Posted tagged ‘Richard Ebeling’

Some Econ Homework

June 20, 2017

Jean-Baptiste Say And The “Law Of Markets“, by Richard Ebeling, at fff.org. Say’s ‘Law Of Markets’ states: “A product is no sooner created, than it, from that instant, affords a market for other products to the full extent of its own value.”…..As each of us can only purchase the productions of others with his own productions – as the value we can buy is equal to the value we can produce, the more men can produce, the more they will purchase.”

You can’t consume what has not been produced. Production creates the ability to consume. The more you produce the more you can consume.

Say: “It is not the abundance of money but the abundance of other products in general that facilitates sales….Money performs no more than the role of a conduit in this double exchange. When the exchanges have been completed, it will be fount that one has paid for products with products….Should a tradesman say, ‘I don not want other commodities for my woolens, I want money,’ there could be little difficulty in convincing him, that his customers cannot pay him money, without having first procured it by the sale of some other  commodities of their own….”

Counterfeiting money creates an exchange of an actual produced good for dollars that are not backed by corresponding production. This is theft. Even if the counterfeiting is done ‘legally’ by The Federal Reserve, it is still an exchange of something for nothing (aka theft).

There are always imbalances with supply and demand in the market, but they are usually corrected rather quickly. Monetary intervention by the Fed creates imbalances that last much longer and are only corrected by stopping the monetary intervention or an eventual bursting of the bubble.

Federal Reserve monetary manipulation has been going on for about a decade. Does anyone know what is real and what is fake in our economy right now? All we can say is there are major imbalances in our economy that will eventually be liquidated, and it won’t be pretty.

“Priming The Pump” Won’t Create Real Wealth, by Frank Shostak, at mises.org. When a recession happens labor and capital become idle. ‘Experts’ think the way out of the recession is to increase demand for goods and services so these idle labor and capital will become employed once again. Ignoring how the over-supply of labor and capital happened in the first place can lead to the same Government and Fed policy solutions which created the problem in the first place. Idle resources are not the problem. Idle resources are the symptom of the problem. The problem is the initial intervention into the market using the policies of below market interest rates and injecting electronically printing counterfeit money into the economy.

Excerpt from the article: “Commentators are correct in believing that what prevents the expansion of the production and the utilization of idle resources is the lack of credit. There is, however, the need to emphasize that the credit that is lacking is the productive credit – the one that is fully backed by real wealth (real savings). The fact that this type of credit is scarce is the outcome of previous episodes of expansionary monetary mischief by the central bank, which resulted in the diversion of wealth from wealth producers to non – wealth producers.”

“What most commentators advocate is the expansion of credit out of “thin air,” via central bank…. direct monetary injections or via intervention in the money markets to maintain a lower target interest rate……This expansion of unbacked credit not only cannot revitalize the economy but, on the contrary, will set in motion a further weakening of the process of wealth generation.

Fed Officials Can’t See What’s Right In Front Of Them, Jonathan Newman, at mises.org. Fed officials can’t see the forest for the trees.

Here is an excerpt from the article:”Minnesota District Bank president, Neel Kashkari recently wrote…..the Fed faces a dilemma regarding asset bubbles and whether of not they should be met with raising interest. He summarizes in five points.”

-“It is really hard to spot bubbles with any confidence before they burst.”

-“The fed has limited policy tools to stop a bubble from growing, even if we thought we spotted one.”

-“The costs of making policy mistakes can be very high, so we must proceed with caution.”

-“What we can and must do is ensure that the financial system is strong enough to withstand the inevitable bursting of a bubble.”

-“Monetary policy should be used only as a last resort to address asset prices, because the costs of the economy of such policy response are potentially so large.”

“Then he admits that it is possible artificially low-interest rates increase the probability of asset bubbles forming: “Low rates…could make bubbles more likely to form in the first place.” He laments that there is no economic theory to back this up….”

