Ludwig von Mises - "The Problems of Inflation"

Presented at FEE on 3 April 1968. [1:07:18] --- worth remembering that this was delivered even before the gold convertibility of the US$ was suspended by the Nixon administration

the problem of legislative powers usurped by unelected bureaucrats

The Road To A Downgrade (WSJ)

The Road To A Downgrade (WSJ)

a short recap of the salient facts, and the simple meaning thereof, from the Journal editorial team

"We told you so" the Austrian demolition of neo-Keynesian ad hockery, Gary North (video)

Anti-capitalists: Barbarians at the Gate, Larry Sechrest (video)

Capitalism: A Treatise On Economics - George Reisman

Capitalism: A Treatise On Economics - George Reisman (PDF)

The Anticapitalistic Bias of American Intellectuals - Ludwig von Mises

The Anticapitalistic Bias of American Intellectuals - Ludwig von Mises - Mises Daily

the professional intellectuals, especially of the mediocre kind, gravitate towards direct/indirect employment by the state as a praxeologically rational choice ("benefits" and "security", I hear, are big keywords) as employment by the markets is hazardously related to the quality of results produced by one's intellectual efforts, and the jeopardy of competition measured in those terms

the persistence of caste systems well into the capitalist age cannot be explained by Mises, although his observations are completely accurate, because what he saw was the practical application of the idea in "secure the fruits of liberty to ourselves and for our posterity", whereby the perpetuation or (capitalistically inevitable) annihilation of the caste system is a matter entirely reserved to the volition of those indicated by "ourselves" and "our posterity" or, in other words, it is entirely up to the signatories of the constitution and their offspring to admit of any amendment to the definition of "ourselves" and "our posterity", only from which would then result the swift dismantling of the caste system in favor of a capitalistically rational society of high individual mobility and low information asymmetry - such a society, however, will put into rapid obsolescence ideas and philosophies (like eugenics) that derive from the false conception called "race", along with all other endogamous hierarchies that are predicated on unearned wealth secured by the application of state force, in defiance of nature's own distribution of human abilities

US Hubris and the Destruction of the Middle Class

America's economic system, which is based upon debt and Federal Reserve-generated inflation, benefits a chosen few while destroying the middle class.

"Since the supposed end of this economic recession in late 2009, the number of people added to the food stamp rolls has increased by 8 million. The annual cost for this program will reach $70 billion this year, up from $33 billion in 2007. If the economy is recovering and people are voluntarily leaving the workforce, why have the number of people on food stamps increased by 22% since the official start of the recovery? Why does the number of people going on food stamps go up every month? The answer is that there has been no economic recovery for the average American. Wall Street bankers and the ultra-wealthy elite are the only people who have experienced a recovery."

Gold ironically hits new record on 78th anniversary of FDR's infamous ban

April 5, 1933: A day that will live in infamy

the US$1450 level taken out by the gold bulls - another big wave coming up? can't argue against it, really can't...

our central banker has "no idea" about gold, by his own admission, an admission made with the typical keynesian arrogance, and without a trace whatsoever of shame or remorse deriving from having to reveal such stunning ignorance about money and its' history! personally, I found it *the* seminal moment of the whole darned mess, illuminating in a single, astonishing statement how preposterous the field of professional economics today really is, and how pathetic the thrall in which it holds professional politicians and media intellectuals alike

meanwhile, the US$ struggles mightily to retake the 76 level - another slide to new 52-week lows coming up? can't argue against it, really can't...

UPDATE

Aden sisters bullish on bullion (April 6, 2011, 11:17 a.m. EDT )

Scary interest burden on federal debt... the grinding sound is the economy downshifting

Commentary: Federal government is in a tight spot

"It’s in a very tight spot.

Reassuring endnote: we’ve been around long enough to remember charting similarly frightening trends in the late 1970s and 1980s. It turned out these trends can be reversed surprisingly quickly by economic growth.

But where is economic growth coming from now?"

one answer is being given here,  forecasts for U.S. economic growth cut again

"Battered by poor weather and surging gas prices, the U.S. economy likely grew slower in the first three months of 2011 compared to the end of 2010, according to revised estimates of forecasters.

