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155 of 189 people found the following review helpful
4.0 out of 5 stars Strips the Veneer and Exposes Reality, October 7, 2007
This review is from: Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics (Hardcover)
Mobs, Messiahs, and Markets provides insights that run counter to the propaganda spewed by the mainstream media. Thought-provoking and myth-challenging, it will delight those who value liberty. People who believe the government is "here to help you" or that the tooth fairy really does leave coins under your pillow won't like Mobs, Messiahs, and Markets. That's their problem.

Mobs, Messiahs, and Markets looks at how and why people do stupid things en masse. Understanding how mass manipulation works can help you avoid trotting off the cliff in a herd of lemmings, so this stuff is good to know. One of the tools of mass manipulation is the really big lie. Quite adroitly, Mobs, Messiahs, and Markets looks at specific lies and gives them a sound thrashing.

An example of a really big lie
Let's look at example of one such lie: Alan Greenspan did a great job as Chairman of the Federal Reserve. Anyone who has paid the slightest bit of attention to the economic data knows that's false. But prior to reading Mobs, Messiahs, and Markets, I thought he was just incompetent. The truth is far worse. The truth is that Alan Greenspan's collusion with the Clintons amounted to a theft of half our assets and half our income. He accomplished this theft by undermining our currency so much that the dollar lost half its value during his "reign of reverse gain."

Look around. Now, imagine someone barges into your home and burns half of everything you own--including half your home. While the flames are still roaring, they access your investments, retirement accounts, and any other liquid or not so liquid assets of yours and take half of those, as well. Just as the fire trucks roll up, your boss calls and tells you that from now on your wages will be 50% less--after taxes. How happy would you be about now? I have just described exactly what Greenspan did to middle class Americans and the poor.

Doesn't this make you wonder why he isn't in prison? If you steal only $1,000 and use the money to feed your kids, that's grand larceny. You go to jail, and the newspapers call you a felon. But if you steal trillions of dollars (not just billions) to abet the shenanigans of a few unscrupulous people who have wheedled their way into political office, you get an excellent pension and the newspapers call you The Maestro. Go figure. By the way, the threshold for grand larceny was $500 before Greenspan took over.

Witty
I personally don't enjoy the witty ripostes that permeate Mobs, Messiahs, and Markets, but the barbs are creative and many people will be amused. To me, the reality is farcical enough already.

What makes Mobs, Messiahs, and Markets valuable to me is how the authors use facts and logic to debunk frauds and delusions in a definitive manner. Mobs, Messiahs, and Markets should be required reading for anyone wishing to participate as a citizen. I also highly recommend it for anyone who has bills to pay.

Gold and central banking
As I read Mobs, Messiahs, and Markets, I kept nodding in approval. Yes, these folks have done their research. Then, I got to the last chapter and things suddenly changed. The last chapter promotes the tired old "gold as a defense" notion. Accepting that particular notion as reasonable requires suspending several laws of economics, commerce, and finance. And it requires ignoring a large body of long-established basic facts. While the rest of the book was insightful, this chapter bombed in the "fundamental understanding" department. If you are stuck on the gold notion, of course, you can cherry pick what you want to "prove" you are right.

Now that I've fired a shot at an otherwise excellent book, here's my explanation. A currency, to facilitate trade, cannot be fixed to a commodity. A currency must be flexible, because markets are always in flux. Fix our currency to gold, and our markets will misfire. Markets are complex interactions among multiple parties simultaneously, rather than one-for-one trades of my pig and your cow.

The "gold mentality" assumes a physical production model and the trading of physical objects whose value is clearly known among parties who know each other. But those assumptions don't fit our actual markets, which is why everyone went off the gold standard. The reality is that most of trade is for non-physical assets (an example being intellectual property), and that alone tells you a great deal if you think about it.

This is a book review and not a white paper, so I won't go into detail on the other problems with this model. But let's look at this one a bit closer. As you look at the variety of products that people pay for, you can see a specific order in which value is added and by which profits are made. At the bottom are raw materials, in the middle somewhere you have manufactured goods. The highest level of value, and thus of economic gain, is intellectual rather than physical. That's why, for example, jobs that use your brain pay far more than jobs that use your back. It's why, for example, an engineering firm like Black and Veatch always has job openings and why, for example, widget factories in China are laying people off. It's why, for example, Bill Gates is the richest man in the world, but not a single factory machine operator is even on the list of the top 100 million richest people. Do we really need to "debate" this?

