Federal Reserve Chairman Ben Bernanke says he’s a bit puzzled by surging gold prices. The 30% rally from a year ago, on top of gains in previous years, ... Gold is seen by many investors as a hedge against inflation risk.
Mr. Bernanke notes that the inflation signal isn’t confirmed by movements in other asset classes.
That's because the CPI is complete BS, and everyone knows it (with the possible exception of Bernanke). Of course he's also leaving out such asset classes as "Food" and "Energy" (apart from Oil). Plus his whole "reflation" strategy is keeping prices high as household income declines (fewer hours, worse wages, unemployment), plunging everyone but the super-rich into horrible poverty (worse than we would've had even with just the recession).
Yields on Treasury bonds tend to rise when investors worry about inflation, but those yields have been falling recently.
1) People are fleeing the Euro 2) The fed is BUYING THE FREAKIN BONDS IN RECORD NUMBERS ON THE SECONDARY MARKET
Inflation expectations as measured in Treasury Inflation Protected Securities (TIPS) markets remain low.
Again...
And other commodity prices are falling. Gold is breaking records, but copper prices are down 17% so far this year.
Demand for copper, now that the housing market is on its last legs, is going to be reduced from the highs the federal reserve and other government agencies artificially raised them. The copper bubble popped with the housing bubble, and as of yet Bernanke hasn't been able to inflate your way out of it. Not to mention the fact that China is no longer stockpiling all the copper on the planet. (121,228)
There's a thundering hailstorm in Phoenix today, sending drops of frozen hate clattering across the skylight and beating the life out of weak trees. On the outskirts of my peripheral vision, I caught a glimpse of something white and jagged -- the future.
Life as a human right now is akin to having woken up inside the chute of a woodchipper. We may not even recall how we got inside the woodchipper in the first place. The one thing that is clear : the inevitability of the blades.
A feeling like saws chewing into my neck. The sounds of weeping just outside my door. And a cold light knife into my pupil reminds me : This is a world divorced from hope.
When facing a suffocated reality of nonexistent future, what do you do? Here are some options :
1) Lie down and wait quietly for the ice weasels to come. 2) Cry until you're too tired to cry any longer, then die. 3) Fight until death. 4) Put on heavy metal records and rock out for as long as possible.
Now, I don't know which of these sounds most attractive, or which you, the reader, may already be doing. I choose option #4. Here's why :
* Metal music is brain floss. * Metal music improves blood flow to the face. * Metal music is not a norm. * Metal music has no sympathy for your suffering. * Metal music remembers when you were only an animal. * Metal music hasn't heard about your regrets, but it can drench them in molten @#$%^& * Metal music will survive long after the Universe is toast. * Metal music recognizes your true form and can restore it if lost. * Metal music connects you with that aspect of youself that you forgot about. * Metal music is truth erupting from a sea of lies.
There's no future. But with metal music, the present can be made to rock. In these bleak and doomed days, everybody looks for help. Some go to shrinks, some watch TV, and some try in futility to numb the pain with drugs. Well, you all are welcome to your 'cheese' heroin, 'lean,' and amphetamines. I'm an Earache man myself. (47,007)
I normally shy away from talking about monetary policy. To me it's self-explanatory that falling/rising prices are either caused naturally and innocuously by the market or forced up/down by the government's intentional/unintentional detrimental manipulation of the market.
To me, that's where the subject ends. Obviously, most economists these days have a different view. Modern economic theory states that prices fall during recessions and thinks therefore falling prices cause recessions. It's akin to saying people with the flu have fever, therefore the fever must cause the flu. Fever can cause its own problems, but your body does it for a reason.
The "exit strategy" talk is spawned by the economic enigma I call the "Chinese Finger Trap". Essentially, the Fed is printing tons of money to stimulate the economy as it's both fun and entertaining (similar to sticking your fingers in the finger trap). However, if they keep doing that, eventually life's going to really suck (due to inflation, speculation on inflation, and all manner of evil). Therefore, at some point, they have to take their fingers out.
The problem is, of course, the deeper they get themselves into the trap, the harder it is to pull out without doing some damage. In the event Bernanke stops printing money, those pitiful, beleaguered financial institutions will have no source of funds for their poor investments, demand (and therefore prices) for those investments will fall, and the balance sheets for these companies will look like Bernanke's afterbirth.
The "Exit Strategy" is a myth--that somehow there's a way out of the trap other than tearing your own fingers off. Of course the metaphor ends there, as the toy is fairly harmless, this game is not.
This video specifically attacks the myth and pretty well beats this dead horse until tender and delicious. It's also a meager 25 minutes long, which is pretty amazing considering it totally eviscerates modern pop-econ.
