Posted tagged ‘Stock Market Bubble’

Some Econ Homework

July 16, 2019

Austrian Business Cycle Theory, Explained, by Murry N. Rothbard, at This is a short explanation of the boom-bust cycle that is created by monetary intervention into the free market via bank credit expansion. Excerpt from the article:

…bank credit expansion sets into motion the business cycle in all its phases: the inflationary boom, marked by expansion of the money supply and by malinvestment; the crisis, which arrives when credit expansion ceases and malinvestments become evident; and the depression recovery, the necessary adjustment process by which the economy returns to the most efficient ways of satisfying consumer desires.

Keynesian Fake News In The Wall Street Journal, by Daniel J. Mitchell, at Government spending will not stimulate the economy. Government can only spend what it takes from the private sector. There is only a transfer of how the private sector would allocate its production, to government politicians and bureaucrats who will allocate their newly confiscated production according to what they value. Government doesn’t produce anything that it can exchange for money. It can only confiscate private sector production. The transfer via taxes is a transfer of something for nothing. It is not only theft, it is a reduction of wealth.

Why Socialism Must Fail, by Hans Hermann Hoppe, at Excerpt from the article:

Socialism and capitalism offer radically different solutions to the problem posed by scarcity: everybody can’t have everything they want when they want it, so how can we effectively decide who will own and control the resources we have? The chosen solution has profound implications. It can mean the difference between prosperity and impoverishment,

“The United States is not fully socialized, but already we see the disastrous effects of a politicized society as our own politicians continue to encroach on the rights of private property owners. All the impoverishing effects of socialism are with us in the U.S.: reduced levels of investment and saving, the misallocation of resources, the overutilization and vandalization of factors of production, and the inferior quality of products and services. And these are only tastes of life under total socialism.”

When Will The Stock Market Respond to 2016’s Liquidity Collapse? by Frank Shostak, at Intervention into the free market via lower interest rates and an increase of the money supply leads to artificial booms and all to real busts. If the Fed is to keep the Stock Market from correcting the Feds previous monetary expansion, it has to lower interest rates.

Social Pressure vs. Consumer Preferences, by Joakim Book, at Excerpt from the article:

“Indeed, on a more fundamental economic level, this is the logical conclusion of division of labor. Taking information from others is how we survive in large-scale complex market societies. This is easy to see when discussing a broken car or leaking pipes: you could probably learn how to fix those pipes yourself and develop your car mechanic skills to be able to repair the car, but it would likely take much more time, effort and money than you’re willing to part with — hiring a specialist makes economic sense. Similarly, you can think of relying on others’ tastes when it comes to music or food flavors or TV shows to be a trove of useful information, deflated appropriately by how much you tend to like what others like.”

What’s Up With The Obsession About Low Interest Rates, by Mark J. Perry, at carpediemblog. Excerpt from the article:

“Raising/lowering prices, wages, or interest rates can only benefit one half of the market (buyers or sellers, workers or employers, borrowers or savers, but not both) and those benefits come at the direct expense of the other half of the market (buyers/sellers, workers/employers, borrowers/savers). In other words, it’s is zero-sum outcome that redistributes gains and losses, but without any net gains, similar to the Keynesian stimulus fallacy illustrated below.”

So what’s with the obsession, especially the political obsession, with lower interest rates that are guaranteed to do great harm to savers while benefiting borrowers?”

“The answer must be that there’s a much greater political short-run payoff from lower interest rates than from higher interest rates. That is, borrowers (including corporations) must have a louder and more organized political influence than disorganized savers. In that case, aren’t lower interest rates a form of legal plunder and crony capitalism that allow borrowers to take advantage of savers enabled by easy monetary policy by the Fed?”


Must Reads For The Week 2/10/18

February 11, 2018



Is The 9-Year Dead Cat Bounce Finally Ending? By Charles Hugh Smith, at 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 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 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 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.


Pentagon Auditor Can’t Account For $800 Million In Spending, at 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 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 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 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 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.”


We Say Peoplekind”: Trudeau Mansplains To woman That “Mankind” Is Not an Appropriate Term, at 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 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 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 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.”


Must Reads For The Week 7/16/16

July 16, 2016

Marine’s Attorney: If Hillary Clinton Wasn’t Prosecuted, This Officer Shouldn’t Be Discharged, by Jeff Schogol, at This officer tried to warn fellow soldiers about a potential threat by sending them classified information over his personal email account. The bottom line is if Hillary Clinton wasn’t prosecuted, neither should this officer.

Martin Armstrong: James Comey Had No Problem Keeping Me In Prison Without Any Charges, at Remember what I said early in the week: The laws don’t apply to the ruling Aristocracy.

Peak FBI Corruption? Meet Bryan Nishimura Found Guilty Of “Removal and Retention” Of Classified Material, at Hillary got a mulligan, Bryan Nishimura had to play it as it lies.

FBI Agents Were Told To Sign A Very Very Unusual NDA In Hillary EMail Case, at The Queen must be protected. Politics trumps the law.