So, why do the authors go down this path? The "gold solution" is a proposed cure for the debasement of our currency. That debasement comes in the form of inflation caused by our central bank, which can create money from thin air because we have a fiat money supply (the money has no intrinsic value). The authors compare central banking to central planning of manufacturing and agriculture (Soviet style), but that's a false comparison because a central bank isn't making anything. At least, it's not supposed to and therein lies the problem with our central bank.

The mission of a central bank should be to ensure the currency remains stable. To do that, it needs to expand and contract the money supply to maintain the value of the currency. Central bankers in the USA believe their mission is to serve politicians, not to be guardians of the currency. And that's the problem. The book gives an excellent explanation of how this political serving is done and the huge damage it does to individuals and the nation as a whole. But instead of connecting the dots at the end, the authors jump into an alternate universe.

Creating money out of thin air can't be helped. The Federal Reserve isn't the only entity that creates money. We all do it, all the time. When a business extends trade credit, guess what? It creates money. Ditto when you write a check, use a credit card, write an IOU, take out a loan, or buy tickets to the show. All of these activities contribute to our money supply, even if only in a transitory way. They are fluid, which is why they work. You could not tie them to a gold standard, even if you wanted to.

Tying a currency to any commodity is exactly the kind of central planning that the authors rail against. Instead of letting the market decide the value of the currency (with a central bank to guard against inflation), some central authority pegs it to an industrial metal (which doesn't guard against inflation, as history proves). Then the supply of that metal fluctuates to one rhythm while the general market fluctuates to another. This creates many wealth-inhibiting problems, which is why we don't do it anymore. If you want commerce (as we know it) to grind to a halt, put us on the gold standard. Watch the bread lines form, shortly thereafter.

Another tired and irrelevant cliché the authors use is "printing money." The printing of dollars (Federal Reserve Notes) contributes a statistically insignificant amount to the total money supply. If the FR decided to triple the number of FRNs printed over the next six months, I doubt we'd notice any difference in our economy. People and businesses rely primarily on electronic money, not paper notes, today. Look at your own finances as an example, and you'll see how little you actually use paper notes. Does anyone pay a mortgage with paper notes these days? Make a list....

When we create money out of thin air, the Federal Reserve should contract the money supply to keep the currency stable. What happens instead is the FR also creates money out of thin air--doing the exact opposite of what it is morally compelled to do.

Thus, the behavior of the Federal Reserve is like that of someone who throws a drowning man an anchor. Greenspan, instead of throwing us life preservers, tossed so many anchors at us that our currency lost half its value. Nice guy, huh? Buying gold won't stop that, and it won't protect you from that. The only peaceful means of getting that kind of theft stopped is to vote the bums out of office. Voting for anyone other than a Democrat or Republican would help, but if you vote only for candidates who speak of the problems this book exposes (yes, they are out there, and Ron Paul is one of them), you will be doing the most good.

The rest of the book
Now that I've addressed (at length) the part of the book that should be revised (the misinformation about gold), I have to say the rest of the book is spot on. It is no exaggeration to refer to our public policies as spectacles. Or worse. The way the authors address these spectacles is great, and they provide a badly-needed counterbalance to the lies and lunacy that people are inundated with.

The book has a fairly high page count, but it's a quick read. It's divided into six Parts.

Part One is titled "A Critique of Impure Reason" and contains three chapters. This presents a theme the book revisits throughout, and that is of the person who is determined to make the world a "better" place by making it conform to his/her delusions. Hitler was such a person--you can guess how this goes. The book takes shots at several incompetent and/or downright crazy people who have led one nation or another into an expensive debacle or even complete ruin. Some of the blunders were monumentally stupid. And as we see, monumental stupidity is a recurring theme in government.

The first chapter of Part Two talks about the witch hunts that we look back on as examples of hysteria today as in, "we would never do that." Don't be so sure. The second chapter talks about how the media inflame war rhetoric and create news rather than report it. That's one reason I don't read newspapers. I don't watch television, either, because I have a machine to wash my clothes and another to wash my dishes--I don't need one to wash my brain.

Part Three talks about the futility of war. I like the example of how France loses wars yet still is sovereign France. Winning or losing doesn't seem to matter. Germany lost two world wars, but what language do Germans speak today? Hint: Sie sprechen Deutsch?

Was any war ever worth its high cost? The authors ask why there was an American revolution. The people of India, Australia, and New Zealand were able to obtain their independence from the British Empire without firing a shot. If that doesn't make you pause....

