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Considering Ayn Rand's philosophy holds that laissez-faire capitalism is "the only moral social...

Considering Ayn Rand's philosophy holds that laissez-faire capitalism is "the only moral social system," it's not surprising that Ayn Rand Institute's Yaron Brook thinks the economy is sputtering because the U.S. government's response to the 2008 crisis was too heavy-handed. "We should have let banks fail, let auto companies fail [and] let housing prices tank to reach their true bottom."
Comments (46)
  • Ayn Rand must live in a castle with a moat and own lots and lots of guns. And eats iPads.
    9 May 2011, 05:32 PM Reply Like
  • KMI,
    Actually, it was regional Fed official Dudley that fell under criticism for suggesting one could "Eat I Pads"

     

    Was he against the Bailouts?
    9 May 2011, 05:41 PM Reply Like
  • humor 1980, it's humor....

     

    I'm merely implying that Ayn Rand Institute's Yaron Brook is not being realistic, and using Dudley's idiotic comment to highlight that.
    9 May 2011, 05:47 PM Reply Like
  • Ayn Rand is dead. She is not expressing any new opinions these days. The opinion is based on her philosophy.
    9 May 2011, 05:50 PM Reply Like
  • She may have in Russia, but she's been dead for 30 years.
    9 May 2011, 05:51 PM Reply Like
  • Let the record show, her philosophy let her to collect walfare as ann occonnor. everything else is immaterial
    9 May 2011, 06:14 PM Reply Like
  • Ayn Rand was a psychopath. Her family were jewish russians terrorized by the communists, she came to USA, and developed an equally psychopathic antithetic philosophy.

     

    try repeating that 50X after a few beers.
    9 May 2011, 06:52 PM Reply Like
  • Does Sarah Palin know Ayn Rand was a pro choice atheist???
    9 May 2011, 05:34 PM Reply Like
  • Bbro,

     

    I did not see Sarah Palin's name in the story.
    And the relevance?............
    9 May 2011, 05:43 PM Reply Like
  • None....wanted to gauge the reaction of the SA mob....
    10 May 2011, 03:16 AM Reply Like
  • Maybe they are busy pushing silver lol
    10 May 2011, 11:22 AM Reply Like
  • there is no free market capitalism in USA for a long time, except perhaps for pizzerias, bagel shops, bars, etc.

     

    all corporate business are so heavily subsidized/regulated lobbying is perhaps the largest key success factor.

     

    Stick to theory, you fail at reality. Not that the response to the GFC was not overdone, but the ayn rand theoretical nonsense is also completely impractical.
    9 May 2011, 05:37 PM Reply Like
  • Rand's vision would work great if you could start from scratch without any pre-history to deal with. The problem with any type of Utopian world is that you have to destroy the old world first before you can implement it. I believe Greenspan may actually have been working toward that, and certainly Geithner and Bernanke have taken up the mantle in his absence.
    9 May 2011, 05:38 PM Reply Like
  • Problem with AG and BB and TG is they are working toward their form of Utopian world where they are the elitists and the rest of the 1 billion people the consider sustainable for the planet are the slaves alowing them to feed themselves on the labors of everyone else. By the way, that's what they have been doing for several hundred years anyway. So yep...they want to destroy it, but what they want afterwards is nothing I want to be a part of.
    9 May 2011, 05:55 PM Reply Like
  • Never trust an Ayn Rand acolyte. Anyone I've known that cites her work typically uses her philosophies to justify skimming and tax evasion while driving on public roads.

     

    They're typically people who redraw the rules to justify anything that indirectly harms someone as justified because they did not directly do any harm.
    9 May 2011, 05:42 PM Reply Like
  • Hard to respond to this comment, but my understanding is that every time I buy a gallon of gas...I pay a State and Federal Tax. I'm not sure how to avoid those taxes. And please don't get me started on the massive waste that is embodied in the way we handle our roads. Oh, by the way....do you have any idea how the Congress and Feds have used the Highway Tax Funds? Surely you know that they are not used "exclusively" for roads.
    9 May 2011, 05:58 PM Reply Like
  • that's a good one. usually ayn rand followers are just as psycho as she was.
    9 May 2011, 06:52 PM Reply Like
  • Yes, but my comment was more to illustrate that a true individualist society can never exist. Without some degree of collectivism, there would be no community and no country.

