Please don’t be offended by the graphic. I am just offering to lead you through a little bit of a jungle where even the self-proclaimed Tarzans are lost.
There are many others out there that insist you put your trust in them. They are dangerous in their hubris.
They are either economists or other putative experts on the economy and finance. Most are ignorant self-serving whores. Their education on the subject is basically bounded by the farcical works of Ayn Rand.
For 19 years Alan Greenspan headed the Federal Reserve. For more than that he was a close personal friend and collaborator of Ayn Rand. You may remember him being touted as the deity of economics and finance. Nineteen years is far from a normal tenure as head of the Fed. Our country, indeed, the world, needed this genius. Presidents reappointed him. He was what made America great.
There was something that nagged at me for a long time. All we ever heard from him was that the situation required the bank rate to be raised, lowered or maintained. All economic woes could be remedied or avoided by changing that one number. Let Wall Street’s greed make us all gazillionaires. He had it under control. It was oh, so simple then. That was the way we were.
What nagged at me began as a question. If it was all that simple, why was it a mark of genius to know and apply it? But, was it really that simple? If it wasn’t, Alan was not a genius, but a fool. No guessing. It’s just too easy.
To focus on one entity requires other entities to be outside of the area of focus. Were other factors unworthy of attention? Apparently.
Our entire economy is based on debt. Creating debt is the principle method for creating money, for creating wealth. That, at least, is what we have been led to believe and, in fact, has been the way our economy actually has been operated.
When one lends money there are, or should be, multiple factors to consider. How much? To what use is it to be put? What collateral backs the loan? What are the risks? These factors need to be considered to determine whether to make a loan and what the interest rate should be.
Alan looked primarily at the lower right-hand corner of his television screen when watching Faux News. Poor Alan thinks that Wall Street is the economy. If he wanted the economy to speed up he would lower the rate. If he wanted it to slow down he would increase the rate. Remember, he knew it was simple.
If Wall Street wanted more wealth it needed to create more loans. What if all the collateral was tied up in other loans? Simple. Reduce the required collateral and/or create derivatives. But those are risky. Don’t worry. Get rid of regulations – or ignore them. And what do you get? What we’ve got – a global economic crisis.
Those poor souls on Wall Street need to salvage the collapse of the fake wealth they had created for themselves. Woe is me. What can we do? Idea! Let’s get those whose jobs we destroyed or sent overseas to bail us out. They’ll buy anything.
So, it is more complex than manipulation of the interest rate. One less genius to sing the praises of.
Although these self-proclaimed Masters of the Universe are far from 3-digit IQs, they were so convinced of the correctness of their religious tenets that they convinced the public that they knew the secrets of wealth, success and how to manage the economy. Our ignorance and gullibility made our deceit and their self-deceit possible. It made us victims of their hubris and greed.
Is Alan Greenspan the only one who needs to be sentenced to hard labor for the rest of his days? No. Personally, I would provide him plenty of company: Tim Geithner, Hank Paulson, Robert Rubin, Phil Gramm, Larry Summers and too many more.
Every one of these people is wealthy. None of these people have ever enhanced our economy with the creation of real wealth. They give us paper and platitudes. We give them money we don’t have and can’t afford. These people caused harm and ruin on a global scale. Bernie Madoff was a piker compared to them.
Now you can loosen your grip. With an understanding of one aspect of economics and finance that the “experts” have yet to learn, you can take a few tentative steps on your own. You can enjoy a little exploration. You can begin to see what the world is really like.
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