Your Econonomic Homework

Posted October 22, 2014 by austrianaddict
Categories: Econ. 201

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Business Woman Present Business Cycle - stock photo

I like reading economic articles by Richard Ebeling. He explains abstract economic concepts in ways that are understandable for regular people. Although we have written about these concepts in the past, we can always gain greater insight by reading different explanations by different writers. Even if you understand these economic concepts, this article may help when you try to explain them to people who don’t have the same level of understanding.

KEYNES LEAKS THE  TRUTH ABOUT DEBASING THE CURRENCY

As John Maynard Keynes said, “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

The only way Central Banks have gotten away with electronically printing counterfeiting money is because it is difficult to understand. Our job is to shrink that one in a million ratio, because the only way our current problems change is if more people truly understand what results when the Fed intervenes in the market.

RICHARD EBELING ARTICLE

The article, Ludwig von Mises And The Austrian Theory Of Inflations And Recessions, by Richard Ebeling, at epictimes.com, explains, 1) How money emerges from markets not Government, 2) Saving and investment, 3) How central banks cause business cycles, 4) Inflation and misallocated resources, 5) Recession corrects the Fed caused misallocations.

Here are some excerpts from the article.

“Money is a market-based and market-generated social institution that spontaneously emerges out of the interactions of people attempting to overcome the hindrances and difficulties of direct barter exchange……Historically, gold and silver were found through time to have those attributes most desirable for use as a medium of exchange to facilitate the ever-growing network of complex market transactions that enabled the development of an ever-more productive system of division of labor.”

“Like all other prices on the market, the rates of interest on loans coordinate the choices of savers with the decisions of borrowers so to keep supplies in balance with demands for either consumer goods or future-oriented investment goods.”

“An economic recession, therefore, is the discovery period of misallocations of scarce resources in the economy that requires a rebalancing and a recoordination of supplies and demands for a return to market- and competitively-determined harmony in the society’s economic activities for long-run growth, employment, and improved standards of living.”

Related ArticleFederal Reserve Policies Cause Booms And Busts by Richard Ebeling, at austrianaddict.com.

Related ArticleKeynes Was Right In 1919, by austrianaddict.com.

George Will: Faith In Government?

Posted October 19, 2014 by austrianaddict
Categories: Government and Politics

Tags: , , , , ,

George Will was on Fox News Sunday, and here are his comments to the questions, 1)Can we have faith in Government? and 2) Can we trust the Government to do its job?

Here are the highlights from his comments.

“…you asked: ‘can we have faith in Government’? I think we have much more to fear from excessive faith in Government than from to little faith in Government.”

“You asked: ‘can we trust the Government to do its job’? What isn’t it’s job nowadays…this is a government that doesn’t know when to stop.”

The distilled essence….of progressivism is that Government is benign, that it’s a disinterested force. That’s false,  and b) it is stocked with experts who are really gifted at doing things…..Republicans do this Democrats do this also…a common theme is excessive faith in the skills of Government.

GOVERNMENT DOESN’T MAKE DECISIONS, INDIVIDUALS IN GOVERNMENT DO.

When we use the word Government we mean individuals in Government. Government doesn’t make policy and decisions, individual politicians and bureaucrats make policy and decisions. The reason these politicians have the power to make and implement certain decisions is because “we the people” set up the frame-work of Government that allows them certain areas in which to legislate. We also elect these politicians to sit in the seat of power. Unfortunately we have allowed them to ignore the boundaries that surround their power, because we don’t hold them accountable once they are elected.

Here are some examples of incompetence at different levels of Government. 1) The Nurse who flew to Akron after being exposed to Ebola, had contacted the Center for Disease Control twice asking them if it was alright to fly, and they said yes (read here). 2) The Parents who called the cops to help with their mentally ill son who locked himself in his room and threatened to harm himself. Eleven shots later their son was dead. The police succeeded in not letting him harm himself (watch here). 3) A 5-year-old girl pointed a crayon at a class mate, and school officials punished her by making her sign a contract that she wouldn’t kill anyone or commit suicide (read here). 4) Need we say more than the Obamacare web site that cost $2 billion (read here). This list is literally endless.

