Category Archives: Inflation

Updated: Land of Moussaka, Moochers and Looters

Debt, Democracy, EU, Europe, Federal Reserve Bank, Inflation, Welfare

COMING TO A THEATER NEAR YOU. The excerpt is from “Land of Moussaka, Moochers and Looters,” which you can read on WND.COM:

“The public sector and its syndicates will collapse a country before they accept “austerity measures” – the focus of disaffection among Greece’s gritty street fighters is the requirement that they begin to exercise frugality.

Against the better judgment of the people in member EU states, the Eurocrats have committed to rescuing the profligate Greeks. The International Monetary Fund (for which Americans are liable, too) will assist. In exchange, the slackers striking out on city streets and against their compatriots will have to watch their public-sector wages slashed, pensions cut, pay frozen. And, horrors, Greeks will have to live with ‘liberalized labor laws,’ in other words, allow some economic freedoms to the few workers who carry the welfariat. …

The defaulting Dionysians, on the other hand, are fueled with the righteousness of the wronged. From the janitor to the journalist, they blame their politicians who, in exchange for power, only gave the demos what they demanded at the time. …

The Grecian wilding is a minor event compared to the events that’ll unfold should China quit funding our federal behemoth’s bacchanalia, and the Moody’s credit-rating agency downgrades U.S. Treasuries to junk bond status, befitting a banana republic.” …

The complete column is “Land of Moussaka, Moochers and Looters,” now on WND.COM.

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Update (May Eighth): Pat Buchanan on the Greek welfariat:

“… consider what brought Greece to where she is – running a deficit of 14 percent of gross domestic product with a debt approaching 100 percent, with Portugal, Spain, Ireland and Great Britain not that far behind.
All of Europe adopted universal health care. All voted in a shorter workweek, a higher minimum wage, greater job security, earlier retirements and munificent pensions.
As the cradle-to-grave welfare states rose, an ever-increasing share of the labor force left the private sector for the security of the public sector.
Tax-consumers, the beneficiaries of the welfare states and the bureaucrats that ran them, grew in number, as taxpayers declined as a share of the labor force. Though Greece was far from the most productive nation in Europe, Athens led the parade. …
And America is not all that far behind.
While the federal deficit is not 14 percent of GDP, it was 10 percent in 2009 and may reach 11 percent in 2010. Trillion-dollar deficits are projected through the decade, bringing the public debt – held by citizens, companies, foreign governments and sovereign wealth funds – close to 100 percent of GD
And the unfunded liabilities of Social Security, Medicare and federal pensions rival those of Western Europe.
States like California and New York, larger than Greece, look a lot like Greece. Were it not for the scores of billions dished out to them by Obama’s stimulus, some of these states would have come close to the brink New York City went over in 1975.
Many of these states are today laying off teachers, letting felons out of prison and looking hard at the salaries and pensions of civil servants. While the temptation is great for Washington to bail them out again, the United States government itself has now begun to attract the concerned notice of holders of U.S.debt.” …

[SNIP]

Keynesians still manage to surprise me. Fox News’ Neil Cavuto helped disseminate ignorance and immorality when he entertained an “economist,” or just a shyster, who advanced anti-gravity claims: austerity measures were the wrong thing for Greece. National bankruptcy could never happen in the US, because we have a printing press with which to create prosperity. Just like that.

By that logic, why work? Why produce? Why not just print magic money at that paper Pantheon, and hand it out to Americans who can then sit idle on the beaches?

Inflation Central (AKA ‘Global Governance’)

Debt, EU, Europe, Federal Reserve Bank, Inflation

The world’s central bankers, entrusted as they are with keeping themselves in style and their politician friends in power, would very much like to be able to access YOUR wallet. Feel like saving Greece? Bailing out Portugal? The EU’s Uncle Jean-Claude Trichet has a plan: Let’s centralize political spending—incur debt in unison and inflate our way out of the pit. Let the serfs suffer.

