Sunday, October 7, 2012

Four More Years

Standing on the steps of the Berkeley Springs castle in the colorful Fall of 2008, I was approached by several individuals who had just heard my rambling monologue about the imminent collapse of several banking institutions and the attendant interventions which would follow.  "How are we going to make it through the collapse?"  "What are senior citizens going to do if their retirements devalue?"  As part of his commitment to promoting the role of foresight planning in public debate, John Petersen and The Arlington Institute had provided a series of venues for several years in which I discussed the inevitabilities of the undoing of the Bretton Woods experiment.  Topics like the ECB's strategy to staunch the bleeding in the Eurozone, the consequence of monetary policy interventions in the U.S., and the fitful role of China as producer and consumer were the grist for the Spring Side Chat mill.

Four years ago this weekend, my dear friend and fellow Arlington Institute board member Napier Collyns laid out a challenge. 

"I think it's important that more people be exposed to what you have to say," he told me in the wake of my lecture.

"What I have to say is not warmly received anywhere," I replied.  "In a world that wants to avoid dealing with accountability, transparency is not welcome."

"You know what you should do?," he persisted.  "You should write a blog!"

A blog?  I had no interest in writing a blog.  In October of 2008, the idea of blogging hadn't crossed my mind for any reason.  This, mind you, was not because of my Luddite tendencies.  Blogging wasn’t what it is at present and the means of distributing blog visibility didn't have the social media utility it enjoys today.  So Napier's request for my blog was, to say the least, unexpected.  That my first blog echoes the EXACT same theme that I have been advocating in the ears of Congressional members and bank overseers since the Clinton Administration means that:

1.         I'm crazy for maintaining my passionate struggle to link the utility of marginal productivity back into our financial system;
2.         I'm incapable of presenting it in a compelling manner;
3.         It takes a long time to transform a system that has been 400 years in the making and 100 years in the official dogma of "economists"; or,
4.         A bit of all of the above.

I've been taking considerable time this week reflecting on the irony that we're quietly marking a centennial that is receiving no attention.  Set in motion with Theodore Roosevelt and under the leadership of the 27th President of the United States, William Howard Taft, an impassioned Congressional inquiry was alight 100 years ago.  During this very month, 100 years ago, a group in Congress was quite concerned with the lack of transparency in the nation's banking system and launched a series of inquiries into the possible ill-effects of consolidating too much national economic policy in the hands of conflicted private sector interests.  Ironically, the area of greatest opacity to the Pujo Committee 100 years ago is exactly the same challenge facing our nation and the countries of Europe today - total ignorance of the actual credits and collateral interest supporting debt issued by the world's leading financial institutions.  From 1905 until 1913, a clarion call for actual collateral sufficiency (can you hear Basel III echoes?) was resounding in hearings and inquiries.  Opaque shell corporations (special purpose vehicles) were used to mask assets and liabilities.  Concerned Congressmen were sure that they were inadequately informed but faced an Executive branch that was delaying the compelling for information disclosure until after the November elections of 1912.  Reading the reports of the Committee lead by Louisiana's own Arsène Paulin Pujo reminds me of the persistent value of inquiry and the malignancy of secrecy.  However, I feel like I'm in good company with respect to my self-assessment above as Congressman Pujo was definitely a bit of all 4 conditions I've articulated.

For those of you who don't recall this part of history, the Pujo Committee concluded that under interlocking directorates and due to common corporate ownership, J.P. Morgan & Co. and its board controlled 84.9% of the entire market capitalization of the NYSE.  By controlling banks, trust companies, utilities, industrial manufacturing behemoths, mining, fledgling telecommunications, and railroads, J.P. Morgan, George R. Baker, and James Stillman formed a cartel that controlled the U.S. economy.  With over 300 board positions controlled or influenced in 112 corporations across the country, the idea that the national economy wasn't the handmaiden of private interests was feared an illusion. 

Rereading the Pujo Committee Report's 172 pages and the testimony upon which it was written forms the basis for a rather damning conclusion on the much heralded arguments for transparency supporting democracy.  In depositions and sworn testimony, then as now, the public was informed of the total control and collusion wielded by a few individuals acting exclusively for their self-interest brashly confirmed in their own words and deeds.  Then, as now, the public did nothing to avert the behaviors which would lead to their desperation a few decades later.  I read my blog, the Puju Committee report, and the minutes of today's monetary policy maker meetings and I come to a very particular conclusion.  Being the disseminator of information - whether you're a Louisiana Congressman 100 years ago or a bald globe-trotting private sector itinerant today - is of little import unless people actually consume, and act upon, the information they receive.

The purpose of this blog was NOT intended to be a monologue.  It was put in motion to be my periodic musings to my dear friend Napier Collyns.   It has accomplished that mission as well as being consumed by several hundred thousand inquiring minds.  However, for it to have any effect and consequence, the next four years will need to have something else: ACTION.  This can come in a few forms.

