It’s the Uncertainty, Stupid
The seasonally adjusted unemployment rate has been over 9% for fourteen consecutive months, and seems certain to break the record for the longest such string (18) since the government began reporting monthly results in 1948. On a population-adjusted basis, the actual number of housing starts in June (i.e., before seasonal adjustment) was the lowest on record for any June since such records have been kept — by over 50%. Foreclosures are on track to break another annual record. Factory output fell in June. Retail sales went negative during May and June. Federal tax collections are still plummeting; only remittances from the Fed are keeping year-over-year receipts from diving further. Do I really need to go on?
Getting back to Ben Bernanke, it’s important to remember that the Fed chairman has extensively studied the Great Depression and understands its monetary lessons. He agrees with the late Milton Friedman that serious Fed policy blunders added to its depth, telling the Nobel laureate in 2002: “You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”
But there’s only so much Ben and the Fed can do. In Congressional testimony, Bernanke essentially admitted that he has done virtually all he can:
[E}ven as the Federal Reserve continues prudent planning for the ultimate withdrawal of extraordinary monetary policy accommodation, we also recognize that the economic outlook remains unusually uncertain.
That, friends, is a de facto admission of impotence.
Ben really can’t do anything about our atmosphere of “unusual uncertainty,” because he didn’t create it. Nancy Pelosi, Barack Obama, and Harry Reid did that just over two years ago by establishing what I have been calling the POR (Pelosi-Obama-Reid) economy ever since. It was in June of 2008 that these three demonstrated that they would act as ruthless redistributionist statists if they achieved monopoly power over the presidency and Congress. Their energy-starving environmental proposals, their near giddiness over the prospect of massive tax increases, and their fundamental hostility towards capitalism, free markets, wealth creation, and even the rule of law became all too apparent to those not wearing Beltway blinders. Entrepreneurs, investors, and businesspeople began pulling to the sidelines. Their expansion and hiring plans began to go on hold. They began stripping ongoing operations down to bare essentials.
The pullback by the productive accelerated two months later. The frauds by design known as Fannie Mae and Freddie Mac imploded, while Congress got stampeded into setting up the $750 billion slush fund we now know as TARP. Obama’s funny money-aided election convinced all but the snookered (I’m talking to you, Mort Zuckerman) that unacceptable uncertainty was about to become a permanent part of the economic landscape.
If you think the uncertainty is bad now, look at what’s coming. How many yet to be discovered daggers to personal and economic freedom lie in the thousands of pages of signed but largely unread legislation? How much more damage will be done when unelected, job security-conscious technocrats add tens of thousands of pages of regulations into the mix?
I don’t see how the uncertain business environment can improve as long as the current bunch is in charge. Ben Bernanke can’t make things better. Only voters can — maybe.
And then there was Al Franken’s speech tonight. Wonderful, totally dishonest demagoguery, calling all leftwing loons to battle.
When I add to that the knee jerk Democratic loyalty that I hear at our local, mostly blue collar American Legion, I am tempted to despair. There are too many who still believe that FDR was a secular saint who saved us from the Depression, and still cling to the Democrats for little guys- Republicans for the big guys myth. This in spite of the fact that it is the very rich who come out of college furthest Left, and who finance so much of the Left’s political machine.
Franken and Acorn basically stole that Minn. Senate seat, with help from a Democratic Secretary of State. They didn’t miss the lesson of the 2000 elections when Republican SOS’ played a large part in keeping elections honest in Florida and Ohio. In ’08 those states and others found themselves with Democrats in those offices. A Secretary of State or other equivalent chief elections officer can’t steal an election, but he/she can sure fail to stop a theft. (See DOJ) How many recounts in Minn. last time around? Remember, the Supreme Court didn’t declare George W. the winner in 2000; they just kept the Fla Supreme Court from continuing to order recounts until someone got it right. (Left?)
A large part of any hope for big Republican gains in Nov. will depend on keeping the polls honest. Not that I’m all that fond of the Republican party’s good old boys, but at least they’re not Democrats. I think I will offer to be a poll watcher this year, if our local Repubs have enough sense to deploy some.
It ain’t much, but it’s something.
Hello,
You summarize the best economic policy as ”tax cuts, tax simplification, and regulatory reform.”
Just a question, what would economic policy consist of when there are no more taxes and no more rules (which is what many conservatives seem to want)?
I think there’s something more to getting growth.
styx
Isn’t that what’s called “people doing what they damn please with their own money”?
Other than its deceptive simplicity what is your problem with ”tax cuts, tax simplification, and regulatory reform?” How much further are you willing to go with the so called stimulus policies of Obama before concluding that perhaps they’re not working as advertised? Or maybe you don’t go along with Obama’s so called economic stimulus ideas either in which case please accept my apology.
What never ceases to aggravate me are the double standards that have been created when comparisons are made between Conservative and Liberal policies. I am not a diehard Bush supporter but when he became President the economy which had already begun its dip into recession, immediately became entirely his problem. He initiated his now infamous “tax cuts for the rich;” actually tax cuts across the board but that lie never seems to deter the Democrats from constantly playing the class warfare game. No need to expand on Mr. Bluimer’s economic trifecta but if you recall, the Democrats and all their sycophants in the media screamed like a bunch of little girls that the economy was headed to hell in a hand basket with GW at the helm. Why? It was all about jobs. The economy was not creating any jobs they said and each week with dismal jobs data was proof positive that America was in desperate trouble with this “incompetent, nincompoop Republican” in office. Within weeks the job numbers began to improve as the likes of John Kerry continued to rail against Bush certain the Democrats had a winning issue. As these numbers increased at an “alarming” rate John Kerry, the Democrats and their media went completely silent. No one is quicker than a politician at dropping a rancid bone and the media is never eager to give credit where credit is due if it’s due a Republican.
Democrats cannot bring themselves to believe that somehow reducing taxes increases economic activity which reduces unemployment and, miracle of miracles, actually results in an increase in tax revenues. They apparently never heard of or refuse to believe the Laffer curve; look it up. Nor do they ever understand that taxes are not a zero sum game.
Here’s a simple exercise. Consider no taxes, ergo; no revenue. Consider a 100% tax rate (would anybody work if it all went to the government? Of course not.), ergo; no revenue. Somewhere in between 0% and 100% tax revenues must peak. Arriving at the optimum number or, more likely, range of numbers, is no doubt an extremely complex and difficult task but this general idea is the basis for the Laffer curve and real world results have proved that in a free market economy lower tax rates spur economic growth. How low can they go before revenues begin to fall off, I don’t know but if history teaches us anything raising taxes to the level in the waning Clinton years when the economy was sliding into recession is very likely a recipe for further disaster.
The democrats like to refer to 2009 as the legacy of George Bush when the unemployment rate went to 9.3% apparently now relying on the theory that unlike GW, Obama, is not yet responsible for the economy he “inherited from Bush.” From the Bureau of labor Statistics here’s the unemployment rates from Bush’s first year in office, 2001 through the end of 2008:
4.7%, 5.8%, 6%, 5.5%, 5.1%, 4.6%, 4.6%, 5.8%.
If you’re mathematically inclined this is an eight year average of 5.26%. If you’re mired in liberal think I suppose, with a little mental gymnastics, you can twist this with the same logic used today that these low rates of unemployment really belonged to Bill Clinton.
Obama and all those pundits he considers objective news sources, i.e.; those that carry his water, in the face of an unemployment rate stuck in the 9+% range, out of control spending and drastic increases in the deficit would now have us believe that he “saved” us from what they loudly proclaim “would have been apocalyptic” without Obama.
O.K. We can take that or leave it. I choose the latter. Obama has chosen a diametrically opposed tack; raise taxes, complicate the tax code further and Health Care and the most “comprehensive financial reform since FDR” which greatly increase bureaucracy and regulations. Hows that working so far? Further the Democrats and their media friends conveniently ignore completely the role of the CRA, Barney Frank, Chris Dodd, Franklin Raines, ACORN, Fannie Mae and Freddie Mac in being largely responsible for the housing bubble resulting in the financial meltdown, the economic crisis in which we are currently mired. This oversight goes beyond incompetence and partisanship it is downright unpatriotic, anti-American and indicative of a deep seated hatred for their adopted country or country of birth. These problems may never be solved without a long overdue reemergence of journalistic integrity.
This is a blatant over reaction to your simple, inoffensive comment and I apologize and offer you my gratitude for giving me an opportunity to get this off my chest. I hope you’re not offended.
I’ve said my piece; long winded as usual.
Other than its deceptive simplicity what is your problem with ”tax cuts, tax simplification, and regulatory reform?” How much further are you willing to go with the so called stimulus policies of Obama before concluding that perhaps they’re not working as advertised? Or maybe you don’t go along with Obama’s so called economic stimulus ideas either in which case please accept my apology.
