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Source link: http://archive.mises.org/16010/the-end-of-sound-money-and-the-triumph-of-crony-capitalism/

The End of Sound Money and the Triumph of Crony Capitalism

March 14, 2011 by

The triumph of crony capitalism occurred on October 3rd, 2008. The event was the enactment of TARP — the single greatest economic-policy abomination since the 1930s, or perhaps ever. Like most other quantum leaps in statist intervention, the Wall Street bailout was justified as a last-resort exercise in breaking the rules to save the system. FULL ARTICLE by David Stockman

{ 21 comments }

Evan Foreman March 14, 2011 at 11:36 am

So what is next?

Either through more stupidity or brilliant deception, President Obama and his administration are dooming the future of the United States. When it comes, if we hear from Mr. Obama that the free market is a failure and that it must be replaced by some kind of system that provides “social justice,” then we will know that what he had in mind all along was socialism, plain and simple, and that his actions as President are best explained as ruining the United States. If so, why didn’t he and his associates offer it right up front and give the voters a chance to exercise a real choice?

So, we might ask, what happens then? Look for a new kind of paper, when the current fiat is finally discovered by the world to be what it has been since President Nixon closed the gold window on August 15, 1971: just paper. And the new paper? Rationing stamps issued by the government, with all the new regulations, exceptions, waivers, and obfuscations we have come to expect from the Obama administration.

pbergn March 14, 2011 at 12:50 pm

Disagree with the main premise of the article that the “crony capitalism” has triumphed recently…

It has been around since inception – it was ALWAYS just that – a “Crony Capitalism”…
In fact, I will go even further, and tell you that the Feudalism has never even been abolished, but on the surface…

So, nothing new here… The $1bln+ question IS – “What are you going to do about it?”… It is a nature of Man to pull the blanket to his side… An there is NOTHING, NOTHING you can do about it…
Any system even if it starts in a fair, even-handed state, will eventually corrupt itself given sufficient time, since the Mother Nature is asymmetric, and not all are equally capable, gifted or willing, and most of us are not capable of contributing enough while consuming disproportionately large amount of limited natural resources…

So the system will ALWAYS be just that – RIGGED for the benefit of the conniving and more unscrupulous…

billwald March 14, 2011 at 1:28 pm

On the other hand, the US dollar has only a couple of percent against the Canadian dollar, the euro, and the British pound since the latest depression started. I can’t see the yuan replacing the US dollar in the near future.

Ryan March 14, 2011 at 4:57 pm

Stockman specifically addresses the fact that the Fed has the other central banks in tow. Competitive devaluation will not make people wealthier.

Dave M March 14, 2011 at 2:47 pm

It seems that more people daily are becoming enlightened to the corrupt nature of the financial markets yet they are becoming more entrenched in the political system than ever before.

The question Evan posed as to “what next” can best be answered by what we are seeing in Egypt, Libya Bahrain ect. The end result will be a Peasant Revolt.

Franklin March 14, 2011 at 7:32 pm

Your initial sentence is profound and telling. And it is a reality I observe as well.
I’m overwhelmed by the paradox, the widespread accusations, cynic disdain of a civic refrain, culminating in, ironically, a pathetic “can’t beat ‘em, join ‘em” betrayal of individual self-reliance.
Troubling but perhaps not perplexing.

billwald March 14, 2011 at 3:34 pm

Revolt against the people we elected last year or the people we elected three years ago?

Franklin March 14, 2011 at 7:23 pm

What’s the difference?

Jim March 14, 2011 at 4:57 pm

An extremely in-depth look at the current regime and crises, and I look forward to posting this link in quite a few places.

Chris March 14, 2011 at 5:43 pm

I commend Davis Stockman for using facts and data to dispell the myth that the whole system would have collapsed. Certainly, there are those who have argued the same thing, but very few have been willing and able to support their view with actual facts. It is true that is there does not seem to be much one can do about it, but this whole web site is about the battle of ideas. And the battle of ideas must be won first before any of this will ever change.

v March 14, 2011 at 8:52 pm

Greetings David & all
US v. BVNH Case #5:09-CR-00027 Statesville NC March 7th 2011 about 5 weeks
Pray for Liberty Dollar trial victory Maccabees 2:3-20-40 God Divine Presence
Pray you have time to report this trial
Prayerfully v

Ohhh Henry March 14, 2011 at 9:31 pm

the nation’s number one crony capitalist — Jeff Immelt of GE — jumped on the phone to Secretary Paulsen and yelled “fire”! Soon the Fed and FDIC stopped the commercial-paper unwind dead in its tracks by essentially nationalizing the entire market. Even a cursory look at the data, however, shows that Immelt’s SOS call was a self-serving crock.

