Christopher Whalen is an interesting character who has been on the financial scene for a long time. He is intelligent, and thought provoking. These are his words... words of wisdom and advice, "We have to take the truths, the values, the thought processes that people have left us for a legacy, and turn that into a message that is politically relevant. There has got to be a way where we can make our fellow citizens understand just how hurtful the current arrangement is for our people. How it prevents them from accumulating and passing capital along from one generation to the next." If we have that conversation we might be a more stable but boring country.
Whalen is Co-founder of Institutional Risk Analytics and author of "Inflated: How Money and Debt Built the American Dream." He was in New York last May speaking to The Mises Circle In Manhattan, on Austrian Economics and the Financial Markets, and he had a lot to say!
He shares a piece of trivia about himself by telling the audience that he's a collector of books from the "gilded age," and from the 30's. He held up a book and called it one of his favorites entitled, "The New Dealers." It was published by Simon and Schuster in 1934, by an anonymous author. He said, "in those days people were intimated by Wall Street, and the power of the politicians who were owned by Wall Street. Nothing has changed my friends."
He opens his talk by reading a few paragraphs from a chapter called, "Mad Money."
After reading the paragraphs, he closed the book and looked out into the audience and said, "Unfortunately we have a monetary system that doesn't have any money!" Many people believe that this is a financial truth, and it's the foundation for the rest of his simply spoken words.
He tells the audience that you need two conditions to accept the premise of market efficiency. The first condition is to have a centrally planned world. One that you manage and plan, and that doesn't destroy us periodically! The second condition, is the nature of the FED. Whalen confidently states, "If your going to have a central bank then you have to have an authoritarian centrally planned society."
He comments that a central bank is anti-thetical to free market capitalism. He says, it may be a gradual process of diminishing individual liberties, diminishing the rights of property, diminishing the rights of businesses.......but to look at the end result over time.
Whalen believes that the idea of globalization is going to be challenged more and more. He says that banks have the illusion of global regulation, the illusion of global accounting, and the illusion of global markets. He gives the example that we thought we had a global market in residential backed securities!
He said that we also have this perception of an internationally linked and efficient market, but what we really have is national treatment in most markets. In Europe you have 25 countries that do not agree on the definition of default, or agree on a bank regulatory scheme for the EU.
His face showed a deep sense of pride as he expressed his gratitude for living in America. He commented, that we are still fortunate to have a "degree of freedom," and "a degree of random chance" in our lives that gives us the ability to do things, to participate in things that shape our future. In Europe you don't have an entrepreneurial advantage, the Europeans have decided who is running things!
He urged people to think about the what kind of political leaders we need to have, and the role of the dollar. He thinks that when Europe decides to get into quantitative easing that the US will be there to print money and pass it on to foreign central banks through swap lines. He smiled after saying that Ben Bernanke had to explain "swap lines" to the Senate. He even poses the possibility of having to tax trade to get us out of debt.
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