What never ceases to aggravate me are the double standards that have been created when comparisons are made between Conservative and Liberal policies. I am not a diehard Bush supporter but when he became President the economy which had already begun its dip into recession, immediately became entirely his problem. He initiated his now infamous “tax cuts for the rich;” actually tax cuts across the board but that lie never seems to deter the Democrats from constantly playing the class warfare game. No need to expand on Mr. Bluimer’s economic trifecta but if you recall, the Democrats and all their sycophants in the media screamed like a bunch of little girls that the economy was headed to hell in a hand basket with GW at the helm. Why? It was all about jobs. The economy was not creating any jobs they said and each week with dismal jobs data was proof positive that America was in desperate trouble with this “incompetent, nincompoop Republican” in office. Within weeks the job numbers began to improve as the likes of John Kerry continued to rail against Bush certain the Democrats had a winning issue. As these numbers increased at an “alarming” rate John Kerry, the Democrats and their media went completely silent. No one is quicker than a politician at dropping a rancid bone and the media is never eager to give credit where credit is due if it’s due a Republican.
Democrats cannot bring themselves to believe that somehow reducing taxes increases economic activity which reduces unemployment and, miracle of miracles, actually results in an increase in tax revenues. They apparently never heard of or refuse to believe the Laffer curve; look it up. Nor do they ever understand that taxes are not a zero sum game.
Here’s a simple exercise. Consider no taxes, ergo; no revenue. Consider a 100% tax rate (would anybody work if it all went to the government? Of course not.), ergo; no revenue. Somewhere in between 0% and 100% tax revenues must peak. Arriving at the optimum number or, more likely, range of numbers, is no doubt an extremely complex and difficult task but this general idea is the basis for the Laffer curve and real world results have proved that in a free market economy lower tax rates spur economic growth. How low can they go before revenues begin to fall off, I don’t know but if history teaches us anything raising taxes to the level in the waning Clinton years when the economy was sliding into recession is very likely a recipe for further disaster.
The democrats like to refer to 2009 as the legacy of George Bush when the unemployment rate went to 9.3% apparently now relying on the theory that unlike GW, Obama, is not yet responsible for the economy he “inherited from Bush.” From the Bureau of labor Statistics here’s the unemployment rates from Bush’s first year in office, 2001 through the end of 2008:
4.7%, 5.8%, 6%, 5.5%, 5.1%, 4.6%, 4.6%, 5.8%.
If you’re mathematically inclined this is an eight year average of 5.26%. If you’re mired in liberal think I suppose, with a little mental gymnastics, you can twist this with the same logic used today that these low rates of unemployment really belonged to Bill Clinton.
Obama and all those pundits he considers objective news sources, i.e.; those that carry his water, in the face of an unemployment rate stuck in the 9+% range, out of control spending and drastic increases in the deficit would now have us believe that he “saved” us from what they loudly proclaim “would have been apocalyptic” without Obama.
O.K. We can take that or leave it. I choose the latter. Obama has chosen a diametrically opposed tack; raise taxes, complicate the tax code further and Health Care and the most “comprehensive financial reform since FDR” which greatly increase bureaucracy and regulations. Hows that working so far? Further the Democrats and their media friends conveniently ignore completely the role of the CRA, Barney Frank, Chris Dodd, Franklin Raines, ACORN, Fannie Mae and Freddie Mac in being largely responsible for the housing bubble resulting in the financial meltdown, the economic crisis in which we are currently mired. This oversight goes beyond incompetence and partisanship it is downright unpatriotic, anti-American and indicative of a deep seated hatred for their adopted country or country of birth. These problems may never be solved without a long overdue reemergence of journalistic integrity.
This is a blatant over reaction to your simple, inoffensive comment and I apologize and offer you my gratitude for giving me an opportunity to get this off my chest. I hope you’re not offended.
I’ve said my piece; long winded as usual.
July 25th, 2010 at 2:00 pm
Dear riverstyx,
Could you please refrain from being any more stupid than you have to?
If one is carrying a burdonsome load to the point such that they cannot walk, calling for the load to be lightened is not the same as calling for one to go nakid.
Yet somehow you are incapable of discerning the difference between LOWERING taxes and ELIMINATING taxes.
Hey, I.D. 10 T, they are not the same thing.
It’s like the mixture of an engine, too rich (that is too much fuel not enough air) and the engine sputters, too lean (that is too much air not enough fuel) and the engine sputters.
Economies are the same way, Too much taxes and the economy slows down, too little taxes and GENUINLY essential services cannot be funded and anarchy ensues.
Republicans look for a good balance, Democrats are like fire, they are never satisfied, there is never ENOUGH taxes.
Now go back to HuffPo and leave thinking people with intelligence alone!
Looking at it from a JFK (i.e. somewhat sane) Socialist perspective, where the goal is to maximize Federal revenue, a 0% tax rate means 0 revenue, and a 100% tax rate mean 0 revenue (all your serfs are dead). At historic tax rates, revenue has been positive, so Calculus tells us that between those two zeros is an “optimum” tax rate that maximizes Federal revenue. The JFK, Reagan, and Bush tax cuts all tell us that we are way on the high side of the optimum tax rate.
So if Liberals want lots of money for all the Federal programs they want to run (and to service the debt, never mind pay it off), they need to cut taxes like JFK. Now, my Mama told me to, “Never attribute to malice what is adequately explained by stupidity”, and that seemed applicable to Carter. I’m sorry Mom, but Obama is not stupid. In this case, it seems obvious that Obama’s goal is not revenue for programs, but total dictatorial control.
After we see what happens with a five percent tax on income, on capital gains, and on corporate income for two years, I will be ready to entertain your hypothetical.
Considering the fact that just about every economic downturn over the last few centuries has been caused by govt meddling in the economy, when taxes and regulations are reduced to an absolute minimum, then there won’t be much in the way of recessions to get out of.
Secondly, I’ve have never met a single conservative or Republican who wants to completely get rid of govt. So quite with the brain dead strawmen, they only serve to make you look dumber than you already are.
In real life, I’m a CPA. I’ve been a Controller, Consultant, Internal Auditor, implementation lead….
I need to renew my license this year, in a couple of months. To do so, I have to have 80 hours of “CPE” — Continuing Professional Education — in order to demonstrate that I’ve maintained my skills.
And I’m in the same position that I’ve been for the last few months — what courses do I take? Do I study ways of living with the current Obamacare law, when its internal contradictions are already causing stresses (like not issuing new health policies to individual minors) that signal major changes and 2/3 of the American people want it repealed outright?
Do I study tax, when the expiration of the Bush tax cuts will spin things around by 180 degrees….unless they won’t, in case the laws on the books will change substantially to ensure that we avoid the onrushing doom built into them?
Should I further study Sarbanes-Oxley? — after all, it paid for itself manifold over 2004-2008….but it’s been gutted since, and there are no new jobs there.
With the current economic policies of the Federal government, perhaps I should study bankruptcy law…..except that AIG, Lehman, Chrysler, GM, Fannie, and Freddie have shown that bankruptcy is whatever the political class wants it to be at the time you ask. Further, exempting student loans from bankruptcy relief is a signal that politically connected creditors will continue to be held unaccountable for bad credit decisions made “for the public good.”
I could study pension accounting, if I wanted to involve myself in a slow-motion train wreck. Why worry about governmental accounting when the US Congress takes a pass on having a budget? If I were interested in “mark-to-market” accounting for mortgage securities, that’s been changed about as frequently as I’ve changed my bedsheets.
In years past, I’ve been able to rack up CPE that had lasting value, that my career could leverage over many years to come. This year, most of what is “hot” will be cold within six months. Most of what is unfamiliar will be just as unfamiliar in another year. Most of what is current is scheduled for imminent demolition by the Powers That Be.
Years ago, there was a concept known as “Unicap” that was going to revolutionize the allocation of costs into inventory. Section 263A of the Internal Revenue Code was enacted in 1986 order to “rein-in abuses” in industry. This immediately caused great consternation — one local company hired 30 accountants for three solid months to analyze the impact of the law and ended up with a total adjustment of less than $20,000. Within the profession, many people took CPE courses and spent immeasurable amounts of time studying the impact of this law on businesses throughout the US.
Within a few years, the IRS issued rulings that essentially stated, “give it the old college try to adapt section 263A, and it’s unlikely that we’d challenge it.” All of those (including myself) who’d spent so much time with the law were left hanging.
Fundamentally, the profession of accounting is about accountability….and this has been obscured, deferred, denied, spun, ignored, blocked, and paved over for the last couple of years. While there are plenty of CPE courses available, it’s difficult to see any that can provide value beyond my next renewal period. How can I defend spending time and money on anything that might be as useless as UNICAP?
And, of course, what’s worth studying for CPE?
I don’t know how 80 hours of earnest study would even begin to bring clarity to the contents of any 2000-page bill. These documents seem to be created to produce more obscurity, not more light! How can you play a game when nobody can explain the rules?
My field is not accounting, it’s applied physics, but I experience feelings similar to those you share, because I can see clearly that any new method in the production of energy cannot violate the laws of nature, nor the laws of economy. Instead of respect for either one of these, the debate mindlessly pivots around some mythology of planet fever, green employment or such! This political and cultural hyperventilation feeds on the cultivation of ignorance and hysteria over learning and reason, and negates the value of any professional discipline, accounting, applied science, etc…
There is no point in further polishing our professional skills until we have discredited the madness by discharging our civic duty to send the zealots to pasture in the first place. Let’s not despair. Let’s do what the season is calling for come November!
“History should have told Team Obama that its statist stimulus strategy was doomed to failure.”
