The Plague of the Witch Doctors
Nelson Hultberg
February 11, 2008
"Here we are yet again in the midst of another 'global economic
crisis'," says financial analyst, Nicholas Vardy, editor of The
Global Guru. Vardy is not reporting, but mocking. For he is one
of the establishment cheerleaders respected by Wall Street, and he
does not look kindly upon those considered to be bears in today's
world. There was a lot of castigation in his latest missive to us
in the hinterland (2/5/08). So what I wish to do in this essay is
investigate some of Vardy's derisive barbs and see how substantive
they really are. His comments are in italics; my answers follow in
regular font.
Before you liquidate your financial assets, buy gold bullion,
and move to a cave in Montana, you may wish to consider that current
predictions of global economic collapse may be simply hyperbole.
It has happened before.
Yes, hyperbole accompanies all economic crises in history, most
of which do not result in collapse. But the presence of hyperbole
does not negate the disastrous policies that create the potential
for a collapse. It is the policy sources of the potential collapse
that we must investigate here, not the tenor of the voices exclaiming
its coming.
Comparing economic statistics is inevitably a "glass is half
empty" versus "glass is half full" kind of game. Both Pollyannas
and Cassandras can marshal endless statistics to support their
version of events.
True both of us can marshal support statistics. But we both cannot
marshal credible historical, philosophical, economic and moral arguments
to support our case. When we incorporate history, philosophy, economics
and morality together, the Cassandras have the far better case. In
the following, I will present these kinds of arguments.
Good news came from the consumer sector (spending increased by
2%), business investment (jumping 7.5%), and exports (up 3.9%).
It was declines in residential investment (down 23.9%) and in inventory
investment that almost wiped out those gains. All of this indicates
that the economy stands less at the precipice of the next Great
Depression than at a cyclical purging of excesses.
Many of us in Bear Country don't insist that a Great Depression
is coming. In fact we insist that what is coming is NOT going to
be a depression as we have known such a phenomenon in the past. This
time, it will be different because our political and monetary authorities
have learned some things from their last escapade in economic humbuggery
during the 1930s. In fact Bernanke is a devout student of that period
and his Fed has acquired several new ways to shore up the Keynesian
system. So things will be extended this time. Not healed, or solved,
just extended. And in the process, exacerbated. We bears see Bernanke
and the Fed as nothing but gussied up monetary witch doctors with
an array of fiscal gimmickry (such as derivatives) and crypto agencies
(such as the WGFM), which they can draw upon to defend their paper
paradigm. But it is not a defense that can last. It is a defense
that, every time it is trotted out, loses a little of its impact.
Thus a day of reckoning is coming.
Actually we are experiencing the "day of reckoning" right now; have
been for the past seven years. The Great Depression this time is
going to be a long period of stagflation comprised of numerous severe
Dow plunges followed by WGFM-engineered dead cat bounces. The plunges,
however, will be deeper than the bounces can recoup, and thus the
Dow and the Dollar will greatly deteriorate over the next 10-15 years.
Our standard of living will erode as the authorities try to cover
it all up via Washington's rendition of Enron, the BLS.
Thus instead of a dramatic mega-crash like in 1929, economic conditions
will just relentlessly worsen for all Americans as Wall Street and
Washington convince a credulous citizenry that during the "dead cat
bounce" periods nominal growth is real growth, and that during the "severe
plunge" periods our misery is the necessary price we must pay to
bring about the ideal of One World Government. This will take place
because our political and monetary authorities do not possess the
courage to face the real problem that afflicts us -- massive debt
-- and then provide the appropriate remedy, liquidation. What's more,
due to many decades of collectivist brainwashing in the West, they
do not possess the desire either. They seek to further centralize
government control over our lives. And if systemic debt is overwhelming
us, then such turmoil can be exploited to panic the people into relinquishing
more and more of their freedom every year. Turmoil, misery, and debt
thus become tools for our government's Mad Hatters to smuggle us
into their Brave New World.
The current din of criticism against Bernanke is a lot like baseball
fans, screaming "throw the bum out" at the game or venting their
frustrations on post-game AM radio talk shows. But it's a lot easier
to criticize than to step up to home plate and swing the bat.
This is what investors will NOT be doing for a while -- stepping
up to the plate and taking lusty swings. In a recession, everyone
pulls in their horns and goes to the sidelines. This is the natural,
prudent, intelligent thing to do. Yet Vardy is trying to turn virtue
into vice and make it look like all "bears" are a bunch of armchair
quarterbacks with no stomach for playing on the field in the snow
and cold. Don't buy it. The place to be in a raging blizzard is safely
hunkered down inside a warm and well-stocked cave. Do we have a blizzard
coming? Can't say for sure, of course. But when the temperatures
are dropping to zero, and the winds are howling like the ghosts that
haunted Ebenezer Scrooge, it is best to head for the cave rather
than charge out to frolic in the night.
