With the exception of those among us who are clinically insane, humans are rational beings who make rational choices. The choices are quite obviously not necessarily good choices, nor is the rationale behind them necessarily sound. However, any sane human bases a decision on the information available at the time and takes what they perceive as the most appropriate course of action. This holds true for decisions as small as what kind of bread you want at Subway and as big as whether or not to go to war with another nation.
Even the most vile among us have their reasons for doing what they do. Let’s race toward the bottom of the barrel and use a child predator as an example. When held to account for their actions, they may well articulately explain the basis for what they do. They could calmly lay out how they are aroused by certain youngsters, and how they know acting on this desire leads to the execution of a self-interested outcome. From their point of view, they are acting logically. From our point of view, of course, what they’re doing is horrific, vile, and worthy of incarceration.
What better way to lead to a discussion of Jerome Powell than by way of child predators? I can’t think of any better.
For although I am not privy to Jay Powell’s own carnal dispositions (nor am I inclined to find out), the decisions he has been making lately are, in his mind, absolutely logical and grounded in reason. I, on the other hand, find his actions as repugnant and vile as the aforementioned kid-diddler. The difference being that Powell is affecting hundreds of millions of people as opposed to just one.
Just as I believe humans behave rationally, for better or for worse, I also think most people have an innate sense of balance and harmony.
We observe the world around us, and what we find pleasing are those things which suggest justice, fairness, symmetry, or otherwise some sense of order, rhythm, and positive energy.
These vivid reactions could range from architecture to music to books to a person’s face that you find attractive. All animals, including the human animal, is attracted to balance – – and rationality is one expression of that – – and, in turn, fairness and harmony.
Simply stated, both humans and animals possess a sense as to what is right and wrong, through a combination of intuition and upbringing. Here, in a simple but powerful example, we can see these monkeys have an innate sense of fairness (hat tip to Wahoo):
To be clear, I have a lifelong love affair with the free enterprise ethic. Having grown up in the 80s, I was saturated with the Ronald Reagan ethos of a resurgent America. My heroes were the likes of Steve Jobs and Steve Wozniak, and I was proud to be part of a country that shook off the grey malaise of the 1970s and became, as Reagan described it, a shining city on the hill.
Even as a teenager, I was the kind of kid that subscribed to Forbes and Fortune, and I loved reading about business success stories. There was something absolutely beautiful about witnessing human creativity, inventiveness, and intellect blending into an organization that could satisfy human needs. True entrepreneurship represented everything to me that seemed right and good: creative expression, personal freedom, and the steady improvement of the human condition.
That love affair has been chipped away, piece by piece, over the past couple of decades. My adoration of America has degraded into a strongly-held conviction that the end of empire is at hand, and that, as the decades pass, the United States will sink into an abyss of its own creation.
And one of the architects of this collapse is none other than the aforementioned Jerome Powell. I strongly suspect that Powell does not see himself this way. I seriously doubt he inhabits an eerily-lit boardroom in which the ruination of our country is plotted.
Maybe he’s so indoctrinated into the Fed mindset that he honestly believes he is serving the tragicomical “dual mandate” that he references every goddamned time he speaks (which, in case you missed it the first eight thousand times, is stable prices and low unemployment).
However, I have a visceral and repugnant reaction to everything the man is doing right now. Whether he knows it or not, he is an instrument of evil, and quite a substantial one, too.
By “evil”, do I mean he’s slitting people’s throats and raping their corpses? Well, no, not quite, although anything is possible. I am referring to my own definition of evil, which is “that which opposes life and liveliness.’ Powell is, in my estimation, smothering true American free enterprise to death, and that, to my mind, is evil incarnate.
Decades ago, the Federal Reserve received as much attention from the general public as the Bureau of Indian Affairs. It was just some obscure government organization that very few people followed. From time to time, they might tweak the dials of the financial system in times of stress, but on the whole they left us alone (except inasmuch as our fiat-based currency degraded steadily over the long haul).
Lately, however, not a day goes that that the Federal Reserve isn’t thrust into the public spotlight. Powell has gone absolutely drunk with power, growing the balance sheet of the Federal Reserve for what had been a few hundred billion dollars not too many years ago to over $10 trillion by the end of this year. He haughtily told Congress last Thursday that there was “no limit” to what he could do, and the whores in Congress naturally gobbled it up with gusto.
Of course, there used to be limits. Indeed, there still are limits written into law, but those limits are being circumvented with impunity. For example, strictly speaking, it is absolutely forbidden for the Federal Reserve to buy assets which have any risk of failure. That’s why, for decades, the one and only thing they were permitted to acquire were the debt instruments of the United States.
In recent weeks, however, Congress has offered up $500,000,000,000 of guarantees from unwitting taxpayers (most of which aren’t even born yet), permitting the Federal Reserve to gobble up half a trillion bucks of absolutely-not-safe assets, since Congress has made the purchase of such instruments “risk-free” by virtue of the backstop. It’s a total cheat, and about as legitimate as a recovering alcoholic having an IV installed in his arm for vodka to enter his system and still declaring he doesn’t drink.
What Powell is doing is making clear to every citizen in this country that:
- Savers get punished;
- Hedge funds will always be bailed out;
- Reckless corporate management will never suffer any consequences;
- The rich will always get richer, and the middle class can just suck it up
In other words, Moral Hazard gone absolutely berserk.
Have you noticed how many people are asking why the hell they should pay taxes? And they’re right! If the Fed is just going to print money and bail out the rich, why in the name of God should any working man pay one cent to this beast? Let them just print what they want, and leave us alone!
I’m sure taxpayers would have no problem telling Mnuchin precisely what he can do with that 1040 form.
This is all just an idle musing, of course. There’s not a damned thing we can do about Powell choking the life out of what’s left of free enterprise. We can only observe, interpret, and try to make decisions in our own lives based on the ever-changing circumstances.
What’s insidious about what Powell, Yellen, and Bernanke have done, however, is that they have irreversibly trained the public, both rich and poor, to rebel against their own good instincts and, henceforth, make poor choices, since there’s no consequence to being wrong and no risk in being reckless.
There hasn’t been a single market observer who, at some point since 2008, hasn’t uttered the phrase “This will all end badly some day.”
Well, folks, “some day” is here. And although those cute little $1200 bribes that Congress is sending out to every taxpayer to placate and distract them might feel good for a moment or two, I can only assure you that the “bad” is well on its way, and Jerome Powell is delivering the entire mess on a multi-trillion dollar platter.