Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21
Why Tether USDT, Stable Scam Coins Could COLLAPSE the Crypto Markets - Black Swan 2021 - 6th Jun 21
Stock Market: 4 Tips for Investing in Gold - 6th Jun 21
Apple (AAPL) Summer Correction Stock Trend Analysis - 5th Jun 21
Stock Market Sentiment Speaks: I 'Believe' We Rally Into A June Swoon - 5th Jun 21
Stock Market Russell 2000 After Reaching A Trend Channel High Flags Out - 5th Jun 21
Money Is Cheap, Own Gold - 5th Jun 21
Bitcoin and Ravencoin Cryptos CRASH Bear Market Buying Levels Price Targets - 4th Jun 21
Scan Computers - How to Test New Systems CPU, GPU and Hard Drive Stability With Free Software - 4th Jun 21
Hedge Funds Getting Bullish on Gold - 4th Jun 21
THERE ARE NO SOLUTIONS When the Media is the VIRUS - 4th Jun 21
Investors Who Blindly Trust the ‘Experts’ Will Get Left Behind - 4th Jun 21
US Stock Market Indexes Consolidate Into Flagging Pattern – Watch For Aggressive Trending Soon - 4th Jun 21
Microsoft (MSFT) Stock Trend Analysis - 3rd Jun 21
No More Market Bloodbath – Beyond Cryptos - 3rd Jun 21
Bank run, or run from the banks? - 3rd Jun 21
This Chart Shows When Gold Stocks Will Explode - 3rd Jun 21
The Meaning Behind Gold’s Triple Top - 2nd Jun 21
Stock Market Breakout Or Breakdown – What Does The Next Big Trend Look Like? - 2nd Jun 21
Biden’s Alternate Inflation Universe - 2nd Jun 21
What You Should Know Before Buying Car Insurance - 2nd Jun 21
Amazon (AMZN) Stock Summer Prime Day Discount Sale - 1st Jun 21
Gold Investor's Survival Guide - 1st Jun 21
Silver and Copper to Benefit from Global Electrification Push - 1st Jun 21
Will Gold Shine Under Bidenomics? - 1st Jun 21
Stock Market Buy the Dip, Again?! - 1st Jun 21
Stock Market Consolidation Ahead - 1st Jun 21
Stock Market Summer Correction Review, Crypto CRASH, Bitcoin Bear Market Initial Targets - 31st May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Does The Economy Need a Referee?

Economics / Economic Theory Oct 20, 2011 - 03:39 AM GMT

By: Jeff_Berwick


Best Financial Markets Analysis ArticleI recently appeared on Max Keiser’s "On The Edge" program.  Unbeknownst to the viewer, we were having major communication problems.  Max only could hear a small portion of what I said and I, likewise.  But, right at the very end of the interview the communications worked again… that’s when the interview finally got interesting.  Max stated that we “need a referee” in the economy.  I replied, “I disagree.  We don’t need a referee, I’m an anarchist…”

That was when the interview suddenly ended.  It’s too bad because at that point it had just gotten quite interesting.

Max was parroting a fairly typical statist argument that we need a neutral arbiter, like government, to have a monopoly of force to act as a “referee” to protect the exploited from being devoured by the exploiters, and from all of humanity devolving into eating each other.  This, simply is not the case.

First: Life isn’t a game, Max.  And all a coercive referee does is make things worse.  But, to go along with Max's analogy and to make that point, let’s look at some sports and how the rules and regulations influence their participants.
Or, as they say everywhere else in the world except the US and Canada: football.

In soccer, goals could be said to be a scarce resource.  Unlike a game like basketball, where there are hundreds of scores per game, in soccer there is often only one or two.  Like all games, soccer has a referee, and because goals are such a scarce resource the urge to manipulate the referee through diving is very high.

Furthermore, because there are very strict rules on things like physical contact and fighting it also encourages the participants to go to extremes in their attempts to manipulate the referee without fear of major repercussions.  This is what makes soccer players roll around on the ground like they just had their kneecaps blown off by a sniper rifle when even the slightest of contact occurs.  See the following video to see this isn't even an exaggeration!

Conclusion: When resources are tight and the referee plays such a big role in who can access those resources AND when there are very strict laws on any sort of contact it makes the participants act completely unnaturally and in immoral ways.


In ice hockey, goals are quite a scarce resource as well, but unlike in soccer the rules are not so strict on contact and self-policing.  In fact, fighting just gets you five minutes sitting in a box.

In this case there are much, much less occurrences of diving.  The reason is that if you do it there is a very good chance that a man nearly twice your size will come and beat you into submission and in many cases he won't even be penalized for it.

