He covers the braindead "Marxist" media reaction; the rush to blame laissez-faire (as if!); what, and who, is really responsible for the crisis; and where, if we're not careful, we're going to all end up.
Read it. That's an order. Read it all. And then use it -- take what you know, and make what you know heard more widely.
16 comments:
Peter, that's the definitive article on the US economic woes for me, thus far. Superb.
Thanks. I've circulated it.
The greatest economist since Mises strikes again!
WOW! Reisman hits it out of the park!
After reading much of Reisman's 'review', my MBA degreed response to it is that it just looks like more economic right NeoLiberalism [NeoLiberatarian] BS denying their own responsibility for the Free Market hoax starting in the Reagan era.
'Anti-Democratic Nature of US Capitalism is Being Exposed': US NeoLiberals [NeoLibertarians] created banking crisis
That's a great article, but that is what one expects from George Reisman.
The sad thing is that those who need it most won't read it...
Adnihilo,
You are right to apologies for having an MBA!
MBAs are a waste of time and money. We don't employ MBAs as a rule. A person is far better off getting into a business and gaining serious experience rather than attending yakfests and play school.
This Adnihilo creature is yet another example of the shallow uselessness of much of the MBA fraud. He can't comprehend the meaning of a clearly written essay. His premise is socialist (this from a person with a supposed "business" qualification). He makes an arrogant appeal to authority (I have an MBA, therefore I know all about the economy). This sort of willful stupidity is unfortunately common. The trouble is that MBA academic staff mostly reinforce it. Seriously, can you imagine giving a person like this ANY sort of real responsibility over aspects of YOUR business?
Does anyone remember Robert Jones giving some salient advice to a couple of MBA ninnies a while back?
LGM
Excellent article by Prof Reisman. The trouble is that the people who need to understand it, and act according to it, won't. They fall into two groups- the ignorant or the fraudulent. As a result the next while will be very tough. There is going to be a lot of suffering which will be made much worse by the actions of various political "leaders" and influential agents and special interests.
---
Anyone for a World Central Bank? Well, that's the latest idea. Interesting it's the French govt positing it. I recall a previous French President saying the environment was the means to establish World Government. Seems they just can't get away from the notion of coercive central planning and control. How far they have fallen!
LGM
LGM
Reisman is too good to be allowed to go on holiday!
You're right, Linda.
He's so good he should be nationalised. :-)
Excellent analysis of the media reaction. It puts their response in a much clearer perspective.
Okay, NOW it all makes sense...thanks for the link.
LGM,
You say an MBA is a waste of time and money. I will contend that you are wrong, but not for the reasons you might think I'm going to argue.
The usefulness of an MBA is in the apparent authority one can derive from it, as other blind-authority-followers such as adnihilo will consider you an expert by virtue of your having received that official designation as a "master."
It is also useful because rising to a leadership position in business may have a lot more to do with satisfying people's belief systems than it does with actual understanding of economic issues--so you may rise to the top of some places with an MBA backing you precisely because you believe the wrong ideas so often sold as gold in those programs.
And let's face it, you're bound to learn some genuinely true and useful stuff studying for an MBA too, though not likely in the realm of macroeconomics. If you're the sort who can weed out the copious amounts of absolute tripe they're feeding you and grab the nuggets of true or useful stuff in there, that's like the icing on the cake.
But the cake is the fact that most people preconceive their perceptions of the wisdom of other people's words and actions, based on the letters they are allowed to associate with their names. So you gain credibility in many eyes by having an MBA, which may then give you a better opportunity to make your way in business and implement actual good ideas.
But it's important to note that in this light, the MBA is more like a permit you obtain, which allows progress not to be obstructed, as opposed to a life-changing educational experience.
Another educational benefit, if you can see through it though, could be to see what false ideas currently have a great deal of credence in schools, which could set you in a position to act in the lucrative position of counterweight to mistakes being made on a large scale....
Hi PC, thanks for this link.
I don’t have an MBA, nor do I have any serious experience in business, (and worst of all I’m French)…so I have a question rather than a comment. I’d have liked to post it on the original blog…but I was either unable to find the “post a comment” or it is a no-comment one (a bit sad for a “Prof.’s blog” not to answer questions!). Therefore I post it here as PC I trust you to help me find an answer.
A/ I clearly see the point that the US are far from being a “Laissez faire” state…No problem with that (i.e. the first third of the paper).
B/ I understand well the opinion that “The US administration is a disguised communist organisation”, i.e. the last third, even if I tend to disagree and find it quite overacted, if not “conspiracist / paranoid”.
My question is about the middle part of the article (actually, the only one that really matters in “understanding the crisis”, which was my motivation for reading it in a first place): GR accuses the US government of being responsible for the crisis, and his arguments are that:
“To the extent that the banks are then enabled […]”
“made it possible for banks to operate”
“contrived to make it possible for them to operate”.
So if I understand well, he reproaches the US administration to have been “too permissive” in letting the banks do whatever they wanted? Sorry, but I really can’t see the point here!!
THX in advance
Pierre
Hi Pierre, No need to apologise for being French. Where would we be without Bastiat. :-)
And I wouldn't worry about not having an MBA either (which stands for Miles of Bugger All) since that makes you more intelligent rather than less.
It's a good question, because it's a good indication of the importance of NOT JUST looking at this as a case of too much or too little regulation, but looking at what the existence of government institutions allow, and what particular regulations encouraged.
You ask about Reisman's comments that apparently call for more regulation, rather than less. What he's talking about is a sort of 'Gresham's Law' for banks -- that if government makes laws that prop up unsound banks, then you'll tend to drive out the more reliable banks.
Reisman's point is that in being a lender of last resort, the Federal Reserve system actively encourages riskier banking behaviour, and punishes more responsible banks.
And that problem is enormously exacerbated when regulations allow fractional reserve banking, which is a combination of fraud and theft-by-inflation - which means the law should properly prohibit the practice.
I think if you check the context of the quotes you mention, you'll find that that is what Reisman is saying.
For instance, he says "the Federal Reserve in recent years contrived to make it possible for [banks] to operate with irredeemable fiat money reserves of less than 2 percent," which means they failed to prohibit the fraudulent practice of fractional reserve banking, and allowed them to use the phony Federal Reserve fiat money as if it were real reserves that are 'as good as gold.'
Does that help?
Hi PC. Thanks for your answer, and sorry for the delay to reply.
Yes it helps of course.
So understanding even the general principles of this crisis requires an in-depth knowledge of monetary economics. Unfortunately that will take me a lot of time to get to this point. I will start surely with Bastiat's "what is money" (a more honest translation would have been "cursed money").
It's a shame though that it sounds like it can be even 'reduced' to 'only' monetary economics, and therefore makes all the "nice and pleasant principles" I read in e.g. other Bastiat's work or Smith totally irrelevant to this topic, as they relate to the creation of wealth whereas there isn't such thing involved here, rather the absence of it!
Anyhow, to me stupidity and ignorance are two different things, and amalgamating this crisis with laissez-faire is a mistake that does not require the first to make. Only the second (the ignorance of a very tricky field of knowledge, i.e. monetary economics) is plenty enough.
Also I still don't see the central point of Reisman paper. Even if, as you wrote, "Federal Reserve system actively encourages riskier banking behaviour", to me profit-making was a much more important "encouragement" for the banks and other (non-governmental and profit-motivated) financial bodies who invested in such a mess. And in that, again I believe this (mistaken?) amalgam is not that stupid to make.
Thanks again for your answer.
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