Please stop assuming that history did not tell them that and they did not understand what history said. To suggest that history “should have told them” is displaced blame in the highest. It is not that they were not told. It is not that they do not know. I knew that the statist stimulus strategy was doomed to failure. Mark Levin knew it. If you really want to give them a pass by suggest that they didn’t know it, fine. Just don’t blame history.
It would appear that none of them have even a nodding acquaintance with actual history, economic or otherwise.
I cannot think of a single thing done by the obaMadministration that clearly indicates they are interested in either a strong economy or a safe nation.
“Ben Bernanke can’t make things better. Only voters can — maybe.”
It was the “voters” that wanted this creep in office.
It was the “voters” that put him there.
It is those same “voters” that are still clapping their hands and cheering every time Obama breaks wind.
Until those “voters” are dismembered and smashed beyond recognition nothing, absolutely nothing worthwhile is going to change.
No one with a brain is going to send their children out to play in a neighborhood that openly harbors a bunch of known perverts and rapists. The same goes for anything with a healthy business mind.
If the way Obama, Pelosi and Reid think about our Constitution isn’t perverted and the way that they are “changing” America isn’t forceful rape then nothing ever will be.
The writer merely alludes to Bernacke’s limited power to rectify what the fiat dollar he presides over has wrought.
The political right, as part of the American one party system, can’t be taken seriously on money until it makes a break from the single best way to oppress a people under such a one party system, which is our fiat reserve monetary system. Championing the fiat dollar’s manager, on a partisan basis, as hope for a failed fiat system is either a spectacular ignorance or a ruse.
Which is it, Blumer? The smart money is on system failure because failure enables replacing the ruined dollar with the long yearned for managed global economy. Belaboring Bernacke’s place in this calculated brew is laughable.
Excuse me, how does your theory explain the Reagan years, one of the largest peacetime expansions of the economy in American history, if not the largest? Don’t forget, we weren’t on the gold standard at that time, Nixon having pulled the final plug in 1971.
Theories do have to account for reality, you know… that’s Obama’s big problem, and it seems to be the goldbugs’ problem, too.
Ah, “goldbug”, the equivalent of the left’s eternal race card. Both are pulled when there are no principles to argue with — when one can only default to their myths.
What distinguished the Reagan years? Certainly not that the establishment reversed the ramping debt and the exponentially-mounting and inevitable demise of fiat reserve systems. Citing Reaganomics — even in a positive sense as the conservative you think you are — doesn’t defend a Ponzi monetary system. It only shows that you can do pretty much what the writer alludes you can, which is to turn to the Fed itself to fix what it ruined ever since Wilson.
Again, the ostensible right needs to finally bury its monetary myth, leave monetary progressivism behind with the left’s many carcasses, and see about a new monetary system, one that values individual liberty anew instead of fealty to the worst crony statism in the country’s history. Progg statism isn’t conservative and neither is fiat reserve under central management clearly aimed at absorbing all liberty.
Thanks.
You’ve shown that the gold standard is irrelevant to Reagan’s economic successes… therefore, we can return to the same policies that led to the growth of the economy of Reagan without returning to the gold standard.
By the way, did you know that the Great Depression didn’t start to reverse itself until FDR moved away from the gold standard?
In short, you’ve fallen well short of making a logical case for your theory.
Nonsense — that’s quite a leap of faith, especially for a self-professed conservative, which you aren’t. The fiat-reserve system is a variable but with a finite end. Reaganomics affect that variable but do not alter the fact that the system is inherently nonviable. Your assertion that in the face of failure we can return to hyper-Keynesianism is unproven and silly on its face. Mounting evidence says that’s empty conjecture.
The onus is on you to prove that an exponential system can revert to stability after the interest has accrued, that interest being manufactured as a debt that together with the principal, exceeds the sum total of wealth. Where is the interest going to come from, is not from re-inflation? Hence we have exponential growth and the assurance the system must default. It’s inevitable.
FDR prolonged the depression. Short term “stimulus” is nothing more than an admission we cannot recover, and this time surely we are not. It’s heroin and its cure is ugly.
Given your broad brush, I’m not motivated to spend the hours here reforming your misled notions.
(Bolding mine.) Aggregate debt and unpaid obligations in the US total some $260 trillion dollars. We’re well past the crossover.
Turning to Bernacke is folly.
You still cannot account for the growth of the economy under Reagan’s economic program. That is reality, and your theories cannot account for it.
Bottom line, you appear to be convinced that economics is a zero-sum game, much like the lefties are. 200+ years of American history show that it is not, and all your fancy words and grandiose theories can’t change that one, single fact that blows your theories to pieces.
Wasn’t aware I had to. But no matter; I already did. Variables influence even a system running into exponential instability.
“My” theory that the system in inherently unstable? I suggest you drop the rhetoric and refute LaChance. You can’t, you won’t, and so you parrot things you hope will deflect your cognitive dissonance. That’s not exactly reality, is it?
To wit:
Not even remotely — here, zero sum doesn’t apply for good or for bad. In fact, it’s the growth of the system that incites the ignorant to appeal to the Fed and call for more hyper-Keynesianism while the lever-pullers aggregate fortune and power. If you’re still blind to this I can’t help you.
You’re really in over your head. Learn how fiat money works in a reserve economy — since Wilson and not for “200 years” — and then compare that to conservatism. It’s actually very simple and once the denial ends, you’ll realize that money is actually debt.
From there you can see how the whole game of Jenga is established, including that the dollar is worth four cents and we really have created a quarter quadrillion in debt. Or if you prefer, in notes. Good luck.
No, but if the collapse you goldbugs fear actually comes to pass, GOLD WON’T SAVE YOU. A total global collapse will render gold just as worthless as paper currency. St. James mocked such fools.
You’re as irretrievable as the wandering conservative. The monetary system is fatally flawed and appealing to Bernacke is precisely the wrong way to conceive of and plan for how it ends. Such is madness.
It’s you raising the goldbug canard. I’m pointing out that there’s nothing rational about appealing to the federal banksters’ highest power in claiming to want to solve banksterism. And there’s nothing at all conservative about appealing to the most onerous anti-liberty regime in the country when that regime put us where we are today.
An excellent point.
To paraphrase a friend who was just reading this thread (but declined to comment on her own), “A hundred pounds of gold or a hundred pounds of food. If the collapse happens, who’s gonna be better off?”
I didn’t say appealing to Bernanke or any other bankers was a good idea. I said that hoarding metals is a fool’s errand. The day will come when you’ll toss that gold and silver into the street lamenting that they’re worthless. If you’re going to hoard something, hoard something with intrinsic value, like food, fuel and ammunition, not metals whose value rests in the fact that they’re rare and nice to look at.
You sound like a zealot. Do I “hoard metal”?
Notwithstanding that they continue to blow the hell out of pretty much everything else, do you? Then don’t fear them.
I get so tired of goldbugs.
Look, all this stuff is pretty clearly explained by the “quantity theory of money”, which Milton Friedman did so much to popularize and validate. The quantity theory of money also explains why, for example, Spain had ruinous inflation while maintaining a completely hard-money economy. So let’s recall some historical points:
(1) Hard money doesn’t prevent inflation — see Spain after Columbus
(2) Hard money doesn’t prevent boom-bust cycles — see the US pre-FDR.
What hard money does, except in special situations like Spain’s, is automatically create deflationary pressures in a growing economy that slow growth. Why? When productivity grows, the economy grows, there are more goodies to go around, and the same amount of “money” to buy them. So, the price of the goodies has to go down. This is called deflation.
But when there is deflation, it means that if you don’t use your “money” somehow, it’s worth more later. So people are less inclined to invest — which slows the growth of productivity, which slows the growth of the economy.
The effect is that the economy stagnates, and we stop getting more new goodies.
Forcing a gold standard might seen desirable, but if you like having a new iPhone next year instead of Steve Jobs playing Scrooge McDuck with his accumulated wealth, it’s a bad choice.
If you’re so tired of goldbuggery, Chuck, don’t strawman it out there. No disrespect, but judging from past columns, you never were all that lucid about the nature of money…not anywhere as much as you were tedious about economics, a naturally tedious subject.
Look, money is debt. Go back and read LaChance. The system is insolvent. Appealing to the Fed — the very entity responsible for the last 80 years of spiraling ruin — is nuts. About as nuts as tacitly denouncing the Austrian School.
And we wonder why self-identified conservatives have no answers. Confronted with a literal world of evidence, they can’t even grasp the question, while begging their masters for an answer.
That’s not conservative, that’s the definition of insanity.
Ten et al,
I think it’s unfair to say that the column “champions” Bernanke. It does say that he understands how monetary policy made the Great Depression worse, that he has done what he can within the system that exists, and that he’s basically out of bullets.
A debate about whether the Fed should exist and whether we should be on a hard-currency standard is one worth having. But this was a column, not a treatise.
One starting point in the debate would be to distinguish how the economy “somehow” righted itself pretty quickly after the very sharp 1920-21 Depression and roared during most of the rest of the 1920s despite no FDR-like stimulus. The government uber alles crowd doesn’t have good answers for that.
Fair enough. I’m saying that looking to the Fed chairman to correct the failures guaranteed by a fiat-reserve construction is counterproductive and illogical. For example:
He has not “done what he can within the system that exists” that we can point to as sound monetary policy — yes, he is out of bullets, as was predictable.
