The Bear’s Lair: Bernanke brought us Bankman-Fried

The collapse of Sam Bankman-Fried’s crypto-currency exchange FTX, resulting in the loss of at least $1 billion of customer money, will be used to demand more regulation of the crypto-currency business. Yet its growth, collapse and the murky web of corrupt connections surrounding it were a product of the decade of “funny money” that has allowed fraud to flourish, as it always does in such periods. The blame for the Bankman-Fried debacle, therefore, can be traced back to one source: the unjustifiable corruption of monetary policy by Fed chairman Ben Bernanke. Continue reading

The Bear’s Lair: The 2010s were worse than the 1970s

As we move through the 2020s, the 2010s, the decade between the financial crisis and the COVID outbreak, come into perspective. In terms of monetary, fiscal and regulatory policy in the United States and throughout the rich world, it was extreme, worse than the 1970s in its disregard for free-market first principles. The main difference in outcomes was that the 2010s saw no significant inflation. That has now changed, and the prognosis going forward may well be worse than the hardships of the early 1980s. Continue reading

The Bear’s Lair: Greta reveals her true colors

Greta Thunberg, the Swedish teenage climate change activist, was not invited to attend the 27th United Nations Climate Change Conference, and therefore denounced it, explaining that her true objective was not to battle climate change but to undermine the rotten racist Western capitalist system. Thereby she showed herself in her true colors, which are the deep red of the vast majority of the climate change movement. For them, the precise temperature of the planet in 2100 is of only moderate interest; by far their greater objective is to subject what remains of the free market to their own control, and thereby achieve a planned economy, Communist rather than socialist since it would control speech and leave no place for individual freedom. Continue reading

The Bear’s Lair: Teach Finance Through its Origins

The British pension funds’ sudden vulnerability to an interest rate blip two weeks ago due to their misguided derivatives games showed that financiers make the same mistakes, decade after decade. While a few financial techniques are new, the errors are not; indeed they can be traced back to the era when modern finance was being created, in Britain in 1693-1720. Those wishing to learn how finance really works should take a course in the financial history of that era, when it was all invented for the first time, and the vulnerabilities were discovered by trial and error. The errors at least appear to be immortal. Continue reading

The Bear’s Lair: Chairman Xi’s Austrian Economics

China’s President Xi Jinping is a devotee of Austrian economics. Unfortunately, he does not follow the enlightened and intelligent economics of the “Austrian School” — Eugen von Böhm-Bawerk, Ludwig von Mises and Friedrich Hayek. Instead, China’s attempts to dominate the economies of its neighbors through “Belt and Road” investments, its use of slave labor, its exploitation of foreign investment through intellectual property theft, its protectionism and its military buildup and adventurism, together follow the economics of a different Austrian. Yes, you know who I mean! Continue reading

The Bear’s Lair: Nobel prize for GOSPLAN

Ben Bernanke winning vodka prize, style of Diego Rivera

The Nobel prize in economics this year went to Ben Bernanke, Douglas Diamond and Philip Dybvig for “work adding to understanding of the relationship between banking crises and the broader economy.” Like other Nobels, the prize has a mixed reputation, having been given to outright Marxists like Gunnar Myrdal in the past. Looked at that way, this year’s prize fills a gap that must be a matter of deep regret to the Nobel Committee: they never gave an Economics Prize to GOSPLAN. Continue reading

The Bear’s Lair: Institutional stupidity threatens us all again

The Bank of England re-instituted “quantitative easing” last week because British pension funds were threatened with insolvency, having hedged their bond portfolios with unstable derivatives. We have seen this movie before, in 2007-08. Dopey behavior by financial institutions, central banks and regulators causes a massive unnecessary financial crash that blights the lives of billions of innocent people. It’s about time they made these people pass an IQ test! Continue reading

The Bear’s Lair: How steam engines entered the economy

Conventional wisdom has it that James Watt invented the steam engine, which became economically important in the 1780s, setting off the Industrial Revolution. All three of those beliefs are wrong. This column will lay out the true process, which was a 3-stage one over a century in duration, intensifying the Industrial Revolution but not directly setting it off. Understanding that process properly has important implications for how we adopt new technology today. Continue reading

The Bear’s Lair: High Net Worth Retail – Everybody’s Suckers

I am glad I am not rich! If I were, I would be subjected to bombardment by the financial services sector, attempting to sell me fancy products just when they are going out of style. The plumbing of financial services is very apparent: as far as possible you want to get to the source of deals and stay well away from the elegantly dressed salesmen who deal with the rich. Maximizing your return is simply a matter of maneuvering yourself further up the food chain. Continue reading

The Bear’s Lair: The Soaring Senility Market

Since the middle 1990s, investors and entrepreneurs have focused almost solely on the youth market, generating endless devices and amusements for youth. Many of these (smartphones, for example) older people can use only with difficulty, because of limited eyesight or coordination. This has been demographically foolish and has increasingly stymied economic growth. The real opportunity, demographic and technological, lies in the opposite direction: in providing services for the ever-increasing number of partially debilitated seniors. They are much richer than the young, their numbers are growing faster, and they have a major unmet demand for what technology can supply: goods and services that allow them to continue living independently in their own homes. Continue reading