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Friday, April 27, 2012

The Greatest Speech Ever Given

The greatest economics-related speech, at any rate. I kid you not. I found myself sounding like a Spirit-infused Southern Baptist listening to a fiery old preacher thundering from the pulpit as I read it:
Thank you very much for inviting me to speak here at the New York Federal Reserve Bank.

Intellectual discourse is, of course, extraordinarily valuable in reaching truth. In this sense, I welcome the opportunity to discuss my views on the economy and monetary policy and how they may differ with those of you here at the Fed.

That said, I suspect my views are so different from those of you here today that my comments will be a complete failure in convincing you to do what I believe should be done, which is to close down the entire Federal Reserve System

My views, I suspect, differ from beginning to end. From the proper methodology to be used in the science of economics, to the manner in which the macro-economy functions, to the role of the Federal Reserve, and to the accomplishments of the Federal Reserve, I stand here confused as to how you see the world so differently than I do.

I simply do not understand most of the thinking that goes on here at the Fed and I do not understand how this thinking can go on when in my view it smacks up against reality.

Please allow me to begin with methodology, I hold the view developed by such great economic thinkers as Ludwig von Mises, Friedrich Hayek and Murray Rothbard that there are no constants in the science of economics similar to those in the physical sciences.

In the science of physics, we know that water freezes at 32 degrees. We can predict with immense accuracy exactly how far a rocket ship will travel filled with 500 gallons of fuel. There is preciseness because there are constants, which do not change and upon which equations can be constructed..

There are no such constants in the field of economics since the science of economics deals with human action, which can change at any time. If potato prices remain the same for 10 weeks, it does not mean they will be the same the following day. I defy anyone in this room to provide me with a constant in the field of economics that has the same unchanging constancy that exists in the fields of physics or chemistry.

And yet, in paper after paper here at the Federal Reserve, I see equations built as though constants do exist.
And the close, Sweet Mises, the close! It is unbelievable! If you can read Robert Wenzel's speech to the New York Federal Reserve without involuntarily emitting one "that's right", "amen", or "halle-fucking-lujah", you simply do not belong at this blog. I sent him the following email:

Please allow me to compliment you, no, praise you, for giving what henceforth must be known as The Greatest Speech Ever Given in the field of economics. It was as if Daniel not only entered the lions' den without fear, but voluntarily, to preach to the beasts of the merits of vegetarianism. The English language simply does not possess the words to describe how magnificent your speech was.

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68 Comments:

Anonymous Mr. Nightstick April 27, 2012 4:23 AM  

"four-legged rats" That's a good one.

Blogger Markku April 27, 2012 5:41 AM  

"four-legged rats" That's a good one.

It's like a fractal of insults. The entire speech is a big insult, then there is a final paragraph of insult, and inside that, a tiny three-word insult. I'm sure that if we would look at that last period with a microscope, it would contain an insult.

Anonymous Toby Temple April 27, 2012 5:48 AM  

The entire speech was a lecture on how stupid people working in the FRB are.

Anonymous Rantor April 27, 2012 6:07 AM  

I love the part on Operation Twist, and the part on unemployment, and the part about gold reserves, etc.

Blogger tz April 27, 2012 6:32 AM  

A cross berween the sermon on the mount and the "woe to you..."

Pity it wasn't recorded.

I'm still rrading it, but I agree.

Anonymous Rantor April 27, 2012 6:51 AM  

The only point I would have added, centuries of experience has demonstrated that artificially low interest rates hurt the poor and the way central banking is working today, they only serve to enrich the super wealthy to the detriment of the overall economy

Anonymous ODG April 27, 2012 7:11 AM  

I'm kinda surprised the man was allowed to walk out of that meeting alive...

Anonymous Difster April 27, 2012 7:19 AM  

I read it three times I was in such awe.

And if you've ever heard one of Wenzel's podcasts, it's even more awesomer. In fact, go listen to one of his podcats then read the speech again.

