We’re pondering the Machiavellian tactics of our central bankers over the past seven years. In that regard, let’s listen in on the following conversation, which took place in early 2014:
Ben Bernanke: Nicky! Ciao, baby!
Niccolò Machiavelli: It’s wonderful to see you, Your Highness! Thanks for sparing some of your precious time for me.
Bernanke: Your minute is my month.
Bernanke: Ancient Chinese proverb.
Bernanke: Or maybe Nigerian, I forget which.
Machiavelli: In any event, as you know, sir, I’m interested in how ruthless, unelected rulers seize and hold power. Frankly, you are an extraordinary example. [Ben smiles modestly.] I mean, a few years ago you were an obscure economics professor and now you rule the globe singlehandedly!
Bernanke: You exaggerate, surely! I have a little help, you know. There’s Mario, Haruhiko, Xi…(1)
Machiavelli: You are too modest, sir! Those men are merely handmaidens, acolytes, hangers-on! They follow slavishly whatever you do!
Bernanke: Remember what you said in The Prince, Nicky: “Imitation is the sincerest form of plagiarism.”
Machiavelli: True enough. But, sir, how did you do it? Seize power, I mean?
Bernanke: Remember how the Medicis seized power?(2) They manufactured a grave crisis. “You must do as we say!” they told the Florentines. “Otherwise, you are in imminent danger of being overrun! Massacred! Enslaved!”
Machiavelli: But, sir, the Florentines actually were in grave danger! There was this fellow, Charles VIII, and he had these huge…
Bernanke: Don’t split hairs with me, Nicky. A crisis is a crisis, manufactured or not! I told Congress, “Look fellows, if you don’t do exactly as I say, and do it this very weekend, we won’t have an economy on Monday!”
Machiavelli (bursts out laughing, but then notices that Bernanke is serious): Sorry, sir, I thought you were making a joke.
Bernanke: Not at all, they took me seriously! We’re talking about Congress, here, Nicky. The place is a few screws short of a hardware store.
Machiavelli: So that’s how you seized absolute power – simple but effective! But, sir, how did you hold on to it? I mean, the global economy didn’t collapse. The banking system didn’t fall apart, stocks started going up again, the recession was over in a few months!
Bernanke: A modest problem, Nicky. According to The Prince, if the Borgias couldn’t terrify everyone into submission, and if they couldn’t poison everyone into submission, why, they simply bought them, lock, stock and barrel.
Machiavelli: Bought them? Bought who? What do you mean, sir?
Bernanke: The Prince says a ruler must know his people. Who are the only people who matter in this country? The rich! What do rich people want? To get richer! What do they own? Stocks! So I manipulated the stock market to make it go up and up and up! Who says trees don’t grow to the sky!
Machiavelli: But isn’t that, uh, illegal?
Bernanke: If you did it, Nicky, it would be illegal. If I did it, it’s quantitative easing.
Machiavelli: It was a brilliant move, sir! But, if I may, let me move on. I’m interested in how a ruler, even an absolute ruler like Yourself, can behave unscrupulously for so long without arousing opposition. As everyone knows, it was the banks that caused the crisis, and yet those were the very people you bailed out! You spent trillions of dollars of taxpayer money to enrich those swine, and…
Bernanke: Hey, I got rid of a lot of those bank CEOs.
Machiavelli: Well, sure, but they walked away with hundreds of millions of dollars in their pockets!
Bernanke: A pittance, Nicky. Personally, I deal in trillions.
Machiavelli: And while you were bailing out the scumbags, you were crushing everybody else. Older people, who’d spent their lives scrimping and saving for their old age, were devastated by your low interest rates while bankers got rich.
Bernanke: A strong ruler can’t trouble himself about a little collateral damage, my friend.
Machiavelli: Yes, I see that. But what about inequality, sir? Before you seized power US society was about as equal as in any developed country. But after eight years of your policies, the US has the Gini coefficient of a banana republic.
Bernanke: The Prince teaches that if a ruler must make enemies – and any absolute ruler will make enemies, Nicky – then those enemies should be little people, not big people. My policies helped the rich and crushed the middle class, so they were my enemies. Who cares?
Machiavelli: Ah, right. But there’s one last thing, sir, and this is really the crux of the matter. By bailing out the crooks, by interfering with the efficient operation of the US economy for years upon years, by mispricing risk, by engaging in a whole host of amoral, duplicitous, wrongheaded policies, none of which did the slightest good for the real economy, you’ve trashed the reputation of capitalism itself! All across the globe, people who once looked to free market democracy as their salvation now view it as a slimy trick for the rich and powerful to stay rich and powerful! I mean, in Greece there’s Syriza, in the UK there’s that idiot Jeremy Corbyn. There’s Bernie Sanders, Elizabeth Warren, Pope Francis…
Bernanke: May I ask you a simple question, Nicky?
Machiavelli: Of course, sir!
Bernanke: In your entire lifetime – and unless I’ve miscounted you are now 544 years old – did you ever meet an economist who wasn’t a leftwing nutcase?
Machiavelli: Well, no, I guess not.
Bernanke: Of course you didn’t! Economists are all academics, and all academics are leftwing nutcases! If you turn the world over to the economists, what can you expect? Capitalism will soon be on life support!
Machiavelli: But…, but…, that means a return to socialism, Communism! We’ll have show trials, mass purges, murder-by-economic-restructuring, billions of desperate people condemned to grinding poverty forever! It means turning the clock back by…
Bernanke (sighing): Nicky, Nicky, Nicky, don’t get your shorts in a knot. Come on, I’ll buy you a drink.
Machiavelli: But, sir, it’s 9:30 in the morning!
Bernanke (grabbing his hat and heading out the door): Let’s go! They make a great choco-tini at the Old Ebbitt Grill…
Well, you are thinking, that ices it. The Prince would not only have approved of the actions of our central banker friends, but if the book were being written today, the central bankers would shove the Medici and the Borgias aside and take center stage.
Maybe so. But the question before the house isn’t whether The Prince would have approved of Bernanke et al., but whether Machiavelli would have approved. And in that respect we might recall that the great man wrote two masterpieces, not one. Before we jump to conclusions, in my next post we’ll take a look at Discourses on Livy.
(1) The heads of the European Central Bank, the Bank of Japan, and the People’s Republic of China. There is a head of the People’s Bank of China, Zhou Xiaochuan, but he doesn’t matter.
(2) Machiavelli dedicated The Prince to Lorenzo de’ Medici in the forlorn hope of securing a government position. It didn’t work.
Next up: The Financial Crisis and Institutional Ethics, Part 4
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