     

    Roads...police...firef... of these NEED to be managed by a central agency. Yes, it could be done better, but, in any situation where the moral hazard is too extreme (such as privatized security or fire brigade), there must be an intervention of a greater power to "police the police."
    9 May 2011, 07:53 PM Reply Like
  • We should go back to more volunteer FD's. How much are we spending on FD's and long term benefits and really how many fires are there? We are killing a fly with a sledge hammer. Besides everyone is out of shape so the activty would be good.

     

    You can find exceptions to this approach like Manhattan but they can be the exception if necessary.
    9 May 2011, 09:36 PM Reply Like
  • Victor Niederhoffer, who named his daughter "Galtia," managed to blow up two hedge funds. And of course, Greenspan was integral to blowing up the world.

     

    Seems like being an Ayn Rand fanboy is correlated with flawed thinking. Even Greenspan admitted to a "flaw"
    9 May 2011, 05:47 PM Reply Like
  • Greenspan, as you mentioned (and well know) Mr. Rocca, was in Rand's inner circle for those not aware of that fact.
    9 May 2011, 05:49 PM Reply Like
  • Yea....AG was a pure gold standard guy in his early years too....but then he caved in to the "dark" side.
    9 May 2011, 06:00 PM Reply Like
  • Greenspan kept his mouth shut in exchange for limousines and black-tie dinners. He's 100% Fabian Society - 0% Rand Institute. He's like Katie Couric without breasts.
    9 May 2011, 10:04 PM Reply Like
  • This is spot on. One way or another the ,markets will finally clear. The dollar is just starting to catch a bid here, thank God! It is revealing in how blind this administration{Bernanke/ Geithner} have been to the willing devaluation of the standard of living for the American people!
    How arrogant to think they{Greenspan/ Bernanke/ Geithner} could manage the worlds markets. Since LT.C.M. The world has been leveraging and over leveraging into oblivion. Who is going to stop this before it really does cause the U.S. Dollar to collapse. And not in a "so called", "Orderly Way", who the hell are you kidding? Orderly? If the dollar really does take out the .72 level with any conviction, I predict right here, right now, Bernanke will be dragged kicking and screaming to "Support" the dollar! The endgame is here. This is math. Pure and simple.
    No more bull shit allowed. The unions {Trumka/Stern} will get the rank and file 100% of nothing. If we don't get serious about "Real" reform/givebacks, start with 50% for all union workers in the whole country. Yeah, that's right! 50% ,"GIVE IT BACK"right now!
    If we refuse to act like a country of adults, the ensuring depression will clear the slate for us! I posit it is better to at least have some sort of say in the process, but no! We will take care of it,uncle Sam knows best!Obamanomic's? Bernake/Geithner? They are the one's who have brought us to the edge! This progressive/ big government experiment is coming to an end! Grow a set, then grow up!
    This country is the strongest, and the most Moral place on earth! I defend her to my last breath. You, every single "ONE" of you, are the solution. Look inward! Collective salvation? Surely you jest,"Don't call me Shirley". Collective anything just isn't cool! Remember the Borg? America stands proud! Americans have inalienable rights granted to each and every one of us, no politician can deny them! Word up Barry!
    Jerry
    9 May 2011, 05:55 PM Reply Like
  • They are right. Economics 101, Austrian style. By endorsing government intervention and legalized theft (bailouts), you are going against every principle and conviction that the founders stood for and that the revolutionary war was fought for.

     

    .. well, you can say what you want about me, but I'm not going to stand here while you bad-mouth the United States of America. Gentlemen!
    9 May 2011, 05:57 PM Reply Like
  • If somebody bad-mouth US then they are carpet bagger.
    9 May 2011, 09:03 PM Reply Like
  • Not exactly EVERY principle I'm afraid. The founders were all about slave ownership and profited greatly from the sweat of men used as beasts of burden. Not exactly the ideals I would like to work towards.
    9 May 2011, 09:29 PM Reply Like
  • Wow ! 6 thumbs down...supporters of slavery I guess....perhaps the metaphor of Wall Street and the FED enslaving the masses is more real than even I thought.
    10 May 2011, 12:16 PM Reply Like
  • first of all - if you have not read Rand's work then you are not qualified.

     

    the Fountainhead was a pretty good story. Atlas shrugged is tediously long and mostly you keep wondering when the bodice ripper element heats up - it never does.

