Dark Wraith Publishing presents The Dark Wraith Lecture Series, specially edited versions of academic lectures in economics and business offered as a public service to visitors at this Website.

Lecture 3: "Constitutional Rights and Fiduciary Duty"
Duration: 0:04:19
Size: 3.95 Mb

The 2002 horror movie The Ring wove a tale about a horrific video that would predicate the death in seven days of anyone who watched it. The only way to avoid this fate was to further propagate the video, allowing others to suffer its fatal curse. Personally, I enjoyed the movie; but, then again, I'm a sucker for scary movies, although I can pretty much always do without gore-galore festivals (unless the victims were really, really bad actors). The Ring was satisfying for me to the extent that it presented a kind of terror too remote to make me worry about some real-world version of its central premise coming true.

Therein was my potentially grave error in assessing the story line of The Ring, and I have now decided that the only way I can dispense with what could otherwise be an unwanted curse upon my soul is to invite—indeed to encourage—readers to watch a 139-minute film by über-conspiracy theorist Alex Jones of Prison Planet. The movie is herewith embedded near the end of this article.

Long-time readers of my articles might recall that I have mentioned Mr. Jones in the past, specifically with respect to the fact that maverick Republican presidential candidate Ron Paul appeared in a film of his. In my tradition of diplomatic understatement, I wrote of Alex Jones that, "[He is] believed by at least some rational people to be a few cheese cubes short of a snack tray..."

That aside, for readers who want a remarkable, although incomplete, rundown of a principal branch of conspiracy theory, allow me to recommend Alex Jones's 2007 movie, Endgame. It is sweeping, and it is compelling. It is also deeply flawed, primarily by the way it, like most conspiracy theories, constructs conspiracy by virtue of mere associations, some of them familial, others chronological, still others even less well-defined. For example, Jones connects the evolution theory of Charles Darwin to a cousin's twisted ideas on eugenics, and then he goes on to associate the early eugenics whackos—admittedly including a number of Charles Darwin's subsequent family members—to the later eugenics whackos like Adolf Hitler and the better-race promoters in the U.S., including the predecessor to Planned Parenthood. In all fairness to Jones, however, he does not directly attack the theory of evolution, nor does he condemn the idea of the right of women to choose abortion; but he does seem to have an intense interest in offering a less-than-dim view of the foundations of many modern-day organizations, including everything from the World Wildlife Federation to the Federal Reserve system. Along the way, as well as going after the predecessor to Planned Parenthood, he jumps on the usual list of conspiracy theory hot buttons like the United Nations, the European Union, and NAFTA. I roll my eyes every last time the conspiracy theorists trot out these worn-out whipping boys, although the matter of that trans-America highway corridor is a little less of an eye-roller than meets the eye, particularly since officialdom in Washington acts to this very day like the thing doesn't even exist.

I must admit that, within the sweep of his attack, Jones goes after some of my favorite rich-boy charlatans. One of them is Al Gore, a gentleman who in my own, personal opinion is a PowerPoint-wielding, sky-is-falling elitist-opportunist. My published writing and comments about him are harsh and unyielding, and I am not in the least impressed by his Nobel Peace Prize, awarded as it was to a quite comfortable, upper-class gentleman at the same time in history that genuine heroes the world over are rotting in prisons, being tortured, and getting executed for demanding such trivial things as freedom in unfree lands. Yes, the Presidency of the United States was stolen from Mr. Gore; but, no, sometimes it is not better for the Republic that its wronged meekly stand down, for their surrender is not theirs alone, but is also the sacrifice of the millions who will then suffer under the reign of the venal thieves wretchedly proclaimed victor.

Enough with grinding the personal axes; this post is about Endgame, which is, as noted above, incomplete. While it fabulously explains the Bilderberg Group—a favorite sore spot of any self-respecting conspiracy theorist—it completely avoids mentioning the Illuminati, Opus Dei, Freemasonry (although a stylized version of the All Seeing Eye is presented several times), the Jewish conspiracy, and anything whatsoever having to do with UFOs. (Those who know about these matters will, however, notice in the movie all kinds of visual hints of other conspiracy theory threads.) Strangely, avoiding a free-fall involvement of all these other branches of conspiracy theory keeps the movie from drifting into complete silliness.

Along the way, the movie gets a little slow in some places, but the tenor re-attains fever pitch at several places in the last half. Without giving away too many details, the mention that Hillary Rodham Clinton did a half-day appearance at the 2006 Bilderberg Group conference is worth noting. No, she's not a Bilderberger: a half-day visit would mean she was there to briefly present herself for the core group to consider. At that 2006 conference, by the way, Jones got photographs of none other than the disgraced Ahmed Chalabi of Iraq pre-invasion disinformation fame; Chalabi was slithering around at the hotel like some kind of creepy denizen from the depths, apparently a welcome participant in the confab of the rich and powerful.

Another fun part of the movie is the interview into which Jones suckered a young Rothschild heir, a fellow heavily into promoting save-the-planet concerts. Jones threw a rather ludicrous "fact" at the dear boy, who took the bait like an idiot and responded with one of the most self-defeatingly stupid answers I've ever heard from an ostensible heir to shadowy greatness. I actually had to get out of my chair and walk a few feet away during the Rothschild pup's blithering oral dance. Whether or not Jones knew his "fact" about other planets in the solar system exhibiting signs of warming was ridiculous, he certainly got a future Bilderberger to make an ass of himself.

