Tuesday, August 24, 2010

Rap Session

Here's a good recap of a meeting that top Treasury officials held with a group of bloggers. Because of Geithner's unpopularity, it can be easy to forget that these are real people working on tough problems.


Anonymous Blakenator said...

I appreciate the link, especially the comments thread that lacked the empty-headed ideological blather some blogs attract. Probably the two things that were the most disingenuous to me were: 1. The concept that regulation (the part about derivatives like credit default swaps) could drive away investors. Why is that a bad thing considering recent history? 2. Good policy can cause political damage. Methinks this is evidence of the short term thinking that contributed to the mess in the first place.

8/24/2010 12:31 PM  
Anonymous Goldhorder said...

I was not lying when I said at the beginning of this piece that I like the people at Treasury personally. I have no great wish that they should lose their jobs
he lost me there... I feel a bit dirty after reading that. Because they are pleasant and smart being shills for the financial industry is somehow excusable? I don't think anybody ever thought Geithner was dumb. I just don't think he was ever worked an honest job in his life.

8/25/2010 9:29 AM  
Anonymous KAIMU said...


The entire meeting misses the main US Constitutional mandate for the US Treasury which is that of providing stable currency(money) and promoting fiscal responsibility of Congress. What purpose do derivatives serve at the US Treasury? Is MBS or CDS money?

I am not sure how it is derivatives clearinghouses and stocks constitute "money". I honestly don't know how a bunch of stock and derivatives traders off the blogosphere can even understand production and full employment since they have never even been a business owner. All I see is a bunch of "paper shufflers" sitting around FDR's table like card sharks. You have the "traders" from the blog on one side who's only source of income is playing profit spreads off market trades based on OPM(Other People Money) and on the other side you have the biggest paper shufflers in the modern World at the US Treasury who shuffle OPM via taxes and debt. Between them they have never even manufactured one single widget.

There are in my mind two functions of money. One, and the most important, is for money to be a "long term" store of value. As any of us old timers will point out you cannot buy a new car today for $3000, so the US Treasury has failed in its duty to preserve the purchasing power of a US Dollar. The second thing that money needs to be is a "trusted" medium of exchange. Well a US Dollar certainly is "exchangeable" as just about everything in the known World is priced in US Dollars, like oil and every commodity on Earth, heck even China pegs its currency to a US Dollar as do many other countries. So the issue is not the US Dollar's exchange, but what backs its value. In short the "exchange" is one of debt.

What we have here is the US Treasury's version of the Obama Jobs Summit. Tim Geithner has invited everyone except small business. Obama's brilliant Economic Advisers figured that a Jobs Summit with Fortune 500 CEOs, ivy league professors and union bosses covered the economy. Problem is they left out the largest jobs creator in America ... small business. If you think the US government ever created a single job or a dime of real wealth think again. The same goes for an ivy league professor and a union boss. What would our government be without taxes, which are stolen from those who create wealth via manufacturing and trade? Our government would not exist. The US Treasury has changed the Declaration of Independence from WE THE PEOPLE to WE THE TAXPAYERS. Perhaps Christine Rohmer, Obama's top Economic Adviser quit for those very reasons. She went back to UC Berkeley where real wealth is still measured in hippy beads and the righteous weed.

None of those bloggers sitting at the table even had a clue as to what the US Treasury's true function is. All those bloggers did the whole time is bask in the egocentric belief that they have made America a better place. Shuffling paper by trades on exchanges has done nothing for America's long term wealth and done everything to undermine our long term viability.

If the Grand Master were still alive, the table's prior owner, FDR would be whispering in each participant's ear ... "Steal the People's Gold!" FDR's table speaks!!! And so they have when the Wall Street Fat Cats, the unofficial US Treasury, created GLD. Instead the US Treasury is so clueless of real "value" that they still price all our gold reserves at $42.22 an ounce.

The prerequisite for TRUST is CONFIDENCE. Without confidence in your money then trust cannot exist, just the same as confidence in your partner in your marriage. In laymans terms the cost of a home and food does not go up the value of a US Dollar goes down. The fact that my cost of living continually rises inspires no confidence in my money or the US Treasury. That trust died for the entire World in 1971. We just don't know it yet.

8/27/2010 10:21 AM  
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