     

    Rand saw communism up close and the books were written in a time when collectivism was actually believed to be a superior economic approach. "we will bury you..., sputnik and all that nonsense"

     

    the philosophy borrowed a lot from Adam Smith - where Smith was describing the invisible hand as an economic principle - Rand used "self first" the focus on the purity of individual action as the driving force of all that is positive and "anti-altruism" to describe a way of living. clearly this is pretty extreme stuff - but for the time it was a perfectly rational reaction and like all similar thought there is some value in this philosophy. Individual rights and actions need to be protected and government and the collective must always be contained - in all facets - economic or social - freedom to choose and be is paramount but not to the exclusion of all "group action or norms" - after all we all (except for the guns and gold crowd" choose to live in a society surounded by people. there's the rub.

     

    as for Yaron - he is no economist or policy adviser.

     

    as for the fools who quote Rand without understanding - I feel sorry for them. Indeed Gay marriage and abortion rights would be well protected and promoted under the Randian model - religion (as another form of the collective) would not - personally I would support that - but I know a lot would have trouble with it.

     

    E
    9 May 2011, 06:16 PM Reply Like
  • AR was equally nuts as the communism she hated. proves she had no brains, no ability to make reasoned judgements, and no ability to understand the dangers of ANY extreme philosophy.

     

    In other words, AR has no place in the complex, real world which is full of ambiguity.
    9 May 2011, 06:57 PM Reply Like
  • @econdoc

     

    The second to last chapter of Atlas Shrugged describes the germination our descent. The government struggles to continue to coerce the real working people into supporting not only the 50% that pay no income tax (and the 48 million on food stamps); but also the parasitic bureaucracy which lives upon our effort.

     

    The gov absolves $60billion in GM debt with no recourse to bond holders so that the union can continue to deliver votes. To big to fail, will become illegal to fail (as Rand predicted).

     

    Just think, if Goldman Sachs were allowed to go under - there would no longer be sunlight or oxygen. Clearly our leaders are looking out for our best interest.

     

    Rand rules. Bernank and Greenspan will descend into history as goats of the Republic.
    9 May 2011, 08:58 PM Reply Like
  • but she provides an extreme rebuttal that was lacking support at that time that allows for us to synthesize a middle ground to build on. she does have a place. it isn't a central, mainstream place, but it is a place in our post-modern economic and political discourse. besides, a quarter of her ideas are straight marx.
    9 May 2011, 09:08 PM Reply Like
  • Atlas Shrugged is a work of fiction. It is a strawman designed for another age. Rand was confronting a world moving away from her toward the collective. Clearly this did not happen. Why? Because of "Randism" I doubt it.

     

    As for GM etc. Politicians make choices. The test of those decisions is the ballot box. The GM debt abrogation was not to my liking, the continual pandering to trade unions either public or private and environmental and other groups by Obama is a sign of abject weakness and must be punished. The weak and insulting budget. The administration's cynical response to the challenge of entitlement reform, points to a weak and self absorbed parochial politician. This is not Kenedy or FDR or Reagan or Roosevelt. This is Carter redux without the moral center. Obama was a mistake.

     

    Returning to Rand - I find her interesting. She was not predictive or all that insightful. The reasons are complex but there is a paradox that a work of fiction like Atlas Shrugged cannot fathom. There is a middle ground and people when faced with the alternative of the "collective" or "unbridled invidualism" opt of a mix. We are social animals who like to exercise our freedom of choice.

     

    I have stated it before on these pages. There is a place for social responsibility inside capitalism. I am one of the 1% who pay 40% of the taxes. I know that half the people pay no income tax and it pisses me off to the max when I hear that I am not paying my fair share. But I equally am disgusted by the demonization of the poor. People on food stamps, unemployment benefits, welfare recipients, people without health insurance, Medicaid benes, the children of the poor. Need more not less. Programs when targeted at the true poor must be supported. It is imperative that there is a safety net and that we apply resources to lift up the high school dropouts, single mothers and their kids, immigrants, ex-convicts and other unfortunates - not with hand outs but hand ups. Education, training and upskilling to cure structural unemployment is essential. Microcredit and entrepreneur training are critical. All of these I gladly support for the poor. It is the middle classes who benefit from entitlement creep that should get less and pay more.

     

    Right now the public - i.e. most of you - believe that taxing the "top 1% more" and not changing anything else will solve it. Wrong.
    Any pol. who comes out and says the solution is to spend less on entitlements - Medicare and SS and tax the huge middle more will get my vote - for that is the truth. The solutions requires pain for all - one way or another - less spending on entitlements for all and more spending on vital areas and program especially with respect to the labor market. Nobody talks about that. They should.

     

    Bernanke for President.