A particularly enjoyable area in The Flattening the Globe (title of Part Four), is where the authors take on Thomas L. Friedman. This is the guy who wrote the whacked out "The Lexus and the Olive Tree" and actually got it published as nonfiction. Having read relatively smarter material on bathroom walls, I never made it past the first 20% or so of the book. I wonder to this day whether Friedman had suffered from repeated blows to the skull, or deliberately wrote that ode to stupidity as a practical joke. Bonner and Rajiva wrote counterarguments to Friedman's absurd assertions, to illustrate some interesting points. The explanations were quite entertaining, and in themselves justify buying the book.

To understand what a Bubble King is, read Part Five. Here's where we get a good expose on the lunacy of price runups, speculation posing as investing, national fiscal policy (such that it is), and other "suckers apply here" scams that snag millions of people who eagerly line up to be fleeced. The real kicker is Chapter 15, "The Mother of the Mother of All Bubbles." Here, we get an analysis of the most important financial topic relevant to today. Understanding it will prevent you from becoming just another donor to the ultra-wealthy. That's probably why you don't get to read about it in the mainstream media. Guess who owns the mainstream media?

The last chapter lurches suddenly into lala-land, as noted earlier. That's where the book is supposed to tell you how to survive the public spectacle in politics and finance, but doesn't. However, there's still the rest of the book to enjoy and learn from. The authors poke right through the veneer of deception that seems to cover most everything that's financial or political these days. And just being able to see the reality will help you avoid following a herd of lemmings over a cliff.

Reviewer's view on elections
One reason we get things like Alan Greenspan's massive theft is we don't have an elected government in this country. Hold on, now, and let me explain. We can look back on the "elections" of the past half century and see that no matter which side of the Demopublican Party is "elected," we still get insane levels of federal spending. And they fund that irresponsible behavior through a combination of currency devaluation (what Greenspan did to us), stealing from children not yet born, and levying a hidden national sales tax by jacking up the cost of capital through staggering levels of debt accumulation.

How do they get away with this? Through a clever combination of disinformation, red herrings, and blatant lies. They also use a clever "good cop, bad cop" routine to pretend before the voters that the "election" is a choice between the Democrats and the Republicans. Or, more accurately, it's a "good crook, bad crook" routine--about like choosing between the Crips and the Bloods. The outcome is as pre-arranged and orchestrated as an All Star Wrestling match.

The common wisdom (or lack thereof) is that unless you vote for Democrat or Republican, your vote doesn't count. This defies logic, because voting either way means you simply rubber stamp a decision made by some Demopublicans behind closed doors. In other words, you throw away your vote out of fear it might not count unless you do.

Meanwhile, the currency devaluation helps these thieves keep right on fooling most of the people all of the time. Read Mobs, Messiahs, and Markets. Then, decide if you still want to give these criminals your personal seal of approval at the polls.

Mobs, Messiahs, and Markets isn't about elections, but the information in it should help you decide what to do at election time. It should also help you decide what to do about choices in investing, asset protection, and other aspects of financial management. Just don't go out and buy gold out of fear the world is ending--whether you have it or not won't make any real difference, and there are far better strategies available.
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Showing 1-10 of 19 posts in this discussion
Initial post: Oct 31, 2007 7:59:39 PM PDT
yogabike says:
Wow! This has gotta be the mother of all reviews! And I enjoyed every word. Well done :)

Posted on Nov 5, 2007 4:33:37 AM PST
Both the book and the reviewer refer to lemmings running off cliffs. A useful image at times, but a folk tale. I agree with a lot of the points in the book, but it still feels like a careless cherry picking of anecdotes to fit prejudices...a dangerous brew if, like me, you share many of the same prejudices.

Posted on Nov 10, 2007 11:03:22 PM PST
Last edited by the author on Nov 11, 2007 1:29:25 PM PST
Hey bro, you should learn more about what you are talking about before you give a review. I didn't like this book, it's long and wordy. But you are totally wrong about the gold standard, and you don't have a clue what your talking about. When you wrote this:

Now that I've fired a shot at an otherwise excellent book, here's my explanation. A currency, to facilitate trade, cannot be fixed to a commodity. A currency must be flexible, because markets are always in flux. Fix our currency to gold, and our markets will misfire. Markets are complex interactions among multiple parties simultaneously, rather than one-for-one trades of my pig and your cow.

