The Federal Reserve Goes Parabolic

When traders say that a security has gone parabolic, they mean its price is increasing at an increasing rate.  Naive investors are drawn to the security, but to experienced investors the rapid increases signal an incipient collapse. That's because the excessive price stimulates experienced investors to sell. The upward spiral ends, causing those who entered the market during the parabolic increase to sell too. The ensuing crash is excessive, and the price falls below the security's true value because investors who otherwise would have held the security sell from fear.

The Federal Reserve Bank  has increased the money supply at a parabolic rate. The money supply has been increasing regularly since the 1930s.  Once of the results of the money supply's increase has been excessive investment in real estate, especially in politically sanctioned projects.  The projects include the urban renewal of the 1950s and 1960s, the construction of the suburbs, the development of the suburban mall, the expansion of retailing, and the sub-prime crisis. Some of these would have occurred, but to a lesser extent, without the Fed.  Others, like the sub-prime crisis, would not have occurred at all.

The excessive real estate investment arose because the money the Fed creates is deposited with risk- averse money center banks that prefer guaranteed returns.  Besides the real estate bubble of the past seven decades, there has been a government bubble. Rather than rely on democracy, which would not have supported the current level of spending if taxpayers had been forced to pay the market value of the cost of government each year, the central bank facilitates issuance of bonds, allowing the public to vote for politicians who spend more than the public has in resources. The public lacks the intellect to vote otherwise--its taste for doing what seems right or beneficial prevails because it lacks the ability to analyze the costs.  The advent of Keynesian economics causes supposed experts to offer the irrational advice that the public favors on its own--to spend money it does not have.

Hence, the Federal Reserve is inconsistent with democracy because it permits the public to vote for politicians who spend more than the public would want them to if they were required to cover the costs, and to spend more than government can pay back.  The resulting debt is becoming too large to pay back. Government will then deprive bond holders of their wealth by debasing the currency.This will harm those whose assets are in dollars or who receive wages.

The public does not want a dollar collapse--but it votes for it because the media and the government-financed school system advertise a distorted view of the costs and cripple citizens intellectually so that they believe the claims of supposed experts even when they are repeatedly wrong. A case in point is the economics profession.  Few economists predicted the sub-prime crisis or the tech bubble. But, despite their history of error, economists and the news media continue to broadcast the same predictions.

 The money center banks tend to invest with risk-averse, large corporations. It is evident that the corporations are risk averse because executives need to be paid in stock options whose purpose is to stimulate risk.  Wall Street sanctions publicly traded corporations through the stock market.  Executives are rewarded if the stock price rises. The corporations, then, only take risks of which Wall Street approves. The result of hiring psychologically deviant, risk-averse executives and then  countering the risk aversion with stock options is that the nature of the risk the executives take tends to pander to Wall Street's needs.  As a result, mergers and acquisitions tend to dominate firms' risk taking. Firms do not serve product markets--they serve financial markets.   

The largest way that the Fed distorts risk taking is through its subsidies to the stock-and-bond markets, and, consequently, hedge funds through (1) direct lending to hedge funds and Wall Street banks, (2) issuance of government securities that Wall Street sells, and (3) depression of interest rates that cause the stock market to increase inversely.  The rise in the stock market since 1937 is due to the Federal Reserve Bank. That rise has come out of the real hourly wage.

In 2008 the Fed began a massive quantitative easing that has caused bank credit to increase three fold and may potentially increase the money supply thirty fold.  This is equivalent to a parabolic price increase in the securities market.  The effects of the parabolic increase are (1) trivialization of technology at an increasing rate, (2) increasing crony capitalism, and investment in frivolous public-private partnerships, (3) subsidies to hedge funds and other socially unproductive financial firms, and (4) the current stock and real estate market comebacks.

The trivialization of technology is seen in the massive stock price increases of firms like Facebook and LinkedIn.  In the 19th century, technology meant the invention of the automobile and A/C electricity.  In the 21st century it means a program by which you add people unknown to you, called  friends, to a computer program whose purpose is also unknown.  


