Other People’s Money

What’s the difference, whether it’s crypto chicanery, inflation caused by the Fed, or lame ducks in Congress running amok with taxpayers’ dollars?

Good Morning America/ABC News via AP
The former FTX chief executive, Sam Bankman-Fried. Good Morning America/ABC News via AP

Some news days it’s hard to know what’s the sideshow and what’s the truly big story. Today is such a day. Inflation came in lower. So that’s good. Yet we now have a new financial super-crook. And that’s not good.  

I’m going to go with inflation as the really big story, because presumably all Americans benefited, right? Inflation is the cruelest tax of all, and real wages did go up for a change after falling for 18 straight months. 

Even though 7.1 percent inflation is still a big problem, and the Fed’s tight money is going to continue, and the recession threat looms large, at least folks got some relief on prices. 

On the other hand, a lot of people lost a lot of money because of an accused crook named Sam Bankman-Fried, who was supposed to testify before the House today, but instead got busted with 8 counts of fraud and conspiracy and was taken into custody by authorities in the Bahamas.  

By the way, there’s a hint of why this is a terrible story right there — the Bahamas. Not that I have anything against the Bahamas, mind you. But these crypto funds should be based in America, where they might be subjected to more intelligent regulation. Or, more specifically, any regulation.

The kid, based on the charges against him, was a crook — sort of a junior Bernard Madoff. He will be extradited to the United States in order to face all these charges — like conspiracy to defraud the United States, wire fraud, securities fraud, money laundering, and various conspiracies.  

And, by the way, it could prove to be a family criminal enterprise. Because questions are being raised about the role played by his parents, both of whom taught at the fancy Stanford Law School — isn’t that always the case nowadays. They reportedly helped him set up a political fundraising operation that would leverage contributions from various Silicon Valley fat cats and channel them into various lobbying efforts to Washington politicians, essentially in order to avoid regulation.  

The bulk of the money went to progressive Democrats. As I see it, this wasn’t even an old-fashioned pump and dump fraud. This was a simple case of raising money in order to bribe Washington not to regulate SBF’s crypto exchange, which was nothing more than a front group for his hedge fund — which donated to Democrats and Republicans alike.  

I mean, most of the money went to left-wing Democrats, to be sure, but some pretty decent sums went to Republicans.  And now, the question is whether the authorities will claw back the money.  

Criminal lawsuits were brought by the U.S. attorney in the Southern District of New York, and civil charges were brought by the SEC and the Commodity Futures Trading Commission. Neither of which know anything about crypto. But that’s a subject of another riff.  

So, in summary, based on the accusations by the authorities, this SBF kid looks like a crook. So do his lieutenants.  It doesn’t look good for the parents, either. It appears as if they basically took other people’s money and tried to bribe politicians to look the other way. Am I being too hard here? Too blunt? Well, time will tell.  Yet I think I’ve fairly presented you with the outline of this story.  

You know what? From what I gather, most of the so-called victims here were very wealthy and famous people. Not everyone, I know there were some middle-class folks who got killed.  

Back to the improving inflation news — really, all Americans did better. If only the politicians could figure out a way to keep inflation coming down. And that’s a big question, isn’t it?  

Now Wall Street obsesses about the Federal Reserve — and the Fed’s big-time money printing and zero interest rates, which have recently turned into big-time money crunching and interest rate hiking, is certainly culpable.  

But then we have the Congress and the White House, and the threat of a bunch of lame-ducks running amok with your taxpayer money.  

The two biggest ducks are retirees, Senators Shelby and Leahy. And they want to spend their keisters off.  They’re talking about $1.9 trillion of spending in an Omnibus bill ginned up by a few people in a dark smoky room, where no one will really know what hit them until the committee print is published — and even then we may not know.  

And they might spend a couple of hundred billion more.  Now, unfortunately this kind of rancid behavior is legal. Because, after all, they’re lawmakers. Unlike the horrible behavior of SBF, who is not a lawmaker and is probably going to jail for a very long time.  

So folks, I’ll end where I began: I’m not really sure what’s the sideshow or the real story here. 

From Mr. Kudlow’s Broadcast on Fox Business Network.

The New York Sun

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