No, Obama, It’s Not Easier For A Teenager To Buy A Glock Than A Book, by Sean Davis, at It is hard to believe a politician would lie fudge the truth just to advance his agenda.

We’re Witnessing A Complete Breakdown In Western Values, at  Excerpt from the article: “The West adopted core values, like the sacrosanct protection of private property; the ability for an individual to work hard and build wealth; and spirited intellectual debate. This is how western civilization became the most prosperous that history has ever seen. Now people know they’re getting screwed. and they are.  They just don’t know why. They have no idea how central bankers who conjure money out of thin air have rigged the entire economy against them. So they blame “capitalism” and naturally embrace its opposite socialism.

Get A Warrant: Federal Judge Throws Out Stingray evidence In Drug Case, at This judge should be applauded for ruling in favor of our fourth amendment rights. We need to remain vigilant because you know the left will appeal this, and shop for a judge who is an enemy of the constitution.

Too Many Laws: Why Police Encounters Escalate, by Ryan McMaken, at If our politicians wouldn’t pass so many petty laws, the police, and citizens, wouldn’t cross paths as much.

Elon Musk Is The Face Of This Bubbling Stock Market, at Musk is building his empire with government (tax payer) subsidies.

Why Helicopter Money Won’t Push Stocks Higher, by Charles Hugh Smith, at If production. increases wealth, consumption destroys it. By creating money out of thin air, money that does not represent corresponding production, you promote consumption. You destroy wealth. Consuming more than you produce can only go on for so long.

The Market Is True Democracy, by Matthew McCaffery, at Quote from Ludwig von Mises: “It would be more correct to say that a democratic constitution is a scheme to assign to the citizens in the conduct of government the same supremacy the market economy gives them in their capacity as consumers. However, the comparison is imperfect. In the political democracy only the votes cast for the majority candidate or the majority plan are effective in shaping the course of affairs. The votes polled by the minority do not directly influence politics. But on the market no vote is cast in vain. Every penny spent has the power to work upon the production processes.

Technology Is Amazing. Meet Farmbot.


Some Cartoons from the

Political Cartoons by Chip Bok

Political Cartoons by Glenn McCoy


Must Reads For The Week 12/12/14

December 13, 2014
The pen is mightier than the sword...

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

Why So Many Health Insurance Plans Canceled By Obamacare, by John Lott , at This short video explains how insane the rules are in the The Affordable Care Act. The only reason you would make rules like this is if you want them to fail, so you can try to go to a single payer Government system.

Indications Of What Obamacare Is Really Going To Be Like Begin To Emerge, at It doesn’t matter if Government promises you healthcare, free or otherwise, if there is no one willing to supply it.

30 of the 60 Democrat Senators Who Voted For Obamacare Are No Longer Employed By “The People”, by Philip Klein, at The cost of voting for a socialist healthcare scheme is a Senate seat. Unfortunately I don’t think the establishment Republicans want to get rid of Obamacare.

Fighting Free Markets: Orlando Government Wants Uber To Charge 25% More Than Taxis, at This is one way Government tries to “level the playing field”.  Orlando Fla. is trying to reclassify Uber rides as livery vehicles. Uber drivers would be forced to charge 25% more than the minimum taxi rate. Get this, taxi companies say they are afraid Uber drivers would ignore the new regulation; no, really, they wouldn’t do that. The next step would be to have the police enforce the new regulation. I can see the headline now: “Uber Driver Shot Dead By Police For Failing To Charge Rider A Higher Fare”.

N.Y.C. Would Have City Develop Its Own Taxi-Hailing App, by Eric Pfeiffer, at Here is another way Government tries to create a level playing field. City Council Member Ben Kallos is proposing a bill to authorize the creation of a city sponsored app for hailing traditional city cabs. First question, is there a reason taxi companies can’t create the app themselves? Answer, yes, because there is a New York City Taxi and Limousine Commission that regulates these businesses. The Taxi Cartel didn’t know that when they made their deal with the devil to protect their monopoly position, that the devil would some day prevent them from competing with an upstart competitor that could not be foreseen when the deal was made. Does anyone really think the Government can create a competitive app? Before you answer, think Ah: “Hoisted by one’s own petard“.

Do Leftists Have Any Idea How Supply And Demand Work? at Is Uber price Gouging in San Francisco, or are they rationing a scarce resource according to the law of supply and demand?

The Runaway Trillions, at The national debt is $18,000,000,000,000.00 (that’s 18 trillion), and growing exponentially.

Detroit West: California Pension Plans Are Running Dry, at This is what happens when you pay labor more than what it produces. The difference between California’s debt and the Federal Governments debt? The Federal Government can get the Fed to electronically print counterfeit money to finance their debt, and States can’t.

How The Fed Grows Government, by Hunter Hastings, at Money printing by central banks is the only thing that has allowed Governments to grow so big.

With Q3 Buy Back Surging, These Are The Top 20 purchasers Of Their Own Stock, at Using the Feds electronically printed counterfeit money, companies are purchasing back their stock in order to boost the price. Low supply means higher price. The stock market is a bubble activity.

