As the world twists

Today, September 23, 2011, at 9:04 am, Greenwich Mean Time, Earth's axis of rotation was perpendicular to the line connecting the center of the Sun to the center of the Earth; thus, autumn began at that moment.

Meanwhile, down here on the surface of Spaceship Earth, that marvelous blue and white orb which has been infested with a particularly maladapted and hugely destructive species for a tiny fraction of its total existence (and the Earth still has about 5 billion years to go before the Sun begins its fatal expansion to a red giant and incinerates this place once and for all, thus assuring that for probably the last 99.99% of its existence, the Earth will be blessedly human-free), the arguments currently are about how various forms of paper counters of wealth are in conflict with each other, and the various games that can be played to make a given country's money seem as if it is worth more than the paper it is written on. The United States, which long ago gave up productive enterprise in favor of devoting itself to just such paper-manipulating games as the exclusive means of not only maintaining one's vital heat, but of expanding the mansion out in the Hamptons and stocking the garage with several high-number-model Mercedes Benzes, has decided, this time around, to use its central bank, the Federal Reserve, as a means of controlling "long term interest rates."

It will accomplish this ruse by Operation Twist. In this game of make-believe, the Federal Reserve will use part of its stock of Treasury debt by which the Treasury "owes" money to the Federal Reserve, to the tune of about $400 billion, to purchase longer-dated Treasury "debt" in the 6 to 30 year range. The Fed owns about $1.2 trillion of Treasury "debt" (it is the largest "creditor" of the Treasury in the world, and it "purchased" all of these bills and bonds by conjuring the money out of thin air, or, if you prefer, by pulling the money out of its ass). The Fed will "sell" $400 billion of shorter-duration bonds to "raise the money" to "purchase" the longer-dated stuff. The Fed will then pretend to "receive" coupon payments from the Treasury (by making data entries on its computers noting the creation of money representing the payments) and then will use part of this "money" to pay the Fed's operating expenses (this is one of the Fed's sources of "revenue"), and promptly remit the "balance" of the money to the Treasury which it just received from the Treasury.

Once the Fed's big decision was announced, the Dow Jones immediately fell 400 points. A reasonable person might opine that all of this talk about the hallucinatory essence of the American money system might cause rational people to believe that the whole economic situation is too ludicrous to be part of, that one must flee it in favor of something more substantial and real, like a cave and an acre of tomato plants. In such thinking one would be incorrect. Wall Street was freaked out because the Federal Reserve was not hallucinatory enough. Operation Twist simply takes previously hallucinated money and transforms it into long-dated Treasury bonds. The "Quantitative Easing" episodes, by contrast, conjured substantial amounts of new "money" on the Fed's computer, over $2 trillion worth, and most of this money found its way into the rarefied atmosphere of the Titans of Wall Street, to speculate and play dumb big money games with.

However, this time around the Federal Reserve, intimidated by certain know-nothing governors who threatened, in essence, vigilante justice if the Chairman should venture into "money printing" again, kept things on the down-low. Well, hell, that's not going to work. You can't actually expect the American economy to prosper on its own merits. That's not how we do things around here. It's why we liked that magical period between about 1998 and 2006. Money just sort of happened. People got rich while watching "The Weakest Link," chugging a Budweiser and filling out a re-fi form. That's more like it!

How we gonna stay rich if Chairman Ben starts bogarting the punch bowl? This is unnatural. It's damn near unAmerican, as I have come to understand the term.