confusion of that press conference that the market tanked. Contrary to the norm that when stocks go down, bond yields go up, that didn’t happen. Further, the financial sector got hit hard as banks have a huge amount of unrealized losses given their bond holdings, not to mention that many “Zombie” corporations have loans due they may not be able to meet. So will someone please explain why Yellen keeps telling us that it’s different this time, and not the same as 2008? True the details are different, but like a soap opera, the script is the same.

As Powell was pummeled with questions about the future of rate hikes, he kept singing the 2% mantra, but refused to project when that could happen. We keep hearing about the “terminal rate”, meaning the rate at which no more hikes are required because inflation is done; that’s not likely to happen soon with inflation per the CPI still at 6%, but is it actually higher? Up until 2002 the BLS used a ten year data base to calculate the CPI, but that year it adjusted the index to a two year average as the Bush administration attempted to change the public’s perception of the economy by adjusting the calculation for inflation for a lower CPI. Since that appeared to work for Bush, why not Biden, so last year the BLS again changed its CPI calculation based on the single year of 2021; as is all too common with politics, if you don’t like the result, redefine it.

What is so meaningful anyway for inflation at 2%? It’s like “Death by a Thousand Cuts”; no single one is fatal, but taken together you get death. I remember a funny line by Jay Leno who said “I was reading in the paper today that Congress wants to replace the dollar bill with a coin. They’ve already done it. It’s called a nickel.” Pretty accurate actually; since the Federal Reserve Act of 1913 the US Dollar has lost about 95% of its value, a slow death indeed.  Another word that has crept into the lexicon of Fed Speak is “sticky inflation”, meaning that American’s perceptions of prices are responsible for persistent inflation; so if we just changed our attitude toward ticket shock the price would get lower? 

There are signs that more and more Americans are beginning to understand that the Wall Street slogan “You can’t fight the Fed!” is a dangerous submission to the ultimate manipulation of a nation’s economic health. Consider that all US currency denominations state at the top “Federal Reserve Note”; a note is a debt security obligating repayment of a loan, at a predetermined interest rate. Now imagine if you go to the Fed and attempt to redeem that note, what do you think you’ll get? Well since it’s not commodity money, all you’ll get is the good faith and trust of the US government; try taking that to the “bank” and see where you’ll get.  

Then consider that the Fed, like many of the banks under its supervision, have a huge amount of unrealized losses given its bond holdings, mortgage backed securities and what it disingenuously called “Deferred Payments” for what it owes the US Treasury now. In common sense language, when your assets are less than your liabilities, you are bankrupt; what will the new word wizards come up with to explain how the “lender of last resort” has nothing left to lend? Oh, my apologies, I forgot they have the printing press, exactly what got us into this mess to begin with. As Ron Paul once said of the Fed years ago, “The Federal Reserve system is nothing more than legalized counterfeit.”

“Tricks and treachery are the practice of fools that don’t have brains enough to be honest.” Benjamin Franklin

You have to love Benjamin Franklin who said so much with so few words. Here we have the best explanations not only for the recent bank failures, but those who rush in to save the day; not only were we initially told what later proved to be at best inaccurate, but then that there was nothing to worry about and further that the cure would not be at the tax payers expense. We’ve seen this movie before, as the saying goes, as most of us are still around who witnessed the “Financial Crisis”, so why the obvious deceptions?

We should start with the facts. SVB’s and Signature’s problems had nothing to do with crypto currencies any more than FTX’s problem, which was a Ponzi Scheme; such reports in the legacy media are at best deflections. These two banks were both very poorly managed; they bought assets such as USTs and MBSs when both had marginal yields and/or very low ratings, which comprised the majority of their assets. Now, with ever rising interest rates, these assets depreciated so much that even when sold, which was at considerable discounts, they failed to provide sufficient capital to meet the demand of depositors seeking higher yields or withdrawal of their money. What you had was a good old fashion bank run, something we were told back in 2010 the Dodd Frank Law was meant to avoid.

What we need to appreciate here is that the dilemma that these banks got into was created by the very government that came to save the day; both the Federal Reserve and the Federal Government has, through egregious print and spend policies, created high inflation, which in turn caused the need for ever higher interest rates. Further, that 2010 Dodd Frank Law, which required banks to meet high standards through what was called “stress tests”, was amended in 2018 with large bi-partisan support, lowering the standards for “medium and small” size banks in order to encourage lending.

On top of this, much of the lending by these banks was to high risk start-ups and “zombie” companies, adding to the risks already exposed by fractional banking levels greater than what was even now allowed, clearly a failure of both regulatory and supervisory practices and procedures. In fact, Gregory W. Becker, the CEO of SVB until the collapse, is a director of the Federal Reserve Bank of San Francisco, a clear conflict of interest. While it’s true that Barney Frank is on Signature Bank’s Board, he was not in public office at the time; however, it’s curious that in a recent interview he claims that the 2018 amendments to the law that bears his name had nothing to do with Signature’s collapse.

It remains to be seen if these bank failures, and the destabilization of some other “medium and small” banks, mostly regional but still important, creates a “contagion” similar to the 2008 Financial Crisis; we have been told that’s pure speculation and unlikely because this time it’s different. While it’s true that the circumstances differ as the 2008 crisis devolved from a bust in the speculative residential mortgage market as house values tanked below mortgage debt, creating a huge number of defaults, the results are basically the same, i.e. banks owned assets worth less than their liabilities. What we got was a huge bailout program by the Federal Reserve and Federal Government and the birth of “QE” as interest rates were cut to nearly nothing, and the Fed took on huge depreciated assets on their balance sheet, a practice that technically made the Fed insolvent.

Now with SVB we have the government paying higher than the FDIC $250K deposit insurance; we have to call it like it is as we have again another case of bailouts and corporate welfare at the taxpayer’s expense; for us to be told otherwise is insult on injury, which creates such a smoke and mirrors environment that we are left with the inevitable conclusion that such a deflection has become deception. Adding to that, we also have the case of First Republic Bank, a regional based in San Francisco providing wealth management for the rich. Following SVB’s demise those wealthy clients with deposits in excess of the FDIC’s insured limits headed for the exits. Under Fed direction a consortium of major banks lent $30B to address FRB’s distress; despite that, its shares continue to fall.

Pardon my skepticism, but isn’t this like a doctor spreading a disease among his patients as a remedy for one patient’s affliction? What happens to the lending banks should First Republic collapse despite the infusion of so much money? What we get from the administration is a blame for its predecessor as it was they who amended the Dodd Frank Law. What’s forgotten is that the amendment was a bipartisan action; as George Carlin famously said, “Bipartisan usually means that a larger-than-usual deception is being carried out.” What we need now is not blaming the past, but addressing the present to insure the future.

For Joe Biden to hold a press conference where he attempts to assure us that all’s well, that there’s nothing to worry about, and that the bailouts will not be at the tax payer’s expense, is a deception only the delusional would attempt. Add to this that both SVB and Signature made considerable donations for Biden’s election campaign and you have the makings of a deflection morphing as it usually does into a deception. That was only made worse by his turning his back on the press conference as he left it, refusing to answer any questions. Perhaps it’s true that there’s nothing more deceptive than the obvious.