Posted tagged ‘Zero Interest Rates’

Central Planners Hate Economics

August 26, 2015

F A Hayek

F.A. HAYEK The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

 

Politicians get voted into office because they promise to use the power of government to ‘do something’ to fix fake ‘crises’. They try to blame the unfettered free market for every inequality or unmet need found in society. Politicians blame economics because it is an easy target since most people don’t understand basic principles of economics.

Economic reality puts a limit on the unlimited designs of planners. The first law of economics, scarcity, especially the scarcity of knowledge, sees to it that everything has limits. Economic laws don’t limit the planners plans. Economic laws reveal the reasons the plans won’t work but they don’t create the underlying economic reality.

Ludwig von Mises

LUDWIG VON MISES  – “Economic history is a long record of Government policies that failed because they were designed with a bold disregard for the laws of economics.”

Planners have charged their central banks to do away with scarcity by using electronically printed counterfeit money. It sounds plausible on the surface if you look at ‘that which is seen’. But we all know from reading Bastiat that ‘that which is not seen’ is more important. The unintended consequences of Central Bankers policies, of money printing and zero percent interest rates, are playing out right now for all to see. Wasted resources and capital consumption are two of these results.

F. A. Hayek – “It has already been suggested that it is not necessary for the working of this system (free market capitalism) that anybody should understand it. But people are not likely to let it work if they do not understand it.

Central planners condemn free market capitalism because it doesn’t produce perfect results, (which means it doesn’t produce their desired result). Free market capitalism is the best system for allowing individuals the freedom to pursue their desires. This individual freedom has lifted the masses of people to a higher standard of living. Is it perfect? Nothing that man does is perfect. It is the responsibility of each voter to understand basic economic principles in order to protect the free market from the planners who want to destroy it. Start now because your individual freedom to pursue your interests in a free market is under siege.

 

LUDWIG VON MISES  – “Many think that governments are free to achieve all they aim at without being restrained by an inexorable regularity in the sequence of economic phenomena….they maintain that the state is God.”

These quotes by Hayek and Mises came to mind as I was reading an article titled, Economics Is Dead, And It Is Being Killed Again, by Per Bylund, at mises.org. here are some excerpts from the article.

“You have to applaud the anti-economics left for this rhetorical masterpiece. They have struggled for decades to sink the ship of economics, the generally acclaimed science that has firmly stood in the way of their anti-market and egalitarian policies, hindered the growth of big government, and raised obstacles to enact everything else that is beautiful to the anti-economics left. The financial crisis is exactly the excuse the Left has been waiting for. It is a slam dunk: government grows, Keynesianism is revived, and economics is made the culprit for all our troubles.”

“If this weren’t so serious, it would be amusing that the failure of Keynesian macro-economics (whether it is formally Keynes’s theory or post-Keynesian, new Keynesian, neo-Keynesian, monetarist, etc.) is taken as an excuse to do away with sound micro-economic theory to be replaced with Keynesian and other anti-market ideas. But it is not amusing. If most of the discussions heard are to be believed, the failures of central planning is a reason for central planning, just like socialism is a reason for socialism. The success of the market, on the other hand, is not a reason for the market.”

“…. the Left hates all that is economics. Because it points out that creating a better world through central planning, money-printing, and political manipulation is indeed impossible. The market is neither perfect nor efficient, but it is better than any available alternative. In fact, the unhampered market is the only positive-sum means available for human society. The market is indeed the only way of progress; all else is a step backward.

Related ArticleCapital Consumption aka. Eating Our Seed Corn, at austrianaddict.com.

Related ArticleWe’re All Born In The Middle Of The Story, at austrianaddict.com.

Related ArticlePolitician’s “Affordable” Ideas Must Obey Economic Forces, at austrianaddict.com.

 

Must Reads For The Week 12/20/14

December 20, 2014
The pen is mightier than the sword...

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

Elvira Nabiullina: Central Banker Of The Year, at economicpolicyjournal.com. Russian central bank chair Elvira Nabiulinna raised the interest rate from 10.5% to 17% in order to reign in inflation and also to stop the collapse of the ruble which was caused when the central bank stopped its previous multiple billion dollar intervention. Here is an excerpt from the article, “The Central Bank has yet to hint they would start a stimulus project, or money printing, to avoid recession…..Contrast this coolness with the panic in the eyes of Fed chairman Ben Bernanke and Treasury Secretary Hank Paulson during the 2008 financial crisis, when they caused the US government to intervene one hundred different ways and bail out the banksters.”

Can we trade Fed Chairman Janet Yellen, a couple billion of electronically printed counterfeit U.S. dollars, and a player to be named later for Elvira Nabiullina.

Money For Nothing: Volcker, from Liberty Street Films. Below is a video clip about the Federal Reserve Bank from the movie “Money For Nothing”. The clip talks about Fed Chairman Paul Volker raising the interest rates to above 20% in order to kill inflation and cure the easy money sickness that plagued the U.S. economy during the 70’s and early 80’s. This is what Elvira Nabiulina is attempting to do in Russia by raising interest rates to 17%. The U.S economy will have to eventually go through the liquidation of economic activity artificially brought into existence because the Fed electronically printed trillions of counterfeit dollars, and also their zero interest rate policy. Sooner or later the correction has to come.

 

Where The ‘Great Recovery’ Is 25% Worse Than The ‘Great Recession‘, at zerohedge.com. We talked about companies using easy money to buy back their stock in order to raise its price. Here are some interesting charts about how Caterpillar has been doing during this great recovery.

Six Ways The Government Criminalizes Economic Activity, by Diana Furchtgott Roth, at marketwatch.com. On the whim of a central planner you could become a criminal.

Dead Weight Loss From The New California Gas Tax, by David Henderson, at econlog.econlib.org. California’s cap-and-trade regulations will cost consumers 10 cents more per gallon. I don’t understand this excerpt from the article. “When you buy one gallon of California gasoline, the seller will have to cover about 18 pounds of emissions. At the current price of allowances–about $12 per metric ton–that works out to about 10 cents per gallon of gas…” My question is; if a gallon of gas weighs 6.25 lbs, how can it produce 18 lbs of emissions? I have to ask my brother, who is a chemist, ow this works.

Your All Electric Car May Not Be So Green, by Seth Borenstein, at ap.org. Apparently coal powered cars pollute more than gasoline powered cars.

Socialist On The Line Caption Contest, at zerohedge.com. Their caption is, If Cuba is good socialism, and Venezuela is bad socialism, what does that make America. My caption: George Washington is thinking, “there’s a lot of credentialed ignorance in this room.

Senator Sanders Blamed Speculators For The Rise In Oil Prices From Jan-June; Do They Now Get The Credit For The Drop In Oil Prices Since July? by Mark J. Perry, at carpe diem blog. Supply and demand are that driving factors in setting the price of oil at any given time, in spite of all the Government intervention into the oil business.  Speculators helped bring supply and demand into line quicker than it would have happened if the speculators had stayed out.

Study This For A While, at economicpolicyjournal.com. The Government is making a killing on student loans by making college students debt serfs.

3D Printed Prosthetic Legs Allow Derby The Dog To Run For The First Time, by Catherine Winter-Hebert, at inhabitat.com. Watch the short video.

Federal Budget Contains Provision Preventing Attempts To Ban Lead Ammunition, by John Lott, at johnrlott.blogspot.com. At least something good was in the budget.

As Michelle Nags America…Which Professions Have The Biggest Waist Lines, by Chris Rossini, at targetliberty.com. Looks like our first responders are spending too much time at Dunkin Donuts.