[…] in 2008-2009 Bernanke did nearly let “it” happen again — a banking collapse, a depression, deflation — by bringing the U.S. financial system to its knees by roughly the same Fed policy adopted in the 1930s, followed by his blizzard of paper-money printing that has caused a dollar debasement unprecedented in U.S. history. The result has been a huge destruction of wealth, spreading fiscal chaos and stagflation as far as the eye can see.
How did Bernanke create this horrible morass? First, in 2006-2007 he deliberately inverted the Treasury yield curve, even while knowing it would cause a recession and credit-financial crisis. Second, he imposed on the reeling economy a $1.7 trillion flood of “quantitative easing” (QE), euphemistic for the hazardous policy of money-printing. His first policy caused economic stagnation, his second policy caused monetary inflation, and combined, his policies have generated “stagflation” — the corrosive mix last seen in the 1970s. It’s the direct opposite of the supply-side polices (pro-growth, sound-money) that made the 1980s and 1990s so prosperous.
How can we hold Bernanke accountable for this widespread mess? Consider first the economic stagnation. By training, Bernanke knew full well (and still knows) that an inverted Treasury yield curve — wherein the Fed deliberately keeps short-term interest rates above longer-term Treasury bond yields — invariably causes recessions and crises in the modern (fiat paper money) era.
He knows that an inverted yield curve severely and nearly instantly renders unprofitable most financial intermediation, which is the process of “borrowing short to lend long.” The normal case is for short-term borrowing yields to trade below long-term investment yields (an upward-sloped yield curve), which is profitable for credit intermediaries, given the positive yield margin. In contrast, the rarer case is for short-term rates to trade above long-term rates (an “inverted,” or downward-sloped yield curve), which is far less profitable or an outright loser for lenders, due to the negative yield margin.
Writes John Allison in Unshackle The Job Creators – Investors.com:
[…] As a longtime banking CEO, I know first-hand and with certainty how jobs are created — and it’s not by government bureaucrats waving magic wands. Jobs are created by private businesses, from the large multinational corporation down to the sole proprietor who mows grass and spreads mulch.
[…] In today’s economy, entrepreneurs and business leaders are eager to ramp up production, launch new products, open new branches and create new jobs. But what’s standing in the way of translating that eagerness into paychecks? Government policies that undermine the rule of law, create destructive boom-and-bust cycles, and generate massive deficits.
Under the rule of law, the legal system specifically defines unlawful behavior and gives fair warning of the punishment for wrongdoing. Instead, we suffer under the rule of regulators.
Every year, Congress and state legislatures concoct new schemes to clamp down on business freedom. Using real wrongdoers as a pretext, they declare the entire business world guilty without a trial and pass a sentence of perpetual supervision by an army of bureaucrats who halt progress until they get around to doling out licenses, permits, inspections and new rules.
The result is that businessmen live in perpetual fear of government reprisals.
The all new capitalism forum is up!
The amazing, John Allison, who as chairman and CEO made BB&T Corporation the 10th largest financial institution headquartered in the United States, attributes the success of BB&T to the concept of Principled Leadership, based on an uncompromising commitment to fundamental values. In this talk, he explains how Ayn Rand’s ethical system can be used practically to create a competitive advantage in any organization.
Part I: Lecture
Part II: Q&A
Freedom and School Choice in American Education has just been released. In the book, leading intellectual figures in the school reform movement, all of them favoring approaches centered around the value of competition and choice, outline different visions for the goal of choice-oriented educational reform and the best means for achieving it. This volume takes the reader inside the movement to empower parents with choice, airing the more interesting debates that the reformers have with one another over the direction and strategy of their movement.
Features an important and somewhat controversial essay by C. Bradley Thompson on “Do Children Have a Right to an Education?”
Writes C. Bradley Thompson: “In 1958 Mike Wallace interviewed the Marxist social theorist, Erich Fromm (author of “The Sane Society”). If you want to understand the philosophy behind the New Left and the world in which we live today, I recommend that you watch it. […] Watching the Fromm interview helps us to understand why the Dustin Hoffman film, The Graduate, was such a hit in 1967. The culture had been prepared by Fromm, Marcuse, et. al. The famous line uttered by Mr. McGuire to Benjamin is straight out of Fromm: ‘I just want to say one word to you. Just one word. . . Are you listening? . . . Plastics.’ “
House Budget Committee Chairman Paul Ryan’s budget has come under severe attack for daring to curtail some elements of the entitlement state. Although we are certainly not defenders of the plan’s details — it doesn’t even cut spending — what’s striking is how easily its supporters have been put on the moral defensive, and to how devastating an effect. In a column typical of the attacks on the Ryan budget, New York Times columnist Paul Krugman called the plan “cruel,” “heartless” and “mean-spirited.” Ryan “has talked a good game about taking care of those in need,” but that can’t be reconciled with cutting the welfare state.
