If it is the first responsibility of the Federal Reserve to protect the dollars that Americans earn and save, is it not dereliction of duty for the Fed to pursue a policy to bleed value from those dollars? For that is what Chairman Ben Bernanke is up to with his QE2, or “quantitative easing.”

Translation: The Fed is committed to buy $600 billion in bonds from banks and pay for them by printing money that will then be deposited in those banks. The more dollars that flood into the economy, the less every one of them is worth.

Bernanke is not just risking inflation. He is inducing inflation.

He is reducing the value of the dollar to make U.S. exports more competitive and imports more expensive, so that we will consume fewer imports. He is trying to eliminate the U.S. trade deficit by treating the once universally respected dollar like the peso of a banana republic.

Sarah Palin has nailed cold what Bernanke is about:

“We shouldn’t be playing around with inflation. It’s not for nothing Reagan called it ‘as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.’

What do Superman, Spiderman, Buffy the Vampire Slayer – and their countless peers — have in common that makes them terrible heroes for America?  Fun dreams, but symptomatic of a growing weakness in us that imperils not just our Constitutional regime but the foundations of the nation?

It’s not their superpowers.  Consider other examples of this symptom: Batman, Sheriff Will Kane (in High Noon), the Lone Ranger, Dashell Hammett’s Sam Spade and the Continental Op.  It’s their role as individuals, and so contrary to the collective action that actually built America.

Super-empowered individuals (using Tom Friedman’s neologism) have always played a large role in American myth, from from James Fenimore Cooper’s frontier hero Nathaniel “Natty” Bumppo to the libertarian hero John Galt (in Ayn Rand’s Atlas Shrugged).  Until now this fantasy existed in creative tension with our true greatest strength – people working together to build America.  The Mayflower Compact, the Revolution, the Constitutional Convention, abolitionist societies, wagon trains, cattle drives – groups from Franklin’s Philadelphia Contributionship for the Insurance of Houses from Loss by Fire (our first property insurance company) to the Boy Scouts of America.  Our triumphs during the Great Depression (avoiding totalitarianism) and WWII.

Teamwork and powerful institutions used to populate not just our history books but also our legends.  Such as Marvel Comic’s SHIELD, E. E. Smith’s Triplanetary, Robert Heinlein’s Space Patrol, and UNCLE (as in The Man from). No longer.  Today organizations most often appear in today’s fiction as irrelevant, inept, or evil. During the 1960′s and especially the 1970′s we became alienated from our institutions.  Organizations which should have led us into the future, like NASA, failed us.  We learned that institutions which should have protected us, like the FBI and CIA, were often criminal oppressors.  Institutions which we admired, like the military, displayed gross incompetence.

Our response is not reform, whatever the cost or effort.  Instead we retreat into fantasy.  Ignoring the great problems facing our nation, we attempt to triumph by ignoring them.  As the punch line to the Russian joke goes, we’ll pull down the blinds and pretend we’re moving.  Gridlock in Washington becomes progress.   The Blue Fairy will solve everything —  if we believe in fairies.

Conclusion (update)


One person can make a difference.  That confidence has (and hopefully will remain) a core American tradition.  To work it must remain in balance with its opposite, our ability together to build powerful institutions.  Otherwise we’ll be sheep, controlled by special interests beyond the average individual or household’s to influence in any way.

The ability to maintain balances between contradictory values is distinguishing strength of western civililzation.  Freedom-equality.  Science-humanities.  Nature-Art.  Human rights-Multiculturalism.  Periods where we lose these balances often end badly.

Bill Black: “Control Fraud” Crushes Kabul, And the New York Times Needs to Correct its Correction

By William C. Black, Associate Professor of Economics and Law, University of Missouri-Kansas City, the author of The Best Way to Rob a Bank is to Own One, who also posts at New Economic Perspectives. 

The New York Times, in a story entitled “Afghanistan Tries to Help Nation’s Biggest Bank” issued the following correction:

Correction: September 4, 2010

An earlier version of this article, citing American and Afghan officials, erroneously stated that the United States would contribute money to help the Kabul Bank. American officials say the United States is providing technical assistance but no funds for the bank.

The problem is that the “earlier version” was correct – the correction is incorrect. Kabul Bank has been revealed to be a “control fraud.” Control frauds occur when those that control a seemingly legitimate entity use it as a “weapon” to defraud. Control frauds cause greater financial losses than all other forms of property crime – combined. Control frauds can also cause immense damage to a nation because they are run by financial elites that curry favor from political elites. The result is that they are often able to loot “their” banks for years with impunity. They also degrade the integrity of the entire system.