I should also point out that Endgame touched a soft spot in my heart as it took on such historical icons as Bertrand Russell, a man whose bizarre statements about depopulation made him someone I have reviled both as a person and as an intellectual inspiration my whole adult life; Russell resides in the same level of my esteem with self-fawning sods like Ayn Rand and Henry David Thoreau. Another joy to my heart came in the mention that Vice President Dick Cheney, in making his triumphal return to the Council on Foreign Relations some years back, commented on the use of ethnic bio-weapons. (Gee, with stuff like that being talked about by White leaders of the Free World, it's no wonder people like Rev. Wright are considered total lunatics when they start their bizarre rants about AIDS being human-manufactured to kill Blacks.)

I tell you, if all that wasn't enough, I became downright giddy when Bill Gates and Warren Buffet were trotted out for a brief flogging.

Yes, for me, Endgame was a veritable orgy of evil, sinful, wrongful delight, the kind of stuff I know very well is just plain mind-rotting in the same way a rare, fatty, 20-ounce steak cooked on an open fire and a nose-piercing, mucous-clearing cigar are bad for me. God! but it was sweet.

For me, the list of pleasure points in Endgame was rather long; but just because Jones and I have a common manifest of disliked creeps and just because we share a deep concern for the emergence of an authoritarian state, I simply cannot allow that I agree with the scope of his conspiracy theory. I do not, and the reason is quite simple: even though the Bilderbergers really do imagine themselves controlling the fate of the world, and even though their idiocy has caused actual harm, they are pathetically incompetent in their silly plans, schemes, and dreams. Unless their master plan really was to crater the world economy with a blithering combination of neo-liberals, neo-conservatives, communists, Right-wing thugs, religious nutcases, and assorted other thunderously ignorant operatives, where we are headed would be the very last place putative global controllers would have wanted to go: down this path we are plunging lies what will in all likelihood be a horrendous, destructive clash of classes over everything from food to shelter to freedom. As enfeebled of mind as Americans have been for a long time, and as weak and reckless as political opposition has been to the insanity of the Bush Administration, its military adventures abroad, and its ever-expanding, ever-more-intrusive law enforcement machinery at home, the dynamic will change, and the change will be dramatic.

It will also be ugly.

Shadowy, filthy rich cretins who meet once a year to plan the fate of the world would be awfully stupid to risk a global economic collapse that could just as easily lead to anarchy as it could to some pretext for a one-world, authoritarian government solution.

Certainly, those shadowy, filthy rich cretins are not that stupid. Such an idea is every bit as crazy as saying that the richest, most powerful nation on Earth would allow itself to be ruled, and thereby economically destroyed, for eight long years by a vicious, moronic, inarticulate, power-mad, secretive, incompetent fool.

The very idea is laughable.

Anyway, grab some popcorn, pour a drink, close the curtains, and spend a little more than two hours watching Endgame. If nothing else, it's certainly worth a laugh.




The Dark Wraith gives it two thumbs way up.

With respect to the verdicts exonerating three New York City police officers of all criminal charges for killing Sean Bell, an unarmed, innocent man, the mainstream news media have taken a largely muted, matter-of-fact tone in reporting the acquittals, although shades of support for the decisions by Queens State Supreme Court Justice Arthur Cooperman have come from surprising sources like The New York Times, which sought to characterize the incident in terms of "nuance" in a "...complicated case that unfolded in a city less racially divided than 10 years ago," thereby lending further weight to the reasoning advanced by the judge who presided over the bench trial of the three officers, Detectives Michael Oliver and Gescard Isnora, who were charged with manslaughter, assault and reckless endangerment, and Detective Marc Cooper, who was charged with reckless endangerment.

Justice Cooperman, in acquitting the officers, asserted from the bench that inconsistent testimony by, and prior criminal records of, prosecution witnesses, principally the victim's friends, "had the effect of eviscerating" their credibility.

Not only was Justice Cooperman's means of arriving at his verdicts wrong, it was broadly outrageous on its face, and it speaks to the distortion of justice by courts over which preside judges who use their position to promote their own classist views. The detached assertions of The New York Times notwithstanding, the use of courts to craft justice by class has the invariable effect of promoting racism, sexism, and all manner of other ills the elites would furiously disclaim as their intent, even as they repeatedly ensure the endurance of inequality in both their refined and brutish instrumentalities of maintaining the status quo.

The rule of law cannot exist when, in any way, justice is shaded to the victim's general righteousness, nor should the quality of that victim's grievance before the bar of justice be diminished by some diffuse notion held by a judge that testimonial evidence is "eviscerated" when those who have already been marginalized by the courts, the police, and the larger society are invited to speak to the matter at bar. The misunderstanding of such fundamental principles is one of the primary means by which defense attorneys have historically elicited not guilty verdicts from juries, and it is appalling that any judge, extensively trained and long in experience, would allow such tactics by defense counsel to have any impact whatsoever on trial outcome. To the extent that Justice Cooperman is certainly not alone in permitting his court to become a proving ground for the character and quality of victims and their witnesses, the courts of this land allow themselves to become yet one more formidable wall by which law enforcement authorities deter citizens from seeking redress within the justice system.

