The C-Word

In last week’s discussion with the Renegade Economist, Fred Harrison made a somewhat bizarre comment regarding monetary reform advocates:

Renegade Economist: People who believe in the need for monetary reform really are fixated on it. And many of them think there is some kind of grand conspiracy that allows the bankers and those who have money to control our society.

Interviewer: Is there?

RE: There isn’t; no there isn’t – other than that , within the rules of the game, there is a bias that favours a certain categoey of people against the interests of the majority. Now, that’s not a conspiracy – that’s written into the laws! So when people make statements about how they’re going to exploit the current crisis to their own advantage – well they’re not making any secret of the fact that yes, they have a lot of money and they are going to get even richer.

I: Because it’s in the rules?

RE: Because it’s in the rules.

He reaffirms this perspective towards the end of the interview when he is asked:

I: So the system’s working as it should work?

RE: It’s exactly as we’ve had it programmed and we’ve inherited it.

So, of course, the obvious questions that should arise are from this are: Who determines the ‘rules of the game’? Who writes ‘the laws’? and, Who ‘programmed’ the system? The Renegade Economist doesn’t seem to see the merits of discussing these issues:

Interviewer: There are alot of monetary reformers out there and alot of them (as you say) subscribe to huge conspiracy theories and we should do our best to try and put this to rest…

RE: Well, nothing is going to convince that community of people…

The reason that Tiberius finds this so odd is the Renegade Economist himself does not mind dabbling in an analysis which comes close ‘conspiracy theory’:

A century ago a group of influential economists calluded to manipulate the building blocks of Classical Economics. They had an ideological  agenda. The future that they shaped is our reality. […] Their mission was clear: to protect the vital interests of the privileged few but to do so they had to conceal the unique qualities of one of the Classical factors of production – land.

He doesn’t however use the dreaded ‘c-word’ and instead what the Renegade Economist tends to describe is some kind of systemic bias at work. As  Tiberius recently tried to explain with the aid of a packet of cornflakes, many of the problems that we face today are systemic. However, as he also tried to make clear in a subsequent post, this does not mean that conspiracies do not exists – indeed they are one of the mean by which many of these systemic biases function:

the current box we all live in was actually designed by the bigger flakes themselves:  not necessarily consciously in a ‘lets think of the best design to ensure our dominance’ fashion, but rather slowly and incrementally in more of a ‘this seems to work best for us’ way – though less ‘Blind Watchmaker’, more ‘Short-sighted Bastard’.

The problem is that ‘conspiracy theories’ are given a bum rap because they are generally seen to be over-simplistic and all-encompassing – and, indeed, some of them are. However it doesn’t follow from this that there are no conspiracies, nor that a ‘conspiracy theory’ cannot be the best explanation for the facts in some cases. Despite this, the ‘c-word’ is generally used as a pejorative term used to silence dissent and it seems that it’s therefore considered to be more ‘intellectually acceptable’ to promote what may be called a ‘systemic bias theory’.

The unfortunate result is that people tend to adopt an analysis that is either/or and fail to recognise that there is a dynamic interplay between these factors at work: systemic biases create conspiracies of interest, which in turn also cause further system biases, and so on.

To try and explain this it is best to look at the favoured metaphor of the ‘systemic bias’ purveyor: evolution by natural selection.

No one makes the Lion kill the Wildebeest – it is simply part of its nature to do so. The Lion’s ‘nature’ is a the sum of a biologically determined set of predispositions to its behaviour – all of which (so the theory goes) have at their root a genetic underpinning. These genes are selected for (and against) by an incremental and directionless process of which the Lion has no awareness and no control. Lions may cooperate with one another in achieving their tasks (hanging out in prides, hunting in teams, etc) but they have no idea why they are doing so, and this behaviour is simply a more complex example of this self-gene system at work in social animals – they are not ‘conspiring’ in any sense.

But this metaphor only works  so long as none of the agents become aware of their own interest and how the rules affect them.

Let’s look again at our Savannah setting should the lions become self-aware:

If  the Lions become self-conscious, then, in time, their own ‘Darwin Lion’ will develop a theory of natural selection, and their ‘Dawkins Lion’ will explain that the driving force of this evolutionary process is the individual genes make every living thing : Lions and Wildebeests included. Some Lions will be impressed by these facts, and one particularly enterprising feline may suggests they utilize these new understandings to try and develop more successful hunting strategies. An idea may be proposed: instead of always targetting the weaker Wildebeest young, the Lions make a pact to only hunt the stronger calves. They agree that all the punier Wildebeast will be allowed to live until they have reproduced (after which lunch!). A few generations later, thanks to these artificial selection policies,  there are would be a greater proportion of weaker Wildebeast in the herd and hunting would become easier.

