Warren Buffet Hypocrite

Writes Richard M. Salsman on Warren Buffett and Other Anti-Rich Capitalists:

Omaha-based billionaire investor Warren Buffet announced this week that he’d invest $5 billion in newly-issued preferred stock of troubled Bank of America (yielding 6%), not unlike the $10 billion he invested in the preferred shares of a shaky Goldman Sachs (yielding 10%) back in 2008. Neither bank would exist today absent the billions-of-dollars in bailouts they got from Washington (taxpayers) or the billions in cheap loans they got from the Federal Reserve. Buffet simultaneously complains that he and other rich Americans are materially under-taxed. But if he had any real integrity on such matters, if Buffet were to practice what he preaches, he’d send his $15 billion to the U.S. Treasury, via PayPal, here.  Yet he refuses to do so. Why?

Read the rest in Warren Buffett and Other Anti-Rich Capitalists.

 

Amy Peikoff Q & A On Privacy and Social Media

Professor Amy Peikoff did a short Q & A on privacy and social media for the Summer 2011 issue of Chapman Magazine. You can find it here, just click on the issue with “A Roaring 20″ on the cover, and use the online reader to flip to page 10.

Also don’t forget to check out her 2 hour special podcast, where topics include: Hurricane Irene, including our government’s reaction to it and global warming hype about it; David Letterman’s reaction to the jihadist threat; Steve Jobs’s retirement, Obamanomics vs. Reaganomics; Federal Raid on Gibson Guitars; Bloomberg’s decision to have no clergy present at 9/11 commemoration.

If you were unable to attend live and would like to hear this week’s webcast/podcast, click here for hour one, and click here for hour two, or you can access the files via iTunes

Religious Freedom vs Economic Freedom: Kennedy Townsend’s False Alternative

Ms. Kennedy Townsend is very confused about Ayn Rand.

Sadly, because like many of Rand’s critics, her views on Ayn Rand are based on third-rate biographies as opposed to actually reading Ayn Rand’s views first hand. Take for example Kennedy Townsend’s  straw man attack on Ayn Rand’s view of government.

Writes Townsend in The Atlantic:

America was a beacon of freedom from its earliest days. But the freedom to earn one’s living is not the same as the freedom to emasculate government. It’s a mistake to enshrine individual liberty without acknowledging the role that a good government plays in preserving and promoting it. Look at places like Haiti, Somalia, and the Congo to see what happens when governments aren’t around much.

When government is marginalized, it’s not just individual freedom that suffers; the economy suffers too. A vibrant capitalism requires a legal system: contracts must be honored, fraud punished. Markets have to work, and for that we need a strong infrastructure of roads, rail, energy, and water and sewage systems.

Ayn Rand was no anarchist as pure libertarians are.

Rather than blindly accepting Kennedy Townsend’s view that Ayn Rand was against a legal system that honors contracts, lets see what Rand actually wrote on this issue in The Virtue of Selfishness:

The only proper purpose of a government is to protect man’s rights, which means: to protect him from physical violence. A proper government is only a policeman, acting as an agent of man’s self-defense, and, as such, may resort to force only against those who start the use of force. The only proper functions of a government are: the police, to protect you from criminals; the army, to protect you from foreign invaders; and the courts, to protect your property and contracts from breach or fraud by others, to settle disputes by rational rules, according to objective law. [“The Nature of Government“]

Ayn Rand was for good government. In Rand’s view the essence of good government was judged by one principle: the protection of individual rights, which means in practice the banning of the initiation of physical force from all human relationships. Rand would agree with a government to enforce contracts, however, there is no reason for government being required to build roads, railroads, build power plants or sewage systems. Practically, because private industry can do these things more efficiently and at a better bang for the buck, i.e., before they were nationalized, America’s railroads were actually built by private industry. Morally, because such endeavors by government can only be funded by robbing the wealth of those forced to finance such projects against their will.

Even worse is Ms. Townsend’s misunderstanding of the relationship of religion and the concept freedom, the latter of which she views as a competing set of contradictory freedoms as opposed to an inseparable whole:

 I’ve always understood that one’s loyalty to God should take precedence over one’s patriotic duty. [As did the 9/11 terrorists! — D&C] Churches are exempt from taxation, and conscientious objectors aren’t required to serve in war. Our high regard for the First Amendment shows the preeminence of faith in the American consciousness.