Over the past few days more than a dozen forecasters have chopped estimates for the first quarter. As a result, the MarketWatch survey of economists now puts the projected rate of growth at 2.4%, down from 2.8% just a week earlier and from 3.5% when the quarter began"

Exports not boosted by weak US$ - buyers expect more weakness?

hmmm, the US$ weak as heck, but exports still down... meanwhile, consumers feel the $4+ gas squeeze

Why Is Unemployment So High? - Robert P. Murphy - Mises Daily

Why Is Unemployment So High? - Robert P. Murphy - Mises Daily

• Resources were misallocated during the boom period. In the standard Austrian theory of the business cycle, the boom period leads entrepreneurs to start too many long-term projects, for which there are insufficient real savings. The underlying capital structure of the economy becomes distorted, and it takes time for market forces to clean up the mess after the bubble pops. For certain pockets of the labor force, the "optimal" thing to do is wait it out. (See my "sushi article" for a simple numerical example of how this all can play out.)

  In some respects this process is what Keynesians interpret as a "fall in aggregate demand," when businesses and consumers come to believe they are on an unsustainable trajectory and slam on the brakes. Of course, only the Austrians recognize that the boom really is unsustainable, whereas the Keynesian efforts to prop up spending only perpetuate the problem and postpone the genuine recovery.

• The government made low-skilled workers artificially more expensive. In July 2009, the federal minimum wage (due to legislation from 2007) rose from $6.55 to $7.25 per hour. Thus, anyone with productivity worth more than $6.55 but less than $7.25 per hour to an employer was turned into a money-losing proposition when he otherwise would have been profitable to hire.

• The government made unemployment more financially attractive. By extending unemployment benefits repeatedly, the federal government has made it easier for job-seekers to maintain unreasonable expectations as they try to find new work.

• The government is making employee health benefits more expensive by an unknown amount. "Obamacare" is leading to rising health-insurance premiums for employers, but on top of that the total impact is unknown, because of court challenges and Republican promises to reform or even repeal the legislation. Consequently, employers have an incentive to postpone long-term hiring decisions until the issues are resolved.

• The Fed is making long-term planning far more difficult. Although most analysts think that the Fed's policies reduce unemployment while possibly risking high price inflation, I submit that the paralysis striking the private sector is partially due to Bernanke's unprecedented actions. If thousands of business owners are stocking up on canned goods and gold, because they think there is a small but definite possibility that the dollar may crash within a few years, that doesn't bode well for expanding employment opportunities.

a vital monetary lesson from the 19th-c Brits

Currency and Banking Reform in 19th-Century Britain

convertibility to specie is vital, yes, and fractional reserve lending also has to be done transparently, if at all, without the illusion that deposits are equally safe in any bank - in other words, two banks operating at 1:5 ratio do not represent identical safety for deposits simply deriving from that ratio, the quality of management is critical

“The Relationship of Monetary Policy and Rising Prices” - Congressional hearing video

“The Relationship of Monetary Policy and Rising Prices” - Congressional hearing 03/17/2011 (windows media)

Is QE3 Ahead? asks Lew Rockwell

Is QE3 Ahead?

the sep '10 rally setting up near 'classical' (it's eerie, really!) wave shapes, with 5-wave steady climbs, 3-wave orderly retraces - if the pattern holds, the retrace gives way to a strong wave 5 up, with the 'real' correction to follow after

all assuming of course that a new bull market started in mar '09, making sep '10 wave 3 of the rally - the bears could read it as wave C of a retrace, and I'm not talking of "permabears", even the Aden sisters are still bearish long term - here's why I'm giving... ummm, 'unorthodox', 'unconventional' weightage to volume because I know "primary dealer" activity is quite capable of moving price action as if its' on rocket fuel! so, I'm watching how the larger herd is reacting, are they buying in? one should be seeing green bars dominating the volume story, instead we still have sub-average volume on rallies and big volume on sell-offs

*too* classical wave shapes + unorthodox herd behavior = reflation roulette wheel is still spinning... you want to watch the insiders, are they buying on the dips? you see, managers and analysts think from quarter-to-quarter, their reference point is their peer group, they can post a 'win' in their column based upon that - you cannot, it is your money, your family, you have to think safety and long term security first