It is hard to believe that with his myriad of  ‘credentialed ignorance’ he has never heard of the Austrian Business Cycle Theory.  Excerpt from the article:

“For Mises and Hayek, the policy mistake involves any creation of credit out of thin air…….If any central bank increases the money supply through the financial system, it means that borrowers have the privilege of being the first to bid up prices as the new money ripples through the economy.”

“It means that nominal incomes, employment, consumption, the prices of capital goods, and other asset prices will increase. It means that capital will be directed into new, longer, and riskier lines of production, beyond what would have happened at the prevailing levels of real saving. These lines of production will turn out to be unprofitable as the increasing scarcity of capital becomes apparent and the costs of production become prohibitively high. Incomes, employment, consumption, and stock prices plummet as laborers and capital owners seek productive and profitable employment. The bust is made up of all of the necessary corrections for the errors made during the boom. Additional artificial credit will only delay this process and make it more painful when the day comes.

Mr. Kashkari, you said: ” Monetary policy should be used only as a last resort to address asset prices, because the cost to the economy of such policy responses are potentially so large.” Mr. Kashkari, do you know that the Fed monetary policies “of last resort” have been in effect since before 2000? These policies caused the tech and housing bubbles. What have been the costs to the economy after 20 years of these policies? They are incalculable. The only way to stop this waste is to allow interest rates to be set by the market and stop the money printing. This will bring about a recession which will correct all the dislocations of resources, capital and labor that were brought about by these policies. All thought the losses will be high, they won’t come close to the losses that will be incur the longer these monetary policies are allowed to continue.

Related ArticleInterest Rates Set By The Market vs. Interest Rates Set By The Fed, at austrianaddict.com.

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

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

Related ArticleThe Fed has Proved The Lefts “Trickle down Straw Man” Doesn’t Work. at austrianaddict.com.

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Interest Rates Set By The Market vs. Interest Rates Set By The Fed

September 29, 2015

The Fed has kept interest rates at near zero since the 08 economic crash. For the last year the Fed has floated the trial balloon that they would raise interest rates this September by a mere quarter of a point. The Fed huffed and puffed and failed to follow through with this increase. To understand if the original lowering of the interest rate and the failure to raise the interest rate is good or bad, a few questions have to be answered.

What is an interest rate? How is an interest rate determined? What is its purpose? What happens if the interest rate is set artificially?

We will attempt to answer these questions with some excerpts from these articles, Central Banks Don’t Dictate Interest Rates, Frank Shostak, and Low Interest Rates Cant Save A House Of Cards, by Richard Ebeling. These articles give great explanations about interest rates, central banks, and the Austrian business cycle theory. Take time to read them.

WHAT IS AN INTEREST RATE

Individuals place a higher value on a good possessed in the present than a good possessed at some point in the future. The interest rate is the difference in time preference made by each individual between possessing a good in the present as opposed to the future. Put differently, the premium we place on present goods compared to future goods, or the discount we place on future goods compared to present goods is the interest rate.

Shostak –“…… a lender or an investor gives up some benefits at present. Hence the essence of the phenomenon of interest is the cost that a lender or an investor endures.”

“……For instance, an individual who has just enough resources to keep himself alive is unlikely to lend or invest his paltry means. The cost of lending, or investing, to him is likely to be very high — it might even cost him his life if he were to consider lending part of his means. So under this condition he is unlikely to lend, or invest even if offered a very high interest rate.”

“Once his wealth starts to expand, the cost of lending — or investing — starts to diminish. Allocating some of his wealth toward lending or investment is going to undermine, to a lesser extent, our individual’s life and well being at present. From this we can infer that anything that leads to an expansion in the real wealth of individuals gives rise to a decline in the interest rate (i.e., the lowering of the premium of present goods versus future goods). Conversely, factors that undermine real wealth expansion lead to a higher rate of interest.