My response:

You have to learn first how and why a commodity even starts as a monetary unit. Money originally starts as a commodity, it is a commodity, just like what you exchange it for! There is reason. It is a natural evolving process, a step above barter. Gold and silver were naturally chosen commodities in all socities because they were homogeneous, divisible, and long lasting to store value for later purchasing power. If you use a worthless thing like paper, (which was originally the IOU of the gold or silver) what is to stop it's creation when you break the connection to the natural entity which originally serves as stored value? Your whole argument about flexibility and all this (whatever you mean by that I don't know, the "flexibility" you are refering to is corruption) is based on a market that is so out of wack because of malinvestment. Also, why didn't people need credit card 100 years ago, and why do you now and think its a good thing? It's because your money is being debased, it's buying power destroyed, so now you have to resort to credit. Also they never went off the gold standard to help people out... they are did it to destroy the middle class and make you a slave. Look around you, how many fathers can still support a family? Wow, going off the gold standard was a good thing. By the way, it was never a real gold standard to begin with anyway.

You wrote:

Tying a currency to any commodity is exactly the kind of central planning that the authors rail against. Instead of letting the market decide the value of the currency (with a central bank to guard against inflation), some central authority pegs it to an industrial metal (which doesn't guard against inflation, as history proves).

My response:

How is that central planning? When you allow gold and silver to compete in a free economy you are allowing the market to decide what money should be. People will always revert back to gold or silver because it cannot be devalued. The FED is central planning, they themselves have admitted they can't predict a bubble or know really when to lower or raise rates. That is why the market (individual people making choices) has to decide what happens in the economy. The FED (central bank) is a fascist central planning entity that benefits the few at the expense of the many. In the communist manifesto, Marx says how important it is to have a central bank. Alexander Hamilton was a banker, and wanted a central bank. Why didn't Jefferson want a central bank? Because he knew what it would do, go read all his writing. The central bank can control so much of society once they control the money of a country. They can even indirectly break up families by inflation by making them work harder and harder for less and less, it steals the resources of the middle class by transfering their resources to the rich. It diverts the value of a commodity (a monetary unit) to pieces of paper. For instance, let us say you have your gold in a vault, the bank gives you paper IOU for the gold. Remember we are talking in weights, rather than dollars, dollars are meaningless.

No need for a central authority to tie anything down, just get rid of the governments paper that says " this note is legal tender". Keep it if you like, but, allow competition between gold, silver and paper like there was before 1913. Allow competition between banks. People can use paper, but why would anyone use it unless someone says it's worth something, or it represents value of something else. We all know where value will always revert back to, it always has, gold and silver. These things haven't been money throughout civilization for the hell of it. The paper is the IOU. All the banks right now can be bailed out by the FED to stop runs on banks. If there was no central bank to bail them out, they would think twice about what they do. In fact, in the current setup, dishonesty is almost rewarded.

Always remember, central banks make people dependent on the government, when they don't exist, it makes the government dependent on the people. Without the central banks, there is a strong likelihood there would not have been a WW1 or WW2.

With a strong money standard, ( the US throughout the 19 century) , prices fell continuously. It's not a matter of making or forcing people to use a gold standard, it's that in a free society, it becomes this, it's a reversion to a mean of stored value.

You wrote:

Another tired and irrelevant cliché the authors use is "printing money." The printing of dollars (Federal Reserve Notes) contributes a statistically insignificant amount to the total money supply.

My response:

It's all the same. False demand, inflated demand driving prices up, and they are all still considered dollars.

You wrote:

If the FR decided to triple the number of FRNs printed over the next six months, I doubt we'd notice any difference in our economy. People and businesses rely primarily on electronic money, not paper notes, today.

My response:

But you'd notice it in prices, it all the same, demand, demand, demand. What is keeping prices somewhat down in US right now (the real inflation rate is probably as high as 10%) is that the US is exporting their inflation. The chinese government is holding a lot of them and debt too. But, imagine when they start buying up stuff in the US economy (which they will probably do to get out of the dollars and into assets because the dollar is devaluing) and start throwing those dollars in the US. Inflation, which is rising prices because of more "money" in circulation, (whether blips on a screen or paper) will go nuts.

You wrote:

Look at your own finances as an example, and you'll see how little you actually use paper notes. Does anyone pay a mortgage with paper notes these days? Make a list....

My response:

What are you talking about, it's all money man.

