ROI that unlucky investors have ever seen – and that includes the stock market conditions of 1931. So I've now found another disturbing jpeg. It's from the Federal Reserve Bank of St. Louis. I have to wonder what our policy makers think when they see charts like this. Devaluing our currency so rapidly is going to create massive economic shock waves for years to come. And this chart proves beyond a doubt that Federal Reserve Chairman Ben Bernanke is the orchestrator of the most significant devaluation of American currency in U.S. history.
Tuesday, January 27, 2009
Take A Look At Real Inflation
Not too long ago, I posted a blog entry that linked to a photo of the real returns, or lack of real returns, that stock investors were seeing during the receding market of 2008. It's impressive. And sad. It's the worst 
ROI that unlucky investors have ever seen – and that includes the stock market conditions of 1931. So I've now found another disturbing jpeg. It's from the Federal Reserve Bank of St. Louis. I have to wonder what our policy makers think when they see charts like this. Devaluing our currency so rapidly is going to create massive economic shock waves for years to come. And this chart proves beyond a doubt that Federal Reserve Chairman Ben Bernanke is the orchestrator of the most significant devaluation of American currency in U.S. history.
ROI that unlucky investors have ever seen – and that includes the stock market conditions of 1931. So I've now found another disturbing jpeg. It's from the Federal Reserve Bank of St. Louis. I have to wonder what our policy makers think when they see charts like this. Devaluing our currency so rapidly is going to create massive economic shock waves for years to come. And this chart proves beyond a doubt that Federal Reserve Chairman Ben Bernanke is the orchestrator of the most significant devaluation of American currency in U.S. history.
Friday, January 23, 2009
The Job Of President Is Tougher Than It Looks
One day after signing an executive order to close the Guantanamo Bay prison in Cuba, a former Gitmo inmate was found on a militant web site as having become a new Al-Qaida commander. In fact, a total of 18 former inmates are now confirmed as having returned to their former hostilities, and another 43 are suspected to have done the same – bringing the total to 61 the number of Guantanamo prisoners who are believed to be once again fighting against American soldiers in the middle east.
Obama moves to reshape US policy by closing Gitmo
(Thursday, Jan. 22nd)
Report: Ex-Gitmo detainee joins al-Qaida in Yemen
(Friday, Jan. 23rd)
Released detainee now Yemen al-Qaida commander
Obama moves to reshape US policy by closing Gitmo
(Thursday, Jan. 22nd)
Report: Ex-Gitmo detainee joins al-Qaida in Yemen
(Friday, Jan. 23rd)
Released detainee now Yemen al-Qaida commander
Thursday, January 22, 2009
The Private Individual vs. The Government Collective
Private Individual = I cannot start wars.
Government Collective = We can start as many wars as we wish.
Private Individual = I cannot legally use force, coercion or violence in any endeavor.
Government Collective = We can legally use force, coercion and violence for any notion we desire.
Private Individual = I can profit and make my life much better.
Government Collective = You can profit for as long as we remain comfortable with your profit.
Private Individual = The money I earn belongs to me.
Government Collective = The money you earn belongs to others as well.
Private Individual = If I fail, it's my responsibility, and no one else's.
Government Collective = If you fail, everyone will pay for your failure.
Private Individual = My free will is my mind, and my desire to use it for anything I wish.
Government Collective = We are fine with your free will, so long as it doesn't interfere with what we want from you.
Private Individual = My government represents me and my best interests.
Government Collective = We let special interests write laws for us when it's convenient for us.
Private Individual = My vote counts.
Government Collective = That's why we're keeping The Electoral College.
Private Individual = My government represents me and my best interests.
Government Collective = We will decide how to tax you, and how to spend your money, without your permission.
Private Individual = If I succeed, it's from my hard work, and I will reap the benefits.
Government Collective = If you succeed, you will sacrifice your success to others.
Private Individual = My life is my own, and I can live it any way I desire.
Government Collective = Your life is not your own; it is the means to the ends of others whom you don't know.
Private Individual = What greater good could there be than my own, personal happiness.
Government Collective = The greater good is served when you give up something you want for something you don't want; and we will set your standards.
Private Individual = The Founding Fathers focused most on placing the individual before government, and that is what made America the most prosperous nation on earth.
Government Collective = We're working on that.
Private Individual = The poorer I am.
Government Collective = The richer I am.
Private Individual = The weaker I am.
Government Collective = The stronger I am.
Private Individual = “To govern” means “to restrict.”
Government Collective = Government sets you free.
Government Collective = We can start as many wars as we wish.
Private Individual = I cannot legally use force, coercion or violence in any endeavor.