The Lions would still be, in a sense, ‘trapped’ in the evolutionary system (they’d still have the desire to hunt/kill Wildebeast), but their awareness of it would  enabled them to agree (conspire) to forgoe the short-term advantages (which the selfish-genes thrives on), in favour of a greater long-term prospect. They would have therefore changed the mechanics of that system to their advantage.

In terms of our own ‘economic system’, Tiberius doesn’t think a group of people sat down and explicitly mapped out the best method possible to ensure the dominance of the few over the many. Instead, the system has developed incrementally (like natural selection) but deliberately (unlike natural selection), so what we have now is like an animal that has been selectively bred – sheep, cows, dogs, etc.

For example, noone set out to ‘make a Great Dane’ in the sense that they were working from a blueprint. Instead certain dogs were consciously chosen to breed in order to fix certain inheritable characteristics that were considered desirable – and this eventually led to a tall, funny-looking dog. Saying that our system is ‘inevitable’, or ‘conspiracy-neutral’, is a bit like arguing that the Great Dane is a ‘naturally-occuring’ animal.

Unfortunately, there seems to be a tendancy in modern humans to be very puritanical in their view of the world. In the case of the c-word, this means on the one hand, those that see a conspiracy in almost everything,  and those that failing to see even the most outrageous examples. This more complex reality needs to be as acknowledged as explicitly in the case of land reform as it does in monetary reform and, in his excellent book “Who Owns Britain“, Kevin Cahill spells this out clearly:

All these advantages were deliberately conferred on the already priviledged by a manipulation of the law which created the modern Land Registry…

Much more than a simple cover-up, it is an ongoing conspiracy even in an age when such a term is frequently and wilfully over-used.

This book is about that conspiracy and its consequences. [emphasis added]


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  1. Tiberius,

    Thanks for another great post. The whole concept of “conspiracy theory”, which as you note is a term of abuse, is infuriating, since it not only serves to end discussion, but also labels one a “kook”; an unworthy opponent of any future exchanges. I won’t even go into the fact that since a conspiracy is “a secret arrangement between two or more people to commit a harmful or illegal act”, most “conspiracies” exposed by conspiracy theorists do not even qualify as such. A “conspiracy theorist” in practice is anyone daring to challenge received wisdom. Chomsky once complained that because of the way news is framed by our “free and impartial media”, he cannot appear on TV and present his views without looking like a raving lunatic to the vast majority of viewers, even if what he says is perfectly true, and easily verifiable.

    You make an interesting observation:

    Unfortunately, there seems to be a tendency in modern humans to be very puritanical in their view of the world. In the case of the c-word, this means on the one hand, those that see a conspiracy in almost everything, and those that failing to see even the most outrageous examples.

    To this I would add a third group, probably the most numerous – people who cannot see a conspiracy when it is staring them in the face, and who look for conspiracies where there are none. I was recently (gently) reprimanded by Cynicus for pointing out the obvious collusion between high ranking politicians and big business interests (J. Major and T. Blair being the more blatant examples in recent years). Cynicus noted that this smells too much like a “conspiracy theory” to him, and suggested that the actions of politicians can be better explained by their incompetence and ignorance, not corruption. On the other hand, as you probably noticed, he has devoted two recent blogs to exploring the “affair of smuggled bonds”. Now, even assuming that Japan wanted to dump 10% of their foreign reserve holdings on the sly in Switzerland, they would not send them in a suitcase carried by two individuals on a train from Italy (why Italy?). Anyone who has even a rudimentary understanding of how sovereign states operate, and the means available to them, would immediately see the absurdity of such a scenario. This has not stopped feverish speculation among numerous commentators, which continues even as I write this…

    If we redefine “conspiracy” to mean “two or more individuals colluding to promote their interests”, then I would claim that almost everything that happens in the world is the (sometimes unintended) result of “conspiracy” (natural disasters excluded). I think it was FDR who said that “nothing happens in politics, unless there are people actively working to make it happen”. When you add the “law of unintended consequences” to the hundreds or thousands of (often interacting) “conspiracies” active at any one time you get what we have – a curious chaotic mixture of “conspiracy” and randomness which characterizes our world.