That a sitting judge would be so essentially, fundamentally flawed in reasoning that he would incorporate into adjudication his own biases, shaped as they are by his own socio-economic standing, is outrageous on its face. That he would actually speak in his opinion of how he found wanting and thereby suspect the words and demeanor of the prosecution witnesses speaks not only to his classist mentality, but also to a deeper elitism inconsistent both with proper judicial temperament and, indeed, with any claim to legitimacy as a representative of a society that poses to render equal justice for all.

A trial court finds facts; it then applies the law to those facts it has derived from material, circumstantial, and testimonial evidence.

The judge's finding of facts was wrong: it was wrong because he found facts based upon the divergence of his preconceived expectations of testimony from the reality of those providing that testimony whose degraded experience in the society and with the courts had already individually and historically marginalized them.

The verdicts in this case were not examples of the rule of law protecting society and its enduring principles; these acquittals of policemen who used 50 bullets to butcher an unarmed, innocent man were the pernicious rule of an elite advancing the interests of his own class.

Res ipsa loquitur: the thing speaks for itself.


The Dark Wraith has spoken.

Dark Wraith Publishing presents The Dark Wraith Lecture Series, specially edited versions of academic lectures in economics and business offered as a public service to visitors at this Website.

Lecture 2: "Agency"
Duration: 57:27
Size: 52.6 Mb

Today, I am taking a break from having too much to do. Later this afternoon, I will get back to work. I need to write a couple of quizzes for classes; a few graphics for future articles could use some attention, too, but the concentration I need for such matters eludes me at the moment.

In early January, the community college at which I teach finally posted a position for a full-time faculty member who could teach economics, finance, business law, and accounting, a daunting combination for which I have more than two decades of classroom experience. It seemed to me that the position had been crafted for me, and I almost got the impression that this is, indeed, what had been done. I’ve been at this school (while teaching at others off and on) now for five-and-a-half years. I had once been passed over when a position opened and an administrator was slotted into it via a back-door contract provision available to those who serve their time in administration. I imagined in January that, given the requirements for this new faculty position, the Powers That Be were constructing a means by which old matters would be tied up as the school moved into an era of rapid growth, prominence, and independence from the nearby state university that had been, as if by some divine right, forever imposing its will upon higher education in the region.

The grueling process of faculty hiring moves through ponderously slow stages. First, public notice is given in professional publications; then a slate of eight preliminary candidates is selected; then those individuals are each given a phone interview by the hiring committee, which, in this case, included the chairwoman, herself, and two solid friends of mine. After the phone interviews, the list of candidates is culled to four, each of whom is brought to campus for a series of on-site interviews and to deliver a teaching demonstration.

From early January, this process finally came to its conclusion a week ago last Thursday. That day, after I had taught my own classes, I was “brought to campus” for the big interview. I had already arranged for several other faculty members to make the recommendations they are allowed to do as part of the evidence that is used in the hiring decision, so I had those recommendations, along with three of the six members of the hiring committee fairly certainly in favor of my appointment; in addition, I had a whole slate of credentials, including my Faculty Member of the Year award from last year. It did not hurt, of course, that I have published over four hundred articles on the Web, many of them nothing other than teaching exercises in economics, business, and related fields; and it did not hurt, of course, that the New Age information technology fad had not eluded me one bit, what with how I manage not only to podcast my lectures, but also to ensure that those podcasts are available from heavy-hitter sites like Apple iTunes, Yahoo! and other places virtually no faculty member could dream of designing RSS feeds to accommodate.

Geez, what more could a college want? Unless one of those other finalists was a Nobel Prize winner, I had it in the bag. Thursday was going to be a great day.

Because of morning classes I teach, I was already on campus before the interview. Such convenience! They did not even have to drive to the airport to pick me up; I just wandered over to the office of the Division Chair, the first person with whom I would meet so she could explain in detail the position, the salary, the duties, and all of that. I met her, and we spoke at length on matters of which we both knew, agreeing in many ways on issues having to do with the school and the important things coming to the fore in this period of substantial growth through which the college is now going. This particular woman has been quite a star since she took over from the gentleman who preceded her. Everyone has been impressed both by her ability to get things done and by her interest in creating more cohesiveness among faculty she oversees in business, economics, social sciences, and computer software skills and office technology. I have considered her something of an ally of mine and have introduced her to some of my articles published here at The Dark Wraith Forums.

After I had my meeting with her, I was taken to meet with the Director of Education, an old, retired astrophysicist from a monster-big university. He had held a grudge against me for some years because of a math program I fielded that was very popular with the community but was condemned (in the newspaper, no less!) by the chairman of the math department at that nearby university. That was an ugly affair, one for which I was blamed, that caused a rift between the community college and the university. The old astrophysicist had wanted a scholarly, interactive relationship with the hard science people over at the university, and my blustering, high-profile program (sort of like a math boot camp) had disrupted that. Interestingly, though, in that meeting Thursday, the Director of Education and I spoke in an entirely amicable, mutually edifying way about all the things upon which we agree about the state of education and the political landscape of modern America. It was almost disconcerting how well and how comfortably we spoke. It was like two old curmudgeons sitting on a park bench railing against the bleak prospects offered by the pervasive ignorance of modernity.