Blogger LP 999/Eliza April 27, 2012 7:21 AM  

Cpsan is featuring a segment on the FOMC/ZIRP (policy). Callers are correcting every mistake they view the Fed as making.

Anonymous willneverpostagain April 27, 2012 7:27 AM  

If the members of the New York Fed did decide to leave and never come back, there would be a gaggle of new blooc in there in a heartbeat.

Wenzel would have to make that same speech every year in that Building.

Still, I would like to have been a fly on the wall in that room that day.

Anonymous willneverpostagain April 27, 2012 7:29 AM  

blooc = blood.

Sorry for the typo.

Anonymous Hood April 27, 2012 7:31 AM  

Hope he called parley first. Thanks for posting VD.

Anonymous Difster April 27, 2012 7:39 AM  

By the way, lots of Wenzel's readers asked for details on the response he got, here it is.

In many ways, the responses he mentioned are more illuminating than the speech itself.

Anonymous The One April 27, 2012 7:40 AM  

Let's see how long he lives.

Blogger Nate April 27, 2012 7:41 AM  

The speech was glorious... but I am still shocked by the stunning irony of the fact that there is a place called the Liberty Room at the Federal Reserve.

Surely its a padded cell named in jest.

Anonymous Stilicho April 27, 2012 8:11 AM  

When I read the speech yesterday morning, I was laughing so hard by the close (4 legged rats as opposed to the current 2 legged variety) that my wife asked what was wrong. Simply beautiful.

Anonymous Difster April 27, 2012 8:12 AM  

Who can doubt that whoever invited Wenzel and made sure it happened has been summarily fired (or executed)?

Anonymous Stilicho April 27, 2012 8:13 AM  

The speech was glorious... but I am still shocked by the stunning irony of the fact that there is a place called the Liberty Room at the Federal Reserve.

Surely its a padded cell named in jest.


Orwell didn't invent Newspeak, he merely commented on its existence.

Anonymous Cheddarman April 27, 2012 8:22 AM  

If only Wenzel were the prophet Elijah, he could have called fire down from heaven to destroy the building, and the false prophets of economic stability and growth.

Sincerely

Cheddarman

Anonymous Kyle In Japan April 27, 2012 8:23 AM  

Man Vox, I've never seen you gush like this about *anything* before. Economics isn't one of the main reasons I visit this blog, but even I might try reading it.

Anonymous Joshua_D April 27, 2012 8:33 AM  

Damn. That was awesome. I want to give that man a hug.

Anonymous jack April 27, 2012 8:34 AM  

Gawd; you're right. That was SOME speech. I've saved it and will happily read it to anyone that EVER tries to tell me the government is doing a good job with the economy.
When the whole of the situation at the Fed is outlined like this you just know it all was to lay the ground work and then implement massive fraud; and, or, to instigate the destruction of these United States.
We need to make this man the treasury secretary AND the Fed chairman [this last to oversee the desolution of said Fed]

Whew!

Anonymous jerry April 27, 2012 8:39 AM  

Quit scratching your head, Wenzel. You know exactly what they are doing and so do they.

Anonymous RL April 27, 2012 8:39 AM  

I am surprised that anyone at that New York Fed thought to invite Wenzel. An excellent speech--it may even give the Fed economists something to talk about for a week or so. The day that crazy Austrian came to the New York Fed.

Anonymous rho April 27, 2012 8:55 AM  

"four-legged rats" was epic lol.

Good talk.

Blogger W.LindsayWheeler April 27, 2012 9:07 AM  

There are no constants in economics because half of econimcs exist in the minds of men. It is part of their self-interest and greed that drives economics. Economics is half science, half personality. Half of what makes up economics is the human factor, 10% nature/acts of God, and the remaining is science.

Blogger 2Bfree April 27, 2012 9:18 AM  

W.LindsayWheeler please explain exactly what part of "economics" is science?

Anonymous TheExpat April 27, 2012 9:27 AM  

Trial and error... error... error... error... error... error... error...

lol

Anonymous aero April 27, 2012 9:31 AM  

Increase Money Supply and Debt Demand, These two constants lower the value of the dollar and increase the cost of goods. More so then the actual supply and demand for the goods.

