Feast of Famine
Last year, the head of the division at my college suggested that I attend with the other economics professor, who always goes to these annual events. Fortunately, the subject of my going this year did not come up when the registration period was open. I would have declined the opportunity, and that would have led to an uncomfortable exchange about matters I would rather not discuss anymore within the halls of academia.
You see, I cannot afford to drive clear to St. Louis, much less can I afford a hotel room. I am sure the school would have offered to pay my way, but I find that untenable: I would be taking money from taxpayers who finance the school; and, far worse, I would be taking money from tuition and other fees students pay. Having the school foot the bill for "professional" trips and other benefits doesn't seem to bother any college teacher I know, but the very thought deeply offends me. I am paid about $24,000 a year to teach courses at a level of quality that won me recognition as Faculty Member of the Year a few years back. My salary is the direct and fair compensation for what I do, and that salary already comes from the wallets of taxpayers and students. I feed at the bloated hog trough of public funds, which come from people who produce goods and services of great and small incremental values to the economy. I provide a derivative service, and I choose to do that where I am protected from the harsh pricing-for-value of free and private markets. That I would expect even greater rewards from the public treasure is, in my judgment, not just unethical, it is immoral. My academic colleagues who have no problem with taking a little extra here and there from department funds might want to take a good look in the parking lots at their schools to see the oceans of beat-up, barely drivable cars kids have; or maybe my fellow professors might want to try the mass transit system some students have to use so they can stand in the freezing cold or the sweltering heat just for the privilege of getting packed into rocking, nauseating buses with all manner of people by day or with the assortment of gang-bangers and mental cases that roam the aisles or sit in menacing silence on the buses at night.
Money for "professional development" comes from somewhere, and that somewhere is mostly from the pockets of people who can ill afford to pay for the fun masquerading as professional expenses of self-indulgent academics whose contributions to society are marginal at best.
Besides, were I to have gone to the meeting in St. Louis, I would have been compelled to cancel two days of classes. I need not watch the Weather Channel to know that Hell is not going to freeze over, so I'm not going to cancel a single class, much less two days of them. As I have told my students on many occasions, even if the Lord Jesus Christ, Himself, were to return in a clap of thunder and a bolt of lightning, I would tell Him to shut up and sit down until class was over. His rapture can wait; my lecture cannot.
Having taken that much-needed aside to storm about the hog trough of public higher education, my fellow economics professor, a conservative fellow still ranting about the outcome of the presidential election, assured me that I would be in his thoughts while he was in St. Louis. I told him that I would like to go because I had some questions for the people at the Fed. He told me that's why, if I did go, he would be sitting on the other side of the room. Although he and other conservative economists frequently tell me I just don't "get it," he avoids discussing economics with me. He knows very well that I am a fierce critic of the Federal Reserve Board and its monetary policy wing, the Federal Open Market Committee. He does not dispute my basis of criticism, although his reserve might be evidence of nothing more than his unwillingness to have me start whipping out charts showing how the Fed single-handedly created the so-called "credit crisis" by trying to prop up the failing economic policies of Bush and his Republican Congresses. I think he also doesn't want to hear me tear down one of his favorite icons, Alan Greenspan, a man so obsessed with politicizing his chairmanship of the Fed that he tried to derail President Clinton's successful economic policies and cover for Bush's catastrophically failed ones before they even began to fail, just to protect the Federal Reserve's power to manipulate the economy through open market operations that had been rendered impossible to carry out when the government stopped running budget deficits.