After that relatively short meeting came the full-blown, one-hour interview with the six-member committee, which included, as I noted, the Division Chair, two faculty members whom I consider good friends and solid colleagues, one faculty member who does not dislike me on a professional level (but probably does, to some extent, on a personal level), a representative from Academic Advising (a lady with whom I have worked productively in the past), and a representative from Information Technology Services (a young man who seems unaware of the long-running war between older teachers and the technology-is-everything crowd in ITS).

In that interview, I answered a battery of questions with what I considered excellent, well-worded, highly informed responses. I was right on my game: I had all the right answers for the sake of political correctness, with just the right measure of independence of thought to make for a productive professor who would never rock the boat so much as to tip it over. Nods, smiles, and positive facial expressions abounded.

The last part of the day's agenda was the teaching demonstration. I used the occasion to present one of my locally famous lectures, one that involves everything from graphs of money supply, inflation, and economic growth to rubber chickens, Kool-Aid, apple pies, and the theme from the '60s television show Gilligan's Island. Students young and old just love this one. (I simply must figure out a way to make a video of this to publish here.)

At the conclusion of the teaching demonstration, the head of the division told me that a decision would be made within two weeks, and she would be personally calling each of the four candidates to convey the news about the hiring decision. Actually, the decision was going to be made the next afternoon; I knew that because I had heard that this was when the committee was going to meet. The two weeks was for the Board of Trustees, itself, to internally signal an “official” decision.

I left campus that Thursday feeling quite good. Although I had not been my best in that teaching demonstration, I had gotten pretty darned close. As I was walking through the parking lot to my car, something entirely strange, fleeting, and most subtle happened to me. It was such a brief incident, too quick to rattle me even though it should have, given how genuinely odd it was. As I thought about it later, I concluded that it had been something positive; but at the time, I misunderstood why.

I was not on campus very long the next day, Friday, but I was there long enough. No one said a word about the meeting, but it was pretty obvious to me. Indeed, the sense I had was palpable.

I had not been selected.

All my fantastic thoughts, convictions, and certainties were gone. I had finally opened my eyes.

For just a moment—an awful, long moment—such a wave of sadness overcame me: that impenetrable, inconsolable grief no longer held at bay in forethought, no longer to be set aside for another time.

Then came relief: utter, complete, life-giving relief, as if from a great and terrible illness, years in its duration, I could not help but arise.

I departed the building in which my department is located, and as I was walking through the parking lot, I understood why what had happened there in that fleeting moment at that same place just the day before was not merely a good sign, but something better than I had been given in many, many years. I wish only that I knew whom to thank for it.

Today, official confirmation came. I was given face-to-face notification. I had the vague sense of being consoled like a favorite pet whore; but that's alright. I am not. At peril are the apparachiks of the establishment, the jackboots of government, the politicians, the Right-wingers, the Leftists, the Democrats, the Republicans, the religious zealots, the science lovers, the technologists, and all the other authoritarians, imbeciles, and fools who would think otherwise.

I am set to the task of regaining my concentration now that I am once again, as always, free.

Destiny lights the way; fate then rends from darkness the future.


The Dark Wraith has so much work to do.

Dark Wraith Publishing presents The Dark Wraith Lecture Series, specially edited versions of academic lectures in economics and business offered as a public service to visitors at this Website.

Lecture 1: "The Road Ahead for the American Economy"
Duration: 23:50
Size: 28.1 Mb

Just as the deputy director of the Centers for Disease Control admits little progress in the fight against food-borne illnesses, the Food and Drug Administration is announcing that at least 23 people in 14 states have contracted salmonella from several cereals sold under the Malt-O-Meal name.

That's right: cereal may now be added to the list of foods that can make you sick or kill you because of lax federal regulation, sloppy corporate manufacturing processes, free-market greed, and disdain by this Administration and its apologists for the essential role of government in providing basic protections for its citizens.

Sooner or later, perhaps Americans are going to notice that, not only does the Bush Administration's miserable incompetence let foreign terrorists kill thousands of our citizens, but that same stunningly incompetent horde of ignoramuses, neo-cons, religious zealots, and simpletons lets foreign and American corporations kill, maim, and otherwise harm a whole lot more than thousands of our citizens. Maybe once citizens figure that out, some people might want to ask their leaders why more than half-a-trillion dollars has been spent on a never-ending War on Terror when that money could have been used to prosecute a far more productive war on corporate greed, sloth, and mendacity. It's certainly a fair question; but it's not one for which Mr. Bush and his Republican corporate apologists will ever have to answer.

They're going to get away with what they've done.


The Dark Wraith recommends cooking everything to well-nuked before eating.

Long-time commenter tali sent the link to a thread at Democratic Underground where an on-going discussion concerns a picture of Vice President Dick Cheney. The specific topic of conversation has to do with what is being reflected in his sunglasses. The picture in question is reproduced below.



Some observers are of the opinion that Mr. Cheney is looking at something naughty, but others are of different opinions, so your host here at The Dark Wraith Forums decided to do some computer enhancement of the image reflected in each lens. A different enhancement technique was applied to each reflection to provide differing perspectives. Readers should be aware that computer enhancement entails both technical skill and some degree of subjectivity, and the end result, at least in this case, is open to some interpretation. Ultimately, it is up to each observer to decide what he or she is seeing in the final renderings.