Government Collective = We can legally use force, coercion and violence for any notion we desire.
Private Individual = I can profit and make my life much better.
Government Collective = You can profit for as long as we remain comfortable with your profit.
Private Individual = The money I earn belongs to me.
Government Collective = The money you earn belongs to others as well.
Private Individual = If I fail, it's my responsibility, and no one else's.
Government Collective = If you fail, everyone will pay for your failure.
Private Individual = My free will is my mind, and my desire to use it for anything I wish.
Government Collective = We are fine with your free will, so long as it doesn't interfere with what we want from you.
Private Individual = My government represents me and my best interests.
Government Collective = We let special interests write laws for us when it's convenient for us.
Private Individual = My vote counts.
Government Collective = That's why we're keeping The Electoral College.
Private Individual = My government represents me and my best interests.
Government Collective = We will decide how to tax you, and how to spend your money, without your permission.
Private Individual = If I succeed, it's from my hard work, and I will reap the benefits.
Government Collective = If you succeed, you will sacrifice your success to others.
Private Individual = My life is my own, and I can live it any way I desire.
Government Collective = Your life is not your own; it is the means to the ends of others whom you don't know.
Private Individual = What greater good could there be than my own, personal happiness.
Government Collective = The greater good is served when you give up something you want for something you don't want; and we will set your standards.
Private Individual = The Founding Fathers focused most on placing the individual before government, and that is what made America the most prosperous nation on earth.
Government Collective = We're working on that.
Private Individual = The poorer I am.
Government Collective = The richer I am.
Private Individual = The weaker I am.
Government Collective = The stronger I am.
Private Individual = “To govern” means “to restrict.”
Government Collective = Government sets you free.
Wednesday, January 21, 2009
Once Bitten, Not Shy - The British Version
In my post “Toxin as Medicine in Japan” I argue against “stimulus” programs, because so many of them have been so costly and failed so horribly. I've also argued heavily against bailouts. They're just as illogical in principle and as inefficient as any confiscation of wealth for a so called “stimulus.” And Britain is the latest country to reaffirm the absurdity of government involvement in the peoples' economy. A friend of mine was describing to me recently the quality of employee he's forced to hire in his business. “They're unteachable,” he said. “They're unteachable.” I feel the same way about politicians. As you read this article, keep that in mind, and be sure to check out my “Top 30 Watch List For Economic Armageddon,” and my “I Told You So” posts.
Saturday, January 17, 2009
Slow Down, Whipper-Snapper
Sometimes as we get older we like to laugh at ourselves that we just can't keep up with the world, because the world is speeding up. We say it tongue-and-cheek as if it's not true. But this incredibly informative video offers us proof. The world really is speeding up, and there's nothing we can do to stop it.
Toxin as Medicine in Japan
Japanese politicians clearly haven't learned any lessons from their collectivist school of hard knocks. They are now repeating the spending mistakes they made during the 1990's.
In a repeat example of what no one should do during an economic reversal, the Japanese government has once again started spending money that neither it nor its electorate can afford to spend. They are still under the impression that the economic machinations of John Maynard Keynes are correct. But they're not.
Keynes proposed that during recessions or depressions, the government of a given country can increase its spending and debt to jump start an economy out of its doldrums. In the past, this method of operation has been tried – and repeatedly. And virtually every time it's tried, it becomes nothing more than a costly mistake.
In fact, Japan and many other countries have already tried this. Germany tried it just prior to WWII, and became the one country on earth with the worst inflation rate ever. The US tried it during the Hoover administration; then during Roosevelt's administration; then again during the Carter administration. It failed each time. Japan, in particular, has become an extraordinarily clear case of how economically unsound Keynes's ideas can be. After the Second World War, Japan was seen as a unique model of economic policy, combining government and business in an original mix. And by the 1980's, Japan achieved what was widely described as a “miracle” in economic growth. But when the '90's came around, the people of Japan were left with an economy in stagnation and debt that amounted to one and a half times its GDP. And they have yet to fully recover.
In fact, Japan spent the sum total of 100 trillion yen ($950 billion, U.S.) on nearly a dozen stimulus programs from 1990 to 2000. The majority of the monies were spent on public works projects. They even lowered their interest rate to zero in 1999, but to no avail. Borrowing remained as stagnant as the whole of the economy.