    The problem in trying to explain the world in terms of its constituent “conspiracies” is the fact that there is a large number of them, they are constantly changing and shifting, not much is known about many (but not all) of them, unless you are an insider, their complex, non-linear interactions etc.

    The opacity has a simple (non-conspiratorial) explanation. Knowledge is power. One of my favourite sayings expresses it best: Those who talk don’t know. Those who know, don’t talk

    Best Regards

  2. Matt,

    Thanks, as always, for the comment.

    re “To this I would add a third group, probably the most numerous – people who cannot see a conspiracy when it is staring them in the face, and who look for conspiracies where there are none.”

    Yeah – and the most infuriating thing is when people see conspiracies in instances when it would hardly matter whether there was a conspiracy or not!

    For example, Papa Leodis is fairly certain there was some hidden agenda at work to ensure that his personal favourite didn’t win this years’ X-Factor (Simon Cowell reckoned the other girl would make him more money apparently). Yet he would dismiss out of hand as ‘conspiracy talk’ the suggestion that, say, there is anything wrong with the official narrative of 9/11.

    This is especially evident in sport. Only a couple of months ago many football fans were convinced that Michel Platini had orchestrated a plan to ensure that there was no second successive all-English Champions League final. For many, the terrible performance of the referee in the Chelsea-Barca match was considered ‘proof’ of this.

    I’m not saying there isn’t match-fixing in football (it’s probably cost Leeds United at least one trophy!), but in the grander scheme of things, it really does not matter if there is.

    re the “affair of smuggled bonds”

    I really don’t know enough about the whole bond-selling system to have an opinion on this either way – but it seems that some ‘conspiracy theories’ capture the public imagination more than others (especially when obscene amounts of money are involved!)

    My conspiracy-theory of the day is:

    Journalist Files Charges against WHO and UN for Bioterrorism and Intent to Commit Mass Murder

    Now THAT would be some C-word!

    All the best,


  3. Tiberius/Matt,

    Might I add some observation. A conspiracy must surely be something is undertaken in secret i.e. excluding those who are conspired against from the information about how they are being used/manipulated etc.

    A conspiracy is only possible if very few people are necessary to keep a secret. The more people that are involved the less likely it is to be a conspiracy. Also, the outrageousness of the conspiracy determines how many people might be involved before the odds of a breaking of the conspiracy become far higher.

    For example, the JFK story given by Oliver Stone, was both an outrageous conspiracy, and would have required 1000s of individuals in the ‘know’. It is highly improbable that such a number would not have at least a few people involved who would blow the whistle. Killing a president would outrageous, and therefore could only be achieved by a tiny clique, and could not involve so many.

    On the other hand, the Japanese bonds would not be outrageous to even a slightly nationalistic Japanese citizen working in government. It could also have been achieved with a minimal number of people. I agree with Matt that, if it was a conspiracy, it was very, very poorly enacted.I have always tried to square how it might be so poorly enacted, if it was indeed a conspiracy (note ‘if’).

    However, the problems surrounding the story remain. The biggest forgery bust in history, no arrests, no press conference, and a complete absence of any substantiated information from any official sources. No samples of the bonds shown, no evidence presented of any kind about any part of it, contradictory stories about how the smugglers were caught, the appearance of an apparently incompetent mafia into the story, and so on… I still find it distinctly odd, but nothing substantive has emerged since.

    However, it meets the requirements of a potential (and I emphasise this word)conspiracy. It is not outrageous to Japanese government officials necessary, and can be achieved with very few people.

    In the case of the conspiracy that is alluded to in the post above, it is not a conspiracy, as much it is not being kept a secret, except under the redefinition that allows for a couple of people to have a private conversation and collude to their common interest.

    For example, the relationship between Goldman Sachs and government was out in the open. It is just it garnered no interest up to now. It is only now that a crisis has taken place that what was always out in the open has been the subject of inquiry by journalists and commentators.

    This is not conspiracy, but complacency. It is a situation in which nobody bothered to ask the questions until it all went wrong. I still go with my explanation of incompetence and clubbiness (an explanation not noted by Matt, which is not a criticism but clubbiness is a critical part of the worldview I propose see, which are perfectly reasonable explanations for the behaviour that we see. All of the information about the relationships has been there to be found. It was not secret, and therefore is no conspriacy.

