Economy

A candid moment from a member of the FOMC

Federal Reserve Chairman Ben Bernanke just announced Operation Twist, a new combat operation that will supposedly fix our market woes. Supposedly. (Hey, pass the vodka, will you? I need a drink before I listen to this guy.)

I am not a financial markets expert, and I have not heard that much on the actual details of Operation Twist, but, courtesy of CNN, here’s a brief explanation:

NEW YORK (CNNMoney) — The Federal Reserve announced “Operation Twist” Wednesday, a widely expected stimulus move reviving a policy from the 1960s.

The policy involves selling $400 billion in short-term Treasuries in exchange for the same amount of longer-term bonds, starting in October and ending in June 2012.

 

While the move does not mean the Fed will pump additional money into the economy, it is designed to lower yields on long-term bonds, while keeping short-term rates little changed.

The intent is to thereby push down interest rates on everything from mortgages to business loans, giving consumers and companies an additional incentive to borrow and spend money.

So basically, they’re selling bonds and buying bonds. Nothing exactly Earth shattering here. And definitely not anything that will get us out of this rut.

Interestingly, some members of the FOMC agree with my assessment, and one of them had a speech about it. Mr. Richard W. Fisher, president and CEO of the Federal Reserve Bank of Dallas, had this to say about recent monetary policy, using a Nordic weather station as a metaphor:

No Long Faces - The Ron Paul Outlook

During Ron Paul’s speech at the 2011 Southern Republican Leadership Conference in New Orleans, he closed his speech with a couple of references to Samuel Adams. One that many know, and one more obscure. Dr. Paul said that Sam Adams was known for saying “no long faces”.

“If we wear long faces, others will do so too; if we despair, let us not expect that others will hope; or that they will persevere in a contest, from which their leaders shrink. But let not such feelings, let not such language, be ours.” - Samuel Adams

With the ever-encroaching leviathan comprised of local, state and federal governments and a political class that doesn’t appear to address, much less acknowledge, the concerns of the average person, it is tempting to build a bunker somewhere, crawl into bed and pull the covers up over your head.

Tempting until you take notice of the positive strides made by liberty advocates in the past four years; things which could not have been accomplished had activists focused on the negative or gone into bunkers.

Does Ron Paul actually have a chance at winning the GOP nomination? In all honesty, yes.

There are a lot more positive differences between this and last Presidential election than you might know. Consider the utterances of a few Republican candidates espousing a less interventionist foreign policy. Much of this is merely anti-Obama windmill-tilting but it wouldn’t be occurring at all if it weren’t for widespread support amongst the general public.

The recent news that Osama bin Laden has been killed has itself caused some conservatives to wonder what we’re still doing in Afghanistan. If the main objective has been accomplished, after some 10 trillion dollars and 10 years, shouldn’t we bring the troops home and leave the people of Afghanistan to deal with their own independence?

Guess who else thinks Social Security is a Ponzi scheme?

The bruhaha over Rick Perry’s comments that Social Security is a Ponzi scheme have taken a backseat to the remembrance of 9/11 and the Redskins’ first win in about 90 years, but let’s fan the flames a bit. Thanks to the erudite Don Boudreaux over at Cafe Hayek, it has come to my attention that a highly visible economist at one of the nation’s largest papers agrees with Gov. Perry’s assertion:

Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today’s young may well get less than they put in).

And yes, you’ve probably guessed it: it’s Paul Krugman. And yes, you’ve probably guessed it, but the above emphasis is mine.

The essay was written in the December 1996/January 1997 edition of the Boston Review, as a response to Richard Freeman’s suggestions on fixing inequality. I profess to not having read Freeman’s work entirely, though mostly it was more of the same “we need to take the wealth from the top 20% and give it to the bottom 20%” nonsense.

VIDEO: Daily Caller Remembers 9/11, Examines Life Since

Via the Daily Caller’s video producer Sean W. Malone comes this new mini-documentary reflecting on the horrors of 9/11, and an examination of how America and the world reacted in terms of public policy. The video features Daily Caller editor-in-chief Tucker Carlson, Cato Institute vice president for defense and foreign policy studies Christopher A. Preble, Cato research fellow in defense and homeland security studies Benjamin H. Friedman, Heritage Foundation’s director of the Douglas and Sarah Allison Center for Foreign Policy Studies James Carafano, Rep. Allen West (R-Fla. 22nd), and Antiwar.com’s development director Angela Keaton.

National security policy, like all other forms of public policy, involves an innumerable series of trade-offs. We should be applying the same rigorous cost-benefit analyses to the Pentagon and DHS budgets that we do to social welfare programs.

The best line in the whole video comes from Tucker Carlson, who quips,

VIDEO: Free Trade vs. Protectionism

Welcome, Instapundit readers!

The folks over at Learn Liberty bring a new lesson from George Mason University economist Donald J. Boudreaux (who blogs at Cafe Hayek) on free trade and protectionism as matters of policy, and their impacts on wealth creation:

Protectionism today comes in the form of Buy American restrictions (which were reinforced in the so-called stimulus bill), whose proponents argue that forcing manufacturers to produce goods using inputs created by American firms, or that the government buy/contract goods and services solely from American firms through its procurement process, will help preserve and create jobs at home.

Sincerity, Burning Through the Fog of Obfuscation

It is human nature to seek those things which are most rare and beautiful, and therefore the most prized. In the physical world, few things elicit visions of such stark elegance and grandeur than Carrara marble. Marble is highly sought after and desired in our most beautiful edifices. Expensive and often difficult to work with, its very temperamental nature makes it all the more desirable, the elemental equivalent of a beautiful, tempestuous woman that will not be tamed.

