Must Reads For The Week 4/4/15

Posted April 4, 2015 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)

Electric Cars Are Doing More Harm Than Good, at zerohedge.com. Electric cars charged by electricity produced from coal, generate more CO2 emissions over their lifetime than gas-powered cars.

Does California Need Rain, Rationing, Or Prices, by Daniel Bier, at fee.org. Water is a scarce resource and has to be rationed in one of two ways. 1) By prices in a free market system. 2) By bureaucrats in a centrally planned system. Price controls and subsidies lead to water being used in activities that wouldn’t be cost-effective if market prices prevailed. Agriculture accounts for 80% of water usage but only 2% of economic activity. Market prices would get rid of inefficient agricultural activities, as well as curb industrial and residential usage. There is no chance that prices will be allowed to work their magic in California.

Stop Policing For Profit In New Mexico, at santafenewmexican.com. A house bill would get rid of civil asset forfeiture in New Mexico. The fifth amendment is back in vogue. Lets hope other states will follow New Mexico’s lead.

Cop Federally Charged For Paralyzing Indian Grandfather Visiting America, by Cassius Mythel, at theantimedia.org. Click on the article and watch the video of this incident. Excessive force? You decide.

Methods Police Use On Mentally Ill Are Madness, by Conor Friedersdorf, at theatlantic.com. Watch the first three minutes of the video. A mother called police and said her son was off his meds, and needed help to get him to the hospital. She probably wishes she would have called an ambulance instead of the cops, because her son would still be alive today. The cops immediately escalate the situation and the rest is history. Read the whole article it has some excellent points.

Kshama Sawant’s Next Planned Attempt To Destroy Free Markets, at economicpolicyjournal.com. The Seattle council woman who lead the passage of a job and business killing 15 dollar minimum wage law, now has her sights set on destroying the housing market by pushing rent controls. This central planner is hurting the very people she is claiming to help. Is she ignorant about the results of her policies, or is she doing this on purpose? It doesn’t matter, the result is the same either way.

Parents Must Sign Permission Slip Before Kids Can Eat Oreos, by Lenore Skenazy, at reason.com. This is on the permission slip, “the ingredients of the oreo is on the back of this sheet and on my e-board....”. We are going to raise a generation who are not curious, will never take a risk, and are easily manipulated.

North Dakota Vote Puts The U.S. One Step Closer To A Convention Of States, by Pete Kasperowicz, at theblaze.com. Cutting back big government is going to happen from the bottom up.

Cal State U. Deactivates Christian Group…For Seeking Christian Leaders, at tammybruce.com. When you try to micromanage every decision with excessive rules, there is no sphere of freedom left for individuals to make decisions. The result is this illogical, or insane, decision by some bureaucrat at Cal State U. Or is it anti Christian bias.

Local Indiana Station Ambushes Memories Pizza To Gin Up A Religious Freedom Restoration Act Story, by Tom Blumer, at newsbusters.org. Why would anyone think people in the media don’t have an agenda? Journalists got it wrong about hands up don’t shoot in Ferguson, the gang rape at University of Virginia, the Duke lacrosse rape case, Harry Reid Lying about Romney not paying taxes, the RFRA story in Indiana. Hard core progressive’s on the left and right, will lie, cheat, break laws, and destroy individuals in order to advance government power, and journalists play the role of the get away driver.

How To Win An Election? It’s About The Ice Cream, Not The Cow, by Steve Straub, at thefederalistpapers.org. Politicians understand that man is a self interested being.

 

Comments: Be the first to comment

Individual Liberty Is The Least Contentious Way Of Settling Differences.

Posted April 2, 2015 by austrianaddict
Categories: Government and Politics
Tags: , , , , , , , , ,

Is there a perfect system in which human beings interact with no conflict? Since nothing human is perfect the answer is obviously no. But politicians and demagogues have for decades held up the standard of perfection as the straw man to compare any perceived flaw produced by our free market capitalist economic system and our constitutional republic. When results created by individuals voluntarily cooperating don’t meet what our betters deem acceptable, they want to pass laws correcting this perceived injustice, or “fundamentally change” the system.