Here is a George Gilder quote about big Government, “The ambitious agenda of contemporary liberalism simply ensures that Government will do nothing well, except to expand itself as an obstacle of growth and innovation. Government best supports the future by refraining as much as possible from trying unduly to shape it.

It is our fault that we have arrived at this point where Government is this big. We are the only ones who can reel this monster in, because politicians and bureaucrats will never vote to reduce their power.

Related Article – “I’m From The Government And I’m Here To Help“, by austrianaddict.com.

Related ArticleTyranny Is Hidden Inside The Bureaucratic Maze, by austrianaddict.com.

Related ArticleProof Once Again That Power Corrupts, Will We Have Enough Courage To Believe It This Time, at austrianaddict.com.

 

 

Must Reads For The Week 10/18/14

Posted October 18, 2014 by austrianaddict
Categories: Must Reads For The Week

Tags: , , , , , , ,
The pen is mightier than the sword...

 The pen is mightier than the sword… (Photo credit: mbshane)

Scientists Have Debunked These 5 Common Myths About Red Meat, at businessinsider.com. First, I posted this because the video made me hungry for a medium rare steak. Second, these myths about red meat had to have come from some other “scientist”. I guess science is up for debate.

The Corruption Of Science, by William O’Keefe, at economicpolicyjournal.com. Everything is political, even science. Here is an excerpt from the article, “I want to …talk about … the rise of what has been called consensus science. I regard consensus science as an extremely pernicious development that ought to be stopped cold in its tracks. Historically, the claim of consensus has been the first refuge of scoundrels; it is a way to avoid debate by claiming that the matter is already settled. …Let’s be clear: the work of science has nothing whatever to do with consensus. Consensus is the business of politics.”

The Nightmarish Politics Of Ebola, by John Cassidy, at newyouker.com. Everything  is political, from the name of the Washington Redskins, to Ebola. As much as I hate politics, it is part of  the reality we live in. Even this article trying to decry the politics of Ebola, is a political article. When it comes to analysis of any event, the first question the cable news anchors ask is, “How will this help or hurt the (President, republicans, democrats, congress)” pick one. I don’t care about Ebola politically. I care about Ebola from an epidemiological stand point. When everything is politicized, Government is to big and intrusive. We are living in the chaotic middle ground between central planning and individual freedom.

The Increasing Precision And Efficiency Of Revolutionary Drilling Technologies Has Made US World’s Greatest Producer, by Mark J. Perry at carpediemblog. The US is now the leader in oil and natural gas production thanks to entrepreneurs and technology. Supplying more oil to the market has helped drop the price of oil. The law of  supply and demand is right again. Drill baby drill.

More Schumpeterian Innovation In Ride-Sharing Service Uber, And Another Reason Big Taxi Is Doomed, by Mark J. Perry, at carpediemblog. The upstart competitor (Uber) is putting its efforts into finding ways to serve the consumer better, which in turn expands its business. The status quo monopoly (Taxi Cartel) puts its efforts into trying to keep the upstart competitor out of the market. The consumer will decide which strategy is the best.

The 10 Deadliest Jobs In The US, at economicpolicyjournal.com. Producing a higher standard of living has a cost in lives. But a higher standard of living not only saves lives, it also makes it possible to support a higher population.

Irresponsible ‘Education‘ , and We Can Still Salvage Enough Of The Constitution To Remain A Free And Democratic Nation, by Thomas Sowell, at jewishworldreview.com. These are two great articles by my favorite author, and are truly must reads. Thomas Sowell always makes you think. He also makes you debate, with yourself, about how you arrived at the way you think about different subject matters.

 

Are We Losing Economic Freedom?

