Exclusive to STR
January 20, 2009
Speculation, as we know, comes about when bridge trolls get hold of refined sugar. The rush of the abrupt shift from their normal grumpy diet of bone marrow and gruel causes the trolls to dance out from under their bridges in a miasma of invisible gaseous trollulose, which makes the human world go mad. Florida real estate soon follows.
This makes as much sense as most more commonplace explanations, when explanations are considered at all, and like 'greed,' most trolls are invisible--all you'll ever see is their supposed primary effects. (Something else: it's frustrating that Congress has made no determination to regulate this bridge troll problem--a simple matter of requiring that no sugar, sodas, or baked goods be transported within five miles of any bridges--easily accomplishable by the use of dirigibles.)
Words must be made to work properly, and work hard, on behalf of their human (or egg) masters, contended Humpty Dumpty. (I believe that Mr. Dumpty would have no issue with the slight shock transition here, since he's willing to end poems in the middle of a sentence. I'm not sure that every egg would have the guts to do that.)
It's because of my humble attempts to make Mr. Dumpty's philosophy of language live and breathe, and to do as he says (not to criticize too harshly, but as he says, not always as the great but inconstant semanticist does), that my keyboard caps lock key remains nearly virginal. Its use could be viewed as a kind of cheating, since it deprives words of their proper labor. I hardly ever even use exclamation points!!
But I'm drawn to embark on a strange desperate exercise:
Locate caps lock. Check.
Fingers limber. Check.
Brain function engaged'
Brain function engaged'
BRAIN FUNCTION ENGAGED!!' CHECK!!
CAPS LOCK ON'
OH' ALREADY ON. I MEAN CHECK.
SPECULATIVE BUBBLES ARE NOT CAUSED BY BRIDGE TROLLS:
SPECULATIVE BUBBLES ARE CAUSED BY MONEY AND CREDIT CREATION. THIS WAS TRUE IN THE MISSISSIPPI BUBBLE IN THE 18TH CENTURY. IT WAS TRUE IN THE STOCK MARKET BUBBLE OF THE ROARING '20S. AND IT'S TRUE TODAY.
One can sort of understand--though not without some contemptuous lip curl-- why our leaders skip over this simple analysis to get straight to their 'solutions.' Subconsciously at least, they must know that close examination of speculative causes would for them be an exercise even more perilous than my latent discovery of the caps lock key will no doubt be for me. Blame is a dish best served over-spiced, over-garnished, and over-sauced, to someone else, who really only wanted a sesame bagel.
And anyway, there's an easy short cut for politicians to skip from their vigorous, over-sauced non-analysis to expensive, fatuous, over-garnished non-solutions. That short cut of course, is GREED.
Why was there speculation?
Greed caused it.
Oh well then, there you go. We need a solution for that.
Never mind that greed can cause or not cause anything, or anything's opposite. A greedy child could hoard all his lollipops, or give all of them away hoping to be rewarded with ice cream. Gordon Gekko had it completely wrong, even from his own imperturbable perspective. 'Greed,' Gekko should have said, 'is meaningless. Greed, for lack of two better words, doesn't tell us crap about crap.'
Great bubbles aren't arithmetic sequences. They need pyramids of money, to enrich early speculators and stimulate the fantasies of growing numbers of newbies. Whatever any politician or central banker (or non-central banker) says, we need to keep track of this fact--it's not possible to come by these pyramids honestly--an honest society with honest institutions would never be able to keep these pyramids marching.
In The Theory of Money and Credit, Ludwig von Mises said, 'It is impossible to grasp the meaning of sound money, if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.'
We could hardly be further away from such a concept. In fact (as some have recently pointed out), it's more like we're living in Atlas Shrugged, with very unsound money 'solutions' that cause problems which appear to need more problem causing solutions. Nowhere on the horizon is there any Atlas capable of shrugging. (At this point, I think most taxpayers would settle for an Atlas with any capability to restrain himself from whimpering behind an outstretched begging hand.)
AS FOR THE U.S. MONETARY SYSTEM, THAT'S A CONTRIVANCE THAT ONLY TYRANTS AND SPECULATORS COULD LOVE.
Les Lafave  writes about banking reform at themaestrosrep.org.
Where Does Speculation Come From?
by Les Lafave