They are never asked: 1) Why is what they value, better than what results from decisions made by individuals cooperating voluntarily? 2) Does the decision-making process they desire (usually some form central planning) produce more satisfaction for more people than the process of voluntary cooperation by individuals under the rule of law? 3) Who decides what is the better outcome?

INDIVIDUAL LIBERTY vs. GOVERNMENT DECISION MAKING

It is not possible to come up with a single decision that satisfies everyone. It is sometimes difficult for me to decide what flavor of ice cream I want. Many times I am not happy with my decision the second I take the first bite. If picking just one flavor for myself is difficult, how much more difficult would it be for two people to choose one flavor? As more people become involved in deciding one flavor, it becomes exponentially more difficult for people to be pleased with the choice. How many people would be satisfied if one person was chosen to pick a flavor for everybody? What would be the difference if everybody voted, and people had to eat the flavor receiving that most votes?

One person choosing between many flavors for himself is voluntary cooperation in a market between him and the person producing the ice cream. If no one produced the flavor he liked, he could produce it for himself if he thought it was worth his time.

One individual choosing a flavor that everyone is forced to eat is a dictatorship. Even if this person is democratically elected by a majority.

Every person voting on a single flavor, and the flavor receiving the majority of the votes has to be eaten is democracy in action.

Are any of these systems perfect? No. But that’s not the question that should be asked. The question should be: which system would produce the most satisfied individuals, and which system would produce the most contention among individuals? It is obvious that the system that produces the most satisfaction is voluntary cooperation under the rule of law. Unfortunately over the last century we have elected leaders, in both parties, who are taking incremental decisions away from individuals, and making categorical decisions for all of us. They are acting like tyrants, but unfortunately they just reflect the tyrannical attitudes of the people who vote them into power.

We lose more freedom as more laws get passed. When people say “there should be a law for…” they are really saying I want to force what I value on people who don’t agree. Even a law against murder forces a particular value on certain individuals who don’t share that value. Fortunately most people agree that murder is not acceptable behaviour. But what happens when there isn’t an overwhelming majority of people who agree. How do you reconcile each persons values?

PROPERTY RIGHTS AND VOLUNTARY EXCHANGE

Our system was founded on property rights and voluntary exchange (contract). Each person owns himself and what he produces, and no one is allowed to take another persons life, take what he produces, or take what he receives in exchange for what he has produced. If he doesn’t want to make an exchange with another person, that person doesn’t have a right to force him into making the exchange.

This all seems very simple, and it is, until petty tyrants in the form of politicians, bureaucrats, thieves, do gooders, thought police, political correctness advocates, or the average citizen try to steal from, or force their values on, other individuals. The more laws that are passed, the more contention there is between people who would otherwise have no reason to be contentious.

RELIGIOUS FREEDOM RESTORATION ACT

The recent conflict in Indiana between a State version of the federal Religious Freedom Restoration Act, which was signed into law by President Clinton in 1993, and gay rights activists who say this is legalizing discrimination, is an example of what happens when people won’t follow the simple rules of property rights and voluntary exchange.

Under our simple rules, if a gay couple went to a bakery and ask the baker to bake a cake for their gay wedding, and the baker said no, the couple would go to another bakery. Just as a gay person could go to a bakery and ask the baker if he was a christian, and if the baker said yes, he could walk out without purchasing anything. These are simply different sides of the same transaction. In the first the baker refuses to exchange what he produces (his property), with the other person. In the second case the gay person refuses to exchange money (which represents what he produces, aka his property) with the baker. Does it really matter why each person refused the exchange? It only matters when force, especially the monopoly of Government force, is introduced into the equation.

The first amendment of our constitution protects an individual’s freedom of religion, and the supreme court has previously ruled that, “racial discrimination in the operation of public accommodations, such as restaurants and lodgings, affects interstate commerce by impeding interstate travel and is prohibited….”  at thefreedictionary.com.

