Posted tagged ‘Electronically Printing Counterfeit Money’

Must Reads For The Week 8/15/15

August 14, 2015

The pen is mightier than the sword...

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

Fed Finally Figures Out Soaring Student Debt Is Reason For Exploding College Costs, at zerohedge.com. The Fed has figured out that when money, from debt and money printing, is injected into a particular area of the economy, it raises the price (creates a bubble). Does this revelation hold true for all of the Feds printed money that has gone into the stock market?

The Doctor Won’t See You Now, at Forbes.com.  The laws of economics will be strictly obeyed.  The money quote from the article, “Many exchange policies limit patients’ choices of doctors and hospitals in order to keep premiums down in the face of Obamacare’s intrusive regulations and costly mandates.”  Who could have predicted that?

Navajo Nation Vows To Hold EPA Accountable, at zerohedge.com.  The EPA is responsible for releasing 1 Million, 3 Million gallons of toxic waste water into Colorado’s Animus River.  Like all Government agencies they are currently blaming the contractor for the accident.  Tough luck for New Mexico and Utah who are downstream from the toxic release.  I haven’t heard a peep from the media or environmental groups about this.  I guess it’s neither illegal nor a big deal if the government does it.  I wish the Navajo nation good luck in any lawsuit.  It’s great to be the tyrant, king!

Did EPA Intentionally Poison Animus River To Secure SuperFund Money?, at zerohedge.com.  It appears that a retired geologist predicted that the EPA would foul the Animus River a week before it actually occurred.  The implications of his accusations are chilling.  Never let a good crisis go to waste?

The Battle Intensifies: Police Raid Uber’s Hong Kong Office, at economicpolicyjournal.com.  Car Wars! Return of the Jitneys continues.  At this point, a rational government would realize they can’t put the genie back in the bottle.  Protecting special interests always trumps rationality but it can’t defeat the basic laws of economics.

Going Breadless in Venezuela, at economicpolicyjournal.com.  Socialism and price controls rear their ugly head again as bread shortages are the new norm in Venezuela.  Weren’t there food riots last week?  Don’t they have a toilet paper shortage as well?  Hey, let them eat cake!  Sorry, that’s reserved for the rulers.

Minimum Wage Effect?, at Carpe Diem Blog.  January to June job losses for Seattle area restaurants reaches 1300.  While there are many reasons for declining employment, artificially raising the price of labor means you will have less of it.  Businesses must make adjustments to increased costs.  My guess is that one unintended consequence will be less tipping for servers.

China’s Currency Policy: Devastating Manipulation or a Form of Generous Foreign Aid to Americans?, at Carpe Diem Blog.  This is a very different take on China’s recent efforts to devalue their currency.  Government intervention in currency whether it is printing counterfeit money, zero point interest rates, fractional reserve banking, or devaluing will always have unforeseen and negative consequences.  As for devaluing currency, how do you jump off a cliff halfway?

The Disturbing Messages In Police Recruiting Videos, at The Washington Post.  You don’t have to watch all the videos to get the point.  Why would you stress violent confrontation in your recruiting videos?  Even the Marine Corps doesn’t do that and they have the best military recruiting videos bar none.  If it is part of the recruiting tactics then it is likely the emphasis of their training.  When the only tool you have is a hammer, everything looks like a nail.  Make sure you check out the last recruiting video by the Decatur Alabama police.  Quite the difference!

Serfdom USA!, at economicpolicyjournal.com.  Let’s end the week with some laughs.  This is for all of the true Austrian Economics Addicts out there.

 

The Fed Has Proved The Lefts “Trickle Down Straw Man” Doesn’t Work.

October 28, 2014

The left always comes up with words or phrases that ridicule the ideas and/or policies of their opponents with the intent of stopping any intelligent debate about the merits. In the 80’s, the policy of lowering tax rates for the purpose of economic growth, was called “trickle down economics” by the left in an attempt to convince shallow thinking people that this idea couldn’t possibly work. The term “trickle down” has been used by the left since the 80’s to torpedo any economic policy, especially tax cuts.