It was nothing new: Every attempt to cut entitlements has been denounced as unethical and immoral. But this time there was a new twist. The real motive behind the plan, critics say, is a philosophic opposition to entitlements — an opposition fueled by the ideas of the controversial philosopher Ayn Rand.
Rand of course was both an uncompromising critic of the entitlement state and a preeminent champion of laissez-faire. But whatever influence Rand might have had on Ryan’s goal — he credits her with inspiring him to go into politics — one thing is for sure: Her arguments have been conspicuously absent in the budget debate. Frankly, that’s like going to war without a weapon. Rand’s ideas are indispensable in the struggle to limit government: they provide the key to answering the moral argument for the entitlement state.
Writes resident philosopher at the Ayn Rand Institute, Onkar Ghate, in “Does America Need Ayn Rand or Jesus?” over at Fox News:
What worries advocates of the welfare state is that they have never before faced any moral opposition. […] But now its advocates sense that this is no longer true, that some Americans are beginning to question the moral legitimacy of the welfare state. To strangle this questioning in the crib, supporters of government controls are trying to persuade their opponents to abandon Rand.
The current tactic is to tell Tea Partiers and “conservatives” that if you take religion seriously, you can’t be a fan of the atheist Ayn Rand. The American Values Network (AVN) has produced a short video containing snippets of Rand’s rejection of religion, which they hope to e-mail to more than a million people in Ryan’s home state of Wisconsin, asking citizens how they can support both Jesus and Rand. Leaving aside AVN’s distressing attempt to blur the separation of church and state by basing politics on faith, this much is true. Rand’s moral teachings are fundamentally different from Jesus’ teachings.
Given her positive teachings, Rand must reject what is usually taken to be the core of Jesus’ moral teachings, the Sermon on the Mount. But before you dismiss this as unthinkable, ask yourself the following question. Did Jefferson and the other Founding Fathers not reject the Sermon’s advice in creating America?
As I’ve written before: “When the British struck America’s right cheek, did Jefferson in the Declaration tell America to turn to offer them the left? Did Jefferson love his enemy—or did he go to war with him? Did Jefferson, who had a gallery of worthies in his home, portraits of men like Isaac Newton and John Locke, think that the blessed are the poor in spirit—or that the only people worthy of admiration are those who choose to make something of their spirit? Did Jefferson and the other Founding Fathers think that the meek shall inherit the earth—or that, in Locke’s words, the rational and the industrious shall? Did Jefferson give up riches—or did he seek them?”
Over at the Washington Examiner, Tim Carney writes on the waiver process for Obamacare:
Congress imposes mandates on other entities, but gives bureaucrats the power to waive those mandates. To get such a waiver, you hire the people who used to administer or who helped craft the policies. So who’s the net winner? The politicians and bureaucrats who craft policies and wield power, because this combination of massive government power and wide bureaucratic discretion creates huge demand for revolving-door lobbyists. It’s another reason Obama’s legislative agenda, including bailouts, stimulus, ObamaCare, Dodd-Frank, tobacco regulation, and more, necessarily fosters more corruption and cronyism.
As Dan Mitchel at Forbes notes, this replays a scene from Ayn Rand’s epic novel Atlas Shrugged:
Nobody professed to understand the question of the frozen railroad bonds, perhaps, because everybody understood it too well.
At first, there had been signs of a panic among the bondholders and of a dangerous indignation among the public. Then, Wesley Mouch had issued another directive, which ruled that people could get their bonds “defrozen” upon a plea of “essential need”: the government would purchase the bonds, if it found proof of the need satisfactory. There were three questions that no one answered or asked: “What constituted proof?” “What constituted need?” “Essential-to whom?”
[…] One was not supposed to speak about the men who, having been refused, sold their bonds for one-third of the value to other men who possessed needs which, miraculously, made thirty-three frozen cents melt into a whole dollar, or about a new profession practiced by bright young boys just out of college, who called themselves “defreezers” and offered their services “to help you draft your application in the proper modern terms.” The boys had friends in Washington. [Atlas Shrugged, Ayn Rand]
Was Ayn Rand a fortune teller? No. She was a philosopher who identified the principles that guide action in the human sphere and carried them out to their logical conclusions. And when government bureaucrats are granted the arbitrarily power to regulate commerce, the rule of economic production is replaced by replaced by the rule of political pull.
This year’s conference — OCON 2011 — will be held from July 2–8 in Fort Lauderdale, Florida. In addition to the beauty of our beachfront setting, the Fort Lauderdale area offers a wide array of leisure and entertainment activities.
