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Ed quotes this definition of libertarian:
Libertarianism is a term adopted by a broad spectrum[1] of political
philosophies which advocate the maximization of individual liberty[2]
and the minimization or even abolition of the state.[3][4] Libertarians
embrace viewpoints across that spectrum, ranging from pro-property to
anti-property, from minarchist to openly anarchist
http://en.wikipedia.org/wiki/Libertarian
1. Since the effective liberty of most people would be diminished if not
completely destroyed as the "state" is diminished (not that many are
capable of liberty either way), even in pure liberty terms this is
already really might makes right, right of the stronger, and
"libertarian" is simply a fancy, dishonest word to dress up that fact.
Still, beyond the terminological dishonesty,
might-makes-right in itself can be an internally consistent view.
2. But where they bring "property" into it is where we know the whole
thing is a scam. Property and wealth accumulation (let alone all the
bells and whistles of banks and stock markets and so on) of course
cannot exist at all without a strong, aggressive government aggressively
dedicated to those things.
It's absurd on its face to say "get rid of
government" and yet say "I have property rights!"
"Property" and "rights" - one has to be doubly an aggressive statist.
So there's where we KNOW "libertarian" is
just a stalking horse for the brutal, direct dictatorship of big
corporations and the rich.
Law is the order of the land and its
inception was to protect *property*
from the mob (see the poor) by
landed army's aka the Authoritarian
system. We have evolved socially
from feudal to monarchy to peoples
forms of governance.
Democracy is an attempt to equalize
societal pressures with regards to
concentration of wealth and power by
the few over the many (see Rome).
Now sorry for the 101, but what are
we really debating here libertarian
vs socialist vs free market vs
??????. I thought the Constitution
said WE the people not some fence in
the mind that has so many gray areas
multiplied by the number individuals
present in the republic at one time.
Hence we all have different
interpretations of definitions
regardless of what wiped says.
I fear Democracy is under the knife
by forces which would concentrate
power for their benefit and not that
of the people as a hole. Call that
what you may, but remember the club
of I over US has ramifications and
one should consider fully their
impact.
Hell lets all just get big stamps on
our foreheads and call a spade, a
spade and respond accordingly to
their ideology with out
interference.
Every system of governance I have
studied evolves and then devolves to
a basic state of community if not
over whelmed by another budding
system of youthful expansionist
exuberance.
We are some where on that historical
trajectory and need to sort out who
we really are ie: a group of
citizens ready to learn from our
mistakes or a rowdy group of
individuals ready to cut each others
throats for our individualistic/
idealogical needs, especially when
none can lay claim to fact, but
merely see truth in own minds.
Skippy...sorry just so sick of the
crap: see extremism.
depresso said... Nakedcapitalism and Stephen Roach are spreading LIES!
Bernanke is NOT and never was "an ultra-free market Libertarian".
Libertarians and proponents of free-markets believe in sound money, gold standard and want the Federal Reserve to be abolished.
I am tired of all the libertarian-bashing and free-market-bashing. Bernanke is no more a Libertarian and free-market believer than Roach/Yves is a radical communist.Edward Harrison said... depresso,
I happen to be a Libertarian myself albeit not as much a believer in the unadulterated form of the free markets espoused by some.
How would you describe Bernanke?
And do think we are spreading lies or giving opinion because it seems that it is obviously the latter?
Edward (the writer of the post)roger said... It is strange to me to look at Japan's lost decade, when we have our own staring at us in the face. The 00s were characterized by the worst employment figures, month by month, of any decade since the forties, the worst income figures for the medium household since the thirties, and an amazingly flabby technology sector - that is, in terms of innovation. What is really different about 2009 from 2001 or 2000? Youtube? From 2000, 1990 looked positively primitive. One could go decade by decade looking at major techno changes - but not the "lets spend money on the Mcmansion" decade. Although I'm forgetting the innovation in the "financial industry" - so excellent! of such social benefit! Like, oh, the invention of three card monte.
