Liberty Forged

the State has no money of its own, so it has no power of its own. ` Nock

Posts Tagged ‘democrats’

Keynes’ General Theory. Much like cluster bombs for the world.

Posted by Jesse on March 5, 2008

The Crisis Point of the Inflationary Boom
By Sean Corrigan

Posted on 3/4/2008

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In a recent survey — jointly conducted by CFO magazine and Duke University — one of the top concerns being expressed by industry executives across the United States, Europe, and Asia was that of the rising cost and — to a slightly lesser extent — the reduced availability of labor, especially that of the skilled variety.

The worry most forcibly competing with this angst was that of whether “consumer demand” would hold up in coming months.

For a Keynesian this conflict can have no meaning, for the central chicanery around which the General Theory is constructed is that depressions can be warded off through monetary debasement, simply by stuffing the workers’ pockets with extra cash, while simultaneously fooling them as to the real value of the nominal wages being received in such a newly clipped coinage.

In the case where wages are rising (labor costs are mounting) because employment is near full (suitable candidates for work are hard to find) then, assuming the mythical “propensity to consume” remains broadly constant, consumer demand should be a shoe-in, and unlearned industrialists need not lose too much sleep over their prospects for either sales or profits.

Granted, “end demand” could also become (temporarily) curtailed by a sudden outbreak of thrift, that virulent, unpredictable strain of global pandemic feared by the macromancers more than dirty bombs, bird flu, melting ice caps, and a direct asteroid strike, combined, for its potency in disrupting the pristine, academic beauty of their consumption functions and ISLM curves.

The unlikelihood of this taking place in a world whose mail boxes bulge daily with unsolicited offers of new credit, and whose masses have been conditioned to view shopping as a sacramental rite, should be all too apparent.

In fact, what our survey results really display are the classic symptoms of the unhealthy discoordination that an unbacked credit expansion induces in the body economic.

What we see here is that most of the businessmen canvassed are finding their costs are rising and, in particular, the dominant cost they typically bear: that associated with retaining a competent and motivated workforce. At the same time, those who do not directly play a part in satisfying the needs of end consumers (an overriding majority, if our sample is representative of industrial and commercial organization as a whole) are beginning to fret about a slackening of demand for their (mainly higher and intermediate goods) output.

As Mises, Hayek, et al. took great pains to explain, what this means is that the seemingly golden age — in reality, a thinly gilded one — during which the first, most favored issuers of cheap credit and artificially boosted equity prices enjoyed almost effortless success, has reached the limit of its ability to postpone the workings of fundamental economic law.

Even if financial capital once appeared so abundant as to provoke strange, Swiftian fantasies about the “saving glut” and the “asset shortage,” real, physical capital was never called into being quite so readily, since its creation requires not the staccato keystroke of a fiat banker, but entrepreneurial vision, hard work, and genuine saving.

By that last we mean a voluntary abstention from current consumption, undertaken in order to improve the chance of greater plenty in the future, and not the corrupt preemption of a man’s spending power — effected with monetary trickery — which inflationists laud as “forced saving.” Being a species of initially unrecognized compulsion, this is a deceit doomed to fatal self-contradiction, once its dupes wake up to the nature of the con being practiced upon them.

Since the boom has been driven forward according to the projections of the borrowers and the low-hurdle eagerness of their lenders, rather than being predicated on meeting the imperatives of consumer sovereignty, we eventually find ambition has come to overmaster achievability and hope to have triumphed over hardheaded calculation.

To be harmonious and self-consistent, production should be guided by the wants of those whose ability to express them comes by virtue of being in harness to the same web of mutually supportive processes that help satisfy the needs of others, in turn. If not, scarce physical resources will be squandered in trying to realize misplaced visions of a world as overbrimming with affordable means as the unnaturally low interest rate treacherously seems to imply.

Worse still, once the fever of the boom spreads from its initial promoters and their preferred clients to infect the populace at large, sobriety and forbearance tends to vanish in a kind of Gresham’s Law of the spirit. A world awash with “liquidity” is not one where the steady flame of good husbandry can outshine the neon-lit promise of instant gain.