GE? Where have I heard that name recently … oh yes, now I remember.

Joe March 15, 2011 at 5:00 pm

To call Jeff Immelt of GE a “crony capitalist” is giving him a compliment. He is nothing but a “green whore” and if you don’t believe me just ask Obama. It really is a sad day to see GE the company fall so far in such a short period of time.

Nathan March 14, 2011 at 10:35 pm

Rather than calling this Crony Capitalism, wouldn’t it be more appropriate to call it fascism?

I just hate connecting the label “Capitalism” to this kind of treachery. So many people are so easily confused about capitalism as it is. Sometimes it seems like most think capitalism is evil.

Dave M March 15, 2011 at 11:26 am

Yes…this symbiotic relationship between the legislators and the financial market could be used as a definition of fascism. It is interesting to note how the western powers avoided calling Nazi Germany a socialist power, allthough it was, and instead labeled as fascist and moved it to the extreme right of the political spectrum. In reality it was of course more closely aligned with communism. Personaly I group all political parties that either control or are controled by a segment of industry as Statist.

mstob March 15, 2011 at 6:17 am

Im with pbergn. I think crony capitalism triumphed long before this. What we are seeing now is the result of it being in place for decades.

Dick Fox March 15, 2011 at 7:01 am

Stockman always starts out pretty good but then, as usual, about half way through he proves that he does not understand economics and he certainly did not/does not understand the Supply Side Revolution led by Robert Mundell, Art Laffer, Bob Bartley, and Jude Wanniski. Stockman is that kind of man who knows just enough to be dangerous and that he is. In 1981 Stockman even admitted he didn’t know what he was doing or what Supply Side economics was. The biggest problem is he did not/does not understand what Robert Mundell has been teaching since the 1960s, something that China is slowly learning.

Stockman’s formulation would lead to economic confusion and chaos, just as it did in the Reagan administration because he still doesn’t understand anything but seeking the lime-light.

Sione March 15, 2011 at 2:52 pm

Dick

You write, “In 1981 Stockman even admitted he didn’t know what he was doing or what Supply Side economics was.”

What did he say and in what context did he state it?

You state, “The biggest problem is he did not/does not understand what Robert Mundell has been teaching since the 1960s, something that China is slowly learning.”

Interesting. Please elaborate some.

You write, “Stockman’s formulation would lead to economic confusion and chaos, just as it did in the Reagan administration because he still doesn’t understand anything but seeking the lime-light.”

Provide your formulation so I can contrast it against Stockman’s. It’d be good to work out what exactly what went on, who is right or wrong and why that might be so.

Thanks for your help.

Sione

The Fresh Prince of Darkness March 15, 2011 at 3:39 pm

Yes, I too would like to know what China is “slowly learning.”

T Paine March 15, 2011 at 6:01 pm

I won’t speak for Mr. Fox. I will say that, while I have been writing and saying the same things as Stockman for the past 2+ years on the phony financial Armageddon, I don’t think Stockman’s correct on the Reagan supply side issue. Federal receipts did double during Reagan’s tenure. http://www.whitehouse.gov/omb/budget/Historicals/
Unfortunately, he never cut the dept of ed or energy as he said he would and spending increased accordingly. Most people also forget that Reagan, Dole, Rostenkowski, and Mitchel (gang of 4) raised soc sec taxes enormously in 1983 and again raised taxes in ’86. No one can say that Reagan cut taxes overall.
This speech is an important contribution to the national discussion. I hope it’s passed around the country and world.

David Calderwood May 13, 2011 at 11:26 am

This was a very insightful column. My question is, why does Mr. Stockman then get on MSNBC and say that the major Federal entitlement programs should by “saved” by “means testing” them?

The invasiveness of means testing would require each person to list EVERY single bit of personal property, from gun and coin collections to artwork, from financial assets around the world to every bit of real estate and royalty-producing patents, music, and books. In short, it would mean a financial strip-search and cavity probe by the IRS, far worse than the current nightmare.

Was Mr. Stockman’s comment simply him staying “between the boundaries of acceptable discourse” necessary to avoid revealing truths that get one excommunicated from polite punditry?

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