PINGPONG: Food For Thought

Insane or not insane, that is the question. A Money-Talk with psychologist Dr. Christof Lehmann.

By Lars Schall

Dr. Christof Lehmann was born in 1958 in Germany. He is a psychologist and besides clinical practice he has for 30 years been working as political adviser and consultant on a wide range of issues. He is a life time peace activist, human rights advocate and advocate for Palestinian rights to self-determination and peace. In August 2011 he started the blog nsnbc (no spin news: as response to what he perceives as an embargo on truth. His articles are published widely and he is part of the advisory board of The 4Th Media. He lives in Denmark.

Recently I have published this little story:

Central Bank of Russia refuses to comment on gold questions,

on which my friend Chris Powell from the Gold Anti-Trust Action Committee commented this way:

If you doubt that national gold reserves, far from being quaint antiques, are assets even more strategic than nuclear weapons, and if you doubt that the gold market, far from being just another commodity market like soybeans, is actually the primary battlefield of a world war, the currency war, consider the questions recently put to the Bank of Russia by our friend the German freelance journalist Lars Schall, and the Bank of Russia’s refusal to answer this week.

Schall’s questions well might be put to any central bank and probably would evoke the same refusals to answer. On any planet with actual financial journalism, a news story might be found in this secrecy and certain conclusions drawn from it. Instead when it comes to gold the financial news media settle for comment from supposed market analysts, taking for granted that the market’s biggest actors are not to be pressed for answers and not even mentioned if mentioning them can be avoided.

All this constitutes another proof of a heavily manipulated market, even as such manipulation is denied by market analysts whose next question to central banks will be their first.


Related to this, I received the following response by Dr. Christof Lehmann:

Dear Lars.

Let me answer some aspects of the questions that you have put forward from the perspective of the psychology in finance and economics.

The post-Soviet era was an era with an international climate marked by rapid and dynamical changes. Even though some were sceptical, others naïve, the developing of Russian markets, the hopes and ambitions for peaceful co-existence, joint-venturism, and a generally positive outlook towards the market was the predominant atmosphere. Others, within the new oligarchi saw their chance to plunder and rob Russia on the basis that a struggling Russian Jeltsin government was utterly dependent on the support of the emerging new financial power structures.

The first post-soviet governments as well as many of the Russian oligarchs that dominated Russian domestic, international and economical politics operated in a climate of generally perceived stability, peace and optimism. Even though the middle class suffered, even though pensionists, veterans and the working class suffered intensely, the general climate was optimistic. Co-opted media made it possible.

The new elite perceived the time as a symbiosis of “Gold Rush” and Clondike Anarchy under the rule of the gun. In other words, things went well for some, very well for others, and the rest was made to believe that everything was rosy.

In such a climate it is very normal to be „less concerned“ about being able to back a national currency with either gold, natural resources or other assets. Businesses were booming, and the Partnership for Peace Program with NATO and “promises” of security for Russia, which were systematically broken by NATO, also contributed to an atmosphere of perceived security, stability, optimism and “perceived” growth.

That climate changed during the first Putin Presidency where the sell-out boom of the new Russian oligarchy was opposed and when Russia slowly began re-asserting its geo-political status. Up to and after Putin´s speech at the International Security Conference in Munich, 2007, the climate between the EU / US (NATO) and Russia became significantly more tense. The UN/NATO Secretariat Coordination Treaty  in 2008 made it obvious that the Partnership for Peace Program was a trap, set up by NATO countries, the former optimism declined significantly.

Naturally, factors of human behavior such as the need to assert status and position, to assert power, to co-opt/protect resources and so forth become more relevant, are having a greater influence on decision making processes, in an atmosphere of perceived instability or an atmosphere of a perceived and very real threat.

Within such climate it is normal to assure that one consolidates and becomes more oriented towards assets that are not as easily manipulated by external factors such as foreign currencies that are backed by nothing but goodwill (USD / EURO). In times of conflict one needs to assure that the nation has access to vital resources – rare metals for example. Things vital for the military industry and national defense.

Gold can almost always be traded against such resources. Within a climate of conflict it is also very normal to hold ones hand (cards) close to oneself rather than putting them on the table. Makes sense? If Russia does not want to disclose how much gold reserves it has, I would consider that as possibly being based on strategic considerations by a country that is under threat. The latest aggravation was the NATO declaration at the 25th NATO Summit in Chicago, that it made intervention on the grounds of the “responsibility to protect” part of the official NATO doctrine. At the same summit the controversial NATO missile defense shield, which Russia perceives as NATO`s attempt to achieve a successful first strike capability was another serious aggravation. The situation is intensely stressful over Syria, Iran, and NATO bases all along Russian borders. Knowledge about gold reserves can under circumstances be perceived as being of significance for national security.