Kabul Bank is a typical example of a crude variant of control fraud at a major bank. Systems of crony capitalism, such as Afghanistan, inherently create an intensely “criminogenic” environment that produces epidemics of control fraud in the public, private, and non-profit sectors. Kabul Bank, like the (originally Pakistani) Bank of Credit and Commerce International (BCCI) – better known to regulators as the “Bank of Crooks and Criminals International” is reported to have helped everyone – corrupt Afghani government officials, corrupt business leaders, and the Taliban laundering its drug profits to, in part, buy weapons. Like BCCI, Kabul Bank’s managers’ reported frauds and self-dealing blew up the bank by causing massive losses. (If you believe that Kabul Bank is the only bank like this in Afghanistan you are consuming too much of Afghanistan’s leading export.)

Liberalism has always purported to defend a neutral stance toward ultimate goods or final aims, to stand impartially above the contesting claims of citizens, and instead open a sphere of liberty for the pursuit of personal goods. Yet, smuggled into this very claim of neutrality is a substantive worldview that, over time, remakes the world in its image in support of a highly individualist, voluntarist, and autonomous prevailing set of norms. Its purported neutrality about ends is a kind of solvent that, over time, corrodes non-individualist, non-voluntarist and non-autonomous ways of life, slowly but relentlessly dissolving what are often pre-liberal cultural inheritances under the weight of liberalism’s logic. The claim to be “neutral” among worldviews itself contains a worldview that, over time, transforms all human societies. Ironically, it fosters first by a kind of societal logic, and then by force of law, the conditions described by its first theorists, namely, the vision of humanity described in social contract theory. Bertrand de Jouvenel suggested that social contract theories were conceived by “childless men who had forgotten their childhoods,” but in fact, liberal theory fosters social and ultimately legal conditions in which we are increasingly childless, siblingless and generationally disconnected. It begins with a false assumption about how humans exist by nature – without histories or culture or memory – but over time makes them into the spitting image of the creatures that they fantasize exist by nature in a prepolitical state. What nature could not in fact create, liberal politics fashions by artifice.

The evidence, it seems to me, is quite contrary: over the past forty years, by many measures, the cultural forms and practices that have been often most important to traditionalists have weakened and even collapsed – including the basic fabric of marriage and family life. I think the evidence suggests that the oligarchic elements of the Republican party have consistently attracted and then co-opted religious conservatives for their electoral support, and then have engineered ever greater concentrations of economic power with nary an effort exerted on behalf of the causes dear to social and religious conservatives. In the meantime, these plutocrats – much quieter – have enjoyed relatively little critical attention by the Left, which instead has become absorbed with an embrace of identity politics, and has largely eschewed a serious reflection on the titanic inequalities that now pervade our national life in favor of denouncing social conservatives.

The Left’s narrative has wholly obscured the fact that it was these very religious conservatives who were once at the heart of the Left. Offering them no place at the table of the official Left today – indeed, treating them when possible with dismissiveness if not outright condescension – the egalitarian economic populism of this segment of America now lies dormant and their energies are instead bestowed upon a Republican Party that yearly further decimates their way of life. There is a straight line backward from the Tea Party to Reagan Democrats, but then further back to William Jenning Bryan’s people and the Jacksonian and Jeffersonian Democrats. There was a time in this country when the Left was more devoted to equality than to lifestyle autonomy, and it was more often than not religious conservatives were the most vocal defenders of democratic equality. Linker articulates a contemporary understanding of Liberalism that asks us to be indifferent to a variety of lifestyle choices, but we ought to ponder whether such indifference can be reined in, or whether it results in indifference toward our fellow citizens in a much wider scope.

Linker’s story is finally informed by its own triumphalist and Providentialist storyline, the history of the victory of Liberalism and the need for it to maintain firm control of what he calls the “skirmish line” between religion and politics. This storyline wholly obscures what I think to be the real story – the story of how modern economic conservatism and modern identity liberalism have combined in support of titanic inequalities in our society, the former in the name of corporate profit and the latter in the name of lifestyle autonomy and the “secession of the successful.” Truly homeless today are the religious conservatives whose voices Linker would silence rather than engage. America needs the older lyrics that religious voices once raised as a prophetic witness to the Republic, that language of equal dignity that demands more than indifference and more than the private reveries and worse, the self-congratulation of today’s autonomous individuals. It calls for the language of community, fidelity, memory, and a belief in our shared fate that was ever the greatest contribution of American faith to the Republic.