Posted tagged ‘Fed Money Printing’

Must Reads For The Week 2/10/18

February 11, 2018

 

THE FED AND THE STOCK MARKET

Is The 9-Year Dead Cat Bounce Finally Ending? By Charles Hugh Smith, at oftwominds.com. The Feds double edged sword of artificially low interest rates and money printing have created bubbles in the financial markets. No one knows what is and is not a bubble activity. We just know printed money went into the financial markets. As Jim Grant has said, “It is money in search of mischief”. In other words, artificially low interest rates and printed money misallocates scarce resources to activities that would not exist under free market interest rates and stable money.

When the Fed raises interest rates and takes money out of the system by unwinding its balance sheet, the bubble activities will be revealed. Could this be what is happening to the stock market now. The Fed’s QE Unwind Accelerates Sharply, at zerohedge.com. The Fed created the financial bubble in the first lace and is now trying to figure out how to gradually let the air out, instead of popping it. They hope a stronger economy can help release the air slowly over time.

Former Fed Chairman Alan Greenspan Warns: “We Have A Stock Market Bubble, at zerohedge.com. No kidding! You helped cause it by lowering interest rates and printing money.

The worlds Central Banks Holding Steady, But Promise More Rate Hikes, at mises.org. I scratch my head when I hear central banks talk about price inflation without mentioning that their policies are the cause of inflation. Prices will go up and down because of supply and demand. But this is not inflation. Money printing is the definition of inflation.

DEBT

Pentagon Auditor Can’t Account For $800 Million In Spending, at zerohedge.com. No shock here. There is waste, theft and fraud everywhere tax payer money is spent.

Credit Card, Student and Auto Debt All Hit Record Highs In December, at zerohedge.com. Borrowing money means you bring your future consumption into the present. How much more do you have to produce in order to be able to pay off the interest and inflated cost of present consumption and to also be able to consume when the future becomes the present?

Republican Fiscal Hawks Revolt Against Budget Deal, Suspension Of Debt Ceiling, at zerohedge.com. How can the Republicans in Congress say they are for small government when they pass a budget that increases the yearly budget debt by $400 billion? Only fiscally responsible Republicans stood against this budget. With the Fed saying they are going to increase interest rates, the $20 plus trillion national could increase exponentially.

Student-Loan Crisis Worsens; Looming Defaults Strain Govt Bailout Program, at zerohedge.com. Since the Government took over student loans it has become a bubble activity. The rise in the cost of college tuition is being caused by borrowed money being used to pay for college. When students get out of college and have more debt than income there will be defaults. These defaults will eventually be paid by you and me the tax payer. What a scam!

The Cure, at ericpetersautos.com. Excerpt from the article: “Imagine how different cars would be if people had to pay for them – as opposed to financing them. Debt – which is what financing is – allows people to buy more car than they can afford. It hides the actual cost of the car. It enables the government to impose costs in the forms of mandates which would otherwise be unaffordable – and so, objectionable. People would complain in the one language the government understands. They would not comply – because they could not buy.”

OTHER STUFF

We Say Peoplekind”: Trudeau Mansplains To woman That “Mankind” Is Not an Appropriate Term, at zerohedge.com. This is the the idiocy of political correctness. Everyone with a brain knows what mankind means.

Lawmakers Want To Ban Tide-Pods From Looking So Delicious…. Seriously, at zerohedge.com. Who in their right mind would think eating laundry pods is a good idea? What kind of ego does it take to think it is your job to protect these idiots from themselves?

The Greatest Public Health Mistake Of The 20th Century, at mercola.com. We have been told for decades to stay out of the sun or wear sunscreen when you have to be out in it. But staying out of the sun causes a vitamin D deficiency. The study says that vitamin D may prevent 30 deaths for each death caused by skin cancer. Thomas Sowell is right again when he said, “There are no solutions in life. There are only trade offs.” We were sold a bill of goods on a bad trade off.

