Let Them Eat Pizza

Corruption, embezzlement, fraud, these are all characteristics which exist everywhere. It is regrettably the way human nature functions, whether we like it or not. What successful economies do is keep it to a minimum. No one has ever eliminated any of that stuff.” – Alan Greenspan

Imagine being Robert Kaplan. Imagine graduating from Harvard Business School and making it to the top levels of Goldman Sachs over a period of 22 years. Imagine being adorned with the prestigious title of President and CEO of the Federal Reserve Bank of Dallas with an estimated net worth approaching one billion dollars.

Imagine that not being enough.

At a time when the grotesque exploitation of political power for personal financial gain is so common that it dulls one’s capacity for outrage, Kaplan asked America to hold his beer.

According to the excellent reporting of Wall Street on Parade – a plucky and independent news organization that exists to speak truth to the powers-that-be on Wall Street – Kaplan was effectively front running the country from his highly privileged perch inside the Federal Reserve.

Dallas Fed President, Robert Kaplan, wasn’t just trading like an aggressive hedge fund kingpin in 2020, he’s been doing the same thing for five years at the Dallas Fed while simultaneously having access to non-public, market moving information from the Federal Reserve’s interest-rate setting FOMC meetings and other confidential communications.

Each of Kaplan’s financial disclosures forms dating back to when he first became Dallas Fed President on September 8, 2015 (which we obtained directly from the Dallas Fed), show that Kaplan was trading in and out of S&P 500 futures, a highly speculative form of trading used by hedge funds and day traders. Each of Kaplan’s S&P 500 transactions are listed at “over $1 million.” The phrase “over $1 million” could mean anything from $1,000,001 to tens of millions of dollars per transaction. The phrase is a form of opacity that leads to more loss of credibility at the Dallas Fed.

Predictably, Kaplan tried to cover up his outrageous behavior through obfuscation:

Unlike other regional Fed bank presidents and all Federal Reserve Board Governors, Kaplan did not list the dates of his transactions for any year of his financial disclosures. He simply placed the word “multiple” where the specific dates should have gone on his financial disclosure forms.

I guess Kaplan hasn’t read his own book.

In a country with true equal protection under the law, Kaplan would have been fired from his job and his activity referred to the authorities for further investigation. Instead, he was allowed to resign while defiantly claiming no wrongdoing. In accepting Kaplan’s resignation, Fed Chair Jerome Powell heaped praised on him, thereby tipping future investigations in Kaplan’s favor.

There are approximately 1.8 million people sitting in prison in America – don’t hold your breath waiting for Kaplan to join them. Prison is for the peasants, and Kaplan is no peasant.

Nor will they be joined by Nancy Pelosi, whose husband routinely speculates in companies that are impacted by her legislative decisions. Nor will they be joined by Senators Kelly Loeffler, David Purdue, Richard Burr, Jim Inhofe, and Dianne Feinstein, who all engaged in what appears to be flagrant insider trading shortly after being briefed about the seriousness of Covid-19 in the early spring of 2020. The Department of Justice went through the motions, opening an investigation into these powerful senators and various members of the House of Representatives for potential violation of the STOCK Act. In an outcome less surprising than Jeff Epstein’s suicide, no charges were brought, and the matter is now considered closed.

Compare all of this to how the Securities and Exchange Commission (SEC) routinely cracks down on small-time offenders. In a press release dated August 9, 2021, the SEC proudly announced the filing of settled charges against an accountant at Domino’s Pizza (emphasis added):

The Securities and Exchange Commission today announced the filing of settled insider trading charges against Leonard R. Barr, a Michigan resident and former accountant at Domino's Pizza, Inc.

According to the SEC's complaint, filed in the U.S. District Court for the Eastern District of Michigan, Barr used confidential financial data he obtained through his role as an accountant at Domino's to trade ahead of two Domino's earnings announcements in 2016 and 2020 and obtained illicit profits of $34,180.

I’m not here to defend Mr. Barr, who had to pay back twice the amount of his illicit gains, lost his job, and can’t work as an accountant for at least five years. Instead, I want to point out this exception that proves the rule. Our authorities have the capability to detect fraud at the smallest of levels. Clearly, they must know what is going on at the top and have proactively decided to look the other way.

What is the future of a country in which the top 1% hoard a combined net worth 16 times greater than the entire bottom 50%? What is the future of a country in which minor offenses by “everyman” individuals are prosecuted, and major offenses committed by powerful figureheads are permitted?

Not satisfied with mere good fortune, America’s elite are indulging in an orgy of staggering self-enrichment, the scale of which would make even Bacchus blush. As the embers of disgust take hold, one wonders how long until a full-on fire rages from below to spoil the party.

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