  4. Cynicus,

    Thanks for your comments. What Tiberius was saying is that “systemic biases” in our socio/economic framework lead naturally to the evolution of “conspiracies”, which in turn transform the framework. So he explicitly denies the existence of a “grand conspiracy”, in the sense of the “New World Order”, while admitting the fact that real conspiracies do in fact exist and are a factor in the way our world operates.

    I completely agree with this viewpoint, but question the usefulness of the category “conspiracy theory” itself. Just because something is a conspiracy theory, does not make it false (there are many well-documented cases of real conspiracies in history), and likewise, just because an explanation is non-conspiratorial (Rumsfeld’s famous “stuff happens”), does not make it true. So the fact whether a theory involves the existence of conspiracy or not is no guide to its truth or falsity. There are good and bad theories, with various degrees of coherence, plausibility, explanatory value, correspondence to known facts etc. The paradigmatic “conspiracy theories”, e.g. alien abductions covered up by evil governments, the “assassination” of Princess Di, the “protocols of the Elders of Zion” are false because they are crap theories, not because they involve a conspiracy. So independent thinkers like yourself or Tiberius should not feel apologetic about straying from “received wisdom” and just ignore any jibes about being “conspiracy theorists” and don’t spend time trying to distance yourselves from the “tin foil hat brigade”. It just puts you on your defensive and detracts from your arguments.

    And you’re only partially right that the relationship between Goldman Sachs and the government was out in the open. What was out in the open were the potentially huge conflicts of interest that these people had. What still remains unknown, a matter of conjecture only, is the real motivation behind the decisions that were made under this cosy arrangement. What was Blankfein (the chairman of GS) doing at the meeting at Treasury which decided to let Lehman Bros. (a GS competitor) go bust, and to bailout AIG (to the tune of 80 billion taxpayer dollars, some 12 billion of which went immediately to GS)? We are not talking here about canny businessmen “protecting” the welfare of their stockholders, but a possibly criminal conspiracy to defraud the public on an unimaginable scale. But the true facts will probably never be known because the decisions were made by a small cabal of players in secret (the classical case of conspiracy). This has absolutely nothing to do with “free markets” as you rightly point out. It is a blatant takeover of government by privileged special interest groups. The only reason why these facts emerged at all, and that we can even talk about them, is that a lot of powerful people got screwed and raised a stink in the mainstream press. But I suspect that this particular case is just the tip of an iceberg…

    All the best

    P.S. I’m following your blog, but for the last couple of weeks have found it almost impossible to comment. Only one out of about ten proxy servers allows me to access your page at all, only one of ten of those allows me to view the comments, and out of those almost none shows the comment box. I hope things will improve…

    A bit of news from my Chinese grapevine (connected to the PRC banking sector) r.e. your prediction of the collapse of the USD. Apparently all US embassies and consulates have been instructed to convert US currency into local currencies to an amount which would allow them to operate for a year. This seems to point to a predicted collapse of the dollar in the coming months.

  5. Cynicus,

    Thanks for your comments. Unfortunately I only have time to make a few quick points in reply.

    I think your notion of ‘secrecy’, differs from mine. My partner and I often speak infront of our child by s-p-e-l-l-i-n-g out messages that they are not intended for them. Is this a conspiracy? Are we being secretive?

    It’s probably a crude analogy, but the point I was trying to make above is that a conspiracy in the traditional sense of plotting behind locked doors is hardly necessary when very few people would even understand what is being conspired about .

    To take your example of JFK, the Stone movie is an oversimplification (necessitated by the format) but is in no way as ‘outrageous’ as the findings of the Warren commission. If forced to choose between an unlikely theory and a scientifically impossible one, I’d always go for the former. The ‘conspiracy’ is whatever prevents intelligent people such as yourself seeing this.

    As for the rest, Matt (as ever) makes my point probably better than I could.

    Best regards and apologies again for brevity.


  6. Cynicus/Tiberius

    After mulling it over, I’d like to modify my position re. the “behind the door” actions of players such as GS. I would now agree with Cynicus, that these actions are not strictly speaking “conspiracies”, they are rather simply the exercise of power. The situation is similar to the actions of e.g. management in a company which decides to sack part of its workforce in order to make next quarter figures look better and increase the amount of bonus payments to themselves. The loans, bailouts etc. to the FIRE sector only seem like conspiracies if we assume (following conventional “wisdom”) that the duty of decision makers is to protect the interests of the “majority”. Since this is not the case in reality, there is no “conspiracy”.

