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
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
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
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. U.S.
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.