Look at the original image above, then click on each link below to see the computer-enhanced version of the reflection.




The Dark Wraith awaits opinions on what Vice President Cheney was looking at.

According to a Republican strategist cited by ABC News, Secretary of State Condoleezza Rice is actively looking to get tapped by John McCain as his running mate, although through her spokesman she is denying such ambitions; and McCain, himself, is saying he doesn't think she wants to be his running mate.

Whatever. It's good political gossip, and it's breathing press attention into McCain's campaign, which has recently been so unnewsworthy that even the mainstream media hasn't been able to think of any way to hype it.

So, in the interest of keeping the Arizona senator and his fresh-out-of-new-ideas candidacy from disappearing into yesterday's news cycle, readers here at The Dark Wraith Forums may voice their opinions on what a McCain/Rice 2008 ticket would mean in the general election.

Have your say in the poll; then, if you so choose, have your say in the comments.



The Dark Wraith awaits the considered opinion of the readers.

In Part One of this series, the current state of the U.S. economy was cast in the light of the monetary policy regime of the Federal Reserve under George W. Bush. That article followed up on themes presented in previous articles written by the author, including Prelude to Finale and Part Two and Part Three of "The Economics of Wreckage." In this second and concluding part of "The Federal Reserve under Fire," a summary of monetary and fiscal policy activities by Presidents in the post-World War II era is provided to illustrate the choices and consequences that have faced Presidents of the United States in the last half of the 20th Century, with implications for what lies ahead.

President Eisenhower, in the face of the relatively mild recession of 1958, resisted the harangue of Republicans in Congress to cut taxes and, in so doing, was able to oversee a government that had several years of balanced budgets. He argued that the huge tax cuts of 1954 had been enough in the way of fiscal stimulus, and he was proud to point out that the majority of the money from that round of tax cuts had gone to people of more modest means. The fiscal discipline he imposed as chief executive officer of the United States would prove exceptional, particularly in light of the howl from his own Republican Party as it obsessively paraded its pandering wares for the low-taxes crowd of that day.

President Kennedy, fully infused of a more enlightened Keynesian advisory slate, and with the excuse of having inherited from Eisenhower a sluggish economy, actually appealed to Congress for legislation to cut taxes. At the same time, he was laying out plans to take the country onto the entrance ramp of a long, wide highway of massive growth of government. His vision was dutifully and honorably fulfilled by his successor, President Johnson, who knew full well, as did his ill-fated predecessor, that a completely compliant Federal Reserve stood ready to monetize what would become a spiral of expenditures far beyond the means of even the United States, especially in the face of inadequate tax revenues. The Great Society (Johnson's follow-on to Kennedy's New Frontier) and the Vietnam War (Johnson's high-octane version of Kennedy's advisory actions in southeast Asia) would together become, first, the engine of fiscal policy permanently masked as economic stimulus; second, the wedge by which the public sector would become permanently entrenched as an integral and significant part of the American economy; and, third, a means by which monetary and fiscal policy distinctions could be better and more systematically blurred on a nearly permanent basis.

Duties and Tools of the Federal Reserve
In principle, the Federal Reserve has three functions, the first two of which it has carried out with what has arguably been a considerable degree of clarity and strength. The Fed regulates and supervises banks; the Fed provides banking services for banks (as a competitor with private financial institutions that offer the same); and the Fed conducts monetary policy.

Regulation and Supervision: The seven Governors, appointed by the President with the advice and consent of the Senate, of the Federal Reserve Board construct bank regulations. Sometimes, as with many federal agencies, these rules rise to the level of regulatory law; in other circumstances, the regulations are interpretations of federal laws enacted by Congress. The application and enforcement of these regulations created by the Board of Governors is the responsibility of the 12 Reserve (or "District") Banks, each overseeing the banks in its own geographical region. Application and enforcement is carried out through bank audits, dissemination of information, and other activities. In summary, regulation is carried out by the central Board of Governors, and supervision is carried out by the Reserve Banks.

Banker's Bank: Just like any other business enterprise, a bank needs a place to deposit its money and get other important financial services. The Federal Reserve offers the entire range of such services a bank might need, but the Fed operates as only one possible financial institution banks may use for such purposes. Certain private, commercial institutions offer the same services, and the Fed's participation in this market is generally to ensure a degree of competition and encourage innovation.

Monetary Policy: Technically speaking, the Federal Reserve has three tools by which it can conduct monetary policy. One is the "required reserve ratio," the fraction of demand deposits a bank must keep on hand to satisfy claims on its customers' checking accounts. The level at which this required reserve ratio is set has the consequence of determining the factor by which new money entering the system will multiply as the result of loans and deposits. A higher required reserve ratio will slow down the multiplier effect; a lower required reserve ratio will increase the multiplier effect. As a tool of monetary policy, this required reserve ratio is blunt in the sense that relatively small changes in it can have fairly dramatic effects on how fast the money supply grows; as such, the ratio is set primarily for its function of imposing upon member banks a minimum amount of money that will be in the vault for customers and for those bearing checks from customers. In times when people have worries about the banking system and their money, the Fed might set the required reserve ratio higher than in times when people are quite confident about the economy and its banking system.