To assume that Fed policy is based on responses to such criticism
would be as absurd as for baseball star Alex Rodriguez to walk
over and hand his bat to an obnoxious, beer-swilling critic in
the bleachers of Yankee Stadium to take his place at home plate.
On the contrary, we don't think noisy responses from bear critics
are what drive the Fed at all. What drives the Fed is false Keynesian
economics, authoritarianism, hubris, and the desire to drive around
in black limousines. It's pretty much the same thing that has driven
all humans that have climbed the political and banking ladders for
the past 3,000 years. Anyone who has read a modicum of history knows
that the political elites and monetary elites have been conspiring
with each other for centuries. It goes back to the ancient money
changers playing up to the Kings of Judea, to the smelters of gold
and the Caesars of Rome meeting behind closed doors. Conniving power
lusters are common to the human race, and that is what we have in
abundance in Washington these days -- contemptible power lusters
who have thrown out all sanity and common sense to govern our Economy
as if it is the board game of Monopoly. Only in this case, the role
of the bank has been rigged to favor its Wall Street cronies with
lavish injections of "liquidity" every time they throw a bad number
on the dice.
The reality is that few of Bernanke's most vitriolic critics
were even smart enough to make it into an introductory economics
class taught by Bernanke at Princeton -- let alone to run the world's
most influential Central Bank.
How naïve! This is not a matter of "smartness." Bernanke's
intellect will not be able to protect against the coming downturn
if it is a full blown recession / stagflation period. This is a matter
of Natural Law manifesting. It is like a Great Northern blizzard,
and all the IQ in the world will be no better shield than a fish
net against the freezing snow. Smartness won't get Bernanke very
far at all. Nature does not take kindly to humans driven by hubris
instead of humility; and it is hubris that has driven Keynesians
for the past 70 years in America. This is retribution time for Nature,
while it is mea culpa time for Keynesians and their fellow travelers
among the neo-con establishment (Kudlow, Cramer, et al come to mind
regarding the latter).
Thankfully, airline pilots guiding a plane through rough turbulence
play to a less vociferous crowd.
This conveys the notion that Bernanke is a wise and benevolent operator
that has been honorably given the job of directing his fellow citizens
through economic blizzards and avalanches that are just "out there" and
not of his and his ideological comrades' doing. These heroic chaps
at the Fed are thus riding to the rescue of us know-nothings in the
hinterland, and flying us off to the safe havens of Big Brother's
wonderfully planned Great Society.
Not so. The economic hazards that Bernanke is now facing are not
just "out there." They are of his and his ideological mentors' own
doing. It is the Bernanke-Greenspan-Burns-Keynes mindset that has
created the Great Northern blizzard that Washington and its apologists
are now saying they are going to fly us through in their ideological
biplane. I say, "No thank you." I prefer Montana where they have
steel structured storm cellars dug deep into the ground so as to
ride out Great Northerns. They have loads of provisions and gold.
Guns too. They're no nonsense people out there. They have watched
the greed and stupidity of Washington / Wall Street types like Kudlow
and Cramer for over 35 years now. They see their hubris, their blindness
to the big picture, their lust for celebrity, their disingenuous
twisting of critics' complaints, their shallow understanding of ideology's
power, their ignorance of Natural Law, their imprudence regarding
the next generation, their gullibility regarding "liquidity" (e.g.,
if we call the counterfeiting of money by a fancy term, it will somehow
not be criminality), etc., etc.
Here's the reality....The Fed can't stop a downturn, but it can
help it be short and shallow. This is a complex, fast-changing
situation. Let's give the Fed and the U.S. government some credit
for acting swiftly and decisively.
The Fed is not a "swift and decisive captain at the helm of the
good ship Gibraltar." It is a mafia gang of ideological thugs who
have been handed a printing press that pours out green pieces of
paper because 70 years of sham economics in the school system have
bamboozled Americans into believing paper money is wealth if we call
it wealth. But as any economist knows, money itself is not wealth. If
money was actually wealth, then the government could just print up
a million dollars for everyone and wipe poverty off the face of the
earth. Money is just a substitute for wealth, a store of value for
it. True wealth is the goods and services that we have produced.
It can never be created with a printing press.
So are things really that bad?...The Fed has shown that it is
willing to act quickly to reverse course and hike interest rates
once it is clear that the economy is through this bout of weakness.
Yes, the Fed may be able to whipsaw us again into another bout of "boom
times," and then whipsaw us back to higher rates. That's the plan,
I'm sure. But I doubt it will work this time around. The mortgage
mess, the derivatives overload, the insidious termites of debt, the
plague of protracted foreign wars, the cerebral decadence and fraud
of our intellectual class all add up to the Lilliputians not just
tying Gulliver down, but poisoning him in the process to keep him
down for a long time. I would say the Fed is going to be whipsawing
us into a long bout of "stagflation" rather than "boom times." And
since the Fed will not want to assume responsibility for bringing
on such fiscal insanity, it will cover its connection to the bad
times with a lot of doubletalk and sophistry. The boys at the Fed
are good at sophistry to cover up the ideological criminality that
launched their cartel back in 1913 and which is the cause of this
long train of monetary debasement promoted as "new economics." Unfortunately
our establishment media are very bad at deciphering sophistry.
