Posted tagged ‘Financial Bubble’

Must Reads For The Week 7/15/17

July 15, 2017

 

Love Your Heart? Eat Chocolate, by Joseph Mercola, at lewrockwell.com. Lets start with something that not only makes me happy, it also satisfies my confirmation bias. Chocolate is good for me! Excerpt from the article: “According to a recent study in Denmark, people who consume cocoa one to three times a month were about 10 percent less likely to be diagnosed with AFib, compared to people who ate chocolate less than once a month.”  By my calculation if I consume cocoa 30 times a month I will be 100 percent less likely to be diagnosed with AFib.

How Dumb Is The Fed? at zerohedge.com. Excerpt from the article: “….the boom of 09-17 was wrought by the Fed and paid for with fake money. It is a classic credit bubble, in other words – not genuine prosperity…..All the bubbly action… is in the financial markets, not the real main street economy. And as the Austrian School economists tell us, every boom not financed on real savings must end in a bust…..Nothing comes from nothing. Fake money produces fake prosperity. Take away the fake money… and the fake prosperity goes “poof,” too. Which is why the Fed will never, voluntarily, stop manipulating prices. It can’t let the markets return to “normal” price discovery…..All of this debt now hangs on the feeble reed of more ultra-low interest rate policies. The Fed says it is going to return its interest rate policy back to normal……No chance. It’s not that dumb.

Doctors Are Fighting To Treat Charlie Gard. Will The UK Let Them? by Arina Grossu, at thefederalist.com. This is what government-run healthcare looks like. The UK supreme court won’t allow the parents of this child to seek  treatment in the US, even though the UK won’t be on the hook for the cost of any treatments. The problem with government-run healthcare is, who makes decisions about your care? You or the government? Trust me it’s not going to be you. In totally government-run healthcare system, you are owned by the State.

Rand Paul: The Senate GOP Is Going To Keep Obamacare, at economicpolicyjournal.com. Is anyone surprised by this? No! Because the leadership of the GOP is biased toward the status quo of big government. The only way to get rid of Obamacare is to get rid of the leadership of the Republican party. Mitch McConnell and Paul Ryan should be replaced by Rand Paul and Thomas Massie.

Illinois “Budget Deal” Is Likely The Death Knell For The State’s $130 Billion Underfunded Pensions, at zerohedge.com. Bernie Madoff went to jail for his Ponzi scheme. These bureaucrats and politicians won’t spend a day in jail for doing the same thing Bernie Madoff did. Excerpt from the article: “…One of the ways Illinois managed to “fix” its budget crisis was to kick the can down the road on their future pension funding requirements….pensions which are only funded 35% as it is. How did they do it? …they simply decided to continue modeling future returns at a much higher rate than they’ll ever be able to reasonably achieve……In short they tweaked one simple number and, like magic, your whole funding crisis “disappears”.” Manipulating data? That’s what the global warming pretenders have been doing for decades.

Real Climate Science Shows Trump Was Right To Exit Paris, at whatsupwiththat.com. Excerpt from the article: “In actual intent and practice, the Paris Agreement is a political tool for suppressing growth, instituting global governance over energy use and economic growth, and redistributing wealth.”

Maureen Dowd: Economic Illiterate, at economicpolicyjournal.com. The reason I posted this is to get you to understand that you don’t have to take a back seat to the likes of Maureen Dowd, or any other supposed intelligent progressives in positions of “authority”, when it comes to understanding economics. Reading my site allows you to understand basic economics at a higher level than people with credentialed ignorance, like Maureen Dowd.

Mizzou Says 35% Decline In Enrollment Due To 2015 Protests, at tammybruce.com. This shows people are paying attention to the actions of the crazy leftists, and these actions have consequences. Regular people couldn’t relate to the craziness of these protesters, and many are deciding Mizzou isn’t the place for them.

Majoring In Unemployment: Ohio Wesleyan To Launch “Social Justice Major” at tammybruce.com. Why would anyone go into debt to get a Social Justice degree? If you can get a job with this degree, will the job you get allow you to pay back the debt and have a high standard of living? At some point economic reality will destroy these kinds of degrees.