     

    E
    9 May 2011, 10:58 PM Reply Like
  • Other than Bernank for Pres (which equates to my Grandmother eating cat food because the $200K which she has scrimped and saved over the past 85 years is worth sh*t) - I agree with your comments.

     

    Printing $2.5 Trillion so JP Morgan can turn over $7Bil a week in "fake" POMO transactions doesn't qualify one for President. It qualifies one for hanging by treason.

     

    Rand wasn't against charity by choice; only by usurpation.
    9 May 2011, 11:12 PM Reply Like
  • I'm good with everything you said except the last sentence.

     

    Maybe it's your educational affinity for eachother. Maybe you say in jest. I think Bernanke is an elitist who thinks he knows more than anyone else in the room. I'm not convinced what he knows about the depression has been applied. In reality, I think he is not independent, but reports to the upper tier financial movers and shakers. He does their bidding. I have a problem with the central banking cabal founded on the principle of debt generating income to those creative enough to develop a system of fractional reserve banking.
    9 May 2011, 11:18 PM Reply Like
  • much of the fed stimulus seem to continue to prop up the large banks not main street & job creation. these institutions now continue to make much of their profits with deriviative trading(part using taxpayer money), except not all of those transactions are profitable and some of the bad ones are hidding off their books. my limited understanding of deriviatives is that the word covers a wide range of financial transactions the basic being hedging against bad debt. perhaps a tax of less than 1% on future transactions--not current(you pick the number, you pick the type of deviviative,cds etc??) would make sense. i have read the money in dervivative trading is huge--hundred of trillions or more. if such a tax was institued there would also need to be an assurance that it would only be used to pay off the national debt. whether this would work or not i do not know. but that is where the big money hanges out.(not with some retired person on social security). an idea just to consider and discuss. perhaps some variation might save our beloved country as we know it.
    9 May 2011, 07:56 PM Reply Like
  • Yaron Brook is Monday morning quarterback. We have few millions like that. Please do not bring Ayn Rand in this quote. It is insulting to her. Here is my advise to Yaron Brook. Go to the barber and cut your hair. You will look sharp.
    9 May 2011, 08:45 PM Reply Like
  • indeed. well said...tigersam.
    9 May 2011, 09:47 PM Reply Like
  • Ayn Rand and her ilk were only the most extreme of those that put their faith in the capacity of the market to find the ‘true value’ of capital, labour, commodities etc. if only the State would stand aside and allow markets to clear through liquidation of ‘excess value’ created from time to time by boom conditions. Two amongst several problems exist with this liquidationist analysis
    (a) How can one logically assume that the prices of all these elements of production will achieve a realistic balance one to another through some process of price free-fall?
    (b) What in this analysis gives cause for the assumption that prices at one phase of the business cycle are ‘true’ but are not true at other phases?
    9 May 2011, 10:32 PM Reply Like
  • Bob - markets work. Look around you. No other mechanism matches supply and demand as efficiently and dynamically. That is the lesson of the 19th and 20th century. The notion that the market is the best allocation mechanism is not an argument against Government - as much as The Theory of Evolution is not incompatible with a belief in a God Creator. This clinging to absolutes to the exclusion of the other is the hallmark of a weak intellect.

     

    Liquidating capital, liquidating etc. etc. is not the "free market" it is nihilsm. The "liquidiationists" miss the point entirely and this is the genius of what Bernanke did - under certain conditions of panic - when the great allocation and wealth generation machine is broken or frozen there is a place for intervention - an intervention of a form and fashion that is profound enough to restore confidence or at least quell the panic - this is Bernanke's sin - when all around were unable to comprehend what was happening - he devised a strategy and executed a plan to save the system. That is THE role of Central Bank - THE lender of last resort...as Walter Bagehot put it.

     

    This is is why I defend the Chairman - and why I say Bernanke for President. Not because I am a Keynesian (nor is Bernanke for that matter) - not because I like Government intervention or money printing per se - nor did it make me feel good to see a bunch of people who should have known better get saved - but BECAUSE at the end of the day the system which sustains all and which all of US - yes ALL - rely upon. The system needed to be saved and was saved by one guy and his cohorts - despite the stupidity and ignorance of the forces of evil.

     

    Bernanke for President.

     

    E
    10 May 2011, 12:07 AM Reply Like
  • Econdoc, Bernanke and Paulson caused the crisis that you claim he has ended up saving. He was the arsonist and now is the fireman. They allowed Bear Stearns to fail in an orderly fashion and the system was fine. Then they allowed Lehman to fail in a disorderly fashion, and all hell breaks loose because they were unable to see any of the second & third order effects. They were a beginner chess player that couldn't see more than the current move. They completely miscalculated the ramifications of a disorderly chaotic failure in the financial system.