HOW INTEREST RATES ARE DETERMINED

The time preference of all individuals determines the interest rate. As savings by individuals accumulate the interest rate decreases. As savings by individuals diminish the interest rate increases. The amount of savings determines the interest rate, the interest rate doesn’t determine the amount of savings. When the interest rate is falling we are saving more and consuming less, which means resources are being saved for future consumption. When the interest rate is rising we are consuming more and saving less, which means resources are being used for present consumption.

Shostak – “In the money economy, individuals’ time preferences are realized through the supply and the demand for money. The lowering of time preferences (i.e., lowering the premium of present goods versus future goods) on account of real wealth expansion, will become manifest in a greater eagerness to lend and invest money and thus lowering of the demand for money.”

“This means that for a given stock of money, there will be now a monetary surplus.”

“To get rid of this monetary surplus people start buying various assets and in the process raise asset prices and lower their yields. Hence, the increase in the pool of real wealth will be associated with a lowering in the interest rate structure.”

“The converse will take place with a fall in real wealth. People will be less eager to lend and invest, thus raising their demand for money relative to the previous situation. This, for a given money supply, reduces monetary liquidity — a decline in monetary surplus. Consequently, this lowers the demand for assets and thus lowers their prices and raises their yields.”

PURPOSE OF INTEREST RATES

Resources are scarce and have alternative uses. Low interest rates send a signal to producers that resources are being freed up for use in future lines of production. But all they need to know is the lower interest rate makes expanding for future production affordable. Higher interest rates send a signal to producers that resources are being used for present consumption. The higher interest rate makes their plans to expand unaffordable and that is all they need to know.

Each individuals unlimited desire for specific goods, their time preference for specific goods, all of which are constrained by the scarcity of resources, their different uses, and the desire of individuals to produce specific goods based on whether they think it’s profitable is coordinated by interest rates. Interest rates coordinate production across time as long as they are determined by the market i.e. individuals time preferences. If set arbitrarily, interest rates distort the production process.

Ebeling – “Investment requires the availability and application of real resources and the distribution of raw materials and the use of a portion of the existing workforce to manufacture and at least maintain the capital goods – tools, machines, equipment, machinery and factory structures – finished and final goods and services produced and made available on the market that consumers want.”

“But all this takes time, repeated periods of production, through which goods are not to be done only once or even twice, but ever-so-every day, every week, every month, every year, there is a constant flow of them…..”

“If the resources, capital, equipment, and the work is not allocated and maintained, over and over again, to begin the process for the assembly of the next device, the output would shortly come to an end….”

“It must be the necessary savings in the economy to buy, implement and use the necessary raw materials, capital, equipment and workers so that each of the goods that are going on in the partially completed sequence can be brought to its final, usable form that is ready to be sold to consumers on the market.”

“Goods and services of all kinds are bought and sold with the help of money. But pieces of paper money, or even minted coins of gold or silver, can’t make the lack of real raw materials, capital, equipment, work or services disappear or less limited. Print out pieces of paper currency does not create out of thin air more coal, iron, or platinum. such paper money does not lead to a capital equipment miraculously falling from the sky. Nor do they materialize more working – age workers ready to be assigned to the desired job.”

THE ARTIFICIAL BOOM AND THE REALITY OF THE BUST

What happens when the Federal Reserve intervenes into this complex process? Fed policies usually result in artificially low-interest rates, and the injecting of electronically printed money into the system. The policy sends mixed signals through the market. The artificially low interest rate is a false signal that says there are more resources for expansion. Unfortunately people are still consuming at their present rate and haven’t started saving more for future production. The economy is being pulled in two different directions. The counterfeit money is demanding scarce resources for future production, but the structure of production is set up to meet people’s desires for present consumption. This is what happened with the housing bubble. The prices for scarce resources, labor, capital, and time were being bid up because they were being demanded for the expansion of new processes of production for future consumption. And at the same time these resources were being demanded for present consumption patterns that hadn’t changed. At some point there weren’t enough resources to go around and they were wasted when the bubble became unsustainable and collapsed.

