I particularly enjoyed this non sequitur today in my inbox, from one of my favorite news providers, BusinessInsider.com:
“The G20 has agreed to pursue programs of austerity while also preserving and enhancing the recovery.”
When I clicked on the link, I got the real headline:
“G20 Officially Reveals Its Total Pointlessness.”
Yes, the politicians are stymied. The only good thing going for them is that they are finding lots of occasions to practice their talent for talking out of both sides of their mouth. But the straight-talking intellectual academics aren’t faring much better.
A few blogs ago, I described this slow-motion movie we’re all watching as this recession unfolds. The movie’s climax will approach when the Federal Reserve finds itself in front of a dilemma: They must withdraw central bank assistance to maintain credibility in the U.S. bond and dollar, but when is the right time to begin?
Their problem is that no one seems to know. Bernanke and his colleagues are reportedly hunkered down as I write, trying to figure out how to handle what is looking increasingly like another slowdown, or to be precise the second V in the W. But this is not what they expected to happen. This is not AT ALL what they expected to happen.
I recently read an article written by former Fed economist Richard Alford over at Naked Capitalism. He focused his criticism on the zero interest rate policy (ZIRP) currently deployed by the Fed under the watch of Chairman Ben Bernanke. There has been increasing noise surrounding ZIRP and more mainstream suggestions that interest rates were too low for too long between 2001 and 2006.
Alford’s article gets into quite a bit of detail, but it is worth a read if you enjoy geeky economics stuff. Mainstream macroeconomists believe that the economy can be explained and managed with mathematical formulas. In fact, the formulas are really quite simple and do not capture the dynamics of the millions of “irrational” actors therein. One favorite is the Taylor rule which suggests a target for the Fed funds rate - the key interest rate set by the central bank. Alford points to a Taylor op-ed which states that rates were too low from 2002-2005.
Bernanke has suggested that rates necessarily had to be low (and must stay low) to fend off the threat of deflation. When analyzing Bernanke’s definition of deflation, however, Alford suggests deflation was never a threat. Thus, interest rates were lower than they “should have been” for no good reason.
So contends Lev Nazrozov. He writes:
Out-of-control predatory capitalists have perpetrated a worldwide economic depression. Capitalism’s degenerate character is now extraordinarily visible during this time of multiple crises.
On each side of the page there is a picture of a miserable emaciated proletarian who carries on his back a huge pack of money, with a bourgeois seated atop of the pack and smoking a cigar.
By simply allowing the government to dominate every sector of the polity, by embracing totalitarianism, we might be able to avoid the woes of economic recession? Historical study makes such a conclusion seem ridiculous. While totalitarian economies did not suffer from “depressions”, per se, one could argue that consumers and citizens lived under a system which continuously mimicked the effects of depression.
Every year the Ludwig von Mises Institute in Auburn, AL hosts a conference for scholars of the Austrian tradition to come together and share essays and ideas. This year’s conference was loaded with big names and reputable authors among the Libertarian and generally liberty-minded.
Most of us have seen the passionate speech given by George Baily in It’s a Wonderful Life to the evil bank-owner, Mr. Potter, begging for leniency towards Potter’s delinquent homeowners and espousing why owning a home makes the residents of Bedford Falls better citizens and more productive members of society.
Mr. Potter is simply interested in making sure his payments are received on time and that foreclosures are issued to those who fall behind. He believes, and rightly so, that if a man has overextended himself and cannot pay his bills, the mortgage owner has the right to claim the house and boot the residents out.
George Baily, however, is more interested in promoting the “American Dream”- home ownership- and has built his life and Savings and Loan business around helping families buy homes… even if they’re not quite ready to take on that financial responsibility.
The “Independence” of the Thoroughly Dependent: Modern Scotland’s Welfare Mentality and Proposed Succession in 2014
Scotland holds a very special place in my heart as it always does for anyone who has had the pleasure to travel there. My wife and I lived in Scotland while I was at the University of Glasgow, and our time spent amongst those charming, funny, witty, spirited people will never be forgotten. I still enjoy all things Scottish and look forward to my future visits to that amazing country. It is because of my admiration for both the Scottish people and succession movements in general that I have been closely watching the Scottish independence movement and am eagerly awaiting the upcoming referendum. I’d love to see a truly free Scotland loosened from the socialist, statist, bureaucratic chains of the United Kingdom. I get goosebumps at the very thought.
We all know the fighting spirit of William Wallace who proclaimed that the enemies of Scotland may take their lives but never their freedom. Statism and state-dependency have taken both from today’s Scotland. As shown on the Drudge Report this week, Mrs. Ruth Davidson of the Tory party recently got into hot water by drawing attention to the fact that nine out of ten Scottish households take more from the government than they pay in. In her words they are “living off of the patronage of the state.” This should shame those nine out of ten households, but it won’t. For the European lefty political class, there is no such thing as shame and they have passed this mentality onto their constituents.
