Sunday, October 25, 2009

Propaganda "Gets" Everyone, Mr. Geithner, even you

I myself was to experience how easily one is taken in by a lying and censored press and radio in a totalitarian state. Though unlike most Germans I had daily access to foreign newspapers, especially those of London, Paris and Zurich, which arrived the day after publication, and though I listened regularly to the BBC and other foreign broadcasts, my job necessitated the spending of many hours a day in combing the German press, checking the German radio, conferring with Nazi officials and going to party meetings. It was surprising and sometimes consternating to find that notwithstanding the opportunities I had to learn the facts and despite one's inherent distrust of what one learned from Nazi sources, a steady diet over the years of falsifications and distortions made a certain impression on one's mind and often misled it. No one who has not lived for years in a totalitarian land can possibly conceive how difficult it is to escape the dread consequences of a regime's calculated and incessant propaganda. Often in a German home or office or sometimes in a casual conversation with a stranger in a restaurant, a beer hall, a cafe, I would meet with the most outlandish assertions from seemingly educated and intelligent persons. It was obvious that they were parroting some piece of nonsense they had heard on the radio or read in the newspapers. Sometimes one was tempted to say as much, but on such occasions one was met with such a stare of incredulity, such a shock of silence, as if one had blasphemed the Almighty, that one realized how useless it was even to try to make contact with a mind which had become warped and for whom the facts of life had become what Hitler and Goebbels, with their cynical disregard for truth, said they wereWilliam Shirer: The Rise and Fall of the Third Reich

In a recent interview US Treasury Secretary displayed- presumably the reason he was chosen for the job- the ability to hew to the party line. I wonder if he has considered the costs associated with that strategy.

As the opening quote attests, even when one might know "the truth," the effect of habitual repetition of propaganda is to accept that which is repeated and echoed publically, even when it conflicts. Goebbels view on the importance of repetition, which has an analog in education, springs to mind.

While in private Mr. Geithner might attest to believing different things, in public he sticks to the script- he repeats it, perhaps often enough that like Mr. Shirer, he comes to believe it.  Mr. Geithner promotes the view that the US$ is the final solution of currencies, and other such nonsense.

To wit, in the interview Mr. Geithner is asked:

Question: World Bank President Robert Zoellick recently said that the U.S. should not take for granted the dollar's preeminence. Would you expect, at some point, that the dollar will not be the world reserve currency?

Geithner: I wouldn't. But I think the dollar's role in the system requires us to do everything possible to keep inflation low and make sure we're getting our fiscal house in order.

This seems to me a silly statement. The question of the length of US$'s preeminent role is one of time. Eventually the US$ will be replaced and those who think otherwise, apparently like Mr. Geithner, exhibit ahistoric beliefs.

Of course, the propaganda continues:

Question: Here we are at Dow 10,000, and JPMorgan (JPM) and Goldman Sachs (GS) are once again reporting great numbers and paying record bonuses. And yet 10% of the country is unemployed. Some people out there are saying: "Did we get snookered again? Have we learned anything?"

Geithner: We're not going to let this financial system go back to where it was, and we're not going to let the practices reemerge that caused this crisis. That's very, very important, and the financial community has a huge interest in a more stable framework with better protections for the industry. The best-run firms were disadvantaged by the worst-run.

The financial system, contra Mr. Geithner's statement, is already back where it was. Financial sector profits aren't flowing from borrowing short and lending long, but leveraged bets on US rates staying low, else they would not be nearly so substantial.

The last sentence in his response was particularly expressive of the propaganda flowing from Big Finance- their errors were a function, not of incompetence, but the spill-over effects of "worse-run" firms. Speculative Capitalism, at least as I understand it, is all about correctly forecasting the financial future. If the supposedly best-run firms didn't bet on the liquidity draining knock-on effects of those duped by financial over-shoot (or worse, got duped themselves) they don't qualify as best-run. Unless you happen to be Mr. Geithner whose goal is, to quote George Bush the Younger, to catapult the propaganda.

The men who truly fix the financial system will not be spouting such nonsense.