A bad day for democracy
Q&A about an historic FED decision, first drafted on Sept. 19, 2007
----------------------------------------------------------------------------------------------------
Q: What does Noah denkt™ think of yesterday’s FED decision to cut the its fund rate by 50 basis points?
A: Noah denkt™ believes that this decision marks a very bad day for democracy, and for the future of freedom and prosperity.
Q: Why does Noah denkt™ think so?
A: Because it believes that with yesterday’s decision the FED has made it even more likely that our freedom will become the victim
of fortune hunters and career junkies. For too much has it caved in to their anxieties that we could now still hope that to overcome
them later.
Q: So Noah denkt™ thinks that those who were warning the FED of an impending recession and who therefore asked her to lower
their interest rates are fortune hunters and career junkies?
A: Not all of them, but many of them.
Q: Why do you think so?
A: Because a lot of them have too narrow a view of their self-interest. And so it is only natural that they cause one disaster after
another.
Q: But what is wrong with their idea of satisfying their self-interest?
A: It’s too convenient. It believes that the best way to grow the economy is for them simply focus on their personal advancement. And
so it is only logical that they won’t crucify themselves when satisfying their own personal interest.
Q: So you are saying that one has to go through a near self-destructive self-analysis in order to have a reasonable understanding of
how to satisfy one’s self-interest?
A: Well, at least one has to go through a near self-destructive self-analysis to understand how to most reasonably satisfy one’s self
interest.
Q: But how does this self-crucifixion help to come to a more reasonable understanding as to how to best pursue one’s self-interest?
A: It helps you to find the best possible balance between a legitimate personal interests and the legitimate general interest. And it
is because of that gains your will thus generate are sustainable and fair.
Q: And without this self-torturing analysis you cannot get to that best possible balance?
A: We do not see how. Because it is only by exploring both sides of the aisle that you can truly see the middle ground. And so an off-
the-cuff approach won’t do the work for you.
Q: So what you are basically saying is that it is the degree that you inflict upon yourself that determines the quality of your analysis?
A: We prefer to say that it is the degree of reflective pain that you are willing to subject yourself to which determines this quality.
Q: But isn’t that quite masochistic as an approach.
A: Well, it is. But then again reason itself is a pretty masochistic enterprise.
Q: How so?
A: Because if forces man to embrace the relative lostness in space. And so he will only be able to live up to the challenge, if he
strives for his very limits.
Q: But surely the idea of reason is not to risk one’s health when exercising it. After all, the rational for reason is that it should help to
manage life and not to destroy it.
A: This is exactly why we are not promoting a morbid death philosophy here, but much rather lobby for near self-destructive
approach. Because it is only by taking out an existential risk, that you can truly save your existence.
Q: But you are still suggesting a strategy that could cause damage to your health.
A: Well, we cannot deny that there might be risk for the individual’s physical health. But if that is the case it is only to preserve mental
health.
Q: To tell you the truth, I have a hard time accepting this. For too much does it seem to me as if this is an over-extension of oneself
that I could now still believe that this is reasonable.
A: Okay, granted. May be we can help you to see the merit of this argument, if we approach it from a different point of view.
Q: How so?
A: By demonstrating to you, that the only way to live in peace with one’s incredible gains is, by showing to others that one truly has
tortured oneself to generate them.
Q: But are not the rich guys living pretty peaceful right now?
A: It stills looks like it. But their profits have recently been so obscene, that it is only matter of time until the markets will revolt against
them.
Q: Still, there have always been very rich people, and society never had a problem with that. Look at Bill Gates or at Warren Buffet?
A: Well, the difference between these guys and the investment bank billionaires of our time is, that Gates’ and Buffets of this world
took an existential risk when building their empire.
Q: But haven’t these private equity and bank manager tortured themselves equally. After all they too had to take out a substantial risk
when starting their business. And so they should be measured with the same yard stick that has been held at Buffet and Gates. For
too existentialist has been their undertaking too, that you could now still argue that they do not deserve the proceeds thereof.
A: Well, I do no deny that some private equity founders actually did accept a pretty substantial pioneering risk when starting up their
new businesses. I strongly doubt though that this can be also said for the bank managers, who received substantial bonuses on
the back of this merger mania.
Q: So it is the lack of a self-torturing pioneering stance then, that turns someone into a careerist and fortune hunter.
A: It definitely turns him into a careerist. If he also is a fortune hunter is determined by the ferociousness by which he is trying to ride
the fashion waves.
Q: Okay, let’s assume you are right. Do you see it as unfounded then that the US economy is heading for a recession, and the FED
had to intervene to avert that risk? Or is this just another careerist ploy to hunt undeserved fortunes.