Europe Blinks on Bank Test

Regulators Seen Easing 'Stress' Gauge, Undercutting Effort to Restore Confidence

kinda defeats the whole point, doesn't it? well, it all depends on what you interpret the "point" to be... the cozy collusion of high finance and government, improperly understood as it is by the intellectual opinion makers, is liable to cause more public fury and quite impossible political turmoil

UPDATE:

Europe Buys Breathing Space

"Until the market knows who will bear the ultimate costs of clearing up Europe's debt mess, governments and banks will pay the price in higher borrowing costs. But to get an answer, the market may need to apply yet more pressure."

full proceeding of House FinServ Cmte Bernanke testimony

link to full proceeding of House Fin Serv Cmte Bernanke testimony (windows media)

Barney Frank seems to think that doom-and-gloom predictions that have not materialized disqualify further inputs from those sources, whereas the thing to remember is that the administration had predicted 4% GDP growth early in '10 and 7% late in '10 and the reality was a little over half of that prediction - of course that other wonderful prediction that unemployment would be contained under 8% by the stimulus packages turned out to be a little demon that is still making insulting faces at the genie

whatever recovery there is results from the extraordinary resilience (speaking of the buildup of savings), creativity (speaking of the likes of Apple) and work ethic (speaking of those whose labors have increased from payroll cuts at the firm) of the American people, who have not stopped doing the right thing just because their government is frustrating and infuriating them relentlessly, by refusing to act in alignment with their actions, stubbornly reflating failed ideas the people have rejected, certainly intuitively and increasingly consciously

an example is indefinite suspension of mark-to-market accounting, the institutionalization of the TBTF concept as a "necessity", after having raised it as a "problem", the rather naked cronyism between finance and government that has infuriated the people - an example is the stubborn denial that a massive paradigm shift has occurred in the perception of home ownership and real estate, not to mention labor mobility in the age of globalization and the life options presented, i.e. stimulus designed from past behavior will not have the expected effect (this of course is a perpetual hazard of the Keynesian way)

frustrating savers with artificially low interest rates does not make sense, because the loss of appetite for credit has nothing to with the rates in this present time, and is not going to accelerate significantly for a longish while, whereas acceleration in savings will enable banks to get healthier quicker - as the whole system is restructuring and rebalancing in a typically complex, human way, essentially what I am saying is that as far as employment is concerned getting smaller, local banks lending is the key, not a mountain of capital reserves at the top, and of course I am always also saying, not by "policy", by freedom

link to full proceeding of House Fin Serv Cmte Bernanke testimony (windows media)

$100 crude a "tipping point"?

ominous portents for the nascent "recovery"

the question I suppose is how much of this is Libya reaction, and whether the market really wants to shrug it off - the USO chart sure looks poised for a strong up wave, having completed a pretty classic 3-wave correction, so it could well be a case of Libya simply triggering a psychological number of a well established uptrend, also confirmed by the volume trend - a sharp run up from $100 would almost certainly be a blow to the main street mood, and have rippling effects

Inflation, subsidies, rebates, plantings... Asia in a tizzy

Moves to Soften Blow Could Backfire On Asian Countries, Economists Argue

meanwhile, the supply adjusts to demand, a recipe for unintended consequences brewing as usual...

Food-Price Fall Seen as Plantings Rise

interestingly, I saw this Hayek interview where he recounts his last meeting with Keynes about some of his famous disciples, weeks before his death, in which Keynes distanced himself from Keynesianism and with his usual indefatigable confidence said he would be the most resolute enemy of inflation, "turn public opinion around like that" *snapping fingers* - I just find this stuff hilarious and mind-boggling at the same time, just astonishing

The Federal Reserve Is Causing Turmoil Abroad (WSJ)

Few protesters in the Middle East connect rising food prices to U.S. monetary policy. But central bankers do. 

Mr. Melloan, a former columnist and deputy editor of the Journal editorial page, is author of "The Great Money Binge: Spending Our Way to Socialism" (Simon & Schuster, 2009)