Posted October 15, 2014 by austrianaddict
Categories: Econ. 101, Government and Politics

Tags: , , , , , , , ,

Capitalism 3D sphere Word Cloud Concept with great terms such as economic, private, free and more. - stock photo

The Fraser Institute published a paper titled, Economic Freedom Of The World: 2013 Annual Report, which shows how the US is in the slow lane on the Road to Serfdom, because we as individuals have lost economic freedom over the past 12 years. Economic freedom is nothing more than each individual deciding what to produce, consume, exchange, and save without anyone, especially Government bureaucrats, hampering or intervening in his activities. Individuals are less free today than they were in 2000.

Scroll down to page 148 in the report to see the statistics for the United States in different categories related to freedom, from 1980 to 2011. The report rates 154 countries on economic freedom, with a 10 being the highest rating. It also ranks each country in order of most free to least free. Our freedom rating and rank has dropped since our high in 2000.

CATEGORY     (rate/rank)                    80               90              00               11

UNITED STATES

Summary  (rating/rank)                  7.92/3      8.35/3      8.65/2        7.74/19

Size of Government                           5.08/49    6.71/24   7.03/34    6.83/47

Legal System/Property Rights     8.35/1       8.35/10   9.23/9        6.93/38

Sound Money                                      9.22/5       9.68/7      9.78/2       9.30/36

Freedom Of Trade Inter.                8.77/7       8.77/11    8.78/22    7.92/30

Regulation                                            8.11/4         8.23/4      8.43/2       7.75/17

 

Below is Hong Kong’s summary rating and rank for economic freedom. Go to page 62 to see a more detailed report on Hong Kong.

HONG KONG                                              80                90                00               11

Summary  (rating/rank)                 9.02/1        8.59/1       8.86/1        8.87/1

Hong Kong was under British rule for 156 years until 1997 when it was turned over to China. Hong Kong has had more economic freedom under British colonial rule, and Chinese communism than the US has had under a constitutional republic with leaders elected democratically. People in Hong Kong have been protesting recently because it looks like China is going back out on its promise to allow democratic elections in 2015. The people in Hong Kong should take a look at the US to see what democratic elections have done to our economic freedom, before they go all in for democracy. Democracy is just one possible means for gaining individual freedom, but it is no guarantee of individual freedom. Read, Thomas Sowell Explains How Democracy And Freedom Are Not The Same Thing.

Three of the categories, listed in the above article, that the Fraser Institute rates and ranks countries on their level of economic freedom are; legal system/property rights, regulation, and sound money. The US has decreased in rate and rank in these three categories over the last decade.

REGULATION

The Affordable Care Act (Obamacare) is just one example of  the thousands of pages of regulations, passed by congress and signed into law by the President, that take away economic freedom by imposing  huge costs on businesses. Where does the Government get the power to interfere with an individuals right to make a contract with another party on how he chooses to pay for his healthcare? Nowhere in the constitution do politicians and bureaucrats have a right to do this. They’ve usurped the power from us, and the Supreme Court, which has turned into a nine seat legislature, uphold their lawlessness. Read Regulatory-Industrial Complex, by Lew Rockwell, at mises.org, for more analysis on what regulation does to economic freedom.

SOUND MONEY

We could talk endlessly about how important sound money is for economic freedom, but here is the short version. When the Federal Reserve electronically prints counterfeit money, it is theft. What you produce each day at work is represented in the money your employer gives you in exchange for your labor. You in turn can demand goods and services with the money you are paid. The stable purchasing power of the monetary unit is what sound money guarantees. When the Federal Reserve electronically prints counterfeit money, it is decreasing the purchasing power of each dollar you have, and therefore stealing your production. If you or I counterfeit money it is theft. If the Fed counterfeits, it is still theft, it is simply theft that is sanctioned by the legislative, executive, and judicial branches of Government. Read, Is The Surge In Capital Goods Orders Do To Malinvestment, by Frank Shostak, at mises.org, to understand what happens when the Fed counterfeits.

