Wednesday, March 11, 2009

- Welcome Back Carter




Somewhere in Philadelphia my buddy Karl is peeing his pants with laughter right now.....
Posted by at

2 comments:

<br><br><br>Steven Rodgers said...

You don't really have a post that corresponds to a question, so I just picked a recent one!

Just as I was beginning to hear rumblings about shorting treasuries - and actually considering it myself - on March 18th the Fed announces that they are about to start gobbling up existing treasuries by the billions.

Am I wrong in my belief that the Fed is engaging in the kind of market manipulating activities that would land a CEO in court?

March 21, 2009 6:53 AM
Tom said...

Yeah sorry .... I'm a little busy these days. Between a heavy work schedule and trying to find a way to move myself, my family and my company offshore with a minimum of loss, I haven't had a lot of time. This is wildly overstated of course, but I think I'm getting a little whisper of how Jews in Germany must have felt in the first 100 days after Hitler took over.

Yours is an interesting question. There is no doubt that it’s intended as market manipulation, it’s even stated as such. But that something like that would find someone in court these days seems a bit of a stretch. No private citizen has enough assets to manipulate markets without massive and undue risk. It's happened in the past, but it's a much more rare thing than you would imagine. It's really only possible if the market is very small (and US treasuries certainly is not).

The whole thing is a bit of a red herring I'm afraid.

Besides, the only people I know who are fearful of repercussions these days are people who have done things which were perfectly legal.

With this punitive tax that the congress is about to levy on bonuses, they have thrown out the last vestiges of rule of law. And when contracts aren’t worth anything, what else is? The constitution is after all, just a contract between the people and the government, and if they don’t honor it contracts anymore I don’t see why that one should matter any more than the others. Even more, I don’t see why any of us should be compelled to honor it either.

The constitution is an agreement which basically says that if the government sticks by these rules, then we won’t rise up and kill them all. We will recognize that those are the rules our society plays by, and we’ll all play by them too. But clearly, they don’t care about that sort of thing anymore, so in my opinion the citizenry shouldn't care about it either.

The government can still derive it’s authority through force of course… like any other banana republic. And they will no doubt be forcing us to do more and more in the coming months and years. And like Germany in the 30’s many will be cheering the whole thing forward. But that makes it no less unjust.

So is it market manipulation? Sure it is. They even say so. But since it’s being done by the government and since we no longer have a country ruled by laws instead of men, I don’t think there will be any consequences to it other that those immutable laws of the market. Expect the currency to collapse relative to hard assets but not other currencies. Competitive devaluation is the new central bank M.O.

March 21, 2009 8:53 AM

Post a Comment

Subscribe to: Post Comments (Atom)