In reply to an earlier post on Nov 14, 2007 1:49:08 PM PST
Good response.
May I add that real value can be understood also as energy. Industrial society and its financing schemes really got tailwind around the time that oil took over as the primary driver of growth, and as a result the expectation of growth became the foundation for modern credit schemes. Pyramids of paper whose only collateral is tomorrow's growth. We are at the toppling point now, having hit peak oil in 2005 and made up the difference in refined liquids for two years. Peak oil is peak growth. On the other side of peak growth, the credit pyramid starts to collapse because it was built on little more than the illusion of infinitely cheap energy. Even so-called hard assets will prove to be rather soft in the end.

Posted on Dec 26, 2007 11:37:33 AM PST
It was a good review right up until it got to the defense of fiat money and the claim that it is necessary to facilitate economic transactions.

For those of us who are familiar with the works of Mises and Rothbard or have an understanding of monetary history it is evident that the reviewer is mistaken. Unfortunately, the subject requires some time to go through and this is not the place for it. But let me point out that in brief lifetime I have seen many fiat currencies go to zero and many savers get wiped out by the coordinated actions of the banking system and governments. In my family seeing a currency go to zero is quite common. In 1943 my grandfather woke up one day to find that the currency that he held had become worthless overnight. The family did all right because he had gold and did not trust the banks and government enough to put all his money into the financial system. My wife's grandfather had the same experience when Mao made the currency that he held worthless. During my childhood it was common for me to see the bank introduce a new currency unit which was worth ten or one hundred of the old ones. In 1993 my uncle woke up to find that the old monetary unit was exchangeable for the new one at the rate of 1,000,000 to one. Less than two months the process was repeated. And it was repeated again before the government threw in the towel, stopped issuing its own money and started to use the German Mark as the currency. A friend got into trouble filling out an expense report because he had exchanged his dollars for Pesos at the airport in Toronto before he got on the airplane. By the time he landed the Peso was devalued by 50%. About ten years ago my wife and I did not exchange our Baht for dollars because we were going back to Thailand for a vacation in a few weeks. When we got back the cash we had only purchased half of what it had previously.

I could go on, but as I wrote above, this is not the place for it. As a rule of thumb, a fiat currency will be lucky to retain 10% of its purchasing power by the time thirty years have passed. How that makes Bonner wrong is a puzzle that only our reviewer can try to answer. My guess is that the reviewer is a victim of what passes for modern economic education and as such is destined to make the very errors that Bonner hopes we avoid.

Before I stop let me point out that in his previous book Bonner suggested a simple trade of the decade. He suggested that people sell the Dow and buy gold. Bonner was right. While this decade still has three years to go I suggest that the passage of time will make him even more right than he is now.

Posted on Jan 2, 2008 7:40:20 AM PST
Last edited by the author on Feb 3, 2008 5:40:14 AM PST
LILA RAJIVA says:
Thank you, Mr. Lamendole,
for treating the work as the joint effort of two authors and not the solo work of one.
I appreciate it.

http://www.thehindubusinessline.com/2007/11/23/stories/2007112350660900.htm

Lila Rajiva

Posted on Jan 6, 2008 10:40:52 AM PST
Last edited by the author on Jan 7, 2008 12:35:02 AM PST
At last! Someone who condemns irresponsible expansion of the money supply WITHOUT invoking the magical "gold standard" as a solution. Because of its rarity, pleasing appearance, and apparent eternal endurance (a mere chemical oddity), gold has inspired superstitious awe throughout human history. But so far nobody, from Ron Paul to "Superstar" (above) has convinced me that it could or should underpin a modern economy. It's way past time to put this superstition to rest, and base our economic future on another rare commodity: responsible behaviour by goverments, banks, business, and individuals.

Posted on Feb 2, 2008 12:17:52 PM PST
Last edited by the author on Feb 2, 2008 12:20:46 PM PST
qwerty3 says:
There ought to be a word limit on book reviews. This is not the place to write your own book.

In reply to an earlier post on Feb 5, 2008 2:41:33 PM PST
LILA RAJIVA says:
1. Defending property rights is a hall mark of conservatism - like hauling squatters off your land.

2. We were not necessarily advocating a return to the gold standard. We were advocating diversifying with gold.

"Superstar"

In reply to an earlier post on Sep 18, 2008 10:32:22 PM PDT
[Deleted by Amazon on May 6, 2011 12:02:40 PM PDT]
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M. L Lamendola
(VINE VOICE)    (REAL NAME)   

Location: Merriam, KS USA

Top Reviewer Ranking: 1,410