The Federal Reserve uses Treasury debt securities as the instruments to move money into and out of the banking system to alter the money supply. No Treasury debt securities being issued means no effective instruments the Fed can trade for money with banks. That means the end of the Federal Reserve as a source of economic policy, which it should not have, anyway, considering it comprises a body of unelected, unaccountable individuals who should be dedicated only to the tasks of maintaining aggregate price level stability (preventing inflations and deflations) and regulating and supervising member banks. In his day, former Fed Chairman Alan Greenspan bitched to Congress in the 1990s about "irrational exuberance" of the stock markets so he would have an excuse to start ratcheting up interest rates to kill the economic boom. He was convinced that the federal budget deficits were narrowing largely because of enhanced tax revenues from capital gains earned in the stock markets (a theme even some of my more astute friends seem to take as gospel, these days), so he figured that killing the stock market boom with a historically unprecedented string of discount rate increases would do the trick. All it did, instead, was kill the dot-com boom. Once George W. Bush got into office, Greenspan jumped on board a huge Republican-led tax cut package to deal with a "recession" that actually was not a recession by technical measures (see my article, "The Gospel for Impending Doom" about this and other points I make in this article). That one did the trick: federal tax revenues plunged under government expenditures, and so the Bush era of massive federal budget deficits was born, and that meant the U.S. Treasury was once again pouring out hundreds of billions of dollars in debt securities that the Federal Reserve could then buy up by printing money like there was no tomorrow to cart to the Treasury auctions. Thus was the Federal Reserve back in business as an unelected body with more short-term and long-term control over the U.S. economy than the President and the Congress put together.
Were I to have gone to St. Louis and participated in that very exciting question-and-answer session with the top Fed economists there, I would probably have prefaced my first question with the narrative of that last paragraph, above. It's not that those economists don't know exactly what's been going on, it's just that I would want to make sure they did not think I was too stupid to know how ugly the politicization of the Fed had become during the Bush era. In fact, a former fellow grad student who now works for one of the Federal Reserve district banks told me a few years back that the name "John Maynard Keynes" is not to be mentioned at his office. I thought the guy was joking, but he assured me that he was not. I asked him if he grasped the irony of a cabal of economists who all want to pretend they're conservative, strict monetarists when they're working under a Federal Reserve Board that has turned the Keynesian economics of aggregate demand management into a train wreck exercise in monetary stimulus gone mad. He did, indeed, see the irony, but he's not a man given to humor, so he didn't think it was nearly as funny as I did.
Were I to have been at that question-and-answer session at the St. Louis Fed, having made it past the formalities and preface as outlined above, I think I would have restricted myself to one, albeit multi-part and long-winded, question:
Sir, you let the broad monetary aggregate M3 grow at an increasing rate ever since you declared an end in mid-2004 to accommodative monetary policy. In fact, that measure of money, which includes M2 and M1, grew at such an alarming rate that, by the end of February of this year, it was approaching 20 percent growth on an annual basis. You were doing this in the very same period that you were holding the M1 monetary aggregate — the kind of money everyday people and businesses use — at a growth rate virtually indistinguishable from zero. In other words, the real economy of working people and productive enterprises was slowly being strangled for actual cash-money to conduct transactions because the real economy was growing at maybe around three percent, which was faster than the growth rate of the money they needed to provide liquidity for their transactions. Yet, at the same time, the monetary aggregate M3, which includes highly illiquid money that only huge financial institutions can turn into liquidity, was skyrocketing. (And, of course, M3 includes both M1 and M2, meaning that the top-end money — Eurodollars, massive time deposits, and all of that pseudo-money — was growing at a rate even faster than M3, itself, indicates.) So that means, not only was the base economy of the United States being starved of liquidity, but the very top end of the banking system was veritably swimming in a highly illiquid form of it.
So, then, how could all those inordinately large, very sophisticated financial institutions use that highly illiquid form of money that was growing at such a breath-taking rate? Ah, yes: they would have to use it as collateral for something more liquid, sort of like using the title on a car (something very illiquid) as collateral for a cash loan (something very liquid) at one of those quick-and-easy loan stores on the bad side of town. Right? Yes, right.
Oh, my goodness! So, that's why we had this sudden "crisis" in the credit markets with all those bad, bad derivative instruments! Those were the means by which the financial institutions could turn that sea of highly illiquid pseudo-money into real cash-money! And there the Federal Reserve was, letting M3 just grow and grow and grow at an accelerating rate.