HILLARY: ECONOMIST EXTRAORDINAIRE

Here is Hillary Clinton using this tactic in a speech yesterday (10/24/14) at a campaign rally for Martha Coakly.  At the start of this short video she says, “…don’t let anybody tell you that, you know, it’s corporations and businesses that create jobs.”, which is similar to the President saying, “..if you got a business, you didn’t build that“, in a campaign speech from the 2012. Mrs. Clinton’s statement reveals either her total ignorance about economics, or her great insight into the economic ignorance of the audience. We could write a post answering this statement, but it’s the next line; “You know that old theory, trickle down economics.  That has been tried. That has failed. That has failed rather spectacularly.”, that this post will be about.

THOMAS SOWELL AND WALTER E. WILLIAMS SPEAK ABOUT “TRICKLE DOWN”

Economist Thomas Sowell has challenged anyone to name an economist from any economic school of thought who had actually advocated a “trickle down theory”. In this article from 2001, Capital Gains And Trickle Down, he states that there is no such thing as “trickle down theory”. The left uses the term to attack tax cuts by saying, their opponents want tax cuts that will help the rich first and the money will supposedly trickle down to the masses. So just to be clear they are saying that letting everybody keep more of what they produce by reducing tax rates is a “trickle down theory”. This theory they created is simply a straw man.

Economist Walter E. Williams talks about the fake war that has been fought against the “Trickle Down” straw man in this article, Trickle Down And Tax Cuts. This is a tactic used by all politicians in which they misrepresent (lie about) an opponents idea or policy, setting up a straw man, in order to argue against this false premise instead of debating their opponent head on. In this case the left sets up the “Trickle Down” straw man to try to win the tax cut argument.

These two articles are really great especially the examples they give. Here are some excerpts from Thomas Sowell’s article.

“But free-market economics is not about “distributing” anything to anybody. It is about letting people earn whatever they can from voluntary transactions with other people.”

“Those who imagine that profits first benefit business owners — and that benefits only belatedly trickle down to workers — have the sequence completely backward. When an investment is made, whether to build a railroad or to open a new restaurant, the first money is spent hiring people to do the work. Without that, nothing happens.”

“Money goes out first to pay expenses and then comes back as profits later — if at all. The high rate of failure of new businesses makes painfully clear that there is nothing inevitable about the money coming back.”

” No one who begins publishing a newspaper expects to break even — much less make a profit — during the first year or two. But reporters and other members of the newspaper staff expect to be paid every payday, even while the paper shows only red ink on the bottom line.”

“In short, the sequence of payments is directly the opposite of what is assumed by those who talk about a “trickle-down” theory.”

Here are some excerpts from Walter E. Williams article.

“Trickle down is a nonexistent theory. Those who use it simply argue against a caricature rather than confront an argument actually made.”

“You can bet that the White House has people reading every bit of the news, including this column and Dr. Sowell’s article. You can bet some people in the news media will read it, as well. Despite the facts that Sowell has marshaled, they will continue to use trickle down theory and “tax cuts for the rich” demagoguery, even though they now have hard evidence to the contrary, because they can count on widespread gullibility and inability to do critical thinking.”

THE FEDS MONETARY POLICY, IS THE TRICKLE DOWN STRAW MAN

Getting money in the hands of the rich with the idea that it will trickle down through the rest of the economy is the straw man the left says won’t work. They are correct. The Feds loose money policy since 2000 is proof that it doesn’t work. Instead of letting individuals keep what they produce by lowering taxes, the Fed electronically prints counterfeit money and gives it to the top 1%. The Fed has printed a total of  $7 trillion since 2000 (click here) with $4 trillion of that being printed since 2008. Click here to see what has happened to the real median household income since this counterfeiting started before 2000. It has gone down.

The Fed injects electronically printed counterfeited money into the economy by purchasing mortgage-backed securities, from banks, and treasury bonds, from the Federal Government. The banks and the Federal Government have first access to the counterfeit money. Everyone in the immediate orbit of the banks and the Federal Government benefit secondarily from this printed money, you and I don’t benefit. Look at the charts in this article, Abolish The Engine Of Inequality: The Federal Reserve, by Charles Hugh Smith. They show that the  income and wealth of the people with access to the Feds counterfeit money has grown. And the wealth of the rest of us is stagnant or shrinking. The more the Fed prints the bigger the gap.