These are just a few thoughts – it´s far more complex than that and the details need to be looked at closely before it´s possible to predict anything BUT – these are some of the basic functions which I would take into account.

Then Dr. Lehman and I started a little conversation via e-mails, or as we have called it: PINGPONG.

Lars Schall: In 1900 the German philosopher Georg Simmel published his opus magnum “The Philosophy of Money.” Could it be that a major problem of our time is that he was “right on the money” when he stated in that book that money is basically today’s god? To be more precise about it, Simmel describes how the money economy of modernity has taken on more and more a life of its own and banished all other purposes of being into the background. He argues that money occupies in modern societies the function of a God respectively replaces it: money is turned  increasingly from a means of exchange into the absolute end in itself, a thing that is universally and perfectly usable, and provides enhanced potency – in short, the self-esteem of man depends on money.

Christof Lehmann: Money, and the scarcity-based economical system based on it, are like religion a means of social control and regulation of power. It may be that money becomes an end in itself. That would be the case for those who are bound to act within the limitations of the scarcity-based system. For those managing the system however, who have almost endless amounts, amounts that actually are beyond most peoples wildest imaginations, it has no other inherent value than that of control. Power is the ultimate aphrodisiac, not money. If you have almost unlimited access to money you can throw a hell of a party and Presidents dance according to your tune.

When you are referring to Simmel I come to think about Kant´s extended categorical imperative. That is, that it is unethical to see another human being as merely a means to an end. One could say that it is unethical to use money as merely a means to using people and entire nations as merely a means to an end. Seen from that perspective one could say that todays “money masters” are somewhat diabolical, and in fact that is how they are perceived by many.

L.S.: Is hidden / secret power, that is there but seldom seen / revealed, the „crack-version“ of the ultimate aphrodisiac?

C.L.: Maybe that´s what Kissinger was talking about – Power as the ultimate aphrodisiac. Think about the privilege to giggle about the fact that he, Nixon, Rumsfeld, and a couple of other geeks gave the order to have certain CIA assets permanently removed because Nixon was scared that some of his NASA deals were discovered…( and even more so that he could admit it in an interview together with Rummie laughing about it.) Admitting murder in a documentary and being aware that one will get away with it, that is power.

L.S.: Does the following scientific results surprise you?:

Lessons From The Brain-Damaged Investor

Unusual Study Explores Links Between Emotion and Results; ‚Neuroeconomics‘ on Wall Street,,SB112190164023291519,00.html

C.L.: May those suffering from Aspergers forgive me, and I don´t like generalizing, but persons with Aspergers Syndrome  usually make brilliant economists, investors and political advisers for warmongers. I have personally seen a few cases over the years. But to your question. No it does not surprise me that some people with certain forms of brain damages, whose emotional response to losses is inhibited are scoring better in investment trials. It´s a far cry from being able to say, however, that the best investors are suffering from some kind of psychopathology or neurological problem, or that any form of psychopathology necessarily makes you a better investor.

L.S.: Is the result of this “power trip” as referenced below the case by chance?:

The Power Trip

Contrary to the Machiavellian cliché, nice people are more likely to rise to power. Then something strange happens: Authority atrophies the very talents that got them there.

C.L.: I would take those kind of studies with a big grain of salt. Their cross cultural validity is questionable and the stability under changing circumstances is questionable too.

L.S.: How do you interpret the term „financial terrorism“?

C.L.: Financial is financial. Terrorism is to act with the purpose to elicit emotions of fear and helplessness in people or any group of people as a means to achieving a particular goal.

You could say that the entire scarcity based „fractional reserve“ monetary system is financial terrorism. The arguments validity is based on the fact that the state who lends money from a reserve bank never can honor the payment of interests unless it lends more against interest, which creates inflation and devalues the entire pot. The system creates a dependency on the “money masters” which then can be and is being used to control the behavior of the states functionaries. Financial terrorism in such cases is for instance, to exercise pressure against the state – unless you do this we do that…Financial terrorism is also the demand of the “too big to fail banksters” who threaten with bringing down the entire nation and its economy or currency unless they are bailed out by the citizens.

My best advice is, don´t negotiate with financial terrorists and put them in jail where they belong. A government that lets itself be terrorized is selling out on its people. A good example how to respond is the Italian response to corrupt rating agencies. A good public prosecutor is worth a lot of rating points.

L.S.: Can you talk a bit about the systematic / inherent insanity of the money system as you see it?

