Friday, June 10, 2011

Jim Rogers Paints Bleak Scenario

In a June 8 interview on CNBC Jim Rogers paints a bleak outlook for the US economy.  Much of what he says coincides with Ron Paul's 2008 book End the Fed.  Rogers is saying that he has NO US STOCKS. I am thinking in terms of high dividend yield stocks like Philip Morris (PM and MO) and Verizon (VZ). He thinks that the end of quantitative easing two, which is resulting in the stock market correction of the past few weeks (and it's bad today) will be followed by a QE3, resulting in a classic hyper-inflation and economic collapse.

It would be nice to hold the yuan, but Everbank does not make a yuan CD available.  I agree with Rogers about waiting for a dip to buy gold and silver. I'm crossing my fingers for $25 or $28 silver, in which case I will get back in.

I was just reading Murray N. Rothbard's What has Government Done to Our Money? which is an excellent, condensed version of his Mystery of Banking.  The issues that Rothbard talks about in his books, written several decades ago, are alive today.  Rogers's pessimism is realistic. But what to do? Foreign stocks haven't performed that well recently either. A collapse in the US economy will bring down the world.  BRIC hasn't been doing well, even if in the long run there is more reason for optimism in China and Brazil.

If there is another 2008 collapse it might be wise to recall what happened in 2008. The dollar went up, not down. I'm not a fan of the dollar, but the short term fluctuations that the Fed has caused are incredibly destructive to the small investor who risks his livelihood because of them.

The current Federal Reserve Bank system is a complete failure. Price instability, dozens of booms and busts since 1913, the Great Depression, the 1970s Stagflaton which hurt me personally, the recent financial crisis, the lack of jobs in America, the destruction of good jobs, all of this has come about because of the Fed and because of the legacy media and the failed two-party system.

Thursday, June 9, 2011

Review of Ron Paul's "End the Fed"

 I just submitted this piece to Mike Marnell's Lincoln Eagle. It may appear in the June or July issue.

Review: Ron Paul's End the Fed
Mitchell Langbert, Ph.D.*

Ron Paul, End The Fed.  New York: Grand Central Publishing. 2009. 212 pages.

"There was no food, however, in the whole region because the famine was severe; both Egypt and Canaan wasted away…They came to (Joseph)…and said, 'We cannot hide from our lord the fact that since our money is gone and our livestock belongs to you, there is nothing left for our lord except our bodies and or land. Why should we perish before your eyes…Buy us and our land in exchange for food, and we with our land will be in bondage to Pharaoh…and Joseph reduced the people to servitude, from one end of Egypt to the other." --Genesis 47: 13-22

            I have just finished Representative Ron Paul's End the Fed.  I consider it must reading for all Americans, but especially for Congressman Maurice Hinchey and most other local politicians, Democrats and Republicans alike. For a century American citizens have chosen, ostrich-like, to avoid discussion about the Federal Reserve Bank. Their head-in-the-sand attitude is encouraged by the legacy media, all of which is owned by interests beholden to Wall Street, which, along with commercial banks, government employees and big businesses benefit from the Federal Reserve Bank's redistribution of wealth from you to them.  The Fed does this by printing dollars, making yours worth less and soon, according to Representative Paul, worthless. 

            The fact is that the richer you are the more you benefit from the current Federal Reserve Bank system, and the media is indebted to the super-rich. George Soros, for instance, just gave funding to National Public Radio. Warren Buffett owns stakes in The Washington Post and Capital Cities ABC.  General Electric and Bill Gates own MS-NBC.  Sumner Redstone owns CBS. Rupert Murdoch owns Fox.  As far back as 1912, The New York Times silenced presidential candidate Robert M. La Follette when he publicly stated that the magazine industry, like the newspaper industry of the day, had fallen under Wall Street's editorial domination.  To this day the Ochs Sulzbergers, the inheritors of The Times who oppose inheritance for everyone else but have never opposed family trusts for the super-rich, are key apologists for the Federal Reserve Bank.

            In his book, Representative Paul makes clear why you should pay no attention whatsoever to the legacy media-- NPR, CBS, ABC, NBC, CNN, Fox, The New York Times, The Washington Post, or Newsmax.  The Federal Reserve Bank is the single most important story of today, yet none of the legacy media chooses to explain what it is doing to you financially.

            In a nutshell, the Federal Reserve prints money, uses it to buy bonds from commercial banks, which then expand the amount of money up to ten-fold and lend much of it to Wall Street, hedge funds, sub-prime real estate interests, big companies, and government. The last, in turn, subsidizes special interest lobbies like government employees, the Association of Trial Lawyers (now called the American Association for Justice), and the National Lawyers' Guild.   The economics profession gains considerable prestige and power from this arrangement, and has become a vested interest just like any other. Any economist who defends the Fed, and virtually all do, is part of the economic chicanery that is bringing America down.  The economists whom Fox and MS-NBC broadcast are big bank lobbyists.