Like all parabolic price increases, this one too shall pass. But the collapse of the dollar's value does not just mean that a few greedy investors will be harmed. It means that all working Americans, suckers who have voted for Democrats and Republicans, will be harmed.

Term Paper Pre-submission Checklist

I have been trying to help my students overcome the grammatical deficit that ensues twelve years in the New York City school system. I made up a checklist and gave it to them. I also sent around a copy to my colleagues at Brooklyn College in case they want to post it:

Dear Colleagues:

I’ve been working on ways to encourage the students to write better. I came up with the idea of giving them a term paper pre-submission checklist to help them go over their grammar before submitting their papers.  I’ve been posting it on the Blackboard announcements page. Feel free to use it if you think it will help.

Best wishes,

Mitchell Langbert

Term Paper Pre-submission Checklist

Before you hand in a paper, check the following points:

1. Avoid unnecessary or extraneous words like "very" and "really." Avoid using the first person ("in my opinion").

2. Check that the verb tense in each paragraph does not change unless you have a specific reason.  

3. If necessary, check the verb tense that you are using against the discussion on English Page: http://www.englishpage.com/verbpage/verbtenseintro.html .

4. Only words that require capitalization should be capitalized. Check your paper against the capitalization rules on Grammarbook.com: http://www.grammarbook.com/punctuation/capital.asp .

5. Check your paper to make sure that restrictive phrases and clauses are not preceded or followed by commas and that non-restrictive phrases and clauses are preceded and followed by commas. To understand the difference between restrictive and non-restrictive clauses, read these Websites: http://gtotd.blogspot.com/2007/08/set-off-non-restrictive-phrases-or.html and http://library.cn.edu/wacn/pdfs/clausetry.pdf  .

Non-restrictive clauses add a little information: George Washington, the first president, rode a white horse.

Restrictive clauses are central to the sentence's meaning: George Washington the first president rode a white horse, but during a parade white horses rode upon George Washington the bridge.

 5. Do not use a comma to separate the subject of the sentence from the verb. Do not use a comma to separate a dependent or subordinate clause that ends a sentence unless it contrasts with or contradicts the meaning of the rest of the sentence or is non-restrictive.    When you inject non-essential remarks into a sentence, enclose them in commas: , in his view, ; , as she remarked, .

6. Check your sentence for independent clauses, and if two or more are in a sentence, punctuate the linkage or linkages correctly.  An independent clause can be a sentence in its own right. If there is more than one independent clause, then there are four potential options for correct punctuation:

(1) Use a comma followed by a coordinating conjunction. The coordinating conjunctions are FAN BOYS: for, and, nor, but, or, yet, so.

(2)  Use a semicolon.

(3) Use a semicolon followed by a conjunctive adverb or adverbial phrase followed by a comma.

(4) Bite the bullet. Often, the best option is a shorter sentence. Consider breaking the separate independent clauses into separate sentences.

An example of a run-on sentence (a sentence that lacks proper linkage of independent clauses) is as follows: 

Rudolph Valentino was a famous movie star, he broke box office records and he broke many hearts.

Four alternative potential corrective measures:

1) Rudolph Valentino was a famous movie star, for he broke box office records, and he broke many hearts.

(2)  Rudolph Valentino was a famous movie star; he broke box office records; he broke many hearts.

(3) Rudolph Valentino was a famous movie star; specifically, he broke box office records; also, he broke many hearts.

(4) Rudolph Valentino was a famous movie star. He broke box office records.  He broke many hearts.

All four are grammatically correct from a technical standpoint. Which is the most effective? I say (4). Yet, students insist on long sentences. One time, I broke one into six separate sentences.

Institute for Justice Fights IRS Support for Large Accountants

I just received this e-mail from Mark Meranta of the Institute for Justice.

