Showing posts with label Federal Reserve. Show all posts
Showing posts with label Federal Reserve. Show all posts

Friday, March 29, 2013

James Bond meets Ludwig von Mises

Silver Circle: An action movie about monetary policy

The first rule for writing good political fiction is that the message is secondary. The writer’s first priority should be to tell a good story. Silver Circle, the new animated thriller about out-of-control government, delivers.

The story begins with an entire neighborhood being forced out of their homes and herded onto buses. The scene reminded me of the internment of Japanese-Americans during World War II. As in that dark chapter in American history, the government is the villain. In this case the evictions are orchestrated by the Federal Reserve Bank, in an ill-conceived (and perhaps disingenuous) effort to stabilize housing prices. But when eleven of the houses are subsequently blown up, the Fed sends agent Jay Nelson to investigate. Nelson is challenged by ambushes, car chases, hostile police, and some hot sex, before his inquiries lead to a group of rebels fighting against the growing power of the Fed. Jay had never been political, but as he learns that “when they control the money, they control everything,” he must confront his preconceptions about his employer and make up his mind which side he’s on.

After the screening (which was sold out, BTW. I got the third to last ticket) I joined some of the cast and crew at Tommy Doyle’s in Cambridge. I had an opportunity to tell producer/director Pasha Roberts how well-done the story was - especially one sad scene where a sympathetic character was headed to his death. Although the entire audience could see it coming, they couldn't look away - the film managed to keep it dramatic and suspenseful.

Roberts and I also talked about the film’s message; he told me that he realizes the Fed doesn’t have the sort of power today that is depicted in Silver Circle’s dystopian future, but he wanted to warn about the power that it does have – in particular the power to print money, a power which robs the savings of ordinary Americans through inflation. This message is threaded throughout the film (as you can see in the trailer, gas prices are up to $152/gallon), and indeed Silver Circle takes its name from the silver coins that the rebels mint as alternative money that holds its value.

More generally, the film is about what kind of country we want to live in: a free America, where we’re responsible for our own lives, or one where we trade our freedom for government promises of security. Silver Circle reminds us that those promises hold their value no better than a Federal Reserve note.

The only criticism I have of the movie is that the animation is just ok. One person I talked to at the party thought it looked a little like a video game. The flip side is that I’m sure the availability of low-cost computer animation tools is what made it possible for an indie filmmaker to end run the liberals in Hollywood and make a liberty action film on a shoestring budget. In any case, I don’t think the audience cared: they were too caught up in the story. The applause that accompanied the closing credits was more than just polite.

Silver Circle is playing in limited engagement. You can find venues and show times at www.silvercirclemovie.com.

Also, check out my gallery from the after party:

Silver Circle After Party

Silver Circle After Party

Kristen Alpert sets some folks straight.

Silver Circle After Party

Silver Circle After Party

Silver Circle After Party

Silver Circle After Party

Carla Mora gets another commitment for the Free State Project.

Silver Circle After Party

Pasha Roberts talks to a fan.

Silver Circle After Party

Silver Circle After Party

Michael Isenberg is the author of Full Asylum, a novel about politics, freedom, and hospital gowns. Check it out on Amazon.com

Friday, May 4, 2012

The Fed Gets One Right

Thanks to The Life of Julia and today’s crappy unemployment report, this story got lost in the shuffle. But it’s a big one.

Remember John McCain’s explanation for the mortgage crisis?: “The regulators were asleep at the switch.” The crisis handed him an opportunity to give the voters a clear choice between capitalism and socialism, and he chose to join Obama in embracing the socialist narrative. No wonder he lost.

Now, an unlikely source calls the socialist narrative into question. Christopher L. Foote, Kristopher S. Gerardi, and Paul S. Wille—three economists at the Federal Reserve—have issued “The Causes of the Foreclosure Crisis”. According to the abstract, “This paper presents 12 facts about the mortgage market. The authors argue that the facts refute the popular story that the crisis resulted from financial industry insiders deceiving uninformed mortgage borrowers and investors.”

Two theories of the mortgage crisis

Source: Federal Reserve

The twelve facts are:

Fact 1: Resets of adjustable-rate mortgages did not cause the foreclosure crisis.
Fact 2: No mortgage was “designed to fail.”
Fact 3: There was little innovation in mortgage markets in the 2000s.
Fact 4: Government policy toward the mortgage market did not change much from 1990 to 2005.
Fact 5: The originate-to-distribute model was not new.
Fact 6: MBSs, CDOs, and other “complex financial products” had been widely used for decades.
Fact 7: Mortgage investors had lots of information.
Fact 8: Investors understood the risks.
Fact 9: Investors were optimistic about house prices.
Fact 10: Mortgage market insiders were the biggest losers.
Fact 11: Mortgage market outsiders were the biggest winners.
Fact 12: Top-rated bonds backed by mortgages did not turn out to be “toxic.” Top-rated bonds in collateralized debt obligations (CDOs) did.
Instead of the “Insiders” theory, the authors offer a much simpler explanation for the mortgage crisis: the “Bubble Fever” theory. Everything lenders, borrowers, and investors did during the housing bubble can be explained by their belief that housing prices would continue to rise.

Systematic failure requires systematic explanation.

The full report is rather long (62 pages) but I strongly recommend reading at least the introduction. It is available on the Federal Reserve Bank of Boston website.