Andy Kessler

Section 230/anonymity column at Commerce Secty hearing and put into the Congressional Record

WSJ: Online Speech Wars Are Here to Stay

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https://www.wsj.com/articles/online-speech-wars-are-here-to-stay-11611526491

Ding dong, he’s gone, but Donald Trump’s bans from Facebook, Twitter, Google, Reddit, Snapchat, Grindr (wait, what?), Pinterest, TikTok and others mostly persist. Don’t bans on Mr. Trump and others violate the First Amendment? Actually, it’s private companies invoking their own First Amendment right to bar things they don’t like. But even Twitter CEO Jack Dorsey called it “a failure.” That’s also true of Parler’s decapitation. Never mind that these actions seem partisan and hypocritical; the bans will continue until morale improves. Democrats may cheer but the precedent is scary—soon they’ll be silencing their own. Vive la guillotine electronique.

Expect the siren calls for regulation to become deafening—mostly focused on “updating” Section 230 of the 1996 Communications Decency Act, the provision that limits social-media companies’ liability for things users say. A year ago Joe Biden said it should be “revoked, immediately.” The law states that except for illegal materials like child pornography, companies can host everything and employ their own community standards to take down what they consider offensive.

This mess was all predicted by a comic strip (really!) in 2004, when only Harvard dorm residents knew about TheFacebook—and Twitter was two years away. John “Gabe” Gabriel—the alter ego of one of the creators of Penny Arcade, a web comic—came up with the Greater Internet [Jerkwad] Theory (obscenity deleted). The theory is spelled out on a green chalkboard: “Normal Person + Anonymity + Audience = Total [Jerkwad]” while interpreters note that “normal, well-adjusted people may display psychopathic or antisocial behaviors when given both anonymity and a captive audience on the Internet.” It’s no longer a theory, is it?

In our new slushy, snowflake-soaked society, some folks are offended by just about anything, and are quick to deploy torches and pitchforks to silence and cancel anything not currently considered politically correct. It’s worth reiterating: social media and all its benefits (ask small businesses) wouldn’t exist without Section 230. Instead of hiring hundreds of thousands of coders, Facebook and Twitter would instead be giant law firms forever fighting lawsuits.

Still, Facebook ran ads all fall practically begging for regulation. But any attempt to “fix” Section 230 would surely kill it. Legislation would be a bicameral camel—a horse designed by committee—trying to define community standards, hate speech, what “incites” riots, what constitutes “systemic” racism and on and on, with the inevitable loopholes for certain politicians and favored groups.

Twitter tried to quash the unmasking of an anonymous user, @whysprtech, who in 2016 had released forged FBI documents concerning the death of Democratic National Committee staffer Seth Rich.

WSJ: Once Trump Leaves, Who’s Left to Blame?

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https://www.wsj.com/articles/once-trump-leaves-whos-left-to-blame-11610314313

Here’s my prediction: On Jan. 20, the No. 1 video on YouTube will be “Ding Dong the Witch Is Dead” from “The Wizard of Oz.” Go ahead, play the song in your head. I’ll wait.

This hope for mass emotional relief was best summed up by House Speaker Nancy Pelosi who, according to Politico, told her leadership team, “I’m counting down the hours ’til he’s gone. . . . I plan to pull him out of there by his hair, his little hands and his feet.” I guess tearing up the State of the Union speech wasn’t therapeutic enough. Nor is there any peace for the mouth breathers who stormed the Capitol and sat feet-up on her desk. Or the quixotic and psychotic contesting and protesting of the 2020 election—or 2016, or 2000 for that matter.

What a mentally unnerving four years. We’ve all heard, “I cried with my daughter that morning.” Some folks actually sent me books on Hitler so I could brush up on what they were convinced would come—but never did. Universities offered therapy dogs and breathing spaces—some with coloring books. “Resist” jewelry jumped off shelves. NBC’s “Today” show seemed to open every day, as did many casual conversations, with “Did you see that tweet?” And we added to the vernacular “Orange Man bad,” “El Cheeto” and the Bidenism “C’mon man!”

So many seemingly functioning adults needed someone to blame. A literary agent told the New York Times : “Trump doesn’t want to let go of his job, and a shockingly high number of us don’t want to let go of him.” Author Douglas Coupland smartly noted that “blame is just a lazy person’s way of making sense of chaos.”

Years ago, I believe the comedian Dennis Miller nailed it by saying—and I’ll clean it up—that blaming cigarette companies for getting cancer is like blaming your Members Only jacket for not getting dates in the ’80s. Blame yourself! Mr. Trump or Mrs. Pelosi may not be to your liking, but they weren’t the cause of all your problems. Everyone ought to stop projecting and look inward. Especially the dude in the horns and animal skins.

According to Salon, “Trump is a psychopath. He has all the defining characteristics in spades: narcissistic, sadistic, antisocial, paranoid.”

WSJ: How the Fed Stifles Lending

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https://www.wsj.com/articles/how-the-fed-stifles-lending-11609697886

Dear Jerome Powell: End quantitative easing now. The Japanese tried QE in 2001, buying government debt, mortgage securities and even stocks. It didn’t work. The Federal Reserve has tried it four times since Lehman Brothers went belly up in 2008. QE doesn’t work and instead of keeping markets stable it creates instability.

The Fed supervises and regulates U.S. banks. But traditional banking (think Mr. Potter from “It’s a Wonderful Life”) represents only about 15% of all lending, maybe less. The rest is the mysterious-sounding shadow banking system based on securities lending and other credit products, including repurchase agreements—the repo market.

In repo, broker-dealers, hedge funds and banks construct short-term transactions. You put up collateral—Treasury bills or sometimes less-pristine instruments—with an agreement to buy them back the next day or week for slightly more, and invest the proceeds in the interim. Jeffrey Snider, head of research at Alhambra Investments, calls it a “reserve-less currency system.” This is how global supply chains are funded, to bring us cheap goods from Walmart or Amazon.

Sometimes lenders repledge the collateral to other lenders and take out repo loans of their own. And the cycle goes on. It’s a little bit like hot potato, passing the collateral to the next guy. Known as rehypothecation, these transfers used to be done once or twice for each posted asset but are now sometimes done six to eight times, each time creating new money supply. Note: this is modern money creation—outside the purview of the Federal Reserve—and it’s huge.

When times are good, repos work fine: The agreements expire without problems and the collateral gets passed back down the chain smoothly. But eventually, iffy collateral sneaks into the system. That’s also fine, until markets hit an inevitable rough patch, like, say, March 2020. No one will take the junky stuff anymore, and everyone scrambles for good collateral. So there’s a mad dash, a brawl really, to buy Treasurys—like musical chairs with six to eight buyers eagerly eyeing one chair.

We saw this collateral problem in action.