I recently completed Bob Murphy's Politically Incorrect Guide to The New Deal. Subsequently, I found out that the advocates for monetary intervention (eg Krugman, Bernanke, and yes, Milton Friedman) have twisted history and that I had been unwittingly duped by it. They would have you believe that The Fed did essentially nothing to correct the massive monetary contraction at the beginning of the Great Depression. In fact, the Fed of 1929 and the 1930's expanded the money supply more than any American central bank ever (until Greenspan/Bernanke). Krugman, Bernanke, and Friedman basically either deny this or pretend like the actions of the Fed at the time were "too little, too late." The facts, however, speak for themselves.
Though my article about The Great Depression contains this error, I left it in there for simplicity's sake and included this correction as a footnote.
(excuse this boring personal note) I was extremely lucky to be taught economics by a monetarist. My economics textbook subtly jabbed at Keynesianism throughout the book, and compartmentalized Keynes and his balderdash in a single chapter called "Chapter 11--John Maynard Keynes" (I'm almost positive that was on purpose). At the time, I would chat with my friends, some of whom had taken Econ101 taught by a Keynesian. My Friends were always talking about Aggregate Demand and Animal Spirits. I thought that maybe I'd missed that lecture and always wondered what the heck they were talking about. I later rediscovered economics and chuckled my way though a rundown of Keynes' theories and fallacious supporting arguments.
Unfortunately, monetarism was also wrong in many ways. While being unabashedly free-market in most things, I followed what I was taught for a long time and balked at the idea that the Fed could do any wrong. I was a huge fan of Alan Greenspan and even posted a couple favorable articles on this site about him. I now see these essays as akin to the innocent inhabitants of Russian gulags, convinced that "Uncle Stalin" was unaware of their predicament, sneaking letters out of the camp to him for help, apparently thinking that he loved the people so much he would close the camp immediately if he only knew (when, of course, it was he and his goons that built the gulags put them there in the first place). It was actually a lecture by Tom Woods (an Austrian Economist) I watched in 2008 that floored me and ended up changing my mind.
Nowadays, looking at the world of economics through this new lens, it's actually a lot scarier to think that not even Friedman was truly laissez faire. The only well-known anti-Fed advocate seems to be Ron Paul. Obviously this movement is gaining steam. However, the Federal Reserve is now more powerful than the US Government, and with basically the entire economics profession vying to keep it that way, it seems like it's really going to take something big to even introduce the concept of sound money back into the public mind-set. (91,829)
In a totally unlikely and unforseen turn of events, markets are not responding favorably to government bailouts and inflation.
NEW YORK (AP) - The Federal Reserve announced a $1.2 trillion plan three months ago designed to push down mortgage rates and breathe life into the housing market.
But this and other big government spending programs are turning out to have the opposite effect. Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation.
That's the Catch-22 threatening to make an awful housing market potentially worse and keep the economy stuck in a funk. Kick-starting the economy requires higher spending, but rising rates mean fewer Americans will be able to refinance their home loans. And some potential buyers will be shut out of the market by higher monthly payments they won't be able to afford.
To understand how this is all connected, you have to think like a bond trader. Inflation is their enemy because it means the purchasing power of the dollars they receive when bonds eventually are paid off will be diminished. The only question is by how much.
I hate politics. I happen to believe that whenever someone writes about political issues they actually care about, their IQ drops at least 35 points before they put the first word on the page. This is why most comments on political YouTube videos are fragmented and incoherent: Someone with an IQ of 110 decided to jot down a thoughtful political opinion, and was temporarily deprived of the ability to form sentences. This is simple emotion clouding over reason and intellect. It's just human nature.
To therefore write effectively about politics, you've got to either not care at all, or just not have human emotion to begin with. This is why most professional political pundits are actually sociopaths. The pundit's ability to look apocalypse in the face and say "Fuck it." is the secret to readable copy. It's not that these people are especially smart, it's that they're emotionally distant enough to keep their heads on straight when writing about the metaphorical rape of all their espoused beliefs.
I, on the other hand, can't even be in the same room with a TV with a talking head on it without getting acid reflux and foaming at the mouth. I had to stop watching televised news years ago for the sake of my physical health. And that is the reason why this article is going to suck. I did it anyway though, and I may never know the reason why.
The problem with the vast majority of voters is that they know a sum total of "dick" about history. This is one of the many reasons it's totally pointless for any intelligent person to vote (less intelligent people may enjoy the free stickers, so it's a good deal for them). In the case of economics, the US has made so many ridiculously idiotic mistakes that we have plenty of past experiences to draw wisdom from, provided we look at history through the right lens. The Great Depression should have been the end of economic intervention. Unfortunately it's apparently become the beginning. Part of this stems from the total distortion of the history of the Great Depression, which is what will be addressed here.
Popular History
The popular view of the Great Depression is as follows: It started with the crash of 1929 and lasted up until World War II. According to the history books, our economy was "unequally distributed" to rich people and the crash of 1929 was the culmination of the inequity of the "bubble" in markets such as luxury goods (think dot com era). Moreover, our president at the time, Herbert Hoover, was against interference in the markets and therefore passed up his opportunity to save the day through intervention, which lead to the deep depression that lasted "over a decade." After Hoover's beleaguered term ended, idle government gave way to FDR's promises of interventionism and reform. FDR's activities, combined with that of the Federal Reserve and the seemingly fortuitous entrance of the US into WWII lead to the end of the depression.