To recap, what then we find is that not only does the availability of financial capital become wholly divorced from the extent of the pool of physical capital goods; not only does much of that pool become misused (and, hence, ultimately, stripped of its original “capitalness”); but that the wellspring of capital maintenance and augmentation — namely, voluntary saving — is concreted over to provide a gaudy, Baroque fountain of greater exhaustive consumption.

As this happens, many final-goods prices will rise as they are revealed to have been undersupplied in relation to the monetary means now pouring into the hands of their would-be consumers. Where such goods also comprise inputs to production taking place further upstream (as is archetypically the case with, say, energy), this increase in expense will primarily add to costs and may therefore begin to sap profitability, if these are not either offset with greater efficiencies or fully recouped in higher selling prices.

Furthermore, as they find their standards of living slipping, those workers who are so enabled — and they will be legion at the height of the boom — will be far less shy about insisting upon more from their employers, by way of compensation for their efforts. Labor costs will now feature in the list of boardroom anxieties.

Simultaneously, since “demand” will have come to a white-hot focus of insistency on end-consumer items, all those who can do so will be shifting resources towards meeting it. If this means abandoning half-completed schemes for long-duration projects in favor of pursuing more mundane but now more lucrative goals, such as putting food on the average man’s table and keeping his boiler stoked with fuel in the here-and-now, so be it.

Unfortunately for the Keynesians, with their quaint, quasi-hydraulic depiction of the economy, such intensified end demand will not automatically translate into higher revenues for all the businesses strung out along the chain of production, just as a sudden appetite for beef will not instantly cause the grass upon which the cattle feed to grow more luxuriantly in the pasture.

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What it will tend to do instead is to strip those not immediately involved in meeting that end demand of their ability to call upon productive resources on the same terms as before.

Squeezing margins as in a vice, this development may also diminish the orders received from those closer to the shop front, since these erstwhile business customers will now be too busy scrambling to restack their emptying shelves to contemplate closing off the sales area for a refit, much less to ponder the purchase of a gimmicky new IT system, or to think of splashing out on an expensive and distinctly nonessential corporate makeover.

This last may not wholly be a matter of discretion since, besides seeing their own wage bill expand, consumer-goods merchants are likely to see inventory replacement come complete with higher invoices, so working-capital needs may soon start to crowd out much more deferrable fixed-investment schedules.

Costs up, labor more pricey, yet demand flagging: this is the fate of all too many of the myriad businesses which comprise the vast, hidden, submarine bulk of the iceberg that is our modern, highly specialized, vertically stratified, distributed assembly-line economy — to the befuddlement of a mainstream lacking a proper theory of capital or a true appreciation of the role of time.

Welcome to the crisis point of the inflationary boom!

Sean Corrigan is Chief Investment Strategist at Diapason Commodities Management. Send him mail. See his articles. Comment on the blog.

Posted in *Take Action, abortion, antiwar, Constitution, Current Events, democrat, economy, Education, election 2008, free market, Gold, government, healthcare, internet, lew rockwell, Libertarian, mccain, Mises, obama, old right, Politics, Pro Market, republican, Rights, Ron Paul, Rothbard, technology, Video | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments »

Hope for the Economy

Posted by Jesse on March 4, 2008

Hope for the Economy
By Ron Paul

It is becoming harder and harder for Washington and the mainstream media to ignore the ripple effect the collapse of the housing bubble is having on the economy. Inflation is up, cost of food is up, oil and gold are up, foreclosures are up, unemployment is up, government spending is at record highs, its seems that the only thing down is the value of the dollar. The middle and lower classes are getting squeezed as prices jump and wages stay flat.

Though it is good that Washington is acknowledging the problem instead of sweeping it under the rug, I always get nervous at their ideas of solutions. A proper solution requires an honest, in-depth look at the root of the problem.