First, it can come in the form of expanding the conversation to include more people.  This is abundantly simple.  When you see something worth reading, pass it along.  

Second, and more important, it can involve a deeper inquiry.  InvertedAlchemy has been constructed not to answer questions but to put context around topics requiring greater understanding.  I would love to see the comment section of this blog actually appended with commentary and criticism.  It is through this mechanism that we all would enrich the experience.

And then there's the greatest challenge of all.  Arsène Paulin Pujo left Congress in 1913 and, following the creation of the Federal Reserve, largely retired from the fight he had championed in Congress.  I'm still running.  However, what I know from many of you is that some of the postings I write are "inaccessible".  Since I don't know another language, particularly when I'm sitting at my weekly scribe table, I'm not sure how to make what I say more approachable.  And that's where some of you can come in.  It would be amazing to see someone or a group of readers take up the challenge to write their impressions of what I meant to say.  This would do two very important things.  First, it could solve the accessibility issue.  But more importantly, as I read what others say on the same topic, I could adapt my mode of delivery to be more effective.  In the end, we would all benefit and that, my dear friends, would make a world of difference.

So, here's to the Four Years Past and here's to Four More Years!  Let's make it a More Perfect Union.  Thanks Napier!  I wouldn't have done it without you.


  1. Thanks David! I am looking forward to the next four years.

    Jan de Dood

    1. Jan, the world needs to know that: a) you exist, and, b) that you are a important agent of transformation in the market. I am honored by your comment and look forward to knowing that we're collaborating for a more suitable means of engaging the world's capital system for the benefit of all.

  2. Dr. Martin,
    I'm incredibly glad I found this blog and I greatly appreciate your dedication in keeping up with it. The world of global financial institutions, central banks, and regulations is an intimidatingly complex and technical topic and I'm grateful for your expert view.

    Your belief in and embodiment of human freedom and compassion shines through your writing. Your passion for the creative possibilities of finance and the potentials of new forms of cooperation is vivifying. Developing and connecting thriving human localities in mutually enhancing global networks has a great appeal to me.

    Money and finance are a kind of infrastructure that I used to take completely for granted and I think many other people are the same way. We unconsciously trust and hope that someone somewhere is taking care of the systems and only notice and complain if something goes wrong. In the United States we turn the tap and water comes out. We put the trash by the curb in the morning and it's gone when we get back in the afternoon. We swipe our credit card at the store and go home with the thing we needed or wanted. We don't usually think about how all this stuff works.

    I went through quite a process of becoming interested in economics and finance, prompted by having to deal with my personal debt and the existential feeling that systemic economic/financial forces were pushing me into an unhappy, unhealthy, and inauthentic way of life. My first goal was just to understand what all the numbers and jargon on CNBC meant. Then I wanted to understand the theories behind mainstream economic commentary (and thereby also discover the marginalized alternative views). Then I wanted to understand where money comes from and the history and relationship between government and the financial sector.

    Each step took me into deeper levels of complexity, required a broader grasp of the technical facts, and a willingness to reach into longer time horizons. At each step I had to resist oversimplifications, demagogy, and learn to discern the angle of the author's presentations. I have to continuously acknowledge my ignorance and reject oversimplifications in this learning process. I have to overcome my anxiety at recognizing that I'm dependent on systems that are essentially out of my control which are managed by mere humans with great power. I have to remain on guard against the many demagogues offering utopian solutions and convenient scapegoats. It's an effort.

    With your blog, I get a sense of wonder at the complexity and potential of global finance. I'm always challenged to have to look up some new technical term or follow up on some institution or element of the financial infrastructure that I'd never heard of before. Once again, thank you for doing this.

    Many blessings,
    Lincoln Merchant

    1. Lincoln, I am constantly bouyed by your enthusiastic sharing of the conversations launched by these blogs. Your commitment to share your inquiry with others while deepening your own perspective is a great joy and deep honor.

  3. Dear David:
    I want to express my appreciation again for your effort in expressing your ideas in your blog and I am glad to read that you are keeping doing it.
    I feel, in some way, in the same situation than you, being a loner when trying to dig for the deeper causes of the symptoms present in the world we live in. Being prone to focus in the big context where all the details happens I find myself struggling many times to draw other people to see the view from above for a better understanding of what may happen at the moment; for example, regarding the post of last week, which I think it was extraordinary, relating to the issue of problem-solution dichotomy, I wouldn't be able to find somebody in the circle of people I work with or friends to discuss that issue with, by that reason.
    Concerning your style to expose your views, I understand what people say about it and at the same time I understand what you say that you won't change your style because it is part of yourself, it is your nature, that's how I see it.
    At least for me, finding it difficult sometimes, maybe because English is not my native language, I don't see that as a nuisance, but as a challenge to let my mind expand with the intricacies of the views exposed in your blog and it is a challenge that I take with joy every week!
    So, again, thank you for carrying on writing your ideas, I'll keep on reading to digest them for the inquiry into the understanding of our world and lives.
    Warm regards.