How do you reconcile these competing rules, rights, or laws. The problem with having growing numbers of rules and laws, is that each person, or group, tries to use the force of government to impose their values on other people. It’s a never-ending battle of court cases that creates competing factions that continue to fight because nothing really gets solved. This was the result of the Roe vs. Wade decision. Instead of allowing each State to have its own abortion law, no matter how restrictive or permissive it was, five justices on the court imposed their view of abortion on the whole country. Actually the pro abortion activists brought the Roe case to court because they wanted to impose their view of abortion on the rest of the country. That decision has made the abortion issue more contentious over the years, not less.

If decisions are allowed to be made at the point of decision-making, there is less contention and conflict. Most laws take the decision away from the point where the decision should actually be made. Petty tyrants in or out of government, want to use government force to impose their values on others. Gay activists have come a long way from just wanting people and government out of their bedrooms, or was that just a straw man to get government to force people to accept their values. I don’t care what a person does, as long as they don’t “pick my pocket, break my arm“, or have government do it for them.

CONCLUSION

In a free society you have a right to associate with whom ever you want. When you choose your friends, you are discriminating against those who aren’t your friends. When you choose a wife, you are discriminating against other woman. When you make any choice, you are discriminating.

Since every decision is discriminatory, should government be more involved in individual decision making? Many people think it should. Why are individuals and groups seemingly in constant conflict with each other? Because over the last fifty years, government has taken over many of the decisions that individuals used to be free to make. I hope we are at the point where most of us can agree that Government encroachment into every aspect of our lives has to be rolled back, if our civil society is to survive.

If you want to know my thoughts on gay marriage read, Marriage Laws Don’t Expand Rights They Limit Rights.

Related Article – Meet 10 Americans Helped By Religious Freedom Bills Like Indiana’s, by Mollie Hemingway, at the federalist.com.

Related Article – Gay Marriage Isn’t About Justice, It’s About Selma Envy, by Hans Fiene, at the federalist.com.

 

 

 

Comments: Be the first to comment

“Must Read” Leftovers

Posted March 31, 2015 by austrianaddict
Categories: Leftovers
Tags: , , , , , , , ,

How Much Formal Education Do Americans Get, at economicpolicyjournal.com.

It seems that as formal education (brain washing) has increased over the last 70 years, individual liberty has decreased. Correlation or causation?

Congresswomen Eleanor Holmes Norton Attempts To Park Her Car?

1) You can’t be this bad at driving and not know it, can you?  2) How could the guy helping her let this happen? 3) We get the leaders we deserve!

 

Environmental Guy

Jim Carrey does a caricature of an environmentalist. This is from one of my favorite shows, In Living Color, which aired back in the early 90’s. This is really funny because it is true.

 

Matt Ridley: “Fossil Fuels Will Save The World, by Mark J. Perry, at CarpeDiemBlog. Wind accounts for 1% of the worlds energy consumption, and solar accounts for less than 1%. Carbon Based fuels aren’t going anywhere until the cost per kilowatt hour of “green energy” is lower than the cost per kilowatt hour for fossil fuels.

Top Ten Reasons Bacon Is Actually HEALTHY For You, at bacontoday.com. Just like Global Warming believers, I was looking to confirm my bias that bacon is good for you, and I found it. I think we can now say that the science is “settled” on bacon being good for you. If you don’t agree with this settled bacon science, you are a bacon denier.

 

 

Comments: Be the first to comment

Must Reads For The Week 3/28/15

Posted March 28, 2015 by austrianaddict
Categories: Must Reads For The Week
Tags: , , , , , , , , , , , , , , , ,

The Grand Canyon Filling Up With Fog – And Why – In 60 Seconds.

 

California Raisin Farmers Get Another Day In Court, by Bonner Cohen, at cfact.org. The Government through the USDA has the authority to confiscate half of farmer’s raisin crop and sell it abroad at a discounted price in order to keep prices in the US high. The fifth amendment of the Constitution states, “…nor shall any person’s private property be taken for public use without just compensation.” As Joseph Sobran stated, “The constitution is no threat to our current form of government”.