The Japanese slough is already here, and its been here since 2001.moslof said... A good article but I disagree with labeling Bernanke a Libertarian. Most Libertarians are for "sound money" in my view. Bernanke may well be our last Fed Chairman. The greatest cycle of real economic growth in history occurred in Hong Kong with no central bank.
We need to try it here because the short sighted knee jerk policies of the Fed have needlessly distorted the natural swings of the business cycle since day one.Edward Harrison said... Here's a definition of Libertarianism that I agree with:
Libertarianism is a term adopted by a broad spectrum[1] of political philosophies which advocate the maximization of individual liberty[2] and the minimization or even abolition of the state.[3][4] Libertarians embrace viewpoints across that spectrum, ranging from pro-property to anti-property, from minarchist to openly anarchist
http://en.wikipedia.org/wiki/Libertarian
The key thing that binds us Libertarians is a desire for individual liberty over power of the state. Otherwise, there are many different flavors.depresso said... If you use the proper definitions of terms, then you could call Bernanke a fascist (fascism is the merger of state and private interests).
The vast majority of libertarians I know were highly critical of Greenspan, Bernanke and Fed's policies and predicted the inevitable crisis that would result form their activities. So, calling Bernanke a libertarian is an insult to them. A very high number of libertarians are proponents of sound money and gold standard or at least favor very strong restrictions on fiat money creation. That would be the opposite of what Bernanke and Greenspan did and are doing.
I am not interested in what Bernanke supposedly or really says. I am interested in his actions. And his actions have nothing to do with libertarian principles, unless you happen to be a libertarian basher, liar or a simple ignorant.Edward Harrison said... Depresso, that's absolute rubbish. The seminal moment in Bernanke's tenure was his decision to let Lehman Brothers fail, a decision which was driven by free market thinking.
Use silly terms like basher, liar and ignorant all you want, they are not in any way adding strength to your argument.
Clearly Bernanke had 'libertarian sympathies' until the moment of truth post-Lehman.Edward Harrison said... This from Alan Blinder two years BEFORE the crisis:
http://money.cnn.com/magazines/fortune/fortune_archive/2005/05/02/8258489/
He's very driven on the inside, but comes across as a very calm personality--strong-minded, but not argumentative. Like Greenspan, he never raises his voice," said Princeton economist and former Clinton-appointed Fed vice chairman Alan Blinder. "I worked with him for years before I even knew he was a libertarian-leaning Republican."
Again, I certainly don't agree with much of what Bernanke did as Fed chairman, but in policy circles he is considered to be a Libertarian.depresso said... I don't give a damn about the "policy circles". Bernanke is not and never was a libertarian and anyone who says otherwise is a liar or ignorant. Considering the ongoing statist campaign against libertarians, I believe that the former is more true than the latter.
A person who is responsible for manipulating the interest rates and money supply, creating and popping bubbles, creating an alphabet soup of funny facilities, etc. can not be a libertarian by definition.
It does not matter how much the liars and libertarian-bashers say that black is white, they will not change this simple fact. They can however influence the public perceptions and that is their real agenda, the real reason why they falsely blame the libertarians and free markets for this crisis.
And, by the way, I also don't give a damn about you getting offended by "silly terms" like basher, liar, etc. The statist campaign is reaching gigantic proportions and I don't see a reason why I should restrain myself in the face of all this obnoxiousness coming from the "circles".Edward Harrison said... depresso, yours is not a well-reasoned argument. It's an entirely emotional response. And whether Bernanke is a Libertarian is irrelevant as it has nothing to do with whether he will be a good Fed chairman.
You have your view. I have mine. Let's just leave it at that.Yves Smith said... depresso.
Ad hominem attacks are against this blog's comment policy. If you want to disagree, that's fine, but abuse and name calling is not.bob said... "A person who is responsible for manipulating the interest rates and money supply, creating and popping bubbles, creating an alphabet soup of funny facilities, etc. can not be a libertarian by definition"
Nonsense. If its yours why can't you manipulate it? That is the heart of libertarianism.
