Auditing the Fed: Different truths for different people.

(9 am. – promoted by ek hornbeck)

Distrust in democracy and “the common man” is used as a rationale for having different classes of people invested in different “grades” or “tranches” of truth.  The belief that commoners can’t handle the truth is probably the central dogma of modern politics.  The belief is to some extent real, as self-deception is critical to credible lying, but primarily serves to mask the deep conflicts of interest of those holding power.  The dogma is frequently presented in a way to suggest that truth is imminently dangerous to national security concerns, justifying the invocation of state’s secrets.  One version of this “Father knows best” attitude was famously articulated by Irving Kristol:

“There are different kinds of truths for different kinds of people. There are truths appropriate for children; truths that are appropriate for students; truths that are appropriate for educated adults; and truths that are appropriate for highly educated adults, and the notion that there should be one set of truths available to everyone is a modern democratic fallacy. It doesn’t work.”

Irving’s taxonomy of people according to grades of maturity and education, which I read as code words for “ideological intelligence” is almost diabolically funny, in retrospect.

The selective dissemination and outright fabrication of “truth” has always been key to decision-making at the highest levels of power.  This was true in the 2000 elections, after 9/11, in the run up to Iraq, and before, during, and after the financial crisis, among recent notable catastrophes where truth was peddled in tranches of differing and dubious values, all rated as AAA, and foisted off on to unwary consumers.  The peddlers of these “truths” are fully aware that the dissemination of knowledge outside of the inner sanctums of power could cause the powerful to lose control of their agenda, as Greenspan’s remarks on the housing bubble make clear:

“We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand,” Greenspan said, according to the transcripts of a March 2004 meeting.  “I’m a little concerned about other people getting into the debate when they know far less than we do.”

Since the massive failures of both political and financial elites with respect to their complete loss of control over the global economy, there has been a growing bipartisan consensus to find out what actually transpired during the financial crisis, e.g., there is a growing movement to audit the Federal Reserve, to find out what kinds of assets they have assumed on their books, which will indicate the value of the banks’ vaults, as well.  Obama and the Feds and the Banks resist sharing this proprietary knowledge, because it would expose them for the frauds they are, and reveal what many already know to be true:

“To say this [Federal Reserve] portfolio is a pile of junk is being unkind to junk,” David Zervos, Jefferies & Co. global fixed-income strategist, wrote in a note Thursday.

We seem to be operating temporarily on the cartoon principle that if the coyote holding the anvil does not look down, he will not plummet into the ravine, but this realization that gives a moment’s pause is just a cute trick by the writers, who know that the terror of consciously anticipating the fall makes a diabolical plan that backfires that much crueler and funnier.

If only Irving Kristol and Ronald Reagan were alive today.