The second tool of monetary policy is the "discount rate," which is the interest rate at which the Federal Reserve, itself, would lend money to member banks. The Board of Governors sets the discount rate about eight times a year, moving it up and down, or leaving it alone, to signal broader Fed policy intentions. Typically, banks would prefer not to step up to the so-called "discount window" for a loan because they can borrow from each other in the "Federal Funds market," even though the "Federal Funds rate" (or "Fed Funds rate," for short) is higher. The Federal Reserve sets the discount rate (logically, because it is the lender at the discount window), but it cannot "set" the Fed Funds rate because this rate is driven by the supply of and demand for lendable funds in the banking system.

The Federal Reserve does set a target for the Federal Funds rate, and it tries to move the actual rate toward the target rate by the third of the three tools of monetary policy, the so-called "open market operations" (OMOs), which are executed by the Domestic Trading Desk at the Reserve Bank of New York (the "Empire" bank). These OMOs are carried out every day, and they are the activity of the Federal Reserve in the financial markets that powerfully affects the supply of money in the banking system. Policy expressed through the open market operations is set in meetings of the Federal Open Market Committee (FOMC), on which the seven Governors are voting members, as well as the presidents of four Reserve Banks on a two-year, rotating basis, and the president of the New York Reserve Bank on a permanent basis. The FOMC makes decisions about how much liquidity the banking system should have at a given time, and the directives to add liquidity to or drain liquidity from the system are transmitted to the Desk in New York for execution by traders who then enter the open market for Treasury securities and offer to buy them from or sell them to member banks. If the Desk is a net buyer, that causes demand for Treasuries to increase, which drives their prices up (which pushes their yields down), and the result is that banks receive money from the Fed for the Treasuries they sell to it, induced as the banks are to sell some of their Treasuries because they can fetch the rising prices of them. On the other hand, if the Desk is a net seller of Treasury securities, that causes the supply of those Treasuries to increase in the open market, thus driving their prices down (which pushes their yields up), and the result is that banks surrender money in exchange for the Treasuries they are buying, induced as they are to buy some Treasuries because the falling prices are making them more attractive investments.

In the case where the Desk is a net buyer of Treasuries from member banks, money is flowing into the banking system as the Desk pays the banks for the assets it has purchased, so the cash is being deposited in Federal Funds market in the names of the banks the Desk is paying. This makes the Fed Funds rate drop because the supply of lendable funds is rising, meaning the system has more cash money to lend. In the case where the Desk is a net seller of Treasuries to member banks, money is flowing out of the banking system (and into the vault or shredder at the Fed), making the Fed Funds rate rise because the supply of lendable funds is decreasing, meaning the banking system has less cash money to lend, since it spent money buying those Treasury securities the Desk was offering. The result of these open market operations is that the liquidity of member banks' asset portfolios is altered: when the Fed is pursuing expansionary monetary policy, the asset portfolios of member banks is becoming more liquid (tilted toward more cash that can be lent), causing interest rates banks charge for loans to drop; when the Fed is pursuing contractionary monetary policy, the asset portfolios of member banks is becoming less liquid (tilted more toward Treasuries, which cannot be used for lending), causing interest rates banks charge for loans to rise.

The Purpose of Monetary Policy: Theory and Reality
Ideally, in carrying out its duties to conduct monetary policy, the Fed has one and only one goal: maintain the stability of the aggregate price level. That means the Federal Reserve, in managing the money supply, is charged with preventing inflations and deflations, especially those that would persist long enough to embed expectations of future continuations of price increases or decreases into wage levels, interest rates, and prices for goods and services. To that singular goal of maintaining stability of the aggregate price level, the Fed would oversee a growth rate of the money supply that matched—and did not go above or below—the real growth rate of the economy. In other words, sound monetary policy would be to the exclusive and singular end of ensuring that the money available to the American economy was just enough, no more and no less, to provide the cash the economy needed for its transactions. This would mean that the money, itself, was completely neutral with respect to effect and did not, because of an over- or under-supply of it, distort growth, expectations, aggregate demand, or aggregate supply.

Unfortunately, monetary policy can affect the short-term real growth rate of an economy, and the neo-Keynesians have not been afraid to use this as a tool of intervention in the business cycle, particularly to the end of stimulating the economy, whether or not the economy needed any stimulus. President Kennedy's Fed was certainly not the first to understand that excessive growth of the money supply can create a short-run stimulative effect, and the Federal Reserve came in the neo-Keynesian era to embrace an expansive understanding of the goal of monetary policy (and, by implication, of the authority of the Fed) that included "assisting" the economy in times of economic hardship. The worst part for the Fed of abandoning a more parsimonious goal of controlling the aggregate price level was that, once it had become an instrument of fiscal policy—indeed, of social and public policies—its Board of Governors found itself less and less able to stop the integration of the Fed into the machinery by which the U.S. Treasury funded government operations.

