The Great Conmen of Our Day
Known unknowns are commonly unsettling. People pay good money for the comfort of a favorable prediction, particularly when it’s from someone with strong convictions. It doesn’t really matter if the forecaster is right or not. What’s important is how they sound when they portend the future.
Could you imagine a world where a bridge engineer miscalculated as often as a weatherman? Or where a carpenter was as wrong as a stockbroker? Bridges would collapse and roofs would cave in as quickly as a dark cloud appears on the horizon or a trading session reverses course.
Central bankers are the great conmen of our day. Take Fed Chairman Ben Bernanke, for instance. He’s printing up $85 billion each month to prop up U.S. Treasury debt and the mortgage market.
According to Bernanke all this monetary intervention is for our own good. He believes the economy’s lacking demand. His theory is all this cheap credit will stimulate demand, which will boost the economy and lower the unemployment rate. The problem with this line of thinking is that it’s based on a lie…that you can spend your way to prosperity.
Yet the leading minds in economics today endorse this theory. To the uninterested bystander, it appears Bernanke knows what he’s doing; he has conviction. But to those who’ve paused to consider just what’s going on, and who haven’t had their brain softened by university economics, it’s obvious he’s just holding a licked finger up to the wind and guessing which way it’ll blow next. He knows not the consequences of his actions.
Like other quacks before him, history will deliver a harsh retrospective…
Prophecy of the Apocalypse
In 1696, William Whiston wrote a book. It was zealously titled, “A New Theory of the Earth from its Original to the Consummation of all Things.” In it he proclaimed the global flood of Noah had been caused by a comet.
Mr. Whiston took his book very serious. The good people of London took it very serious too. Perhaps it was Whiston’s conviction. Or his great fear of comets. But, for whatever reason, it never occurred to Londoners that he was a quack of the highest order.
If he’d lived today, he would have gone to Wall Street and applied his talents to doing God’s work…separating fools from their money. Maybe he’d have won a Nobel Prize for developing an elaborate pricing model. The kind of model that works just great until just the moment it doesn’t; which is when his hedge fund would’ve blown up.
But in the time of William Whiston there was little demand for elaborate pricing models. Prophecies of the Apocalypse had greater market share in his day. For in 1736 William Whiston could see the future; and what he saw scared him mad. He barked…and ranted…and foamed at the mouth to anyone who would listen. Pretty soon he’d stirred up his neighbors with a prophecy that the world would be destroyed on October 13th of that year when a comet would collide with the earth.
Jonathan Swift, in his work, “A True and Faithful Narrative of What Passed in London on a Rumour of the Day of Judgment,” quoted William Whiston:
“Friends and fellow-citizens, all speculative science is at an end: the period of all things is at hand; on Friday next this world shall be no more. Put not your confidence in me, brethren; for tomorrow morning, five minutes after five, the truth will be evident; in that instant the comet shall appear, of which I have heretofore warned you. As ye have heard, believe. Go hence, and prepare your wives, your families, and friends, for the universal change.”
The Archbishop of Canterbury, William Wake, had to officially deny this prediction to ease the public consternation. But it did little good. Crowds gathered at Islington, Hampstead, and the surrounding fields, to witness the destruction of London, which was deemed the “beginning of the end.”
It never came.
Welcome to Life After the End of the World
Unfortunately for Whiston, he’d never heard of the Mayan prophecy or the 5,125-year Mayan Long Count calendar. If he had, he’d have known that the end of the world is today.
Obviously, if you are reading this, the Mayan’s got it wrong too. But not entirely… The end of the world as we know it keeps coming and going; somehow, life after the end of the world goes on. Here’s what we mean…
“In the long run, we are all dead,” said 20th Century economist, John Maynard Keynes. This was Keynes rationale for why governments should borrow from the future to fund economic growth today. Of course, politicians love any academic theory that gives them cover to spend other people’s money to buy votes. Thus they’ve attempted to borrow and spend the nation to prosperity for the last 80 years.
But, alas, in the long run we are not all dead. In the long run, we are all here…and we are all living with the consequences of shortsighted economic policies. The end of the world as it was once known – where a dollar was as good as gold – has come and gone. Today, in life after the end of the world, we are witnessing the illusion of wealth, erected by three generations of borrowing and spending, crumble before our very eyes.
For the Mayans the end of the world came around 900 AD. That was about the time their civilization went into irreparable decline. But not all Mayans died. Some continued to live after the end of the Mayan world as they knew it, only to have the Mayan world end again – with the arrival of the Spanish Conquistadors.
Yet humans are a persistent species. Some Mayans continued to live…even after the end of the world. In fact, there are approximately 800,000 Mayans currently living on Mexico’s Yucatan peninsula. But today’s Mayans, like today’s postmodern Americans, live less by independence and humility than by big government…
“When people planted their corn fields 50 years ago, everybody from all the towns around would pray for good harvests,” said Mayan priest and farmer Petronilo Acevedo Pena. “But when the government started giving out aid, seeds and fertilizer … what do the people do now? They go to the government to ask for help.”
Welcome to life after the end of the world.
for Economic Prism