PROPERTY RIGHTS

Without property rights there is no economic freedom. If an individual has no assurances that what he produces or owns can’t be taken away, then economic freedom is just meaningless rhetoric by politicians. There is the obvious taking of property through eminent domain laws (Kelo vs. New London), civil asset forfeiture laws, federal taxes etc, and then there is the unseen taking of property through the cost of complying with regulations, and out right stealing it by electronically printing counterfeit money. Read “Human Rights As Property Rights, by Murray N. Rothbard, at mises.org, to see how property rights are the foundation of economic freedom.

As F. A. Hayek said, “the battle for freedom must be won over and over again, the socialists of both parties must be persuaded or defeated if they and we are to remain free men.” These words are more true today then when he wrote them.

 

-I found the, Economic Freedom Of The World: 2013 Annual Report, in this article titled, The “Land Of The Free” Ranks 36th In The World In Respecting Property Rights, at zerohedge.com.

 

 

 

 

Must Reads For The Week 10/11/14

Posted October 10, 2014 by austrianaddict
Categories: Must Reads For The Week

Tags: , , , , , , , , , , , , , , ,
The pen is mightier than the sword...

 The pen is mightier than the sword… (Photo credit: mbshane)

How Michelle Obama’s Daughters Eat vs. The Rules She Has Set Down For Public School Kids, at economicpolicyjournal.com. The fact that the ruling elite don’t have to abide by the rules they impose on the benighted masses is one thing. The more important point is, a  Government that has the power to make this mandate has too much power, and is therefore tyrannical.

How The Real World Reacts When Minimum Wage Laws Raise The Cost Of Labor Above What It Produces, at economicpolicyjournal.com. Here is the money quote from the article,“If government could transform unskilled entry-level positions into middle-income jobs, the Soviet Union would be today’s dominant world economy. Spain and Greece would be thriving.”

Mayo Clinic To Bring A Medical Kiosk To An Employer Near You, by Jeff Hansel, at m.postbulliten.com. Health care “affordability” would have taken care of itself if politicians in the Democrat party would have passed legislation that moved healthcare toward a free market system instead of passing “The Affordable Care Act”. This article is an example of markets reducing costs and providing a better product for the consumer.

Obamacare Causes Wal-Mart To Cut Benefits For Some Part Time Workers, by John Lott, by johnrlott.blogspot.com. This is the opposite of what you read about in the above post regarding the Mayo Clinic. Government intervention in the free market produces outcomes that have higher costs and inferior products.

3D Printing Entire Homes And Neighborhoods May Be Just Around The Corner, by Michael Krieger, at libertyblitzkrieg.com. Technology is in the process of changing how we do things in ways we can’t even imagine. Technology is advancing  faster than Government can regulate it (the fracking revolution is another example). This gives me hope that at some point, our current experiment with big government will someday be a chapter in history that people will read about and say, “what made them think that would work”.

Common People Do Not Carry This Much Currency”. How Police Justify Theft via Civil Asset Forfeiture Laws, at zerohedge.com. Taking money without probable cause, is only going to escalate the tension between police and citizens. Watch the video in this post, it makes great points in a humorous way.

Hong Kong Ranks First In Economic Freedom, The US Is Twelfth, at freetheworld.com. We were ranked second in ‘2000’ , but a decade of regulation, Fed counterfeiting, loss of property rights, and growth of Government has us cheering, “we’re number 12, we’re number 12″! We are not moving toward more individual, economic, and political freedom.

How The US Ranks In Corporate Tax Rates (Not Pretty), at economicpolicyjournal.com. The US has the highest corporate tax rate in the world! We’re number 1, We’re number 1!

Upcoming Anniversary: Oct. 1st Will Mark 18 Years Of No Global Warming, by Barbara Hollingsworth, at cnsnews.com. The evidence doesn’t match the chicken little rhetoric.