What the government needs to stop doing is taxing Americans literally out of house and home in the wake of the housing debacle. We should not take money from taxpayers to bail out bad businesses. At the same time, we need to make sure that America can get back to work by easing taxes and regulations on good businesses and allow them to function and prosper. Also there a lot of tax cuts and tax reforms we could be making to ease the burden on the American people.

I have many bills in Congress that address the high taxes Americans pay, but one in particular – my Tax-Free Tips Act – should be a no-brainer at a time like this. This legislation would exempt gratuities earned by service sector workers from income tax liability. A tip is a small gift and there is no contractual requirement to give it, yet if someone leaves a restaurant without tipping, the IRS will still estimate how much they should have been tipped and tax the waiter based on that, should they perform an audit. This is patently wrong.

People working these jobs are the backbone of our economy, and they often support a family or put themselves through school on this money. They are already taxed on their base wages through withholding. They should not be taxed on tips. We do not need to put this kind of pressure on our service workers.

To really fix the economy and get it back on track, though, a sea change, not a quick-fix attempt, is needed. I was very pleased and encouraged that on Friday the Wall Street Journal published my letter to the editor addressing some of our economic problems. The message is getting out because people are demanding answers. The American people are strong, resourceful, hard working and determined. Because of this we can get through these tough economic times, but our leaders need to understand how we got here in the first place. Continuing the same flawed policies that got us here will only prolong the agony.

Posted in abortion, antiwar, Constitution, Current Events, democrat, economy, Education, election 2008, free market, Gold, government, healthcare, internet, lew rockwell, mccain, obama, old right, Politics, republican, Rights, Ron Paul, technology | Tagged: , , , , , , , , , , , , , , , , , , , , , | 1 Comment »

Obama pulls at our heart strings…

Posted by Jesse on March 4, 2008

but who’s pulling his?…

January 27, 2008

Paul vs. Obama
Posted by Anthony Gregory at January 27, 2008 03:08 PM
Anyone serious about foreign policy, civil liberties, and the war on drugs — issues on which the left is typically, if however marginally, better than the right (at least today) — has got to hand it to Ron Paul for being so principled and correct. Tom Woods points out Paul’s superiority here. And let’s keep in mind that Ron Paul has been a unique voice on all these crucial issues – issues on which his own party tends to be nearly uniformly terrible – quite consistently, at times when all popular sentiment was going in the opposite direction.

Check out Ron Paul’s warning in October of 2001, at a time when most Democrats were firmly behind the war on terror. Paul was prescient then in saying the war on terror could easily become as deadly and disastrous as the war on drugs.
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February 18, 2008

Obama: Warmonger
Posted by Anthony Gregory at February 18, 2008 09:23 PM
Although I do think he’s probably less of one than Hillary and McCain, and maybe less of one than Bush, here Obama is advocating war in Pakistan.

Sure, he sounds less bad on foreign policy than McCain, now. And Bush sounded less bad on foreign policy than Gore — before he was elected.

Ron Paul is pro-peace, pro-national defense, anti-intervention and anti-empire. None of the other major candidates have come close. Too bad the best debate the establishment wants us to get to see in November, 2008, will be one between escalated neocon aggression and old-school, someone less belligerent Rockefeller imperialism. And that is only if Mr. Change actually defeats the witch.

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The above photo comes from this article:

Make the World Safe for Hope
Can Barack Obama, who campaigns as an icon of peace, actually be more bellicose than Bush?
Yes, he can.

Obama-mania is getting out of hand. Full-grown and well-educated men—from swooning Andrew Sullivan to the entire staff of GQ magazine—are developing “man crushes” on Barack Obama, going weak in the knees for his immaculately pressed suits, oratorical skills, and shameless hope-mongering.

“I’ve never wanted anyone more than I want you,” warbles Obama Girl in a song called “I Got a Crush on Obama,” which has been viewed over 6 million times on YouTube. Celebs are queuing up to fall at his feet. “My heart belongs to Barack,” says Scarlett Johansson. There’s a palpable whiff of semi-religious hysteria at Obama rallies. As Joel Stein wrote in the Los Angeles Times, “Obamaphilia has gotten creepy,” and its “fanatical” adherents are starting to embarrass themselves.

