Category Archives: Debt

Libertarian (Trade) Deficits

Business, Debt, Economy, Free Markets, libertarianism

The following is from my new, WND.Com column, “Libertarian (Trade) Deficits”:

“… I am confident the legendary Lou Dobbs understands that voluntary exchanges are by definition advantageous to their participants. Costco, my hair stylist, and the GTI dealer—all have products or skills I want. Within this voluntary, mutually beneficial relationship, I give up an item I value less, for something I value more: a fee for the desired product or service. My trading partners, whose valuations are in complementary opposition to mine, reciprocate in kind. Silhouetted by the force of the state, this synchronized, magic market starts to splutter, and people suffer. That’s a no-brainer.

However, when it comes to the glories of an aggregate, negative balance of trade, allow me to respond to the typical libertarian post-graduate cleverness, as evinced by Dr. Boudreaux. In one respect libertarians are right: there is nothing wrong with my running a trade deficit with Costco, my hair stylist, or my GTI dealer, as I do—just so long as I pay for my purchases. The data demonstrate that Americans, in general, don’t.

All in all, by Vox Day’s account, ‘U.S. households, corporations and various levels of government’ owe fifty three trillion dollars! The consumption being lauded by libertarians is debt-driven consumption. In this context, a trade deficit is significant, inasmuch as it reflects not an increase in wealth but an increase in indebtedness.

To dismiss the gap between U.S. exports and U.S. imports as an insignificant economic indicator—now that’s silly. ” …

The complete column is “Libertarian (Trade) Deficits”

Read my libertarian manifesto, Broad Sides: One Woman’s Clash With A Corrupt Society.

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UPDATED: 'Brace For Impact!' (Breaking: BHO EXPERT AGREES)

America, Business, Capitalism, Debt

“[A] very successful entrepreneur now living abroad” wrote to John Derbyshire, in response to an article Derb wrote detailing what a “terrible country the US is” if you want “to start an imaginative new enterprise”:

“Capitalism is dead in the US . . . The US was not destroyed by the Russians, the Chinese or even the militant Islamists. They did it to themselves . . . The $104 trillion debt is beyond any possible means of repayment. The only way out will be to monetize the debt by hyperinflation . . . I’m now watching the final days from 8,000 miles away . . . In November 2008, half of the US electorate put a loaded ballot in their mouth and pulled the trigger . . .”

Derb: “There’s a 40-foot tsunami in plain sight on the horizon, and we’re playing beach volleyball. Can Petraeus turn Afghanistan around? How unpopular is the healthcare bill? Will the feds sue the state of Arizona? (What’s that distant rumbling sound?) Is Turkey a friend or an enemy? Should Rahm Emanuel go? Is Elena Kagan gay?” [Or should Bill Kristol resign … Pat Buchanan said something to the effect that Americans are a deeply silly people in serious times.]

Vox Day writes: “The car has already hit the tree and the bumper is already in the process of buckling inward, so there is no time to turn the wheel or fasten seat belts. It is too late to do anything but scream.”

Derb “favor[s] aerodynamic analogies over Vox Day’s merely automotive ones. So: Heads between knees, arms over heads, hold that position. Pray if you’re inclined to. Brace for impact!”

UPDATE (July 12): I’ve searched the Net high-and-low, news outlets, Reuters too, are not reporting what Bill O’Reilly has just announced. A member of BHO’s commission-to-investigate-and-approve-the-levels-of-debt-the-USA-is-carrying has said we are on the road to ruin. Isn’t it curious how left-liberal mainstream media doesn’t even break vital stories any longer? If Bill is right, and I have no reason to believe otherwise, the man is a former Clinton official.

Talker Juan Williams, a simple sort who has long championed Keynesian deficit spending, denying that huge debt is in any way economically deleterious, suddenly got religion on austerity. It is as I said in the post asking the Punditocracy to quit, truth comes into existence in America as soon as someone in the establishment pronounces it, usually a decade or so after we’ve been screaming it from the rooftops.

UPDATED: Great Depression 2.0: An Interview With Vox Day (PART II)

Debt, Economy, Federal Reserve Bank, Inflation, libertarianism, Political Economy

The “infamous Internet Superintelligence,” Vox Day, author of “The Return Of The Great Depression,” needs no introduction. My WND colleague and fellow libertarian dishes it out on the impending depression, D.C. dummies (down to their position under The Bell Curve), the U.S.’ Marx-compliant financial system, and a dark future. As always, Vox makes this glum stuff fun.

The first part of my interview, “Great Depression 2.0: An Interview With Vox Day,” is available now on WND.Com. The interview continues. The sequel will be posted on Barely a Blog on Friday evening.

Be sure not to miss your double dose of Day.

UPDATED (July 2): AS PROMISED, YOUR DOUBLE DOSE OF DAY. You’ve read the first part of my Vox Day interview on WND. Now to the sequel, exclusive to Barely A Blog:

• Ilana: To mention the Fed today as anything but a hedge against inflation is to qualify as “Worst Person in the World.” Early Americans were not nearly as baffled about what the Fed did. Comment with reference to the on-and-off attempts to eradicate this Federal Frankenstein. What good would an audit of the money mafia do?
Vox: Keith Olbermann should have stuck to sports. He has no idea what he’s talking about when it comes to economics. The Fed isn’t a hedge against inflation, it is the primary engine of inflation just as its three predecessors were. A genuine audit of the Fed will immediately end its political viability and probably its existence, which is why the Fed is fighting so desperately against the Ron Paul bill. But the end result is inevitable. The Fed can’t hide behind fictional statistics forever, as with the Soviet Union, people eventually begin to notice that they are not, in fact, wealthy and well fed.

