Tag Archives: crony capitalism

The Hypocrisy of the Sam Bankman-Fried Conviction

Sam Bankman-Fried (SBF), the founder of FTX and Alameda Research hedge fund has been found guilty on all seven counts related to financial fraud and money laundering in a lower Manhattan court room.  The trial took a lot less time than expected as did the jury’s deliberation of the case which speaks to the overwhelming evidence against the onetime financial guru of entertainers, crypto enthusiasts, and politicians.  SBF could face up to 100 years behind bars.

Gary Gensler, chairman of the Securities and Exchange Commission, said that “Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto.”*  Manhattan U.S. Attorney Damian Williams concurred, calling Bankman-Fried’s actions “one of the biggest financial frauds in American history.”**

SBF’s conviction is particularly fitting since he had marketed himself as a new-style capitalist who was more interested in philanthropy and giving away his wealth, instead of enriching himself.  That so many were taken in by this charlatan, especially a number of supposedly savvy investors, demonstrates again that greed remains a significant part of the human condition. 

While SBF will hopefully receive his just rewards for his wrongdoings, there is another fraud that has been taking place in the financial world for quite some time which dwarfs exponentially the scam of the one-time “crypto-king.” Unlike SBF, however, this entity continues to exist and faces no prosecution, but instead is often praised for its operations.

The institution, of course, is the Federal Reserve and, for that matter, all central banks.  Central banks do what FTX did but on a colossal scale.  While SBF’s crimes were limited to those who foolishly invested with him, the Fed’s customers are all those who hold dollars and have little option to not use them unless they want to revert to barter and become desperately poor.  Like what SBF did to his investors, the Fed has defrauded (although surreptitiously) its “customers” by robbing them of their purchasing power through monetary debasement.  The loss of purchasing power by the public has been redistributed to the Fed, the political class, and financial elites. 

The Federal Reserve

While Fed officials, the government, academia, and the sycophantic financial press may try and obfuscate the matter, the fact remains that the Federal Reserve has the ability to create money out of thin air and without limit.  It is counterfeiting writ large.  No criminal, be it SBF, Bernie Madoff, or the Mafia could ever dream of such a scenario! 

The Fed’s creation of money through credit expansion is certainly more subtler than the swindling which SBF engaged in or what took place in earlier times from “coin clipping,” but the criminality of the action is the same.  Under Western jurisprudence, however, central banking is now enshrined in law as a legitimate part of financial life.

As SBF wrapped himself in an aura of a benevolent and charitable new-age businessman, the Fed hides behind its criminality by presenting itself as a necessary and indispensable factor for the nation’s economic well-being.  Without the Fed and its dual mandate of “price stability” and full employment, the economy would collapse. 

Yet, this is a ruse.  Before the advent of central banking, economic life went about quite nicely.  It was only when central banks appeared that the dreaded boom and bust cycle became more frequent and severe.  Moreover, in the pre-central bank era, the world was on a metallic monetary standard which protected peoples’ purchasing power.

The Fed was created by the major U.S. banks and top politicos at the time to allow banks to counterfeit without facing the consequences of their actions.  Stable prices and low unemployment are secondary functions of the Fed and mostly spoken about for public relations.  Protection of the system, especially the solvency of the Big Banks and now funding the national government through debt monetization, remains the prime responsibility of the Fed. 

This, of course, is not to exonerate SBF.  Why is it though that the laws which convicted the rogue crypto financier are not applied to America’s central bank?  When sovereigns of the past debased the money supply most acknowledged its immorality and pointed out who benefited.  In this supposed enlightened age where “equal justice before the law” is a ruling mandate of the legal system, its application apparently does not apply to the monetary authorities of the world.

Capitalism, at its core, is a moral argument where respect for property rights, the freedom to exchange, honest money, and the liberty to become an entrepreneur are the foundations which the system rests.  Those who legitimately satisfy consumer tastes and demand are rightly rewarded.  Naturally, in doing so, entrepreneurs enrich themselves but they do so by providing for the needs of their customers and in the process create jobs and incomes for those they employ, all of which is done on a voluntary basis. 