Three reasons: First, sound , durable monetary policy within an inherently unsound system is simply a fallacious construct.
Second, we have no idea of Bernacke’s intent. It’s that intent — those motives, agents, and aims — that concern us, assuming we retain a shred of our individual sovereign liberty under such a monetary regime and within such an evidently schemed, too-big-to-fail economy as ours.
Third, Bernacke’s Keynesian helicopter economics have simply not wrought the heroin-in-the-veins response from the economy the progressive economist invariably claims is the way out of yet another desert. Even if they had, every dollar so generated and spent costs far more an a dollar to implement — have we not learned there are no free lunches in nature? Then why would we not only believe that such an advanced nation as ours would chronically find itself in economic crisis while being some quarter quadrillion dollars upside down in debt and obligations, but that the only way out was federally collectivizing yet more red ink?
The debate about the monetary system is of primary importance and again, Bernacke’s claimed (or professed or even evident) competence must immediately factor within a simple understanding how fiat-reserve currency works. One can just easily and far more credibly claim that what Bernacke does today is throw good money after bad. And that, in turn, returns us to the fundamental question of central fiat-reserve banking’s place in what many are now coming to realize is a great encroachment on the finances and liberties of the individual American people.
That would require a treatise. And we certainly need one on this and all matters related to the great tension between the “progressive”, managed, centralized, and manipulated fiat economy and our personal security within what we thought were the protections of our individual rights and liberties.
To the rest of your comment:
Again, I’m not advocating for a particular solution. I’m disavowing fresh appeals to the system that ruined us.
Amusing. This is you selecting an isolated tributary of economics to defend an inherently fraudulent monetary system. Cart and horse, Charles.
Moreover, upthread you advocated for the liberty of economic choice, a principle we all agree with and one I’ve been banging on. Yet here you at least tacitly advocate a guaranteed failure — one that runs on collective ends designed by exclusive federal means — to defend what you can only claim is the collective good? Wow.
For which you propose a system known to consolidate power in the hands of those who would steal us blind. How is this fiscal and economic liberty, Charlie?
I’m forcing nothing. But the end game of whatever confronts us all most certainly will.
“Inflation in Spain after Columbus”
Do you know what happened in Spain after Columbus? A huge influx of gold. Not “earned” gold, worked for the old fashioned way, but “unearned” gold, acquired the easy way, by stealing it. In effect,they were acquiring gold almost as easy as the modern day Fed prints money. Ergo, inflation.
So you see, your ill-informed argument actually supports the position of your opponent more than it does you.
As always, a little knowledge is dangerous.
Well then, that settles it. There’s nothing a Ponzi scheme entrusted to a relative handful of collectivist globalists can’t break that a little baseless conjecture wouldn’t have broken worse.
I know I’m sold.
For every simple solution, there is a simple mind to push it.
Gold has as many problems, if not more, as a currency as does fiat currency. They aren’t the same problems, but they do exist.
Well then, that settles it. There’s nothing a Ponzi scheme entrusted to a relative handful of collectivist globalists can’t break that a little baseless conjecture wouldn’t have broken worse.
I know I’m sold.
(strike duplicate comment just above.)
It would help if you could demonstrate that fiat money is a ponzi scheme instead of just demonstrating how paranoid you are.
You mean like this, you faithful tool?
Please, tell me you thought this would turn out well. I’ll wait.
It isn’t “uncertainty” that’s keeping the lid on investment and growth, it’s certainty.
Entrepreneurs and investors are certain that if they attempt to invest, or improve their bottom lines, the Obama Administration will move in, take over their businesses, and either;
1. Turn them into politically-correct “social collectives” controlled by a large union which exists solely to funnel money to that union, and thus into Democratic Party slush funds (GM and Chrysler);
2. Seize the business directly, put it under an appointed “tsar”, and use it to funnel money directly to “socially-approved” but disastrous government programs (the “too big to fail” banks; CRA now, solar and wind energy next?); or
3. Simply do a Donald Trump style “grab it, gut it, sell it off, and run” takeover-and-destroy op (the rest of the banks). You can’t honestly say the “progressives” learned nothing from the “greed is good” era on Wall Street; they certainly learned how to go “scorched earth” on a business, and line their own pockets in doing so.
With these being the most likely outcomes of what we used to call responsible stewardship of a business (and the money of its investors), the only surprising thing is that every sensible businessman in the country isn’t “going John Galt”. (I suspect the recent upswing in sales of Rand’s “Atlas Shrugged” is not just a coincidence.)
When you know that you’re going to be robbed if you go to a certain place, the smart thing is not to go there to begin with. And as usual, the pseudo-intellectuals in the Obama White House, as well as the rest of their progressive ilk, assume that those they see as the enemies of all that is Good and True are too stupid to realize that their “betters” are setting them up. And equally as usual, they are wrong.
Or as Scotty once said, “Fool me once, shame on you; fool me twice, shame on me.”
clear ether
eon
He is out of bullets. Only tax cuts can revive the economy now. Along with that, they do need to cut govt spending to minimize budget deficits-but we will still run a deficit.
End Cap gains. See what happens.
The economy cannot be revived. It can only be replaced.
Congressional approval is at 11 percent.
Interestingly,
that number is probably the actual average unemployment figure for America.
We have millions of homeless that are waiting to be evicted from their homes,
millions underemployed or totally unemployed,
and Trillions of dollars wasted on funding
“No jobs coming back to America project”
Spoken by a true democrat politician, “We will shock you midterm”-
Joe Biden.
Any independent or republican running for office this year needs to ask the old Ronald Reagan question.
“Are you better off now than you were 4 years ago when the Democrats took control of Congress?”
What Bernanke politely describes as “unusual uncertainty” really isn’t. Obama is hostile to the private sector because collectively it can opt out of investing in bad ideas and agendas that run counter to their interests. Why invest and create jobs in an environment of increasing government intrusion and higher taxes? This Administration has shown itself hostile to investors in favor of unions (e.g., Big 3) and the only thing they did quickly about the the oil spill was shakedown BP.
The only investment I’m willing to make in the POR agenda is to defeat it. Bring on the elections.
Tom writes: “But the pseudo-smarties at Team Obama thought they could defy history.”
Don’t forget that economic genius at the NYT, Paul Krugman. He has been saying over and over again for months that the porkulous should have been larger, and ever larger, you know, like bigger. That it was so puny is the reason the problem hasn’t been licked, Krugie says. Good money tossed after bad is the answer, he says.
i just wonder how many of the dead will cast their ballots this November, seeing as how the DOJ isn’t going to check voter rolls.
Let’s not forget Dems are pushing to return the “right to vote” to another of their big constituencies: convicted felons!
“…how many of the dead will cast their ballots this November….”?
That’s easy….as many as they think they need.
Of course the idea of stimulus wasn’t to improve the economy, it was to pass out the cash to specific constituencies, and count on the media to cover for them. Where this band of scum in the WH has miscalculated is in the power of the media to provide such long term cover, lies, as were needed.
Still, to a degree it does work, as evidenced in small part by the visitations of demented leftist morons to this site defending politicians who continue to screw them, as well as normal people.
Story lines on news programs that start with “the economy appears to be turning around”, or it’s variations, are fading. Oh well, I’ll just to continue to watch Fox News, the network that doesn’t do news supposedly & let the morons eat the pablum that media trash feed them and that they want to hear, kind of like a bedtime story from a parent.
Bottom line, of course we’re going down the tubes, that’s just what Obama and his party want, it creates dependence and leads to power.
Yes, it’s the uncertainty. It’s also the dread. Preview of coming attractions:
http://www.telegraph.co.uk/health/7908742/Axe-falls-on-NHS-services.html
It’s much worse than even this. The central question most people fail to ask (and too many don’t want to ask) is: Is Obama destroying the economy through ideological incompetence, or on purpose?
Redistributionist socialists and communists (Obama is the latter) are inherently destructive, but motivated by a hatred of achievement (and happy achieving people) which they can never equal, they have an uncontrollable itch to tear them down. Without a doubt this dominates the psyche of a man steeped in communist orthodoxy since his child hood.
But it’s also true that no matter how openly nihilist such people are, when they achieve some measure of significant power, they can usually afford to be more “genererous” and “magnanimous” — quotes mandatory, since the measure of this generousity and magnanimity is entirely capricious and arbitrary –it’s at the whim of a soul only the very sick Kim Jung Il would well understand. But nonetheless, under duress, they will usually somewhat relent in their destructive policies to allow the peasants their slice of moldy bread, and pay lip service to “helping” the economy.
Obama isn’t doing that. One must ask why.
The first explanation: he is actually that evil. Yes, I know, the “E” word. Horrible. Conspiratorial. But evil is as evil does. The question here is whether his ideological bent is so twisted and his hate of achievement and the American ideal so great that he would consciously and deliberately expend effort on policies and hiring practices that would ensure the destruction of the United States.
Sadly, I think this is true. But it does get worse. There is a second explanation which is also consistent with the first explanation: Is Obama working at the behest of some other party to accomplish such destruction?