Is it your assertion that I could not sell my gold for more (or less) than what it was going for in another market?
Who enforces libertarianism? By your definition, they would not be libertarian.
Its a word. An adjective. Hitler was libertarian compared to Stalin.
What you seem to be advocating is anarchy.
Where does this free market exist? Point to one example of it anywhere in the history of the world.Edward Harrison said... When it comes to Bernanke (and Greenspan), I think moslof has it right about the subversion of Libertarian ideas and makes criticism I can accept:
"...I disagree with labeling Bernanke a Libertarian. Most Libertarians are for "sound money" in my view. ...short sighted knee jerk policies of the Fed have needlessly distorted the natural swings of the business cycle since day one."depresso said... Yves, I consider calling Bernanke a Libertarian an ad hominem attack on all Libertarians.
Bob said: Nonsense. If its yours why can't you manipulate it? That is the heart of libertarianism.
Bob, that would be true if fed wasn't a state enforced monopoly. However, the Fed is a state enforced monopoly and thus is anti-libertarian.
Yves, feel free to block my access and/or delete my comments. It is your blog and you have a right to do as you wish here (unless a "libertarian" makes it illegal). I admit that my comments are partially emotional. I am simply sick and tired of all the nonsense that is nowadays coming out from the mainstream and from blogs like nakedcapitalism (which I used to like...).
Edward Harrison said: ...I think moslof has it right...
Interesting that you say this because before moslof said what you claim to agree with, I said: Libertarians and proponents of free-markets believe in sound money, gold standard and want the Federal Reserve to be abolished.
Bernanke is NOT libertarian, never was, never will be.bob said... You seem to have a monopoly on the word libertarian, who can use it and how they can use it.
That is anti-libertarian.depresso said... Very funny bob. Feel free to believe that a government monopoly is libertarian, up is down and black is white. As you can see on this blog, you will not be alone in your beliefs... attempter said... Ed quotes this definition of libertarian:
Libertarianism is a term adopted by a broad spectrum[1] of political philosophies which advocate the maximization of individual liberty[2] and the minimization or even abolition of the state.[3][4] Libertarians embrace viewpoints across that spectrum, ranging from pro-property to anti-property, from minarchist to openly anarchist
http://en.wikipedia.org/wiki/Libertarian
1. Since the effective liberty of most people would be diminished if not completely destroyed as the "state" is diminished (not that many are capable of liberty either way), even in pure liberty terms this is already really might makes right, right of the stronger, and "libertarian" is simply a fancy, dishonest word to dress up that fact.
Still, beyond the terminological dishonesty, might-makes-right in itself can be an internally consistent view.
2. But where they bring "property" into it is where we know the whole thing is a scam. Property and wealth accumulation (let alone all the bells and whistles of banks and stock markets and so on) of course cannot exist at all without a strong, aggressive government aggressively dedicated to those things.
It's absurd on its face to say "get rid of government" and yet say "I have property rights!"
"Property" and "rights" - one has to be doubly an aggressive statist.
So there's where we KNOW "libertarian" is just a stalking horse for the brutal, direct dictatorship of big corporations and the rich.Prashant said... I don't know about the definitions, but Bernanke, Greenspan and Co. are definitely no believers in Free markets.
All said and done, it is just another variant of Crony Capitalism that is practised in the United States despite what it preaches to the rest of the world.skippy said... Law is the order of the land and its inception was to protect *property* from the mob (see the poor) by landed army's aka the Authoritarian system. We have evolved socially from feudal to monarchy to peoples forms of governance.
Democracy is an attempt to equalize societal pressures with regards to concentration of wealth and power by the few over the many (see Rome).
Now sorry for the 101, but what are we really debating here libertarian vs socialist vs free market vs ??????. I thought the Constitution said WE the people not some fence in the mind that has so many gray areas multiplied by the number individuals present in the republic at one time. Hence we all have different interpretations of definitions regardless of what wiped says.
I fear Democracy is under the knife by forces which would concentrate power for their benefit and not that of the people as a hole. Call that what you may, but remember the club of I over US has ramifications and one should consider fully their impact.
