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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

Best of Bill Buckler
May 10, 2011
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Mr Geithner decided to use the safe confines of the CFR conference in New York City to resurrect an old chestnut. It has been beloved of US Treasury Secretaries for decades. But Mr Geithner had not let it escape his lips thus far in 2011. Not until now anyway. We quote: “Our policy has been and will always be, as long, at least, as I'm in this job, that a strong dollar is in our interests as a country. And we will never embrace a strategy of trying to weaken our currency to gain economic advantage at the expense of our trading partners.”

This was in response to a question from the audience after Mr Geithner’s speech to the CFR on April 26. There was no report of any follow up questions. Nor was there a report of the response to Mr Geithner’s statement from the audience. There is no point in using up space in The Privateer to show just how ridiculous this statement is. We are quite willing to concede that the US has a strong Dollar POLICY. Their actions, by contrast, are specifically designed to weaken the Dollar and have done so quite effectively, especially so far this year. George Orwell put the difference between government policy and government actions very clearly indeed in his book - 1984. It is simply another version of Orwell’s “Newspeak”. WAR IS PEACE! FREEDOM IS SLAVERY! IGNORANCE IS STRENGTH!

In Orwell’s novel, the idea of “newspeak” was to align all thoughts and actions with the aims sought by the government by making all other forms of thought impossible. As Orwell himself later admitted and as the subsequent history of eastern Europe and the USSR eloquently proved, that cannot be done. What can be done is to set up a situation which is so fraught with potential or actual danger that a large proportion of the people affected by it refuse to think about it for fear of what they might discover.

This is what Mr Geithner is counting on when he talks about a “strong Dollar policy”. It is what Mr Bernanke is counting on when he talks about “transitory inflation”. It is what Mr Obama is counting on when he equates cutting deficits with cutting debts. Government policy always claims to be aimed at achieving prosperity for its subjects. The greater the shear between the professed goal and the reality, the more vehemently the policy is pushed. You can judge the extent of the shear by the vehemence.

As Ben Bernanke and his colleagues never tire of telling anyone who still listens to them, the Fed has a “twin mandate”. It is charged with maintaining both “price stability” and “maximum employment”. These goals explain why the statistical methods of measuring both the Consumer Price Index (CPI) and US unemployment levels have been tinkered with and changed on a regular basis for the past three decades. Plugging today’s data into the formulas which were in use to derive these numbers at the start of the great paper market boom of the early 1980s would produce results which bear no resemblance to the figures churned out today. US unemployment would be more than double its official 8.8 percent. The US CPI would be a HUGE multiple of the official figure. In essence, the derivation of modern government economic statistics is done like this: Figure out the figure you want and then design a formula to suit.

The Fed’s REAL mandate is the one which becomes more vital in direct proportion to the amount of new “money” which they pump into the system. That mandate is to preserve the faith in the system which is still being clung to by the vast majority of the American people. To do that, the Fed must do more than aid the government in “doctoring” the numbers which claim to measure the “health” of the system. They must select the prices they DON’T want to remain stable and do everything they can to ensure that they go in the direction in which the Fed wants them to go.

The Fed gets their “stable” prices from a very carefully managed (and often changing) selection of goods and services which are sold as representing the “cost of living” for Americans. For the paper markets, the Fed operates quite differently. Here, they don’t want “stable” prices - they want RISING prices. For the perceived “health” of the US and global financial system, this applies to Treasury debt paper. For the perceived “health” of the US economy, this applies to US stock markets. Mr Bernanke has made no secret of the fact that one of the goals of QE2 has been to support the stock market.




Ó 2009 – The Privateer

(reproduced with permission)


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