FORBES.COM:

“The President of the European Central Bank, Jean-Claude Trichet, told Forbes that global governance is extremely necessary if we want to prevent another financial crisis. In his prepared printed and spoken remarks to the Council on Foreign Relations, Trichet emphasized that politicians, economists, and financiers must work across the Atlantic and collaborate on methods to create an international set of standards. It is his belief that through global governance, the resiliency of the global financial system can be assured, noting that ultimately it was governments’ use of taxpayer’s money, equivalent to around 25% of GDP on both sides of the Atlantic, that prevented another catastrophic great depression from occurring.” …

Yelling About Yellen (The New BO Appointee)

Debt, Economy, Federal Reserve Bank, Inflation, Labor

In an economy of high unemployment and inflation, Barack Obama has gone and appointed as vice chair of the Federal Reserve a woman called Janet Yellen, by whose “economic” model inflation is the result of “too many people working and too much economic prosperity.” Or at least, that’s how Larry Kudlow distills the theory.

That such an economic theory exists attests to the degree to which economics and politics have become intertwined. Certainly, “Keynes’s political creed guaranteed a hand-in-glove relationship between the state and its stooge economists. Most of what Keynes advocated entails giving the state enormous confiscatory powers.”

Is “the Phillips-curve model,” Yellen’s preferred theory, an extension of Keynesianism, or is it just some form of free floating statism? I have no idea. But since most economists are servants of the state in-waiting, following the Phillips Curve—which posits “a consistent inverse relationship: when unemployment is high, wages increase slowly; when unemployment is low, wages rise rapidly”—has given rise to “a menu of policy options.” Examples, courtesy of the Concise Encyclopedia of Economics, are:

with an unemployment rate of 6 percent, the government might stimulate the economy to lower unemployment to 5 percent. Figure 1 indicates that the cost, in terms of higher inflation, would be a little more than half a percentage point. But if the government initially faced lower rates of unemployment, the costs would be considerably higher: a reduction in unemployment from 5 to 4 percent would imply more than twice as big an increase in the rate of inflation—about one and a quarter percentage points.

OF COURSE, the unquestioned premise of these phillipic prescriptions is that “stimulus” does indeed lower said unemployment rates. Only in The Oink Sectors.

Updated: 'Don’t Bet On A Recovery'

Debt, Federal Reserve Bank, Inflation, Labor, Uncategorized

PETER SCHIFF CHALLENGES “those who fantasize about a consumer-led recovery to describe where the spending money will come from. Most consumers are tapped out, millions are unemployed, and home equity has been wiped out. The only reasonable thing for them to do is to pay down debt and sock away as much money as possible to rebuild their savings.

Beyond the question of ‘how’ the spending could be achieved, is the deeper question of ‘why’ such activity should be sought at all. Excessive spending, fueled by an insane housing bubble and catalyzed by reckless monetary and fiscal policy, was the reason that our current recession became unavoidable. Why would we want to go down that road again?

During the run up to the crash, excess spending had created economic distortions that have yet to be resolved. Too many resources, including land, labor, and capital, were devoted to servicing an unsustainable economic model in which Americans borrowed money to buy homes, products and services they really could not afford. In many cases consumer behavior was influenced by overly optimistic assumptions regarding real estate related riches.

However, now that the real estate bubble has burst, Americans are coming to terms with a more sober reality. Many have cut up their credit cards, dramatically reduced their spending, and have squirreled away as much money as they can. This change in behavior should necessitate a dramatic shift in the labor market as workers move away from jobs associated with consumer spending and toward jobs associated with real production, primarily for exportable goods.

The real problem is that monetary and fiscal policy designed to re-inflate the burst spending bubble is preventing this transition from taking place. As a result we are not creating the jobs we need to replace – the ones we have lost in mortgage servicing, home improvement, and real estate sales (which we never really needed to begin with). As these jobless remain unable to find alternative employment, our economy will continue to languish.

Some will argue that the new jobs created by government stimulus spending will provide the additional purchasing power necessary to revitalize consumer spending. There are two problems with this expectation. First, those jobs being ‘created’ by the government are outnumbered by those being destroyed by government domination of resources. Second, even if it were possible for job growth to return, having hopefully learned from their mistakes, workers will be far more frugal with their paychecks than they were in the past.”

The complete column is HERE.

Update: From the U.S. Bureau of Labor Statistics comes “THE EMPLOYMENT SITUATION — FEBRUARY 2010.” It’s not good.