CONCLUSION

The Feds experiment of giving their counterfeit money to the people at the top and hoping it will trickle down has been going on since before the tech bubble popped in 2000. The tech bubble lead to the housing bubble that popped in 2008, which lead to the current financial bubble that will eventually liquidate itself at some point. The counterfeiting by the Fed created these bubbles in the first place. In the words of economist extraordinaire Hillary Clinton, “It has failed rather spectacularly“. She is correct. Trickle down economic theory defined by the left, as giving money to the wealthy in the hopes that it will trickle down, doesn’t work. Unless the goal was to make the first receivers of the money wealthier at the expense of the rest of us. But who could possibly be cynical enough to think that?

 

Related ArticleReal Savings vs. Counterfeit Savings, by austrianaddict.com.

Related ArticleA Tornado vs. The Fed, Which Is More Destructive, by austrianaddict.com.

 

 

 

 

Federal Reserve Policies Cause Booms And Busts, by Richard M. Ebeling

September 26, 2014

In God (or money) we trust - making money on the hand printing press - stock photo

Federal Reserve Policies Cause Booms And Busts (read here at mises.org), is a fantastic article by Richard M. Ebeling, explaining what happens when central banks, like the Fed, intervene in the economy. Electronically printing counterfeit money and artificially lowering interest rates are the tools the Fed uses to “improve” the economy. The Fed may pay lip service to the free market, but the policy makers at the Fed truly don’t like the outcome resulting from the voluntary decisions individuals make in the free market. If they did, they wouldn’t intervene after the fact to try to exchange what they want the economy to look like, for what actually exists as a result of what each individual decides to produce, consume, save, and exchange.

Their tools of intervention, electronically printing counterfeit money and artificially lowering interest rates, send false information through the market. People in the market start to make decisions on what to produce, consume, save, and exchange based on this false information. The structure of the production process has no anchor to reality and the result is distortions and malinvestment. Scarce resources are allocated to areas of the economy that can’t be sustained unless ever-increasing amounts of electronically printed counterfeit money is pushed into the economy. The economic forces of supply and demand are always trying to reach equilibrium (balance). These economic forces, that are trying to correct the interventions of the central planners, will eventually win.

HERE ARE SOME EXCERPTS FROM THE ARTICLE

“In the free market, interest rates perform the same functions as all other prices: to provide information to market participants; to serve as an incentive mechanism for buyers and sellers; and to bring market supply and demand into balance. Market prices convey information about what goods consumers want and what it would cost for producers to bring those goods to the market.”

“Market rates of interest balance the actions and decisions of borrowers (investors) and lenders (savers) just as the prices of shoes, hats, or bananas balance the activities of the suppliers and demanders of those goods...”

“…There is one crucial difference, however, between the price of any other good that is pushed below that balancing point and interest rates being set below that point. If the price of hats, for example, is below the balancing point, the result is a shortage;”

“…In contrast, in the market for borrowing and lending the Federal Reserve pushes interest rates below the point at which the market would have set them by increasing the supply of money on the loan market. Even though savers are not willing to supply more of their income for investors to borrow, the central bank provides the required funds by creating them out of thin air and making them available to banks for loans to investors. Investment spending now exceeds the amount of savings available to support the projects undertaken”

“…The twin result of the Federal Reserve’s increase in the money supply……is an emerging price inflation and an initial investment boom…”

“…The boom is unsustainable because the imbalance between savings and investment will eventually necessitate a market correction when it is discovered that the resources available are not enough to produce all the consumer goods people want to buy, as well as all the investment projects borrowers have begun.”

“Interest rates, like market prices in general, cannot tell the truth about real supply and demand conditions when governments and their central banks prevent them from doing their job. All that government produces from its interventions, regulations, and manipulations is false signals and bad information. And all of us suffer from this abridgement of our right to freedom of speech to talk honestly to each other through the competitive communication of market prices and interest rates, without governments and central banks getting in the way.

Related ArticleThe Role Of Interest Rates In A Market Economy, by austrianaddict.com.

Related ArticleThomas Woods Explains The Austrian Business Cycle Theory, by austrianaddict.com.

Related ArticleCounterfeiting By The Federal Reserve, Although Legal, Still Results In Theft, by austrianaddict.com.