Hell lets all just get big stamps on our foreheads and call a spade, a spade and respond accordingly to their ideology with out interference.
Communists can have one small room like all the others and rationing of all worldly goods.
Socialists can have an egalitarian world, little bits of everything the good and the bad ie: nobody really happy or completely fulfilled ideologically.
Free Marketeers can get screwed and screw over each other till one person owns it all, the hole planet.
Every system of governance I have studied evolves and then devolves to a basic state of community if not over whelmed by another budding system of youthful expansionist exuberance.
We are some where on that historical trajectory and need to sort out who we really are ie: a group of citizens ready to learn from our mistakes or a rowdy group of individuals ready to cut each others throats for our individualistic/ idealogical needs, especially when none can lay claim to fact, but merely see truth in own minds.
Skippy...sorry just so sick of the crap: see extremism.
PS. Have a good trip Ted K. you tried to do good things.skippy said... @above shez....wiped should read...wikipedia.
amendsstylerspeakslife said... i guess you can never please everyone in Washington, and this Bernanke mess is no different. Obama and his supporters are confident that he can come in and save the day, but others think he helped cause the mess in the first place! http://www.newsy.com/videos/ben_bernanke_is_here_to_stay Siggy said... Roach wrote a very good piece. Bit of a realty check. A hugge amount of pointless parsing of libertarian/socialist/fascist here.
Why the reliance on democracy? We are a Constutionally Empowered Federal Republic! When we consistently mis-identify our political system as being a democracy, we erode the contract that was the great gift of our nations founders.
What Roach has clearly pointed out is that the extension of Bernanke's term was a choice of lessor evils, the devil we know.Dave Raithel said... Ed Harrison and all re "Libertarian" and "Libertarianism" etc.: So how come John Rawls wouldn't be called "Libertarian", since his first principle of justice is (paraphrased): Each person is to have the broadest degree of liberty consistent with a like degree of liberty for each other person...
Because he had no gold fetish, and was for redistribution (as needed to improve the circumstances of the representative least well-off person ...)
But all that is a mostly a digression from the main point of the argument: "The world needs central bankers who avoid problems...", which returns us to the whole foreknowledge problem I've lately been tasking myself about. Sure, but how much are you going to pay them? Has to be more than they can make in the private sector (with proper utility considerations for power and prestige.)
Granted, there's some limiting point at which past choices preclude one from future participation. (Imagine Goerring or Borman genuinely confessing that the whole kill the Jews thing was a terrible policy - doesn't seem to work.) On the other hand, for all I know - since I don't live and work in Financelandia - Bernanke is rational, and he's gotten past the errors of his previous ways. Reality has been the experiment, and it just didn't work out as predicted.
Or not. Here's an aspect of reality that persists as much as my extraordinary disappointment in Obamaman - somebody, somewhere, made money (and somebody lost some) because of how they speculated on who'd be running the Fed a year from now.
Bernanke is, at worst, a symptom.attempter said... Dave says:
Ed Harrison and all re "Libertarian" and "Libertarianism" etc.: So how come John Rawls wouldn't be called "Libertarian", since his first principle of justice is (paraphrased): Each person is to have the broadest degree of liberty consistent with a like degree of liberty for each other person...
Because he had no gold fetish, and was for redistribution (as needed to improve the circumstances of the representative least well-off person ...)
Just yesterday I was flipping through an Ayn Rand tome and chuckled to see her referring to the rather innocuous (a word I'm not using as a compliment) Rawls as "evil" and "malevolent".
Now I wonder what would inspire her to such a seemingly disproportionate response? Could it be that Rawls really does represent a kind of capitalistic liberty philosophy, exactly what she lyingly claimed to represent?Edward Harrison said... I have added this paragraph to the end of the post: Update: I wouldn't characterize Ben Bernanke as "cut from the same market libertarian cloth," as Roach does. I would suggest he has Libertarian leanings, but was probably the least inclined between himself, Paulson and Geithner to let Lehman fail.
