Posted tagged ‘Keynesian Stimulus Spending’

Must Reads For The Week 8/13/16

August 13, 2016

HILLARY + TRUMP = ECONOMIC IGNORANCE

Donald Trump Turns To Herbert Hoover Economics, at economicpolicyjournal.com. Mr. Trump wants to “prime the pump with more spending and debt.” Spending financed by debt, both public and private, is what got us here in the first place. In the last 10 years the Fed printed over $4 trillion, and the Government took on $10 trillion in new debt. That’s enough pump priming don’t you think? The Keynsian Economic well has dry up. The simple answer is to allow free markets to work unencumbered by Government spending and Fed monetary expansion. Unfortunately nothing is simple when politicians and bureaucrats are involved in the decision making.

Hillary Clinton’s 5 Ideas To Fix The US Economy, at money.cnn.com. How does this sound. 1) Government spending on infrastructure, 2) debt free college, 3) “encourage” (force) companies to share profits with employees, 4) make the rich pay more in taxes, 5) raise the minimum wage. This is simply more spending and debt wrapped up in Christmas paper with a bow on top.

ECONOMIC REALITY

Bankster Flips Out: Says Japan’s Government Isn’t Doing Enough Keynsian Spending, at economicpolicyjournal.com. Decades of Keynsian stimulus by the Japanese Government isn’t enough? It is always the same answer to every economic problem more spending.

What Should The US Do If Other Countries Use Tariffs And Use Other Methods To Distort Trade, at economicpolicyjournal.com. Government intervention with free trade through tariffs, subsidies, and regulations harms the economy of the country that implements these policies. If other countries want to harm their economies with these policies; Why would we respond to such stupidity by implementing the same policies?

The Minimum Wage: Taking Away The Right To Work, by Roy Cordato, at mises.org. How many times does it have to be said: when a wage is set above what a particular job produces, that job will go away. Why do you think the number of private sector union workers has declined from 35% of the private sector work force, to just over 6% of the private sector work force since the 50’s. Unions priced themselves out of the market and the jobs went away. When it comes to raising the minimum wage, it is our benevolent politicians who are pricing low skill workers out of the work place. Political rhetoric is seen, workers losing their jobs are unseen.

Latest Jobs Data: The Worst expansion In 30 Years Continues, by Ryan McMaken, at mises.org.  All the stimulus spending by government and the money printing by the Fed hasn’t worked as the planners planned. Until these two activities are stopped. This is the new normal.

Will The Bubble Pop Even If The Fed Never Raises Interest Rates, by Brendan Brown, at mises.org. We are in new territory. Does anyone know how this will end? No. But it will end with a lot of pain. All we know is, at some point the activities brought about by low interest rates and printed money will have to be liquidated.

Consumer Optimism Is Not The Key To Economic Growth, by Frank Shostak, at mises.org. As we have asked before; What Comes First, Production or Consumption? You can’t consume what isn’t produced. Stimulating spending puts the cart before the horse. As Mr. Schostak says, “Demand is limited by prior production. To put it differently, his demand if fully covered (i.e., funded by the bread that he has produced). demand therefore, cannot stand by itself and be independent: it is limited by prior production….”. Interest rates coordinate production across time. Interest rates set artificially by government send false information through process of production. As a result production and consumption are mismatched. This is where we are after a decade of the Fed’s monetary manipulation.

Venezuela Has But One Choice: Capitalism or Chaos, by Carmen Elena Dorobat, at mises.org. Here is a quote by Ludwig von Mises which sums up what every article in this post: “THE ISSUE IS ALWAYS THE SAME: THE GOVERNMENT OR THE MARKET. THERE IS NO THIRD SOLUTION.”

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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.