            The Fed has been badly managed, and in his book Representative Paul shows why.  Big, money center banks in New York City lend the Fed's counterfeit printed money to incompetently run Wall Street firms which invest it in bubble investments that make money in the short run but crash in the longer run. Then, rather than allow the badly run Wall Street firms to collapse, economists and the legacy media clamor for even bigger investments to the badly run firms in part at taxpayers' expense and in part through more counterfeit.  Although manipulative politicians like Representative Hinchey postured about the first bailout, they know that their interests coincide with Wall Street's, hedge fund managers' the super rich's and the National Lawyers' Guild's. The success of Representative Hinchey's favorite programs depends on Federal Reserve Bank credit expansion. Representative Hinchey would likely be poorer without the Fed.

            Where does the wealth come from which is allocated to Wall Street and Hinchey-style government mismanagement? It comes from you. The Congressman whom you have been electing has benefited from the Federal Reserve Bank's fraud for his entire career, most recently by voting against an audit Representative Paul proposed that would have required the Fed to show how much wealth it is diverting from your pocket via rising prices to firms like Mitsubishi Bank, Deutsche Bank, Citibank and other trans-national banks.  Americans' real (inflation-adjusted) hourly wage hasn't risen since 1970, but lots of money has been diverted to foreign banks and corporations.   You can see why Hinchey voted against an audit of the Fed. People who have nothing to hide hide nothing.

            So, Representative Paul concludes, the dollar is going to collapse, and that will make you worse off. It might throw you out of work, or it might cause a gradual or perhaps a rapid hyper-inflation that will reduce your standard of living.  The fault clearly rests with Congress, including your representative, Maurice Hinchey.  But how do you prepare for the coming economic decline for which Americans have voted?

            For me, there are three kinds of investments that make sense. I hope to eventually retire, not to make big money through speculation.  I don't recommend this for you; rather, you need to think for yourself.  In my case I am first gradually putting a large share of my savings in gold (GLD) and silver (SLV), 20 or 30 percent.  Second, I am taking a stake in other commodities, especially agriculture (DBA) and oil (DBO).  Third, for cash income I am buying high dividend yielding stocks such as Verizon (VZ) and Philip Morris (MO and PM).  If the dollar collapses, Philip Morris will still sell cigarettes.

            Congressman Ron Paul is pessimistic about the end result of the Federal Reserve Bank's policies. If you want to pretend that what we face today is business as usual, I will buy you a ticket to an ostrich farm I know of in Big Indian, and you can plan to retire there. Meanwhile, read Ron Paul's End the Fed and face the facts-- both parties have been complicit in wrecking the American way of life. Monetary debasement has accelerated and will eventually harm you. Currency collapses end freedom, what you know as the American way of life.  We are in the endgame now. There is nothing left for Soros, Buffett, Goldman Sachs, Ben Bernanke, Alan Greenspan and the American Association for Justice (what a laugh) to steal.  If you believe the legacy media you will get hurt.
*Mitchell Langbert is associate professor of business at Brooklyn College. He blogs at

Sunday, June 5, 2011

Bill Readings's University in Ruins

Readings published his important tract about the decline of the university in 1996. The book provides a powerful description of the evolution of the German university and its decline into what Readings sarcastically calls the "university of excellence," which is "excellent" because it is committed to "quality." Readings claims that both words are vacuous.  He offers in place a university based on what he claims is an equally vacuous term: "Thought."   He discusses English literature's transformation into "cultural studies."  His philosophical creativity is impressive. The best part of the book is his discussion of the origins of the modern university in chapter 5.  There, he describes a debate between Fichte and Humboldt as to the structure of the University of Berlin and subsequent interpretations of the relationship between the nation, the university and culture in philosophers like Schiller, Schelling, Schleiermacher and Leavis. He contrasts them with Cardinal Newman's parallel but religiously-based vision of a liberal education (p. 75).

I gained much from Readings's book; his contextualization of the history of the university in terms of the German Idealists and more recent authors is essential.  But I disagree with his analysis because he understates and in large part overlooks the culture-based university's moral failure.  He notes that the German Idealists created not only the modern university but also the German nation (p. 62-3).  He describes Schleiermacher's ethnically-based concept of evolution to the "rational state."  Schiller  adds that culture or the development of moral character can offer beauty as the link between ethnicity and the rational state. Schiller defines art as history and the interpretation of nature as a historical process. This argument, while intriguing, is linked directly to ethnically-based national socialism.

