Category Archives: Federal Reserve Bank

UPDATED (7/9/018): Non-‘Shithole’ Countries Seem To Recover Quickly From Disasters, Natural Or Man-Made

Business, Economy, Federal Reserve Bank, Human Accomplishment, IMMIGRATION, Intelligence, Technology

In 2008, Iceland collapsed under the weight of its banking industry’s federal-reserve like excesses.

In 2018, Iceland’s is a red hot economy. The highly able population has shifted from finance to technology and tourism. No bailout—allowing the banks to collapse and a natural recovery take place—has a lot to do with it.

“… rather than stepping in with taxpayers’ money like the British and Americans did, the Icelandic government let its banks go bust.”

Likewise did Chile cope reasonably well with what was “one of the most powerful earthquakes in history.” We hear nothing of Chile’s struggles to recover.

Not so Haiti, the Africa of the Western Hemisphere.

Haiti is forever convulsed by political and natural disasters. It remains the poorest country in the Western Hemisphere, where four out of five people live in poverty and more than half in abject poverty (NYT).

It’s nearly two decades since a pair of earthquakes struck El Salvador in 2001. The US government granted Salvadorians a generous grant of privilege in the late 1990s, in the form of a temporary protected status (TPS) for nearly 200,000.

Ditto the “Haitians who were stranded after an earthquake in 2010.”

To the din of protest, “the United States’ Department of Homeland Security had only recently revoked the so-called temporary protection (it lasted nearly 2 decades).

“Shithole countries,” a Trump coinage, don’t seem to recover very well from disasters, natural or man-made, do they?

SEE RELATED READING:

“Trump’s ‘Shithole’ Controversy Deconstructed (Part 1)”
“Why Trump Pooh-Poohed ‘S-ithole’ Countries (Part 2)”

UPDATE (7/9/018):

Meanwhile in Haiti ...

1 Reason The State Department Turned On #RexTillerson: He Tried Trimming Budgets & Getting Rid Of Deadwood

Business, Economy, Federal Reserve Bank, Free Markets, Government, Political Economy, Taxation, The State

The Economist notes that Rex Tillerson was a poor secretary of state—but not for the reasons I would advance.

One reason for their opinion is that, “Disastrously for morale, he declined to defend his own department when the White House proposed cutting its budget by 25% or more … Mr Tillerson squandered goodwill with a corporate restructuring that felt to many staff like an invitation to resign. At one point, outside consultants sent round a questionnaire asking: “To optimally support the future mission of the Department, what one or two things should your work unit totally stop doing or providing?” (“Trump Unbound: In foreign affairs, America just moved closer to one-man rule,” March 17, 2018.)

TILLESRSON TRIED TO CUT GOVERNMENT! Defending your employees, The Economist here equates with increasing or maintaining the budget for the department, it diplomats, envoys and other career and or deadwood staff.

State institutions are self-reinforcing and not amenable to reform; they grow through failure.

So while it would be nice if state institutions were able to reform, because of the structure of incentives, the state cannot be corrected. The incentive structure underlying state institutions is antithetical to reform.

To correct processes that may be killing people—affirmative action, when the subject of special privileges isn’t qualified—you have to cut budgets in the billions. This likely will never happen, in state institutions, because they don’t abide by the profit motive. So to express belief in this is to express belief in the possibility of the state fixing itself.

The libertarian grasps that the state grows through inefficiency. The more it bungles—the greater its budget will be. Economically, the state’s incentives are inverted.  A private company, on the other hand, grows through economic and performative efficiencies; by singles the customer. The state is the opposite. As a monopoly, it need please nobody. For example, the education system is a giant failure.  Will it be scrapped? Of course not. The system will reward itself with MORE, not less, funds to fix the problem.

This is a structural fact of the state.

Why can the state grow and prosper through inefficiency? Because it has access to the funds of an indentured third party, taxpayers, and has the promiscuous use of the printing press.

A private institution can come back from the abyss, because, economically, it will go bust if it doesn’t start pleasing customers. However, if, like the Florida bridge collapse, a private enterprise is working in tandem with the state, then taxpayers bail it out.

Profit is privatized, loss is socialized.

Most people no longer read or understand the economics of the state. Ten years ago, I had readers who had at least read Hazlitt’s Economics in One Lesson.

 

As I Said A Few Posts Ago Regarding Cyril Ramaphosa’s South Africa …

Economy, Federal Reserve Bank, Private Property, South-Africa

Via Zero Hedge comes the news that South Africa’s ruling African National Congress has just caused the Rand to plummet with the news that it will seek “constitutional changes for land expropriation (from whites) without compensation.” The ruling party, moreover, has decided that “the Reserve Bank must be wholly owned by the state.”

As my book, “Into the Cannibal’s Pot: Lessons for America From Post-Apartheid South Africa,” shows, the SA constitution already allows expropriation of private property, with only nominal compensation.

Facebook Friends were angry at me for raining on their parade, a few posts back, writing that the appointment of a new, South-African leader to head the dominant-party state was an insignificant game of musical chairs.

But already the news out of Cyril Ramaphosa’s South Africa is bad.

As for the alarm over the nationalization of the country’s Reserve Bank. Reserve Banks are private in name only. Who still pretends this is not the case? Central banks serve The State and are for The State and its cronies. Private shareholders are ensconced to put up a facade to the contrary.

UPDATED: ‘Continuity Candidate’ Jerome Powell To Chair The Federal Reserve System

Debt, Economy, Federal Reserve Bank, Inflation

Paul Volcker looks especially good right about now” given the appointment of “continuity candidate” Jerome Powell to chair the Federal Reserve Bank.

MORE:

“Paul Volcker Looks Pretty Good Right About Now” By Jeff Deist.

Trump Taps Jerome Powell to Chair Fed” @ CATO

UPDATE:

The Swamp Wins: Trump Nominates Powell to Replace Yellen“:

… in naming Powell, Trump is picking an Obama-appointed Fed Governor for his most important nominations is itself quite fitting. While we have long known that bad monetary policy is bipartisan, Powell’s nomination serves as a particularly useful illustration of how little has changed in Washington since the Bush Administration.

Of course, just as Trump received his loudest applause from Washington for doing his best impersonation of his two predecessors, the President is already being praised for making a “grown up” decision when it comes to the Fed.