To be clear: The above paragraph is total bullshit, with a few spacklings of horseshit and "WTF".
Pseudo-Austrian Theory on What Went Wrong
First of all, the Great Depression didn't start in 1929, it started in the credit bubble of the 1920's. A "credit bubble" is where lenders, on a massive scale, lend too much money without taking proper care to see that the borrower can pay it back. Giving more money to people who are going to waste it means that the useless goods that these people buy are going to have an "increase in demand" (DEMAND = more will be sold, and they will be sold at a higher price). Investors will see this rise in prices (caused by the artificially-inflated demand) and think this is an exploding market and haphazardly stuff their money in as fast as they can, maybe even borrowing to do so. This will further drive up demand until such time as the supply of credit goes away. 1) Lower supply of (inflated) credit -> 2) Higher interest rates ---> 3) less borrowing -----> 4) less money for buying (overvalued) crap -------> 5) less demand for crap ---------> 6) price of crap declines -----------> 7) investors cash-in to avoid losses -------------> 8) Go to 5 and repeat for a while ---------------> 9) investors go bankrupt, can't pay back loans -----------------> 10) Lenders lose money -------------------> 11) Go to 1 and repeat until prices are normalized.
This violent return to normalcy is referred to as a "crash." As you can see, interest rates are a key component of normalization, and that's exactly what the Fed messes with.
The stock market crash of 1929 was not what started the Great Depression, it simply signaled the start of a market correction. The crash of 1929 was the solution to the bubble. The falling prices and the deflation were necessary forces in stabilization of the economy. These forces were fought tooth and nail by the Hoover and FDR administrations (I'll talk about this later), because they meant a decline in economic activity over the short term.
Where did this credit bubble come from? Well something happened during the 1920's that had never happened before in American history. A massive, mismanaged lending force came into play that would haunt the American economy the next 90 years (and counting). Of course I'm talking about the Federal Reserve. Though the Federal Reserve was founded in 1913, they did not participate in open market operations until 1922. The stated objective of "The Fed" is to stabilize the economy by injecting money when markets are down, and deflating when markets are up. They do this by printing money that doesn't exist and loaning it to banks, which it trickles down in a massive, cascading manner (through loan after loan after loan) to consumers who use it to buy crap with. This sounds simple enough, except that in doing this, they flatten out the market corrections which are necessary for normalization. It also makes the arrogant assumption that a handful overeducated academics can make God-like pontifications based on whatever criteria they feel like. All The Fed seems to be able to do is create credit bubbles, which lead to bubbles in everything else. This is exactly what happened in the years prior to the market crash of 1929.
Think about it: It's true, by 1929, the US had seen a few depressions and recessions over its ~150 year history. However, just 7 short years after the Fed starts tinkering with the money supply, we see the largest and deepest depression ever...?? That's coincidence in the same sense that 90% of lung cancers being found in the bodies of smokers is coincidence. What's also not coincidental is the biggest economic intervention in US history (at the time) occurred right at the beginning of this--the longest depression in US history. [Did you see that segue? Was that not awesome?]
Herbert Hoover: The Interventionist
The next myth I'mbout-ta-bust about the Great Mf'ing Depression is that President Herbert Hoover was some kind of coward who refused to intervene. This is almost certainly a case of politics totally f'ing up history. Pay attention boys and girls: this is what it looks like. These 'Court Historians' [*cough* Paul Krugman *cough*] want to blame the "free market" for the Great Depression, and to do that, they have to paint Hoover as a slimy, good-for-nothing, free market Republican (to be fair, he was a Republican, and he looked pretty slimy). Presumably, they're distorting history so they can blame the depression on Hoover and also so they can attribute this country's salvation to FDR's "economic reform." This lends credence to the government power-grab ("bailout") that's going on right now, since conceptually FDR's stimulus was the same thing. Luckily, the claims about Hoover's "non-interventionism" are so ridiculously false that the debate ends in the 2 seconds it takes to load the Wikipedia article.
One thing the pop-historians like to point out (apparently to further this myth) is that the chairman of the fed at time (Andrew Mellon) was pushing to let the recession run its course. Can you imagine? After years of tinkering with the economy, the Fed acknowledges it had 'screwed the pooch' and clamors for natural free market correction. Amazingly, that's totally true. At first, the fed was quite reluctant to intervene*. In fact, according to Hoover's memoirs, Mellon (Fed guy) strongly suggested to Hoover that he stay out of it. Not to be swayed by little things like reality, Hoover ignored Mellon and promptly embarked on the largest ever peacetime increase in government spending. He even brags about it in a speech he made near the end of his term:
We might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action. - Herbert "Give Me a Kiss, Krugman" Hoover
Convinced yet? Too bad, I'm not done! To pay for this "fiscal stimulus," Hoover ran huge deficits until 1932, at which point he doubled the income tax (Revenue Act of 1932) and instituted a tax on checks (this is a lot worse than it sounds, by the way). He even pushed forward a bill to force the Fed to inflate the money supply. Finally, not content to leave it alone, Hoover rammed through congress the largest import tax of the 1900's, the infamous "Smoot-Hawley Tariff." Non-interventionist my ass! Hoover's plans were basically slightly less ambitious versions of "The New Deal" (which would occur later, under President Roosevelt).