The FED has more to do with the rising price of OIL then the supply and demand for it or the speculators on wall street do. Every time they increase the money supply or debt the more it will cost to drill for oil to increase the supply of oil.

Anonymous aero April 27, 2012 9:36 AM  

VD said

"English language simply does not possess the words to describe how magnificent your speech was"

What language does?

Anonymous Josh April 27, 2012 9:37 AM  

I laughed, I cried, it was much better than cats.

Brilliant effing speech. Magnificent, simply magnificent

Anonymous Daniel April 27, 2012 9:38 AM  

I imagine the Federazzi laughed like they'd just been roasted by Don Rickles. I can consider no other circumstance by which he would have been invited and received.

Regardless - hallelujah.

Blogger Galt-in-Da-Box April 27, 2012 9:38 AM  

Is this guy still alive, or did the BanKhazars hire a hitman & have him executed immediately afterwards?

Blogger Galt-in-Da-Box April 27, 2012 9:48 AM  

By the end of which Burn-the-bank-e & comrades were doubtless laughing uproariously! Hell, I'll bet helicopter Ben walked up, clapped bubba on the shouldah und zed zumtink like
"OY MEIN GOTT zhat vas funyah! Too bad yeh ein goyim dagh or I'd have vanna my relatives in Hellyveyad get ye schtaatid in schtand-ap comedy!!!"

Anonymous Stilicho April 27, 2012 9:49 AM  

By the way, lots of Wenzel's readers asked for details on the response he got, here it is.

In many ways, the responses he mentioned are more illuminating than the speech itself.


Thanks, Difster. The part that jumped out at me more than any other was the Fed economist's ignorance of the Chicago School and, by extension, the work Friedman and Hayek. Come on, here he is, an economist working at ground zero of the monetarist/neo-keynesian world and he isn't even familiar with the economic school of thought responsible for the monetarist theory which he presumable employs on a daily basis.

Would you trust an engineer to tinker with a jet engine if that engineer did not know who Sir Isaac Newton was or had not heard of Newtonian physics?

Anonymous The other skeptic April 27, 2012 10:01 AM  

Meanwhile, highly risk-averse president wouldn't even piss on Romney if Romney was on fire but there was some risk to the president.

Anonymous dh April 27, 2012 10:02 AM  

>The FED has more to do with the rising price of OIL then the supply and
>demand for it or the speculators on wall street do. Every time they increase
>the money supply or debt the more it will cost to drill for oil to increase
>the supply of oil.

I've only been studying the oil market for a few weeks in depth, but I have never seen such a small change in demand affect the price so very much.

From the height of the economic crisis in 2008/2009 to now, the shift in demand is at most roughly one million barrels a day. The price effect is in the realm of 200-300%.

A hidden risk with the economic order today is that if China, instead of buying US debt instruments, created a new subsidy for internal use of oil, it could shock US prices like never before. Right now China is sinking about $100B a quarter into US debt. For $120B a quarter, China could subsidize about $3/a barrel. The resulting increase in demand could easily eclipse a 1 million barrels effect we say between 2008/9 and present.

Anonymous Grendelizer April 27, 2012 10:23 AM  

And, as with the prophets of old who called it exactly as it subsequently went down, let's see if any of the fat and rich take his words to heart.

Anonymous Starbuck April 27, 2012 10:25 AM  

You're right, it is a great speech. But I am not confused. i certianly in agreement with this Robert fellow. And I certianly agree with VD's assesment of said speech.

What confuses me is the FED. Are they being run by "incompentents"? Are they idiots trying to figure out how to run the fiscal section of a nation/world?

I have a hard time believing these people are idiots. Nor is it greed, although they are greedy. Are they following a plan? Is this all staged to bring about something they desire?
How on earth would owning the entire world benifit them?

Because I cannot swallow the fact that these people are stupid/greedy and are destroying all things fiscal because of that. They might be destroying everything fiscal, but it isn't because they are idiots. I think maybe it is a plan. But for what?
I know I know.. World government, Control, New World Order, Elitism, etc.. I have heard all the conspiracy theories and a lot of them make sense and a lot of them don't.