The Fragile Generation, at zerohedge.com. Excerpt from the article: “Bad policy and paranoid parenting are making kids too safe to succeed…..This generation of kids must be protected like none other. They can’t use tools, they can’t play on grass, and they certainly can’t be expected to work through a spat with a friend.”

 

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Wealth Can’t Be Redistributed If It Doesn’t Exist!

June 25, 2015

The simple concept that production comes before consumption must not be as simple to understand as I think. Since before the tech bubble popped in 2000, our Government and the Federal Reserve have tried to spend, and electronically print, our way to prosperity. Government spending and money printing are not just consumption activities, they also work to distort the production process. We have been consuming more than we have been producing for about a decade or more. We have essentially been eating our seed corn.

Government’s wealth distribution policies are put forth by politicians as charitable activities. But, since Government doesn’t produce anything, it must first confiscate what it redistributes. That is theft not charity.

Here are three short articles from Mises.org that address the above topic.

1)  Technology Needs Capital To Produce Economic Growth, by Frank Shostak. Here are some excerpts from the article.

“Most modern theories that emphasize the importance of new ideas and new technologies give the impression that these ideas and technologies have a “life of their own.” Many experts hold that because of the limited amounts of capital and labor, without technological progress, the opportunities for growth will eventually run out.”

“So regardless of how clever we are and regardless of various technological ideas, without an adequate pool of funding nothing will emerge. It is through the expansion in the pool of real savings that an increase in the stock of capital goods is possible. And it is the increase in the capital goods per worker that permits economic growth to emerge.”

2)  Wealth Must Be Created Before We Give It To The Poor, by Steve Patterson. Here are some excerpts from the article.

“Charity is seen as ethically superior to business. After all, what could make a greater impact on the world than giving to the needy?”

“This view of the world is shortsighted. While it’s true that charity helps people, business makes a far greater contribution to humanity. Virtually all of the increases in society’s standard of living are because of simple commerce, and it’s the poor, in particular, who benefit the most…”

“In the developed world, it’s easy to forget that poverty is the default state of human existence. Wealth is not found in nature; it must be created, and this is precisely the role of businesses and entrepreneurs. They are the force which takes us out of the state of nature. All cases of poverty have the same solution — not wealth distribution, but wealth creation. This is not merely a theoretical argument. It’s witnessed everywhere around the globe.”

“… Not everybody has the skills necessary to create a new invention or become a successful businessman. But that doesn’t preclude them from making a positive difference in the world. However, we should be realistic: a donation of furniture to Goodwill does not create the same ripple effect as selling affordable food or power tools to everyone.”

“Many economic truths work this way. We’re quick to praise what’s easily seen…… but we overlook or even condemn what happens behind the scenes….. The farmer, the butcher, the truck driver, the cook, the engineer, and the businessman should also be praised for their work. Without them, there would be no surplus food for the charity worker to give away.

3) Let’s Hope Machines Take Our Jobs: We Want Wealth Not Jobs, by Peter St. Onge.

When we use technology and machines to become more productive it destroys jobs, and this is a good thing. This article explains this abstract concept that I have found to be difficult to get people to understand. The article starts with the thought experiment that a machine is created that is capable of producing everything with a push of a button. Its creation puts a lot of people out of work. Now what happens? Read the article it will make you think which is a good thing.

Related ArticleWhat Comes First, Production Or Consumption, at austrianaddict.com.

Related ArticleCapital Consumption, aka Eating Our Seed Corn, at austrianaddict.com.

Related ArticleReal Savings = True Credit, Printed Savings = False Credit, at austrianaddict.com.

Related ArticleProducing Capital Goods, Requires Restricting Present Consumption, at austrianaddict.com

Related ArticleWhy Do People Think The Government Is The Economy? at austrianaddict.com.

Related ArticleEntrepreneurship Can Be A Stinky Business, at austrianaddict.com.