But to place economics on the same level as religious freedom seemed to me almost blasphemous. Are we really to believe that the freedom to make money should stand on the same level of religious liberty?

Yes, because freedom is an inseparable whole.

The right to religious freedom is not merely the freedom for the individual to practice religion as he chooses (so long as he does not violate the rights of others), but is the freedom from religion being imposed on the individual whether by private criminals or public bureaucrats, i.e., the freedom to not practice any religious doctrine.

Quoting Thomas Jefferson, in his letter to Danbury Baptist Association, CT., Jan. 1, 1802:

Believing with you that religion is a matter which lies solely between man and his God, that he owes account to none other for his faith or his worship, that the legislative powers of government reach actions only, and not opinions, I contemplate with sovereign reverence that act of the whole American people which declared that their legislature should ‘make no law respecting an establishment of religion, or prohibiting the free exercise thereof,’ thus building a wall of separation between church and State.

Quoting Jefferson in a letter to Horatio G. Spafford, March 17, 1814:

In every country and in every age, the priest has been hostile to liberty. He is always in alliance with the despot, abetting his abuses in return for protection to his own.

Religious freedom is the application of the right to free speech and property applied to the religious sphere. You are free to say what you wish on these matters — even that God does not exist — and no one can physically force you to think or act differently. Remarks Jefferson’s on this point in his Notes on Virginia, 1782:

But it does me no injury for my neighbor to say there are twenty gods or no God. It neither picks my pocket nor breaks my leg.

Religious freedom — the right to free speech and action so long as one does not violate the rights of others — and economic freedom — the right to produce values necessary to support ones own life so long as one does not violate the rights of others — are equals, because the right to life is an inseparable, non-contradictory whole.

Religious freedom (the freedom from the state forcing some religious doctrine upon you) is an instance of the principle of freedom applied to the religious sphere. It is hierarchically a derivative of the fundamental right to life, liberty and the pursuit of happiness.

There is no compromise or antagonism between religious and economic freedom when the two are properly grasped and defined.

Or in Ayn Rand’s words:

It is not society, nor any social right, that forbids you to kill—but the inalienable individual right of another man to live. This is not a “compromise” between two rights—but a line of division that preserves both rights untouched. The division is not derived from an edict of society—but from your own inalienable individual right. The definition of this limit is not set arbitrarily by society—but is implicit in the definition of your own right.

Within the sphere of your own rights, your freedom is absolute. [“Textbook of Americanism,”The Ayn Rand Column, 85]

As for charity and the “special responsibility” of the wealthy here is what Ayn Rand had to say:

The small minority of adults who are unable rather than unwilling to work, have to rely on voluntary charity; misfortune is not a claim to slave labor; there is no such thing as the right to consume, control, and destroy those without whom one would be unable to survive. [CUI]

Quoting Ayn Rand in her interview in Playboy, March 1964:

My views on charity are very simple. I do not consider it a major virtue and, above all, I do not consider it a moral duty. There is nothing wrong in helping other people, if and when they are worthy of the help and you can afford to help them. I regard charity as a marginal issue. What I am fighting is the idea that charity is a moral duty and a primary virtue.

Rand did not see charity — the benevolent act of giving away one’s wealth to aid someone in need — as a badge of moral honor; she did award such a badge for the ability to produce that wealth. In Rand’s view your only political responsibility in regards to others is not to violate their rights by initiating force against them:

The basic political principle of the Objectivist ethics is: no man may initiate the use of physical force against others. No man—or group or society or government—has the right to assume the role of a criminal and initiate the use of physical compulsion against any man. Men have the right to use physical force only in retaliation and only against those who initiate its use. The ethical principle involved is simple and clear-cut: it is the difference between murder and self-defense. A holdup man seeks to gain a value, wealth, by killing his victim; the victim does not grow richer by killing a holdup man. The principle is: no man may obtain any values from others by resorting to physical force. [“The Objectivist Ethics,”The Virtue of Selfishness, 32 ]

And again quoting Rand in “The Nature of Government,” The Virtue of Selfishness, 108:

Man’s rights can be violated only by the use of physical force. It is only by means of physical force that one man can deprive another of his life, or enslave him, or rob him, or prevent him from pursuing his own goals, or compel him to act against his own rational judgment.

