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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Monday, September 17, 2012

Goldman Sachs: Proponents of Shamanistic Economics?

Goldman Sachs has its own economists who often predict what is going to happen in the economy (a fool's errand).  One aspect that Goldman dwells on each time Bernanke gives a speech is Quantitative Easing (QE).  The latest QE is 3.

Why is Goldman so interested in whether or not QE will be instituted?  Well, it helps them make profits because QE stimulates stock and commodity prices on which Goldman makes profits and the Fed buys up MBSs on bank balance sheets.

"The Fed will spend $40 billion in money created out of thin air to buy non-performing mortgages from banks eager to dump them and interest rates on new mortgages will fall to record low levels. This will supposedly "stimulate" the housing market. "  (from James Kunstler's article in Business Insider called What Does It Mean?)

The financial industry has already spread to include 40% of economic activity.  Never mind that the banks committed fraud;  the central bank is bailing banks out on an on-going basis and refuses to acknowledge bank losses.  QE3 serves to devalue the American dollar, helps to prop up the insolvent banks and leads to increases in food and fuel.

So we see that the economy is a "pretend" economy and the solvency of the banks is the biggest pretense of all:
Dan Kervick:  Shamanistic Economics
By Dan Kervick - Naked Capitalism
. . . .
Shamanistic economics, when it becomes a routine way of life, debases and undermines our democracy. Its continued efficacy depends on the perpetuation of false and superstitious beliefs among the public, which corrupt public understanding and the capacity for rational public deliberation. It also encourages, and even depends to some extent for its operation, on an attitude of deferential awe toward the central bank and its leadership. And it encourages policy makers themselves to adopt an operating stance of aloof and frequently deceitful control of the masses, rather than a posture of open and accountable public service to the citizenry. The shamanistic policy maker is not a public servant; he is a magus.

It seems deplorable that professional economists are willing to participate in this antithesis of democracy, and replace informed democratic self-government with a primitive and archaic form of governance. To be fair, some of the people calling for more quantitative easing have offered defenses of the program that depend on more firmly grounded and resilient causal mechanisms – non-shamanistic mechanisms that do not depend on the fickle vacillations of popular beliefs and delusions. And even some of those calling for quantitative easing based on the shamanistic path aren’t arguing for the employment of shamanistic economics all the time. Instead, they just seem desperate. They would prefer more concrete actions from the US Congress, but believe it is impossible to get Congress to act. It’s hard to blame them in their despair. The current Congress is one of the most incompetent, malevolent and cynical groups we have ever had sitting in Washington. And the President, with his misguided emphasis on long term deficit and debt reduction hasn’t been that much better – although he has called for more spending up front, with the deficit reduction to be put off until later.
Read the whole article here


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