C.L.: It´s not the money that is inherently insane. Neither is the monetary system based on fractional reserve banking, or on futures, options, and so forth inherently insane. The ones who develop it are not inherently insane either, on the contrary they are rather intelligent, cynical, power oriented. It is insane not to object and resist, to bail out, to let the state be terrorized. That is insane.

L.S.: If the following is true, this is not insane? We have a profound financial crisis and huge debts piled up, but there is very limited effort out there to address the problem of money creation. I mean, if you have a money system in which money is created as debt and in which you have always more interests to pay than you have actually money in circulation to serve the interest, isn’t it logic that you ultimately end up one day in inflation and ever increasing debt via, in popular jargon, endless money printing?

C.L.: Yes of course. Of course you will never be able to repay. Of course you will always create inflation for every new banknote in print. That is the beauty of the entire system. To create scarcity, because scarcity is control. Scarcity is the ability to divide and conquer. Scarcity is the manufacturing of war for co-opting resources. Scarcity is absolute control. It is the perfect tool for the new feudalistic / fascist ( corporative state ) take-over.

The way we are going now is that of austerity and inflation, that is not insane, but it is plunder. Disaster economy and a redistribution of wealth to the top. The only way out of the financial crisis, by the way, is the opposite of austerity.

What is needed is a return to a “sovereign” monetary system rather than privately owned national reserve banks. A tobin tax, taxation of all economic and financial transactions. Interest free loans for everything that creates jobs and real value. Interest-free loans for massive infrastructure projects. Interest free loans for education, for improvements of health care systems. Interest free loans for research and development of sustainable energy. That is the way out of a crisis and a permanent way out, but that of course would not please the money masters who are interested in a redistribution of wealth and power. They are a parasitic entity that is taking over the reigns, and we live far healthier, better and more prosperous without them.

L.S.: Is the „homo economicus“ a sociopath?

C.L.: You could also ask if homo economicus is homo ludens. Again – NO, he´s not a sociopath but as long as we have economical schools like the Chicago school of economics that encourages crime and obliges a C.E.O. to commit crimes if the profit exceeds eventual fines, we will experience behavior that could be described as sociopathic. The person can be ethical, may have moral scruples, but the system is pathological, the power of the situation strong, so is social pressure, peer pressure, belief in authorities.

It is not a question of psychopathology but a question of systemic pathology or a pathological system. Remember to take „the power of the situation“ the „influence of authority“ and a cohort of other factors into account that produce behavior that could be described as sociopathic.

L.S.: The fraudulent aspects of the financial crisis don’t get prosecuted. What does this tell us? And what has to be expected because of that going forward?

C.L.: We see some promising signals in Italy where credit rating agencies got slammed. That´s the way forward but it requires courage and integrity.

L.S.: The populations / tax payers have now to take the debt burden of the private banks. The banking crisis has become a crisis of sovereign debt. Is this insanity in overdrive?

C.L.: Yes you could say it’s madness, but I would rather describe it as the establishment of a new feudalism. The only way out of that situation would be to elect politicians who would follow political and economical programs as I described above. The only alternatives, in the long run, are slavery within a neo-feudalistic system or a revolution, which seldom results in anything that really benefits the people.

L.S.: Is it by chance that we endure in finance religious terms like creation, indebtedness, debt forgiveness?

C.L.: All I want to say about this is, that if we speak about a creation by speculation it is probably as fraudulent as the story about the old man with a beard who spend six plus one day on it. Cultural aspects of behavior and language will of course be found in economics as well as in family systems and everywhere else.

L.S.: One last question. If we would compare the world with an asylum for insane people: isn’t that asylum run and controlled by the most critically ill lunatics among the patients, just as John Lennon put it in an interview with the BBC in June 1968:

„Our society is run by insane people for insane objectives…. I think we’re being run by maniacs for maniacal ends … and I think I’m liable to be put away as insane for expressing that. That’s what’s insane about it.“

C.L.: With all respect for John Lennon, the use of the word insane implies that those people are not responsible for their actions, and I would be inclined to say that it is far more insane to let criminals and parasites get away with terrorizing 99 % of the world’s population. That is “insane”, although it is understandable, understanding the power of mass manipulation that is keeping us placid in the face of being plundered.

L.S.: Why are you opposed to using the word insanity in this context?

C.L.: As long as analysts, economists etc. describe the state of affairs in economics and finance as insane, we implicitly provide „asylum“ for the perpetrators. I think for public educational purposes it would be a good idea to consequently substitute the word insane with the word criminal. Criminal elicits an entirely different response than insane.

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