The precondition of a civilized society is the barring of physical force from social relationships—thus establishing the principle that if men wish to deal with one another, they may do so only by means of reason: by discussion, persuasion and voluntary, uncoerced agreement.

The difference between Ayn Rand and Townsend’s ilk is that Ayn Rand leaves people free to be good as dictated by their own reason and free choice; Kennedy Townsend wishes to use the power of the government to force her altruistic conception of the good on others (i.e., robbing the “rich” to help those who sleep under bridges, i.e., Marxian “fair” taxation, etc.).

Kennedy Townsend wishes to unleash the criminal power of government to initiate force against those who violated the rights of no one — illegitimate and immoral means — to achieve her ends. In Rand’s view, rights are not things to be violated by regulation, but are to be protected by right. Quoting Ayn Rand:

Freedom, in a political context, means freedom from government coercion. It does not mean freedom from the landlord, or freedom from the employer, or freedom from the laws of nature which do not provide men with automatic prosperity. It means freedom from the coercive power of the state—and nothing else.

Scholarships to Study Free-Market Economics and the Philosophic Foundations of Capitalism

National University of La Jolla, CA has a limited number of scholarships available for three online courses that focus on free-market economics and the philosophical foundations of capitalism. These scholarships are being funded by a grant from the Charles G. Koch Charitable Foundation. The scholarships cover the full tuition for the courses plus the application fee to NU. Two courses (ECO 401 and 402, Market Process Economics I and II, respectively) use Capitalism: A Treatise on Economics by George Reisman as the required textbook. One course (ECO 430 – Economics and Philosophy) uses Ayn Rand’s The Virtue of Selfishness and Capitalism: The Unknown Ideal as the required textbooks. These courses can be taken from anywhere in the world, as long as one has access to the internet. The courses incorporate live chat sessions in which the professor and students interact in a virtual classroom, much as they would in a traditional classroom.

The courses run for the next time in the summer and fall of 2012. More information about the courses on the web can be found here:

ECO 401 – Market Process Economics I

ECO 402 – Market Process Economics II

ECO 430 – Economics and Philosophy

To apply for one or more of these scholarships, send your name, transcript from your high school or university, and an essay of no more than 750 words discussing why you believe you deserve a scholarship and your future education and career plans to Dr. Brian P. Simpson.

Send them to bsimpson@nu.edu or 11255 North Torrey Pines Rd.; La Jolla, CA 92037. Please indicate which course or courses for which you are applying for a scholarship. You can apply for one to three scholarships, depending on how many courses you are interested in taking. Note that to receive a scholarship you will have to apply to National University and enroll in the course(s). If you have questions, please contact Dr. Simpson at the email address above or 858-642-8431.

Actress Anne Hathaway on Ayn Rand

From an interview by Chelsea Handler with Anne Hathaway in Interview Magazine:

HANDLER: […] But I know you’re an Ayn Rand fan, right?

HATHAWAY: Yeah, I am.

HANDLER: What’s your favorite Ayn Rand book?

HATHAWAY: Atlas Shrugged.

HANDLER: Did you like that better than The Fountainhead?

HATHAWAY: I did. When I began Atlas Shrugged, I was really excited, because Ayn Rand said that The Fountainhead was the overture to Atlas Shrugged. I was like, “Ooh! What am I getting into?” Whether or not you agree with Ayn Rand-and I have certain issues with some of her beliefs-the woman can tell a story. I mean, the novel as an art form is just in full florid bloom in Atlas Shrugged. It’s an unbelievable story. The characters are so compelling, and what she’s saying is mind-expanding. I really enjoyed that book, and it was kind of prophetic. I read that book for the first time during the Bush Administration and I was like, “People are governing with their feelings as opposed to their intellect. This is happening.” And she wrote this how many years ago?

HANDLER: Not only that, but I think a book like The Fountainhead or Atlas Shrugged is kind of a way to look at leading your life with your professionalism permeated by your value system and your moral rectitude. You’re able to kind of see everything as one whole thing rather than kind of compartmentalizing different things in your life, and being morally bound to your personal life and not your professional life or vice-versa. When I read The Fountainhead, I was 17, and I thought, “I am never, ever going to have a book impact me this much.” And I don’t know that I’ve had one that did. That book definitely changed me for good, and I think the biggest compliment that you can say about any book is that it does that.