Ebeling – “This balancing and coordinating function of the interest rates on the financial markets is undermined and distorted by central banking “activist” monetary policy that pushes for more money in the banking system. Since money is the medium through which the savings and investments carried out further amounts of money being made available for lending purposes creates a false impression that there are more savings to support longer and more time-consuming projects for investment than is actually the case. And artificially lower interest rates makes it seem as if these new or expanded investments in projects that are more profitable than they seem as if the higher market interest rates that prevailed in the financial markets.”

“….the investment boom stage of the business cycle will come to an end, and investment projects that can not be implemented or can not be profitably maintained if they are brought online. The downturn in the economy sets in. The imbalance between savings options and investment decision-making and the allocation and use of resources, capital and labor between the shorter and longer production processes become visible.”

“There  must be a balance between supply and demand, prices, and wages, resources, capital and labor use between different sectors of the economy in order to more accurately reflect the post-boom realistic conditions on the market and profitabilities.”

“Jobs are temporarily lost, unsustainable and unprofitable investment projects must be written down or written out, and the illusory wealth positions will prove to be not as good or as high as they appeared in the previous boom phase of the business cycle.”

“What has happened over the last decade is the home, the stock market and the investment boom that was driven by the Federal Reserve easy money policies beginning in the year 2003 finally came crashing down in 2008-2009. Then, in the name of preventing the decline it mutates into a fearsome new deflation-driven “great depression”, the Federal Reserve has opened the monetary spigots for the last six years, setting up and running the same type of rise in the stock market, capital malinvestments, and the work of the misallocations that its monetary intervention had caused earlier in our century.”

“Now the Fed authorities want to rein in monetary expansion and “push” the interest rates up……. But if they do, this threatens to shake out the imbalance market relationships their own monetary policies have created.”

“This is how and why the roller coaster of the economic cycle continues to repeat itself, but each phase of the cycle varies in duration, and many special properties, depending on specific historical circumstances. The Federal Reserve’s own expansionary monetary policy, wets out for the boom that finally turns into a recession from which it is Fed authorities consider themselves as responsible to prevent or mitigate, that just sets in motion the next unsustainable boom of a new offset the monetary expansion.”

“So while the Federal Reserve has decided to keep its key interest rate near zero, it is only delaying the inevitable result of its own monetary policy, another needed economic correction that its actions will have generated but it will no doubt blame on the supposed  “failures” of the market economy.”

CONSLUSION

The Federal Reserve and all Government bureaucrats don’t have a fraction of the knowledge that the market can bring to bear on any decision, but they have enough arrogance to think they do. As Hayek says their “pretense of knowledge” makes them think they can bring about results that aren’t possible because they fly in the face of the most basic economic principles.

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

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

Related ArticleFederal Reserve Policies Cause Booms And Busts, at austrianaddict.com.

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

 

Government Intervention Stifles Real Job Creation

August 18, 2015

Can government create a job? Yes! Government can create millions of jobs. They could outlaw farming equipment tomorrow which would immediately create millions of farming jobs. But would these new farming jobs be productive jobs?

Government jobs by definition aren’t productive jobs. Does a government job produce more than the cost of the labor? The only way to find this out would be to compete in the market and discover what the price of labor would be according to the law of supply and demand.

High school teaching jobs are examples of jobs that are both free market jobs (private school teachers) and government jobs (public school teachers). What do I mean by this? A private school teacher gets paid considerably less in wages, benefits, and retirement, than a public school teacher. A private school has to provide a quality service at a price that individuals value more than the money they  freely exchange for that service. If they can’t, they will go out of business. A public school has no such incentive to provide quality at a lower price. They receive ever-increasing revenue through local tax levies and state and federal funding. Because of this, teachers unions procure ever-increasing wages and benefits for their teachers who provide a lower quality service. People’s next best alternative,  private schools or home schooling, are considerably more expensive, which is why it is difficult to escape public schools.

