Money of the Mind
Grant, James
English for the daily consumption of readers. As a result, most business writers rely on entire blocks of clauses that, considered in tranquility, are little more than automatic writing. Or they...
...The claim of the lender is against the general credit of the issuing corporation, not specifically against its railcars, real estate, or inventories...
...Unlike a mortgage, it is an unsecured debt...
...How the Banking Act led to the 1980s and beyond is the most important business story to be told today, and Grant does not disappoint...
...According to Grant, the 1980s boom in credit—the money of the mind—was the perfectly logical result of years of destruction of hard money by the federal government: "Central banking, federal subsidies, paper money, deposit insurance, and full disclosure have each fallen short of the claims of their respective promoters...
...Grant takes advantage of the anecdotes, and unknots a lot of otherwise deadly dull and dense history, with style...
...While most business journalists are loath to define their terms, Grant defines every term he uses, and' his definitions are models of grace...
...T he story of what Grant calls the socialization of credit risk is deceptively simple...
...Then we are told, in no uncertain terms, that "the flag and the fetus" are emblems of the American Religion, and that "Reagan-Bush national ReElizabeth Kristol has written for The American Spectator, Commentary, First Things, and the Washington Post...
...Milken plays a relatively small part in Money of the Mind, coming, as he does, at the end of the story...
...Putting a man on the moon, scientists had stood on the shoulders of giants...
...Speeds learning the new computer intensive methods—developer will wager $5000 on the practical performance of students taught resampling compared to that of students taught classical methods...
...Four star rating from my students—and me...
...In fact, one cannot underestimate the impact this book will have on public policy...
...Nor does he gloat, although he might...
...Take this, on commercial paper, for example...
...Or they degenerate into masses of insider jargon...
...When someone says, 'The government did it,' they have Michael Milken to tea...
...Wonnacott, U. of W. Ontario • "...Mhis approach is the wave of the future...
...As early as 1984, when Grant's ran "Junk Bonds Debunked," he was telling his readers about the dangers of easy money, why junk bonds were junk, and why the whole thing was likely to blow up...
...He does not, incidentally, get around to defining his intriguing title until late in the game, when describing the junk bond era: "It was a bull market in credit, and credit is the money of the mind...
...Big mistake...
...More than any other single piece of legislation, the Banking Act of 1935 crystallized and codified the new era...
...He summed up, "The fact is that the American credit system has evolved away from liquidity and individual responsibility toward illiquidity and collective responsibility...
...and Canada) EXAMPLE: Of 1500 voters polled, 56%say they favor Bush...
...Decision Line, May 1990 0- "RESAMPLING STATS is the kind of well-researched, well-piloted software teachers and learners ask for and enjoy.' The Mathematics Teacher, September 1988 1. "Students loved RESAMPLING STATS, even those who thought they hated computing...
...He writes about a subject that confounds most readers, and writes so that they understand it...
...I loved it too...
...What is the poll's sampling variability and a 90% confidence interval for the proportion favoring Bush...
...First the federal government encouraged banks to drop their franchise—safety----and then regulated them into irrelevance...
...The key word is evolution...
...Full documentation, sample problems, tutorial, support & consultation...
...But in May 1990, he told The American Spectator: "Libertarians are children in financial matters...
...Video courses available...
...I have told more than one rookie at my newspaper, "Write like Jim Grant...
...His book describes "the evolution of American credit...
...In business, things are rarely as complicated as some people would have you believe...
...And only a deconstructionist could manage to make his own generalizations so incoherent...
...No inflation lasts forever...
...Such writers invariably fall back on the My Readers excuse: They know what it means, such rascals say...
...Grant, founder and editor of the fortnightly Grant's Interest Rate Observer and author of a 1983 biography of Bernard Baruch, is the finest business journalist working today...
...REPEAT 1000 Do 1000 trials GENERATE 1500 1,100A Generate 1500 "voters" COUNT A <=.-56 B Count Bush supporters p SCORE B Z Keep score END HISTOGRAM Z Display 1000 sample results PERCENTILE Z (5 95) K Find Sth and 95th percentiles 0.52 0.54 0.56 0.58 7. "...an easy entry into the world of Monte Carlo experimentation...
...Readers of Money of the Mind will find the following:full of outlandish characters and remarkable follies...
...All this, by the way, at the same time one could read on page one of the Journal what later became James B. Stewart's exposé, Den of Thieves...
...As good writers leave the profession, another wave of journalism rookies dashes on to the beach of the business pages—or worse, the trade journals...
...For both experts and non-statisticians...
...L ˆ asp 891.11 55 5+ • 2.51 PROBLEM #5...
...First we are told that all Americans are, unknowingly, followers of gnosticism, a second-century religious heresy that preached the identity of the Creation and the Fall, and the ability of the individual, who contains a spark of the divine, to labor his way back to an unfallen state...
...Introductory text available ($29.95...
...of Bus...
...Until then, collectors are on their own...
...This may and often does fool the boss, but it is not professionally satisfying over the long haul...
...Alas, Grant, who himself might be called a gold-standard, balanced-budget, keep-out-of-the-affairs-of-private-individuals kind of conservative, doesn't confront the Journal in his book...
...Call or write for more information...
...Grant traces the origin of the 1980s credit boom, when "the federal apparatus was not only the prime instigator of price inflation but also a leading creator of credit," to the Banking Act of 1935: It was in the Depression that the government first offered its guarantee wholesale in lieu of the credit of banks and individuals...