If you want to place some blame on Hoover for the Great Depression, you can't blame him for doing too little.
Franklin Delano Roosevelt: The Non-Interventionist ... What?
Sort of a fun facet of the whole Hoover Vs FDR thing is that history remembers it as a standard run-of-the-mill socialist Vs free-market debate. The reality, of course, is slightly more complicated.
By the end of Hoover's presidency, it seemed that voters were pretty fed up with all this progressive interventionist hogwash. They knew what Hoover did, they knew it didn't work, they wanted "change," and they wanted it in the form of economic freedom. It seems strange then that they elected FDR--probably the most "progressive" president of all time, according to the history books.
How we explain these ostensibly contradicting facts is not actually all that complicated: FDR was a liar.
FDR ran on a platform of economic non-interventionism. During his 1932 campaign, he berated Hoover for his stimulus actions. FDR's own running mate in 1932 (and later Veep), John Nance Garner said that Hoover was "taking the country down the path of socialism." In fact, the stated Democratic party platform of 1932 was to reduce federal spending by an astounding 25%. No wonder FDR won by such an enormous landslide (57% to 39%)!
Heck, I would've voted for him. Did you know FDR publicly referred to Hoover as a "fat, timid, capon" (a capon is a castrated rooster which is fattened up and raised for eating)? How awesome is that!?
Naturally, the first thing he did was ignore his campaign promises. Starting the very same year he was inaugurated (1933), FDR started creating hundreds of different massive government programs designed to 1) extend government's control over the economy and 2) stimulate it back to health at the same time. Only one of those goals ended up coming true, can you guess which? Hint: the depression continued for 13 years after that, so that leaves...
This package of economic clusterfuck is what is commonly referred to as "The New Deal."
As an aside: In a particularly despicable "dick move," a disproportionately larger amount of the New Deal money was poured into the swing states, which kept them relatively fat and happy while the depression trotted along. FDR effectively bought his first two re-elections this manner. As the New Deal raged on, FDR lost some control over it (legislators found their balls and got in on the money train), which directly correlated with a wider distribution among the other states. Funny how that all works.
Yeah, These Clowns Raped the Free Market, but... Did it Work?
Of course it worked! Why wouldn't it? It's so brilliant: I'm going to inflate the currency through printing, suck tons of money out of the economy through taxes, pour it into wealth-destroying projects, and I'm going to do it all while we're in the heat of a freakin depression!... I mean, where's the problem, am I right guys? WHAT COULD GO WRONG?
Well, what ended up going wrong is that our depression lasted roughly from 1929 to 1946. Popular history says our numbers were turned around at the start of WWII (1941), but that's totally ignoring the fact that you can't ship 11 million unemployed men out of the country and call the ensuing fall in the unemployment rate a "turn-around."
By that notion, Obama could just wait until midnight tonight, use his Santa Claus magic, jump in his reindeer-driven Escalade, and do a drive-by on every unemployed household in America, killing at least half the unemployed in one fell swoop. Wouldn't it be great if it were just that easy? Too bad it isn't (though that may not stop him from trying...). Yeah, it'd make that particular economic indicator jump back into the green, but the smell would be horrendous after a few weeks, plus it wouldn't exactly restore consumer confidence.
No, by most relevant measures, our economy did not reach pre 1929 numbers again until 1946, and this was due to one reason and one reason only: Our shit didn't get fucked up during the war.
Imagine: all of europe and lots of Asia, even including some of the shitty little islands (England), had planes flying over it for YEARS bombing factories used to make war toys as well as necessary consumer goods. What happens after the war when trade barriers are lifted and everyone needs to buy shit? They turn to the one country who still has factories all clean and shiny with no unexploded munitions lodged in the roofs: America. We exploited the living crap out of these countries who needed stuff they couldn't build, it was awesome.
There's a reason why the US forgave most of the loans they made to Europe to rebuild: They made out like bandits.
The production capacity of Europe was shot to shit by the end of the war. By the time everyone had caught up to speed, the United States had become an economic superpower. They would remain that way until idiotic politicians of latter half of the 20th century (and 21st, it seems) could mess all that up. Way to go!
Good Thing This is All Ancient History... Right?
If you accidently leave your TV on for any length of time these days, you probably know that what they did back then to try and "fix the problem" are the exact same types of things they're doing now. You hear about a new Bailout plan just about every month now, and every idea they have isn't exactly new.
You'd think that maybe they would've learned something.
