In previous posts (here and here) I have offered ruminations on how the rich and powerful elites might run things. The following is a continuation in this series. --RPM

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The Big Picture, v. 3
By Robert P. Murphy

If I were rich and powerful, and had no conscience, this is how I might behave...

First, let's look at how my grandfather and his associates set things up, back around the year 1910. They had amassed huge fortunes in their respective industries, and they wanted to solidify their dominance. So they decided to spearhead the creation of a central bank and a federal income tax, as well as to push the U.S. into the global empire business. They also bought the intelligentsia who were developing the rationalizations for incredible new powers for the government that my grandfather and his associates owned.

In a particularly clever twist, my grandfather and his associates allowed the rise of "anti-trust" powers, ostensibly to attack them. But in fact they knew that they could easily circumvent the new regulations, while fooling the general public. The real purpose was to make it impossible for new upstarts to challenge their domination of their respective industries. To that end, the income tax and especially a very high estate tax were particularly useful in crippling competitors who were starting at a disadvantage. In order to shield their wealth and keep it in our families, my grandfather and his associates established dynastic trusts, which were immune to the confiscatory tax rates they had designed for everyone else. Because of a legal formality, these trusts could only shelter the family estates for roughly 100 years, at which point they would be subject to full taxation. But such technicalities never stopped my family before; the other grandchildren and I knew what to do in order to roll over the money.

Ah yes, it's always difficult to predict these things in advance. So much of our work involves setting up roadblocks to anyone who could challenge our power, but then pulling the constraints out of the way whenever we decide they are hindering us more than our weaker competitors. For example, it was a brilliant stroke to strictly limit the amount of money outsiders could spend on political campaigns; since we own the government and major media, this ensured our complete control of what the voters saw in the year before an election. However, in the event of a "game changing" outburst of unpredicted voter behavior, we simply change the rules of the game two days later. This freedom allows us much more flexibility to massage the voters back on message by the 2010 elections, at which point they will conveniently demand that the politicians (whom we have installed because they "oppose" the previous batch we installed) reinstate the limits on campaigning.

The concentration of wealth and fixing elections are fairly easy. The part of my job that requires real finesse is moving the world toward a single fiat currency, the supply of which my associates and I strictly regulate. Naturally we have had to inculcate the concept of an all wise central bank chairman, but the downside is that if we want him to "bungle" it could spook the markets and end up costing us billions of dollars needlessly. (In contrast, we can very easily "accidentally" allow a would-be terrorist to launch an attack from a country we wish to invade, without fear that the American public will lose faith in their government's competence to protect them. It's a very nuanced job I have, indeed.)

But I digress. As I say, getting the American public to support our seizing control of yet another Middle Eastern country--and one with extensive water access--is easy; we've got that down to a science. But what's much riskier is fiddling with the central bank, as the financial traders can be moody.

The problem is how to get the Fed chairman to wreck the dollar, so that Americans will go for a common currency with a much larger region, and yet at the same time not spook the markets into thinking that the Fed chairman is incompetent. The solution is obvious, once we spell out the problem: We have one chairman pump up excess bank reserves to ridiculous heights, but keep them bottled up to prevent price inflation. Then we have every important academic and Nobel laureate (all funded and handpicked by us, of course) praise the chairman's brilliance.

Then, when the time comes for the massive inflation to hit, we tell our guy to start opening the spigots. At the same time, we all of a sudden have an "unthinkable" reversal in the fortunes of the Fed chair at the time of his renomination. We thus get a new guy in charge who can truthfully blame the resulting inflation on the mistakes of the last guy, and yet there is a very short window in which we have a lameduck Fed chair. It's basically the same trick we pulled with the previous guy--who was a maestro while in power and then was the fall guy for the housing bubble once he was out.

At some point I wonder why no one has caught on to this stuff, but I guess it's because no one really thinks people like me exist.

Robert P. Murphy holds a Ph.D. in economics from New York University. He is the author of The Politically Incorrect Guide to the Great Depression and the New Deal (Regnery, 2009), and is the editor of the blog Free Advice.