 

 

Why Has Classical Capitalism Devolved Into Crony-Capitalism, by Charles Hugh Smith

September 16, 2014

In this article, Why Has Classical Capitalism Devolved Into Crony-Capitalism, Charles Hugh Smith, (oftowminds.com) makes the point that the Elites, consisting of ; people in Government and central bankers, lesser institutions that are closest in orbit around Government and central banks, and organizations and individuals who are orbiting these lesser institutions, think the economy will eventually “heal itself” even after all they have stolen through zero percent interest rates, electronically printed counterfeit money, and Government debt. These three legs of theft are, quoting CHS, “crippling the market’s self-healing immune system: Price discovery. Thanks to ceaseless interventions by central banks, the price discovery mechanism has been shattered: want to know the price of risk? It’s near-zero. Yield on sovereign bonds? Near-zero. And so on. Prices have been so distorted (the ultimate goal of Central Planning everywhere, from China to the EU to Japan to the U.S.) that the illusion of stability is impossible without more intervention.”

Here are his six factors of how, “...free market capitalism becomes state-cartel crony-capitalism, a Ponzi scheme of epic proportion...”

1. “Those who control most of the wealth are willing to risk systemic collapse to retain their privileges and wealth. Due to humanity’s virtuosity with rationalization, those at the top always find ways to justify policies that maintain their dominance and downplay the distortions the policies generate. This as true in China as it is in the U.S.”

2. “Short-term thinking: if we fudge the numbers, lower interest rates, etc. today, we (politicians, policy-makers, money managers, etc.) will avoid being sacked tomorrow. The longer term consequences of these politically expedient policies are ignored.”

3. “Legitimate capital accumulation has become more difficult and risky than buying political favors. Global competition and the exhaustion of developed-world consumers has made it difficult to reap outsized profits from legitimate enterprise. In terms of return-on-investment (ROI), buying political favors is far lower risk and generates much higher returns than expanding production or risking investment in R&D.”

4. “The centralization of state/central bank power has increased the leverage of political contributions/lobbying. The greater the concentration of power, the more attractive it is to sociopaths and those seeking to buy state subsidies, sweetheart contracts, protection from competition, etc.”

5. “Any legitimate reform will require dismantling crony-capitalist/state-cartel arrangements. Since that would hurt those at the top of the wealth/power pyramid, reform is politically impossible.”

6. “Understood in this light, it’s clear that central bank monetary policy—zero-interest rates, asset purchases, cheap credit to banks and financiers, QE, etc.—is designed to paper over the structural problems that require real reform.”

 

CHARLES HUGH SMITH INTERVIEW

If you want to hear an interesting and in-depth explanation about the rise of crony capitalism, listening to Charles Hugh Smith’s interview with Gordon T. Long would be well worth your time ( it also has some great graphs and diagrams).

Related ArticleCentral Bank Monetary Policy Enables Us To Put Off Real Reforms, by Charles Hugh Smith, at oftwominds.com.

Related ArticleIs There Capitalism After Cronyism?, by Charles Hugh Smith, at oftwominds.com.

 

Must Reads For The Week 6/28/14

June 28, 2014
The pen is mightier than the sword...

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

FEDERAL RESERVE,  MUST READS OF THE WEEK

 

Lets start with some humor, because the rest of the post isn’t very funny. I saw this video, Money Is Our God, by Tom Simmons, on Libertas Project / Facebook. Tom Simmons has the Federal Reserve figured out.

 

The State Of The Union: A Friendly Reminder Where We Stand Now, at zerohedge.com. These charts show how the Fed is attempting to keep the economy propped up with electronically printed counterfeit money. Their original money pumping caused the very problem their present money pumping is supposed to cure. It’s like an NFL player getting a concussion from a helmet to helmet hit, and trying to cure it by punching him in the face..

The Fed’s Hobson’s Choice: End QE And Zero Interest Rates or Destabilize The Dollar And The Treasury Market, by Charles Hugh Smith, at oftwominds.com. The Fed has been printing counterfeit money to purchase debt, and artificially keeping interest rates low in order to incentivize borrowing which is at record pace over the last 5 years. Policy makers at the Fed believe in the Keynesian theory that spending {consumption} stimulates production. But Say’s law of markets states, “One can only buy with what one has produced….The one product constitutes the means of purchasing another….”  In the market, production spending is always ahead of consumption spending. But when the Fed stimulates Keynesian consumption, without any corresponding production, it misallocates resources. Economic forces are trying to correct the misallocations brought about by the Feds counterfeiting. These forces will eventually prevail no matter how much the Fed tries to prop up it’s false reality with fake money.