A Decade After Welcoming Wind, States Reconsider, by Sean Murphy, at eaglefordtexas.com. Here is a quote form the article, “Today, many of the same political leaders who initially welcomed the wind industry want to regulate it more tightly, even in red states like Oklahoma, where candidates regularly rail against government interference.” Politicians used Government subsidies and tax breaks to allow an industry to exist that would have probably had problems competing in a free market. Government picked the winner. Now they want to regulate an industry that wouldn’t have existed without the previous regulation. Here is my advice; repeal all regulations pertaining to wind, and allow the market to pick the winners and losers.

Reasons For Political Hope, by Bruce Thornton, at victorhanson.com. I know it’s hard to believe, but I am optimistic that freedom will win out over tyranny. It may not seem like it right now but there are signs that we are starting to wake up.

 

Must Reads For The Week 10/4/14

Posted October 4, 2014 by austrianaddict
Categories: Must Reads For The Week

Tags: , , , , , , , , , , , , ,

No America Isn’t Communist; It’s  Only 79% Communist, at zerohedge.com. Look at the 10 planks of The Communist Manifesto and tell me we aren’t traveling down the collectivist road. We’re playing incremental Russian Roulette with our freedoms.

Will You Soon Be Taxed To Use The Internet, at economicpolicyjournal.com. A moratorium keeping state and local governments from taxing the internet is set to expire if congress doesn’t act to extend it.

US Government Promises To Forgive Student Debt…If You Work For Them, at zerohedge.com. This is how bureaucrats create more  believers in Government central planning. They will eventually mandate what a students major should be in order to get the college loan that will eventually be forgiven (at tax payers expense).

The Latest Insane Scare: The Pull Of Gravity Is Decreasing Because Of Climate Change, at economicpolicyjournal.com. How do you measure the pull of Gravity?

Good Work Fed: US Now More Unequal Than Roaring Twenties And Ancient Rome, at davidstockmanscontracorner.com. Electronically printing counterfeit money by the Fed benefits the people who have access to it first. The rest of us lose purchasing power as the counterfeit money works its way through the economy. Our labor buys fewer goods and services.

What Do Uber And School Choice Have In Common? by Mark J. Perry, at Carpe Diem Blog. Uber and school choice are threats to the  taxi and public school monopolies, which is why they will fight Uber and school choice to the bitter end. Competition produces better products at lower prices, benefiting consumers.

Sensible Swiss: 62 Percent Of Voters Reject Replacing Private Health Insurance With Public System, at johnrlottblogspot.com. I guess what we did with Obamacare served as an example to the Swiss of what not to do!

Roll Over Plan: Treasury Debt Increasing, by Terence P. Jeffery, at cnsnews.com. Every year the Treasury has to redeem debt that comes due, by issuing new debt. It is similar to someone paying off a credit card with another credit card. This year the Treasury issued $8.3 trillion of new debt, in order to redeem $7.5 trillion in debt that came due. This means the Treasury (tax payers) went in the hole for another $777 billion. Oh the magic of compound interest. Look at the chart at the bottom of the article.

Drone Footage Reveals Just How Massive Hong Kong’s Protests Really Are, at economicpolicyjournal.com. After 156 years of relative freedom under British rule, Hong Kong was returned to China in 1997. Now Hong Kong wants freedom from China (read here). Hong Kong has a culture of freedom similar to what colonial America had. We fought the Revolutionary war to seceded from England. Hong Kong may be able to secede from China without going to war, much like Eastern Europe seceded from the Soviet Union in 1989 when the Berlin Wall came down. We have our own battle for freedom going on in America today. Will we lose more individual freedom to ever expanding Government, or gain back what we’ve lost by shrinking Government?

Breast Cancer Awareness: Woman Wears Bra Cam To Catch Strangers Sneaking Peek, at youtube.com. No explanation needed.

Some Humor, from theburningplatform.com.