Guiding The Blind Through London’s Subway With Estimote Beacons, at wired.com. Blind people are navigated through the subway via spoken instructions through their mobile device. Where is the seeing eye dog lobby complaining about putting these dogs out of work?

Don’t Call An Ambulance, Call Uber, at medium.com. The median response time for an ambulance in NY City is 6.1 minutes. The median response time for an Uber is 2.42 minutes. It is much cheaper to be transported by Uber than an ambulance. Does this outweigh the medical expertise of the EMT’s? People have another choice when deciding how to get to a hospital. I saw this at Carpe Diem Blog.

Oil And Gas Exports – One Policy Change Many Benefits, by Marita Noon, at cfact.org. Did you know that oil produced in the US is not allowed to be exported to foreign markets? Another example of Government interfering in the market.

Venezuela Oil Wealth Doesn’t Stop Gas Shortages, by Jeremy Morgan, at laht.com. Who would have ever thought that Government price controls, labor union disputes, and socialist distribution collectives would lead to shortages of gasoline?

Venezuela: All Day Shopping Trip For 8 Basic Items.

Prices ration scarce resources in a free market. Waiting in line is part of the rationing process in a socialist paradise. People in the former Soviet Union used to say, “if you see a line forming, get in it”. I saw this at Carpe Diem Blog.

 

EPA Wants To Monitor How Long Hotel Guests Spend In The Shower, Elizabeth Harrington, at freebeacon.com. There is no aspect of your life that Government bureaucrats and politicians won’t try to control. Do you want to bet that someday this will be mandated monitoring equipment on your shower at home? No, that could never happen here.

Michigan Tourism Agency Sees Airbnb As A Threat, at michigancapitalcomfidencial.com. Airbnb is to people looking for lodging, as Uber is to people looking for a ride. And just as the taxi monopoly doesn’t want competition from Uber, so the hotel monopoly doesn’t want competition from Airbnb. This another example of the unstoppable forces of economics catching up to crony capitalists, and helping the consumer through lower prices and more choices. I saw this at Carpe Diem Blog.

The Only Truly Compliant, Submissive Citizen In A Police State Is A Dead One, by John W. Whitehead, at targetliberty.com. Excerpt from the article: “It doesn’t matter where you live, it’s the same scenario being played out over and over again in which government agents, hyped up on their own authority and the power of their uniform, ride roughshod over the rights of the citizenry. In turn, Americans are being brainwashed into believing that anyone who wears a government uniform – soldier, police officer, prison guard – must be obeyed without question.”

 

 

Comments: Be the first to comment

Must Reads For The Week 3/21/15

Posted March 21, 2015 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)

Mesmerizing 3-D Printer Forms Objects Out Of Ooze, And Fast, by Tim Moynihan, at wired.com. The innovation in the field of 3D printing is amazing. Carbon3D’s Continuous Liquid Interface Production (CLIP) technology is mind-blowing. This technique is mush faster than printing an object layer by layer. The object actually grows out of a tray of resin. Watch the video below.

 

Solar Industry Fiascos Continue, at instituteforenergyresearch.org. When Governments try to bring a technology forward before it’s time through tax breaks, tax subsidies, and tax payer backed loans, fraud is ultimately the result. When politicians and bureaucrats are handing out a big pile of tax payer money, there will be no shortage of con artists trying to get their hands on it. Government officials make bad venture capitalists, because they never have to pay the cost of their failures. Tax payers do.

Forget Oil, A Water Revolution Is About To Gusher In Texas, by James Stafford, at economicpolicyjournal.com. New desalination technology has lowered the cost of purifying water from $8 per barrel, to $1.50 to $2.00 per barrel.

UNINTENDED OR INTENDED CONSEQUENCES?