A: It is. Because a recession is inevitable with or without the FED’s intervention. The only effect that this intervention will have is, that
it will postpone the brunt of the pain, so that the latter will eventually be even worse then, than it had been if it had been allowed to
happen now.
Q: But what makes Noah denkt™ so sure that the moral hazard argument is actually applicable in this case? After all, what we are
dealing here, is not a lack of demand but much rather with a lack of trust. And so it is only wise to grease the system with a shot of
confidence from above.
A: Well, the problem with the shot of confidence from above is that it is unclear to us, how market participants plan to overcome their
lack of faith in future confidence crises, if they are unable to deal with this one right now, when according to their own proclamations,
the fundamentals are, still intact.
Q: To me, that seems a pretty academic point. After all, we have a disaster in the making here, and so we cannot waste time
thinking about future hick-ups now.
A: Well, it might seem theoretical to you now, but it will not, when the next pain is starting to develop.
Q: But why worry about the future, if we have pressing problem at hand that needs to be resolved now. After all, it was Noah denkt™
itself that at one point told us (see: Businessplan: Existenzphilosoph) that the best possible solution for a problem is only to be
found when you are closest to the heat. And so it would not make sense, to deny an emergency now in order to deal with the yet
unknown unknowns later on.
A: Well, Noah denkt™ would argue, that, in this case, we have not yet been close enough to the heat in order to allow us taking a
pain killer. After all this Prozac optimism that we have been given now, will only lead to new dilutions. And so one can be sure that
the next crisis is already in the making now.
Q: I am sorry, but I do not see how this FED decision might have undermined our capacity for reason?
A: Well, let us explain it to you then. The problem with this rate cut is this, that those who have caused the present mess, are not
given a chance to really learn from their own mistakes.
Q: So you are saying that Countrywide and others will not use the current mess to embark on an adequate soul searching?
A: Well, they will do some of that. But it won’t be enough. Because the present shock subsides they will go back to their old
exuberant ways.
Q: But what makes Noah denkt™ so sure, that they will not change their ways?
A: Well, what makes us so sure that they won’t change their style is the fact that it takes a tremendous amount of backbone to do
that. And the strength backbone that is required here, can not be developed by taking Prozac.
Q: Why is it so difficult to resist being sucked into the next boom hysteria?
A: Because it is very difficult for any human being to not associate himself with a consensus that apparently is shared by others. For
too painful is it be isolated and alone that one could now still hope to bear the pressure that such a contrarian pressure creates, if
one has not trained oneself in bearing such a pain.
Q: So, if I read, what you are saying here correctly, you would have not suggested any rate cut?
A: Well, I might have given the market a 25 point cut, just to appease them somewhat. But I would not have gone to the extremes of a
double 50. Because this definitely sending the wrong signal here.
Q: Well, then, so you would have cut the fund rate by 25 bases points. But does not that mean that you yourself do not have the
backbone that you so readily ask others to show?
A: May be, may be not. The truth of the matter is that although I am against the use of Prozac in this situation, I do not rule out that
there are some situations, where a dose of chemical help is necessary. And it seems to me that in this case Mr. Bernanke had no
other chance but to dilute himself somewhat.
Q: You surprise me all the time? Why is acceptable, to soften up ones backbone here, when it is, according to your stance,
unacceptable that the Countrywides and others have done so in their predicament?
A: Well, the difference is that the Countrywides of this world were are under considerable less pressure to ease their credit
standards than Bernanke was in this case. After all the Countrywides of this world to did not stand in same media spotlight then,
that Bernanke was in this time. And so they could have hidden their prudence a little better in a relative anonymity. Bernanke,
however, would have made himself the target of a widespread vilifying. And so he would have hardly been able to continue do his
job in a methodical way. No, if there is someone you can ask this resolve from than it is the president himself.
Q: Frankly, this is too much for me. So, if you do not mind, I prefer to bail out of this conversation.
A: Alright. No problem. See you later.
Q&A about an historic FED decision, first drafted on Sept. 19, 2007
----------------------------------------------------------------------------------------------------
Q: What does Noah denkt™ think of yesterday’s FED decision to cut the its fund rate by 50 basis points?
A: Noah denkt™ believes that this decision marks a very bad day for democracy, and for the future of freedom and prosperity.
Q: Why does Noah denkt™ think so?
A: Because it believes that with yesterday’s decision the FED has made it even more likely that our freedom will become the victim
of fortune hunters and career junkies. For too much has it caved in to their anxieties that we could now still hope that to overcome
them later.
Q: So Noah denkt™ thinks that those who were warning the FED of an impending recession and who therefore asked her to lower
their interest rates are fortune hunters and career junkies?
