Must Reads For The Week 1/23/16

ECONOMIC FORCES EVENTUALLY WIN

China Promises To Keep Intervening To “Look After” Stock Market “Investors”, Hurt “Speculators“, at zerohedge.com. So the cure for the Chinese stock market bust is Government intervention? Didn’t Government intervention cause the boom in the first place?  Government planners can’t stop reality. Economic forces are always in the process of correcting Government interventions.

The Rest Belt Goes Red – Glory Days Of China’s Steel Boom Leave Behind Abandoned Mills And Broken Lives, at davidstockmanscontracorner.com. Another example of a Government created bubble ending in a bust. Government centrally planning an economy doesn’t work. Ask the former Soviet Union.

The Three Musketeers Of Global Deflation – China, Russia, and Saudi Arabia, at davidstockmanscontracorner.com. We know about China’s problems, but over 65% of Russia’s and 45% of Saudi Arabia’s GDP comes from oil. Oil below $30 a barrel hurts these two countries. Economic forces can’t be stopped by Government central planners.

The Fragile Forty & How The Word Lost $17 Trillion In 6 Months, at zerohedge.com. Forty global stock indices are in bear markets, as over $17 trillion of equity has evaporated in the last six months. Central banks think the wealth effect created by their money printing will reignite the global economic engine. It hasn’t worked because economic forces eventually prevail.

This Is What The Death Of A Nation Looks Like; Venezuela Prepares for 720% Hyperinflation, at zerohedge.com. Bernie Sanders take note. This is what a socialist utopia looks like. Excerpt from the article: “..in reality the Venezuela economy no longer exists, with all transactions now taking place in grey or black markets, and the government apparatus effectively operating in a vacuum.” Economic forces creating a black markets was inevitable.

Schlumberger Fires 10,000 As It Announces $10 Billion Stock Buy Back, at zerohedge.com. To keep your slumping stock price up, all you have to do is buy back your stock. Simple supply and demand. How do you finance this buyback. Either borrow low interest printed money like many companies have and are doing, or get rid of your biggest expense, your workers. Economic reality forces businesses to make decisions.

A Post Boom World, Auto Prices Will Fall,, by Patrick Barron, at mises.org. Easy credit and sup-prime loans for cars will eventually end in a bust, like the housing bubble. Economic forces of supply and demand will bring the car market back in line.

And You Thought QE Was Over: The Fed Will Monetize Half Of This Years U.S. Treasury Issuance, at zerohedge.com. Over the next four years, the Federal Reserve is going to have to repurchase, with printed money, $1.1 trillion in maturing Government debt that it owns. The Federal Government can only grow to it’s present size if it is financed by it’s central bank, the Federal Reserve.

A RECESSION IS THE CORRECTION

Why We Need A Recession, by Ronald-Peter Stoferle, at mises.org. A recession is nothing more than economic forces correcting the misallocation of resources, labor, land and capital that was brought about by previous central bank money creation and easy credit.

As Ludwig von Mises said: “The return to monetary stability does not generate a crisis. It only brings to light the malinvestments and other mistakes that were made under the hallucination of the illusory prosperity created by the easy money.

And as F. A. Hayek said: “To combat a depression by a forced credit expansion, is akin to the attempt to fight an evil by its own causes; because we suffer from a misdirection of production, we want even more misdirection – an approach that necessarily leads to an even more serious crisis once the credit expansion comes to an end.

GOVERNMENT KNOWS BEST

How Government Poisoned The People Of Flint, by John Counts, at mlive.com. Government doesn’t know what’s best.

Texas Adopts New York Values On Fantasy Football, Tho Bishop, at mises.org. Government wants to protect you from illegal gambling. It’s better for you to buy legal state lottery tickets.

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