Ideologically, he’s entirely compatible with many other forces that would like to see the end of United States dominance, but there is one in particular entity that I was initially very reluctant to blame, but that I have slowly begun to suspect, and recent events have reinforced that to that point where I now give it greater than 90% odds. Russia. I will close with an extended quote of something I posted elsewhere:
quote:
Consider the recent death of Soviet defector Sergei Tretyakov, the most important, highest ranking KGB we’ve had since the fall of the Soviet Union.
http://www.guardian.co.uk/world/2010/jul/11/sergei-tretyakov-obituary
“…he unmasked dozens of foreigners working as Russian agents, including several ambassadors and UN representatives …”
http://www.cbsnews.com/stories/2010/07/09/ap/national/main6661829.shtml
“…His widow, Helen Tretyakov, told the station [WTOP] … He was aware that the part of the SVR [new KGB] budget for supporting illegals [deep cover moles] increased dramatically in the 1990s…”
About the time when Obama’s rise to power began.
Consider the arrest of the 11 Russian spies only weeks after Tretyakov’s unexpected death, and the unprecedented quickness of the the exchange for 4 Russians.
Then read this recent story in the London Telegraph:
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/7883290/Anna-Chapmans-father-may-have-had-serious-Kremlin-connections.html
and consider: Anna Chapman’s father, Vasily Kushchenko, used to work with Sergei Ivanov in Kenya. Ivanov was a friend of Putin.
Also in Kenya about that time: Barack Obama’s birth father, a communist under the KGB control. Before his death in a traffic accident he was trying to help organize a communist takeover of Kenya, with others. Could he have known Ivanov? Could Anna Chapman have known this if he did?
Recap Obama’s childhood: A communist mother, a communist birth father. A communist adopted father. Travel all around the world in Indonesia, Pakistan, etc, etc, and then raised in Hawaii (a known communist hotbed) by Communist grandparents. A communist mentor, Frank Davis, who was a member of CPUSA, a KGB-controlled organization. Many other communist associates all through his adult life, including communist Weather Underground members.
Consider a presidential campaign that received large sums of money (possibly hundreds of millions of dollars) from anonymous overseas donors.
And so on. Then consider how the KGB has long operated:
http://www.youtube.com/watch?v=IHgYPDvQFU8&feature=player_embedded
http://www.youtube.com/watch?v=zeMZGGQ0ERk&feature=player_embedded
http://www.youtube.com/watch?v=aGfN3WRA0Vc&feature=player_embedded
Consider other stories such as http://www.aim.org/aim-column/new-start-and-obama%E2%80%99s-mysterious-trip-to-russia/:
“Lugar, one of the leading globalists in the Senate, was a mentor for then-Senator Barack Obama during a controversial three-day visit they made to Russia and Eastern Europe in 2005. …During the visit, Russian authorities detained Obama and Lugar, threatened to search their plane, and examined their passports. Strangely, an official report from Lugar’s office about the trip ignored the incident. …Obama was quoted as being nonchalant about his detention with Lugar in Russia, saying, “We were in a lounge with a locked door at one point. It wasn’t the gulag.” However, one account said that Lugar and Obama were kept in “an uncomfortably stuffy room” for three hours and “allowed out onto an adjoining porch area only after they surrendered their passports.”"
Stuffy? Or simply a place for discussions? Lugar is himself a long-time “globalist”, ie, one of those who subscribe to a program that is known to have been promoted originally as part of KGB psyops. Lugar — ostensibly a Republican — tried to bring the neophyte Senator Obama — the most left-wing member of the Senate — onto the prestigious and policy-influential Senate Foreign Relations committe. Lugar is also a close friend of Strobe Talbot, a man that Sergei Tretyakov called “our most valuable intelligence asset” in the Clinton White House — while Tretyakov was the top KGB officer in the UN.
Obama had many other similar disappearing acts during his campaign — Chicago, Hawaii, Germany, etc, he would disappear for a time to talk to unknown persons. As reported by our own press.
He also received possibly several hundred million dollars from anonymous overseas contributers during the campaign.
All of this and much more fits into a much broader pattern that point towards the unthinkable possibility that is unfortunately far too probable: that a man raised by communists, and later mentored by a communist known to have KGB connections, and who has associated his entire life with communists, just might be more than a communist.
Let’s state the impossible: Barack Obama might be a deep cover mole for the Russian SVR.
The possibility is all too likely. All you have to do is dig.
endquote
Ralph, Most will overlook your comments. I will not. Do i agree with your conclusion? Perhaps not.
However your premise that BHO is working on behalf of another country and not in the best interest of the USA is one that I agree with.
In fact it is the most plausible explanation for his actions since taking office.
Driving the economy over the cliff means stock prices will tank and Americas finest industrial companies can be bought for a song.
Sharing NASA technology with foreign governments weakens our position in every field of technology.
Holding off on closing the Gulf oil spill increases the value of foreign oil and decreases the ability for America to be energy independent.
Increasing government control of industry removes power from shareholders and places them under political control.
I could go but i know, with you, I am preaching to the choir.
Some will call you a nut for thinking the way you are thinking.
I think you are one of the few who are thinking clearly.
Uncertainty? I think it’s fairly certain that when you grow the public sector too large for the private sector to PAY FOR the teat sucking THUG/Purple-Shirt/Troll/Union-Scum/Politicians-for-life/Going-Postal-Cops/Firemen who threaten to start fires/Teachers-who-don’t teach/idiocy-on-steroids, yeah, the shiznit is going to hit the proverbial fan and break the camel’s back. STUPID write large! Pensions and bennies and grievance gravy…oh my! Who’s going to pay up? Who?
Yeah. STUPID. Really EFFING STUPID.
Czar “Do, Do” depresses
(regs, transaction costs of Coase)
Changing “Do, Do”, uncertainty,more so.
FairTax – No Fed taxes (or IRS except visible,
predictable 23% of every new, retail purchase) will
release investment explosively, with prompt prosperity.
Until we can wash the D.C. stables clean enough with TEA
to pass FairTax, the Roadmap at http://www.house.gov/ryan would help.
The comparison to the Kennedy tax cuts is utterly irrelevant to the circumstances. The country developed the worst financial crisis since the depression, so the most relevant information is in regards to what ended that earlier economic crisis, and that was deficit spending to jumpstart the economy. There was/is a *lot* of serious analysis behind the stimulus approach to mending the economy quickly.
BC, do you know what we call it in other sciences when “serious analysis” turns out not to predict the real results?
“Disproven.”
You haven’t disproved LaChance.
Simple question: Where money is debt, and where interest accrues on fractional reserve accounting, is the system solvent? If all debts are paid — in other words, if all money ceases to exist — is the balance zero?
I say the system must default and the evidence appears to be pointing to that conclusion. Prove me wrong. Please.
Not all the money is debt; only 90% of it is. Besides, capital always seeks a use. One person repays the loan, so the lender seeks another borrower to put his capital to work.
Rather, one person repays the loan, so the lender seeks another borrower to create capital for. This is how the money supply varies, and in a crisis, how it deflates. Today the Dems and Bernacke drop the stuff from helicopters and yet that deflation continues apace at about -4%. As Jeff Carter said upthread, they’re out of bullets.
Money is the trade of debt and faith controlled by arbitrary ways and means that probably do not frequently answer to the conservative ideal of healthy representative influence.
To Charlie Martin: BC, do you know what we call it in other sciences when “serious analysis” turns out not to predict the real results?
“Disproven.”
For one thing, nothing of the sort was “disproven“. Fixing something as complex as a national economy, that in turn is affected by the greater global economy, is a messy process at best. It’s probably more akin to trying to rebuild a family after a long bout of financial misbehavior, lies and cheating. The thing is that Obama executed a real plan that was based on the distillation of all the analyses done by many of the best experts available for what would likely be the best solution — as opposed to the Republicans who seem to always these days confuse planning with just doling out talking points.
BC claimed:
. . . the most relevant information is in regards to what ended that earlier economic crisis, and that was deficit spending to jumpstart the economy.
No, the Great Depression was not ended by deficit spending. You’re trafficking in myths.
Roosevelt tried deficit spending for 8 years — and unemployment never dropped below 12%. The massive deficit spending of WWII also did not end the unemployment problem — rather, the unemployment problem was merely masked by conscripting 12 million Americans into the military.
WWII did not end the depression. Economic conditions during war time were WORSE than the worst years of the depression as massive rationing was applied to the economy and the people suffered war-time privations as a result.
Rationing was applied to tires, meats, fish, cheese, milk, gasoline, fuel oil, kerosene, stoves, rubber footwear, shoes, clothing, sugar, coffee, butter, fats, oils, canned, bottled, and frozen fruits and vegetables, juices, dry beans, soups, catsup — and even baby food. Americans had access to LESS of all those items than they had during the worst year of the Depression.
In addition, during WWII the government outright prohibited the production of automobiles, houses, appliances, radios and other “luxury” items deemed “non-essential”.
The economy did not permanently return to the level of output it had seen in 1928 — and here I refer to output of consumer-useable goods as opposed to output of war materials — until after WWII ended and much of the “New Deal” was repealed.
In fact, the economy grew by some 15% during the years of 1946 – 1948, despite the fact that over that period of time federal government spending fell from its high of 97.7 billion dollars during 1945 to a mere 27.9 billion dollars in 1948, which was a huge decrease given the size of the economy at that time.