Over the weekend, I wrote a powerful rant on my personal blog about Lew Rockwell and his destructive influence over the liberty movement. I’m not going to lie, it is filled with obscenities and is generally NSFW (though the only image is one of Lew’s face.) I wrote it so…colorfully…because I have been incredibly frustrated with a man who paints himself as the patron saint of libertarianism, the prelate of so-called freedom who is so quick to excommunicate anyone who disagrees with his own idiosyncracies. (I was also inspired by a NFL kicker’s letter to a Maryland state senator over the topic of same-sex marriage…among other things.)
There have been a few who are interested in a less avant-garde takedown of Rockwell, though, one better suited for polite company, and I am only too happy to oblige. I really feel that a man like Rockwell does not deserve such treatment, but I’m in the market of ideas, and I have customers to support.
The item that sent me on a tirade was a blog post on the Lew Rockwell blog calling Libertarian Party presidential candidate Gary Johnson a “warmonger” because he dared to say thanks to our military. Now you can have legitimate criticisms of the military and their unwavering, blind support from a large number of Americans, but calling Johnson a “warmonger” is too far and uncalled for. But it wasn’t even that; it was that the blog post labeled 9/11 a false flag operation.
In other words, Lew Rockwell’s blog is now the home of 9/11 Truthers. (Or Troofers.)
Yesterday, Federal Reserve Chairman Ben Bernanke held a press conference for financial reporters:
Could more stimulus be on the way?
Federal Reserve Chairman Ben Bernanke certainly left the option on the table Wednesday, making perfectly clear that he stands ready to do more should the U.S. economy take a turn for the worse.
“In case things get worse, we are prepared to protect the U.S. economy and financial system,” Bernanke told reporters at a press conference.
It was a point he reiterated several times and a sign that many outsiders took to mean the Fed has left the door open on a third round of asset purchases known as quantitative easing, or QE.
“Mr. Bernanke’s press conference surely left few doubts that the Fed will take more aggressive action and renew QE if the economy fails to perform as they expect,” Ian Shepherdson, chief U.S. economist for High Frequency Economics, said in a note to clients.
Meanwhile, University of Pennsylvania Economist Justin Wolfers tweeted: “I read the Fed as saying: One more bad jobs report, and we’ll do more.”
So Ben’s going to go back to the printing press if we have one more disappointing jobs report. He’s going to initiate another round of quantitative easing (QE), which is basically creating money out of thin air. It will be yet another round of quasi-stimulus spending which is basically trying to throw more money at the economy, hoping and praying that it does something. The best name for this kind of economic thinking is “print and pray” economics.
For a group of people who follow the veritable patron saint of Austrian economics on Capitol Hill, the fans of Ron Paul don’t seem to understand the Austrian concept of “malinvestment” very well. Malinvestment, as described by the Mises Wiki, is:
Malinvestment is an investment in wrong lines of production, which inevitably lead to wasted capital and economic losses, subsequently requiring the reallocation of resources to more productive uses. “Wrong” in this sense means “incorrect” or “mistaken” from the point of view of the real long-term needs and demands of the economy, if those needs and demands were expressed with the correct price signals in the free market.
Of course, the concept applies more to commercial dealings than with efforts in the political sphere, but I think it works here too, especially when you regard recent messages from the Ron Paul faithful:
Ok so the Rand endorsement let us all down a lot along with all of the discouraging emails and videos directly from the campaign. I think for the most part we are over the hump if you know what im saying.
Now think… before all of these shenanigans how much did you believe Ron Paul could win! And remember when we realized all the delegates are unbound?! That was amazing and at that point it was the cream of the crop. We were gonna win hands down, romney has no chance in hell.
You remember all those fuzzy feelings right?
Bloomberg News tends to be a slightly more left-leaning economic news source. They often mix ‘green energy’, ‘poverty reduction’ and aid for the ‘third world’ into their news pieces. Normally I do not listen too closely, to these liberal Wall Street syndicate news-sayers. Although they have a neat free radio show in the morning, they do not interview enough American investors for my taste. But this last Monday, I was surprised that good news was again being shown.
A roughly half-hour clip, had Republican Presidential candidate Ron Paul squaring economic knowledge against a New York Times columnist: big government Kaynesian, Paul Krugman. The moderator left the debate open to its flow, did not meddle with too many specifics and let the Texan politician play with ‘Krusty Krug’ like a voodoo doll. Paul Krugman seemed ill at ease, and frightfully underprepared. Over and again, Krugman tried to drown Paul in bombast, but his facts and claims lacked historical accuracy.
Contender Ron Paul looked sprightly, fresh and well-off to making his best talking points, Krugman couldn’t make him vascillate. One thing that liberals like to do, when talking about economic issues, especially spending and taxation; is set their own agenda. They do this by single-mindedly picking vantage points from the historical record. Revising history and economics for us all, as though what happened before WW2 carries no meaning. Only those out of touch with reality, make the mistake of thinking they could ‘regulate’ the economy, the world, society or anything else.