Posted tagged ‘Deflation’

Must Reads For The Week 9/8/18

September 11, 2018

NYT Flashback: “If Donald Trump Targets Journalists, Thank Obama”, at zerohedge.com. Just as Obama set the stage for the executive actions by the next President. He also set a precedent for how to treat the press. The press didn’t worry about the use of executive power by Obama because they shared his world view. The press doesn’t like Trumps use of executive power because his world view doesn’t align with theirs. Here is an example of DOJ abuse of power under Obama.  Sharyl Attkisson computer hacked by DOJ . 

An Uber-Like Service Might Help escape Britain’s Socialist Health System, by George Pickering, at mises.org. The long wait times by patients in the British government healthcare system has produced a situation that allows new technologies to be used to see doctors sooner. In a socialist economic system, waiting lines are how scarce resources are rationed. But the passage of time allowed something new to come into existence that shortens the waiting (rationing) lines.

Criminalizing Childhood: School Safety Measures Aren’t Making Students Any Safer, at zerohedge.com. Excerpt from the article: “From the moment a child enters public schools to the moment he or she graduates, they will be exposed to a steady diet of draconian zero tolerance policies that criminalize childish behavior, overreaching anti-bullying statutes that criminalize speech, school resource officers (police) tasked with disciplining and/or arresting so-called “disorderly” students, standardized testing that emphasizes rote answers over critical thinking, politically correct mindsets that teach young people to censor themselves and those around them, and extensive biometric and surveillance systems that, coupled with the rest, acclimate young people to a world in which they have no freedom of thought, speech or movement.”

Camile Paglia On The Indispensability Of Men, Who Do The Dangerous, Dirty Work That Makes Our Economy Possible, by Mark J. Perry, at carpediemblog. Here is an excerpt from Camile Paglia’s article titled: It’s a Man’s World, and It Always Will Be” (subtitled: The modern economy is a male epic, in which women have found a productive role — but women were not its author):”

“Men are absolutely indispensable right now, invisible as it is to most feminists, who seem blind to the infrastructure that makes their own work lives possible. It is overwhelmingly men who do the dirty, dangerous work………Every day along the Delaware River in Philadelphia, one can watch the passage of vast oil tankers and towering cargo ships arriving from all over the world. These stately colossi are loaded, steered and off-loaded by men. The modern economy, with its vast production and distribution network, is a male epic, in which women have found a productive role – but women were not its author. Surely, modern women are strong enough now to give credit where credit is due!”

Milking Taxpayers, by Dan Mitchell, at danieljmitchell.wordpress.com. Consumers and taxpayers are the ones who pay the cost of Government subsidies for the dairy industry.

Richard Epstein On The Intellectual Poverty And Intellectual Self-Denial Of The ‘New Socialists’ by Mark J. Perry, at carpediemblog. Excerpt from the article by Richard Epstein: “The New Socialists try of course to distance themselves from the glaring failures of the Old Socialists, who suffered from two incurable vices. First, they ran the economies of such places as Cuba, Venezuela, the Soviet Union, and virtually all of Eastern Europe into the ground. Second they turned these states into one-party dictatorships governed by police brutality, forced imprisonment for political offenses, and other human rights abuses………The New Socialists in the United States live in a world of intellectual self-denial. They think that they can control the distribution of all the good things in life without undermining the economic and social institutions needed for the creation of that wealth in the first place.

Stealing By Government, by Dan Mitchell, at danieljmitchell.wordpress.com. Civil asset forfeiture is theft of private property by the state without due process.

FEDERAL RESERVE MISCHIEF

Central Banks Enrich A Select Few At The Expense Of Many, by Thorsten Polleit, at mises.org. Central Banks were created for the purpose of growing Government. Governments can only tax so much out of the private economy before people revolt. Printing money is a stealthier way for governments to procure funds for expansion.

The Fed’s QE Unwind Hits $250 Billion, at zerohedge.com. This slow unwind is hiding the theft that took place by the previous inflation of the money supply.

Can Deflation Fix The Damage Done By Inflation?, by Frank Shostak, at mises.org. This is a must read of the must reads. When the Fed lowers interest rates, below what they would be in a free market, and increases the money supply (counterfeits money), it starts the economy down the road of wasting scarce resources. Here is an excerpt from the article: “It is argued that because we do not exactly know the state of the economy at any point in time, it is quite possible that the central bank’s loose stance could be excessively loose which may result in a so-called overheating. This means that the loose policy will push the economy strongly above the trajectory of a stable non-inflationary growth.”

“Conversely, a tighter stance could be excessively tight thereby risking to plunge the economy below the trajectory of stable non-inflationary economic growth — a severe economic slump.”

“The view that the economy could be seen as a space ship is a misleading metaphor, since the economy is about human beings that use their means to achieve various goals. Given that economy is about human beings, no central authority can replace the free unhampered market that enables individuals achieving their goals in their best possible way.”

SATIRE OR REAL?

Which of these really happened?

Kavanaugh Accused Of Being ‘Too Judgemental’ To Be Effective Judge, at babylonbee.com.