That decrease in spending was accompanied by the release from military service of some 10 million workers back into the economy. According to Keynesian economic assumptions, that massive decline in “aggregate demand” caused by such a decrease in government spending plus the almost instant “un-employing” of some 10 million workers should have caused an even greater depression than the one we were already suffering. But it did not — we had significant economic growth instead.
If deficit spending were actually a stimulus to the economy, we’d never have gotten the recession we have now — because George Bush engaged in over 2.1 TRILLION dollars of deficit spending his last 7 years in office.
The Keynesian economic model is false — as reality has demonstrated time and time again.
During the war, FDR was forced to eliminate most of the regulations that he had put in place during the depression. He had the good graces to die before the war ended so he never had a chance to put those regulations back in place. It was the elimination of the regulations that enabled US factories to create the goods necessary to win the war, and it was the elimination of those regulations that permitted those factories to convert back to peacetime production after the war was over.
I am sure you will not hear from BC again. Unfortunately, like a jack-in-the-box, he will pop up again on another thread. Nice reply though.
To Michael Smith: Ummm….you’re not citing anthing to back up your claims. If you had checked my first link, you would note that the national debt peaked during Truman’s term, and then started dropping rapidly. As far as who is really trafficking in myths, please note one example of the type of people Obama brought in for insight and advice, and she kind of disagrees with your assessment.
But I suppose this could be considered just a little bit of he said/she said, eh?
To Jim Baker: I do this in your general direction, you weak tapper of sissy, insignificant letters.
Deficit spending has never caused economic growth. That’s been proven. There has been a lot of serious thought given towards how to disguise this fact so that more govt money can be passed to the current govt favorites, but that’s all that has happened.
Wasn’t the Fed created to end bubble-bust cycles? When do we ask ourselves why the most productive country on earth needs these constant jump starts? Why does this economy need all these mendings?
The end game is forced reform. And it won’t be conservative.
I’ll turn your question around on you.
Why are we the most productive country on earth if our economic system is so screwed up?
In fact, if the gold standard is so wonderful, point to a single prosperous and productive country that is still using it.
Appeals to convention in a world crisis. Good call.
Snark when you can’t provide the evidence requested, I see.
Might make you feel better, but it doesn’t (a) answer the question or (b) convince me to follow your ideals.
The question stands: show me one example of a modern nation that is prosperous and productive with the gold standard.
No, I said you appealed to (world) convention in a world crisis. You did. You did on the heels of dragging more than a few red herrings over the thread, not least of which that I owed you a proof of concept you never defined, presumably that in a vacuum of the practice of that concept, you could somehow yet point to it’s failure while the existing standard was, well, failing.
The question is answered to those who can simply look at the data and draw a conclusion aided by a simple premise, namely the one LaChance posits. I’m not trying to get you to follow my ideals, whatever that means. I think that a conservative should look more than a little askance at what is arguably the greatest assault on conservative principles in our lifetimes. I suggest you remember Jefferson’s views on central banking. And Rockefeller’s on power.
Yet again: That’s a truly fallacious demand. The question is whether you can show yourself a monetary system that’s not failing as the result of fiat reserve and central corruption.
You cannot.
ConservativeWanderer wrote:
In fact, if the gold standard is so wonderful, point to a single prosperous and productive country that is still using it.
Your statement is a non seqitur. The hoped-for conclusion — that the gold standard must be bad — does not follow from the fact that it has been abandoned.
To the contrary, the gold standard was eliminated because of its advantages — because it made uncontrolled government spending and debt impossible.
No, what I am asking for is empirical, verifiable evidence from actual experience that the gold standard works in this day and age. And you goldbugs can’t provide it, all you have are pie-in-the-sky theories.
Ya know, Marxism is/was a theory that worked just fine on paper. It didn’t work out so well in practice. Show me where your theories are working in the real world right now, and I will listen. Until then, I shall scoff.
And indeed, you have, copious evidence of systemic failure be damned. QED!
And you have provided exactly zero real-world modern-day evidence that your policies would be any more successful. One wonders why, if your proposals are so good, you can’t find a single example of them working in the real world at this time.
So, tell me, why should I accept your proposal that we should change to something that we are not certain will help and quite possibly might cause more problems?
The answer is power and wealth, conservativewanderer. Can you really be this obtuse?
ConservativeWanderer:
No, what I am asking for is empirical, verifiable evidence from actual experience that the gold standard works in this day and age. . . Show me where your theories are working in the real world right now, and I will listen. Until then, I shall scoff.
The assertion that the only thing that qualifies as evidence is empirical evidence from experience in the “here and now” is an arbitrary assertion of an arbitrary standard of proof. I find such an assertion amusing coming from someone who is doubtless a believer in the existence of omnipotent supernatural ghosts ruling from another dimension.
And if you had been alive at the moment someone first suggested the use of money for trade instead of simply continuing to barter, you’d have first demanded proof that money was “working in the real world right now” — otherwise you’d “scoff”.
“Conservatism” is in many cases only an advocacy of stagnation.
Ya know, Marxism is/was a theory that worked just fine on paper.
“From each according to his ability, to each according to his need” is simply a proposal to punish those who produce, in proportion to their production, while rewarding those who consume, in proportion to their consumption. There was never any reason to believe such a system would increase production and increase prosperity — nor was it intended to do so.
Precisely.
Wasn’t the Fed created to end bubble-bust cycles?
No.
When do we ask ourselves why the most productive country on earth needs these constant jump starts?
After we figure out the actual issue.
Why does this economy need all these mendings?
Because it’s being nibbled to death by ducks.
You may want to go assist the editors of this page:
A check of the basics would seem to more than indicate that this time the crisis isn’t the same as all the other unrelieved financial panics, unemployment waves, and business depressions.
What motivated the consolidation of all this power and wealth in the hands of the present oligarchy is beside the point. That the effect we see today was argued against all those years ago isn’t. I’d like to know how this monetary and fiscal collectivism and wreckage is wise, conservative, and in the aim of individual liberty, of which property is a most essential component. Especially to the point where we ask for more.
Using Wikipedia as a source?
You really are scraping the bottom of the barrel. I could take 10 minutes and edit that page to say exactly the opposite of what it says. Therefore, it’s not reliable, and intelligent people understand that.
Got it — your unbacked opinion somehow makes me an idiot. I’m really intrigued by your ideas, conservativewanderer, and I’d like to subscribe to your newsletter.
You’re kidding. You haven’t heard about the documented issues with Wikipedia?
Truly, where have you been living? Under a rock?
Or are you just deliberately closing your eyes to a problem because someone who’s opposing you pointed it out?
Not kidding at all, wanderer. If you won’t take a plain-English definition from an objective source, maybe you’ll take one from the Fed itself:
Notice the independence and arbitrary nature of that power. Just who ensures that it always works to your conservative ends? It certainly isn’t now.
Face it, conservativewandered, you want to keep agents in BarryNancyHarryBarney’s meritocracy in charge of your property but you won’t even try to work out a relatively simple equation involving the compounding interest on a parabolic national debt curve.
The fact that you consider Wikipedia “an objective source” says all I need to know about your credibility.
Intractable ignorance is not an asset with which to deny arguing a point you will not define. Are you in favor of a central fiat-reserve monetary policy because its inevitable failure is somehow “conservative” or because you don’t understand how it works? How it works for a time, anyway.
There’s more than enough factual information in this thread — including a comment a few places above this one — for the curious, conservative mind to construct logical, serious doubt from but you bang on Wikipedia even though it parrots the Fed itself. That makes it as objective a source as we have, unless you’d like to refute it.
It hurts to admit we’ve been bilked all these years but it probably hurts more to deny it.
And I am supposed to take the word of someone who thinks Wikipedia is “an objective source”?
Simply put, that statement puts you either in the willfully dishonest group, or in the group of those who are so out of touch with reality that they don’t know better.
Either way, your word is meaningless to me, and I shall waste no more time nor bandwidth on you.
Then take the word of the Fed itself then. Or did I say that already?
Ok Ten – you have our attention. But you need to get some help as far as your ability to sell to us common folk. You need to take all your frustation with both recognizing the problem and harboring the solution and then partner with someone who can put your thesis into into newspaper like language – so those of us with a 4th grade education can wrap our brains around it.
Think Reagan’s answer to the cold war – ‘we win they lose’. It wasn’t just a motto.
I find a lot of what you say compelling – but sorry – my limited intellect (even after reading it several times) still gets lost.
You can be snarky all you want – but is or isn’t the goal to get people to follow your perscription? So being a simpleton I will attempt to suggest a KISS…you know what that means right?
I saw such a debate as you are having with Wandering C here on C-Span between two, I believe, relevant parties. Thomas Woods of the Von Mieses (hates the Fed to Pieces) folks – & journalist John Fund. It was great shakes just like you two have been.
Now I like Fund. I’m 51 and live in AZ and he’s 52 and a succussful journalist originally from Tucson and I’ve been a big fan of his since reading his book about election fraud several years back. I also like him because BEFORE he tackles a business subject he seems to make a real effort to find out everything the subject he can to try and understand as much as possible about it – old fashioned conservative values I also admire – esspeically in a journalist.
I also find it particularly annoying that you are always trying to dismiss Wandering C with personal attacks like he’s not an authentic conservative. It almost as if you need to use misdirection as a defense. Makes me suspicious.
Stay with me – theres a thread here – it just might not be to your liking.