Oakland’s Minimum Wage Hike Is Crushing Childcare Sector And The Domino Effect, at economicpolicyjournal.com. and Seattle’s New Minimum Wage Law Already Leading To Restaurant Closings And Job Losses, by Mark J. Perry, at aei.org. These two articles show the “unintended” consequences of intervention by politicians and bureaucratic busy bodies.

The Robot Lobby Loves A Minimum Wage Hike, atconsultingbyrpm.com. Consequences from Government intervention may actually be “intended”.

Oil Train Derailments In Canada Expose Folly Of Anti-Pipeline Movement, by Kenneth P. Green, at fraserinstitute.org. Environmentalists who have stopped the installation of oil pipelines, are responsible for more oil spills. Shutting down the pipeline doesn’t stop oil from being transported to refineries. More oil is being transported via rail and trucking which increases the chance of a spill. “Unintended” consequences?

German Court Places Nationwide Ban On Uber, at economicpolicyjournal.com. Government always tries to prop up the status quo. Government by its very nature is always tardy. It will always stand in the way of economic innovation that leads to the advancement of our standard of living. The recent passage of Net Neutrality by the FCC will eventually lead to regulations that will slow economic innovation. “Intended” or “unintended” consequences?

More Than 52,000 Canadians Left The Country For Medical Care In 2014, Bacchus Barua, at fraserinstitute.org. Government always produces a decreased supply of a lower quality product of service. The market produces an increased supply of a higher quality product of service. Obamacare will be no different from other socialist healthcare systems. “Unintended” or “intended” consequences?

MISCELLANEOUS

Snowiest Place In America Copenhagen NY, at syracuse.com. 21 feet of snow this winter in this upstate NY town. The pictures are amazing.

Students Attack Preacher Holding Anti-Abortion Sign, Cop Says Free Speech Has Limits On Campus, by Robby Soave, at reason.com. The free speech door only swings in the direction of the progressive left.

Dear Gay Community: Your Kids Are Hurting, by Heather Barwick, at thefederalist.com. Heather Barwick’s perspective on being raised by her mom and her moms same-sex partner. This makes you think.

The Difference Between Going To High School In 1970 vs. 2015, Perfectly Expressed, by Steve Straub, at thefederalistpapers.org. Younger people read this to see how much freedom you’ve lost. Older people read this and ask: How did we let this happen?

Nagging Wife Complains About Her Husband, Gets Unexpected Response, at thechive.com. I know this might come as a shock, but men and women think differently.

 

 

Comments: Be the first to comment

The ‘Disparate Impact’ Racket by Thomas Sowell

Posted March 18, 2015 by austrianaddict
Categories: Government and Politics
Tags: , , , , , ,

Thomas Sowell

Thomas Sowell takes a look at the two reports about the Ferguson Missouri shooting of Micheal Brown, issued by Eric Holder’s Justice Department, in this article titled, The ‘Disparate Impact’ Racket.

In the article Dr. Sowell talks about the difference between the hard evidence and facts used in the first report that proved Brown was in the wrong, and the “sweeping assumptions” and “misleading statistics” used to condemn the Ferguson Police Department as racist in the second report.

Here are some excerpts from the article.

“According to the second report, law enforcement in Ferguson has a “disparate impact” on blacks and is “motivated” by “discriminatory intent”.”
“Like many other uses of “disparate impact” statistics, the Justice Department’s evidence against the Ferguson police department consists of numbers showing that the percentage of people stopped by police or fined in court is larger than the percentage of blacks in the local population.”

“The implicit assumption is that such statistics about particular outcomes would normally reflect the percentage of people in the population. But, no matter how plausible this might seem on the surface, it is seldom found in real life, and those who use that standard are seldom, if ever, asked to produce hard evidence that it is factually correct, as distinct from politically correct.”

“Blacks are far more statistically “over-represented” among basketball stars in the NBA than among people stopped by police in Ferguson. Hispanics are similarly far more “over-represented” among baseball stars than in the general population. Asian Americans are likewise far more “over-represented” among students at leading engineering schools like M.I.T. and Cal Tech than in the population as a whole.”

