Posted tagged ‘Peter Schiff’

The New, Old, Buzz Words, “Income Inequality”

January 13, 2014

142763 600 New Years Resolutions cartoons

INCOME INEQUALITY AS POLITICAL BLUDGOEN

As the 2014 mid-term election cycle begins, big government politicians are starting to use the phrase “income inequality” as a talking point. It must be the new focus group tested phrase that appeals to emotions, which is why politicians are using it. The political solutions concerning “income inequality” elicit an emotional frenzy among the economically ignorant, that is difficult to overcome with logical analysis about the economic reality of “income equality”.

INCOME INEQUALITY IS REALITY

The politically self-righteous start from the premise that income inequality is a problem with the free market that shouldn’t exist and something has to be done about it. The political solutions they invoke are simply the forcing of what they want done for the voluntary decisions individuals have made in the market process. These solutions always benefit the politicians at the expense of everyone, including the people they are purporting to help. The invented problem of “income inequality” isn’t a problem with the laws of economics. Inequality in general, and income inequality in particular, are realities of life, and putting the word income in front of the word inequality doesn’t change that reality. These invented problems are made worse when we try to solve them through the political process.

INDIVIDUALS CAN’T BE EQUAL

The simple reason there is income inequality is because people aren’t equal. People have different skills, different desires concerning the use of those skills, different desires on how productive they want to be, with all of these being influenced by where they were born, who their parents are, how much education they have, and who they gravitated to outside of their family structure, among many factors. Could a crab fisherman in Alaska develop the skills or have the desire to grow oranges, or could an orange grower in Florida develop the skills or have the desire to fish for crab. How many hockey players come from the state of Hawaii, and how many surfers come from the state of Minnesota. The fact that we are individuals, means we are not the same, which means we are not equal.

GREEDY CONSUMERS SET WAGES

Another reason for income inequality is the consumer decides peoples salaries. What a person gets paid isn’t decided by the boss, it is decided by what the consumer will pay for a  particular good, or service. The price of a good isn’t decided by adding up the cost of all the material and labor used to produce it, and the consumer pays that price. What really happens is the entrepreneur takes a risk thinking that consumers will pay a certain price for a particular good and then goes about trying to produce that good at a cost lower than the price he thinks the  consumer will pay. The wages of workers are determined by what the consumer will pay for the finished product. The cost of labor is part of the cost of production, nothing more nothing less. Marxist thinking has so permeated our society that we think labor is sacred and shouldn’t be ruled by something as heartless as economic laws. When the cost of production rises, businesses can’t just raise prices to cover the cost, if this were the case no business would ever go under. Put another way if business could have higher total revenue by simply raising prices they would have already raised them. If you are mad about income inequality, don’t point your finger at the greedy owner of the business for not paying a higher salary, blame the greedy consumer for not being willing to pay more for the product. This Peter Schiff Video: Will Wal-Mart Customers Support Higher Wages For Wal-Mart Workers? , at economicpolicyjournal.com, will show you how eager people are to pay higher prices for their consumer goods.

In the next post we will discuss two ways politicians try to fight income inequality, 1) Raising the minimum wage and 2) Extending unemployment benefits. Do they really work, or do they benefit the politicians prospects for reelection?

Let The Counterfeiting Continue! The Fed Is Stuck In Their Feedback Loop!

September 26, 2013
English: The front book cover art for the book...

The Case Against the Fed by the author Murray Rothbard. (Photo credit: Wikipedia)

Peter Schiff does his impression of a salmon swimming against the current in the video below. Of all the “experts” in the video, he is the only one who understands the trap the Fed has snared itself in. Does he have the ability to predict the future? Don’t be awed by his crystal ball gazing because he understands the Austrian Business Cycle Theory (read and watch video here), and the other “experts” probably have never heard of it,or if they have they don’t understand it. The Fed has electronically printed massive amounts of counterfeit money, and has artificially kept interest rates below what they would be in an unhampered market. Scarce resources, labor, and capital, have been misdirected into activities that wouldn’t stand up under normal market conditions. The only thing that keeps these activities viable is the fact that the Fed continues to inject counterfeit money into the market. If the Fed quits electronically printing counterfeit money, there will be a liquidation of these nonproductive activities, similar to what happened in the 08 collapse. The Feds only political solution, which means a solution that saves their skin, is to keep counterfeiting so they don’t get blamed for the collapse. They don’t understand that stopping the counterfeiting is the only cure for the artificial inflationary boom they created when they injected billions of electrically counterfeited money into the economy in the first place.

In this post, Incremental Steps to The New Normal, I say the Fed hopes their taper, no taper, strategy will get them out of the mess of their own making. Here are a couple of quotes by Ludwig von Mises, and Murray Rothbard from an article below.

Ludwig Von Mises: “Credit expansion is the government’s’ foremost tool in their struggle against the free market. In their hands it is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous.”

Murray Rothbard: “What makes us rich is an abundance of goods, and what limits that abundance is a scarcity of resources: namely land, labor, and capital. Multiplying coin will not whisk these resources into being. We may feel rich for the moment, but clearly all we are doing is diluting the money supply.”

Here are some short articles and videos showing what a fine mess the Fed has gotten us into.

The Treasury Secretary On How Unstable US Government Finances Are, at economicpolicyjournal.com

Is Bernanke Looking For A New PR Director? at economicpolicyjournal.com

Albert Edwards Asks You To Spot The Difference, (There Isn’t One) at zerohedge.com

Druckenmiller Blasts, “The Biggest Redistribution of Wealth From The Poor To The Rich Ever“, zerohedge.com

The Fed’s Reflexive Catch 22 In One Sentence, at zerohedge.com

Five Years Of Hard Work By The Federal Reserve, at zerohedge.com

Bill Bonner Announces His Candidacy For The Federal Reserve Chairmanship, at economicpolicyjournal.com

David Stockman Warns ” ‘Calamity Janet’ Yellen Has No Clue” at zerohedge.com.

Baupost Summarizes Today’s “Investment Process” in 50 Words, at zerohedge.com

This is from, “Is Bernanke Looking For A New PR Director?”

Economic ignorance on parade!

September 10, 2012

In my previous post I wrote about the importance of understanding economic principles so as not to get fooled by rhetoric. This video demonstrates this point as Peter Schiff, who predicted the 07-08 economic meltdown, spoofs these delegates. These people agree with him that profits should be banned or confiscated,  without stopping to think about the consequences.                                                                                                                                                                                                        What are profits and what is their purpose in a free market economy? (more…)