On America’s “deep government”

Image by by Master isolated images / freedigitalphotos.net *

Image by Master isolated images / freedigitalphotos.net *

“America’s ‘deep government’ runs the government and America. The deep government consists of government bureaucracies (agencies, departments, offices, etc.), lobbyists, campaign contributors, political appointees, influential media figures and companies, academics, university centers and schools, foundations, key corporate figures, etc.” Michael S. Rozeff

***

Gary S. Gensler’s Politically-Motivated Attack on Intrade

by Michael S. Rozeff
LewRockwell.com

November 30, 2012

America’s “deep government” runs the government and America. The deep government consists of government bureaucracies (agencies, departments, offices, etc.), lobbyists, campaign contributors, political appointees, influential media figures and companies, academics, university centers and schools, foundations, key corporate figures, etc.

Gary S. Gensler is a member of the deep government. He’s the head of an agency most Americans have never heard of, the CFTC or Commodity Futures Trading Commission. It used to be a sleepy backwater that did very little, but with the advent of huge amounts of trading in derivatives (futures, options, swaps), its power has grown. Gensler’s biography raises many questions, while illustrating the corrupt nature of America’s governing institutions. Men and women who, by their training, their livelihoods, their personal debts to others as they climb to power, and their positions in deep government, cannot be impartial. They cannot escape being in the “old boy” network. They cannot escape having conflicts of interest, as they move from industry to regulator and back again to industry. This environment does not produce objective or dedicated public servants who have the public welfare in mind or heart. Government by experts is a myth. We have government by people trying to get ahead and rise to the top, and they will do what they have to do in order to maintain their positions and look good. They have to learn how to contend with attacks from their rivals in deep government who are playing similar games.

Gensler is a brilliant man who learned finance at Wharton and practiced it at Goldman Sachs. This qualified him as a plutocrat fit for government oversight of the financial sector. Parenthetically, Bernanke’s route was through academia, which is another deep government feeder operation.

Gensler has come under attack by several members of Congress. Bernie Sanders criticized his position on lax regulation of credit default swaps and tried to block his appointment to the CFTC by Obama. A year ago, his ties to Jon Corzine were questioned by the House oversight committee. Corzine, it will be remembered, is the reckless crook (embezzler) who headed MF Global, who lied about MF’s financial health while it descended into bankruptcy, and who shifted money out of customer accounts in a vain attempt to save the company. That money has never been recovered. Corzine was another Goldman Sachs alumnus and another player in the deep government.

When government figures are under attack, their best defense is often offense. Gensler has brought suit against a perfectly innocent, harmless and very useful business operation, namely, Intrade. Intrade operates prediction markets. By doing this, Gensler shows that he is in charge and that he’s not a lax regulator, as Sanders painted him. He overcomes his bad Corzine press and association by showing that he’s tough on gambling. He reinforces his credentials as a government mercantilist.

It doesn’t matter if the CFTC wins or loses its lawsuit. The case will soon be tied up in talk and litigation and fade from the headlines. Gensler will have diverted attention from his troubles and shown himself to be a man of action who is governing. He will be rebuilding his reputation within the establishment circles in which he travels.

Plucky Intrade immediately informed its American customers that they will have to close down their accounts because of this regulatory attack on Intrade. American bettors will no longer be serviced by Intrade. The CFTC has the power to hassle Intrade.

Intrade is an Irish company. The CFTC is preventing Americans from trading with other Americans or with other non-American customers of Intrade. This is another instance of the conflict pointed out by Gary North regarding gold:

“The rival camps are divided by rival systems of economic sovereignty. The gold bugs favor the sovereignty of the free market. The anti-gold bugs favor the sovereignty of the banking cartel, which is the joint creation of the federal government (Federal Reserve) and the states (state bank licensing).

This is a replay of the arguments of Adam Smith against the arguments of the mercantilists. It is the logic of widespread, decentralized private ownership and voluntary contract versus the logic of government licensing, barriers to entry, and the legal right to counterfeit money.”

Gensler, for what I believe are political and personal reasons, which cannot be separated in the case of members of the deep government, stands for government licensing of prediction markets. The CFTC will enforce barriers to entry. The behind-the-scenes cartel consists of existing exchanges which prefer to see all speculation channeled through their doors, and it consists of regulators anxious to maintain the power of setting the rules for these exchanges. If Intrade slips through, it’s a challenge to that power. Government stands against the free market built by Intrade. It stands against voluntary trading. Government is not the protector of Americans, it is thwarting decentralized trading. The fundamental reason behind this is to maintain privileges and power of those in deep government.

Michael S. Rozeff [send him mail] is a retired Professor of Finance living in East Amherst, New York. He is the author of the free e-book Essays on American Empire: Liberty vs. Domination and the free e-book The U.S. Constitution and Money: Corruption and Decline.

Copyright © 2012 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

Source: http://lewrockwell.com/rozeff/rozeff396.html

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