The magic of money

CARPE DIEM: An Open Letter to Janet Yellen

The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or evade truth, not reveal it _________John Kenneth Galbraith

Dear Madame Secretary:

I am fairly certain that you do not recall us meeting several years back when Ed Epstein brought me by your office and you were gracious enough to give me more than a bit of your time to discuss my research on the regulatory reform vs. relief. Don’t worry, I am not looking for a job. I’ve witnessed firsthand the horror of policy “like sausage” being made (or unmade), and still have mild bouts of PTSD. Now I prefer to maintain my amateur curmudgeon status, stay on my couch and carp (with or without the pandemic).

I was very pleased the moment I heard the President was going to put you back in the catbird seat. I cannot imagine a more capable person for the job of Treasury Secretary in these turbulence times. Of course, after 4 years of Lootin Mnuchin and his Homewreckers at the helm, just about any anybody, except perhaps more Wall Street weasels, might be welcomed.

It has been reported that you will strive to “restore the American Dream”. I would merely remind you of the famous words of George Carlin, “they call it the American Dream, because you have to be asleep to see it.” However, folks are now “woke” as well as broke. Plus, “the dream” itself is a significant ingredient in our fractious fairy tale economy (neoliberalism bordering on neofeudalism)….(note: ).

Very few realize better than yourself, perhaps, that much of our mountainous economic difficulties have their roots in our failing financial institutions, and the Herculean efforts expended toward maintaining these sacred cash cows of phantom wealth and their nearly unassailable power. You are also probably painfully aware of the validity of Henry Ford’s statement: “It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” You might also adhere to elements of Jean-Claude Trichet’s famed speech even if he sounded more like Colonel Jessup (from a Few Good Men) than the President of the European Central Bank. It is indeed an awesome responsibility maintaining the integrity of the global systems of money and banking. We want you “on that wall”, but what if most of the integrity is gone? As Aristotle observed in his empirical study of various forms of government, once the oligarchs take hold, one is only left with “a choice between tyranny or revolution.”

Yes, we “can’t handle the truth” but we need to start hearing it anyway. The mythical theories of misguided mainstream economists, regarding “barter” and “neutral mediation”, will no longer suffice. Meanwhile, you will have the anti-social media amplifying increasingly vicious and virulent lies. Not to mention having to suffer the torrent of tropes (misogynistic and antisemitic), now apparently fashionable again. You will not only have to convince Congress and the Courts that you know what you are doing, but demonstrate to American people that the QAnoners and their fellow-traveler don’t know diddly-squat. All of this in the midst of revelations of real historical skullduggery and widespread current corruption.

I’ve had former students running huge stochastic programs for hedge and venture funds, who could (or would) not be able to explain what they did to average person. Yet, you and your former colleagues at the Fed bear the burden of dragging the “shadow bankers” into the light, as well as wrestling tax and spending policy away from the self-pandering plutocrats. Our current system of widespread financial shenanigans makes John Law’s infamous Mississippi Bubble look positively prudential.

When President Obama chose to save the banks (first and foremost) he lost “the mandate of heaven”. It was like a neutron bomb, leaving the oligarchs intact while nearly destroying everything else. It also brought the conspiracy theorists out of the woodwork, and along with rabid racism set the stage for a demagogue like Trump to become our fearless (and fearful) leader. We were extremely lucky that he was such a fumbling Führer, but we may not be nearly so fortunate the next time. So carpe diem Madame Secretary. If you cannot do it, then no one can. I sincerely wish you all the luck in the world and God’s speed, you will need them both.

Respectfully yours: Gregory A. Daneke, Professor Emeritus, W.P. Carey School of Business, Arizona State University.

PS: Feel free to keep my 600 dollar check, if Congress ever approves it.



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