Government wages are higher than market wages. The true price a teacher could command if we had a free market educational system, would be somewhere between the monopoly wage of the public schools and the wage paid by the private schools. We can’t know what it would be, all we know is the wage would be revealed through the interactions between individual demanders and suppliers of the service in the market. The true price of a teachers wage can only be discovered through the market process.

GOVERNMENT STIFLES JOB CREATION

Below are two great articles. One is about how Government regulatory costs make it difficult, if not impossible, to create real jobs in the private sector. And the other tells how we must get back to the understanding that the individuals rights as a free person trumps some vague idea of a collective good.

The first is, Our Government Destroyer of Jobs, by Charles Hugh Smith, at oftwominds.

Here are some excerpts from the article.

“Government regulation is supposed to address life safety and exploitation of workers and the public. But unbeknownst to the status quo, it’s supposed to do so with an eye on cost-benefits and diminishing returns.”

“The government’s solution to absurdly high costs of opening a small business is: borrow more money….. we make the rules, you follow them, and if you can’t afford to follow the rules, then don’t open the business.”

“This is how you get an economy of bureaucrats justifying their existence with 500-page manuals regulating private enterprise and abandoned main streets and malls. The government assumes private enterprise will jump through an endless number of hoops to operate a business, and that there is an endless supply of willing entrepreneurs who will volunteer to put themselves at risk of bankruptcy.”

“Back in reality, there is not an endless supply of people willing to jump through an insane number of hoops and risk their capital and health on starting a risky enterprise.”

“Guess what, our government: you forgot that ultimately you live off the private sector. Yes, let’s pile on another 500 pages of regulations–no problem–nothing could be easier for those in secure jobs funded by taxpayers. But if the private-sector jobs go away, who’s left to pay for state employees to shuffle thousands of pages of regulations and enforce countless “improvements”?”

FREE INDIVIDUALS  vs. THE COLLECTIVE

The second is, Agenda For A Freer And More Prosperous America, by Richard Ebeling, at epictimes.com.

Here are some excerpts from the article.

“America must rediscover and reestablish its own founding principles and philosophical ideas…This means recapturing the spirit and meaning of individualism and individual rights. That every human being should be considered a free person, allowed to live his or her own life as he or she wished, guided by their own goals, purposes and ideals that will give their life meaning, value and worth, as they define it.”

“This means liberating ourselves from the false notion that the individual is owned and subservient to the collective, the tribe or the group into which they were born, and to which a political and ideological elite asserts they are to be sacrificed and obedient; that their life is not their own, but the property of the collective.”

“As long as the underlying collectivism is not challenged and overcome, real and sustainable freedom cannot be restored. America was founded on the idea of sovereign individuals, who associated with each other for mutual betterment through voluntary trade and consensual association. Government was meant to secure and protect each individual’s right to his life, liberty and honestly acquired property (meaning peaceful production and/or voluntary exchange).”

“Privileges and favors, subsidies and artificial protections for some at the expense of others must be repealed and abolished. There must be an equality of individual rights before the law, not an inequality of government-imposed “entitlements” and redistributive “rights”….”

“Freeing markets under a regime of equal individual right under an impartial rule and enforcement of the law would do far more to help those that “progressives” claim there are most concerned about in society than the entire array of interventionist and welfare statist programs have done in more than a half a century of coerced redistribution since the heady hopes of LBJ’s Great Society programs.

VIDEO FROM LEARN LIBERTY

Below is a video from Learn Liberty, that talks about the ramifications of the new sharing economy. This sharing economy is challenging the status quo businesses that are protected by government regulations.

 

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

Related ArticleI’m From The Government And I’m Here To Help, at austrianaddict.com.

Must Reads For The Week 7/18/15

July 18, 2015
The pen is mightier than the sword...