And how did you people deal with this madness? Why, you stopped publishing the M3 monetary aggregate numbers in early March of 2006! You stopped publishing M3! By the Spring of this year, the situation was so ridiculous that a few rogue economists, myself included, were screaming our bloody heads off that this madness was about to take the economy down into a death spiral of inflation and recession. Shortly after that — well, lo and behold! — you Fed folks started ratcheting down the M3 growth rate and started pumping up M1. M3 is still growing at a rate well above 10 percent, though; but hey, at least you answered the phone call from Clueville. Unfortunately, by the time you started to stir from your let-the-banks-have-fun slumber, it was too late: now, we have a full-blown credit crisis in the financial services industry; we have a notional value of maybe $63 trillion in credit derivatives in the toilet that hardly anyone has even mentioned, yet; we have trillions of dollars in greenback overhang that will inevitably come back to bite us as rampant inflation; and now we're going to have a new President who will want the Fed to print money at an even more wildly out-of-control rate to pay for his New-and-Improved New Deal plans.
And as if all of this weren't enough, that President-elect has named the President of the Federal Reserve Bank of New York as his Secretary of the Treasury, and we all know that the Empire Bank is the only district bank with a permanent voting seat on the Federal Open Market Committee, and it's that same New York district bank where the Domestic Trading Desk resides, the DTC being the actual place where the Fed executes its open market operations to alter the nation's money supply. That means our President-elect has put in charge of the United States Treasury the Federal Reserve Board's very own bagman!
Okay, so here's my question, sir: Are you guys cool or WHAT?
If I, a normal citizen, were to have caused hundreds of trillions of dollars of irreparable damage to something I was in charge of protecting; if I, a normal citizen, were to have then tried to cover it up; and if I, a normal citizen, were to have then gone to Congress and said that what I had been responsible for protecting that I instead wrecked must be rescued and that I must be trusted with all the power I had before and more on top of that; if I, a normal citizen, had done all that, I would be sent to prison for the rest of my natural life. In fact, any normal citizen can do a couple thousand dollars worth of damage and go to prison under federal minimum sentencing guidelines. But you guys! — you can blow away hundreds of trillions of dollars of economic value by letting huge financial institutions go bananas with pseudo-money you allowed to grow like a wildfire, and here you are sitting pretty down here in old St. Louie preaching your gospel of Federal Reserve propaganda to a bunch of fat-assed, over-paid, academic economists who got their trip here paid for by students and taxpayers.
Again, sir, I ask you: Are you guys cool or WHAT?
Given that security in the Federal Reserve district banks is top-notch, I'm pretty sure I wouldn't have gotten halfway through that rant before big men with lots of weaponry would have been called. These are all civilized people, and there's really no room for some malcontent who obviously doesn't understand the Big Picture, much less who's in charge when it comes to managing the U.S. economy.
The economist who went without me came back with all kinds of glowing stories about how great the whole affair was. He said that the chief economist looked like the very epitome of dork, and he said that the Bank President's speech was inspiring. He also said that the Fed economists who spoke were all very honest and had a lot to say about how much better the Fed has reacted to the current economic crisis than it did to the one that started in 1929.
That sort of got my attention. The Fed economists were comparing the economic crisis happening right now to the events that heralded the coming of the Great Depression?! That's sort of like going to my doctor about a headache and having the fellow start talking about my condition relative to having brain-eating worms. I wouldn't care if he had a favorable prognosis for me: he's finding his basis for assessing my problem in terms of worms eating my brain, for God's sake!
That point escaped my fellow economist. He was intent on telling me about the all-you-can-eat smorgasboard of incredible food the Fed provided for all the attendees at that conference. Apparently, it was simply awesome. They even had a huge selection of alcoholic beverages, including some of the great beers brewed right there in St. Louis. Food and booze for every economist there; and all the back-slapping camaraderie any academic could possibly hope to get with the big dogs of the Federal Reserve Bank of St. Louis.
How could any self-respecting economist come away from a deal like that with anything other than glowing praise for the Federal Reserve system and the dedicated men and women who serve it?
My colleagues are right: I really don't get it. I certainly didn't get the food, the booze, and the free trip to St. Louis; and, most importantly, I didn't get my chance to rip those incompetent, self-serving, destructive Federal Reserve automatons up one side and down the other.
