Senator Daniel Patrick Moynihan famously quipped “you are entitled to your opinion, but you are not entitled to your own facts”.  Unfortunately, since 2008, neither political party in the US has conducted itself consistently with this observation.  We saw the result yesterday as protesters took over the US Capitol while it was in session.

Regular readers know I have been calling for and attempting to restore transparency across the global financial system.  So clearly, I have demonstrated my personal bias towards disclosure of the facts.

Neither the Obama or Trump administrations have thought disclosure of the facts was important when in reality it is Job One for leaders facing a crisis (financial or healthcare).  They were suppose to disclose what they knew, what they didn’t know and what steps they were taking to find answers to what they didn’t know.

Instead, both presidents offered up fact free narratives.  Narratives the American people understood were lies.  It was as if both individuals channeled their inner Colonel Jessup from “A Few Good Men” and decided Americans can’t handle the truth.

Of course, this was wrong in 2009 and it was wrong in 2020.

I don’t care whether the lies are told by a great orator like Obama or a crass showman like Trump.  The lies are still lies.

Before I go on, let me explain just how damaging Obama’s lying about the true condition of the banks was.  By insisting insolvent banks were actually solvent, he made acceptable the idea you are entitled to your own facts.

If the banks were solvent, why was there any need to “foam the runway” so they could recognize losses over several years?  There wasn’t.

By definition a bank is solvent if the market value of its assets exceeds the book value of its liabilities.  The market value of a bank’s assets includes recognizing any losses on these assets.  So if these banks truly were solvent, there was no reason not to have had the equivalent of a Debt Jubilee.  Instead, we had 10+ million foreclosures and the creation of corporate debt zombies that have been undermining the real economy.

If these banks truly were solvent, there would have been no reason for the Department of Justice to have created the concept of Too Big to Jail.  Solvent banks are not rendered insolvent by throwing bankers who pursued a business model of fraud and broke the law into jail.  By lying about the banks’ solvency, the Obama Administration let the bankers escape jail and keep the money they received from breaking the law.

But the Obama Administration didn’t lie just once about the solvency of the banks.  Through adoption of stress tests it made its comfort with its own facts and lying about the banks an annual event.

In doing so, the Obama Administration created the perfect environment for someone like Trump.  For the last four years, he has shown he has no use for the actual facts and prefers his own facts.

Yesterday, this bipartisan effort of using their own facts reached its logical conclusion:  protesters violently entering the Capitol to claim their own facts to be right.

Of course, it turns out there is a dramatic gap between the protesters’ facts and reality.  I say this based on what Trump’s legal team presented in all of its legal challenges alleging massive voter fraud.  In front of  judges who wanted to rule in Trump’s favor because they had been appointed by Trump, the legal team was unable to provide actual evidence of fraud even when repeatedly asked to do so by the judges.

Clearly, the use of “your own facts” to support lies is undermining American Democracy.

If American Democracy is to be saved (and I truly believe it should be), we need to end the use of “your own facts”.

This means President-Elect Biden will have to champion the restoration of transparency when he is in office.  How likely is this given he was Obama’s Vice President?