The Federal Reserve of the Nixon years continued this abandonment of the mission of the central bank, which arguably culminated when the Board, under the chairmanship of Arthur Burns, monetized the price shock of the OPEC oil embargo of 1973. As excess money was already spreading through the American economy, causing general and escalating inflation, the solution proffered by Nixon and the federal legislature of the time was to impose wage and price controls, which are essentially the legislative version of curing inflation by putting a cork into the wound of a person bleeding profusely from a gunshot to the abdomen. With the Fed pumping money into the system to keep aggregate demand strong, inflation accelerated; far worse, however, expectations that the inflation would continue and accelerate started to set in.

For Nixon's successor in office, Gerald Ford, that meant keeping the money printing presses rolling to forestall the gathering and inevitable storm of a recession that would be caused in part by interest rates rising because of the expected inflation premium in them starting to embed and grow. Ford's solution, facile as it was, had as its hallmark a public campaign to "Whip Inflation Now," as if it would be by some decision of the economy's consumers, workers, and merchants that inflation would abate and expectations of it would vanish.

It was then left to President Carter to do what had to be done. At first, he approached the problem much as Ford had done, putting the burden on the economy's participants to deal with the matter. He dubbed his campaign the "Moral Equivalent of War," which has the unfortunate but telling acronym "MEOW." Carter was not, however, a stupid man by any means, and he did understand what had to be done. In 1979, he appointed Paul Volker as Chairman of the Federal Reserve Board and gave him the charge to do what was necessary: crush the money supply, which would send real interest rates (the actual price of money) through the roof because the expected inflation premium already in those rates was sky-high, and draining liquidity from the banking system would put those interest rates into nose-bleed territory. Sure enough, Volker's Fed sent the U.S. economy into a brutal recession, in part because the peanut farmer from Georgia understood that the pain of austerity was the prelude to rebirth of an American economy able to carry on in the last two decades of the 20th Century. By the end of Carter's one term in office, he was overseeing budget deficits that were minuscule, even in inflation-adjusted dollars, compared to what his successor, Ronald Reagan, was about to allow, encourage, and use to the purpose of inappropriately projecting American military and financial power.

At first, Volker's attack on the money supply did nothing to dampen expected inflation, and this was because no one actually believed the Fed really was Hell-bent on killing inflation; after all, Presidents had for years been promising to deal with it, and yet it had just kept getting progressively worse. The price spiral of something close to hyper-inflation began to abate only after just about everyone became convinced that old "Tall Paul" Volker did not care how badly the economy suffered under constrained liquidity. Finally, as President Carter was swiftly vanishing into history as some kind of pariah to economic pundits and short-sighted historians, expected inflation premiums began to disappear from interest rates, from wage and salary demands, and from prices of goods and services. The falling interest rates, in and of themselves, began to breathe life into what had been a moribund economy.

Ronald Reagan rode into office in 1980 on the strength of what had been done by his immediate successor, and the Gipper was able to stride to the podium in his first address as President to gravely announce, "We're in an economic mess," affording him the populist high ground for his tax cuts to be passed by Congress, attended as they would be in the years that followed by rising budget deficits and a return to neo-Keynesian policies heavy on the interlocking relationship between industry and government, but with a Republican twist of no "countervailing force" (as economist John Kenneth Galbraith called it) of powerful unions to ensure the rights and wages of workers in the final plunge toward the 21st Century.

Government unable to resist the whine of greedy, pandering Republicans for tax cuts coupled with big government spending on government/industry projects: this is the legacy of Republicans from Richard Nixon forward. Government unable to resist the equally tiresome whine of greedy, pandering Democrats calling for a government war solution to everything from poverty to communism in southeast Asia coupled with big spending on government/industry projects: this is the legacy of Jack Kennedy and Lyndon Johnson, but the legacy ended there: both Carter and Clinton oversaw controlled government spending and tax rates that brought in sufficient revenues to meet government expenditures; and Bill Clinton actually oversaw budget surpluses in his last years in office, notwithstanding the still-noisy bleatings of historical revisionists trying to find some shred of equivalence between President William Jefferson Clinton, who reined over the longest peacetime expansion in modern U.S. history, and President George W. Bush, Jr., who collaborated with his Republican-led Congresses to initiate, prosecute, and consummate the recklessly irresponsible fiscal policies of the period from 2001 to the end of 2006 that have finally brought the American economy to the brink of deep recession.

Morning in America, Nightfall of Empire
Jack Kennedy was no Dwight Eisenhower, who stood firm against tax cuts, industrial policy, and monetization of government excess. For that matter, no Republican since Ike Eisenhower has been an Ike Eisenhower. The idealized versions of everything from Jack Kennedy and "Camelot" to Ronald Reagan and "Morning in America" are the fine stuff of American mythology, but the blindness to realities and complexities of the economic leadership these men provided the American people clouded a firm understanding of the long-term consequence of short-term policy actions they and their ilk pursued, particularly those policy actions funded by expansionary monetary policy actions by the Federal Reserve as it persistently strayed into management of the economy. This blindness to consequences is still happening: most Americans have not the slightest clue as to what has caused this nation to now stand at the precipice of an economic chasm of severe recession attended by high inflation. Quick fixes of massive infusions of liquidity are not going to work, and neither are fawning tax rebates; yet, these are the solutions being pursued right now by the United States government. Both the wildly excessive infusions of money and the too-late-to-matter tax cuts will make the problems worse and the subsequent, reparative fiscal and monetary policy actions extraordinarily more painful.