A: Not all of them, but many of them.
Q: Why do you think so?
A: Because a lot of them have too narrow a view of their self-interest. And so it is only natural that they cause one disaster after
another.
Q: But what is wrong with their idea of satisfying their self-interest?
A: It’s too convenient. It believes that the best way to grow the economy is for them simply focus on their personal advancement. And
so it is only logical that they won’t crucify themselves when satisfying their own personal interest.
Q: So you are saying that one has to go through a near self-destructive self-analysis in order to have a reasonable understanding of
how to satisfy one’s self-interest?
A: Well, at least one has to go through a near self-destructive self-analysis to understand how to most reasonably satisfy one’s self
interest.
Q: But how does this self-crucifixion help to come to a more reasonable understanding as to how to best pursue one’s self-interest?
A: It helps you to find the best possible balance between a legitimate personal interests and the legitimate general interest. And it
is because of that gains your will thus generate are sustainable and fair.
Q: And without this self-torturing analysis you cannot get to that best possible balance?
A: We do not see how. Because it is only by exploring both sides of the aisle that you can truly see the middle ground. And so an off-
the-cuff approach won’t do the work for you.
Q: So what you are basically saying is that it is the degree that you inflict upon yourself that determines the quality of your analysis?
A: We prefer to say that it is the degree of reflective pain that you are willing to subject yourself to which determines this quality.
Q: But isn’t that quite masochistic as an approach.
A: Well, it is. But then again reason itself is a pretty masochistic enterprise.
Q: How so?
A: Because if forces man to embrace the relative lostness in space. And so he will only be able to live up to the challenge, if he
strives for his very limits.
Q: But surely the idea of reason is not to risk one’s health when exercising it. After all, the rational for reason is that it should help to
manage life and not to destroy it.
A: This is exactly why we are not promoting a morbid death philosophy here, but much rather lobby for near self-destructive
approach. Because it is only by taking out an existential risk, that you can truly save your existence.
Q: But you are still suggesting a strategy that could cause damage to your health.
A: Well, we cannot deny that there might be risk for the individual’s physical health. But if that is the case it is only to preserve mental
health.
Q: To tell you the truth, I have a hard time accepting this. For too much does it seem to me as if this is an over-extension of oneself
that I could now still believe that this is reasonable.
A: Okay, granted. May be we can help you to see the merit of this argument, if we approach it from a different point of view.
Q: How so?
A: By demonstrating to you, that the only way to live in peace with one’s incredible gains is, by showing to others that one truly has
tortured oneself to generate them.
Q: But are not the rich guys living pretty peaceful right now?
A: It stills looks like it. But their profits have recently been so obscene, that it is only matter of time until the markets will revolt against
them.
Q: Still, there have always been very rich people, and society never had a problem with that. Look at Bill Gates or at Warren Buffet?
A: Well, the difference between these guys and the investment bank billionaires of our time is, that Gates’ and Buffets of this world
took an existential risk when building their empire.
Q: But haven’t these private equity and bank manager tortured themselves equally. After all they too had to take out a substantial risk
when starting their business. And so they should be measured with the same yard stick that has been held at Buffet and Gates. For
too existentialist has been their undertaking too, that you could now still argue that they do not deserve the proceeds thereof.
A: Well, I do no deny that some private equity founders actually did accept a pretty substantial pioneering risk when starting up their
new businesses. I strongly doubt though that this can be also said for the bank managers, who received substantial bonuses on
the back of this merger mania.
Q: So it is the lack of a self-torturing pioneering stance then, that turns someone into a careerist and fortune hunter.
A: It definitely turns him into a careerist. If he also is a fortune hunter is determined by the ferociousness by which he is trying to ride
the fashion waves.
Q: Okay, let’s assume you are right. Do you see it as unfounded then that the US economy is heading for a recession, and the FED
had to intervene to avert that risk? Or is this just another careerist ploy to hunt undeserved fortunes.
A: It is. Because a recession is inevitable with or without the FED’s intervention. The only effect that this intervention will have is, that
it will postpone the brunt of the pain, so that the latter will eventually be even worse then, than it had been if it had been allowed to
happen now.
Q: But what makes Noah denkt™ so sure that the moral hazard argument is actually applicable in this case? After all, what we are
dealing here, is not a lack of demand but much rather with a lack of trust. And so it is only wise to grease the system with a shot of
confidence from above.
A: Well, the problem with the shot of confidence from above is that it is unclear to us, how market participants plan to overcome their
lack of faith in future confidence crises, if they are unable to deal with this one right now, when according to their own proclamations,
the fundamentals are, still intact.