Central banking is the essential instrument of “crony capitalism” which is the antithesis of free enterprise.  Crony capitalism is a new version of mercantilism which was condemned by the likes of Adam Smith and was one of the factors why the American Revolution was fought.  It has since come back with a vengeance.

Besides the immorality of central banking, the Fed’s manipulation of the money supply has deleterious effects on economic life. Inflation hurts the poor and the working class disproportionately while the Fed’s control of interest rates and credit is the reason for the dreaded business cycle.

The present age has prided itself in its efforts to attain justice in regard to race relations, the environment, economic equality, and now gender recognition.  Yet, the immorality of central banking remains and while Sam Bankman-Fried may be incarcerated, social justice warriors (as well as conservatives) willfully ignore the counterfeiting elephant in the room.  Until central banking is outlawed, a truly just social order is an impossibility.

*https://www.zerohedge.com/political/sam-bankman-fried-found

**https://nymag.com/intelligencer/2022/12/sam-bankman-fried-has-been-arrested.html

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

On the 75th Anniversary of V-E Day and the Coronavirus Scamdemic

VE Day Coronavirus

The iconic Champs-Élysées and its Arc de Triomphe stand eerily empty before V-E Day ceremonies Friday in Paris.

This month (May 8th) marks the 75th anniversary of “V-E Day” when German forces unconditionally surrendered to the “Allies.”  Numerous articles, essays, and monographs have appeared commemorating the anniversary and while all are mostly laudatory, some have acknowledged that the outcome had its “drawbacks.”

By any objective rendering, for Western Civilization WWII was an unmitigated catastrophe whose reverberations continue to this day.  Forty-three million troops were senselessly killed between American, British and Continental forces while 38 million civilians perished.  Europe’s current demographic nightmare had its unfruitful seeds cut down with the depopulation of the Continent’s finest for the maniacal aims of the world’s power elites.  Not only the loss of life, but the destruction of property and the cultures upon which they were built have been incalculable.  Although the US emerged in the post-war world as the dominant economic and political power (as its mainland remained unscathed from wartime destruction), its participation in the conflict was a titanic geopolitical blunder.

The defeat of Germany and Japan, which would have not come about without US military might, left vast power vacuums in Eastern Europe and the Far East that Soviet Russia and Red China ruthlessly filled.  Half of Europe would fall behind the Iron Curtain, subjected to fierce political repression and debilitating socialistic economic planning.  In Asia, Communist regimes sprang up with the assistance of China and the Soviet Union which America attempted to counter in Korea and Vietnam at a staggering cost to its domestic economy and social tranquility.

Even after the fall of Soviet Communism, the US’s supposed lethal enemy, America maintained its empire as its “defense” spending continued to escalate beyond all reasonable levels which has led, in part, to the decline of domestic living standards of nearly all except, of course, for the politically well-connected. Not only has military adventurism bankrupted the country, but there is now “blowback” from the countless enemies either real, imagined, or contrived – created by US overseas meddling.  Moreover, the nation’s military-industrial and security complex has turned on its own citizens with spying, surveillance, and data gathering that would be the envy of Stalin’s Cheka. Yet, it was US participation in WWII which cemented the nation on its ruinous course as global policeman.  This was predicted and feared by “isolationists” at the time which is why they so courageously fought to keep the country neutral.

While the peoples of the world suffered from the Apocalyptic-like destruction of the war, certain groups did gain.  The benefactors were obvious – Stalin and the Soviet state which was given free reign in Eastern Europe; the US military and security industrial complex which had a world empire to police; Chinese Communists, with Imperial Japan decimated, it left little opposition for them to gain control in China and beyond.  For almost everyone else, even the so called “victors,” WWII was a Pyrrhic victory at best.