Because the single most important question (in my opinion) that Fund raised in his debate with Woods and others, like you Ten, who claim a clear affiliation with the Free Market Austrian School folks, was this;
You folks are convinced centralized banking is the root of all our evils; So what is the replacement plan?
What are you suggesting we actually do Ten?
Because I hear a lot of compellling analysis. But it all amounts to little more than itty bitty witty whinning Ten. If you were king of the world for long enough to make things better – what is the perscription.
Frankly the kind of Bernanke bashing you enjoy is a dime a dozen type stuff. You certainly seem like a smart person – and eager to flount your bona fides; so try and explain it to me like I am a 4 month old St. Bernard puppy open to changing what little idea I have forged in my malleable puppy brain when it comes to economics.
What should WE DO?
I know what Ron Paul thinks, because he is actually honest about his perscription. He thinks that 19th century capitalism basically had it right and that we need to go back to having congressional control of monetary policy.
I agree with Fund. That such a ‘solution’ is as absurd as outlawing auto’s and going back to horses and buggies.
Are you any different than Ron Paul on this (certainly your quip about the Wilson Admin doesn’t sound promising)? And if so, how are you different?
The article is a bit misleading about “Helicopter Ben”. The linked article is quite clear that Bernanke supports fiscal policy in the form of the stimulus package.
As for the Friedman quote, it’s dated about the same time that Ben got his nickname. His promise to Friedman amounted to a willingness to fire up the printing presses and drop money from helicopters if necessary to fight deflation.
Overall, it seems the article doesn’t draw a distinction between monetary and fiscal policy. Nor does it mention that part of the stimulus package itself is in the form of about $282 Billion in tax credits for individuals and small businesses.
Am I to believe that we should throw bad money after good with tax cuts that are ineffective or take accept some inverse-bizzaro-Krugmann stance that the tax cuts just weren’t big enough to solve the problem.
Mr. Lefty -
You are confusing tax credit with tax cuts. No business is going to hire a $30K + bennies employee to get a $5K tax credit during a down economy unless they were planning to hire to begin with. The $282B was for tax credits. A true tax cut would be spread across the board, both small and large businesses (except for GM , Chrysler, already getting Federal funding) letting them use the savings as they see fit. Ideally, you would want to couple that with cuts in Federal spending. The problem with Obama’s “stimulus” is that it targets all of his, Nancy’s and Harry’s buddies (ACORN, education (unionized), construction (unionized), railways (unionized), state gov. (unionized), etc.). It’s deficit spending, during uncertain times. Do you blame businesses for taking a wait and see attitude? And if the stimulus works so great, why is 50% still unspent? Waiting for about a month before the elections?? My, my, my. The country is suffering, people out of work and they are playing politics.
I suggest, Phoenix, for about the 4th time, that we stop appealing to the powers that sunk us. For example, when the monetary system heads off the rails to crash, that we cease consolidating power in the top of that system.
Is that a serious problem? Oh, it’s the only problem in a matter of speaking. We’ve been shown in a number of important conservative editorials lately just how we’re victimized by a one party system bent on the global collective. The current monetary system makes all the globalist schemes we traditionally distrust — from today’s Congress to the Fourth Estate to the UN to the current Administration — look like kindergarten.
That’s not snark anymore than still thinking banksterism is private industry is conservatism. Us on the right really need to wake up.
Ok, fair enough, and I believe an attempt at a genuine response. While I don’t think it’s an answer it is a starting point I can agree with. The Fed is the problem.
I take this kind of view on the ground here in Arizona. What I am starting to see is the kind of thing my father taught me about my grandfather when we as a country were going through and actual Depression, besides what we as a family delt with in the 70′s.
And it’s just a trickle – not a flood.
That is this. The way my grandfather survived the depression, besides hunting and fishing – when deer or rabbit or squirrel meat was the only meat they ate for years – was a tactic his son also reverted to the last time things were this bad for this long – under Carter and thru Reagans 1st term.
Namely, barter economics. And I believe it’s relevant to what you and I and others here are talking about; not just personal antidote.
That is – the screw the tax man underground economy – where the true test of monetary police (or rather just how screwed up it really is) plays out.
For most of the thirties NOBODY that my family knew or delt with had any money to speak of. That was rural PA (Indiana county). Then work often ment doing something of service – my Grandfather was a wiz mechanic as well as amature jewler/fixer of clocks & such – heck he didn’t pay rent for YEARS supplying his landlord with cars – all ‘work’ in exchange for things YOU NEEDED TO SURVIVE – milk, butter, flour, ect – shelter, clothes as well.
My father did the same (as a skilled AC/Refrigeration UNION worker) to survive Nixon, Ford, Carter and even Reagan (at the front end). But never resorting to what he witnessed and survived as a child. It was an informal network that started at his full-time job, extended to church, and eventually included the union hall and masons.
A lot of networking like this was going on – long before the Jarvis Tax Revolt; just not to avoid starving.
It was never about actual subsistance bartering – except in a few rare extreme cases involving addiction and divorce – if you get the drift. My point is that it never reached the point of being a widespread common practice, like it did in the depression.
It was about bettering circumstances that were difficult but not dire.
My explination my be a bit simple, I admit, but it is partly why I’m reluctant when buying into your lengthy explinations – no matter how much I find some alluring.
Because I don’t see right now as being any where near as devastating or hard as dealing with what I delt with as a 20-yr-old in ’79. Nor what tore at my parents dealing with 12% mort interest and 18-40% interest on everything from food to the car they drove.
Now I admit that last statement is entirely personal antidote. But, again I repeat, even given that, what people like you require of people like me to join you in the quest – AS FAR AS A POLICY LEAP OF FAITH – is no minor request.
If I am to do it, how is it unreasonable to require at the least some kind of policy roadmap?
Also in parting….
Right now it isn’t people at the bottom so much who are reverting to closing ranks and going their own way – since in few instances (besides the false ‘debate’ about extending unemployment bennies this past month – one everyone knew would end with an extention) people are still JOINING THE ASSISTANCE ROLES – rather than term limiting and getting kicked off with no place to go.
We may yet feel the ravages of inflation or deflation or both – but as of yet – its a bitter wind yet to blow.
The real story is that Business’s are tacitly rejecting Obama and his policies – only recently has the MSM began describing this as a deliberate NO VOTE on those policies. Blumer’s post itemizes them quite well.
It is clearer and clearer that Obama is in a box politically – he either softens the ideological agenda in Clintonesque manner – or he ‘owns’ the mess he is creating via Carter.
This doesn’t solve the mess the Fed is, nor the determined practice of turing the Dollar into a depleated fiat currency. But at least it is hope and change I can believe in.
And help DO SOMETHING ABOUT – namely – promoting regime change.
Why all the fuss about the ‘gold’ standard?
If you stock up on canned foods, toilet paper, dried fruits, honey, sugar, tampons, dental floss, toothpaste, medicine and other necessities you are guaranteed to have stuff you can ‘barter’ with.
The guy with more toilet paper will be KING. lol
There is an aspect of the current economic situation that is often overlooked. First some background of a different sort to what is usually covered. The 1930′s depression followed the explosion of 1920′s technical innovations — radio, movies, cheap trucks and automobiles, airplanes — the list just goes on and on. These new technologies made the old pattern of doing business obsolete. Consider how many businesses, for example, depended on horses to be profitable. Not just buggy whips, but wagon makers, farmers who grew the grain the horses ate, extra trains to take the grain to the cities and distribute it — few businesses perhaps depended wholly on horses, but all those that whose “horse” fraction exceeded their profit margin would obviously go bust when nobody wanted horses anymore. And horses were just one of the big changes forced on the economy. Cheap cars and trucks means living in suburbs — there goes all the tenement real-estate, losing its value because no body needs to or wants to live in the city near the factories — which means of course that the old factories lose value and have to be rebuilt elsewhere as more and more goods move by truck instead of train. The thing is, before the economy shakes out and discovers the best way to use all these shatteringly new technologies, most people haven’t the slightest idea what needs to disappear, and if the government’s answer is basically to subsidize the old economic structures, it’s just holding back the needed change. Not only that, if the government tries to work with the old financial experts who cannot really understand why the economy’s old profit centers are no longer performing well, lots of extra bad debt will be generated as the government changes the rules to entice people into investing in the same old economic patterns. We have over the last 15 years experienced a similar growth of shatteringly new technologies — internet, widespread computing power, cell phones — and like in the 1930′s no one knows yet what the new and successful economic patterns will be. We have also, again, had government financial experts working closely with professional financiers to entice people to invest in the same old economic patterns, generating lots of extra bad debt. It’s not clear, with all our game-changing new technologies, that the traditional business organization still make sense. Should most people be commuting into work? Imagine how many businesses will go bust if automobile use is cut in half! Until people figure out what the new economic patterns are, the economy cannot improve, and anything government does to try to maintain the old economic patterns will be at best useless and at worst get in the way of what needs to change …
The permanent damage was done when GM bondholders were stiffed in favor of junior-priority creditors.
That meant that there was no longer any commercial law in the US.
Good luck finding capital now.