HATHAWAY: It’s so true. If you’re going to sum up both of those books, then I think what they say is don’t be a hypocrite.

HANDLER: Exactly.

HATHAWAY: And whatever you are made of, be the best of that.

Brevik, Hitler and Islam

I left this comment on Daniel Pipes’ article on Breivik and Islam:

I’m firmly convinced that Breivik would have been an ardent Nazi in some notable capacity in Hitler’s time, perhaps as a functionary in Hitler’s outer cadre of supporters. Hitler also considered Muslims to be a useful tool to help exterminate Jews in Palestine, and approved the formation of brigades of Muslims in the Balkans (wearing German uniforms, but under the command of Germans). According to Breivik’s manifesto, he also planned to enlist the aid of Muslim “extremists” to wage a war of terror on Europe. But if Hitler had won the war, I often wonder what he would have done about his Muslim “allies.” After all, they weren’t Aryan, and I don’t think the compatibility of Nazi and Islamic ideologies would have mattered to him much. It wouldn’t have stopped him from beginning to exterminate Muslims just as he’d helped to exterminate Jews, gypsies, and other “impure” folk. Islam would have been a rival ideology that also required unqualified submission to the state, in this case, a caliphate. The racial supremacist elements in both ideologies were strikingly similar, as well.

Again, I disagree that there can be any such thing as “moderate Islam,” just as there could not have been any such thing as “moderate Nazism.” Nazism and Islam are ideologies, not tamable or modifiable religions. The religious character of each ideology (and Nazism certainly had its religious character) is just frosting on the cake. Excise either ideology of its totalitarian tenets, demote Hitler and Mohammad from their iconic roles as exemplars of their faiths, and condemn the primitive and brutal practices that are sanctioned by the Koran and Mein Kampf, and nothing inimical to the West would be left of the ideologies.  They would be emasculated of their strength and appeal to anyone wishing to lose himself in a collectivist identity.  Each would require a new name. They would not be the Nazism and Islam that we know all too well.

What The New Left and Islam Have in Common

I left this comment on a Sultan Knish column, “A Clash of Histories.”

Daniel wrote: “The left rejected commercial progress as capitalist, but continued to embrace technological progress and cultural development. Then it rejected technological progress as destructive, culture as perspective and stated that the highest moral principle was for the West to save the world by destroying itself.”

I think he underestimates the purpose of the left, or the left that is at large in Western society today. The attitude of the left is ostensively paradoxical. But it is not the same left that founded the Soviet Union, Red China, or Cuba. Those leftists, at least on the surface, seem to value and promise human and material progress, and tried to achieve it by enslaving their populations and putting fetters on their slaves’ minds. With every bogus five-year plan and every pseudo-false scientific accomplishment, they fooled their populations and convinced themselves that the collectivist scam was workable and practical – until at some point even the most gullible dolts said, “Account overdrawn.” Communist nations are not naturally creative or innovative; they can only emulate their freer, more prosperous neighbors, or the ones they haven’t invaded and sacked.

Contemporary leftists, however, especially the environmentalists, are fundamentally nihilists. They do not want to preserve or discover new, beneficial values for man. They are against man. So they are against nuclear power, genetically-altered produce and livestock, medical research, housing developments, standard light bulbs, even “wind farms” and solar energy, because none of it is “natural.” It all violates Mother Earth, because man must take from the earth to produce those things. Like Islam, contemporary leftists do not want to “save the West.” They want to see it swamped and drowned by their opposite number, their fellow nihilists of Islam.

They see strength in Islam, which is why they side with it, knowing that should a global caliphate ever be realized, they, they, the leftists, will be the first to be told to convert, or else. And, being nihilists, the leftists do not care. They worship non-existence, and know that their best bet of achieving a living death is to destroy, or help to destroy, those who love existence. In that sense, they share the same end as the Islamists and seekers after that “golden age.”

“Baseline” Gimmick: “Cut” is in Reality a Lower Increase in Spending

Richard Salsman crunches the numbers at Forbes on the attempt to “cut” the size of the public debt:

[…] Even the most “radical” GOP plan, to “cut” $9 trillion, would boost federal outlays by 30% in the coming decade versus outlays in the past decade, while the most modest GOP plan, to cut a mere $2 trillion, would boost outlays by 55%. Yet Democrats lambaste GOP plans as “Draconian,” prone to trigger a “depression.”

