Category Archives: Economy

UPDATE II: On The Radio Show Of ‘Austrian’ Jay Taylor

Economy, Ilana On Radio & TV, libertarianism, Media, Natural Law, Political Economy, South-Africa

I will be a guest on The Jay Taylor Radio Show (“Turning Hard Times into Good Times”).

Date: Tuesday, June 26, at 3:30 EST.
Topic: Into the Cannibal’s Pot, as it applies to private property rights, gold in South Africa, and the backdrop to the establishment of Apartheid.

Jay Taylor is a New-York based investor and broadcaster, who invests and broadcasts in the intellectual tradition of Austrian economics. We met at the New York Junto gathering, where I was the month of May’s featured speaker.

I was delighted to hear that the topic of the talk—“Natural Rights in ‘Into the Cannibal’s Pot’: Abstractions or Facts of Life?”—resonated with Jay.

Jay is a treasure. Tune in to support his work. (And, it goes without saying, go easy on me.)

UPDATE I (June 26): You can listen to the show here.

UPDATE II (June 27): An MP3 of my segment is here.

Roubini’s Odd Reasoning

Debt, Economy, EU, Europe, Federal Reserve Bank, Media, Political Economy, Russia

“The cable commentariat is a cog in the sprawling American comitatus. They all feed off Rome.” In this context, it’s hard not to notice just how hard the commentariat is working to create the illusion that America’s economic situation is better than Europe’s, and is the fault of Europe.

Not if you ask Vladimir Putin, who seems to have a reasonable grasp of matters monetary. In July of 2011, “Putin raged over the second plague of quantitative easing, QE2, unleashed by the Federal Reserve Bank, lambasting the Unites States for acting ‘as if they were ‘hooligans’ because they ‘flood’ the entire world with dollars … They start the money printing presses and throw dollars throughout the world in order to solve their immediate responsibilities. They say monopolies are bad but only if they are foreign – their monopolies are perfect. So they use their monopoly to print money until the whole world is flooded.’

This once-avowed communist congratulated his fellow Russians for not being like the Americans: ‘Good for us that we do not print reserve money.'”

In “One Nation Under Inflation,” I observed that “America’s debt-to-GDP ratio is larger than the European Union’s.”

I was wrong.

The US debt “is greater than the combined debt of the entire Eurozone and the U.K.”

At 15.6 trillion dollars of government debt, everyone should know by now that, from the fact that the US keeps loaning billions for bailouts to Christine Lagarde of the International Monetary Fund—it doesn’t follow that we are richer. Or that we have this money. We aren’t and we don’t.

Alas, according to the “logic” of Keynesian macroeconomics, solvency is not a precondition for prosperity.

Adding to the confusion is economist Nouriel Roubini. When asked by RT whether he thought “the US has the risk of seeing the same situation as in the Eurozone, Roubini said something curious:

For now I don’t think there will be a fiscal crisis in the US. Their deficit and debt are large and rising in part because the US can print money to finance its deficit, something the Europeans and their banks are unwilling to do, in part because the US dollar is still a reserve currency, so the foreign demand of China and the rest of emerging markets is financing the large US fiscal and current account deficits. Now, no country should be complacent. Over time, if the US were not to deal with their fiscal problems, if it’s not going to deal with its still low competitiveness, eventually we could see a fiscal train wreck, a sudden stop of capital. And then financial turmoil could happen in the US. Whatever is the result of the election next year, whoever is going to be a president, starting a plan to build a fiscal discipline, a fiscal consolidation, is part of what the US has to do in order to avoid the risk of something bad happening. This can happen later in the US than in other countries, but it can happen eventually.

Is he suggesting that US counterfeiting operations and reserve-currency status are magic amulets against economic realities?

Surely running the printing presses and gulling other governments to buy our worthless bonds serves only to mask the inevitable reality?

Big Ben, One Twisted Brother

Debt, Economy, Federal Reserve Bank, Government, Inflation

So as to get rid of the public debt, our government, via the Fed (which is an arm of the state), is debauching the dollar and all private savings.

In the name of “economic recovery,” wouldn’t you know it, Ben Bernanke is set to “swap some securities for others.” Or, to belabor the “maturity-extension program” baffle-gab,

“sell Treasury securities with remaining maturities of about three years or less, and purchase securities with six years to 30 years remaining.”

In the course of expanding what is known as “Operation Twist,” The man who directs the Federal Reserve wrecking ball claimed he “stands ready to take further action to put unemployed Americans back to work.” [Bloomberg.]

The last bit (my bold) is no joke, and assumes that inflating the money supply and endless liquidity alleviate joblessness. It’s the exact opposite.

What does this mean in the grand scheme of “ultra-loose monetary policy”? You can take this to the bank: Ben will continue to afflict us with ever easier money and lower interest rates, quadruple the money supply and hastened the collapse of the dollar.

As Peter Schiff prognosticated, “The reason I knew QE3 was coming [was] because I knew QE2 wouldn’t work and that’s why QE4 is gonna follow QE3—it never works, it just makes the economy sicker, it’s the reason we’re so screwed up.”

$7.77 Trillion: That’s the amount of money the central bank, chaired by Ben S. Bernanke, “parceled out” during “the bailout to America’s “Big Six,” ostensibly, to rescue the financial system. This according to “Fed documents obtained under the Freedom of Information Act” by “Bloomberg LP, the parent of Bloomberg News.”

Inflating America’s fascistic banking system has cost “more than half the value of everything produced in the U.S. that year.”

It “lasted from August 2007 through April 2010.” Officially.

But we all know Ben’s bacchanalia continues.

Minimum Wage, Maximum Economic Illiteracy

Democrats, Economy, Labor, Law, Regulation

The Bill to raise the minimum wage has three Democratic lawmakers — Reps. John Conyers, Jr. (D-Mich.), Dennis Kucinich (D-Ohio), and Jesse Jackson, Jr. (D-Ill.) — swelling with pride.

The “Catching Up to 1968 Act of 2012” … would spike the minimum wage from $7.25 an hour to $10 while mandating that future increases be tied to inflation. Jackson and his Democratic colleagues proclaimed that the legislation would model the 1968 minimum wage rate for inflation in today’s dollars. “This legislation is long-overdue and sorely needed,” Conyers affirmed. “More than 30 million Americans would see their wages increased, which would provide an immediate boost to the economy.”

Today’s youth don’t have the economic smarts with which to understand why they are less likely to be hired under legislation that fixes the price of their labor above its productivity.

Those who claim to represent unemployed youngsters—whose labor-participation rate has been in decline—don’t much care that such legislation circumvents voluntary exchanges in the market. Because government has fixed the price of labor, economic actors are prevented from engaging in mutually beneficial, voluntary exchange.

Still less is the hike justified because it impoverishes. For government can bid wages above market value, but it cannot compel business to hire, the outcome of which is unemployment among the young and the poor.