* UPDATE/CORRECTION [Dec. '09]: I left this passage as it was originally for simplicity's sake. I recently completed Bob Murphy's Politically Incorrect Guide to The New Deal (which, btw, can be used as a source/reference for all the material in this article). Subsequently, I found out that the advocates for monetary intervention (eg Krugman, Bernanke, and yes, Milton Friedman) have twisted history and I had been unwittingly duped by it. They would have you believe that The Fed did essentially nothing to correct the MASSIVE monetary contraction at the beginning of the Great Depression. In fact, the Fed of 1929 and the 1930's expanded the money supply more than any American central bank ever (until Greenspan/Bernanke). Krugman, Bernanke, and Friedman basically either deny this or pretend like the actions of the Fed at the time were "too little, too late." The facts, however, speak for themselves. (237,567)
There's a scene early in last year's blockbuster flick "No Country for Old Men" when Josh Brolin comes home after plundering the bloody scene of a botched drug deal with a gleaming .45 tucked into his waistband. His wife, with whom he lives in a crummy apartment, asks where he'd obtained the thing. Brolin curtly responds, "At the gettin' place."
Now, anybody who saw that movie will know that in fact, the enviable chrome had not come from 'the gettin' place,' but had been stolen from a corpse shortly after Brolin had left another homie to die by thirst, wounds, and 'el lobo.'
When foreign banks open their email to find a fresh infusion of US Dollars, US depositors find that their account insurance has more than doubled, holders of bad debts are relieved of those 'troubled assets,' and US taxpayers open up their mail next year to find a meager 'stimulus check,' these beneficiaries might ask their benefactor where all this money came from. After all, much like Brolin's character in the movie, the US government has fallen on tough times and is very, very hard up for cash. In fact, like Brolin, it has little but war memories, a moustache, and a gun. So where are the dollars in the firehose coming from?
To hear Bernanke and Paulson, the architects of the current situation, tell it, this vast pile of dollars -- trillions of them now -- came from the gettin' place.
In fact, Bernanke and Paulson's gettin' place isn't much different from Brolin's. Nor does their motivation or depth of thought differ a whole lot from that character's. As the desperate cowboy steals the Colt and suitcase from a dead man, Bernanke and Paulson steal these dollars from the corpse of American liberty. At the scene, the injured taxpayers warn about the coming wolves of statism and rampant inflation; they're coldly told that 'there ain't no lobo.' After all, Bernanke and Paulson know better than anyone about these things.
It has been revealed this week that the incredible, unprecedented, criminal Wall Street bailout was merely the first step in a treacherous and macabre dance of doom. When that move failed to 'unfreeze' the credit markets and Wall Street wasn't impressed, Bernanke promised 'unlimited' -- unlimited -- dollars to foreign banks to help their 'liquidity problems.' Soon after, we started to hear the fiendish candidates for President start talking about direct debt relief for individual homeowners, using public dollars. And then, when all these feints and ruses did not have the desired effect, yet another 'stimulus package' -- more dollars -- was fielded in a hopeless attempt to stanch our 'financial system's' very mortal wound.
Public liability for private debt is an abomination, and would be so under under any conditions. Our present conditions of record public debt, to the tune of ten trillion dollars, make the actions of Paulson and Bernanke monstrous to the maximum. When someone is deep in debt, with a seriously negative net worth, we call that person a fool and irresponsible. When that 'someone' is the government, and their debt spending in fact puts the public in the hole while squandering tax dollars, we call that criminal and treasonous as well as foolhardy.
The people at large, and these crazy actors of policy in particular, need to get a handle on a simple, incontrovertible fact : the government has no money. The government has no money! The government is in debt, and any money that it plans to spend it will confiscate from you; any debt obligations it incurs will be collected from you, and your successors.
Even the most fatalistic, 'FTW' types must confront the immediate and dire consequence of the evils perpetrated by Paulson, Bernanke and their accomplices. That is : rampant, uncontrolled inflation. No matter what you may hear from apologists, no matter what gibberish is vented by pseudo-economists, no matter what your so-called 'conservative' friends may say, the result of these terrible decisions shall be a profoundly accelerated inflation and debasement of the dollar.
The reason that this is true is because of a basic, simple, factual truth about economic activity : when the supply of a commodity increases, its price decreases. Money is a commodity that is used to purchase other commodities. Its price is called its purchasing power. When the price of money is high, that means that you can buy a relatively large amount of other items with it. When its price is low, you can buy less. When the price of money falls, it is called 'inflation,' a misleading term that really means that the average prices of other goods appear to be rising -- inflating -- relative to the price of money. In other words, inflation is really a way to describe the falling price of money relative to other goods, and it is caused by one thing and one thing only : increases in the money supply.
When Bernanke, Paulson, and their buddies 'spend' billions of dollars they don't have, and give 'unlimited' new dollars to foreign and domestic banks, and guarantee innumerable private debts, they are, in short, printing money. They are adding vast, nigh-incalculable amounts to the money supply. This is the fact of the matter, and it is starkly true.