Here lies the real nature of the Keynesian economic paradigm. It
is a grandiose endeavor in SOPHISTRY and IDEOLOGICAL CRIMINALITY.
This, in a nutshell, is the economic history of the 20th century.
A band of collectivist ideologues (with the philosophical prescience
of John Law and the moral compass of a pack of wolves) hijacked Western
civilization. They have not guided our airplane bravely through the
treacherous storms of reality. They have created the treacherous
storms themselves. This is what human beings get when they attempt
to extract more from life than they are willing to put in.
The philosopher, Richard Weaver, wrote in 1948 in his great classic, Ideas
Have Consequences: "Are you ready, we must ask them, to grant
that the law of reward is inflexible and that one cannot, by cunning
or through complaints, obtain more than he puts in? Are you prepared
to see that comfort may be a seduction and that the fetish of material
prosperity will have to be pushed aside in favor of some sterner
ideal? ....These things will be very hard; they will call for deep
reformation."
That life is largely inscrutable is the conclusion wise readers
of history come to once they get past fifty and have rid themselves
of the callow ignorance of their youth. But thankfully despite this
mysterious aspect to life, there still are numerous and profound
realms of truth that are perceivable. One of these truths, which
so many of us have such difficulty remembering, is that all men and
women come into this world with a tendency to wickedness. It's what
the ancients in biblical days referred to as "original sin." Modern
intellectuals don't buy into biblical wisdom anymore, and as a consequence
are having a tough time explaining why their social institutions
are such grotesque and fraudulent affairs. Perhaps if they were presented
with the above biblical wisdom in the words of a modern philosopher,
it would sit better with them.
Richard Weaver referred to original sin in this way: "There is no
concept that I regard as expressing a deeper insight into the enigma
that is man. Original sin is a parabolical expression of the immemorial
tendency of man to do the wrong thing when he knows the right thing.
The fact of this tendency everyone should be able to testify to,
not only from his observation but also from his personal history."
This is what our politicians and media of the present day need so
desperately to rediscover about the human condition. Men and women
are born with a tendency to do wrong even though they know the right.
No one escapes this tendency. This is why Jefferson and Madison tried
to tie down our government with the chains of the Constitution. They
knew that men and women could never be angels. They would always
be naturally and relentlessly "self-serving," and if they were not
given a moral compass in their youth along with a Constitution in
their adult years, they would regress to their barbaric beginnings.
Is this not what we have wrought today? Is this not what our bevy
of Keynesians and fellow travelers are all about? Are they not merely
serving themselves with a lot of sophistry, a lot of "doing wrong
when they know what is right?"
After all, Kudlow, Cramer and friends certainly know that paper
money is not wealth. They know that cranking up the printing press
and "injecting liquidity" is not a genuine cure for what ails the
nation. But perhaps they have been able to con themselves into believing
that somehow Bernanke's dross can be gold if we call it gold. If
that's the case, then they and their comrades are indeed guilty of "doing
wrong when they know the right," for self-con is the first and greatest
sin. So it's either that Kudlow, Cramer and the establishment media
are embarrassingly stupid, or they are crudely sinful. My guess is
that it's the latter.
Not that this writer is any great shakes in the virtue department.
He is, like all humans, afflicted with many failings. But one of
his failings is not blindness when it comes to observing our financial
media prancing around Wall Street these days and our Washington mountebanks
wallowing in capitol graft.
The grafters and sophists have won over the modern world; that is
for sure. In the universities, in the corporations, in the legislative
halls, and in the courts, these despicable humans prevail. The clear
thinkers and freedom advocates are definitely outnumbered. We don't
have bevies of pulchritudinous babes to act as shills for us on the
big television networks. We don't have billion dollar advertising
budgets. We don't have connectivity to the Washington corridor. We
have only one thing going for us. We have the truth on our side.
But that, in the end, will be the determinant, for truth is the real
power infused so mysteriously and majestically into the universe.
Tyrants have never understood this throughout history, which is
why their lives are such ugly and ruinous affairs. The real glory
of life is to find the truth, muster the integrity to accept it,
and then summon the courage to fight for it. This is something about
which our establishment media haven't a clue. They are, no doubt,
sitting in their watering holes tonight fashionably sipping their
cocktails and wondering if the bears could possibly be right. But
they will quickly dismiss such apprehensions as childish boogeyman-under-the-bed
fears. They're not interested in truth as the glory and the meaning
of life. They're interested in celebrity as a means to strut in front
of the chattering classes.
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