     

    The Government as a lender of last resort is a stabilizing force to a financial system that is necessarily based on prudent leverage and trust. Ad hoc, inconsistent policies undermine financial systems. Bernanke told the world that Fannie and Freddie are well capitalized in the Summer of 2008 enabling them to raise preferred stock from banks. This enabled them to survive for another 3 months only to be wiped out as the Government subordinated those preferred holders in their conservatorship. Bernanke had the sub-prime housing crisis all contained in 2007, until he didn't. The funds provided to AIG as a lender of last resort came with terms so punitive as to completely wreck the economics of the business, even though the underlying collateral was sufficient.

     

    Now, 2 1/2 years after the crisis, Bernanke is continuing to flood the system with a total of over $2 trillion dollars of excess monetary stimulus since the crisis which has generated 1) 1.8% GDP growth in the first quarter (and well below normal post recession growth overall), 2) an "official" unemployment rate that is still 9%, and 3) a level of inflation on products that most Americans use like food and energy that rivals that of the runaway inflation of the early 80's if calculated in the same manner.

     

    After all that, I couldn't wait to see what other grand experiments he would have in store for the U.S. if he was President.
    10 May 2011, 01:26 AM Reply Like
  • So the lender of last resort exchanged toxic assets from the member banks for US Treasuries, which it did not own in the first place, but printed into existance. Thus they did not lend any of their (member bank capital - because they never had that much in the first place).

     

    Then the member banks, mainly the largest, magically had improved balance sheets, sufficient to meet reserve requirements and have excess reserves.

     

    But rather than put those reserves to work in the market place, the wizard enticed (cajoled/made it a matter of their playing in the first place) the member banks to place those excess reserves back at the Fed for a handsome margin of 300 basis points.

     

    As a result, this sanitizing action, brilliant I might concur, kept a lid on real monetary expansion, assisting the member banks at the expense of the taxpayer.

     

    I have not seen a comparison of the cost of this action with the original capital structure of the member banks, but I seem to recall seeing once that the bank system capital was less than $100 billion. So if that's the case, I'll simply ask the question: Wouldn't it have been less costly just to have the government become a partner in the "key banks" by providing investment equity capital - say to the tune of $250 or $400 billion.

     

    Can you explain why AIG was permitted to pay Goldman 100 cents on the $ for their CDSs. Can you explain why the largest banks really have not suffered massive hits to their equity, forcing shareholders to take a haircut, just as they are asking Greek debt holders to do. You see the galling aspect of this is that for all the money thrown at the problem, we really didn't solve anything. There are still $750 trillion in derivatives out there. Banks are still leveraged excessively, and I don't see daily tombstones in the WSJ indicating this bank or that bank is raising equity capital in the market. So did we really get saved or is the inevitable just been postponed a couple years?
    13 May 2011, 10:48 PM Reply Like
  • Reading all the commentary --some with amazement-- I am reminded to paraphrase Winston Churchill:

     

    "The 'market' is the worst system of value determination, except for all others."
    9 May 2011, 10:55 PM Reply Like
  • Econdoc and Tack –

     

    I don’t disagree with the propositions that constraining the operation of free markets can distort prices and the allocation in the economy of capital, goods and services in counterproductive and unanticipated ways that can be corrected only with difficulty and at great cost. It doesn’t follow, however, that any constraint in any circumstance must necessarily have these consequences or indeed that there are not circumstances that require moderate and well designed constraint in order that markets do not break down or distort in panic. To say otherwise is to forget, for example, how close the financial system came to collapse in late 2008 and early 2009 (and the role of Governments and Central Banks in preventing that collapse) and the roles played by the management and staff of several commercial, investment and shadow banks and of some hedged funds in setting the stage for the events of 2007 and 2008 that led to that panic.

     

    Fundamentalism in this matter equates free markets with nihilistic ones.
    10 May 2011, 01:35 AM Reply Like
  • I'll give him this "Rigged." Whenever the Fed met, he must have parked the limo a block away. He was always seen walking with a jaunty step on his way to the meetings!
    10 May 2011, 09:38 AM Reply Like
  • ....as if Friedman and Greenspan weren't her most influencial geek-groupies.
    10 May 2011, 01:11 PM Reply Like
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