I should have gotten the money together to go to that conference. I could have used my car to get a quick title loan at one of those quick-and-easy loan stores on the bad side of town. Maybe the government would have bailed me out when I couldn't repay. Then again, I think that $700 billion isn't supposed to go to irresponsible people like me.
After all, I can't even afford to drive to St. Louis for an all-you-can eat buffet of delicious food and fabulous propaganda. That makes me irrelevant.
Just like all of you who have read this article.
Welcome to the 21st Century. It's going to be a lot like the 20th Century, except that it's going to get bad a lot faster before it doesn't get any better a lot sooner.
The Dark Wraith will now go to the kitchen to prepare an all-you-can-eat buffet of Ramen noodles with fried Spam. Bon appétit.
Comments
Wrote Weaseldog:
Wrote Moody Blue:
Obi-Wan Wraithy,
Your articles and insights are most appreciated, as always. But too much deep thinking gives me an awful headache, these days. I miss the times when (I thought) things in life seemed to make a little bit more sense.
This two day conference session thing just doesn't seem to make much sense, to me. Other than we are truly living in the Ironic Age of Insanity.
This economic conference session seems to smack of hypocrisy. Here we are, not even anywhere near to the financial meltdown rock bottom and the economic news gets worse with each new day.
Another half million workers lost their jobs since October. More job losses are on the way, a few more thousand here, more over there, and on and on. One business after another is reporting lower volumes. Our national manufacturing output is on the skids. The credit card industry wants to raise rates and, in some cases, cut people off from using their accounts. College tuition costs are soaring out of the reach of the averaged income families. More and more people are going without medical coverage. Medical costs keep rising. People are losing their investments and their retirement benefits.
Congress is giving more scrutiny to the Big Three (granted they've been major f-ups for the last 30 years) on whom millions of jobs are interconnected, who are asking for loans to tide them over than Congress is doing with the ka-billions of our tax dollars being thrown away, with an incredible lack accountability or oversight, to bailing out the rich. And the revisionist historian commander-decider guy and his crooked crony cohorts are scurrying around trying to screw things up even more before they leave DC.
Fat cat CEOs, COOs and other executive suits (including those who run the colleges) are still making multiple times more than their average workers are, and they cannot even justify those exorbitant salaries, bonuses and perks when they run a company into the ground, or make it so that fewer people can afford the products they are pitching. And the whole world's economic stability is in the toilet.
Working class people need decent paying jobs and benefits before they can help to contribute to the economy with any purchasing power. They are being put upon to give up more and more. And when financial times are tight, they aren't going to spend as freely. The working classes are the ones who need to be bailed out, not stuck with paying for the conscious-less and greedy tax-break welfare Wall Street bailout queens. Tax breaks and bailouts for the rich don't trickle down or help grow the economy. It's always been the working class people. And they've always been the ones getting hosed by the rich. It's the unscrupulous, irresponsible, unregulated marketers who have caused the market crisis, not the working class folks.
So, then we have these economics professors actually giving credence, by default, to the Federal Reserve money machine by their even showing up. I don't doubt they listened to a bunch of "we're just so great" crapola that I bet was spewed, and I bet none of them had the backbone to stand up and ask for any accountability, either. (Sort of like in Congress?)
And there they were, also taking their share of slopping at the trough on (what eventually ends up being) the tax-payers' dime?
"Ain't they got no shame?"
Wrote Peter of Lone Tree:
"In a couple of years, I may not be so quick to discard a bird that's only been dead eight hours and refrigerated overnight by nature."
From the company's website:
Pilgrim's Pride is currently ranked #327 on the Fortune 500 list of largest U.S. corporations.
Pilgrim's Pride employs approximately 48,000 people in the U.S. and Mexico.
The company has major facilities in Texas, Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, Puerto Rico and Mexico, as well as other facilities in Arizona and Utah
From USATODAY:
"No. 1 chicken producer Pilgrim's Pride files for Chapter 11"
Wrote Weaseldog:
Damn Peter.