Another thought: as to whether Bernanke would be the best choice, I think this is largely a political calculation (do we go with an unknown and roil markets/do we change horses mid-stream). Obama plays it safe when it comes to these kinds of decisions. His Biden pick reflects this. It was unlikely he was going to select anyone other than Bernamke, Summers, or Yellen, Although one or two other names have come up.VangelV said... "Bernanke, like Greenspan, is an ultra-free market Libertarian who believes markets always are better informed than regulators..."
So much for Roach's credibility. How can anyone who has the job of being a central planner and is arrogant enough to believe that the economy can be managed by pulling strings and pushing buttons be considered a 'libertarian?' It seems to me that those that favour meddling, as Roach seems to, do not blame the system of regulations that created the mess in the first place but the regulators for not doing enough meddling.
If Bernanke were a true libertarian he would resign his position.Edward Harrison said... Vangel,
I am pretty much sick and tired of people acting as if there is some absolute to being a Libertarian. It's utter rubbish.
I think you have a fairly narrow view of what it means to be Libertarian. In an ideal world, many believe the central bank shouldn't even exist. But Roach is NOT talking solely about monetary policy when he uses the word Libertarian, he's referring to Bernanke's belief in market forces in the financial sector a.k.a. de-regulation.
When I refer to the word Libertarian I mean to invoke the concept of liberty in a general sense. This would a believe in individual freedom, free markets, civil liberties, and so forth.
For instance, the Libertarian Party platform mentions all of these things but nowhere does it explicity state that it wishes to abolish the Federal Reserve, though it does call for the repeal of income taxes. The party does abhor "inflationary monetary policies" and calls for a repeal of legal tender laws.
Being a Libertarian or having Libertarian leanings is not just about monetary policy.
One final word: anyone who is foolish enough to believe that self-regulation in finance works - that allowing an economic ecosystem to flourish without the government enforcing law and acceptable codes of behavior - is either an anarchist or not particularly realistic.
By Henry Kaufman
Published: April 27 2009 19:16 | Last updated: April 27 2009 19:16
The Federal Reserve has been hobbled by at least two major shortcomings that were primarily responsible for the current and several previous credit crises. Its failure to spot the importance of changing financial markets and its commitment to laisser faire economics were big mistakes and justify a fundamental overhaul of the Fed.
The first of these shortcomings was its failure to recognize the significance for monetary policy of structural changes in the markets, changes that surfaced early in the postwar era. The Fed failed to grasp early on the significance of financial innovations that eased the creation of new credit. Perhaps the most far-reaching of these was the securitisation of hard-to-trade assets. This created the illusion that credit risk could be reduced if instruments became marketable.
Moreover, elaborate new techniques employed in securitisation (such as credit guarantees and insurance) blurred credit risks and raised – from my perspective, many years ago – the vexing question, “Who is the real guardian of credit?” Instead of addressing these issues, the Fed was highly supportive of securitisation.
One of the Fed’s biggest blind spots has been its failure to recognise the problems that huge financial conglomerates would pose for financial stability – including their key role in the current debt overload. The Fed allowed the Glass-Steagall Act to succumb without appreciating the negative consequences of allowing investment and commercial banks to be put together. Within two decades or so, financial conglomerates have come to utterly dominate financial markets and financial behaviour. But monetary policymakers failed to recognise that these behemoths were honeycombed with conflicts of interest that interfered with effective credit allocation.
Nor did the Fed recognise the crucial role that the large financial conglomerates have played in changing the public’s perception of liquidity. Traditionally, liquidity was an asset-based concept. But this shifted to the liability side, as liquidity came to be virtually synonymous with easy borrowing. That would not have happened without the marketing efforts of large institutions.
My second major concern about the conduct of monetary policy is the Fed’s prevailing economic libertarianism. At the heart of this economic dogma is the belief that markets know best and that those who compete well will prosper, while those who do not will fail.
How did this affect the Fed’s actions and behaviour?