154149 600 Hell freezes over cartoons

 

 

154191 600 Catch 22 cartoons

Climate Change: Religion? Economics? Science?

Posted October 2, 2014 by austrianaddict
Categories: Econ. 101, Miscellaneous

Tags: , , , , , , , , , ,

The climate march that coincided with the UN’s climate summit a few weeks ago was entertaining to say the least. These two videos show how true believers act when the religion of climate change is challenged. They worship at the altar of climate change, and demand that all infidels accept the teachings of their climate science catechism. True believers never stop to think about trade offs.

QUESTIONS ABOUT TRADE OFFS

A world without fossil fuels is a utopian vision that exists cost-free in the minds of true believers. To their way of thinking, getting rid of carbon based fuels has no consequences. They never ask; how do we get there from here? What is the cost of trying to implement a world of carbon free energy? Will there be enough “green energy” alternatives to make up for the loss of the energy formerly produced by carbon based fuels? What is the cost in dollars per kilowatt-hour for “green energy”, compared to the cost in dollars per kilowatt-hour for carbon based energy? What was the standard of living in the US before we started using coal, oil, natural gas, and nuclear power? How would your present standard of living change if you had to function on 33% less energy a day? What about 40% less, or 50%less? Would you be willing to trade off diminishing amounts of cleaner air against your present standard of living?

CREATING WEALTH ALLOWS US TO AFFORD A CLEANER ENVIRONMENT

Countries like India and China didn’t even attend the climate summit. They are willing to accept more polluted air for a higher standard of living. They won’t clean up after themselves until they have created enough wealth to make it possible to have both a higher standard of living and a cleaner environment. Only wealthy countries can afford to clean up after themselves. People in poorer countries are just trying to make it to the next day. In the case of the US we have clean air to breath and water to drink. Using increasing amounts of scarce resources to make infinitesimal increase in the quality of our air and water, will kill the wealth creation that allowed us to clean up our messes in the first place. There is a diminishing return for trying to create a utopian world. And at some point you start traveling down the “road to serfdom“.

TWO GREAT VIDEOS

Here is a video of Robert Kennedy Jr being interviewed at the People’s Climate March. How condescending is this guy? It wouldn’t take much to push him into a Ray Rice moment.

Here is a video of Alex Epstein at the People’s Climate March. I like the green “I ♥ Fossil Fuels” t-shirt he is wearing.

SCIENCE VS. REALITY

This article, “Stop The Scare Climate Models vs. Human Needs“, by Willie Soon and Christopher Monckton at masterresource.org, asks great questions about the trade offs involved in the discussion (actually it’s a monologue) about climate change. Here are some excerpts from the article.

“India’s Prime Minister Modi, ….. knows that a quarter to a third of India’s people – at least 300 million of its citizens – still have no electricity. In Bihar, four homes in five are still lit by kerosene. His priority is to turn the lights on all over India.”

“Electric power is the quickest, surest, cheapest way to lift people out of poverty, disease and subsistence agriculture, and so to stabilize India’s population, which may soon overtake China’s. Families that no longer have to worry about children dying before they are five, or need them to tend starvation-level crops, tend to downsize their families.”

Not one climate model predicted the severe Indian drought of 2009, followed by the prolonged rains the next year – a rainfall increase of 40% in most regions. These natural variations are not new. They have happened for tens of thousands of years.”

“Models are not ready to predict the climate. Misusing computers to spew out multiple “what-if” scenarios is unscientific. Most of the fundamental problems in our immature understanding of climate have remained unresolved for decades. Some cannot be resolved at all. The UN’s climate panel admitted in 2001 what has been known for 50 years: because the climate is a “coupled, non-linear, chaotic object,” reliable long-term climate predictions are impossible.”

“Misuse of climate models as false prophets is costly in lives as well as treasure. To condemn the poorest of India’s poor to continuing poverty is to condemn many to an untimely death…..It is time to put an end to climate summits. Real-world evidence proves they are not needed.”


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