Peter Schiff Educates CNBC Host About Inflation, at


Must Reads For The Week 3/8/14

March 8, 2014
The pen is mightier than the sword...

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

By Increasing The Minimum Wage, Will We See An Increase In Labor- Saving Technology Like This, by Mark J. Perry, at Do politicians realize their policies hurt the very people they intend to help.

Two Unrelated (?) Videos, at We have moved so far away from individual freedom and much closer to Government control in the last 50 plus years. These videos are just a reminder.

Georgia Residence Threatened With $1000 Fine For Renting Out Rooms To Tourists, by Kristin Tate, at News like this makes me pessimistic about keeping our freedom.

Oklahoma Legislatures Vote To Nullify Agenda 21, by Michael Lotfi, at News like this makes me optimistic about keeping our freedom. It’s a roller coaster ride everyday.

Fed’s Fisher Admits Stocks Are At “Eye Popping Levels”, at In a speech in Mexico City, Dallas Fed President Richard Fisher said, “he was concerned about “eye-popping levels” of some stock market metrics”, warning that “…the Fed must monitor the signs carefully to ensure bubbles were not forming.” He’s worried about bubbles forming! Doesn’t he see that a stock market bubble not only has formed, but is being blown up every month when the Fed electronically prints roughly 80 billion counterfeit dollars.

JP Morgan’s Biggest Concern Is That Bitcoin Will Succeed, by JP Morgan CIO Michael Cembalest, at Excerpt from the article, ” …my biggest concern is not that Bitcoin will fail, but that it or one of its many virtual currency competitors will one day succeed……In the extreme, Bitcoin may lead to economic activity moving from the regulated economy to the underground shadow economy.” The Government and businesses like JP Morgan benefit from the Federal Reserves monopoly on money printing.  A virtual currency would shrink Government and force crony capitalists like  JP Morgan to compete in a free market. It’s no wonder they are both trying to torpedo virtual currencies like Bitcoin.

It’s Official: New School Lunch Rules Get A Grade Of F-, by Shifra, at Government makes rules, and individuals don’t comply. Related article, Healthy, Hunger-Free Kids Act, Doesn’t Work As Planners Planned, by

Teacher Follows All The Rules, And Student Gets Frostbite, by Alain 41, at This can’t be true can it? These teachers decided this student wasn’t as important as what would happen to them if they got caught breaking a rule. The teachers acted in their own self interest, or in the words of President Obama, these teachers “acted stupidly”.

Video Of Eight year Old Son of Fallen Soldier Goes Viral, by oualdeaux, at Lets end with this.

Must Reads For The Week 12/7/13

December 7, 2013
The pen is mightier than the sword...

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

Fast-Food Workers Plan Strikes In 100 Cities This Week, at Unions are trying to increase their membership by preying on the economic ignorance of young people, promising them a minimum wage of $15 dollars an hour. Minimum wages laws don’t work! Read here.

One Of These Is The “Real” Economy, at The Fed’s counterfeit money is creating a bubble in the stock market, and  misallocating  scarce resources in the private sector.

Obama Doesn’t Understand Income Inequality Either, by Michael S. Rozeff, at Incomes are unequal because individuals are unequal, it’s that simple. Individuals have different skill sets, work ethic, and desires. Lebron James and I have different incomes because people value his skill set higher than mine as evidenced by the fact that they will voluntarily pay him more to perform his skill than they will pay me to perform my skill.

Cartoon Of The Day: People vs. Government, at This cartoon says it all.

Clueless Krugman Speaks Out Of Both Sides Of His Mouth, by Chris Rossini, at Krugman laments the idea that the poor and middle class are finding it harder to move up the economic ladder while at the same time cutting their chance to climb the ladder by proposing raising the minimum wage.

San Francisco Considers Banning Butterfly Releases, at Why do we even consider stupidity like this.

Obama’s Plan To Snatch Your Savings, by Jeffery Folks, at Government bureaucrats have their eyes on your retirement accounts. Where ever there’s a pile of money, bureaucrats will try to figure a way to get their hands on it. They will pass a law to make their theft legal.

Confiscation Begins In NYC: “Immediately Surrender Rifle and/or Shotgun, by Tammy Bruce, at Nothing more to  say.

Must Reads For The Week 4/27/13

April 27, 2013

The pen is mightier than the sword...

The Decline of  Self-Employment and Small Business, by Charles Hugh Smith at Most job creation happens in small businesses. The decline in small businesses means a decline in jobs.

Genes and Racism, by Thomas Sowell at Genetics and discrimination were used as explanations for group differences, at different times in history.

Environmentalism’s Seven Deadliest, Most Destructive Power Grabs, at Just scan the top six, and then read the #1 deadliest power grab. It tells you all you need to know about what the hardcore believers really think.

Why Obama Care May Cost You Your Job, by John C. Goodman at Employees and employers search for ways to avoid the mandates, just like our founders tried to avoided British tyranny. Liberty is in our DNA.

Central Banks Join The Herd, Openly Buying Stocks In Record Amounts, at When the central banks counterfeiting doesn’t work, “who gets caught holding the bag?  What chairs are left when the music stops”?