The Civilian Employment -Population Ratio Chart, from the FRED {Federal Reserve Economic Data}. This chart represents the proportion of the civilian noninstitutional population that is employed. This next chart shows the total Civilian Noninstitutional Population, which includes two groups of people who are not working, 1) people under 25,  2) retired people. This chart, Civilian Noninstitutional Population – 25 to 54 years, shows people in their prime working years. Now look at the M2 Money Stock chart. If we look at all of the charts starting from March of 95 to the present, here is what we see. The Fed has increased M2 money stock from $3.49 trillion to $11.22 trillion which is almost $8 trillion. During the same time period the ratio of employed people has decreased from 63.1% of the civilian population working, to 58.9% of the civilian population working. The civilian population has increased  from 198 million to 247 million. These numbers show that the Feds policy of electronically printing counterfeit money is a miserable failure, if its goal is to increase employment and keeping inflation in check. But the Fed’s zero interest rate policy, along with its policy of Quantitative Easing {electronically printing counterfeit money},works perfectly if the goal is to enrich the people who have access to this money first. But it doesn’t matter if that’s the goal or not, the result is still the same. ( The two articles below help explain fake inflation numbers, and enriching those with first access to this counterfeit money.)

Former Fed Governor Warsh Slams Fed’s “Reverse Robin Hood” Policies, at zerohedge.com. Reverse Robin Hood is a great way to explain this. People who don’t have access to this counterfeit money have had the value of what they own stolen. Counterfeiting is theft, even if, in the case of the Fed, it is legal.

Wow: Fed Economist On Fudging Price Inflation Data, at economicpolicyjournal.com. You can make the aggregate inflation rate look great if you don’t count sectors of the economy where the prices are obviously skyrocketing. You can’t believe the numbers stated in the headlines. You have to dig into the numbers to find what is really going on.

 

UNFORTUNATELY THE JOKE’S  ON US.

 

 

Must Reads For The Week 6/14/14

June 14, 2014
The pen is mightier than the sword...

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

 

Rehypothecation Evaporation Concerns Grow, As Copper Plunges Most In Three Months, at zerohedge.com. Rehypothecation is simply selling claims on a commodity, a good, a product, etc, above the amount that exists. If the owner of the Mona Lisa wants to store the painting in your art warehouse, you give him a receipt for the painting. This receipt is a claim on a particular painting by the owner, to be redeemed at any time. What if you make a counterfeit receipt and sell it. There are now two claims on the Mona Lisa. If you own a grain elevator, farmers will store their corn, measured in bushels, in your bins, and you give them a receipt for X amount of bushels to be redeemed at any time. You don’t have to give the farmer back the exact bushels of corn he brought in because bushels of corn are homogenous, unlike the Mona Lisa. What if you started selling counterfeit receipts for the corn? What if you have twice as many claims on bushels of corn as you have bushels of corn in your grain bins?  Your theft will remain hidden until such time that you don’t have enough corn to cover a receipt that is presented. The rehypothecation of copper, and the examples of the Mona Lisa and the bushels of corn, are examples of  how our Fractional Reserve Banking System works. Banks can loan out 10 times the amount of money they hold in reserve. If they have $1million in reserve, they can loan out $10 million. Money never exchanges hands, it is transferred electronically when a check {warehouse receipt} is presented. Its a sweet deal for the banks because they get to collect interest on the electronically printed counterfeit money {warehouse receipts}. Unfortunately this counterfeit money has been released in the market and is causing the unintended consequences of misallocating scarce resources and inflation. Read  more about this topic in my article here.

Texas Mom Outraged Because Her Daughters School Won’t Allow Sunscreen, by Rebecca Klein, at huffingtonpost.com. I love it when the rules central planners make come into conflict with each other. In this case officials at the district banned sunscreen because it is a toxic substance. But what about the central planners who have regulated tanning bed use by minors because of the possible danger of skin cancer. Central planners are all or nothing rule makers. They don’t understand that life consists of tradeoffs. But more importantly they don’t understand that decisions concerning these kinds of trade offs should be made by each individual or in this case the parent.  In this case the individual has to trade off one danger, the risk of the toxicity of the sunscreen against the risk of getting skin cancer. As I have learned from reading Thomas Sowell, their are no categorical solutions, just incremental trade offs. Central planners don’t understand that the more incremental decisions they take away from individuals, and make them categorical decisions for everybody, {except for themselves} the more strife they create between us and them.