This year also marks the 75th anniversary of Ayn Rand’s We the Living, which we will mark with a special panel discussion featuring Drs. Shoshana Milgram, Robert Mayhew, and Onkar Ghate who will discuss the new chapters they have written for the forthcoming expanded edition of Essays on Ayn Rand’s “We the Living,” edited by Robert Mayhew. Two years ago, John Allison former CEO of BB&T delivered a lecture titled “Principled Leadership”; this year his lecture is titled “Teamwork and Independent Thinking.” Longtime Capitalism Magazine writer John David Lewis presents a special perspective on the thought and work of doctors based on his recent experiences as a patient in his new talk, “Individual Rights and Health Care Reform: A Patient’s Perspective.”
Other general session lectures will include: The Objectivist Movement: 50 Years Later by Yaron Brook; Individual Rights and Health Care Reform: A Patient’s Perspective by John David Lewis; Q&A with Interviewees in 100 Voices: An Oral History of Ayn Rand by Michael S. Berliner and others; The Culture of “Package-Dealing” by Peter Schwartz; What It Takes to Win: A Workshop on Defending Capitalism by Yaron Brook and Don Watkins; an Open Q&A by Yaron Brook and Onkar Ghate; Spaceflight as It Was—and as It Ought to Be by Andrew Lewis.
Optional classes include: Principles by Harry Binswanger; Ayn Rand and the Romantic School by Tore Boeckmann; History of the Supreme Court (part 1): The Least Dangerous Branch? by Eric Daniels; Egoism and Altruism by Gregory Salmieri; Bach and the 19th Century by Thomas Shoebotham; The Nature of Literary Heroism by Andrew Bernstein; Topics in Intellectual Property: The Computer and Biotech Revolutions by Adam Mossoff; The Philosophy of Immanuel Kant (part 2): Kant’s Moral Philosophy by Jason Rheins; To Imagine a Heaven—and How “Sense of Life” Can Help You to Claim It by Tara Smith; The Measure of All Things by Robert Knapp; The History of Ancient Greece: The Early Fourth Century by John David Lewis; The Age of Discovery: Discovering the New World (c. 1300–c. 1600) by Andrew Lewis; and Ayn Rand, Private Investigator: Detection in Fiction and Philosophy by Shoshana Milgram.
There will be a variety of events and social opportunities for conference attendees as well, with opening and closing receptions, and an Independence Day BBQ dinner on July 4 at the Marriott Harbor Beach Resort and Spa.
Links: OCON 2011 Website
Writes Wilders in In Defense of ‘Hurtful’ Speech:
[…] Yesterday, the Dutch people learned that political debate has not been stifled in their country. They learned that they are still allowed to speak critically about Islam and that resistance against Islamization is not a crime.
I was brought to trial despite being an elected politician and the leader of the third-largest party in the Dutch parliament. I was not prosecuted for anything I did, but for what I had said. My view on Islam is that it is not so much a religion as a totalitarian political ideology with religious elements. While there are many moderate Muslims, Islam’s political ideology is radical and has global ambitions. I expressed these views in newspaper interviews, op-ed articles and in my 2008 documentary, “Fitna.”
I was dragged to court by leftist and Islamic organizations that were bent not only on silencing me but on stifling public debate. My accusers claimed that I deliberately “insulted” and “incited discrimination and hatred” against Muslims.
[…] That’s why I was taken to court, despite the fact that the public prosecutor saw no reason to prosecute me. “Freedom of expression fulfills an essential role in public debate in a democratic society,” the prosecutors repeatedly said during my trial. “That comments are hurtful and offensive for a large number of Muslims does not mean that they are punishable.”
[…] Though I am obviously relieved by yesterday’s decision, my thoughts go to people such as Danish journalist Lars Hedegaard, Austrian human-rights activist Elisabeth Sabaditsch-Wolff and others who have recently been convicted for criticizing Islam. They have not been as fortunate as I. In far too many Western countries, it is still impossible to have a debate about the nature of Islam.
[…] Citizens should never allow themselves to be silenced. I have spoken, I speak and I shall continue to speak.
Read the rest of In Defense of ‘Hurtful’ Speech.
This morning the Court of Amsterdam has acquitted Geert Wilders of all charges.
“I am delighted with this ruling,” says Geert Wilders. “It is a victory, not only for me but for all the Dutch people. Today is a victory for freedom of speech. The Dutch are still allowed to speak critically about islam, and resistance against islamisation is not a crime. I have spoken, I speak and I shall continue to speak.”
A victory for free speech and a great blow against the religion of violence and intolerance.