• Ilana: My second favorite line in your book: “… the only sense in which mainstream economic theory is worthy of serious study is the sense that a flight recorder demands intense examination after an airplane crash.” (One quibble with this analogy would be that the flight recorder contains retrievable immutable truths.) What hope is there for an awakening if “mainstream economic theory” is precisely what is being seriously studied and heeded by those among us who are not reading Dick Morris?
Vox: The only hope is for economic sensibility to be restored post-crash. There are some positive signs, such as the widespread mocking of Paul Krugman’s belated warning of a “third depression” after the failure of the second stimulus. Krugman said a $600 billion stimulus package was needed, Obama got a $787 billion package through the Congress, and it failed anyhow. But the fact that these Neo-Keynesian clowns are still taken seriously and their models dominate the political discourse is an indication that a serious theoretical retooling will not happen until after the Great Depression 2.0 is well underway.

• Ilana: At first the pols conceded that what they had given us was a jobless recovery, which is a lot like a housewarming for the homeless. They’ve quit that Big Lie and are now touting all the jobs BHO has created. What’s going on? Tell us why official indices such as unemployment and GDP are not to be trusted.
Vox: Unemployment is dependent upon reducing the size of the labor force. So, if you’re out of work and aren’t jumping through the BLS hoops, you don’t count as unemployed. It’s a joke. GDP counts spending but doesn’t subtract debt, so it’s like saying that you’re rich because you maxed out your platinum Mastercard. Until the debt is paid back, you can’t properly count it as economic growth. And almost all of the GDP growth over the last 20 years has been nothing but debt growth. And now that the debt is shrinking as people and governments default, GDP will begin to contract oo.

• Ilana: I know who the “Zulus” are; I’m from that part of the world. You lost me with “Whisky Zulu.” Explain.
Vox: It’s just my personal reference to Weimar and Zimbabwe, two famous cases of hyperinflation. The Whisky Zulu scenario I consider is the hyperinflationary one that many inflationists favor. It’s a credible scenario anticipated by many very smart people, but I believe events are demonstrating that the debt-deflation scenario is the one that is playing out instead.

• Ilana: I agree with you that “the Great Depression 2.0 will be worse than its predecessor.” Debt. Consumption. Credit. Have at it (p. 211).
Vox: It’s pretty simple. I give 10 reasons in the book, but two should suffice for here. First, the amount of outstanding US debt to GDP is proportionately greater. It hit a peak of 287% in 1933, and 375% in 2009. Second, stimulus plans that extended and exacerbated the Great Depression were limited to the USA. This time around, Europe, Japan, and China have been actively engaged in their own stimulus packages as well, so the economic blowback is going to be much larger on a global level than it was in the Thirties. Except for Germany, which had its own particular issues related to losing WWI and the strictures imposed by the Treaty of Versailles, the problems faced by Europe did not rise to the level of a “Great Depression” because Europe’s leaders didn’t make it worse by listening to the Keynesians as Hoover and Roosevelt did.

• Ilana: It’s befitting that we end with perhaps the most important right in a free society. My favorite line in your book: “… one should always be deeply skeptical of any economic theory which … serves as a justification to allow one man to dispose of the property of another.” Private property has become a dirty word in an increasingly collectivist America. Not even Rand Paul, in his valiant defense of “private businesses” vis-à-vis the Civil Rights Act, could bring himself to speak to the sanctity of private property. People are comfortable alluding to “freedom of association” but not to what a man owns. Your thoughts with a view to what lies ahead.
Vox: Government can’t fix what government has broken. All of the desperate attempts to “fix” the global economy according to Neo-Keynesian and Monetarist principles are going to fail, state, local, and even national governments are going to default on their debts, and it’s going to be a very difficult road ahead for the next two decades. There will probably be a major war or two as well, as usually happens in times of large-scale economic contraction. But it is a second Great Depression, it’s not the Ragnarok. This isn’t a Democratic problem or a Republican problem and although the politicians will do their best to take partisan advantage of the situation, it is a structural crisis that cannot end until the structure collapses and is replaced with a more economically realistic one. Needless to say ownership—self-ownership, property ownership—will not fare well.

Soros Muscles Merkel

Debt, Economy, EU, Europe, Federal Reserve Bank

Germany’s Chancellor Angela Merkel (a former East German physicist) has refused to heed the hedonist B. Hussein Obama (an agitator from Chicago) who is urging her to print and inflate her country’s currency to Weimar-Republic levels.

“Financier- philanthropist” George Soros—also an all-round radical and BHO surrogate—has stepped in to muscle Merkel implying, writes Amity Shlaes, that,

“Germany should look to the U.S., where President Barack Obama has spent vigorously and Federal Reserve Chairman Ben Bernanke has created money for the greater good. Soros, the tutor again, underscored that Germany clearly “does not know what it is doing.”

There are reasons for the meddling:

Beyond Merkel’s personal memory there is the German national memory of the 1920s hyperinflation. That resulted from the decision of a desperate Weimar Republic to inflate its way out of war debts. That hyperinflation so punished middle-class savings and so weakened the 1920s economy that the average German became more susceptible to maniacs like Adolf Hitler and the communists.
Pressure on Germany from Soros, and for that matter, from the Obama administration, makes it harder for Merkel or other European leaders to heed their own sound instincts. Soros’s pressure also obscures a desirable policy path for Germany, one in which it practices fiscal discipline and growth creation so well that other euro nations emulate it.

Read Shlaes’ analysis.