VD, do you have any idea why this is happening?

Anonymous Anonymous April 27, 2012 10:36 AM  

starbuck, conspiracy theories are sometimes more than theory. maybe they just think if they keep trying they will get it right. economic activity does not change much. you need something and i have it in surplus then i will sell to you for some medium of exchange. old white guy

Anonymous Stilicho April 27, 2012 10:38 AM  

Starbuck, there is none so blind as he who will not see. Take a look at the link to Wenzel's follow-up that Difter provided above and you'll see that, while not stupid, these banksters live in a keynesian garden with very high walls. Small wonder that they think the economic world ends at the walls, they've never even been told that there is something on the other side.

Anonymous rienzi April 27, 2012 10:49 AM  

It would not have been surprising if, at the "feast" after Wenzel's speech, a disembodied hand had written "mene, mene, tekel, upharsin" on the wall of the Fed's banquet room.

Anonymous Lysander Spooner April 27, 2012 10:57 AM  

That's bob Wenzel !!!

I have a background in Physics, Austrians are the only ones who make economic sense to me, and my name is Daniel.

Oh, and .......

"halle-fucking-lujah-yeah"

Blogger The Aardvark April 27, 2012 11:35 AM  

Vox is an econ-otaku.


And rightfully so. Brilliant speech, bearding the lion so.

Anonymous rycamor April 27, 2012 11:39 AM  

That calls for a serious fist-pump. Made my day.

It is a sign of cracks showing in the wall that such a man would even be allowed to make this speech at the Fed. Very curious indeed.

Blogger Doom April 27, 2012 11:40 AM  

Too short to cover a response to the part you included, but...

Does he really not understand why he sees things as they are and the people in front of him do not? He is seeking the truth, they were hired because they believe enriching their agency and bosses and allies is above any principles of truth or running and economy for the good of all. Either the people in front of him never bothered to try to understand or understand and don't consider truth or right action as beneficial to their continued employment.

Good luck with getting them to do more than grumble, though. Hey, there is always... Is that bacon I smell? Later.

Blogger RobertT April 27, 2012 11:47 AM  

I personally found the reaction to the speech more illuminating than the speech itself. This is another example of the failure of academia to prepare students for life in the world at the expense of indoctrinating them. Too much formal training looks like a liability to me. Einstein, for instance, was well educated but did his best work without access to a university library. Once you have the basics required by your profession, you probably gain more by reading on your own.

Anonymous Difster April 27, 2012 11:48 AM  

Oh, and Karl "Greenback" Denninger... go suck an egg.

Anonymous Suomynona April 27, 2012 12:01 PM  

Wenzel was preaching to the opposite of the choir. He may as well have been extolling the virtues celibacy at a Playboy Mansion soiree.

It only makes me suspicious as to what those vipers are up to. The appearance of being open to change, of looking at proposals and solutions could just be the latest bait to sufficiently appease the increasingly powerless masses until the election, after which time they will pull the switch.

Anonymous Difster April 27, 2012 12:09 PM  

Suomynona,

They actually tried to get him cancelled but one particular economist who Wenzel didn't name pushed it through. I think they didn't know what they were getting themselves in to.

Anonymous Suomynona April 27, 2012 12:15 PM  

Difster April 27, 2012 12:09 PM
I think they didn't know what they were getting themselves in to.


Then it was a serendipitous occasion. Truth managed to temporarily escape its solitary confinement.

Anonymous the vibrant Joseph Kony April 27, 2012 12:28 PM  

"four-legged rats" That's a good one.

Code for "Jews" The antiSemite!

Anonymous Suomynona April 27, 2012 12:57 PM  

Difster April 27, 2012 7:39 AM
By the way, lots of Wenzel's readers asked for details on the response he got, here it is.