Democrats Demand Kavanaugh Submit To DNA Test To Prove He’s Not Actually Hitler, at babylonbee.com.

PETA Finally Frees Animal Crackers From Their Cages, at barstoolsports.com.

It’s the PETA article. There must not be much real animal abuse going on if PETA put time into freeing these cookie animals from their cages. I was worried that the poor Zebra was going to get eaten by the Lion because a cage no longer separates them. Until I remembered that, cage or no cage, all these animals are going to get eaten by me.

CARTOONS

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Political Cartoons by Pat Cross

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Some Econ. Homework

June 22, 2016

The Fed Has Whiffed Again: Massive Monetary Stimulus Has Not Helped Labor, by David Stockman, at davidstockmanscontracorner.com. The Feds injection of 4 Trillion electronically printed dollars into the economy hasn’t produced a return worth that kind of “investment”. Fewer workers working fewer hours means less is being produced. Just because you print money doesn’t mean goods and services are being produced. It only means goods and services are being demanded by using money not backed by any production. Say’s law is being shown to be true.

“Say’s Law can be explained in the following terms:”

1) “The way that a buyer demands a good is by supplying a different good.”

2) “The supply of one type of good constitutes the demand for other, different goods.”

3) “The source of demand is production, not money. Money is only a temporary parking place for past production.”

“In the modern economy with division of labor, most of us demand goods when we supply our labor. I work as a software engineer. I supply my labor writing computer software. And from that supply I am able to demand other goods, such as coffee.”

Pity The Poor Central Bankers: Playing Masters Of The Universe Is No Longer Fun, by Charles Hugh Smith, at oftwominds.com. Here is an excerpt from the article: “Central Banks can create free money for financiers, but they can’t move the needle of the real economy, except to distort and cripple it with perverse incentives to gamble borrowed money on malinvestments and skimming operations…….as former Master of the Universe Ben Bernanke noted: “higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending (that) will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

I guess former Master of the Universe Ben Bernanke has never read Say’s Law: “The Source of demand is production, not money. Money is only a temporary parking place for past production.

Printing money distorts the pricing system. Market discovery of prices (not Fed manipulated prices) is how information about how much to produce and consume is transmitted to producers and consumers in a free market. The interest rate is the most important of these discoveries, because interest rates coordinates production across time. We live in a world where resources and capital have misallocated for the last decade plus. The cure is to quit printing money and allow the market to set interest rates. What are the odds?

The Fed Pours Water On The Job-Growth Hype, by Ryan McMaken, at mises.org. The administration and the media has been telling us how good the economy has been doing. I guess the Fed hasn’t received the memo. The Fed would normally raise interest rates if the economy is doing well because it would be afraid of it overheating.  The Fed will adjust its monetary policy to weather they think the economy is too hot, or too cold, or just right. The fact that the Fed has raised the interest rate once by a 1/4 point since they lowered it to near zero in 2008 tells us everything about what the Fed thinks of the economy. So where has most of the $4 trillion in printed money ended up? If you say in the financial markets to prop up asset prices, in order to help banks, go to the head of the class. Do you think these false stock prices can stay afloat without more printed money???

Central Banks Are Wrong About Inflation and Deflation, by Frank Shostak, at mises.org. Let’s go to Murray Rothbard writing in Man Economy And State for the definition of inflation and deflation.

ROTHBARD: “The process of issuing money beyond any increase in the stock of specie, may be called inflation. A contraction in the money supply outstanding over any period, (aside from a possible net decrease in specie) may be called deflation. Clearly, inflation is the primary event and the primary purpose of monetary intervention. There can be no deflation without an inflation having occurred in some previous period of time.

Movements in the  supply-of-goods and in the demand-for-money schedules are all the results of voluntary changes of preferences on the market. The same is true for increases in the supply of gold or silver. But increases in fiduciary or fiat media (printed money) are acts of fraudulent intervention in the market, distorting voluntary preferences and voluntarily determined pattern of income and wealth. Therefore, the most expedient definition of inflation is one we have set forth above: an increase in the supply of money beyond any increase in specie.”

The absurdity of the various governmental programs for “fighting inflation” now becomes evident. Most people believe that government officials must constantly pace the ramparts, armed with a huge variety of “control” programs designed to combat the inflation enemy. Yet all that is really necessary is the government and the banks (nowadays controlled almost completely by the government) cease inflating. The absurdity of the term “inflationary pressure” also becomes clear. either the government and banks are inflating or they are not; there is no such thing as “inflationary pressure”.

CONCLUSION

Let’s not be fooled by the “Masters of the Universe’ when it comes to monetary policy and interest rates. With a little bit of reading on the topic, you could come up with the policy for fixing our economic problems. That policy would be to quit electronically printing counterfeit money and allow the market to set the interest rates. The solution is very simple but it is not easy. Why?  Because of the Fed’s previous inflationary policy, the resulting recession that would occur when we implement the cure would be politically difficult for politicians and the Fed to let happen. They have been trying to keep the correction from happening since 08, but at some point economic reality will correct all the Feds previous money printing, and it won’t be pretty.