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

Minimum Wage Impact: Garment Industry Eyes Move Out Of L.A. City Limits, at economicpolicyjournal.com. This isn’t a shock to us. Less is demanded at a higher price than a lower price. This includes labor.

Retailers Expected To Raise Prices Or Cut Jobs To Pay For Minimum Wage, at thegardian.com. Even in a more socialist country like Great Britain economic forces are always at work. They can’t be legislated or wished away even with the best of intentions.

Judge To Bakers: No Free Speech For You, by Rachel Lu, at thefederalist.com. Not only where the owners of the bakery fined $135,000 because they wouldn’t bake a wedding cake for a same-sex marriage. They were also told by the Judge they were told they were not allowed to continue to state their intentions to abide by their moral beliefs. This is what happens when our constitution is bastardized to mean protecting group rights instead of individual rights. Our constitution protects the individual from coercive government.

Wallingford Police Look Into Complaint About Nazi, Confederate Items Sold At Flee Market, at myjournalrecord.com. Someone called and complained that they were offended that these items were being sold. I’ve looked in the constitution and I can’t find where is says an individual has a right to “not” be offended. This and the story above show that we are becoming a nation with zero mental toughness. When you whine about someone offending you, you give that person power that they wouldn’t have if you weren’t offended.

“Chattanooga Shootings: Why Should We Make It Easy For Killers To Attack Our Military, by John Lott, at johnrlott.blogspot.com. Look at the gun free zone sign on the front door of the military recruiting station in the picture on this post. One thing we know for sure, the sign didn’t stop the shooting. The question is did it provide an easy target for the terrorist? Why would you advertise that don’t have the means to stop an attack?

Taxpayers Have Now Spent $3.5 Million To Find Out Why Lesbians Are Obese, by Elizabeth Harrington, at freebeacon.com. This study is examining why three-quarters of lesbians are obese, but gay men are not. Why do we need to spend all this money to know why anyone is obese. I’ll give you the reason for free. An individual is obese because he chooses to take in more calories than he burns off. If it was more important for him to be thinner he would choose differently.

38 Ways College Students Enjoy ‘Left Wing Privilege’ On Campus, by Tal Fortgang, at time.com. College is just the next indoctrination camp your kids attend after their initial brainwashing in grade school and high school.

Saudi America” Has Been The World’s Largest Petroleum Producer For 29 Months In A Row, by Mark J. Perry, at Carpe Diem blog. Where would the American economy be without the shale revolution?

Youth Unemployment In The SPIG, at economicpolicyjournal.com. Youth unemployment in Spain, Portugal, Italy, and Greece is reaching an average of 45%. This is how you produce a generation of people who will vote for a centrally planned economic socialist system. Unfortunately they can’t vote economic forces out of existence.

An “Austrian” Economist’s Advice For Greece And The EU, by Richard Ebeling, at epictimes.com. This is our heavy lifting for the week. Top down central planning is the problem, and individual liberty is the solution. Greece is just the most recent experiment with socialism.

 

Must Reads For The Week 5/2/15

May 2, 2015

Toya Graham Interview, youtube. Follow up on our post this week about Baltimore mom Toya Graham who got the attention of her son who was part of the riot.

Reporter, “Do you think strong mothers can keep this thing from happening?” Toya Graham,  “I think so, I think it wouldn’t have been as bad as it was, but once again we don’t know where those mothers were at....”. I tip my hat to Toya Graham. She has not abdicated her responsibility as a mother, even though as a single parent it would have been easy to do.

Mom Shamed For Packing Oreo Cookies In Daughter’s Lunch, by Keith Farrell, at thefederalistpapers.org. Why do parents put up with idiocy like this. Parents should deal with these central planning administrators like Toya Graham dealt with her son. Without slapping them silly.