Because of this, rather than rolling around on the ice after being hit, because the referee has a smaller amount of say on who gets the scarce resources AND because you can get beaten up pretty bad for trying to manipulate the ref, hockey players have been known to play through broken legs, having 7 of their front teeth knocked out at one time and more.  In other words, by having the players police themselves there is far less “crime” and immoral action.
In Ultimate Fighting, there are almost no rules and the referee rarely has any say in the outcome of the fight.  In the UFC, fighters are highly respectful and usually pick up their opponent after defeating them, make sure he is okay and then they grab the microphone to tell the crowd what a great fighter and man he is.

Here, with almost no referee and no rules the people act highly civilized, proud and humble.

Conclusion?  Even in sports little or no refereeing is preferable to making the participants act civilized and with honor.

But, does the economy need a referee?
What Max is missing here is that the referee is the cause of all the problems we are witnessing in the financial world today.

In Max’s world, the referee is the state, and it is supposed to be a neutral arbiter of disputes between members in society.  In other words, in Max’s world, the state – a territorial monopoly on force that has never been used for good – is benign and good.  It is the classical left wing reaction to the current state of affairs.  It represents the views of many of the Occupy Wall Street protesters.

Max believes that the bankers control every aspect of our lives and the economy... and that in the end we control the state.  But these are scarcely half truths.  In reality, the state is used by the bankers to rig the playing field and to protect them from the real check on their affairs: free market competition.

Let’s not forget, the fractional reserve banking system is centralized and backstopped by government protections, like legal tender laws or monetary policy.

The referee was used to create this artificial, non-free market financial system where profits are private but losses are socialized.  There would be no investment banks that were massive and highly leveraged without the “referee” protecting them from competition and offering them the backstop to cover their losses when they do ultimately collapse... of course, all in the name of protecting the consumer.

Ludwig von Mises and Murray Rothbard argued that the best way to prevent inflation was not by outlawing it, or by forcing the central bank to adhere to some set of standards, which they would never do anyway, but rather by eliminating the legislation created by government (the “act”) that effectively cartelizes the industry (this is effectively state capitalism...aka fascism, corporatism, cronyism, etc.; as opposed to free market capitalism which precludes the use of initiatory violence or coercion).

Only under genuinely competitive free banking – where there is no central bank or legislation of any kind to help sustain fractional reserve banking -  would inflation not exist.  Each bank would worry about being called by its competitor if it over-inflated.  There’d be no one to bail them out.  Thus, they would not engage in the policy to begin with... it would be self destructive.

Instead, in today's world, the bankers set out to exchange favors with government.  The banks get their protection from competition, their bailout funds, and the ability to create deposits fraudulently (none of which could happen under a genuinely competitive environment) and the government gets a blank check; and they are in it together to keep it going as long as they possibly can.

Referee?  Hah.


The consumer’s best protection from exploitation and other shenanigans has always been competition.

Fascism, which is not the same as militarism, though it does lead to militarism, is a marriage between the statist left and the statist right; for the left it is the most practical application of socialism; for the right it is the most efficient means to protectionism and for “conquering” markets overseas.

The “referee” is largely the problem today.  It obscures the immoral reality and nature of the state.  The state can never be a neutral arbiter.  Life is not a zero sum game.  The free market is itself the best medium for democracy.  Every dollar counts in the market.  You can’t say that about every vote.  Those evil bankers that Max so despises fear competition more than they fear the referee.  And by even suggesting that the state can be a benign force for good Max is doing the bankers a great service.  He is fooling many into thinking the referee works for us, not the elite.

The free market system works because it is anarchistic; not because of the quality of the refereeing.

An anarchistic society would be one that is free of statist coercion, economic depressions, legislative injustice, and even waste.  It is not a vote for lawlessness and chaos.  The statist apologists like to argue that it represents just that.  But in fact it is the state itself that is the source of chaos.

We are seeing it everywhere in the world today.

Don’t be fooled into thinking that the banking elite is responsible for all of it, or that anyone could be exploited in a voluntary society.  If you want to check the bad guys, all you need to do is unleash the forces of competition...the people’s choice.

Until we see that as a society we will continue to have wars, chaos, poverty and turmoil.  In sports, the referee is often vilified and hated.  We need to take this approach with life's referee, the government, if we want a prosperous future.

The referee in life and the economy doesn't help make the game better, it destroys it.

 Subscribe today to become a part of our community of dollar crash survivors.

The Dollar Vigilante is a free-market financial newsletter focused on covering all aspects of the ongoing financial collapse. The newsletter has news, information and analysis on investments for safety and for profit during the collapse including investments in gold, silver, energy and agriculture commodities and publicly traded stocks. As well, the newsletter covers other aspects including expatriation, both financially and physically and news and info on health, safety and other ways to survive the coming collapse of the US Dollar safely and comfortably. The Dollar Vigilante offers a free newsletter at

© 2011 Copyright Jeff Berwick - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in