Readings adds (p. 64) that culture is both the object of science and the formation of character, that is, of research and teaching, the two goals of the university. Quoting Schelling he asserts that "the 'nurseries of science' must also be 'institutions of general culture."  Humboldt's (p. 65) "University of Culture" both develops the individual student and, through research, the idea of culture; moreover, the university "gives the people an idea of the nation-state to live up to and the nation-state a people capable of living up to that idea."  Readings adds (p. 65),  "The German Idealists propose that the way to reintegrate the multiplicity of known facts into a unified cultural science is through Bildung (learning), the ennoblement of character." 

Quoting Lepenies, Readings offers a limited discussion (p. 82) of the link between the culturally based university, which he fails to point out was frequently anti-Semitic, and national socialism.  As well, he does not consider the possibility that the ideas of philosophers like FR Leavis  led directly to totalitarianism.  Leavis, Readings notes, argues that (p. 80) industrialization and economic specialization sever culture from civilization.  Readings writes, describing Leavis, "a minority culture must supervene as the dialectical resolution of the opposition embodying the principle of the lost unity of culture in order to resist and reform mass civilization through the practice of criticism."

How is a minority to envision a national culture?  It is possible that universities could aim to persuade the general public of their opinions about beauty and history, but might such an approach prove to be authoritarian when combined with political figures of the kind democracies, starting with Athens, have produced?

It is not accurate to say that the American university of the past 30 years has lived in a symbiotic relationship with the state or has supported the state by safeguarding its national culture (an idea that, Readings emphasizes as one of the themes of this book, has been outdated because of globalization).  Rather, the university of the past 30 years atavistically insisted on failed collectivist ideology.  Universities, without offering a viable "minority culture," have assaulted American culture, not as it is fragmented on cable television or reflects excessive specialization, but as it reflects the Lockean ideal of freedom that counters the substantive content that the German Idealists advocated in Germany and that led to totalitarianism.  In place of freedom, American universities have offered ridiculous, failed collectivist ideology. 

The insistence on collectivism  can be traced in the academy's superstitious claim of the viability of Soviet communism until the very end. Even an economist of Paul Samuelson's stature continued to claim into the 1980s that Soviet communism had successfully produced industrialization, a claim that was incorrect and  had been seen to be incorrect sixty years sooner by Ludwig von Mises, who fled the "organic" society of Austria only to be excluded from American universities because he was right and they were wrong. 

Universities' emphasis on collectivism has not been "excellent."  Excellence is a word that is intimately linked to Aristotle.  The Nicomachean Ethics was the first book to emphasize the importance of excellence as a cornerstone of education.  Excellence means achievement or fulfillment of potential on a foundation of character. To be successful universities need to provide students with a foundation of character and with knowledge that they need to achieve.  The humanities and social sciences can potentially do these things, but they have not.  In part the reason may be that the ideals of Humboldt and Leavis are too subtle to be institutionalized. In translation, the American university functioned as a dogmatic institutional apologist for totalitarianism, excluding from its consensus (not dissensus, which would require non-ideologically based hiring and, specifically, would have required that von Mises had been offered a job appropriate to his status) any who could have offered support to the American culture and state.  The universities' failure is consistent with Leavis's claim that university professors offer a minority culture, but the minority culture that they have been capable of offering has been a second rate version of 19th century fantasies that led to Hitler and Stalin.

The University in Ruins is crucial.  Readings's claim that the university has been transformed into a corporation (in today's sense) is correct, and his claim that it is a ruined institution, that the Idealist university has been replaced by a corporatist university is also correct.  Readings does not, though, ultimately explain why the three alternatives he presents are the only ones:  (1) the university of culture, which is linked to totalitarianism; (2) the university of "excellence," which functions along a shallow business model;  and (3) the university in ruins, where thinkers pursue "Thought" among the university's ruins.  A different alternative might be a university grounded in reason and focused on teaching and research aimed to improve humanity; social sciences without ideology that strive to improve widely agreed upon goals such as economic efficiency and human welfare; and the absence of the hubris that claims that university professors trained in English literature are capable of reinventing a nation's culture.

That such an option is excluded from Readings's view is consistent with its being rooted in the failed German university.  A superficial university of "excellence" may not be the best alternative, but it is preferable to the ruined totalitarian one.  A constructive approach would be to recognize that virtue is possible with respect to intellectual pursuit and teaching, that both can be excellent, and that both can authentically graduate students who have the skills society needs and produce research that is of value to humanity.