Following the same Keynesian mentality, the government then began bailing out failing banks, and nationalizing others to the tune of over $500 billion dollars; purchasing publicly traded companies, and lending directly to consumers. They also bought huge amounts of euros; intentionally devalued their own currency; restricted and manipulated the credit markets, and gave companies the government deemed TBTF (too big to fail) a nice line of credit, totaling 20 trillion yen. I have to keep this list short for the sake of blogging format; but there were other measures taken. If we take all of this into account, we can hardly say that since Japan has spent over a dozen years and the equivalent of 1 trillion U.S. dollars trying to resuscitate their feeble economy, that they haven't done or tried enough. Clearly they have. The government has manipulated its way through virtually every corner of the economy. What's most disconcerting is that Japan's economy is less than one third the size of the U.S. economy. If one trillion dollars didn't work for them, it's not likely to work for us either.
But, not surprisingly, the Japanese government has stated a new intention to spend another 10 trillion yen ($105 billion, U.S.) on infrastructure, and other government stimulus programs. And its budget has swelled to an unprecedented 88.5 trillion yen ($990.9 billion, U.S.). They've stated, once again, that they are reducing their interest rate. And, once again, they are hastily beginning a 13 billion dollar “emergency” lending program. If only they would learn that infrastructure spending simply doesn't work in stimulating the economy.
Since I'm a government cynic, I can't say I'm surprised. What they appear to be doing, though, is following the lead of several other countries that can't pull themselves away from their past mistakes, and the overly simplistic and coercive ideas of Keynes and the New Keynesians. Nobel Prize winning economist Paul Krugman, in my humble opinion, is one such New Keynesian.
Several years ago he stated “Japan's postal savings system, which channels money into public works projects that have little if any social payoff, is monumentally inefficient; so is the practice of rolling over the debts of companies that will never regain profitability and hence keeping capital employed producing what nobody wants.” (Krugman, 2001)
Ironically, Krugman also stated in 2008 that massive infrastructure spending is needed for the U.S. economy to turn around. He said "[f]iscal expansion will be even better for America's future if a large part of the expansion takes the form of public investment - of building roads, repairing bridges and developing new technologies, all of which make the nation richer in the long run."
So either Mr. Krugman:
Has forgotten what he said years ago
Is conflicted over whether or not public works programs act as a real stimulus
Has under-estimated the efforts of the Japanese government
Has monumentally over estimated the value and effectiveness of the American government
Thinks the Japanese haven't been thrifty enough
Wants bailouts
Doesn't want bailouts
Or simply can't make up his mind
One would expect to see a little more logic from a Nobel Prize winner. But none of that, ultimately, is important. He's in excellent company. Ben Bernanke, Henry Paulson, George Bush, Barak Obama and many other monetary manipulators still share his view. They all have what Frederick Von Hayek called “The Fatal Conceit.” They still believe in the ill-conceived notion that a small group of intelligent and powerful individuals can tweak an economy just right to force prosperity. They all have the one, undying devotion to the idea that the economy will recover, if only everyone else will just listen to them. The communists thought the same thing: so long as everyone co-operates, prosperity can be had by all.
But history paints a much dimmer picture of such ridiculousness. And in my opinion, such ideas of controlling others say much more about the nature of the individual who believes in them than the ideas themselves - whether the ideas work or not. In the words of Ayn Rand, “The creator's concern is the conquest of nature. The parasite's concern is the conquest of men.”
So we are at a very serious crossroads. Either we tell the bureaucrats, pseudo-bureaucrats, monetarists and do-gooders to get out of the peoples' economy now, or we will most likely be looking at a “lost decade” ourselves - and that might be the least of our worries. The mindset brought on by Keynes is obviously a tough nut to break. But, however difficult it may be at first, letting go of the economy is not unlike the letting go of a child who's leaving home for the first time. Eventually you must let go. It's what's best for the prosperity of the child. And you. If you refuse, you're setting yourself up for a catastrophe.
In the words of Austrian economist Jeffrey Herbener: “Let us hope that the legacy of Japanese debacle is the acceptance of the lesson Ludwig Von Mises taught us in 1912: that the Keynesian miracle of central-bank monetary inflation and credit expansion is counterfeit and must end in crises and depressions.”
So, ultimately, the best thing the government can do now is take their feet off of the financial brakes, take their hands off of the economic steering wheel, and let the economy drive itself to whatever destination it desires most – which is, of course, equilibrium. And the people who promote this notion best are the Austrian Economists, with their Austrian Business Cycle.
The whole story of Japan. “The Rise and Fall of the Japanese Miracle”
This Washington Post story states: "The stimulus plans had the opposite effect of what was expected." The writer even says that the programs have become more like an economic "cancer."
Read Paul Krugman's argument here.
“The US credit crunch is a hoax.”
“Goodbye Japanese Miracle”
In a repeat example of what no one should do during an economic reversal, the Japanese government has once again started spending money that neither it nor its electorate can afford to spend. They are still under the impression that the economic machinations of John Maynard Keynes are correct. But they're not.