There is only one possible result of creating a supply glut : falling prices. When the price of the dollar falls, we call it inflation. To quote John Pugsley in "The Alpha Strategy :"
"An increase in the money supply is the only cause of inflation in the long run. Money is created by fractional-reserve banking, and by the Federal Reserve as it monetizes federal defecits. The future rate of inflation is primarily a function of the size of deficits, since the Federal Reserve is duty-bound to monetize them."
In summary : the cause of inflation is debt spending and the attendant increase in the money supply. There is no other cause. And when the government mounts debt and prints money at unprecedented rates, we should expect nothing else but unprecedented inflation.
This is, as Pugsley would say, the plunder of America. It is also a trespass on our freedom and an assault on our future, as it is our hard-earned dollars along with the security of our future with which these people are toying. Whether they are short-sighted and stupid, or plotting and evil, the result is the same : there certainly is a doggone lobo, and it will be at the door much sooner than they expect.
So what do we do about it? It has been widely suggested that the institutional wheels of theft have been turning for far too long, and the people 'in power' so firmly entrenched or hidden, that we have no choice but to suffer and endure as our future and rights erode and our currency becomes less valuable than kindling. I say that this is a ridiculous and wimpy attitude. There is really only one way to save our freedoms and country from oblivion.
Like the woman-haired killer in "No Country," we know where the politicans are. But that's not where we're going. The politicians are both desperate and foolhardy; we few cannot make them change directly because they fear the public. We must 'get to' those that ultimately control the politicians. We must approach the public directly, for it is the cry of the public for wealth redistribution via taxes that is the engine of government in the long run. The reason we are being sold down the river is because voters and taxpayers are demanding to be sold down the river to protect their short-term interests. Every time that an industry leader requests a subsidy, every time a private individual wants an entitlement, every time a banker wants a loan guarantee from the public, the crisis gets worse. These are the folks that need to be approached, so that they can stop demanding public money from the politicians and start protecting their real interests. But unlike the strange assassin, we visit not with a weapon, but with knowledge and hope.
What a daunting task! How are we to go about educating the public on the serious need to put short-term interests on hold in favor of the preservation of the value of their money, the integrity of their freedom, and the viability of their future? Start by talking to people you know, your friends and family, and point out the basic facts about inflation and debt first, then address the wrongness of public liability for private risk. Let them know that there is no time for complacency, depressive fatalism, or myopia. Things are in motion right now, and only direct action by taxpayers can accomplish what is needed. The public must be made to see that, whatever temporary benefit they may individually receive from public funds, that benefit pales when compared to the grave erosive dangers of inflation, which causes everybody to lose buying power, and debt, which sells our childrens' future.
If you ask people if they generally favor higher or lower taxes, they will usually say 'lower.' Ask them why that is, and they will say it is because they want to keep more of the money they earn. When it is explained to them that they would be able to keep more of that money if they didn't have to pay for some of the 'benefits' they receive from public funding, along with the institutions that administer those 'benefits,' they are forced to confront the true issue. When the inflationary nature of debt spending is included in the conversation, it becomes evident that a preference for these 'benefits' at the expense of a stable currency and a viable future is irresponsible. Fold into this theo the idea of freedom and the integrity of personal property, and the situation becomes even more clear to the person considering the long-term meaning of our choice.
The reason that the people have stood for the theft so far is that we have become so used to having our property violated, supposedly for 'the public good,' that we no longer thing twice about it. We place much faith in the ability of actors like Paulson and Bernanke to know more than we can about our situation, and to make the right decisions for us, because we can't decide for ourselves. This is error. We can see plainly that, despite the wizard-like image that these people project, the facts and correct course are plain. Increased money supply and public debt causes inflation. Massive doses of either are bound to cause inflation that is massive. We don't need ex-industry CEOs turned public administrators to navigate our interests when we can see them so clearly.
As we become aware of our reality and the true nature of the 'crisis,' it's is not less than our duty to tell our fellow citizens about it. Start right now, and don't be discouraged nor intimidated by those who tell you it is either a lost cause or that they know better than you. Our nation was founded by people who would not stand to be plundered and would not be silent. When we stand up for reason, for frugality, and for liberty, when we publicly and privately promote these values, we stand up for the whole of America. We stand up and tell our neighbors that we the people are not, and will not permit ourselves to be, the government's gettin' place. (121,127)
Biden: "When the stock market crashed, Franklin D. Roosevelt got on the television and didn't just talk about the, you know, the princes of greed. He said, 'Look, here's what happened,'" Barack Obama's running mate recently told the "CBS Evening News."
Yeah, that's what he did alright. Then Abe Lincoln got on his cell phone and reminded Biden that FDR didn't take office until 4 years after the crash. Oh, PS: the first television station didn't exist until 1941. I guess FDR was thinking the people of the distant future needed reassurance that the crash of '29 was being taken care of. (101,581)
I never thought that this day would ever come. Well, it's way, way worse than we had even supposed.