By “baseline” federal spending over the coming decade, the CBO means the sum that’ll be spent even with no changes in current fiscal policy, whether in tax rates or spending schemes. As mentioned, the CBO says $45.8 trillion in outlays over the coming decade are effectively on “auto-pilot,” so any proposed “cut” is relative only to this huge number. As mentioned, Washington spent $28.3 trillion over the past decade, so embedded “baseline” spending of $45.8 trillion in the coming decade already entails an astounding increase of 62%. In the coming decade neither U.S. population nor real economic output would rise nearly so much.

[…] Why are today’s politicians, journalists and economists so complicit in deliberately misleading the public about the current and future state of U.S. finances? Why do they speak of “cuts” in future federal spending when the CBO routinely projects increases in the range of +30% to +65%? Check those numbers again, dear citizen: they’re positive, not negative. “Baseline budgeting,” which blithely presumes a perpetually-growing government, was first enacted by the U.S. Congress in 1974, in order to side-step White House efforts to “impound” (limit) federal spending; but that doesn’t condone the gimmick – or justify lying to the public. When people hear that Washington will “cut” spending by $2 trillion over the coming decade, they think that’s a lot of money and that outlays might be $2 trillion lower a decade hence – not higher by 50% or more. Even Boehner’s budget plan, like many others, backloads the “cuts” into later years; he’d “cut” outlays by only $23 billion in 2012, equivalent to less than three days of total federal spending at the current spending rate.  [Richard Salsman, Forbes,  Washington’s Budget “Cuts” Would Boost Spending 50%]

Democrat Casino Mogul Steve Wynn on Obama’s “Weird” Job Destroying Philosophy

From Wynn Resorts’ CEO Discusses Q2 2011 Results – Earnings Call Transcript – Seeking Alpha:

Well, here’s our problem. There are a host of opportunities for expansion in Las Vegas, a host of opportunities to create tens of thousands of jobs in Las Vegas. I know that I could do 10,000 more myself and according to the Chamber of Commerce and the Visitors Convention Bureau, if we hired 10,000 employees, it would create another 20,000 additional jobs for a grand total of 30,000.

I believe in Las Vegas. I think its best days are ahead of it. But I’m afraid to do anything in the current political environment in the United States. You watch television and see what’s going on, on this debt ceiling issue. And what I consider to be a total lack of leadership from the President and nothing’s going to get fixed until the President himself steps up and wrangles both parties in Congress. But everybody is so political, so focused on holding their job for the next year that the discussion in Washington is nauseating.

And I’m saying it bluntly, that this administration is the greatest wet blanket to business, and progress and job creation in my lifetime. And I can prove it and I could spend the next 3 hours giving you examples of all of us in this market place that are frightened to death about all the new regulations, our healthcare costs escalate, regulations coming from left and right. A President that seems — that keeps using that word redistribution.

Well, my customers and the companies that provide the vitality for the hospitality and restaurant industry, in the United States of America, they are frightened of this administration. And it makes you slow down and not invest your money. Everybody complains about how much money is on the side in America. You bet. And until we change the tempo and the conversation from Washington, it’s not going to change. And those of us who have business opportunities and the capital to do it are going to sit in fear of the President. And a lot of people don’t want to say that. They’ll say, “Oh God, don’t be attacking Obama.”

Well, this is Obama’s deal, and it’s Obama that’s responsible for this fear in America. The guy keeps making speeches about redistribution, and maybe we ought to do something to businesses that don’t invest or holding too much money. We haven’t heard that kind of talk except from pure socialists. Everybody’s afraid of the government, and there’s no need to soft peddling it, it’s the truth. It is the truth. And that’s true of Democratic businessman and Republican businessman, and I am a Democratic businessman and I support Harry Reid. I support Democrats and Republicans.

And I’m telling you that the business community in this company is frightened to death of the weird political philosophy of the President of the United States. And until he’s gone, everybody’s going to be sitting on their thumbs.