Keynes proposed that during recessions or depressions, the government of a given country can increase its spending and debt to jump start an economy out of its doldrums. In the past, this method of operation has been tried – and repeatedly. And virtually every time it's tried, it becomes nothing more than a costly mistake.
In fact, Japan and many other countries have already tried this. Germany tried it just prior to WWII, and became the one country on earth with the worst inflation rate ever. The US tried it during the Hoover administration; then during Roosevelt's administration; then again during the Carter administration. It failed each time. Japan, in particular, has become an extraordinarily clear case of how economically unsound Keynes's ideas can be. After the Second World War, Japan was seen as a unique model of economic policy, combining government and business in an original mix. And by the 1980's, Japan achieved what was widely described as a “miracle” in economic growth. But when the '90's came around, the people of Japan were left with an economy in stagnation and debt that amounted to one and a half times its GDP. And they have yet to fully recover.
In fact, Japan spent the sum total of 100 trillion yen ($950 billion, U.S.) on nearly a dozen stimulus programs from 1990 to 2000. The majority of the monies were spent on public works projects. They even lowered their interest rate to zero in 1999, but to no avail. Borrowing remained as stagnant as the whole of the economy.
Following the same Keynesian mentality, the government then began bailing out failing banks, and nationalizing others to the tune of over $500 billion dollars; purchasing publicly traded companies, and lending directly to consumers. They also bought huge amounts of euros; intentionally devalued their own currency; restricted and manipulated the credit markets, and gave companies the government deemed TBTF (too big to fail) a nice line of credit, totaling 20 trillion yen. I have to keep this list short for the sake of blogging format; but there were other measures taken. If we take all of this into account, we can hardly say that since Japan has spent over a dozen years and the equivalent of 1 trillion U.S. dollars trying to resuscitate their feeble economy, that they haven't done or tried enough. Clearly they have. The government has manipulated its way through virtually every corner of the economy. What's most disconcerting is that Japan's economy is less than one third the size of the U.S. economy. If one trillion dollars didn't work for them, it's not likely to work for us either.
But, not surprisingly, the Japanese government has stated a new intention to spend another 10 trillion yen ($105 billion, U.S.) on infrastructure, and other government stimulus programs. And its budget has swelled to an unprecedented 88.5 trillion yen ($990.9 billion, U.S.). They've stated, once again, that they are reducing their interest rate. And, once again, they are hastily beginning a 13 billion dollar “emergency” lending program. If only they would learn that infrastructure spending simply doesn't work in stimulating the economy.
Since I'm a government cynic, I can't say I'm surprised. What they appear to be doing, though, is following the lead of several other countries that can't pull themselves away from their past mistakes, and the overly simplistic and coercive ideas of Keynes and the New Keynesians. Nobel Prize winning economist Paul Krugman, in my humble opinion, is one such New Keynesian.
Several years ago he stated “Japan's postal savings system, which channels money into public works projects that have little if any social payoff, is monumentally inefficient; so is the practice of rolling over the debts of companies that will never regain profitability and hence keeping capital employed producing what nobody wants.” (Krugman, 2001)
Ironically, Krugman also stated in 2008 that massive infrastructure spending is needed for the U.S. economy to turn around. He said "[f]iscal expansion will be even better for America's future if a large part of the expansion takes the form of public investment - of building roads, repairing bridges and developing new technologies, all of which make the nation richer in the long run."
So either Mr. Krugman:
Has forgotten what he said years ago
Is conflicted over whether or not public works programs act as a real stimulus
Has under-estimated the efforts of the Japanese government
Has monumentally over estimated the value and effectiveness of the American government
Thinks the Japanese haven't been thrifty enough
Wants bailouts
Doesn't want bailouts
Or simply can't make up his mind
One would expect to see a little more logic from a Nobel Prize winner. But none of that, ultimately, is important. He's in excellent company. Ben Bernanke, Henry Paulson, George Bush, Barak Obama and many other monetary manipulators still share his view. They all have what Frederick Von Hayek called “The Fatal Conceit.” They still believe in the ill-conceived notion that a small group of intelligent and powerful individuals can tweak an economy just right to force prosperity. They all have the one, undying devotion to the idea that the economy will recover, if only everyone else will just listen to them. The communists thought the same thing: so long as everyone co-operates, prosperity can be had by all.
But history paints a much dimmer picture of such ridiculousness. And in my opinion, such ideas of controlling others say much more about the nature of the individual who believes in them than the ideas themselves - whether the ideas work or not. In the words of Ayn Rand, “The creator's concern is the conquest of nature. The parasite's concern is the conquest of men.”