I see now to what you were referring, Difster. The article, My Fed Speech, The Details, was interesting and illuminating. Apparently they're not all evil, just the elites at the very top who understand the game. The rest are simply ignorant and self-preservation dictates they dare not question the evil ones.

A little evil does indeed go a very long way.

Anonymous Chris April 27, 2012 1:14 PM  

It only makes me suspicious as to what those vipers are up to. The appearance of being open to change, of looking at proposals and solutions could just be the latest bait to sufficiently appease the increasingly powerless masses until the election, after which time they will pull the switch.

Suomynona: What if they know the writing is on the wall, start bringing in Austrian Economists, state they are following their advice, and then blame the final crash on them, in a vain attempt to vindicate the Keynesians?

Anonymous III April 27, 2012 1:31 PM  

Then, behold, the veil of the temple was torn in two from top to bottom; and the earth quaked, and the rocks were split...

Anytime now.

Anonymous JMH April 27, 2012 1:39 PM  

Starbuck, the answer is that the folks running the Fed are another group of Hunter-Gatherers. Their DNA is missing a recent mutuation that allows humans to comprehend production. They are stuck with the ancient mind-set of the hunter-gatherer that says the universe provides and it's up to us to consume. Asking them to undersatand Austrian economics is like asking your dog to fly. No wings. Can't do it.

Loved the speech. The part about Fort Knox being off-limits is great too - it's why I'm not all that enthusiastic about a Gold Standard. If idiots and rent-seekers run things, they'll cheat and blunder their way around the restrictions of a Gold Standard too. If idiots and rent-seekers aren't in charge, we can probably make fiat currency work. The problem isn't the standard underlying the currency, it's the idiots and rent-seekers running the show. Of course, idiots and rent-seekers are almost guaranteed to be running things with a central bank, which, in the end, was Wenzel's point.

Blogger Kentucky Packrat April 27, 2012 1:47 PM  

Oh, and Karl "Greenback" Denninger... go suck an egg.

What did Denninger do this time, and was it before or after his move to short AAPL a week or so before a 10% jump? *snicker*

I'm not allowed to post over there any more (and I shouldn't be; my last suggestion wasn't polite), and Karl has the code block you off the site if you have a "locked" userID cookie. However, I don't really miss it a lot. Karl is getting to be the anti-Cassandra. When he is general, I still respect him (when he's wrong, he still should have been right). When he gets specific, it's a different story. There's at least one group of people making good money betting 100% against every specific prediction he makes (especially Apple and RIMM). I feel sorry for anyone who listened to Karl saying that AAPL at 300 was too high; at least he put his own money where his mouth was for AAPL around 560.

Now, back to the topic at hand... I am in awe of Mr. Wetzel. He is the writer that I can only wish I was. It ranks only slightly lower than Shadrach, Meshach, and Abednego in facing the opposition in his own court. I have had to put Mr. Wetzel's blog into the RSS reader, because I dare not miss any other posts like it.

Anonymous Poli_Mis April 27, 2012 1:58 PM  

And yet when I share this, I still have fools who try to refute it ... I respectfully ask them to re-read the entire speech because nobody is stupid enough to not see the speech for what it is: an air-tight, punch for punch, donkey kick beatdown of centralized banking and monetarist theory.

Anonymous Suomynona April 27, 2012 2:17 PM  

Chris April 27, 2012 1:14 PM
What if they know the writing is on the wall, start bringing in Austrian Economists, state they are following their advice, and then blame the final crash on them, in a vain attempt to vindicate the Keynesians?


The convoluted machinations of the evil mind are difficult to predict, unless one is like-minded, but your scenario doesn't appear likely to me. I don't think sociopaths and the extremely powerful require vindication, and generally don't bother setting up scapegoats - as this would indicate an acknowledgment of guilt and accountability.

But, like I said, I don't think like they do, so I can only take a guess at what their self-serving intentions might be.

Anonymous FUBAR Nation (Ben) April 27, 2012 2:39 PM  

The best point of the speech was the fact that there are no constants in economics, and consequently human behavior. When I was in undergraduate economics, I took econometrics which was basically akin to learning from a witch doctor. There were so many ridiculous constants that all the models were useless.