...Searls, Univ...
...Without that, without the Too Big To Fail doctrine and the evolution of deposit insurance, and the partial deregulation of the thrifts, without all of this, there would have been nothing like the junk bond industry...
...RESAMPLING STATS is an extraordinarily simple yet powerful language that handles the radically different "new statistics" in a clear, intuitive, and user-friendly manner...
...Politicians will be politicians, after all, and the way to get votes is to encourage easy money...
...They don't know a good bond from a bad bond, or a promoter from a reasonably self-respecting banker...
...As if these words are not chilling enough, consider the credentials Bloom presents for the task: he is an "unbeliever" of "strong Gnostic tendencies," who has an "obsession with the American varieties of Orphism and Gnosticism, of Enthusiasm and Antinomianism...
...tization of capital, that Milken and his firm Drexel's guilt was "decided in the prosecutorial hothouse atmosphere of the late 1980s," and that "an important source of capital for small- and medium-sized businesses is now in danger...
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...In time, the socialization of risk—in which A paid B's debts, and perhaps Z's—would help to ignite the greatest credit expansion in American annals...
...The author told the Bond Buyer in 1991 that his book "asked the question of how it was that they sent credit cards to golden retrievers, or how it was that Trump was able to borrow as he borrowed...
...of N. Colorado RESAMPLING STATS, 612 N. Jackson St., Suite 1101, Arlington, VA 22201...
...The law of entropy in corporate finance holds that every good idea must be taken to an extreme...
...In Money of the Mind, Grant tells how we got from there to here—"there" being just after the Civil War, when credit was based on individual responsibility and liquidity, and "here" being the 1980s, when all of that was thrown overboard...
...Grant sees in this trend "the socialization of credit risk, a state-sponsored phenomenon...
...Before we can recover from this blindside, Bloom announces that the American Religion is actually a form of "information anxiety...
...Many of the survivors—those who understand what they write and have a knack for conveying it to the layman—soon figure out that all their sources make ten times what they do...
...I refer specifically to the Wall Street Journal's editorial page, where one could be astounded to read, on a regular basis, that junk bonds represented the democraProgress in financial affairs is cyclical, not cumulative...
...The consequences of this epochal change were slow in corning, awaiting the time when the existing generation of lenders, whom the Depression had scarred for life, were ready to move on...
...In markets, history repeats itself but not so literally as to enrich historians...
...Even the notion "The American Religion" keeps shifting...
...One believes in the powers of markets and reason but not in the perfectability of lenders and borrowers...
...D.T...
...The history of credit is a gaudy one, The American Spectator August 1992 r THE "NEW STATISTICS" RESAMPLING STATS GUARANTEED Resampling-including the bootstrap, randomization, and other non-parametric tests—has taken statisticians by storm worldwide in the past decade...
...Grant tells the story in a way most people, whose business reading usually ends with their savings account passbooks, can understand...
...Overlending to Penn Central, bankers had re-created the errors of their fathers...
...I recall the advice Tom O'Hara of the Palm Beach Post gave once, when trying to break up one of those interminable newsroom fights: Guys, this is not brain surgery...
...No formulas or tables, every step petfectly understood...
...edges as much at the end of his book, and adds: "Knowing the past, one reads the morning newspapers with a sense of fatalism...
...RESAMPLING STATS is the method of choice for confidence limits, hypothesis tests, and other applied everyday problems in statistics and probability...
...He adds a brief coda bringing us up to the present, when the credit welfare state is apparently being toppled...
...Commercial paper is a corporate IOU maturing, typically, in 90 days...
...Grant puckishly acknowlHarold Bloom begins his latest book with the statement: "This is an American literary critic's book about the inner spirit of our national faith...
...Someday, one of Grant's faithful readers will anthologize his common-sense business aphorisms...
...If MONEY OF THE MIND: BORROWING AND LENDING IN AMERICA FROM THE CIVIL WAR TO MICHAEL MILKEN James Grant Farrar, Straus & Giroux/513 pages/$27.50 reviewed by JOE MY SAK 54 The American Spectator August 1992 they would learn the craft of business writing, attain professional contentment, and raise the level of business journalism in general, give them Grant's Money of the Mind...
...T.H...
...Grant's views are a decided heresy among certain conservatives, particularly those who championed Michael Milken as he was on his way to the penitentiary...
...Even lawmakers and congressmen will be able to understand it, but that is not to say that Moneyof the Mind will affect public policy...
...It need not be so grim...
...Forecasting, Summer, 1990 1. "...a very well designed special purpose language with a clear manual...
...But it is also a story told in banking examiners' reports, congressional testimony, Federal Reserve bulletins, bond prospectuses, and such works as the Department of the Treasury's Review of Use of Cumulative Sinking Fund for Retirement of Public Debt Obligations...
...It is axiomatic that when a reporter uses the weasel word "complex," as in This is a complex financing, he has not taken the time to unravel things...
...For IBM & MAC: 18 years experience on mainframes & micros...
...Only someone who uses words like that could even think in terms of the American religion, an artificial construct that is meaningful only to intellectuals who have little respect for actual religious experience...
...195 ($95 academic or personal check/$35 student...
...Call for more information 703-522-2713...
Vol. 25 • August 1992 • No. 8