    All the best

  7. Matt,

    Without wishing to descend to far into semantics again, I would take issue with what I see as the circularity in your arguement.

    You say:

    The loans, bailouts etc. to the FIRE sector only seem like conspiracies if we assume (following conventional “wisdom”) that the duty of decision makers is to protect the interests of the “majority”. Since this is not the case in reality, there is no “conspiracy”.

    But this simply begs the questions: why would we “assume” that the duty of decision makers is to protect the interests of the “majority”? Who dictates what constitutes this piece of “conventional “wisdom””?

    Saying their is “no conspiracy” to promote faith in the state-capitalist system is a little like saying that during the Middle Ages there was no conspiracy to promote the belief in God!

    As far as Cynicus’ take on “conspiracies” goes, I don’t think I even understand it – as far as I can tell it relies on a somewhat arbitrary setting of the bar for what constitues a ‘conspiracy’ and what doesn’t. Yes, Goldman Sachs’ actions were an “exercise of power”, but no less a conspiracy for all that. To return to JFK, his assassins were, in a manner of speaking, simply “exercising their power” when they arranged for and then covered up his execution. More recently, Madoff “exercised his power” to defraud multitudes of people – but it seems to be pretty much taken for granted that he would have had to have conspired with others in order to do it.

    Best Regards,


  8. Tiberius,

    Yes, I was being purposely perverse 😉 I just hate it when discussion veers from its real point to peripheral issues such as “is this or is this not a conspiracy theory?”. So by a simple rephrasing, the statement: “these events were caused by the actions of a group of people colluding together to steer matters in a direction advantageous to them”, becomes: “a group of people exercised their power to bring about a desired outcome”, and we eliminate the overt reference to “conspiracy” and thus (hopefully) steer the discussion into more promising directions. And you are quite correct in noting that the two statements are, for all intents and purposes, identical.

    As to Cynicus’ view of conspiracy goes, I admit I’m also unsure whether I understand it. Its criteria appear to be pretty arbitrary. One of them is the need for high levels of secrecy, and the observation that when large numbers of people are involved, such secrecy is difficult or impossible to maintain. As you previously noted, the required degree of secrecy depends on the particular situation – it obviously greater if you’re trying to kill Hitler and lesser if you are doing insider trading. The other point is that it is not impossible to keep something secret for a long time, even if a great many people are “in on it”. The WWII Ultra program (breaking of the German Enigma communications) involved tens of thousands of people, and yet the secret was successfully kept for decades after the war.

    Best Regards

  9. Matt, Tiberius,

    I think maybe I was not clear. In the following passage I am not defining a conspiracy, but what makes one possible:

    “A conspiracy is only possible if very few people are necessary to keep a secret. The more people that are involved the less likely it is to be a conspiracy. Also, the outrageousness of the conspiracy determines how many people might be involved before the odds of a breaking of the conspiracy become far higher.”

    The point about numbers is related to the potential for success, not definition, and the more outrageous the conspiracy (which is why I give the examples), the less likely is to succeed. As such, I do not believe the Stone JFK story as the outrageousness and numbers do not add up. On the other hand the Japanese bond story **might** add up. If you re-read my post this (I hope) will make it clearer. It is a method of evaluation of likelihood when considering the likelihood of a conspiracy having taken, or taking place, not a definition.

    However, I do believe that it is necessary for the nature of the action to be “excluding those who are conspired against from the information about how they are being used/manipulated etc.” In this sense there must be some secrecy (attempts to conceal). If the information is reasonably available to, for example, a reporter or individual, it is no conspiracy. The closeness of the US government to the banking system was there to be found, but complacency meant that it was not.

    Perhaps we are talking at cross purposes, or perhaps we still disagree. I am not sure.

  10. Cynicus,

    Without wishing to get pedantic I’d still say that you’re offering a definition of a conspiracy (albeit in the negative sense). I also think and your definition is arbtirary in terms of a) participants (how many is ‘very few’?), b) method (what does ‘secrecy’ actually mean in practice?), c) value judgement (who decides what is ‘outrageous’ and what is not?), and d) outcomes (how does one really know the “potential for success”?)