For mumbled, muttered reasons that really boil down to the fact that our national government exists to protect not any thing but the interests of large corporations and their officers, the Federal Reserve Bank elected to 'bail out' the tanking pseudo-insurance dodecapus American International Group.
What this means is that eighty-five billion public dollars -- that is, your tax money -- is being used to prop up the "Weekend at Bernie's" style corpse of AIG in 'exchange' for 80% of AIG's shares of stock. So what you get, pal, is a gigantic liability in addition to an immense amount of worthless stock.
Sounds like a pretty good deal, huh? Well, I've got a better one. Overthrow the government.
See, what we have here is a crime. I'll spare you most of the Econ 101 lecture, but here's the basic problem : this government spends a lot of time trumpeting the wonders of the free market (at least the domestic market -- recall 'trickle-down' theory from the 80s?) and adopting policies both social and economic that are putatively designed to allow that market to operate in a way that is minimally hindered. This includes making sure that feisty entrepreneurs have incentive to take the risks that drive business activity by allowing them to keep a pretty good cut of the rewards if their risks pay off. Market activity for profit is gambling, speculative activity doubly so. The incentive to make the smartest, shrewdest choices in the market is provided by what generally happens when risks don't pay off -- one loses one's investment. If you don't think it through when evaluating risk, you find yourself more 'highly exposed' to the risk -- in essence, you can lose a whole lot on a stupid bet. That's what happened here. The mops at AIG gambled on financial products that few understand and nobody ended up profiting from -- mortgage-backed security bundles and so-called 'derivatives,' which are sort of like a bet on the outcome of other bets -- and lost their stupid, slave-made shirts. And that's how it ought to be, because in a market, there are always winners and losers, and sometimes when folks don't use their heads, there are really really big losers.
Now, the government has justified its meddling in the natural workings of the market that it so loudly promotes by saying that AIG was just tooooo big to fail. Too bookoo! Too big! Too big and too enmeshed in the so-called 'financial system' and if they get wiped out, there will be widespread suffering not limited to our own economy, but others in the global market as well. What the deuce, say you? AIG held a lot of insurance policies on bank deposits and other financial accounts, and was involved in apparently innumerable portfolio capers that are so wide-reaching that if they weren't around to guarantee those investments and manipulate those portfolios, your head might catch on fire! Or your dog might turn into a knife and stab you in the spine. Whatever would happen, it'd be real, real, bad. That's why the national government needs to give away your money to these swine.
The really cool thing about this bull feathers justification is that, since the 'Fed' says that firms of a certain size are 'too big to fail,' everybody now has tremendous incentive to :
1) Grow as large as possible to increase the chance that they, too, will be 'too big to fail'
2) Involve themselves in complex investment transactions of high risk with little regard for the risk levels -- in fact the bigger the risk, the better.
See, if you win on a big risk, you usually win a lot. And if you lose on a big risk and you're 'too big to fail,' well, no big deal! Jim and Edna Taxpayer will slip you a little of their bountiful extra cash to chill them individuals out so you can wait for the cavalry.
Don't buy a word of the barf oil that Paulson is spewing about why he done what he done. If we're going to operate on market principles -- good! Free markets usually do, as the slavering yaks of government have been crowing for years, provide the most good for the most people -- 'utility'-- in the long run. Even if some people get hurt along the way. That, buddies, is why when your bondage shop or panaderia fails and you lose your invested life savings on top of innumerable labor hours and maybe even some of your other personal assets if you were dumb enough to commingle them with your business, the general line is "oh too bad, we feel sorry for you, but that's tough -- that's the market." Likewise when your adjustable-rate mortgage goes ape and you can't make the payments on what is now a double-digit interest rate and you default, ruining your life : tough! Shouldn't have taken on that risky ARM. But don't act like we're maintaining a free market if this applies to anybody -- except giant corporations, who have nothing to fear ever. This recent bare-faced turn makes clear two things : the government is not for you, and Henry Paulson is a whore.
Unless you like paying for the bad debts and dumbass moves of coke-snouted corporate goons, you need to write every on of your legislators and call the White House. Do everything you can think of to let the swine know that you don't much care for their plan. If the government is going to put you on the hook for the liabilities of any firm of size "X" or bigger, that's not a free market. The logical response to that situation is that, since it is obviously not acceptable for the taxpayer to have to foot the bill for failed idiot companies, firms must not be allowed to achieve a size that's too big to fail. We shouldn't allow these horses to have it both ways -- free market when it's profitable, Communism when things get dicey. That's rubbish and it's a crime.
The government's not doing what we pay it to do. Instead, it's giving away your money and doing away with your rights. The Federal Reserve and its cow of a Treasury Secretary are paid henchmen that sneak crimes by you behind closed doors and then lie like Oriental rugs about the reasons they steal. Enough of that. It's time to overthrow that criminal order. Overthrow it. You're going to need every right you have left. (85,828)
Presidential candidatin' time once again, and for some people, it's time to ignore what actually matters and pick the dumbest issue possible to vote on.