For the remainder of 20th century American history, US entry into the Second World War proved to be the catalyst which led to the immense cultural, economic, and political changes, which many conservatives, libertarians, and traditional-minded people at the time and afterwards opposed.  Yet, it was US participation in the war which meant that all of those changes would become permanent.  Harry Elmer Barnes, who was a keen social theorist and wrote extensively in sociology, clearly understood the effects of US entry into the war:

Drastic changes in the domestic realm can also be attributed to the impact of our

entry into the second World War.  The old rural society that had dominated

humanity for millennia was already disintegrating rapidly as the result of

urbanization and technological advances, but the latter failed to supply adequate

new institutions and agencies to control and direct an urban civilization.  This

situation faced the American public before 1941 but the momentous transformation

was given intensified rapidity and scope as a result of the extensive dislocations

produced by years of warfare and recovery.*

Harry Elmer Barnes Harry Elmer Barnes

While every sector of American life was unalterably changed, the most ominous took place in the political order.  Although the federal government had begun to expand during the Progressive Era, its scope and involvement in society drastically accelerated during and after the war.  Barnes, holding many libertarian beliefs, observed the totalitarian features of the post-war nation:

The complex and cumulative aftermath of [WWII] has played the dominant role in

producing the menacing military pattern and political impasse of our time, and the

military-industrial-political Establishment that controls this country and has sought

to determine world policy.**

The rise of America to world power status diverted attention and scarce resources away from the domestic front, which further exacerbated social and economic changes.  The societal strife would become more and more acute as the nation’s overseas commitments mushroomed, as Barnes incisively explains:

The social problems of an urban age were enlarged and intensified, crime increased

and took on new forms that became ever more difficult to combat, juvenile

disorganization became rampant, racial problems increased beyond precedent, and

the difficulties of dealing with this unprecedented and complicated mass of domestic

issues were both parried and intensified by giving primary but evasive

consideration to foreign affairs in our national policy and operations.***

While domestic problems received less attention as the American empire expanded, foreign lands which held different patterns of social order or had non “democratic” forms of government, were targeted for “regime change,” even if they had taken no hostile action toward the US:

. . .  the results of [WWII] already indicate that this produced drastic and possibly

ominous changes in the pattern of American relations to the rest of the world.  We

voluntarily and arbitrarily assumed unprecedented burdens in feeding and

financing a world badly disrupted by war. . . .  The United States sought to police the

world and extend the rule of law on a planetary basis, which actually meant

imposing the ideology of our eastern seaboard Establishment throughout the world,

by force, if necessary. . . .****

Had the US remained neutral as the isolationists and American First supporters had pleaded, the world today would be markedly different – undoubtedly freer, more prosperous, and likely more peaceful.  Since every society is governed, in part, by its understanding of the past, the post-WWII world is built on a lie.  The lie, of course, was that the attack on Pearl Harbor was unprovoked and that the Roosevelt Administration had negotiated in good faith with the Japanese in the months and years leading up to it.

While not recognized at the time and even today the outcome of WWII ushered in the totalitarian nation state which would become a permanent and intimate fixture in the lives of its citizens.  There was no appeal to its dictates and as the decades rolled on it accrued unthinkable power over the society and economy.  It attempted to solve every social and economic problem or inequality (most of which it created) and in each action enhanced its power and control dramatically.

The corona scamdemic may be the state’s greatest power grab yet.  Besides the infringement of civil liberties, the shut down has been adroitly used to cover for the titanic economic collapse which began in the weeks prior to the draconian response measures.  Actually, the financial breakdown began last September with the Fed’s “repo” operations.

All of this has been quietly and deliberately forgotten by the financial press and under the cover of fighting the virus, the Fed and the rest of the world’s central banks have expanded their power and control of financial markets to unprecedented levels, making a mockery that the economy is in any sense “capitalistic.”

The adage that “history is written by the victors” has never been more apparent than in regard to V-E Day, however, the coronavirus scam has shown once again that the consequences of the day and the war which it commemorates are now being ominously fulfilled.

*Harry Elmer Barnes, “Pearl Harbor After a Quarter of a Century.”  In Left and Right: A Journal of Libertarian Thought.  Vol. IV, 1968, p. 11.

**Ibid., pp. 9-10.

***Ibid., p. 11.

****Ibid., pp. 10-11.

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

Donald Trump is an Economic Ignoramus!