    With regard to JFK, it seems like you’re trying to make the facts fit the theory rather than the other way around. To borrow Matt’s analogy of the Enigma code, your statement that “I do not believe the Stone JFK story as the outrageousness and numbers do not add up”, would be akin to a Bletchley Park skeptic saying that “since so many people would have had to have been involved, I don’t believe that the code was broken.”

    I would venture that you don’t know much about the JFK case and that, by rejecting one theory (Stone’s oversimplification), you don’t realise that you’re implying a belief in such absurdities as the ‘single bullet theory’. I find it difficult to imagine that someone as intelligent as yourself would reach the same conclusion were they more familiar with the facts of the case. I’d also add that I think your claim of the conspiracy requiring “1000s of individuals in the ‘know’” is a (very big!) straw man.

    With regard to the ‘concealment of information’, you put the lack of public awareness of the closeness of the US government to the banking system down to the ‘complacency’ of the media; this is consistent with your general use of Hanlon’s Razor in your blog. For me, this is a faith – and a faith that so many people hold because it is the interests of those with power that they do. Presumably in your opinion, the lack of public knowledge over the true number of dead Iraqis is also down to media ‘complacency’ rather than, say, a systemic bias in favour of power structures and the messages they want the masses to receive…?

    I’d say a lot of this comes down to a more general worldview. I’d guess that you use terms like “information is reasonably available” because you think that people are as rational, reasonable and capable of assimilating information as you are. However, I believe that people are quite easily influenced in the way they perceive and interpret information and can, to a large extent, be manipulated to work against their own interests.


    I totally take your point about the apologetic use of ‘conspiracy theory’ and the ultimate banality of that term. I guess this is my subconcious way of offering readers a warning before I lead them too far down the rabbit holes!

    Thank you both for your comments, I hope this post finds you well.


  11. Tiberius,

    You are quite right that I do not know much about the JFK conspiracy theories, which is why I was quite specific about using Stone’s film as an example. The next time that you watch it, it is an interesting idea to count up the number of people it would have taken to do the cover up that he proposes. Then think of those that tell their lovers, get drunk and boast about it etc.

    It is not possible in an evaluation of likelihood of a genuine conspiracy to give number versus outrageousness, because outrageousness is a qualitative and subjective idea. For example, in killing a US president, each time that you introduce a new person into the conspiaracy, the odds that someone will blow the whistle on it would be very high. You might start with a narrow clique in whom you have confidence of shared views, but the Stone JFK story would require very large numbers indeed. How long before they would find a person who, whilst hating the US president, believed in the constitution?

    Whether there was, or was not a conspiracy, the account provided by Stone was highly improbable.

    By contrast, Japanese officicials asking Japanese officials to do something illegal in the interest of their own country, which safeguards their national finances? I would guess (and it is no more than that) they would be pushing at an open door. As was pointed out at the start of this discussion, there are questions about why they might have used the methods, which leave holes in any theory that a conspiracy took place. However, there are also gaping holes in the story of what took place in Italy as well.

    The breaking of the Enigma code would presumably be a similar case, though I do not know enough of the story to be sure. I assume that nobody amongst the allies would think that keeping this a secret would be considered outrageous.

    Number of people in the know versus outrageousness is therefore not a straw man. It is not a formula, but a baseline against which to make a judgement of probability that a conspiracy might have taken place. It is subjective, but it is a starting point.

    Perhaps there was a conspiracy surrounding JFK, perhaps there are elements of the Stone movie that imply conspiracy, but his overall story is highly improbable. In order to explain a conspiracy in the JFK case, the story would need to have a very narrow clique, and a very,very small numbers of outsiders. Anything else becomes increasingly implausible, as the probability of pulling it off becomes very, very small.

    I do agree with the idea that the media is irrational, which I think is your implication. Their interests ebb and flow on any different area according to what they believe is going to be of interest. During the boom, for example, nobody was interested in the revolving door between GS and government bodies, because everybody was too busy ‘living it up’. It is only when the system broke that the interest appeared, and then the shenanigans between government and GS became apparent, because it became a subject of interest.

    Put it this way. If the mainstream media had written a story telling of the revolving door pre-crisis, I think the response would have been ‘so what?’ At that time, the answer might have been that such closeness was helping deliver the prosperity of the boom! Having bankers in the government was why the economy was a success!