In 2000, it was re-introduction of Pogs as a national trend. In 2004, it was gay marriage.
Now, it seems to be the economy. Except not. No it's about Change... no wait, it's about Hope!
That's it, hope!
Can you tactilely feel hope? Can you unfold some hope from your wallet and buy bread when it costs $40 a loaf?
As we're seeing, people chosen to head government agencies like "The Fed" have a bigger impact on your life than your perception of the president.
Unfortunately, that will have no bearing WHATSOEVER on who is elected in November.
Let's do a summary of economic policy from the 2 (3? No) frontrunners:
Obama's economic policy (at least, from his website) is an unending litany of nonsensical and mostly nonspecific populist cliches and exploitation of common economic misconceptions. It's kind of like a checklist of stereotypical democratic voting blocks.
I'm not going to go through all of it. Just bring it to any econ professor who's a fan of monetarism (PS, Alan Greenspan's a monetarist). Bring tissues, it'll be emotional.
Meanwhile, you have McCain who will probably soil his adult diapers and have a stroke in an inhuman surge of glee and vomit if he ever gets elected. Mainly I see him as retaining the Bush policy for the most part but I don't see the budget expanding by as much. This would mean four more years of stupidity and keyensian tomfoolery.
Hillary's out so I'm not going to bother looking up her stated views on the subject. Not like it'd matter anyway, as it's probably a lot of BS.
Neither candidate will balance the budget. Neither will fix the Fed.
What matters more than the president is going to be the people he puts in his cabinet, especially in the treasury and federal reserve. The current people (Bernanke, Paulson) are like a couple of 10 year olds trying to salvage a pot of spaghetti sauce they just drowned a cat in. Since it's pretty much a crap shoot, and hard for either of these idiots to be worse than it already is, I simply don't care.
If you need me November 4th, I'll be at the bar. (41,071)
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The "exit strategy" talk is spawned by the economic enigma I call the "Chinese Finger Trap". Essentially, the Fed is printing tons of money to stimulate the economy as it's both fun and entertaining (similar to sticking your fingers in the finger trap). However, if they keep doing that, eventually life's going to really suck (due to inflation, speculation on inflation, and all manner of evil). Therefore, at some point, they have to take their fingers out.
(excuse this boring personal note) I was extremely lucky to be taught economics by a monetarist. My economics textbook subtly jabbed at Keynesianism throughout the book, and compartmentalized Keynes and his balderdash in a single chapter called "Chapter 11--John Maynard Keynes" (I'm almost positive that was on purpose). At the time, I would chat with my friends, some of whom had taken Econ101 taught by a Keynesian. My Friends were always talking about 
To therefore write effectively about politics, you've got to either not care at all, or just not have human emotion to begin with. This is why most professional political pundits are actually sociopaths. The pundit's ability to look apocalypse in the face and say "Fuck it." is the secret to readable copy. It's not that these people are especially smart, it's that they're emotionally distant enough to keep their heads on straight when writing about the metaphorical rape of all their espoused beliefs.
The next myth I'mbout-ta-bust about the Great Mf'ing Depression is that President Herbert Hoover was some kind of coward who refused to intervene. This is almost certainly a case of politics totally f'ing up history. Pay attention boys and girls: this is what it looks like. These 'Court Historians' [*cough* Paul Krugman *cough*] want to blame the "free market" for the Great Depression, and to do that, they have to paint Hoover as a slimy, good-for-nothing, free market Republican (to be fair, he was a Republican, and he looked pretty slimy). Presumably, they're distorting history so they can blame the depression on Hoover and also so they can attribute this country's salvation to FDR's "economic reform." This lends credence to the government power-grab ("bailout") that's going on right now, since conceptually FDR's stimulus was the same thing. Luckily, the claims about Hoover's "non-interventionism" are so ridiculously false that the debate ends in the 2 seconds it takes to load the Wikipedia article. 
By the end of Hoover's presidency, it seemed that voters were pretty fed up with all this progressive interventionist hogwash. They knew what Hoover did, they knew it didn't work, they wanted "change," and they wanted it in the form of economic freedom. It seems strange then that they elected FDR--probably the most "progressive" president of all time, according to the history books.
By that notion, Obama could just wait until midnight tonight, use his Santa Claus magic, jump in his reindeer-driven Escalade, and do a drive-by on every unemployed household in America, killing at least half the unemployed in one fell swoop. Wouldn't it be great if it were just that easy? Too bad it isn't (though that may not stop him from trying...). Yeah, it'd make that particular economic indicator jump back into the green, but the smell would be horrendous after a few weeks, plus it wouldn't exactly restore consumer confidence.
If you accidently leave your TV on for any length of time these days, you probably know that what they did back then to try and "fix the problem" are the exact same types of things they're doing now. You hear about a new Bailout plan just about every month now, and every idea they have isn't exactly new.
