Posted tagged ‘Consumption’

Must Reads For The Week 1/3/15

January 3, 2015
The pen is mightier than the sword...

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

Congress Poised In 2015 To Order Edit Of The Federal Reserve Long Sought By Ron Paul, by Stephen Dinan, at washingtontimes.com. I’ll believe it when I see it. I doubt the Senate Republican establishment will allow an audit of the entity that allows Government to grow bigger than tax dollars will allow. The Fed finances Government debt with electronically printed counterfeit money. It is the Governments sugar daddy.

Which Cities Benefit From Fed Money Printing, at economicpolicyjournal.com. The Feds electronically printed counterfeit money goes to financial centers and Government first. That’s why New York, San Francisco, Washington D.C., and Arlington Virginia are a few of the cities with growing average incomes. It pays to be close to the money faucet.

Liberty Slipping: 10 Things You Could In 1975 That You Can’t Do Today, at economicpolicyjournal.com. I’m sure you could think of many more than these 10 things. To add to this list, read some of the comments at the end of the article.

Child Protective Services Threatens Dad: Let Your Kids Play Outside And We Will Take Them From You, by Lenore Skenazy, at reason.com. Another example of something you were once allowed to do that you can’t do today. This is an example of an out of control Government agency.

25 Years Ago NYTimes Got Global Warming Right, by Robert J. Bradley, at mises.orgblog. The NYTimes was once a global warming denier.

Ass-Backward Productivity, by Chris Rossini, at targetliberty.com. The 113th Congress passed more bills than the previous congress. “This wasn’t the least productive congress after all”. I guess it all depends on how you define “productive”.

The Year In Oil, by economicpolicyjournal.com. Charts showing oil prices, oil production, and oil consumption.

All The Money Spent On Red Light Cameras To Stop People Running Lights Apparently Didn’t Improve Safety, by John Lott, at johnrlott.blogspot.com. Less intersection T-Bone crashes but more rear end collisions because of people slamming on brakes trying to avoid getting a ticket. Unintended consequences? Who would have thought?

Medicare Payments For Primary Care To Drop By 50% Or More In Cal, NY, Fla, and Penn, at economicpolicyjournal.com. Lets see, how does this work again? Less will be supplied at the lower price than the higher price. Health care is not a right, it is an economic good, and it will obey the economic law of supply and demand.

Why Is United Airline Suing 22-Year-Old, by Patrick Gillespie, at moneycnn.com. Computer whiz’s site finds cheaper air fare for people, and the airlines don’t like it. Incumbant businesses always think they deserve monopoly status protection from competition.

Quotation Of The Day, at cafehayek.com, and Bonus Quotation Of The Day, at cafehayek.com. Global warming predictions that have turned out to be wrong.

What America Talked About In 2014, at economicpolicyjournal.com. Top news stories of 2014. Did the news media drive the stories they wanted driven?

New Years Resolution Statistics, at statisticbrain.com. And the number one resolution is…..

New Years Resolution Cartoon.

 

 

 

 

Is The Economy; Growing, Shrinking, Or Exactly Where It Should Be?

August 26, 2014

Is the economy growing, or shrinking? Looking for answers to this question by listening to political rhetoric won’t help you find the answer. Politicians will always state the opposite of what their opponents assert about the economy, and will propagandize economic data in an attempt to prove these assertions. Like a pawn on a chess board, the economy will be sacrificed at the expense of winning a  political power game. Politicians preface comments about the economy by stating; “economists say” or “economists agree”, in order to prove their political position related to the economy.

ECONOMIC EXPERTS

These “economic experts”, cited by politicians, either work for the Fed, the Congressional Budget Office, the R and D parties, think tanks, or write op-eds for the NY Times. These “experts” are always talking in terms of an economy improving, growing, or healthy, on the one hand or getting worse, shrinking, or weak on the other. We should be weary about these “experts” pronouncements, because the question isn’t, is the economy growing or shrinking, the real question is, how can anyone have enough knowledge to know where the economy should be at any particular moment?

WHAT IS AN ECONOMY

The simple answer to the question, where should the economy be, is very simple: exactly where it is. To understand this we first have to know what an economy is. An economy is what results when each individual makes decisions on what to produce, consume, save, or exchange. The economy is never stationary it is constantly changing, because what each individual values related to production, consumption, saving, and exchange, is constantly changing. Economic forces are constantly in play adjusting the economy to these new changes based on what individuals value. The economy can never be measured at one particular point in time. The economic data that the experts look at is essentially an inaccurate report about what has happened in the past. This economic data is the placing of a numerical total on individual economic activity, but it says nothing about the individual activity. It’s like trying to understand a three-dimensional world by only using  length and width. How can you know what a sphere is, if the only thing you understand is a circle? Think if you had to make decisions about the D-Day invasion if all you received was information on its progress every ten hours. You would make very different decisions than if you knew in real-time what was happening. Now think if you had to make decisions about D-Day with inaccurate information that is transmitted every ten hours. Your chances of making a good decision are nearly impossible. Trying to make decisions about the economy is much more difficult because there are many more constantly changing  variables.