So we are at a very serious crossroads. Either we tell the bureaucrats, pseudo-bureaucrats, monetarists and do-gooders to get out of the peoples' economy now, or we will most likely be looking at a “lost decade” ourselves - and that might be the least of our worries. The mindset brought on by Keynes is obviously a tough nut to break. But, however difficult it may be at first, letting go of the economy is not unlike the letting go of a child who's leaving home for the first time. Eventually you must let go. It's what's best for the prosperity of the child. And you. If you refuse, you're setting yourself up for a catastrophe.
In the words of Austrian economist Jeffrey Herbener: “Let us hope that the legacy of Japanese debacle is the acceptance of the lesson Ludwig Von Mises taught us in 1912: that the Keynesian miracle of central-bank monetary inflation and credit expansion is counterfeit and must end in crises and depressions.”
So, ultimately, the best thing the government can do now is take their feet off of the financial brakes, take their hands off of the economic steering wheel, and let the economy drive itself to whatever destination it desires most – which is, of course, equilibrium. And the people who promote this notion best are the Austrian Economists, with their Austrian Business Cycle.
The whole story of Japan. “The Rise and Fall of the Japanese Miracle”
This Washington Post story states: "The stimulus plans had the opposite effect of what was expected." The writer even says that the programs have become more like an economic "cancer."
Read Paul Krugman's argument here.
“The US credit crunch is a hoax.”
“Goodbye Japanese Miracle”
Saturday, January 10, 2009
The Polaroid is Dead; Long Live the Polaroid
I just love, love, innovation. Just when you think some technology has become obsolete, necessity steps in to prove that invention knows few if any boundaries. The Polaroid company just recently declared bankruptcy. But at this month's (Jan.) Las Vegas Consumer Electronics Show, the company revealed a new product – the PoGo, a $200.00 camera that takes your photos, and then prints them out, just the way you remember. It's a combination of modern day digital camera, and ultra small printer, designed to be a direct replacement of their old point-and-print photo taker. Congratulations to the people at Polaroid. If they can continue to innovate like this, they could very well revive their struggling company.
Tuesday, January 6, 2009
Impossible Chess Game For Barak Obama
Some of the interesting things going on in the world have lots of people very concerned about how effective incoming President Barak Obama will be when he finally takes office. The laundry list is impressive:
a struggling economy that has yet to respond to stimulus
rising unemployment
an increasingly venomous atmosphere in Washington
quelling terrorist plots nationally, in what appears to be an inevitable attack on U.S. soil
rising anti-western sentiment abroad – especially in places like Mumbai, India
two war fronts in the middle east
huge problems with border and homeland security
Israel and Palestine in total conflict
promised healthcare reform
social security reform
education reform
immigration reform
climate change
energy independence
the promised closing of Guantanamo
I've kept it just a list for brevity, but the list goes on and on. Now, however, parties on both sides are criticizing him for doing what appears to be the most innocuous thing – reaching across party lines to choose someone like Rick Warren to take part in his inauguration. Rick Warren, though a bit controversial for his social views in political circles on the left, will play no role whatever in the Obama administration. And actually very little role in the inauguration itself. Rather, he was just asked to give the invocation during Barak Obama's inauguration, a role that is ultimately inconsequential. So it's quite disturbing to see this trend of intolerance from the left (and right) even before Barak's time in office has begun. If the American public is concerned now that current President George Bush can do no right, then Barak's time in office is shaping up to be very ugly indeed.
a struggling economy that has yet to respond to stimulus
rising unemployment
an increasingly venomous atmosphere in Washington
quelling terrorist plots nationally, in what appears to be an inevitable attack on U.S. soil
rising anti-western sentiment abroad – especially in places like Mumbai, India
two war fronts in the middle east
huge problems with border and homeland security
Israel and Palestine in total conflict
promised healthcare reform
social security reform
education reform
immigration reform
climate change
energy independence
the promised closing of Guantanamo
I've kept it just a list for brevity, but the list goes on and on. Now, however, parties on both sides are criticizing him for doing what appears to be the most innocuous thing – reaching across party lines to choose someone like Rick Warren to take part in his inauguration. Rick Warren, though a bit controversial for his social views in political circles on the left, will play no role whatever in the Obama administration. And actually very little role in the inauguration itself. Rather, he was just asked to give the invocation during Barak Obama's inauguration, a role that is ultimately inconsequential. So it's quite disturbing to see this trend of intolerance from the left (and right) even before Barak's time in office has begun. If the American public is concerned now that current President George Bush can do no right, then Barak's time in office is shaping up to be very ugly indeed.
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