Q: To me, that seems a pretty academic point. After all, we have a disaster in the making here, and so we cannot waste time
thinking about future hick-ups now.
A: Well, it might seem theoretical to you now, but it will not, when the next pain is starting to develop.
Q: But why worry about the future, if we have pressing problem at hand that needs to be resolved now. After all, it was Noah denkt™
itself that at one point told us (see: Businessplan: Existenzphilosoph) that the best possible solution for a problem is only to be
found when you are closest to the heat. And so it would not make sense, to deny an emergency now in order to deal with the yet
unknown unknowns later on.
A: Well, Noah denkt™ would argue, that, in this case, we have not yet been close enough to the heat in order to allow us taking a
pain killer. After all this Prozac optimism that we have been given now, will only lead to new dilutions. And so one can be sure that
the next crisis is already in the making now.
Q: I am sorry, but I do not see how this FED decision might have undermined our capacity for reason?
A: Well, let us explain it to you then. The problem with this rate cut is this, that those who have caused the present mess, are not
given a chance to really learn from their own mistakes.
Q: So you are saying that Countrywide and others will not use the current mess to embark on an adequate soul searching?
A: Well, they will do some of that. But it won’t be enough. Because the present shock subsides they will go back to their old
exuberant ways.
Q: But what makes Noah denkt™ so sure, that they will not change their ways?
A: Well, what makes us so sure that they won’t change their style is the fact that it takes a tremendous amount of backbone to do
that. And the strength backbone that is required here, can not be developed by taking Prozac.
Q: Why is it so difficult to resist being sucked into the next boom hysteria?
A: Because it is very difficult for any human being to not associate himself with a consensus that apparently is shared by others. For
too painful is it be isolated and alone that one could now still hope to bear the pressure that such a contrarian pressure creates, if
one has not trained oneself in bearing such a pain.
Q: So, if I read, what you are saying here correctly, you would have not suggested any rate cut?
A: Well, I might have given the market a 25 point cut, just to appease them somewhat. But I would not have gone to the extremes of a
double 50. Because this definitely sending the wrong signal here.
Q: Well, then, so you would have cut the fund rate by 25 bases points. But does not that mean that you yourself do not have the
backbone that you so readily ask others to show?
A: May be, may be not. The truth of the matter is that although I am against the use of Prozac in this situation, I do not rule out that
there are some situations, where a dose of chemical help is necessary. And it seems to me that in this case Mr. Bernanke had no
other chance but to dilute himself somewhat.
Q: You surprise me all the time? Why is acceptable, to soften up ones backbone here, when it is, according to your stance,
unacceptable that the Countrywides and others have done so in their predicament?
A: Well, the difference is that the Countrywides of this world were are under considerable less pressure to ease their credit
standards than Bernanke was in this case. After all the Countrywides of this world to did not stand in same media spotlight then,
that Bernanke was in this time. And so they could have hidden their prudence a little better in a relative anonymity. Bernanke,
however, would have made himself the target of a widespread vilifying. And so he would have hardly been able to continue do his
job in a methodical way. No, if there is someone you can ask this resolve from than it is the president himself.
Q: Frankly, this is too much for me. So, if you do not mind, I prefer to bail out of this conversation.
A: Alright. No problem. See you later.
| © Landei Selbstverlag, owned by Wilhelm ("Wil") Leonards, Gerolstein, Germany. All rights reserved. Reminder: Noah denkt™ is a project of Wilhelm ("Wil") Leonards and his Landei Selbstverlag (WL & his LSV). Consequently, all rights to the texts that have been published under the Noah denkt™brand name are reserved by WL & his LSV. The commentary and the reasoning that was provided on this page is for informational and/or educational purposes only and it is not intended to provide tax, legal or investment advice. It should therefore not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or any issuer by WL & his LSV or its Noah denkt™ Project. In fact, WL & his LSV encourage the user to understand that he alone is responsible for determining whether any investment, security or strategy is appropriate or suitable for him. And to leave no doubt as to what this means we urge our user to also note our extended Legal Notice. |
| Conflict of Interest Statement with respect to the companies mentioned above Q: Does Wil Leonards hold shares in any of the companies mentioned above? A: No Q: Has Wil Leonards done consulting work for any of the companies mentioned above? A: No Q: Does he intend to develop a commercial relationship with any of the companies mentioned above? A: No Q: Do members of Wil Leonards' family hold shares in any of the companies mentioned above? A: No Q: Have members of Wil Leonards' family done consulting work for any of the companies mentioned above? A: No Q: Does a member of his family intend to develop a commercial relationship with any of the companies mentioned above? A: No |
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Project for Philosophical Evaluations of the Economy |