Martin Armstrong: SEC, CTFC, FED, Treasury – Too Many Agencies

Too many Agencies Destroy the Economy

Thomas Jefferson (1743-1816) was one of the three great minds that established the United States – the other two being James Madison (1751-1336) and tl1.e world renown Benjamin Franklin (1706-17ql). Jefferson accomplished much including being President of the United States. Yet of all of his accomplish¬ments, he regarded those he recorded for his own epitaph to be most significant.

Here was buried Thomas Jefferson
Author of the Declaration of American Independence
of Statute of Virginia for religious freedom
and Father of the University of Virginia

Of all the accomplishments of this great man, the first among his deeds he always considered the drafting of the Declaration of Independence. Jefferson shocked many for he declared rights that he viewed as "self-evident" truths. "All men are created are created equal…they are endowed by their creator with certain inalienable rights." He also proclaimed that ''Governments are instituted among men, deriving their just powers from the consent of the governed; that whenever any form of government becomes destructive of these ends, it is the right of the people to alter or abolish it and to institute new government." These were the words that set this nation into motion.

But we must not forget, that government once established, will always seek greater power than it was granted. This is the "hydraulic" pressure of which the Supreme Court once admitted quite candidly. Jefferson established another great evil of government we cannot lose sight of in this dark hour. He listed among the tyrannies of the King:

He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance

These are not my words. They are the words of one of the greatest minds in history. If we do not listen to him now, then we will continue down a path that will lead to revolution. Do not think for one minute that as Americans we are above revolutionary violence. Take the ability to earn income away from the people through economic collapse, and you will suddenly see the short-temper of the mob. Both Russia and China collapsed because a communistic state that owns everything, controls everything. That is where over-regulation leads. It is the collapse of money supply and progress taking society back to the dark ages after the fall of Rome.

When capital will not freely invest, the velocity of money collapses and there is no self-interest that creates the economy.  There can be no central planning.  Governments cannot determine what would be good or had. The same is t.rue in the corporate world. Just look and you will see that large companies will buy smaller innovative companies to gain progress.  Why? Because the board of directors in major companies want no risk, they have no vision and rarely will further great economic advances. All innovation usually comes from the small firm that has the idea, the courage and conviction to implement it, and thus profit by its development.  The big firms, lacking that same entrepreneurship, merely acquire the smaller firms to gain new technology and market share. Innovation rarely comes from the big corporation and never comes from government. This is why the theories of Karl Marx were wrong both in communism and socialism government’s self-interest. Will always be merely to increase its own power. It is this "hydraulic pressure inherent within each of the branches to exceed the outer limits of its power," Bowsher v Synar 478 US 714, 727 (1986), that is the reality of government. Just like we need checks and balances against the excessive leverage of Investment Bankers, we likewise need the checks and balances against this "hydraulic" pressure within government.

To make sure we do not shoot ourselves in the foot and destroy more of our economy wiping out Wall Street entirely, we must consolidate everything into one coherent agency. We cannot make the same tyrannical mistake of which Jefferson listed among the injuries that justified revolt. We do not need 5 agencies all competing over the same turf and pointing fingers when the next collapse takes place because we failed to do the job right again.
We need one agency, not a multitude. Why are hedge funds all offshore? Because they cannot exist onshore for when they obey the CFTC regulations, they will go to jail for life under the SEC regulations. It has been our multiplicity of agencies that has destroyed our financial industry and this competition feeds the Investment Bankers who create their derivative market outside the regulation of both. If you manage money in stocks and know that the stock market will collapse, you cannot use futures to hedge that risk because the CFTC says that makes you a commodity fund subject to their regulation. This was one reason I refused to manage money. The regulations would not allow me to do the job clients expected. Why are there so many different types of funds onshore from junk-bonds, T-bill funds, high risk funds, commodity funds, stock funds and so on? Because you cannot as a fund manager do everything in a single fund because of so many competing regulations.

London is now the financial capital of the world. If the rest or the world is smart, they will recognize that the regulated markets did not cause this nightmare. It was the unregulated Investment Banks. Correct what is wrong; don’t create a multitude of new agencies making it impossible to do anything so everyone leaves. Americans are always their worst enemy.  The rest of the world should look closely and learn.

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7 thoughts on “Martin Armstrong: SEC, CTFC, FED, Treasury – Too Many Agencies”

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