    I am not sure that our positions are very far apart, in that I agree that people are easily influenced. However, I do believe that the ‘third estate’ has **a measure** of integrity within its structure, and can be a positive influence. It is not perfect (I think of Conway in the Telegraph on QE as I write this) in that there is mutual dependence of the press and government, but the outrage over GS shows that third estate can respond in the right circumstance.

    Thanks for the introduction of Hanlon’s razor, which was a new term for me (which I had to look up on Wikipedia). Yes, as a general rule, ‘cock up’ is the best explanation. However, the closeness of the banks to government appears to suggest that the bailouts are more than a cock up. As more information has emerged, I have joined the side that suggests that all is not right. The influence of the bankers does indeed look to be rather dubious, to put it politely. This may surprise you, but I am always open to changing views as more information is presented.

    I do not think that there was a conspiracy here, but rather the closeness of banks and government evolved to a state of ‘business as usual’, and nobody was concerned as long as the system seemed to work. When the system broke, and business as usual involved pouring money into banks, then it became an issue, and the press and politicians responded. For example, the opacity of the Federal Reserve has been accepted for years. This is now an issue under debate.

    I will leave the point here. I can not comment on the Iraqi case, as I know even less about this than the JFK conspiracy. It has been an interesting discussion.

  12. Cynicus,

    I don’t think there is any major disagreement between our respective positions, the problem seems to be semantic.

    You take a very narrow view (albeit a “classical” one) of “conspiracy” i.e. a small number of people scheming together in secret to commit some act which is illegal and/or harmful to others. You then (rightly) observe that most large-scale events (such as the collapse of the financial system, bank bailouts etc.) cannot be credibly explained with reference to such conspiracies, for reasons which you note (the large number of actors involved, difficulty of maintaining the necessary secrecy etc.). That is the reason why I agreed with you that according to your definition of “conspiracy” the actions of GS and the US government (probably) do not constitute a conspiracy.

    But you then make an invalid (in my opinion) inference, that since a “conspiratorial” explanation is false, the only other plausible one must involve some form of Hanlon’s razor.

    Tiberius and I have a much broader concept of “conspiracy”, which includes not only the archetypal cloak and dagger style conspiracies, but more generally any collusion of players with a common interest. For such a “conspiracy” to work, there does not need to be any particular level of secrecy or even explicit plotting between the participants, as long as they understand their respective roles in the action they undertake. That’s how e.g. various “old school tie” networks operate. This kind of conspiracy was mentioned by Adam Smith in a famous Wealth of Nations passage where he says “seldom do members of a trade or occupation get together without some plot against public interest being hatched” (or something to that effect).

    Anyway, hope this clarifies things a bit…

    All the best

    P.S. I wrote a lengthy comment on your FFC proposal. Unfortunately, I am not able to post it on either your blog or that of Lord Keynes 😦

  13. Tiberius,

    I hope you are well. All the best in the New Year. Hope you will start blogging again soon.


  14. Matt,

    Great to hear from you again.

    Was really hoping to learn your views on Cynicus’ recent climate skepticism – but I guess you’re still having problems posting to that site.

    I haven’t found any time to post for some while – but hopefully things will quieten down a little in the New Year.

    As for 2010, well it’s already shaping up to be a pleasantly suprising one! May I also extend my best wishes to you and yours for the year ahead.

    All the best for now,


  15. Tiberius,

    I still follow Cynicus’ blog, but cannot post comments, because the proxies that I use for some reason do not allow me to submit them. This is in fact true for all the other blogs, with the exception of yours. I noticed that since the economic crisis appears to have ended (at least according to MSM – ha ha ha) his readership has dropped, and the discussions following his posts have become less interesting. As far as the climate change debate goes, I must say that I am rather agnostic about the whole thing. To be more precise, it is obvious that the dumping of billions of tonnes of carbon into an unstable system such as the earth’s atmosphere is most likely not a good idea. Whether this will cause climactic catastrophe in the near future (i.e. 5-10 years) it’s difficult to say. Just as difficult to say whether such a catastrophe wouldn’t occur all by itself (as a long look at the climactic history of the earth shows). The global warming movement also has acquired some dodgy allies among the banksters (who want to make money by creating ‘carbon markets’), and the geopoliticists (some of whom see it as an opportunity to put the screws on emerging economies). So all in all, it is a murky situation.