Delta Doesn’t Like Competition From Subsidized Gulf Carriers But US Consumers Should Be Thankful for The Foreign Aid, by Mark J. Perry, at carpediemblog.com. Delta is a crony capitalist business. It doesn’t like competition. It wants the government to protect it from competition.

The Other Side Of “Safety“, at ericpetersautos.com. Is the technology produced by imperfect human beings perfect? Excerpt from the article: “Technology never makes mistakes – unlike the humans who design it. Who never fail to anticipate the unanticipated. Sarcasm, in case you didn’t pick up on it. This 190 prof moonshine – distilled by arrogant technocrats like Elon Musk – is going to get people hurt as automated-driving technology comes online.” Is new safety aid technology in newer cars really safe?

NYT Laments Sharp Decline In Illegal Immigration Under Trump, at tammybruce.com. Who would have thought that stating you are going to enforce the laws, and then actually enforcing the laws, would be a deterrent? I heard someone say it isn’t Trump who is the deterrent, it is the media’s constant portrayal of him as an evil SOB, that is making illegals afraid to come here.

The Real First Responders, at lewrockwell.com. Always remember that in every situation, you are the first responder. Observing what’s going on around you (situational awareness) is the key to being a good first responder.

CARTOONS

Political Cartoons by Bob Gorrell

Political Cartoons by Glenn McCoy

Political Cartoons by Lisa Benson

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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.

 

 

 

 

Must Reads For The Week 12/28/13

December 28, 2013
The pen is mightier than the sword...

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

Two Years After She Passed Away, A Woman Gives Her Family An Unforgettable Christmas, at buzzfeed.com. I saw this on Libertarian Girl’s Facebook page. Thanks Marianne for finding this. Watch this video after you have read or viewed the other articles or videos below, trust me.

The Top Ten Most Ridiculous Law Suits Of 2013, at economicpolicyjournal.com. What kind of people think like this? I’m glad I don’t know.

China Will Require Journalists To Pass A “Marxism Test”, at economicpolicyjournal.com. If the journalists in China need Marxist indoctrination, they should go the journalism schools in America.

Minimum Wage Increase Blowback: Hamburger Ordering Automation, at economicpolicyjournal.com. When the cost of labor is greater than what that labor produces, businesses will find a more cost-effective way of producing that good or service or they will go out of business. It’s simple supply and demand. People demand less at a higher price whether it’s the consumers demand for ice cream, or the employers demand for labor. Read; Minimum Wages Laws Create Unemployment.

Hayek On Why Obamacare Won’t Work, by Mark J. Perry, at aei-ideas.org. The knowledge needed to make the healthcare system work resides in each individual’s decisions concerning healthcare.This knowledge can’t possibly be known by Government bureaucrats.

French Pub Fined For Using Undeclared Labor After Customers Return Glasses To Bar, by Steve Robson, at mirror.co.uk. I saw this at aei-ideas.org. The owners are going to avoid criminal charges but have to pay a fine of 7,500 euro. This is similar to the mafia’s protection racket. This can’t happen here! It’s already here, read this post from last week.

Tammy Bruce on Fox Discussing Phil Robertson’s (Duck Dynasty) Comments, at tammybruce.com. Tammy Bruce’s book, The Death of Right and Wrong, is a great read.

Test Answers That Are 100% Wrong But Totally Genius, by Jake Heppner, at distractify.com. I found this at kids prefer cheese. Numbers 2, 3, 6, 11, 13, 16, 18, 19, 23, and 37 show real creativity.

Obama IRS Tightening Noose On Tea Party Groups, by William Bigelow, at breitbart.com. I found this at kids prefer cheese. Who’s surprised at this?

Spot The Odd One Out, at zerohedge.com. Do these charts show that there is a financial bubble? The Feds counterfeit money is being used to purchase Government securities, which are first laundered through Wall Street and purchased from banks. The money is also used to purchase mortgage backed securities from banks. The counterfeit money the banks receive in exchange for these securities is pumping up the financial bubble.