State of the Culture: Amy Peikoff Interview with ARI’s Yaron Brook

Dr. Yaron Brook, along with business hero John Allison and philosopher Leonard Peikoff, are the leading voices today in promoting Ayn Rand’s philosophy of Objectivism: which advocates reason, individual rights and the virtue of selfishness (i.e., the pursuit of one’s long-term happiness). Listen to this full-hour Interview with Yaron Brook, President of the Ayn Rand Center for Individual Rights and the state of the Culture at Don’t Let It Go…Unheard #22.

Richard Lindzen: A Modern Day Galileo on Climate


Cartoon by Cox and Forkum.

Richard Lindzen is a professor of meteorology at Massachusetts Institute of Technology who thinks that man-caused global warming is real, but will hardly cause any change at all. The NY Times has an interesting article on him: A Climate Change Dissenter Who Has Left His Mark on U.S. Policy. Here are some choice excerpts:

 […] [Lindzen argues that] the answer that emerges from most climate models is wrong because they assume the Earth’s clouds and water will amplify the rising heat. According to Lindzen’s calculations, the clouds should have the opposite effect, minimizing the warming effect.

In his paper, Rahmstorf added a “Personal Postscript”: “Can Lindzen seriously believe that a vast conspiracy of thousands of climatologists worldwide is misleading the public for personal gain? All this seems completely out of touch with the world of climate science as I know it and, to be frank, simply ludicrous.” In a reply, Lindzen skewered Rahmstorf in a footnote, arguing that the German scientist was “addicted to the use of words like ‘entirely,’ ‘fact,’ ‘irrefutable,’ etc. Such words are inappropriate to a primitive and immature science — which is what climate science is at present.

Richard Goody, 90, who taught meteorology to Lindzen at Harvard, says the critics of his former pupil are “focusing on his propensity to debate. He [Lindzen] loves debating. He absorbs an enormous amount of information, and he loves arguing with you about it. Since he’s so well-informed and so smart, he usually wins. This doesn’t endear you to a lot of people.” […] Goody is quick to add: “But science is not about gentility. It’s about discussing the facts. He’s just doing what he should do.” […] “This machine turns out a number for something that will happen 100 years in the future. Science doesn’t usually work that way. There’s not much evidence about the behavior of these climate models,” he said.

[…] Roger Pielke Jr., a political scientist at the University of Colorado, specializes in studying the scientific process. He sees the rough-and-tumble of the climate debate as an unstable brew of science and politics. “If we were to view science as a field where a lot of conflicts happen, then Lindzen is an expected part of the scenery. But if science is a community where there is only one acceptable view, then Lindzen stands out.” Pielke blames environmental groups for making climate a two-sided debate.

[…] In a paper he wrote earlier this year, he managed to lash out at his scientific critics, bureaucrats, politicians — including former Vice President Al Gore — and environmental groups before training his rhetoric on the public. “And finally, there are the numerous well-meaning individuals who have allowed propagandists to convince them that in accepting the alarmist view of anthropogenic climate change, they are displaying intelligence and virtue. For them, their psychic welfare is at stake,” he wrote.

The paper gives the essence of his argument, which is that, while man-caused warming certainly exists, by itself it is small. It was roughly 0.7 degree Celsius in the 20th century. If the amount of carbon dioxide in the atmosphere doubles, which many scientists predict that it will by the end of this century, that will increase global mean temperatures by a little more than 1 degree, he thinks. “A hundred years from now, I don’t really know, but I don’t think it [the climate] will be radically different. The climate is always changing. It’s natural variability,” he said in an interview.

[…] “Now we’re seeing a doubling down, a desperate movement among professional [scientific] societies that have committed themselves to the issue,” he said. Asserting that groups such as the National Academy of Sciences or the American Meteorological Society are wrong about climate projections and proposed government responses doesn’t endear Lindzen to the nation’s science establishment. But he doesn’t stop there. He proposes to cut off most government funding because it rewards what he calls “alarmist” studies about climate change and discourages dissenting views. “There has to be a return to non-government support of science,” he told the Cato group. [A Climate Change Dissenter Who Has Left His Mark on U.S. Policy]

How Ben Bernake Using The Power of the FED Triggered The Great Recession

Another great op-ed in Forbes by Richard Salsman on How Bernanke’s Fed Triggered the Great Recession:

[…] 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.

Read the rest.

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