    I think the elephant in the room about which nobody in the MSM dares to talk about is resource depletion. The effects of this will most likely destroy “civilization as we know it” much sooner than climate change. A lot of what is happening in the world can be explained by the major players positioning themselves for the resource wars which will soon start (and which have already started, according to some).

    All the best

  16. Hi Tiberius,

    I have followed your recent chat with Lord Keynes on his blog and wanted to join in, but the blog, together with almost all others is blocked to me. I agree with you that there is something frustrating about his comments on the CE blog, despite the fact that he makes many valid points and gives numerous links to interesting material. As someone who gave up on Mises’ “Theory of Money and Credit” after about 200 pages, I found his latest discussion of the Austrian theory of inflation very valuable.

    What seems to trigger LK is any mention by anybody that increases in money supply by governments or central banks **always** lead to inflation. He then proceeds to demonstrate at great length that that is not **necessarily** so. And he is absolutely correct. But, as he mentions in passing, in order for monetary policy to be effective, the government must pursue an active industrial policy, invest in infrastructure, education, welfare and so on. Our governments, regardless of their colour, do not propose to do any of those things. It is completely contrary to current economic dogma, where privatization and “free markets” are supposed to solve all problems. LK seems to ignore this reality and does not propose any practical (i.e. implementable in real life)steps which would bring us closer to this ideal. This is what makes his comments so frustrating at times.

    Our friend CE correctly identified the root causes of the problems that countries in the developed world face. Over the last 30 years, an increasingly large proportion of citizens in those countries have been placed in direct competition with cheap (and increasingly well educated) labour in East Asia and India. This competition cannot be won, even if wages descend to Chinese levels. The Tory spin on this – articulated by Steve Tierney – is that “we are living beyond our means” and that “government spending is the root cause of all our woes” is total and complete BS. Unless Western societies completely re-tool, we will continue on our death spiral. But it will take a catastrophe of major proportions before people realize what is happening.

    Speaking of Steve, I was really disgusted by his rude and ad-hominem attacks on some of the commentators on CE’s latest post (including LK). Perhaps that’s what can be expected from a politician in training, but it seems that his denial of the responsibility of banks and finance for the current mess, verges on the seriously delusional. God help us if his thinking is typical of the crew which will assume power tomorrow.

    All the best

  17. Matt,

    Great to hear from you – hope you are well.

    Yes, I find the whole money supply/inflation debate a pain too. I tend to think of it in terms of eating habits and weight: eating more does not necessarily mean that I will put on weight since I may be using those extra calories to exercise more, or fight of illness, etc. What bothers me is that LK seems to go further than this and suggest that there is no fixed relationship between say, food and weight gain, when – all things been equal – there clearly is. I also think he has trouble with exponentials.

    I’m not sure I follow what you mean when you say our government doesn’t ” invest in infrastructure, education, welfare and so on.” There have literally been hundreds new schools been built in this city in the last ten years. Perhaps you could explain more.

    Yes CE is kinda right, but I think this movement of capital would have had less dramatic effects if labour was similarly free to exploit new markets…

    Would love to write more but time – as ever – is the enemy!

    All the best for now,


  18. Tiberius,

    Thanks for the swift reply. I am slowly going insane with lack of any intellectual stimulation, due to my daily interactions with idiots (my American colleagues at work) coupled with the CCP’s great ideas on how to control the internet.

    To answer your question about govt. “investment” – some time ago my father, who in recent years developed a taste for genealogy, informed me that his great grandfather was illiterate. This being a supposed demonstration of the progress that has been made since then. I replied with the question: “What makes you think that your great grandchildren will be literate?”. People take the value of education as a given, but actually literacy for a feudal serf would not only be completely useless, but downright dangerous as far as his chances of survival and procreation are concerned. Mass education over the last hundred years or so has only become possible because industrialization required it. The ongoing de-industrialization taking place in Western societies, means that this is changing, and the results can be seen in the collapse of educational standards. What is the point of educating people to a university level, if they are going to end up flipping burgers at Burger King? It only might give them “wrong” ideas. But the inertia of “progress”, and the desire to be “doing something” has lead to the “investment in education” that you mention. I’m sure that this will stop under a Conservative govt., which understands (on a visceral level) what it is all about. This is quite different from policies pursued by countries which truly understand the game, such as Germany, Japan or China.

    All the Best

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