CENTRAL PLANNERS ARROGANCE

All these “experts”, whether they’re liberal or conservative, or whether they’re for central planning or free markets, think their particular policies can produce a growing economy. These “experts” aren’t just arrogant enough to think they know best how much the economy should be growing or contracting, they also think their policies can make it happen. They think that the decisions of hundreds of millions of people on what to produce, consume, save, and exchange, should be ignored and replaced by their decisions on what they value. Does more knowledge exist about what should be produced, consumed, saved, and exchanged in the millions of decisions made daily by millions of individuals, or does more knowledge exist in the decisions made by “experts” after they analyze false ex post facto data about these millions of decisions?

CONCLUSION

In a free market economy the economy is at any moment exactly where it should be. Whether it is growing of shrinking doesn’t matter because it reflects what millions of people value based on every decision they make. When “experts” intervene in the economy through regulations, taxes, electronically printed counterfeit money, etc, these interventions are factored into the process individuals use to decide what to produce, consume, save and exchange. Even with all of these interventions the economy is exactly where it should be at any given moment. It should be no surprise that interventionist policies, by politicians and bureaucrats, can’t produce the outcomes these planners had hoped for, they were doomed from the start. Not only because the knowledge they receive is useless, it is also late. But instead of repealing their policies, central planners try to fix the outcome brought about by their previous interventions, by proscribing new interventions. They are trying to cure the symptom instead of the problem.

The only way these interventions have a chance of working is if they were made by a totalitarian regime. But even in a totalitarian regime, individuals still have a choice on what they will produce, consume, save, and exchange. Even though the Soviet Union had all of the power to enforce its edicts, they couldn’t make central planning work. The Soviet Union’s economy, at any given time, was exactly where it should have been, even at the point when it collapsed. So don’t vote for politicians who want to steer the decisions of individuals. Allow individuals the freedom to make unhampered decisions about what they produce, consume, save, and exchange, even if you don’t like the outcome of these decisions. The result will be the optimum amount of satisfied individuals that can possibly be achieved in a world ruled by scarcity and subjective value.

Related ArticleCentral Planners Don’t See The Consequences Of Their Actions. Or Do They? at austrianaddict.com.

Related  ArticleA Look Over The Horizon At What Lies Ahead If We Continue Down The Central Planning Road. at austrianaddict.com.

Related ArticleSpontaneous Order Utilizes More Knowledge Than Central Planning Could Ever Hope To Utilize, at austrianaddict.com.

Related ArticleSpontaneous Order = Free Market Economy, at austrianaddict.com.

 

 

 

 

A Housing Recovery, Or Just Another Bubble?

May 29, 2013
English: Blowing large soap bubbles at sunset

Blowing large bubbles  (Photo credit: Wikipedia)

THE WEALTH EFFECT.

Since the housing bust and the corresponding economic downturn in 08, the Fed has been trying to create the “wealth effect”, using its double-edged sword of near zero interest rates and injecting counterfeit money into the banking system. I don’t know if they realize it or not but this double-edged sword is what caused the artificial housing boom which collapsed in 08.

The wealth effect starts from the Keynesian belief that consumption drives the economy. A vast majority of economists, politicians, and bureaucrats believe that if individuals feel wealthier because the value of the stocks and bonds they own are increasing, and the value of their house is also increasing, they will spend more. This increase in consumption [aggregate demand] they believe, is  what drives the economy. Unfortunately if the policies they are implementing are based on a fallacy, the policies will also be  fallacious.

WHAT DRIVES THE ECONOMY SAVINGS OR SPENDING?

The truth is savings, capital formation, and entrepreneurial activity is what drives the economy, not consumer spending. (more…)

Consumption Depletes What Has Been Produced And Saved.

April 26, 2013

CONSUMPTION, PRODUCTION, SAVING

Repetition is the best way to learn something. So lets take another look at consumption, production, and savings. When you consume you destroy, deplete, dissipate, devour, decrease, reduce, exhaust, use up, the supply of. When you produce you create, cause, provide, make, generate, bring forth, the supply of. When you save you accumulate, accrue, invest, reserve, compile, amass, build up the supply of. Production is the creation of wealth which can either be saved and invested for future production, or depleted or destroyed by present consumption.

PRODUCTION PROCESS

We become wealthier when we produce goods at a rate above what we consume. (more…)

What Comes First, Production Or Consumption.

November 20, 2012
Kindof a visual pun that I've illustrated...

Kindof a visual pun. Which came first?  (Photo credit: Wikipedia)

What drives the economy, supply of or demand for goods and services. Does the economy grow because we consume more or can we consume more because the economy grows. This article by Mark Skousen title, “Consumer Spending Doesn’t Drive The Economy, Investment Does”,   explains the public’s perceived chicken or egg conundrum about production or consumption. This is not a puzzling question at all, the answer is very logical and easy to understand. Consumption happens at the end of the production process. You can’t consume something that does not yet exist, and the only way a consumer’s good can exist is if someone produces it. Production is the act of creating wealth, while consumption is (more…)