    1. Angel, I am delighted to have you speak, not only for yourself, but for many others who are passionate about becoming more aware. Ironically, most English language speakers have little to no financial literacy. Much of what we "know we know" we don't. Therefore, approaching this from a perspective outside the U.S. consensus illusion affords you opportunities for great critique. Thank you.

  4. Hi David,

    To make it palatable, you've got to make it short and direct:

    1) Why is America so reluctant to offer amenities the entire developed world offers its citizens? (Universal health care, solid education system, maintained infrastructures and taxpayer-sponsored scientific research?
    2) Where is your taxpayer's money going if not to the above programs?
    3) Why don't you ask your elected officials?
    4) Why are you complaining and what about?
    5) To whom are you complaining?
    6) Why is America ranking so low in health care, education and safety?
    7) Why is America at war in the entire world?

    It is your country, your health, your tax dollars, your children's education and your money paying for impotent representatives your either directly chose or failed to choose out of laziness, indifference or lack of interest. You created this country as it is today. If you want to change it, take action.

  5. David,

    I greatly appreciate the time, thought, diligence that goes into your blog.

    I just returned from a long trip, which included attending the annual AMI Monetary Reform Conference & a celebration of Occupy Chicago's one year anniversary. I took with me, radio host, Bonnie Faulkner, producer of the popular radio show, Guns and Butter, hoping that she might be able to put together some shows to help raise awareness on the problems within our global economy and point towards the more promising solutions, but she has yet to produce any news shows on the topic.

    Much as I appreciate your work and commitment, I too find some of what you say cryptic, raising more questions than you answer. I'm still interested in making a documentary (or two) and would love to see what I can do with the lengthier interviews that you have done. I think the old saying about the teacher appearing when the student is ready is most apt in your case. You are not going to get much attention, unless people are in a state where they can begin to grasp and understand and act upon the information that you offer. That requires some real homework on the part of the student - to be prepared to take on an enormously complex challenge in light of all the forces which conspire to maintain a system which impoverishes the many and serves a very few. I hope I can help in some way to help raise consciousness and mobilize people to create a viable alternative to the current debt based war economy which depends so much upon fear, ignorance, and ritual blood sacrifice.

  6. Nice piece of writing David, I don't think your commentary is to hard to understand but you sometimes use words that require a dictionary. The writing style in your book was flowing and accessible and I for one would like a little bit of World events snippets thrown in with your other meanderings. Are you familiar with the Ubuntu party of South Africa, (of course you are) Michael Tellinger and what he has to say about after the fall of Wall St, the upcoming world without money. It is a little like the Venus project with people contributing to society for the good of all. Everything is in place right now to make this a reality overnight if the will and organisation was in place, it would transform this World into a Utopian paradise. The beauty of the banks new use could be to audit, monitor and regulate resources via individual, community and international accounts, so as to minimise wastage and to see that everyone had what they needed. God freely distributes trillions of gallons of water on a daily basis, when there is a recession the crops do not refuse to grow, minerals and oil deposits still are able to be mined, people can still work to supply electricity to power industry and good people would turn up to do that work. Food for thought. Best Wishes. Bill...

  7. Larry Alderfer FisherOctober 14, 2012 at 7:21 AM

    I think there is a tendency to be reactive to a noted injustice or predatory practice instead of proactive on a different plane. At least that is my tendency. It would be easier for you if you could propose a march or a campaign of some sort but that would miss the point you are making entirely. It is not action you are pleading for it is proactive redirection and since that will require us to think beyond your challenge to our apply our own situation, often we fall short.

    It would be 'easier' (not better) if you named a movement or ran for President or created a new vocabulary supported by a book. We could then sink into a position of 'supporting David.' We would feel better about 'doing something,' but not much would change. I admire your refusal to set yourself up as a charismatic leader to follow. You could I think do that and 'succeed' in worldly terms, but again it would distract from the path we truly seeking.

  8. Well yes, "some things never change". You observe "the total control and collusion wielded by a few individuals acting exclusively for their self-interest brashly confirmed in their own words and deeds" but don't mention that the tricks such people play on each other and us, are to get ahead in responding to market forces. They don't actually control the forces of innovation and market adoption, but at best get in their way a bit.

    So, I don't think we can blame high level collusion, except maybe as a dangerous game nearly everyone seems to want to play, for the tendency of the markets to become driven to chase very dangerous mirages of value so much of the time.


Thank you for your comment. I look forward to considering this in the expanding dialogue. Dave