“Harvard Watch, in case you don’t know, is [was] a group of academics who were formed ostensibly to be the conscience of the ultra secretive Harvard Corporation, whose 7 members have included the likes of Lawrence Summers, Robert Rubin and Dyn Corp.’s Mr. Pug Winokur.
“>The Harvard Corporation administers the ‘not for profit’ [now] 28 billion dollar Harvard Endowment Fund.  The largest such pool of capital this side of the Roman Catholic Church. This fund has been intimately linked to such financial fiascos as Bush/Harken Energy and Enron/California energy debacle.”

“When the Harvard Watch did their own investigations back in 2003 / 2004, here are a few snippets of what they found.  In addition to giving guidance, such as choosing outside money managers, to Harvard’s 21 billion [at the time] dollar Endowment fund, Pug Winokur was the Chairman of Enron’s audit committee.

At the same time one of the Endowment Fund’s biggest outside money managers was Highfields Capital.  This is a hedge fund run by John Jacobson – a former member of the seven-man Harvard Corp.  He left the Corp. in 1996 with 500 million of Harvard money to start his own financial advisory/absolute return fund.

According to Harvard University 1999 tax returns Highfields topped the pay list of advisories at 30 million in management fees for the year. In fact Highfields did so well making money for Harvard, the Harvard Magazine was crowing about the job they did and they were reportedly awarded additional billions of Harvard money to manage.

Now, I’ll bet none of you will ever guess how Highfields made their astonishing returns for Harvard in 1999? This long/short fund only had 3 equity shorts (put options). Enron just happened to be the biggest – and the Enron short was 47 times the size of the next biggest short.

Of course, no guilt was ever found implicating Mr. Winokur or Highfields – because the SEC was on the job!!  Highfields’ 5000 foot grand salami of a homerun simply got chalked up to “pure brilliance”.

Now, for those of you who are not aware; Enron funded research centers at Harvard. This allegedly objective research – incubated at Harvard – was instrumental in legitimizing energy deregulation in California and defending energy industry monoliths against assertions of price manipulation. Nothing stinky here, eh?

Well, apparently something didn’t exactly smell quite right; because it was soon after these facts came to light that Mr. Winokur had sufficiently spread an aroma of his doings about Harvard that his presence was no longer required and he resigned his post to make room for none other than Mr. Robert Rubin. Here’s a snippet of the statement the Harvard Watch published at the time regarding the changing of the guard.

“Winokur’s departure from the Corporation, however, represents only a first step in cutting Harvard’s ties to Enron. There remain multiple Harvard research initiatives funded by and effectively functioning for Enron and its executives. Notable examples include the Harvard Electric Policy Group, the Belfer Center, and the Winokur Public Policy Fund. Moreover, the Harvard Corporation’s remaining members include several Enron insiders. D. Ronald Daniel, for instance, was Jeffrey Skilling’s boss at McKinsey during the 1980s, when Skilling consulted with Enron to design the energy giant’s unsustainable business model. Because of the work of Daniel and Skilling, McKinsey is now a defendant in the largest suit against Enron. Moreover, it is remarkably telling that just as the university prepares to bid farewell to one of the Enron club, it has already announced the entry of another one. Robert Rubin, the Corporation’s latest addition, is a director of Citigroup, Enron’s largest creditor. Rubin attempted to obtain a Federal bailout for Enron as it approached collapse-while its top executives cashed in on Enron’s falling stock and drained the pension funds of thousands of their employees”:
Admittedly, the Enron / Gibson’s Paradox Harvard guffaws occurred before Niall Ferguson’s tenure at Harvard [began in 2004]; but with him being such a sharp economic historian – he probably knew all this stuff anyway….”

—  Ronald Kirby

The Fed’s monopoly of money has meant not only monopoly (i.e “play” money that lacks fixed value, in contrast to gold), but also actual monopolies in every industry across the board. The reason is that bigger organizations can and do borrow more, paying back only in “cheapened” money. That lets them outlast their smaller competitors and lets them grow bigger and bigger….

The Fed’s monopoly of money also makes possible the rise of “pirate” states which can shift the tax inherent in rapidly cheapening money onto others:

1) internally, onto the backs of its savers

2) externally, onto the backs of other countries which have to use the monopoly currency. (e.g. emerging markets have to use the US$).

Here’s an excellent comment on that:

“Anyway, the appalling truth, which explains what’s happened in our own era, is that when Roosevelt managed to make the dollar the world’s currency, and the Federal Reserve began to be able to tax the rest of the world simply by expanding the money supply, what happened is that the whole American economy quietly started to shift from production-and-taxation mode, into “pirate” mode, “without anyone noticing!”

The global consequences have been enormous. It’s enabled American power (and the amount of military spending possible) to expand enormously, beyond what was sensible in the long term. It’s made foreign war seem cost-free to the American public, which in turn has caused a whole string of foreign lobbyists to try to buy American support and intervention in every corner of the world. It’s also made the American economic and political system very unstable in the long term, I suspect, because it’s now “addicted” to getting things cheap. Pirate economies (unlike the old boring taxation ones) tend to collapse, when they can no longer expand, or at least can no longer tap the outside world any more. It’s also gutted American industry and production, because once you could pay for things in paper dollars, it became cheaper to outsource everything possible and buy things from the third world. It’s had a very oligarchic effect on government and big business, since their access to easy credit enabled big organisations to buy up smaller ones on an unprecedented scale; and, finally, it’s been very corrupting, to get something for nothing in this way, for so long. It’s the true background reason for the predicament you’re in today.

And as I said, it’s created a world were “everything” is rigged against traditional conservatism. Currencies that are purely creations of government not only give unprecedented power “to” governments to interfere in all of our lives, but their inherently inflationary nature has created a world that rewards borrowers at the expense of savers. That is historically unprecedented, and an extraordinary thing to build a civilisation on. Should one be surprised that the culture associated with this civilisation should be one of personal self-indulgence, rather than one of self-restraint? That is the world that Roosevelt (and, later, Nixon) gave us…”

Comment by ‘Alexander’ on Rod Dreher’s Crunchy Con