Which One Doesn’t Belong?

October 23, 2013
Which one doesn't belong?

Which one doesn’t belong? (Photo credit: VerismoVita)

This post from zerohedge.com titled, Spot The Odd One Out, needs little explanation. But you know I can’t let it go without putting my two cents in.

The charts in the post are easy to follow as they lead up to this last chart which shows the Feds balance sheet (in red), compared with the S&P 500 (in green) over the last year. Let’s talk about what the Feds balance sheet is and what it represents.

The Feds balance sheet shows the amount of assets, in dollars, purchased by the Fed. The bulk of these assets are government securities and mortgage-backed securities. Government securities are government bonds and t-bills. Purchasing government securities is the purchasing government debt or, put more clearly, financing the ability of the Government to grow beyond what it confiscates in taxes. This is how the Fed Finances the debt.

Purchasing mortgage-backed securities is the purchase of mortgages created and held by banks. This purchase exchanges the mortgage for counterfeit dollars. Because of our 10% fractional reserve banking system, banks can loan out 10 times what they hold in dollars, if they so choose. This means that the bank can loan 1 million counterfeit dollars for every $100 thousand held in reserve, This is how the Fed injects counterfeit money into the economy.

Here is a look into the Feds balance sheet, courtesy of The Wall Street Journal, wsj.com.

The balance sheet above shows that a little under $1 trillion dollars have been injected into the economy in the last year. This money is finding its way into the financial markets, and is pushing the stock market bubble higher. The other charts show the recent movement of many indicators in the opposite direction of the S&P 500. When the Fed hints of tapering their securities purchases, the stock market starts to sell of like a child throwing a tantrum when mom threatens to take away the oreo cookies. So in order to keep the stock market bubble pumped up, the Fed has to inject increasing amounts of counterfeit money. But just like the bursting of the Fed created tech and housing bubbles, in 00 and 08, this financial bubble will eventually burst although no one knows when the correction will happen.

Related ArticleLet The Counterfeiting Continue! The Fed Is Stuck In Their Feedback Loop, at austrianaddict.com.

Related ArticleA Tornado vs. The Fed, Which Id More Destructive? at austrianaddict.com.

Real Savings vs. Counterfeit Savings

July 19, 2013
Savings

Savings (Photo credit: 401(K) 2013)

RESULTS OF COUNTERFEITING

In a previous post titled, Financial Markets Move When The Puppet Master Speaks, we talked about some of the consequences the Fed creates, when it electronically counterfeits money and injects it into the economy. Some of these are 1) the misallocation of scarce resources into activities that can’t be sustained when the counterfeit money injections are halted, and 2) people’s real production is being redistributed to the first receivers of the counterfeit money (which is known in my world as theft). What’s the difference when real savings enter the market as opposed to counterfeit savings? Lets see what happens, but first let’s talk about money.

WHAT IS MONEY? (more…)

Financial Markets Move When The Puppet Master Speaks.

July 15, 2013
♫Puppet on a String♫

♫Puppet on a String♫ (Photo credit: trawets1)

FINANCIAL MARKET MINIPULATION

The stock and bond markets were sent soaring last week when Fed chairman Ben Bernanke said more Fed stimulus was needed (read here). Three weeks ago Mr. Bernanke hinted that the Fed might start to taper its money injections and the stock and bond markets had a sell off. In an article I wrote on July 1, titled Incremental Steps To The New Normal, I said, “The sell off in the stock and bond market, the week of June 20th, at a hint by Ben Bernanke that he might ease out of Quantitative Easing in the not too distant or distant future, is evidence that the financial markets are a bubble activity blown up by the Fed’s double edge sword of printing counterfeit money and artificially lowering interest rates. We witnessed more evidence the following week when first Quarter GDP numbers were revised down. This started a rally in the stock market because investors know that if there are bad aggregate numbers, the Fed will keep electronically printing money…” . It’s not difficult to predict how investors will react to economic data, because they understand what the Fed will do in response to this data. (more…)