This just underlines my point in that there are a huge amount of occupations that produce no wealth or actively destroy wealth, and the economics profession is largely inhabited by denizens that promote the idea of turning the US into a giant lab experiment. The results have been the active destruction of wealth with absolutely no accountability for scum like Paul Krugman and his ilk. I have a right to call him a scumbag because that's what he and his ilk like Brad DeLong do. I am merely returning the favor.

The Federal Reserve is a giant counterfeiting organization that should be shut down.

Ben Bernanke, f you!

Anonymous Mark April 27, 2012 3:07 PM  

Agree; an excellent speech.

A tragedy the audience has mainly deaf ears.

Anonymous Gen. Kong April 27, 2012 4:04 PM  

Absolutely amazing. The man had the stones to walk into a room reeking of sulphur and deliver a speech like that. It's a bit like the sermon of St. Francis to the fishes, though more extreme as there were certainly no fish in that chamber - only reptiles.

Anonymous kh123 April 27, 2012 7:24 PM  

...Followed immediately with circus clowns performing ball-and-shell tricks on stage. See, it can still work; you just have to move the ball at differing speeds based on - if you'll divert your eyes to the Powerpoint chart for a moment - the newest CPI-U report.

Everyone felt better afterwards.

Anonymous Luke April 27, 2012 9:40 PM  

I wrote this satire a while back about the less-educated other end of the spectrum from the Fed Reserve bigshots (but who fundamentally think the same way):

"Ah approovs o' spammin', as long as it be agin thut aw-full Rawn Pawl feller! That freee-speechuh stuf onlee meens rite speechin'! Hee doen't hav noe rite ter run fo' Prez-dint, nawt if hee wunts ter cut back all thuh well-fare and dee-fending awr c-untry from all those A-rabss way over in - I foregets, where are theys again? Ennyway, whie, wivouts dat ae-eff-dee-cee, Meduh-cade, Secshun ate (was that Hudd, or how I got outs the mill-terry? Ah foregets that 'un, tew) ess-ess-dee-eye, fewd shtamps, and that Wick stuff, mah sisster tew tralers ovur an' hur Afro-whatevver frin-wiv-bennies (guvmint bennies, ah thenks?) that lives in thuh next traeler pass hur wun't have noways to feed awl them chirrens! An, nun uh mah cuzzins wuld hav jawbs, buts fore the mill-terry!

An, that Pawl guy wants ter shut down thut Depart of Eddycashun! How will all our chirren suck-ceed lahks wee haz, if there ain't no more eddycashun! He must be a Commee-nist or raght-wing terrurist or sumpin' to want that!"


{Am open to suggestions on working in Ron Paul's advocacy of a gold-backed currency, probably some variation of "an new wun wuld hav enny munny, 'cept the guv-mint givvin thim sum").
{

Anonymous Orion April 28, 2012 4:28 AM  

@Nate

Your confused about the nature of the Liberty Room. It isn't where it is celebrated, it is where it is taken.

Blogger John Regan April 28, 2012 11:26 AM  

Calling that the "greatest speech ever" is way long on hyperbole, Vox. Wenzel pretty much tosses out tired nostrums just like central bankers do. They're just different nostrums, that's all.

Anonymous James April 28, 2012 2:51 PM  

Seems to be open season at the NY Fed at the moment:

http://www.zerohedge.com/news/must-read-jim-grant-crucifies-fed-explains-why-gold-standard-best-option

Anonymous E. PERLINE May 01, 2012 9:20 AM  

If Romney wins and becomes a captive of the banks, it will reinforce the right wing. And if there is an increase in the "occupy" ranks it will reinforce the left wing. The global sheep will be contained.

But will they? First of all, the Federal Reserve, practically unknown two years ago, is now out in the open. The sheep are beginning to make judgments about what its purpose is.

Then, if the pressure on opposite sides becomes unbearable, the flocks won't be confined. They'll squeeze out and form a vast black market. I think the globalists and their hired media are miscalculating

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