In a nutshell, this is why we're suing the IRS:

Last year, the IRS imposed a sweeping new licensing scheme that forces tax preparers to get IRS permission before they can work.  This is an unlawful power grab that exceeds the authority granted to the IRS by Congress.  The burden of compliance will fall most heavily on independent tax return preparers and small businesses.  Unsurprisingly, big firms such as H&R Block and Jackson Hewitt support the licensing scheme.  As The Wall Street Journal explained: “Cheering the new regulations are big tax preparers like H&R Block, who are only too happy to see the feds swoop in to put their mom-and-pop seasonal competitors out of business.”

This lawsuit challenges the IRS’s statutory authority to impose this licensing scheme, and seeks to overturn regulations that would affect an estimated 350,000 tax return preparers, forcing many of them to stop working in the occupation of their choice.

The AP story has already been picked up by numerous outlets throughout the U.S.  http://www.washingtonpost.com/business/industries/federal-lawsuit-challenges-irs-plan-to-license-federal-tax-preparers-require-competency-exam/2012/03/12/gIQAvB8g6R_story.html

Backround Info:  http://www.ij.org/IRS

Case Video (I think it's one of the best we've ever put out):  http://www.youtube.com/watch?v=0-1IEqYy4lc

If you have the time or space, would you mind embedding the video on your blog for us?  

Thank you!

-Mark 

--

Mark Meranta

Social Media Manager

Institute for Justice

Getting "American Pie"

I just sent this draft to The Lincoln Eagle.

Getting "American Pie"

Mitchell Langbert, Ph.D.

Don McLean is a New Yorker from the Town of Rye in Westchester County. According to his Website, he graduated from Iona College in New Rochelle and sang at the Caffé Lena in Saratoga Springs.   He received a grant to sing in the Hudson River Troubadour Project, and he then became Pete Seeger's disciple.  In 1972 his "American Pie" jumped to number one on the charts for four weeks.  Last year I realized that most of my students at Brooklyn College hadn't heard "American Pie."  If you haven't, it's on YouTube.  For the past 40 years Baby Boomers have puzzled over its meaning.  In 1972, my English professor remarked that he couldn't get it.

McLean's Catholicism explains "American Pie." (His mother was an Italian-American and his father was Scottish, but the McLeans also had connections to Ireland.) Just as the Irish remember Henry VIII's takeover of Ireland in the 1530s and Cromwell's invasion in 1649, so McLean laments the 1960s British invasion--of The Beatles and The Stones--following the deaths of Buddy Holly, Ritchie Valens ("La Bamba"), and Jiles Perry Richardson, the Big Bopper ("Chantilly Lace"), in a February 3, 1959 plane crash--"the day," McLean says, "the music died." Valens was only 17 and was already a certified genius. At 22, Holly had produced songs like "That'll Be the Day," "Not Fade Away," "Peggy Sue," and "Everyday."  The Beatles named themselves after Buddy Holly and the Crickets; The Stones have performed "Not Fade Away" more than six hundred times. Sheryl Crow's version reached number 78 in 2007, and James Taylor recorded it in 2008.  What would have happened if Holly had lived? Would there have been a British invasion, and, even if so, would it have been long lived?

What irritated McLean about the British invasion--besides a healthy dose of American nationalism--was the anti-Christian tack that The Beatles and The Stones had taken.  Recall that in 1966 John Lennon, in an interview with Maureen Cleave of The London Evening Standard, said of The Beatles, "We're more popular than Jesus now."  Then, The Stones released "Sympathy for the Devil."

The reason McLean made "American Pie" hard to understand is that in 1971 it would have been professional suicide for him to openly attack The Stones, The Beatles, and Bob Dylan.  As a religious Catholic he was doing just that.

