Central Bankers always seem to do the wrong things at the wrong times in manners that hurt the citizens of their country in the maximum amount possible. Not only do they commit these mistakes, but they commit the same mistakes over and over and over again with the insane belief that executing the same mistake will produce a different outcome. So I suggest that the next person US President Obama appoints to the Board of Governors of the US Federal Reserve should be a US Navy SEAL. In fact, he should also appoint a SEAL to his Presidential Economic Advisory Board. At a minimum, by employing SEAL culture to this financial crisis, we would not have the current crop of buffoons execute the same mistake over and over again and have them sell us their mistakes as recovery that are in reality, cover ups for the next imminent collapse.
When I first started training in martial arts, I was very fortunate to have as my instructor a Navy SEAL trainer for the first four years of my martial arts life. Though those that have never trained in martial arts a single day in their life sometimes belittle such training due to their ignorance of the positive culture of such training, there is no doubt in my mind that the life lessons I learned from my training, if applied to our present global monetary crisis, would provide a clear path towards the development of a sustainable solution. SEALs abide by a certain warrior culture that make them very different from every other elite division of the military. Here are three rules that SEALs could teach Central Banks to abide by that would lead to the development of sustainable solutions instead of the quick fixes Central Banks design to fool the people:
RULE #1: Never make the same mistake twice. You are your best critic. When you make a mistake or do something wrong, take it onboard and take it seriously. Be hard on yourselves. Do what you have to in order to not make the same mistake twice.*
Central Banks continuously repeat the same mistake over and over again and seemingly are incapable of learning from their previous mistakes. Every time the bubbles and price distortions they create in stock markets and real estate markets crash, they have engineered the same response for decades — print more money out of thin air and re-inflate the bubbles again — though this response always ends in failure. Furthermore, Central Banks’ decisions to bail one another out to keep the fiat money system alive has never produced a positive result in the history of mankind, yet we find ourselves heading down this same path today. Greenspan himself admitted that the Fed Reserve’s actions to bail out the UK in the 1920s “nearly destroyed the economies of the world,” yet the Feds insist on repeating these same foolish actions today. If a Navy SEAL sat on the Board of Governors, without knowing a single thing about monetary policy or finance, he could still steer them to make wiser decisions. Employing the rule of never making the same mistake twice, a SEAL would have stopped Central Banks from reinflating bubbles decades ago.
Furthermore, given the penchant of Central Banks to repeatedly engage in the execution of the same mistake, determining the Euro’s fate more than 2- ½ years ago was fairly transparent. This is why, at the beginning of 2008, I stated in my book Confessions of a Wall Street Insider, “We can be assured that in 2008, the destruction of monetary value in both Europe and the United States will occur…when smart investors finally realize that no fiat currency is safe, I believe that investors (at least the savvy ones) will begin to dump the Euro and the Pound as well.” A couple of months after I made that comment, the Euro plummeted from about 1.58 USD to 1.25 USD. Today, we’re back at 1.27 USD. Despite (or perhaps better phrased as “As a result of”) a near trillion dollar bailout of the EU, the Euro remains doomed.
RULE #2: If some part of your platoon’s training is not working, perhaps it’s a matter of command and control or a gear problem or tactical maneuver; fix it now!*
Central Banks are notorious for lying to the public and covering up the truth for the purposes of selling false notions of hope and economic recovery and fooling the sheeple. Such tactics only delay an inevitable crash in financial markets, whether that crash arrives in the form of a melt up in markets denominated in worthless currencies or a deflation of asset values also accompanied by plummeting currency values. Central Banks never try to fix problems now but always choose to delay the inevitable for as long as possible as if delaying the implementation of a real solution and burying their heads in the sand will make the problem go away. A Navy SEAL would never allow such dishonest tactics as these types of tactics could cost the life of every member of his team. Instead, a Navy SEAL would undoubtedly hold all Governors’ feet to the fire. This is why we should desire the appointment of a Navy SEAL to the Board of Governors.
*Source: The Finishing School, by Dick Couch
RULE #3: Take your responsibilities seriously and be accountable for your actions. Don’t cut corners and don’t take the easy way out. Always do things the right way even if the right way is the hard way.**
Again, if you listen to Central Bankers speak, one would conclude that they never heard of the concept of personal accountability and responsibility. Instead of taking blame for the devastating consequences of their mistakes, Central Bankers always blame outside parties for their mistakes, claim such consequences can never be predicted even though Austrian economists repeatedly and accurately predict the consequences of their actions, and lavish undeserved praise upon themselves. Remember Ben Bernanke’s “we saved the world” speech that he gave at Jackson Hole, Wyoming last August 21, 2009? Well Ben, it appears that your declaration was just a little premature. Of course Ben’s arrogant, self-serving comments back then were a product of not adhering to the above SEAL rule of fixing problems now. Central Banks always take stop-gap measures to the emergencies they create that only delay the emergence of a more severe emergency six to nine months later. If a Navy SEAL were on the Board of Governors, he would no doubt kick out any team member that deliberately endangered the lives of team members (all citizens of the Republic of America and the world), refused to accept responsibility for one’s actions, and refused to fix a problem right away when identified. Yes, that means, Helicopter Ben would have been long gone by now.
**Source: The Warrior Elite, by Dick Couch
Central Bankers, it’s time you took a page out of the playbook of Navy SEALs.
About the author: JS Kim is the Chief Investment Strategist and Managing Director of maalamalama, LLC, a fiercely independent wealth consultancy company that guides investors in the best ways to build wealth through the progression of this global financial crisis. His investment newsletter, Crisis Investment Opportunities, has significantly beat all major world indexes since its launch in 2007, outperforming the S&P 500 and FTSE 100 by more than 27% in 2007, both indexes by more than 40% in 2008 and both indexes by more than 51% from January 2009 to May 2010. Special thanks to my mentor, SEAL trainer Alvin Dukes, and author Dick Couch for providing the foundation for this article.