Marble comes in a myriad of types and colors, but Carrara marble, known for its pure, milky white character, is prized above all other marble by the world’s greatest sculptors. Centuries ago, in the “Golden Age” of Tuscan sculpture, it was considered the highest honor for a sculptor to be commissioned by a wealthy benefactor to create a statue from a block of Carrara marble.

It was also an endeavor that came with great pressure for the sculptor. Before the chisel was ever applied to the marble, the sculptor must first study the block in exquisite detail, memorizing its characteristics, noting the direction of the grain and any tiny flaws in the stone. He had to map out every strike with precision, completing the sculpture in his head before ever touching the stone. It was critical that he understand the flow of the marble’s grain. If not, a single strike with hammer and chisel against the grain could crack it. To strike with excessive force could cause the crystalline structure of the stone to be crushed, which in turn led to sub-surface holes that could ruin the entire piece.

The Debt Generation and…Fireworks? Sort of…

Man, I looove me some fireworks. The bright flashes, the intense color, the wave of energy expanding across the room—

Oh, you thought I meant that stuff they light off at the Fourth of July. No, I was referring to the fireworks that occur in a debate. And what a debate we’re going to have!

The sparks started flying when Matt Yglesias, poster boy for the Center for Authoritarian Propaganda American Progress tweeted “David Boaz is dumb.” (Hmm, I wonder what he had to say about naughty rhetoric back in January…) Boaz then retorted that Yglesias had completely missed the point, which I guess is not surprising. Yglesias then decided to tackle Daniel J. Mitchell’s take on Paul Krugman’s…well, I’m not really sure what you could call it. Lunacy? Let’s be nice and just call it “absurdity.” Anyways, Yglesias basically stated that “money doesn’t matter” and that the broken window fallacy itself is broken. A very succint summary of modern progressive thought, I would imagine.

So why do I bring this all up?

Because tomorrow, Cato On Campus is hosting (at the Cato Institute, natch) a debate titled: “US Debt and the Millennials: Is Washington Creating a Lost Generation?” Attending will be Megan McArdle of The Atlantic, Matt Mitchell of Mercatus, and Matt Yglesias of Center for American Progress. Three guesses as to who will be moderating. Yes, Dan Mitchell of Cato.

BREAKING: 11th Circuit Rules against Individual Mandate in Obamacare

It’s a great day for liberty — the 11th Circuit Court in Atlanta has ruled against the government in Florida v. U.S. Department of Health and Human Services:

WASHINGTON - An appeals court ruled on Friday that President Barack Obama’s healthcare law requiring Americans to buy healthcare insurance or face a penalty was unconstitutional, a blow to the White House.

The Appeals Court for the 11th Circuit, based in Atlanta, found that Congress exceeded its authority by requiring Americans to buy coverage, but also ruled that the rest of the wide-ranging law could remain in effect.

The legality of the so-called individual mandate, a cornerstone of the healthcare law, is widely expected to be decided by the U.S. Supreme Court. The Obama administration has defended the provision as constitutional.

There are a couple of things of important note packed into this ruling:

Leftists Shouldn’t Complain about Corporate Rent-seeking when Leftists Encourage Corporate Rent-seeking

A notice in this morning’s Federal Register gives us insight about how regulatory capture begins.

The Department of Energy is looking to create a a regulatory subcommittee of vetted stakeholders to develop energy efficiency standards for electricity distribution transformers:

SUMMARY: The U.S. Department of Energy (DOE or the Department) is giving notice that it intends to establish a negotiated rulemaking subcommittee under ERAC in accordance with the Federal Advisory Committee Act (FACA) and the Negotiated Rulemaking Act (NRA) to negotiate proposed Federal standards for the energy efficiency of low- voltage dry-type distribution transformers. The purpose of the subcommittee will be to discuss and, if possible, reach consensus on a proposed rule for the energy efficiency of distribution transformers, as authorized by the Energy Policy Conservation Act (EPCA) of 1975, as amended. The subcommittee will consist of representatives of parties having a defined stake in the outcome of the proposed standards, and will consult as appropriate with a range of experts on technical issues. DATES: Written comments and requests to be appointed as members of the subcommittee are welcome and should be submitted by August 29, 2011.

So the government is looking for parties with “a defined stake” — meaning entities operating in distribution transformer space, from electricity companies and device manufacturers to green groups and (probably) well-heeled and connected Democratic donors — to appoint (not elect) to a committee responsible for promulgating efficiency criteria that will eventually have the force of law.

Of Hobbits and Acid-Tongued Democrats

On January 8th of this year, Rep. Gabrielle Giffords (D-AZ) was one of nineteen people shot, six fatally, by crazed gunman Jared Loughner. For nearly a week the national press and Democrats excoriated the TEA Party in general, and Sarah Palin in particular, for creating the environment that nurtured this horrifying act of political terrorism. President Obama, apparently in another example of leading from behind, eventually called for “more civility in our public discourse”, and admonished us to refrain from “lay[ing] the blame for all that ails the world at the feet of those who happened to think differently than we do”.

Democrats finally heeded their leader’s advice, although it is uncertain whether that resulted from an epiphany that such inflammatory rhetoric was producing more of the division they claimed to deplore, or because they’d lost the moral high ground when it was discovered that the shooter, supposedly driven to his murderous rampage by seeing target symbols on a map of political districts, was actually a liberal, anti-Christian pot-smoker who hated George Bush.

The civility truce was short-lived however, and soon liberal Democrats went right back to ascribing the worst possible motives to their political enemies, simply for holding opposing policy positions. This last week or so, though, has seen liberal vitriol march back into full attack mode. The TEA Party and conservative Republicans have been repeatedly called “terrorists” by the mainstream press and prominent Democrats.


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