Category Archives: Political Economy

Stop Stimulating In Public

Barack Obama, Economy, Inflation, Political Economy

Mr. Obama’s team is putting together a new economic stimulus plan containing more than $500 billion in federal spending and tax cuts over the next two years, Obama aides and advisers said Sunday. That package would be far more aggressive than anything envisioned during the campaign.

My admonition against the last such lewd display obtains:

“ To revive flaccid financial markets, American politicians are now groping obscenely for their ‘stimulus packages.’ It’s an ugly image. It’s also worse than useless. They might as well be gesturing lewdly like crotch-grabbing rappers, because that’s as likely as their economic package is to get the country out of economic straits. …”

Read on.

Keynesian Commies

Economy, Federal Reserve Bank, Inflation, Political Economy, Socialism

The American economy is being socialized. The government has nationalized the mortgage market and a good chunk of the investment banks. No principled argument is offered against the government acquiring a share of the auto industry. The debate hinges only on whether the government’s growing “investment” portfolio will solve the “problem” or not.

Government intervention in the economy invariably results in a complete takeover. Consequently, once it was agreed that this one industry, GM, was too vital to fail, the government went on to specify the conditions of the baleful bailout. The political ponces—the people who do nothing but sap the productive economy—want to see a viable business plan, no less.

The public and the experts don’t think to question the State’s financial savvy–its ability to “plan” a viable industry. Where is the money coming from—this too is never asked. The soundness of borrowing or printing funny money out of thin air to implement the grand plans—this is never doubted. (Except by Ron Paul.)

Public works and big-time spending by government are planned as ways to get the economy going. Even Lou Dobbs, The Independent, fails to question Paul Krugman, the Keynesian commie, as to why more credit expansion and spending is key to recovery.

Note: Every economist touting the Keynesian twaddle of spending ourselves out of the recession is speaking the language of politics, not economics. The laws of economics are natural, immutable laws. The government, like the average Joe and Jane, can’t spend itself out of bankruptcy. (Try suggesting that to your banker, won’t you?)

With its capacity to inflate the economy with worthless fiat money, all the state does is pacify some politically powerful debtor sectors, to the detriment of politically powerless creditor sectors and other solvent citizens. At least we can hope that’s all they’ll do: The difference between Generic Joe’s insolvency and the government’s is that the first will not bring down the entire country.

A good guide to the perplexed is Mises.org’s “Bail Out Reader.”

Misdirecting Production

Economy, Free Markets, Government, Political Economy

The planned $25 billion to a favored and failing industry, GM, will cause other, perhaps successful, companies to fail. It’s what Frédéric Bastiat referred to as “What Is Seen and What Is Not Seen“:

In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.
There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.
Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

We are being sapped by bad economists and their political pimps.

Ludwig von Mises wrote this in Interventionism: An Economic Analysis:

“In the unhampered market, forces are at work which tend to put every means of production to the use in which it is most beneficial for the satisfaction of human wants. When the authority interferes with this process in order to bring about a different use of the productive factors it can only impair the supply, it cannot improve it.” (P. 17)

Update II: ‘Monetary Freedom and Its Opposite’

Economy, EU, Federal Reserve Bank, Inflation, Political Economy, The State

Writes Mark Thornton of the Ludwig von Mises Institute:

“As we enter the era of decline for the dollar all sorts of reforms will be used to address this decline and the economic instability it causes. However, reforms designed on Wall Street or in Washington will not work and will amount to nothing more than rear guard action by the moneyed interests that control the government.

The only true path to reform is monetary freedom. We have gone from a situation where money was entirely free from government intervention to one that is completely dominated by government. Instead of privately minted coins made from precious metals we now have a system of government-printed paper fiat currency. We have gone from a system of private banking that provided bank notes and checks for demand deposits to one where banks are completely regulated by the central bank and a host of other regulatory bodies. The idea that our current financial mess resulted from a lack of regulation is truly laughable. Of course this process has taken centuries to complete. By giving up our monetary freedom—particularly over the last one hundred years—we have given government the ability to grow in size and scope and to achieve unthinkable levels of power. Every step forward towards government control of money has resulted in social chaos and economic destruction. The real economy only grows in the interludes when monetary mischief is at a minimum.”

[Snip]

Pay attention to the section, “What do we need to do as individuals?”

Update I: As always, Pat Buchanan delves well into the history of events–in this case The Bretton Woods Agreements, and the ongoing, current attempt to recreate a second Bretton Woods by unseating the US and its fallen currency. What I don’t get is why is Pat so confident that a “global central bank, the Fed of the world economy,” will not come to pass. He claims “Americans are not going to fund such a bank, nor cede it authority, nor abide by its dictates. We are not yet a Third World nation dependent on the IMF.”

Why Not? Whence comes the confidence? Pat’s courage and convictions are not shared in Washington and on Wall Street. (Or on “Main Street,” for that matter.)

Update II (Nov. 15): The G-20 Summit, where G stands for Golem, has concluded. Some humor has been injected into this solemn affair, as the central planners’ affirmed “their commitment to free market principles.” Another thing to tickle the funny bone: the commitment these counterfeiters made to “promoting integrity in financial markets.” Nothing about integrity in government. I guess that’s a contradiction in terms.