I'm reading reports of major sea ports that have virtually nothing going on, ships lined up along coastlines, with nothing to haul, nowhere to go, just burning their lights so no one runs into them.
The Baltic Dry Index is in the tank.
DOW and DuPont moved to Asia.
So chlorine for water supplies isn't on its way to the US. Frozen Chicken dinners aren't making the trek from China. No imported noodles, olives, olive oil...
What will Walmart have to sell in six months? How many towns can survive if their Walmart closes its doors?
We're in for a world of hurt. To be succinct, we're fucked. Sorry DW, I couldn't think of a better word or phrase except maybe we're clusterfucked by a herd of gonorrhea infected rhinoceroses. But that's probably getting overly technical.
We've all heard people say that it's time to stock up, and I've been saying it's time to get that victory garden started. Now the clock has almost run out.
Wrote Dark Wraith:
Yes, Weaseldog, and you being a long-time reader of my articles know that I have been warning for a long time that this was coming.
While I'm on the subject, no, this is most decidedly not the result of some abstract thing called "greed" or "capitalism" or anything of the kind; this is the result of the worst presidency in the history of this nation. A massive, complex government overseeing a massive, complex, capitalistic republic cannot be run by incompetent, ideologically single-minded, ill-prepared, unseasoned, inadequate imbeciles.
And lest anyone think that this is an "economic" problem, let me point out that it was not merely economic policy that was flogged through the past eight years by ideologues with no sense: our judiciary, federal law enforcement, and other branches of government are now filled with thousands of appointments made at the behest of virtual children like Monica Goodling who had no clue about the real qualities and characters that would constitute the stuff of responsible people put in charge of our nation. From the FBI to the Justice Department to the Pentagon to the very Supreme Court, itself, men and women are now in place who should never have been put there. The failures of the Federal Reserve and the United States Treasury, as large as those catastrophes are now revealing themselves to be, are just the tip of an iceberg of deep, abiding inadequacy that is and will for a long time be the legacy of the Bush Administration. Law at the very level of the Constitution, itself, has been twisted by Supreme Court decisions that will now stand for generations. Right-wing judges and other legal administrators by the thousands have been appointed to life positions and so are now entrenched to lay the law to a toxic waste site that will take generations to remediate. An entire mentality of siege has now become law and the excuse of law enforcement personnel to bully, abuse, spy on, and otherwise diminish personal privacy and liberty. The list of contaminants in that toxic mess goes on and on.
Yet, we now have a President-elect who not only has signal no retributive justice against those who did this, but is folding some of the worst of them — including Mueller and Gates, as well as appeasers like Lee Hamilton and Hillary Rodham Clinton — into his Administration.
If anyone thinks my days of dire warnings, bleak outlooks, and flaming condemnations are over, think again.
The Dark Wraith is just getting started on Part Two of This Country Is a Mess.
Wrote Moody Blue:
...look at the damage to the toe I think I broke.
No doubt about it: those midnight snacks are definitely not part of a healthy lifestyle. . .
{{Owie, owie, owie.}} I know it had to hurt like a muther.
Wrote Dark Wraith:
In fact, Moody Blue, it hurt worse earlier tonight than it did last night, and that's because I walk around during all of my class lectures, which seems to have put a lot of pressure on it.
Tonight, I'm sitting with my foot propped up on a heating pad. I have some ibuprofen in my system; a giant mug of hot, strong coffee beside me; two cats peacefully sleeping on my desk; and a whole lot of final exam material to write. In other words, life is good, again.
The Dark Wraith could not ask for much more on a quiet Friday night.
Wrote Moody Blue:
May the rest of the weekend be as kind to you, Wraith.
Wrote trog69:
I yi yi, yeah, take a load off with that toe.
Here's a heartwarming vignette to take your mind off things.