“None of this is peculiar to the United States. You can find innumerable examples of such group disparities in countries around the world and throughout recorded history.”

“Even with things whose outcomes are not in human hands, “disparate impact” is common. Men are struck by lightning several times as often as women. Most of the tornadoes in the entire world occur in the middle of the United States.”

“Since the population of Ferguson is 67 percent black, the greatest possible “over-representation” of blacks among those stopped by police or fined by courts is 50 percent. That would not make the top 100 disparities in the United States or the top 1,000 in the world.”

THE MYTH OF PROPORTIONAL REPRESENTATION

Here is a video of a younger Dr. Sowell addressing statistical disparities with host William F. Buckley on Firing Line.

Comments: Be the first to comment

Bob Barker vs. Adam Sandler: Rounds I and II

Posted March 16, 2015 by austrianaddict
Categories: Miscellaneous
Tags: , , ,

BOB BARKER AND ADAM SANDLER GO BARE KNUCKLE.

I came across round II of this epic battle a week ago. I went back and watched the original fight scene from the movie Happy Gilmore, which I hadn’t seen in years. Usually sequels are never better than the original, and as much as I loved the original, in this case round II might be better. You be the judge.

ROUND I

ROUND II

BEST LINE, Bob Barker – “Don’t you understand, they’re applauding because your dead“.

Comments: Be the first to comment

Must Reads For The Week 3/14/15

Posted March 13, 2015 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)

Obama Wants New Regulations That Will Control And Limit How You Can You Invest Your IRA and 401(k) Money, at economicpolicyjournal.com. Does adding more rules and red tape help you, or is it just a way to increase  the power of Government?

We Take Your Class, at wetakeyourclass.com. If you decide that the cost of spending your time taking your online class of doing home work is greater than what you could be doing with your time, go to We Take Your Class. I would have gotten better grades if I would have gone to school in today’s tech world.

Next Mega-Bailout: White House Studying “New Bankruptcy Options” For Student-Loan Borrowers, at zerohedge.com. The Government turns them into student loan debt serfs and then comes to the rescue by forgiving the debt. Just another way of getting the next generation of individuals thinking that everything comes from benevolent Government. The tax payer will be on the hook for this debt.

Planet Fitness Bans Member Who Complained About Transgendered Woman In Locker Room, at wftv.com. If you have an xx sex chromosome you’re a female, and if you have an xy sex chromosome you’re a male. How you feel about your gender doesn’t change your sex.

Cultural Marxism: The Future Of Girlification, by John Derbyshire, at takimag.com. The difference between the sexes will always exist. It can’t be wished away by Cultural Marxists who are trying to create a fake world that can’t exist in reality.

ATF Shelves Controversial Bullet Ban Proposial, at foxnews.com. The people have pushed back and temporarily stopped this ban. The administration will attempt this again, stay alert.

How Much Money Do You Need To Buy A Home In Your City, at economicpolicyjournal.com. Here is the salary you need to make to afford the principle, interest, taxes, and insurance on a median priced home in certain cities across the US. Look at California, especially San Francisco.

California Dreaming Of Lower Gas Prices, by Gregg Laskoski, at usnews.com. Gas Prices In California are more than a dollar per gallon higher than the rest of the country. Why? State imposed regulations and taxes have helped boost the price. With the price of housing and gas, just to name a few, who can afford to live in California?

‘Stingray’ Lets Police Spy On Your Cell Phone, by Sam Alder Bell, at usnews.com. Another Government violation of the fourth amendment. But as Joseph Sobran stated so well, “The constitution is no threat to our current form of Government“.

How To Tell Someone’s Age When All You Know Is His Age, at economicpolicyjournal.com. There aren’t many Mabels, Gertrudes, Elmers or Clarences alive today. It’s interesting to see how the popularity of certain names has changed over the years.