The current Fed Chairman, Ben Bernanke, is no Paul Volker; and George W. Bush is no Jimmy Carter, who stood firm against the economic mess that nearly two decades of decadent use of the Fed had finally produced as the lasting legacy of both Democrats and Republicans who could not keep their whims of Empire and its glory from infecting prudent central bank policy. The United States has now, in seven short years, returned to the brink of the brutal combination of recession and inflation happening at the same time, a mix for which the cure of sustained, contractionary monetary policy will hurt the American people like Hell and politically damage the President who has the courage to put into place a Federal Reserve Board of Governors with the will to administer the near-lethal regimen.

The American people of today will soon have to deal, as the people of Mr. Carter's time did, with the awful and painful solution to the reckless malfeasance and incompetence that will have been the legacy of irresponsible leadership. George W. Bush might be able to depart the White House before the full force of disaster of his economic recklessness becomes apparent to the American people, but even that is not assured: already, many believe that the U.S. is in a recession, even though the majority of Americans have yet to feel much pain other than high fuel prices and the discomfort of getting scared by stories of other people losing their homes in foreclosure. In truth, the American people have not yet even begun to feel a real recession.

But they will. They'll get their paltry tax rebate checks, and when they go out and blow that Fed-printed (and foreign-lent) money to make themselves feel better in their own households, they will see the economic equivalent of tossing tens of millions of lit matches onto a smoldering sea of gasoline that is the excess liquidity by which this Federal Reserve has been keeping the U.S. economy alive even as Mr. Bush and his Congress were digging its grave over the past seven years.

When the economic downturn actually does hit, the American people will scream bloody murder, and they will want the head of the President who is in office when the word "stagflation" comes into vogue, once again. George W. Bush might not be as lucky as, say, John F. Kennedy, the latter having been long in his tomb before the consequences of neo-Keynesian policies he started and his successors continued led to the last round of debilitating stagflation.

For those who reminisce fondly about Jack Kennedy, the good news is this: President Kennedy is a footnote in history; as such, all manner of greatness can be ascribed to him that is nothing more than the expression of fantastic minds imagining a better time than now. President Bush, on the other hand, will suffer the unfortunate advantage of being not a footnote in history, but instead the very definition of the trajectory of the 21st Century for this nation. Kennedy and Bush are, however, of a kind in that the repair of their errant policies will be in the hands of a successor. The United States was most fortunate that several stood to the task in the wake of Kennedy and his otherwise failed successors.

For the President who will succeed George W. Bush, history will allow no breathing room to govern and leave office without facing either the fury of economic disaster or the wrath of an American people who cannot imagine that they must, as part of their citizenship, pay for the failure a prior leader who finally became apparent for the incompetent, dense, prevaricating war-monger that he had always been.

The time of reckoning is soon; but as bad as the economy may get, the worst part is this: not one of the candidates running for President of the United States in 2008 is a Dwight Eisenhower, a Jimmy Carter, or even a Bill Clinton; to that extent, then, the American people will get what they deserve.

Unfortunately for the next President, that same American people will surely want someone other than themselves to blame for the insufferable outrage of inevitable consequences.


The Dark Wraith welcomes readers to the comedic tragedy of Empire in its final act.

For reasons somewhat opaque, and possibly without first informing the United States of the plan, the Iraqi government headed by Prime Minister Nouri al-Maliki chose earlier this week to confront forces of political/military rivals in Baghdad, Basra, and elsewhere, focusing principally on the armed forces of anti-American Shia cleric Moqtada al-Sadr, who had for seven months maintained his part in a truce with the U.S. by which his soldiers would not attack American military and civilian personnel and assets and the U.S. military would allow al-Sadr's civil and armed forces to maintain order and provide services in Shia-dominated neighborhoods and regions.

To that effect, then, al-Sadr has posed as a moderate, a deeply weird thought in and of itself, even by Iraqi standards. According to some intelligence (and one must obviously be cautious in choosing which lie to embrace), in trying to rein in his more violence-prone followers, al-Sadr's purges of insubordinate commanders under him has driven them to become provisionalized as "Special Units" funded by Iran and other forces that will benefit from the mayhem created by an American-supported central government unable to exercise even minimal control over the country it supposedly governs. The rival Supreme Iraqi Islamic Council (ISCI), another Shia faction, is ostensibly funded largely by Iran, as is al-Sadr, himself, and his political wing; but because the ISCI is dominated by more urbane, wealthy Shias, the Bush Administration has chosen to throw the lot of the United States behind it, hoping that, in doing so, a relatively friendly political/military countervailing force would win upcoming elections and suppress the more urban, gritty Shias of al-Sadr's faction, perhaps eventually breaking the back of his thuggish Mahdi Army.

One of many deterrents to a final victory by Prime Minister Maliki's forces is that quite a few members of the government's own military and police contingents are aligned with or sympathetic to al-Sadr or some other faction (of which there are scores); and to make matters even more interesting (read that, "really complicated"), as noted above, while U.S. analysts, tacticians, strategists, and politicians are focused upon Iranians as the shadow agents provocateurs in this drama, plenty of other countries and their intelligence agencies are in the mix, too, providing everything from intelligence to disinformation to war mat&eac