My son is in the Australian financial markets, bonds to be exact. His comment to me last week was what the hell is actually happening over there, we are seeing a huge influx of American funds. He figures that the large Corporations that are flush with cash are looking for somewhere to invest but are very leery of the current regime and are not about to commit funds in an iffy economy with no direction. Two things he said may happen if corporate money does not start investing at home, the Bush tax cuts will be extended, or a page from our book in the past [Australia], restrict funds leaving the Country. The latter he doesn’t think is realistic at this stage but if extended cuts don’t work who knows.
They won’t cut spending, and can’t raise taxes enough to balance things. But there is actually one other option. It only closes the gap, and not indefinitely. Still…
…time for the Feds to hit the pawn shop.
The Hope Diamond would fetch a few bucks. And there’s plenty more like it in the Smithsonian. Plus a few hundred thousand square miles of land the Feds don’t HAVE to have. We can raise hundreds of billions by selling off non-essential assets. Plus the savings from laying off folks associated with them.
http://wormme.com/2010/05/10/yard-sale-make-me-an-offer-on-the-hope-diamond/
Teen unemployment is up to 25% this summer after Pelosi and Reid raised the minimum wage 3 times in 4 years.
It is particularly brutal to young African American males.
Stupid economic policies have consequences. The long term damage this is doing to these young men will be with us for decades.
Where are the “socially conscious” JournoLists on this?
Mr. Army of Davids -
The “socially conscious” are still out there. They are all in government. Recently, in Brooklyn, there was interest in building a mall. The local government leaders decided they would not permit building the mall unless all employees hired were payed at least $10/hour wages. Their justification: no more “cheap labor” for minimum wage. The mall, which could have employed thousands, was never built. None of the committeemen who nixed the deal ever held a real job. They were professional politicians.
I’m still trying to figure out what people claim to be uncertain about. Obama/Pelsoi/Reid rammed through a collection of economically destructive laws, and even if the GOP takes over both houses of Congress, they’re are a bunch of statists too, and even if they get Tea Party religion, the Dems will maintain a filibuster capable Senate minority and a veto-ready President. None of the Dems’ crappy legislation is going to get fixed any time soon. There is nothing to be uncertain about. We’re screwed. It is time to stop waiting for a rescue that is not coming and start dealing with bleak reality, cash out and retire to Costa Rica, and let the stupid American voters who installed this liberal junta deal with the collapsing consequences of their choices. It’s over. The American way of life came to an end on election day 2008 – so history will note.
The easy part is getting a VAT added (Obama is already pushing for one). The hard part is getting the other taxes repealed.
Charlie Martin wrote:
(1) Hard money doesn’t prevent inflation — see Spain after Columbus
This is a singularly tiresome and invalid form of argument. You toss out an assertion, refer to some historical period that you claim supports it, then leave to the reader the job of researching history to see if the claim is true or not — all while you posture as if you’ve actually proven something. You have not.
Of course, there is justice. Someone with a little knowledge of history like “Robert F” can come right along and refute your example.
You further claimed:
(2) Hard money doesn’t prevent boom-bust cycles — see the US pre-FDR.
We didn’t have “hard money” in the U.S. pre-FDR. We had fiat money and fractional reserve banking under the control of the Federal Reserve. By changing reserve requirements and interest rates it was indeed possible for the Feds to affect the money supply – and they were largely responsible for the massive deflation that occurred when the fractional reserve system failed from 1929 – 1933.
What’s more, no one is saying that ONLY “soft money” causes “busts”.
More from you:
What hard money does, except in special situations like Spain’s, is automatically create deflationary pressures in a growing economy that slow growth. Why? When productivity grows, the economy grows, there are more goodies to go around, and the same amount of “money” to buy them. So, the price of the goodies has to go down. This is called deflation.
No, it’s only called deflation by those who don’t understand that many things can cause prices to fall.
More from you:
But when there is deflation, it means that if you don’t use your “money” somehow, it’s worth more later. So people are less inclined to invest — which slows the growth of productivity, which slows the growth of the economy.
The effect is that the economy stagnates, and we stop getting more new goodies.
Utterly false. The U.S. was (mostly) on a gold standard from 1789 to 2013 — a period which featured stunning economic growth that made the U.S. economy the envy of the world.
The price declines from rising productivity — which you mistakenly call “deflation” — are made possible only by the fact that the productivity improvements make COSTS fall even more than prices, thereby improving the profits of producers — if this were not so, there would be absolutely no motivation for investing in the productivity improvements in the first place. This increase in profits means an INCREASED rate of return on investment. Far from reducing the incentive to invest, this increases it.
From the late 18th century to the early 20th century — generally under “hard money” — the industrial revolution vastly increased mankind’s standard of living and life spans to boot, and made possible unprecedented increases in Europe’s population. If “hard money” causes economic stagnation, this would not have been possible.
Nice article. Agreed.
Except for one thing: The stimulus has worked! It’s worked great for lobbyists, unions, state and local municipalities, etc. The American people? Not so much. The Chrysler bondholders? Not so much. American businesses (meaning those without out crony connections)? Not so much.
I am over my head with heavy monetary theory, but would suggest that in really tough times you maintain the jobs of your political allies first, and then adjust. Without the stimulus, unemployment would have jumped to what, 15%? So even if Obama had just skipped the stimulus and cut taxes, or said that he would retain the Bush tax cuts, there would have been a significant lag time before any new employment would have offset the lost jobs of teachers, fire, police, etc (and many jobs got lost anyway). Over time, you fiddle around and create a more positive climate for business and some semblance of prosperity slouches back. For a Democratic President, with his particular constituencies, one can’t suppose that he could have done it much differently, given the depth of the impending (supposed) collapse. It is fine and good to talk about tax cuts stimulating the economy, but everything exists in its own particular context.
Not to belabor the obvious, but we have had boom-bust cycles since the founding of the country. Every political party and economist has their own take (as we have just heard a small sample) on each one and they all tell you that we are in trouble because their particular set of truths wasn’t or isn’t being followed. It seems that the economy is more diverse and complicated that any one group’s take on it, so we are always thrashing around, mixing and matching, adjusting. Fortunately, in the past it seems that just when there is a consensus that hope is gone, something unexpected pops us in the economy and better times follow…for a while.
I do remember RR defending himself while the stock market was in the tank for some time. Good things eventually happened, but it was put on the Mastercard and our payments on it got relatively smaller and smaller. Clinton and Gingrich grappled/stumbled into their own brief period of a balanced budget, but then the .com bubble burst, and there has been nothing approaching a balanced budget since.
Without the stimulus, unemployment would have been at best, what we have today, probably a few tenths lower. The stimulus did not create or save a single job, despite the lies coming from the administration.
You are a piece of work. Haven’t you heard that all the jobs that were saved were government jobs? Oops, you don’t think that ANY jobs were saved at all. It is hardly worth having a conversation with someone so closed-minded, if we can’t agree on just a few of the basic known facts. How about thinking with your brain, not your knees, as one of your pals would say.
I have heard the claim that a lot of govt workers weren’t fired because the feds subsidized them. Too bad.
What you haven’t heard despite having been told many times, was that the money taken out of the economy in order to subsidize those govt jobs killed at least as many private sector jobs.
I guess you are one of those fools who actually believes that money grows on trees.
Tell me that’s snark. Please. Otherwise you really are a piece of work.
Mr. Dwight -
“Without the stimulus, unemployment would have jumped to what, 15%?”
How about 20%? Or 25%? That’s a supposition, or at best an assumption, not a fact. I could just as easily support MarkTheGreat by saying there were no jobs created, or the ones that were were short term. It’s not a far out statement. The state governments took the stimulus money and used it to pay off their deficits, and never had plans to lay anyone off. The construction workers worked until they finished the project, then went home to collect unemployment compensation, etc., etc. It’s no different than your above statement based on a supposition. If you can’t prove me wrong, I’m right? Is that your argument?
When I Googled it, this was first in line:
http://www.foxnews.com/politics/2010/07/14/white-house-ups-number-jobs-saved-stimulus/
And as everyone knows, Obama has never lied.
Are you actually so ignorant that you have no idea how those numbers were generated?
They assume that for every X dollars spent by govt Y jobs are created. They then take the amount spent and viola, declare that they have personally saved the economy.
The only people taken in by such fantasies are those who want to be taken in by them.
I agree, pretty much across the board.
It’s been a long time since we’ve tried it, but a system without a central bank would in a lot of ways be no different than an economic system without heavily centralized planning (i.e., the system that works known as capitalism). If the people collectively reacting to market signals do a better job than even the best and brightest bureaucrats of allocating resources and creating wealth (which they do), who’s to say that they can’t also do a better job of managing the money side of it — assuming government gets out of the way and forces banks to allocate wisely based on risk or suffer the consequences of failing to do so? And I do think we need to figure out a way to get there.
As to Bernanke, he couldn’t possibly have known that the Democratic crony companies Fan and Fred were in the midst of a 15-year campaign to swindle the bond markets by misrepresenting the quality of the loans they securitized (bad enough that a lot of the loans were risky to the point of being doomed to fail, but then they were also represented as being at or near investment grade, so investors were fooled about what they were buying. Classic Cloward-Piven).
I’m not saying Bernanke is a saint, or doing everything right, or even that his motivations are entirely pure, but I do take some comfort that he accepts Friedman’s findings on what made the Depression worse, and has tried to avoid repetition.
Apparently the new fin-reg bill has exempted the SEC from having to answer any more FOIA requests.