Trump & Trade II

Not surprisingly, Donald Trump has followed in the infamous footsteps of his presidential predecessors in the transition from candidate to chief executive.  Invariably, every candidate for the presidency makes a whole host of promises, the vast majority of which are horrible and typically only exacerbate the problems they attempt to resolve.  Among the proposals, however, there is an occasional bright spot.  Yet, once elected the stupid polices are eagerly pursued while the good ones are quickly discarded.

What was somewhat unique about Donald Trump was that he was the first candidate in a long while who had a number of refreshing and much needed proposals – border wall, “drain the swamp,” criticism of Ma Yellen and the Fed, rapprochement with Vladimir Putin and Russia, a deescalation of U.S. imperialism.  There were bad ones, too, but the good ones were enough to lead him to a smashing win over the Wicked Witch of Chappaqua.

Even before being sworn in, however, the president-elect began to downplay his most positive positions and emphasize the worst.  At the top of this list, and what Trump has been consistently wrong about since the inception of his political career, and even prior to it, has been “trade.”

Trump considers himself an “economic nationalist” in the mold of Patrick Buchanan.  Both, however, are simply wrong in this regard demonstrating that they do not have a grasp of the most basic of economic principles.

The latest Trump tirade on trade was reported during his recent trip to Europe and a meeting with high-ranking officials.  Trump is reported to have lashed out at German auto makers who the President accused of being “very bad” because of the “millions of cars that they sell in the U.S.”  The Donald bemoaned, “Terrible, we’re going to stop that” and added “I don’t have a problem [with] Germany, I have a problem with German trade.”*

Such talk makes Trump sound like a fool.  What is “bad” about providing American consumers with first-class automobiles that they apparently want in large quantities and are voluntarily willing to pay for?  And what of American workers employed with Mercedes Benz, BMW, and Volkswagen?  What is so horrible about the jobs and income that is provided by German firms to these workers?

Instead of berating German car manufactures, Trump should direct his ire at the immigration policies of psychopathic politicians like Frau Merkel.  Candidate Trump was very vocal about this and criticized European leaders for allowing their countries to be turned into multicultural cesspools.

The benefits of free trade and the baneful consequences of protectionism have long ago been elucidated by right-thinking economists, while the historical record has shown that lands which engage in “free trade” are decidedly richer than those that do not.  That Trump could spout off such nonsense about the evils of German trade shows how far the level of economic understanding has fallen.

Not only does free trade allow for the extension of the division of labor and specialization, but it has very important non-economic fruits.  When trade is unregulated, there is less of a tendency of trading partners to engage in bellicose actions toward each other.  Free trade and peaceful coexistence among nations are synonymous.  It is when trade is prohibited, skewed by governments to “protect” favored industries, which creates tensions among peoples.

Free trade does not require measures such as NAFTA or negotiated deals by politicians.  Instead, producers of one region are free to sell their goods at whatever prices or quantities to consumers of other areas that agree to buy them.  Ultimately, trade is up to individual producers and consumers in what they contractually agree to exchange, there is no need for political involvement.

Trump’s lambasting of the German auto makers, however, underscores a more fundamental problem with the U.S. economy.  America no longer produces goods that the world’s consumers desire, but instead, produces military hardware that it sells to despotic regimes which enables them to remain in power and wreck havoc on their enemies.  Predictably, this escalates tensions abroad while, domestically, the standard of living of Americans fall as scarce resources that could have been used in the production of useful consumer goods are diverted to the creation of murderous military armaments.

Trump has repeatedly boasted about his and his appointees’ abilities to negotiate great trade “deals.”  His bashing of the German auto makers right after his multi-billion dollar arms sales to the Saudis show not only that he is clueless in regard to the immense benefits of free trade, but that he is just another adherent, like his predecessors, to the ideals of crony capitalism.

*Tyler Durden, “Trump Slams ‘Very Bad’ Germans for Selling Millions of Cars in US: ‘We Will Stop This.'”  Zero Hedge 26 May 2017. http://www.zerohedge.com/print/596683

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com