"American Pie," then, has three levels of meaning.  In addition to McLean's rejection of the British invasion ("I miss American pie") and outrage at the anti-Christian turn rock took in the Sixties, there are personal and political levels that cloak McLean's rejection of rock.  "American Pie" can refer to American music, to a girlfriend who rejected McLean, or to America and its social problems of the "ten years" we were on our own following the day the music died, from 1959 to 1969.  The political level involves the social traumas of the 1960s and the assassinations of John F. Kennedy, Martin Luther King, and Robert F. Kennedy.  Consider the lines near the end of the song: 

And the three men I admire most

-The Father, Son, and the Holy Ghost-

They caught the last train for the coast

The day the music died

McLean says that February 3, 1959 was the day the Father, the Son, and the Holy Ghost caught the last train to the coast because Holly's death meant the dominance of Lennon's and Jagger's contempt for Christianity.   It also, though, is an allusion to events surrounding the crash.  For the fourth act on the Winter Dance Party tour that appeared at Clear Lake Iowa's Surf Ballroom on February 3rd was Dion and the Belmonts.  Dion and the Belmonts did not fly out of Clear Lake, and they were the only act to survive.  Ten years later, around the same time that the Hell's Angels murdered a member of the audience at The Stones' Altamont concert (No angel born in Hell/Could break that Satan's spell) Dion released his classic folk hit, "Abraham, Martin, and John," about the assassinations of Lincoln, King, and Kennedy--the three men many admire most.

Two of the chorus lines, "Drove my Chevy to the levee, but the levee was dry/And them good old boys were drinking whiskey and rye/Singing This'll be the day that I die" can be interpreted on two levels.  Some commentators say the second line is really "And them good old boys were drinking whiskey in Rye" because McLean was singing about bars he used to drink at in Rye and New Rochelle. When McLean went to Iona Preparatory School in the '60s and to Iona College, the Levee was a New Rochelle bar. Since then its name has changed to the Beechmont.   But at the same time, a famous Chevrolet commercial from the 1950s featuring Dinah Shore referred to driving a Chevy along the levee ("See the USA in Your Chevrolet…/America's the greatest land of all/On a highway or road along the levee…").  The line "This'll be the day that I die" refers to Buddy Holly's 1957 hit "That'll Be the Day" ("That'll be the day that I die").   

Once the meaning of "Miss American Pie" as "Bye, bye, I miss American music" is in place, the religious references and the references to the dark side of rock also fall into place.  The verses concerning the Byrds, Janis Joplin's death from heroin, and the violence at Altamont are all references to the decline of rock due to drugs and violence following the plane crash and the British invasion. 

McLean's ambivalence about Bob Dylan is part of the story.  McLean refers to Dylan as "the jester." Dylan is an American, but while he was laid up from a motorcycle accident in Woodstock ("with the jester on the sidelines in a cast"), Dylan was in the middle of a transition from folk to rock.  In 1966, prior to the crash, one of Dylan's first performances that included rock was at the Manchester Free Trade Hall, which is often called his Royal Albert Hall concert. He wore flamboyant Mod clothes of that period. The audience booed when he switched to electric guitar. Dylan may have stolen Elvis's (the King's) crown, and McLean sarcastically calls it a thorny crown because Elvis represented the start of the rock star-as-god phenomenon for which McLean has contempt.  Moreover, in McLean's view it's questionable whether Bob Dylan's rock was any good:

When the jester sang for the king and queen
In a coat he borrowed from James Dean
And a voice that came from you and me
Oh and while the king was looking down
The jester stole his thorny crown
The courtroom was adjourned
No verdict was returned

The song's next-to-last verse suggests that, to McLean, Mick Jagger represented the ultimate decay of rock ("So come on, Jack be nimble, Jack be quick/Jack Flash sat on a candle stick/…My hands were clenched in fists of rage/No angel born in hell/Could break that Satan's spell"), and that the ultimate outcome in the final verse is the death of Janis Joplin.  

Perhaps McLean was prophetic. What has happened to rock since 1971 has been more extreme: punk, heavy metal, rap, and hip hop all extol drugs and violence.  Acts like Justin Bieber are commercialized bubblegum rock.  Bye, bye American culture.