The administrative regions of the United States Environmental Protection Agency. (Photo credit: Wikipedia)
Don’t be mad at evil greedy businesses for the rise in the price of food and energy. Lets focus on the agency that makes the rules which force businesses to operate under new incentives and constraints. That agency is the EPA, an unelected group of bureaucrats who have more power than the House the Senate (more…)
F. A. Hayek—” The free market pricing mechanism has a double misfortune. It is not the product of human design, and the people guided by it usually do not know why they are made to do what they do.”
This video shows how spontaneous orders create complexity which can’t be duplicated by planning. Far more knowledge is utilized through this process, which is why voluntarily cooperation through free market capitalism has historically produced (more…)
saving and spending (Photo credit: 401(K) 2012)
Do interest rates determine the amount of savings or does the amount of savings determine the interest rate?
We place a higher value on possession of a good or service in the present then possession of the same good or service at some point in the future. Unlike a good or service, paper money has no use value, other than use for starting a fire if you are cold or toilet paper if you run out. It’s only value is in exchange. Money is certificates of purchase, and can be exchanged for any good or service at any time, therefore we value money in the present more then we value money in the future. Money represents the ability to acquire a good or service you desire, it is not the good or service.
The premium we place on present goods compared to future goods, or put differently, the discount we place on future goods compared to present goods is (more…)
You will not find any reporter speak the truth like Ben Swann does in his reality check segments on Cincinnati Fox 19 News. We’ve talked about quantitative easing in previous posts, and this video is an outstanding explanation which will add to our understanding about economics and what happens when Government intervenes.
Ben Swann has enough respect for his viewers to tell them the truth.
Plot of the US Federal Reserve Open Market Purchases of Repo Mortgage Backed Securities (MBS), 2000–2007; based on US government data from http://www.newyorkfed.org/markets/omo/dmm/historical/tomo/search.cfm (Photo credit: Wikipedia).
In an article by Phoenix Capital Research on ZeroHedge.com, it lists all the money injections by the Federal Reserve and the Government from 2008 through 2012. One way the Fed pushes money into the economy is by purchasing Mortgage Backed Securities from the entities that hold them, namely banks. The mortgage is now on the balance sheet of the Fed, and the money is now held, as reserve currency (numbers electronically created), on account at the Fed. The bank can now loan ten dollars for every one dollar held as reserves. The reason they can do this is because we operate under a ten percent fractional reserve banking system which means, (more…)
F. A. Hayek — “The coordination of men’s activities through central planning and through voluntary cooperation are roads going in very different directions: the first to serfdom and poverty the second to freedom and plenty”.
This quote by Hayek sums up the ideological battle being waged around the globe today, but especially here in America. This is not a new fight. The Revolutionary War was fought over freedom of the individual to order his life as he sees fit, versus the power of a King to take those decisions from him and make him a subject. Library shelves can be filled with the volumes of books that deal with this ideological battle, summed up so brilliantly in one sentence by Hayek.
This Keynes vs. Hayek rap video deals with Keynesian intervention, vs. the Austrian Business Cycle Theory.
The rest of the above quote by Hayek is — “The battle for freedom must be won over and over again, the socialists of all parties must be persuaded or defeated if they and we are to remain free men.”
The Fight of the Century Keynes vs. Hayek Round Two is better. Click on it when it pops up after the first video finishes playing.
Quantitative easing (Photo credit: duncan)
Peter Schiff explains what will be the end result of QE 3, in this article Operation Screw at Euro Pacific Capital Inc’s site. Who should we believe about the chances of QE3 succeeding, Peter Schiff, who predicted the 2007 economic meltdown, or the Federal Reserve’s policies, embodied in the person of Ben Bernanke it’s chairman. The policies of credit expansion by lowering interest rates and printing (counterfeiting) money caused the original meltdown and continues to stall any chance at real recovery. Schiff understands Keynesianism and the Austrian Business Cycle Theory. Kenynesians try to cure the bust which follows the artificial boom with more cheap credit, below market interest rates, and increased money supply by counterfeiting. The Austrians want to keep the artificial boom from happening by letting the market decide interest rates, and also decide what will be used as the unit of exchange aka, money. The bust is the reallocation, through the free market process, of previous misallocated resources brought about by Federal Reserve’s policies. The Keynesians do everything in their power to prevent the cure from happening. That’s like not prescribing chemo therapy or radiation therapy to cure a cancer patient because the side effects are too unbearable for the patient compared to his death. For a more in-depth explanation of business cycles and their causes read this article by Murray Rothbard at the Mises Institute.
This video is an interesting example of spontaneous order created by voluntary cooperation of individuals. I mentioned spontaneous order in the previous post, and this video demonstrates how people don’t need top down planning to create a complex order.
This is how the free market works. Individuals voluntarily producing, exchanging, and consuming, create this complex societal order in which we live. (more…)
AUSTRIAN ECONOMICS ADDICT 