Why Low Oil Prices Will Not Harm Sales Of Electric Cars, at theeconomist.com. Owners of electric cars use them as a badge of honor to show they are greener than you. Since value is subjective, and most people don’t value being green higher than the price of an electric car, electric car sales aren’t going up. The price of the car has to decrease much lower before most people would consider buying one. The lower price of oil doesn’t compare to the high cost of the electric car when it comes to purchasing one.

Economic Delusions, Political Demagoguery, and Political Deceptions, by Richard Ebeling, at epictimes.com. This is our heavy lifting for the week. Just get started and don’t stop until you finish the article, you will be glad you did.

I CAN’T HELP IT. IT’S TOO MUCH FUN.

 

 

Comments: Be the first to comment

Real Savings = True Credit. Printed Savings = False Credit

Posted March 12, 2015 by austrianaddict
Categories: Econ. 101
Tags: , , , , , , , ,

In this article titled, Understanding True Credit And False Credit, by Frank Shostak at mises.org, explains the difference between real credit that is backed by savings from real production, and counterfeit credit that is created by the printing press.

Don’t think of money when we talk in terms of real credit, think in terms of real things that are first produced, then saved and finally loaned as credit. Money is how we facilitate the exchange of goods and services either in the present or at some time in the future because of saving. Credit is a part of this future exchange.

Here are some excerpts from the article.

“Banks cannot expand true credit as such. All that they can do in reality is to facilitate the transfer of a given pool of savings from savers (i.e., those lending to the bank) to borrowers.”

“Consider the case of a baker who bakes ten loaves of bread. Out of his stock of real wealth (ten loaves of bread), the baker consumes two loaves and saves eight. He lends his eight remaining loaves to the shoemaker in return for a pair of shoes in one-week’s time. Note that credit here is the transfer of ”real stuff,” i.e., eight saved loaves of bread from the baker to the shoemaker in exchange for a future pair of shoes….Note that the saved loaves of bread provide support to the shoemaker. That is, the bread sustains the shoemaker while he is busy making shoes. This means that credit, by sustaining the shoemaker, gives rise to the production of shoes and therefore to the formation of more real wealth. This is the path to real economic growth.”

“The introduction of money does not alter the essence of what credit is. Instead of lending his eight loaves of bread to the shoemaker, the baker can now exchange his saved eight loaves of bread for eight dollars and then lend them to the shoemaker….Money fulfills the role of a medium of exchange. Thus, when the baker exchanges his eight loaves for eight dollars he retains his real savings, so to speak, by means of the eight dollars. The money in his possession will enable him, when he deems it necessary, to reclaim his eight loaves of bread or to secure any other goods and services.”

“The existence of banks does not alter the essence of credit. Instead of the baker lending his money directly to the shoemaker, the baker lends his money to the bank, which in turn lends it to the shoemaker. In the process the baker earns interest for his loan, while the bank earns a commission for facilitating the transfer of money between the baker and the shoemaker….Despite the apparent complexity that the banking system introduces, the essence of credit remains the transfer of saved real stuff from lender to borrower.”

“Trouble emerges when instead of lending fully backed money, a bank engages in issuing empty money (fractional reserve banking) that is backed by nothing….When unbacked money is created, it masquerades as genuine money that is supposedly supported by real stuff. In reality however, nothing has been saved. So when such money is issued, it cannot help the shoemaker since the pieces of empty paper cannot support him in producing shoes — what he needs instead is bread. Since the printed money masquerades as proper money it can be used to divert bread from some other activities and thereby weaken those activities. This is what the diversion of real wealth by means of money out of “thin air” is all about.”

“We can thus conclude that as long as the increase in lending is fully backed by real savings it must be regarded as good news since it promotes the formation of real wealth. False credit, which is generated out of “thin air,” is bad news since credit which is unbacked by real savings is an agent of economic destruction.”

Here is a previous post titled, Printed Money Doesn’t Represent More Savings, in which we talk about how electronically printing counterfeit money doesn’t produce any good or service, it is just the creation of a piece of paper that allows who ever receives it the legal right to demand someones production.