Actually, it’s worse than that: they are deluding themselves. Many Democrats have become so goggle-eyed, so insanely convinced that Obama is the savior of American politics (potentially rescuing both the Democratic Party from political ruin and America herself from the decadence and violence of the Bush era), that they are beginning to suffer political hallucinations. They fantasize that he is pure and righteous, a miracle-worker who, in a pique of rage, will overturn the conventions of neocon-ruled America.

The blind hope in Obama-as-messiah is most clearly expressed in the widespread delusion that he would be a “president of peace,” welcomed by a world eager to bury the warmongering ways of the office’s former occupant and renew its respect for America. Columnist Michael Kinsley praised Obama’s “valuable experience … as what you might call a ‘world man’—Kenyan father, American mother, four formative years living in Indonesia, more years in the ethnic stew of Hawaii, middle name of Hussein, and so on—in an increasingly globalized world.” But from my sedate Obamarama-free home in London, I’m not cheered by the prospect of this “world man” in the White House. Rather, I see him for what he is—or for what he threatens to become. Having never been stirred by the sight of Obama giving an MLK-style speech on the need for change, I can only take the candidates at their words. And Obama’s words are ominous indeed.

President Obama would be a warmonger. He would be a wide-eyed, zealous interventionist who would not think twice about using America’s “military muscle” (his words) to overthrow “rogue states” and to suppress America’s enemies, real and imagined. He would go farther even than President Bush in transforming the globe into America’s backyard and staffing it with spies and soldiers. He would relish the “American mission” to police the world and topple tyrannical regimes.

After eight years of Bush’s military meddling in the Middle East, if you want more war, vote Obama.

Read the rest here…..

Posted in abortion, antiwar, Constitution, Current Events, democrat, economy, Education, election 2008, free market, Gold, government, healthcare, internet, Libertarian, mccain, obama, old right, Politics, republican, Rights, Ron Paul, technology | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment »

Concerns about preventative medicine and US healthcare.

Posted by Jesse on March 4, 2008

My response to innercontinental.wordpress.

Jesse (18:11:22) : Your comment is awaiting moderation
Ron Paul is a teacher. That’s the whole reason he got into politics. To teach people about what he had learned concerning economics.

Health should be left to the people and doctors. Not government policy.

People should have freedom of choice and association.

Ron Paul’s policies are preventative policies. Unlike the other candidates, he does not propose how to fix everything. He is just stating the truth about what problems we are facing.

That’s why he’s not taken seriously. The problems we are facing in America are systemic and will take a whole lot of healing. Unfortunately no candidate seems to have a good understanding of the major issues and will only serve to prolong or exascerbate the issues.

One reason healthcare is such an issue is because of cost.
http://www.ronpaul2008.com/articles/54/free-market-medicine/

Another is a matter of choice.
http://www.ronpaul2008.com/articles/53/dietary-supplements-and-health-freedom/

And, lastly, actual science in any field is required. Naturally, one doesn’t have to be a government employee to find a cure, or some other way of helping people.

Thats my two cents. Yes! There is a candidate who is talking about tough medicine. Preventative medicine. And he is a docotr by trade!

Posted in abortion, antiwar, Constitution, Current Events, democrat, economy, Education, election 2008, free market, Gold, government, healthcare, internet, mccain, obama, old right, Politics, republican, Rights, Ron Paul, technology | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment »

America’s Monetary Policy. Easy credit n bailouts = moral hazard.

Posted by Jesse on March 4, 2008

Financial Services Committee Hearing

Monetary Policy and the State of the Economy
by Ron Paul

A Statement to the House Financial Services Committee, February 27, 2008

Mr. Chairman,

A topic that is on the lips of many people during the past few months, and one with which I have greatly concerned myself, is that of moral hazard. We hear cries from all corners, from politicians, journalists, economists, businessmen, and citizens, clamoring for the federal government to intervene in the economy in order to forestall a calamitous recession. During the boom, many of these same individuals called for no end to the Fed’s easy credit. Now that the consequences of that easy money policy are coming home to roost, no one wants to face those ill effects.

