A short but brilliant essay which lays bare the entire corruption of the unholy fiat currency / fractional banking / democratic government trinity and the chaotic conditions it creates in what would otherwise be an orderly market economy.
Madoff what?
I would not have given a 1¢ to someone with name Madoff. There is no cure for sheer stupidity and combined with greed, no telling what could happen. In this instance, rich people became poor by combining the two.
It turned out bad in this case that people were willing to overlook it and trust him. I've got to think it was his private joke.
I'm a little surprised nobody has attempted to shoot him yet.
"Llewellyn H. Rockwell, Jr."
and a frieking JR. to boot ..It doesn't take Freud to realize he was mixed up starting at birth..
Too short to give any kind of brilliant account.
I'll give you my short and over-generalized account. You had people who were poorly trained in economics and who believed that economics was too arcane, but they had seen other people grow wealthy in the stock market. Whatever the article says about currency, wealthy people didn't perceive that they were getting more of a share of diluted currency. If we were on a gold standard, we'd need to issue "substitute" currency. Some of the worst economic reverses happened when we were on the gold standard-- and the gold reserves ran out.
With Madoff, what he sold his scheme on was the fact that he built a reputation that was rock solid and unassailable, built carefully over decades. I don't think any other crook laid that nearly groundwork.
He had such an exalted reputation that he was the authority that people believed about economics and investments. Von Mises and Molyneux couldn't compete with him for demonstrated expertise, shown by the success he shared. The balance sheets he sent to people might have been transparently phony to people looking at them now, but it didn't matter, people didn't look at them too hard. Meanwhile, if his reputation didn't do it, nobody could believe he could steal from his friends, his charities and his family who had invested in him, too. He showed no favoritism and suckered them all in, and used that fact to gain trust from a wider circle.
When somebody of Madoff's reputation does something this wicked, trust in general crumbles.
Most of what you write about the effect of Madoff's reputation is no doubt true, as far as the government regulators is concerned. Officials at the SEC had been receiving (and scoffing at) warnings about Madoff as far back as 10 years ago.
Curiously, many private enterprise "Due Diligence" firms and investment managers were not nearly so gullible. Among them were Luxembourg's Banque Privee Edmond de Rothschild Europe; Swiss managers Partners Group Holding AG, Gottex Fund Management Holdings Ltd.; and Vienna-based Salus Alpha Group Services GmbH. Also dodging the bullet were New Zealand's Infiniti Solutions Ltd., and U.K.-based CMA Global Hedge PCC Ltd.; GAM, the hedge fund-of-funds subsidiary of Julius Baer AG; and Dexion Capital PLC. Among U.S. fund of funds who shunned Madoff were Cadogan Management LLC, Berens Capital Management LLC, Hennessee Group LLC and Taylor Investment Advisors LP.
Bottom line: Bureaucrats have no personal stake in the results of their work. What little due diligence they do perform is therefore usually of poor quality, politically tainted and often not presented until long after the horse is out of the barn.
Yes, greed was of course a huge factor, but the greater cause was the general trend towards malinvestment when the majority of people have been brainwashed since attending public school into relying on government regulators. NOT.
Then again, why even the greediest among us would expect those who run the greatest Ponzi Scheme of all, Social Security, to protect them is beyond me.
It's about time people woke up and understood that greed is NOT good.