Video: Tammy Bruce On Fox Friends Discussing Gay Gestapo, at tammybruce.com. The bakery that was fined $135K for not baking a wedding cake for gay couple, was getting help with the fine from crowd funding site,Go-Fund-Me, until gay Gestapo pressures Go-Fund-Me to take it down. Tammy Bruce’s background makes her uniquely qualified to speak on this issue.

U.S. Encouraging Cuba To Shift Toward Democratic System Of Corruption, at theonion.com. And I thought Obama went to Cuba to meet with Castro to get pointers on how to implement higher levels of totalitarianism.

Obama’s “Green Energy” Scams Costing Tax Payers Billions, by Russ Helper, at thefederalistpapers.org. When is giving out a pile of money there will be scam artists that are more than willing to take it. We’ve talked about this before in these posts, Green Energy Proving Venture Capitalists Are Smarter Than Government Bureaucrats, and The Hidden High Cost Of Green Energy.

Electric Vehicles Lose Buzz, by Michael Wayland, at detroitnews.com. Car companies, with the help of government subsidies, can’t even give these things away. “The market picks winners, and leaves the losers for government“, at a high cost to tax payers in particular and the economy in general.

This Drivable Car Was 3D Printed In 44 Hours, at entrepreneur.com. From the article; “In the near future, it could cost only about $7,000 to manufacture, perhaps the start of what will become a niche market for customized cars.” In the near future there could be many more car companies competing for market share, which would drive down the cost of cars. Consumers would get more choices at a lower cost.

Video: Ohio Police Officer Refuses To Shoot Man Attempting Suicide By Cop, by Barry Donagen, at benswann.com. This cop had every right to shoot this guy. He trusted his gut and didn’t shoot, which probably went against how he was trained.

CLINTON SLUSH FUND, AND/OR, MONEY LAUNDERING SCHEME

Clinton Non-Profit Admits Organization Is Just A “Pass-Through”, by Seth Davis, at thefederalist.com.

Is The Clinton Foundation Just An International Money Laundering Scheme?, by Sean Davis, at thefederalist.com.

15 cents of every dollar was actually used for charitable work. Part of that 15 cents went to the Clinton Presidential Library. I don’t think that is a charity; is it?

Excerpts from the article, “The entire operation was constructed in order to provide a facade of plausible deniability for Hillary Clinton. Conceal the cash. Hide the donors. Delete the e-mails.

Is America Still On F. A. Hayek’s “Road To Serfdom“, by Richard Ebeling, at epictimes.com. This is our heavy lifting for the week.

 

Must Reads For The Week 3/14/15

March 13, 2015
The pen is mightier than the sword...

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

Obama Wants New Regulations That Will Control And Limit How You Can You Invest Your IRA and 401(k) Money, at economicpolicyjournal.com. Does adding more rules and red tape help you, or is it just a way to increase  the power of Government?

We Take Your Class, at wetakeyourclass.com. If you decide that the cost of spending your time taking your online class of doing home work is greater than what you could be doing with your time, go to We Take Your Class. I would have gotten better grades if I would have gone to school in today’s tech world.

Next Mega-Bailout: White House Studying “New Bankruptcy Options” For Student-Loan Borrowers, at zerohedge.com. The Government turns them into student loan debt serfs and then comes to the rescue by forgiving the debt. Just another way of getting the next generation of individuals thinking that everything comes from benevolent Government. The tax payer will be on the hook for this debt.

Planet Fitness Bans Member Who Complained About Transgendered Woman In Locker Room, at wftv.com. If you have an xx sex chromosome you’re a female, and if you have an xy sex chromosome you’re a male. How you feel about your gender doesn’t change your sex.

Cultural Marxism: The Future Of Girlification, by John Derbyshire, at takimag.com. The difference between the sexes will always exist. It can’t be wished away by Cultural Marxists who are trying to create a fake world that can’t exist in reality.