We have already seen a plan from the administration to freeze mortgages, a plan which is alleged to be only a temporary program. As with other programs that have come through this committee, I believe we ought to learn from history and realize that “temporary” programs are almost anything but temporary. When this program expires and mortgage rates reset, we will see new calls for a rate-freeze plan, maybe for two years, maybe for five, or maybe for more.

Some drastic proposals have called for the federal government to purchase existing mortgages and take upon itself the process of rewriting these and guaranteeing the resulting new mortgages. Aside from exposing the government to tens of billions of dollars of potentially defaulting mortgages, the burden of which will ultimately fall on the taxpayers, this type of plan would embed the federal government even deeper into the housing market and perpetuate instability. The Congress has, over the past decades, relentlessly pushed for increased rates of homeownership among people who have always been viewed by the market as poor credit risks. Various means and incentives have been used by the government, but behind all the actions of lenders has been an implicit belief in a federal bailout in the event of a crisis.

What all of these proposed bailouts fail to mention is the moral hazard to which bailouts lead. If the federal government bails out banks, investors, or homeowners, the lessons of sound investment and fiscal discipline will not take hold. We can see this in the financial markets in the boom and bust of the business cycle. The Fed’s manipulation of interest rates results in malinvestment which, when it is discovered, leads to economic contraction and liquidation of malinvested resources. But the Fed never allows a complete shakeout, so that before a return to a sound market can occur, the Fed has already bailed out numerous market participants by undertaking another bout of loose money before the effects of the last business cycle have worked their way through the economy.

Many market actors therefore continue to undertake risky investments and expect that in the future, if their investments go south, that the Fed would and should intervene by creating more money and credit. The result of these bailouts is that each successive recession runs the risk of becoming larger and more severe, requiring a stronger reaction by the Fed. Eventually, however, the Fed begins to run out of room in which to maneuver, a problem we are facing today.

I urge my colleagues to resist the temptation to call for easy fixes in the form of bailouts. If we fail to address and stem the problem of moral hazard, we are doomed to experience repeated severe economic crises.

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The Dollar is a Big Element of U.S. Security (2/29/08)

The following letter to the editor from Dr. Paul ran in today’s Wall Street Journal:

“I was delighted to read in Judy Shelton’s op-ed, “Security and the Falling Dollar” (Feb. 15), that at long last the security implications of the dollar’s collapse have made their way into the mainstream media. The dollar’s strength (or lack thereof) has been of paramount concern to me, and the subject of many of my statements over the past several years. Decades of manipulation by the Federal Reserve have benefited the government and certain politically-connected firms, while gradually destroying the purchasing power of middle-class Americans. Despite numerous warnings in the past, it is only now at a point of acute crisis that Washington insiders are beginning to awaken to the reality of the end of dollar hegemony.

“While I desire reform of our current monetary system, my own proposals have not been as all-encompassing as Ms. Shelton’s suggestion to return to a Bretton Woods-style system. Her recommendation, though, that gold backing should make up a component of a future monetary system, is one that we would all do well to heed. My own legislative proposals focus around eliminating the taxes and laws that dissuade individuals and institutions from using gold as currency or as a backing for currency. By allowing market processes to determine the issuance of currency, we can allow individuals to decide for themselves what currency they wish to use. This would lead to a gradual reintroduction of sound money and avoid the market shocks that occur when monetary decisions are mandated by government fiat.”

Rep. Ron Paul (R., Texas)
Washington

Posted in abortion, antiwar, Constitution, Current Events, democrat, economy, Education, election 2008, free market, Gold, government, healthcare, internet, lew rockwell, mccain, obama, old right, Politics, republican, Rights, Ron Paul, Rothbard, technology | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , | 12 Comments »