I was getting some equipment out of the change room at work on a Thursday afternoon. There were two guys changing at the time, so I sat down to talk, and take some weight off my foot due to what I thought was an extremely painful ingrown toenail. The fellow directly in front of me mentioned that because he was only an asbestos remover, and not yet in the union, he had no insurance, and he couldn't afford to get his ingrown toenail worked on. This guys was 6' 7" and not at all skinny. He then took off his sock, and all I could think of was Wile E. Coyote after smashing his paw with one of those cartoon massive sledgehammers. This guy's toe was twice it's normal size, bright red, and seemed to visibly throb as we stared agape at this humongous monstrosity that this huge guy was walking on.
Being the tough guy I was, I still took half a day off to get mine done, thanking whatever stars were involved for not afflicting me with that poor guy's foot.
Hey, remind me to tell you about accidentally kicking my brother's erector set-looking multiple fractured leg some time; It's a hoot.
Wrote Dark Wraith:
Good evening, trog.
The old-fashioned way to remove an ingrown toenail is still the best. The trick is, though, that you have to wait until the thing is swollen and terribly painful.
Once it has reached that condition, take a pair of pliers, latch on the end of the toenail good and tight, then just rip upward as fast as you can.
Believe it or not, the relief from the pain of the ingrown toenail is so rapid and so intense that it overwhelms the pain from removing the thing.
I should mention that you might bleed rather intensely, and the blood might be rather nauseating to look at if it flows out laced with pus, but that's all a good thing: the flowing blood will remove the infected fluids; and even though the hemorrhaging will certainly look like it could lead to loss of life, it's actually not going to be all that much blood.
Give it a minute, then pour hydrogen peroxide on the wound and let the foam die down. The macho thing to do next is to douse the injury with alcohol. This is where it's probably best to have a small towel stuffed in the teeth to avoid tearing down the walls with the screaming.
Once the fussiness is over, put some gauze on it, then wrap it with some duct tape (or medical tape, I suppose).
The toenail will grow back in its own time, and the foot will be good to walk on within a matter of an hour or two.
Now, how do I know this?
I've done it to myself.
My mother taught me. I first saw her do it to my grandfather. I honestly thought he was going to gag on the towel, my mother packed it in his mouth so tightly.
Later, when I was about eight, my father took care of his ingrown toenail the same way. I wouldn't have known he did it except that he didn't think he was going to need the towel.
He was wrong.
Not knowing why a blood-curdling, screamed curse had just pounded through the closed door of the bathroom, I was headed for the garage when Mom told me to get back in the house because it was just "the old fart" (as she would call him when he disappointed her) taking care of an ingrown toenail.
Too many people go to doctors, these days.
If more kids grew up hearing their older male relatives making overtures of vulnerability, we'd have a lot more sensitivity in this world. That's what I think, anyway.
The Dark Wraith misses the old days and the old ways.
Wrote trog69:
Sheesh. I guess we know who NOT to ask about headache remedies.
Wrote Dark Wraith:
My headache rememdy is also pretty interesting.
Not only that, but it works.
The Dark Wraith should open his own clinic.
Wrote Progressive Traditionalist:
Good evening, Mr Wraith.
I have accommodations available in the St Louis area, should you require.
Take the Amtrak to the Kirkwood station. Ticket supplied if necessary.
E-mail ahead.
Wrote Missouri Mule:
Dark Wraith, youse might wanna lean to give your friends a bang on the pipes when stuff like this comes up.
Wrote Dark Wraith:
That would definitely not be the manly-man thing to do, ma'am.
Wrote Peter of Lone Tree:
"Call me an alarmist, by I think we need better friends. That, or we need better fire retardant on our trucks."
Indeed! For we already have some hideous retards IN our trucks, DW.
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One of my young roosters got over the fence late last night. The dogs played with him sometime in the night.
I found him cold on the grass near the porch this morning and tossed him the garbage.
In a couple of years, I may not be so quick to discard a bird that's only been dead eight hours and refrigerated overnight by nature.
I just have to wait until my wife is hungry enough to eat a bird that isn't freshly killed and butchered...
I've been reading more articles about Argentina. Aslong as the bankers that raped Argentina continue to rape the USA, I think they are the model we should looking to, in order to understand where we are going.
FerFAL has an interesting blog with firsthand accounts.
http://ferfal.blogspot.com/