LET’S LOOK AT MINIMUM WAGE REALITY

1) A Report From The Bakken Oil Fields, Where The Jobless Rate Is 0.9% And WalMart Is Paying 2.4 Times The Minimum Wage, by Mark J. Perry, at aei-ideas.org. The Federal minimum wage rate is $7:25, as is North Dakotas minimum wage rate. Will the central planners, at the federal and state levels, mandate that the wages of these workers at the bottom of the wage scale be dropped to $7:25 an hour just to be “fair” to the other minimum wage workers in other states?  Or should the central planners pass a law that mandates a maximum level of the minimum wage? These planners apparently have more knowledge about what wages should be than the knowledge the market can bring to bear on wage rates. The market in North Dakota is obviously wrong for paying these low skilled workers over double what the mandated minimum wage is. Don’t these central planners exist to correct the inequalities produced in the market?

2) Seattle Business Charges “Living Wage” Tax In Response To $15 Minimum Wage Hike, by Jessica Chasmar, at washingtimes.com. Plans by central planners can’t work like the planners planned. Why? Because there is still enough of a free market remaining that businesses have options other than just paying the new minimum wage rate. They can raise prices like this company, they can replace labor with technology. they can replace low skilled low wage labor with more productive higher skilled higher wage labor, or they can look to cut costs elsewhere in the production process. If raising the minimum wage for low skilled labor would increase production and profit, businesses would already be paying a higher wage, just like what is happening in North Dakota because of the oil boom.

NOW LETS HAVE SOME LAUGHS

12 Things Men Do Differently Than Women, at economicpolicyjournal.com.

Pee Wee Obama, at theburningplatform.com. I’ve been trying hard not to do this, but I can’t help myself.

Compare this video of President Working Out In Polish Gym, to this, Olivia Newton John, Physical video.

I saw these cartoons at theburningplatform.com.

WHEN THESE POWER PLANTS CLOSE, WHERE WILL THE ELECTRICITY COME FROM?

149321 600 Rates Skyrocket cartoons

 COAL POWERED CARS, I PADS, AND I PHONES

149426 600 Coal Industry cartoons

SOCIALIZED MEDICINE BY ANY OTHER  NAME…..

149459 600 Making Obamacare Look Good cartoons

Observations From The Margin

April 30, 2014
Observation Tower

Observation  (Photo credit: mooglet)

The Federal Reserve electronically prints counterfeit money and loans it to member banks at zero percent interest. These banks purchase guaranteed investments, like U.S. T Bills, with this counterfeit money. When the bonds mature, they pocket the interest and pay back the borrowed counterfeit money. Why can’t you or I get a $100 million dollar loan from the Fed at zero percent interest, purchase 5 year U.S. T Bills at 1.6% interest, and after they mature, pocket $1.6 million after paying back the $100 million? Better yet, why can’t you or I counterfeit $100 million dollars, go through the above process, keep the $1.6 million of interest and burn the $100 million we counterfeited? Better yet, why can’t you or I just skip the 5 year process and counterfeit $1.6 million and use it immediately? The simple answer is, counterfeiting is theft and theft is illegal, except when the Fed counterfeits, then it’s legal. The truth is counterfeiting results in theft whether it’s legal or illegal.

This article titled, Alaskan P0lar Bears Threatened…By Too Much Spring Ice, leaves me scratching my head. I thought polar bears were threatened by melting sea ice because of global warming. Apparently if the ice is too thick, ringed seals, which are the polar bears favorite meal, can’t create the breathing holes they need to survive the frigid winter. The male seals mysteriously arrive in the early spring for the purpose of breeding, which is curiously about the same time the female polar bears are emerging from their maternity dens with their cubs, having not eaten for six months. So should I be for global cooling or global warming?

I read a story about 40 veterans dying after the VA  put them on a secret waiting list for the purpose of making the VA wait list times look better. Bureaucrats at the Government run VA decided that looking competent, as opposed to being competent, was more valuable to them than the lives of these veterans. Welcome to Government run healthcare. This is an example of death panels, and what we can look forward to as Obamacare is incrementally forced upon us. Death panels are nothing more than third-party bureaucratic decisions makers making trade offs under a different set of incentives and constraints than the patient and the doctor normally operate under. No one should be surprised by this, unless you are a true believer in the government’s ability to create a utopian world.