Related Article – What Comes First, Production Or Consumption, at austrianaddict.com.

Related Article – Capital Consumption aka Eating Our Seed Corn, at austrianaddict.com.

Related Article – The Role Of Interest Rates In A Market Economy, at austrianaddict.com.

Comments: Be the first to comment

Must Reads For The Week 3/7/15

Posted March 7, 2015 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)

DOJ: Wilson Won’t Be Charged In Ferguson Fatal Shooting, at usatoday.com. I put emotion aside, and look at these shootings involving police, strictly from the evidence involved. We knew early on, the evidence in the Ferguson case backed up the cops story. That didn’t stop people like AG Holder and the President from fanning the racial flames that sparked the riots in Ferguson. This week AG Holder and his DOJ couldn’t even spin the evidence enough to charge the officer, officer Wilson was exonerated. This is why I hate politics, the high cost of trying to own a particular issue is paid by people (those who were looted or vandalized in the riots) who are in no way involved. The cost of playing political games is more than just taxes and regulations.

Caught On Tape: LAPD Guns Down Homeless Man In Broad Daylight, at zerohedge.com. Here is a video of LA cops shooting a man they have on the ground. It happened this week, and watching the video, it looks bad. I know that we are second guessing split second decisions, but the guy was on the ground with five cops on top of him. Let’s wait and see if more evidence comes to light about this shooting.

Charges Crumble after Cell Phone Video Uncovered, at wwltv.com. This story is why we should not trust people who have the ability to wield power over us. Just because people become “public servants” doesn’t mean they give up the human trait of self-interest. In fact they may have craved positions of power for the very purpose of using it to impose their superior wisdom on we the ignorant masses.

Texas Town Sees 61% Drop In Crime After Kicking Out Cops, at sputnicknews.com. Most people today can’t even imagine how society would work without police to enforce laws. Sharpstown Tx. has contracted with the private security firm, SEAL Security Solutions, to supply security for their town. Crime has gone down and they have saved $200,000 by going private.

Hillary Clinton Created Multiple Private E-Mail Accounts, at dailycaller.com. The break down of the rule of law starts when our “leaders” violate the law. This is just another example of lawlessness by bureaucrats and politicians. She will not be held accountable to the law even though she broke the law. This particular situation isn’t the start us going down this road, it is just another mile marker we have passed along the road.

1996 Called. Wants Its Clinton Fundraising And Documents Scandals Back, at thefederalist.com. The private e-mail lawbreaking isn’t anything new when it comes to the Clintons. Most young people don’t remember all the scandals during the 90’s. This is standard operating procedure for the Clintons. Read: Hillary And Benghazi: Call In The Cleaners.

Top Senate Republican Tells States To Not Draft Plans To Cut Carbon Dioxide From Power Plants, at usnews.com. Senator McConnell is trying to get States to do the work he doesn’t have the stones to do. Hey Mitch, here’s an idea, defund the EPA or get rid of it. Congress created this agency in 1970 giving up their congressional power of legislation to unelected bureaucrats. Congress has power over this agency. Stand up and do something about it. Maybe standing up to Big Government is a job that Americans won’t do. Although I do agree that states should be standing up against federal government mandates. Too many laws leads to the break down of the rule of law.

Customers Save A San Francisco Bookstore, At Least For Now, at kqed.org. Raising the minimum wage was going to force Borderland Books to close its doors. If they could get 300 customers each to buy a $100 one-year sponsorship they could stay open. I don’t think this is a very good business model, but if it is voluntary, I don’t have a problem with it. Do the sponsors know that they will be asked to do this again next year? Do the sponsors know the minimum wage increase is the reason they have to pay to keep the store open? How many sponsors were in favor of the minimum wage ordinance?

WE NEED TO LAUGH. HERE ARE SOME CARTOONS.

 

 

 

some

 

 

Comments: Be the first to comment

« Older Entries
Newer Entries »