- First, it explains to a large extent why the Fed did not strongly oppose the removal of Glass-Steagall restrictions.
- Second, it also helps explain why the Fed failed to recognise that abandoning Glass-Steagall created more institutions that were “too big to fail”.
- Third, it diminished the supervisory role of the Fed, especially its direct responsibility to regulate bank holding companies. To be sure, the Fed’s supervisory responsibilities have never been very visible in the monetary policy decision-making process. But its tilt toward an economic libertarian approach pushed supervision a notch down just at a time when financial market complexity was on the rise.
- Fourth, as hands-on supervision slackened, quantitative risk modelling became increasingly acceptable. This approach, especially quantitative modelling to assess the safety of a financial institution, was far from adequate. But it worked hand in glove with a philosophy that markets knew best.
- Fifth, adherence to economic libertarianism inhibited the Fed from using the bully pulpit or moral suasion to constrain market excesses. It is difficult to believe that recourse to moral suasion by a Fed chairman would be ineffective. Such public pronouncements about financial excesses are hard to ignore, reaching the broad public as well as market participants.
- Sixth, the Fed’s increasingly libertarian philosophy underpinned its view that it could not know how to recognise a credit bubble but knew what to do once a bubble burst. This is a philosophy plagued with fallacies. Credit bubbles can be detected in a number of ways, such as rapid growth of credit, very high price/earnings ratios and very narrow yield spreads between high- and low-quality debt.
By guiding monetary policy in a libertarian direction, the Fed played a central role in creating a financial environment defined by excessive credit growth and unrestrained profit seeking. Major participants came to fear that if they failed to embrace the new world of securitised debt, proxy debt instruments, and quantitative risk analysis, they stood a very good chance of seeing their market shares shrink, top staff defect, and profits dwindle.
Ironically, the problem was made worse by the fact that the Fed was inconsistently libertarian. The central bank stuck to its hands-off approach during monetary expansion but abandoned it when constraint was necessary. And that, in turn, projected an unpredictable and inconsistent set of rules of the game.
We should, therefore, fundamentally re-examine the role of the Fed and the supervision of our financial institutions. Are the current arrangements within the Fed structure adequate – from its regional representation to its compensation for chairman and governors to its terms of office for governors? How can the Fed’s decision-making process be improved? If we were to create a new central bank from the ground up, how would it differ? At a minimum, the Fed’s sensitivity to financial excesses must be improved.
The writer is president, Henry Kaufman & Company
"Libertarian Dogma and the Fed"
hari says...
Old Henry is the master bond dealer of his time.
What he is saying is further confirmation of Waldman/MT on another link today. He's explaining the mindset of Fed when it comes to (ideological) policy orientation under Greenspan/Bernanke.
I don't think you can re-educate them...It's too late!
If you take Henry/Waldman links together, Geithner/Summers policy prescription is a very costly affair for taxpayers - and directly benefits WS Barons who inflicted the serious catastrophe.
It would be next to impossible framework of policy in Germany/France and rest of ECB-16. And for good political-economic reasons to boot.
bakho says...
Blaming "Libertarian tendencies" is a polite way of saying they took a chainsaw to regulations.
ken melvin says...
Part of reform should include driving a stake throught the heart of libertarianism. Generally, I believe in freedom of religion, but the worship of such false gods must henceforth be forbidden, and straight to the gallows with anyone who claims that the markets know best.
8 says...
Libertarianism in the Fed and deregulation was a response to the failed socialism/progressivism of 1910-1978. If we want to get rid of the false gods, we'll have to rip out everything since Teddy Roosevelt.
Patrick says...
"Libertarianism in the Fed and deregulation was a response to the failed socialism/progressivism of 1910-1978"
Not even wrong.
Brooks says...
Just a side note: Funny thing is, many (perhaps most) of the capital "L" Libertarians are the biggest Fed-haters in the nation, and many would like to see the Fed abolished. So when I saw the title of this post "Libertarian Dogma and the Fed" I thought it would be about those "Ban the Fed" types who constantly rail against "fiat currency".
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