The EPA is going to regulate the greenhouse gases emitted when cows burp and fart (read here). I was very sceptical when I heard about this because I thought it was probably a parody from The Onion. I searched The Onion for any article about cow farts and there were none. Sometimes you can’t even make this stuff up.

The FDA is getting its regulatory foot in the door concerning E-Cigarettes. Health advocates and their puppets in congress want the FDA to go farther. But they shouldn’t worry, we all know this is the first goose step of many more goose steps to come. E-Cigs are a safe way for people who are addicted to nicotine to get their fix while reducing the chance of cancer. Shouldn’t the FDA and the CDC be promoting this safer way to inhale nicotine? Don’t cities and counties across the US have needle exchange programs? Isn’t the purpose of these programs to reduce the chances of getting HIV or hepatitis C while the addict enjoys the drug of his choice. Government prohibits safe addiction on the one hand, and promotes safe addiction on the other. What am I missing here?

 

Must Reads For The Week 2/15/14

February 15, 2014
The pen is mightier than the sword...

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

Suicide Bomb Instructor Accidentally Blows Up His Class, at economicpolicyjournal.com. I wonder if Iraq’s version of OSHA will fine the terrorist training camp for unsafe working conditions?

More Evidence Of Employers Fighting Back Against The Possibility Of Higher Minimum Wages, at economicpolicyjournal.com. Do central planners ever consider the possibility that employers will react differently to these interventions than the planners thought they would?

WaPo Columnist: The Austrians Are Winning, by economicpolicyjournal.com. I’ll bet the WaPo columnist, E.J. Dionne, has never read anything  by Hayek, Mises, or Rothbard. Mr. Dionne I have a suggestion, start with Economics in One Lesson by Henry Hazlitt. Baby steps, baby steps.

Europe Considers Wholesale Savings Confiscation, Enforced Redistribution, at zerohedge.com. This can’t happen here, can it? The EU is talking about using the savings of the people of Europe to fund long-term investments in order to boost the economy. I thought all that electronically printed counterfeit money was supposed to boost the economy.

Retail Sales Slide Across The Board, Post Biggest Miss Since June 2012, at zerohedge.com. This is a symptom of not having enough people producing. The more our Government tries to use the spending of electronically printed counterfeit money to stimulate the economy the less will be produced. Spending counterfeit money is theft. It is consuming what has been produced, without any corresponding production to back up the counterfeit money. It is the consumption of wealth not the production of wealth.

Initial Jobless Claims Miss; Back Above 8-Month Average, at zerohedge.com. Government interventions, including the Fed electronically printing counterfeit money and keeping interest rates artificially low, lead to fewer people producing. This is just another symptom of the real problem, which is , say it with me, Government intervention into the free market. If we cure  Government intervention, these symptoms will go away.

Video: John Stossel – In Praise Of Fossil Fuels, at libertypenblog.blogspot.com. Carbon based fuels are the least expensive way to power the world economy. Subsidizing and mandating “green” energies isn’t the answer to lower cost energy. The market will reveal a lower cost form of energy if or when one exists. The Government has chosen Green energy and the market has rejected it. Think of all the wasted resources, including human capital, that could have been used to make carbon based fuels more abundant and less expensive. When it comes to green energy our Government is literally Don Quixote tilting at wind mills.

The Mafia State Of Mind, by Charles Hugh Smith, at oftwominds.com. I like reading CHS’s articles because they make me think.

The Market (Individuals) Finds Ways Around Govenment Intervention.

October 7, 2013
600 mm by 300 mm (24 in by 12 in) emergency pl...

(Photo credit: Wikipedia)

INDIVIDUAL DECISION MAKING vs. GOVERNMENT DECISION MAKING

I’ve always thought free market capitalism would always out pace the interventions of Government, but when the bubble burst in 08, I started to change my mind as I began to educate myself about the interventions by the Fed via the double edge sword of low-interest rates and electronically printing counterfeiting money. I had never understood the ramifications of these policies until I started reading about the Austrian Business Cycle Theory. We have talked about these ramifications in these posts: The Role Of Interest Rates In A Market Economy, Thomas Woods Explains The Austrian Business Cycle Theory, Keynes Was Correct In 1919!,  A Look Over The Horizon At What Lies Ahead If We Continue Down The Central Planning Road, What Comes First Production Or Consumption,

I had become more pessimistic about the chances of the market regaining the lead over Government intervention, but recently I’m seeing signs of the market starting to reassert its dynamism. Two examples are the shale oil boom and another is the plummeting sales of electric cars. The oil boom is happening in spite of the best efforts of Government to get in it’s way, and electric car sales prove the consumer ultimately makes the decision on what succeeds and fails in the market, and not the Government. I should never have been pessimistic in the first place because the market is always attempting to correct the interventions perpetrated on it by the Government.

