The Hirelings Are Running
the World
Will Reishman
April 9, 2005
With corporate scandals, accounting fraud and the like in the
headlines again, allow me to share a bit of my personal understanding
of what's at the root of all this.
Other than, of course, the fallen condition of sinful humanity,
a prime cause of corporate corruption is that the U.S. financial
system is founded upon dishonest money, originating with the
institution of the Federal Reserve in 1913.
A more proximate cause is the Fed's policy of mis-pricing the
cost of money - the Fed Funds rate, or the overnight money rate.
Currently at 2 3/4%, it's well below the true inflation rate
of 5-6%.
Let me use a ridiculously simplistic example to help illustrate
this point. Let's say the finest eating establishment in your
area runs a full-page ad announcing a dinner special for two:
their best steak dinner, bottle of house wine, etc. at $15 per
couple. Do you think they could come close to satisfying the
demand for such a ridiculously priced offer?
When you mis-price any good or service, you create distortions,
often well beyond expectations. The utter calamity of the Soviet
Union's economy, and the biggest reason for its collapse, was
the centralized pricing for all goods and services.
In the '90's, the inflationary momentum of super-charged credit
creation fostered an environment in which Wall Street ginned
up an avalanche of financial junk to peddle to a gullible public,
and to their mutual fund managers, or really mis-managers. They
gobbled up phony-money inflated frauds like Global Crossing,
WorldCom, Adelphia, and Tyco.
When that bubble burst, the Credit Monster re-grouped. Alan Greenspan
genuinely feared a punishing recession after the stock bubble
burst. So he unleashed the latest, greatest, and very likely
the last wave of the Great American Credit Bubble - the current
real estate mania.
Today we're experiencing an unbelievably complex web of money/debt
creation - totally outside of the banking system, and away from
the traditional control mechanisms of the Fed and other financial
market regulators.
What we've gotten is Fannie Mae with less than $30 Billion in
equity supporting almost $1 Trillion in assets, hedged with another
Trillion in derivatives. Fannie is a pure socialist creature,
and will go the way of all such monstrosities. Let's pray it
doesn't take the financial system down with it.
We've gotten a U.S. auto industry that makes what little money
it does through its version of financial engineering, not making
cars, and certainly not advancing transportation technology into
the 21st century.
The trillions in credit created in recent years have metastasized
into a monstrous finance economy. Today's money players make
fortunes in the money game, not developing and producing better
products for America's and the world's consumers.
The scandals of the late '90's, and now this latest crop, are
only a symptom of the deeper problem.
The fact is the underlying finance system is based on a lie:
that Federal Reserve Notes are true money, rather than a device
for improper government and financial-industry influence over
free economic exchange. With the dollar's problems, our huge
deficits, and the endemic financial scandals, we just may be
entering the climactic chapter in another failed attempt to improve
upon God's design for human society - kind of like a financial
Tower of Babel.
When the very basis of your economic system is a fraud, what
do you expect? More and more Americans trapped in debt, as if
they're on the plantation of the Credit Masters. And those very
same Credit Masters are caught up in ever more unconscionable
greed, which leads to reckless corruption and obsessive selfishness.
The hirelings are running the world. Where are the good stewards?
April 8, 2005
Will Reishman
Branch Manager, Medford, OR
Euro Pacific Capital, Inc.
email: wreishman@europac.net
website: www.europac.net
 Will Reishman is manager of Euro Pacific
Capital, Inc. branch office in Medford, Oregon.
Mr. Reishman began his career
in the investment business a commodity broker in 1976. He joined
Bache & Co. a few years later as both a stock and commodity
broker, and has extensive experience at other major investment
firms, including the former PaineWebber and Dain Rauscher.
Mr. Reishman is a regular radio commentator on the topics of the
financial markets and geopolitical issues. "The Reishman
Report" is a daily feature on KDOV-FM (91.7, Medford, OR).
Mr. Reishman joined Euro Pacific in 2001. He is a 1968 graduate
of the University of Notre Dame and a Danforth Fellow.
321gold Inc
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