ATF Shelves Controversial Bullet Ban Proposial, at foxnews.com. The people have pushed back and temporarily stopped this ban. The administration will attempt this again, stay alert.

How Much Money Do You Need To Buy A Home In Your City, at economicpolicyjournal.com. Here is the salary you need to make to afford the principle, interest, taxes, and insurance on a median priced home in certain cities across the US. Look at California, especially San Francisco.

California Dreaming Of Lower Gas Prices, by Gregg Laskoski, at usnews.com. Gas Prices In California are more than a dollar per gallon higher than the rest of the country. Why? State imposed regulations and taxes have helped boost the price. With the price of housing and gas, just to name a few, who can afford to live in California?

Stingray’ Lets Police Spy On Your Cell Phone, by Sam Alder Bell, at usnews.com. Another Government violation of the fourth amendment. But as Joseph Sobran stated so well, “The constitution is no threat to our current form of Government“.

How To Tell Someone’s Age When All You Know Is His Age, at economicpolicyjournal.com. There aren’t many Mabels, Gertrudes, Elmers or Clarences alive today. It’s interesting to see how the popularity of certain names has changed over the years.

Why Low Oil Prices Will Not Harm Sales Of Electric Cars, at theeconomist.com. Owners of electric cars use them as a badge of honor to show they are greener than you. Since value is subjective, and most people don’t value being green higher than the price of an electric car, electric car sales aren’t going up. The price of the car has to decrease much lower before most people would consider buying one. The lower price of oil doesn’t compare to the high cost of the electric car when it comes to purchasing one.

Economic Delusions, Political Demagoguery, and Political Deceptions, by Richard Ebeling, at epictimes.com. This is our heavy lifting for the week. Just get started and don’t stop until you finish the article, you will be glad you did.

I CAN’T HELP IT. IT’S TOO MUCH FUN.

 

 

Your Econonomic Homework

October 22, 2014

Business Woman Present Business Cycle - stock photo

I like reading economic articles by Richard Ebeling. He explains abstract economic concepts in ways that are understandable for regular people. Although we have written about these concepts in the past, we can always gain greater insight by reading different explanations by different writers. Even if you understand these economic concepts, this article may help when you try to explain them to people who don’t have the same level of understanding.

KEYNES LEAKS THE  TRUTH ABOUT DEBASING THE CURRENCY

As John Maynard Keynes said, “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

The only way Central Banks have gotten away with electronically printing counterfeiting money is because it is difficult to understand. Our job is to shrink that one in a million ratio, because the only way our current problems change is if more people truly understand what results when the Fed intervenes in the market.

RICHARD EBELING ARTICLE

The article, Ludwig von Mises And The Austrian Theory Of Inflations And Recessions, by Richard Ebeling, at epictimes.com, explains, 1) How money emerges from markets not Government, 2) Saving and investment, 3) How central banks cause business cycles, 4) Inflation and misallocated resources, 5) Recession corrects the Fed caused misallocations.

Here are some excerpts from the article.

“Money is a market-based and market-generated social institution that spontaneously emerges out of the interactions of people attempting to overcome the hindrances and difficulties of direct barter exchange……Historically, gold and silver were found through time to have those attributes most desirable for use as a medium of exchange to facilitate the ever-growing network of complex market transactions that enabled the development of an ever-more productive system of division of labor.”

“Like all other prices on the market, the rates of interest on loans coordinate the choices of savers with the decisions of borrowers so to keep supplies in balance with demands for either consumer goods or future-oriented investment goods.”

“An economic recession, therefore, is the discovery period of misallocations of scarce resources in the economy that requires a rebalancing and a recoordination of supplies and demands for a return to market- and competitively-determined harmony in the society’s economic activities for long-run growth, employment, and improved standards of living.”

Related ArticleFederal Reserve Policies Cause Booms And Busts by Richard Ebeling, at austrianaddict.com.

Related ArticleKeynes Was Right In 1919, by austrianaddict.com.