THE BUST IS THE CURE FOR THE PRINTED BOOM

If we look at the case of the housing boom that lead to the 08 bust, the boom was out pacing the corrections by the market, much like the story of the tortious and hare, but once economic reality finally caught up to the fake reality created by Government, the bust in housing occurred. The bust was the cure for the artificial boom created by the Government and the Fed, and should have been allowed to run its course in order to wring out all the misallocations that had been allowed to grow during the boom. From the politicians stand point this much-needed cure was a political nightmare, because they were in the driver seat when the crash happened. So instead of letting the market cure the problem they created, the Government and the Fed stepped in and “saved” the too big to fail banks by lowering interest rates to near zero and injecting close to $3 trillion into the economy through the purchase of mortgage-backed securities and treasury bills. This doesn’t even count the TARP bailout under Bush or the $900 billion economic stimulus package under Obama. What the Fed and the Government did to grow the boom and then “save’ the economy from the bust, was like a doctor prescribing steroids to his young patient in ever-increasing amounts to help build a big strong body. Everyone could see him growing because of his outward appearance, but no one could see what was happening on the inside. When his organs began to fail, and his body began to break down, the doctor prescribed more steroids to try to keep his body growing. This isn’t a perfect analogy but it’s close to describing what the Fed and the Government has done to the economy over the last 15 plus years. Unlike the patient, who will eventually die, the economy won’t die, it will continually keep trying to make corrections for all the interventions by the Fed and the Government. Why won’t the economy die? Because an economy is simply the result of all the decisions made by each individual as they cooperate and compete with other individuals on how to use scarce resources for production and consumption. Government intervention is just one variable that has to be considered when individuals make decisions. When Government intervention grows to a certain point, individuals start spending more time protecting what they have rather than spending  time producing more. The standard of living begins to stagnate as we start to consume more than we produce.

Here is a chart that shows that debt doesn’t create growth. The G7 nations consist of US, UK, France, Germany, Italy Canada, and Japan. The debt that was created to grow these economies has only marginally increased GDP compared to the growth in debt. In fact the GDP number is fake because the electronically printed counterfeit money that gets used for consumption is counted when GDP is calculated. You could say the central banks are counterfeiting a positive GDP number. Read article here.

CONCLUSION

This debt has to be paid back by future production. Future production also has to sustain future consumption by Government and private individuals. If production can’t cover all three (debt, Government consumption, and individual consumption), who do you think will have to sacrifice for the other two? The upcoming debt ceiling fight will answer that question. My prediction is the debt ceiling will go up and there will be no actual cuts in Government spending, just minor reductions in the rate of growth. I hope I’m wrong.

Is The Economy Improving? It Depends On How You Define Improving.

August 20, 2013
Real GDP Contracts Most in 27 Years

Real GDP Contracts Most in 27 Years (Photo credit: inspecie.co.uk)

QUANTITATIVE VS. QUALITATIVE ANALYSIS

We keep hearing  from the administration, and the media, that the economy is slowly improving. They cite unemployment data and GDP data to back this assertion, hoping we won’t dig below the surface in search of the truth hidden in the numbers. How you arrive at the specific numbers, is more important than the numbers themselves. Here’s an example. The environmentalists try to prove global warming by using a vaguely defined  point in the past, and comparing it to this years, or this decades, temperature. If you let me pick the year to be used in the comparison, I could prove global cooling. All I’d have to do is pick a year that was hotter than this year. If you can pick the starting point in a  comparison, you can make the data say whatever you want it to say. This is just one sleight of hand trick that politicians, the elites, and the media use in an attempt to shape our opinion, and move it toward their desired outcome. You have to have a definable standard for a comparison to be made. If the standard can be manipulated, comparisons are meaningless. When they say the economy is improving, we have to ask, “compared to what”. Normally the economy is judged to be improving if (more…)