Home » Posts tagged 'mn gordon' (Page 7)

Tag Archives: mn gordon

Seeing the Light

It has been said that “the definition of insanity is doing the same thing over and over again and expecting different results.” No one quite knows who first uttered this remark; it has been attributed to Albert Einstein, Mark Twain, Benjamin Franklin, and has even been said to be an Ancient Chinese Proverb. What is known is that this cliché has been repeated over and over again so often that its mere mention substantiates its own definition.

Several of the ladies and gentlemen above wanted to let us know that they’re merely eccentric, and if they want to do things all over again and again and again, we should let them…

Nonetheless, we repeat it again because it’s particularly fitting to today’s deliberations. Here we begin with a look back to the past in search of edification. For the miscalculations of the past continue to dictate the insanity of the present.

Many years ago, a bright minded and well intentioned Italian pursued a devious undertaking. His efforts aimed to conceive a pure theory of a socialist economy. His objective was to take the sordid teachings of Marx and pencil out the mechanics of how a centrally planned economy could bring a life of security and abundance for all. What follows is an approximation of how the dirty deed went down.

In 1908, Italian economist Enrico Barone suffered an abstraction. One late night he skipped a bite of his meatballs and marinara, and gazed into the outer frontiers of deep space. Looking around, he couldn’t believe his eyes. For in this far corner of absolute darkness, he saw something truly amazing. Out in the distant reaches of nothingness, peering into a black hole, he saw not the dark. Rather, he thought he saw the light.

…click on the above link to read the rest of the article…

Hell To Pay

April 17, 2017

Hell To Pay

Behind the Curve

Economic nonsense comes a dime a dozen. For example, Federal Reserve Chair Janet Yellen “think(s) we have a healthy economy now.” She even told the University of Michigan’s Ford School of Public Policy so earlier this week. Does she know what she’s talking about?

Somehow, this cartoon never gets old…

If you go by a partial subset of the ‘official’ government statistics, perhaps, it appears she does. The unemployment rate is at 4.5 percent, which is considered full employment. What’s more, inflation is ‘reasonably close’ to the Fed’s 2-percent inflation target. But what does this mean, really?

According to Fed Chair Yellen, it means that now’s the time to tighten up the nation’s monetary policy.

Behold this display of awesomeness, citizen. Doesn’t it prove that central planning “works” after all? Unfortunately the ointment is never entirely fly-free, especially when one is pondering statistical aggregates – click to enlarge.

By now you’ve likely seen this upcoming – choice – quote from Yellen. Nonetheless, we can’t resist repeating its remarkable idiocy. For Yellen, who was in the greater Detroit metropolitan area, was kind enough to humor us all with a nifty automotive analogy to explain how to go about normalizing monetary policy. Here Yellen elaborates with a variety of technical terms:

“Whereas before we had our foot pressed down on the gas pedal trying to give the economy all the oomph we possibly could, now allowing the economy to kind of coast and remain on an even keel – to give it some gas but not so much that we are pressing down hard on the accelerator – that’s a better stance of monetary policy. We want to be ahead of the curve and not behind it.”

…click on the above link to read the rest of the article…

March to Default

March 27, 2017

March to Default

Style Over Substance

“May you live in interesting times,” says the ancient Chinese curse. No doubt about it, we live in interesting times. Hardly a day goes by that we’re not aghast and astounded by a series of grotesque caricatures of the world as at devolves towards vulgarity. Just this week, for instance, U.S. Representative Maxine Waters tweeted, “Get ready for impeachment.”

Well, Maxine Waters is obviously right – impeaching the president is an urgent task of the utmost importance. As everybody knows, he is best friends with Vladimir Putin, the shirtless barbarian who rules the Evil Russian Empire (they were seen drinking kompromat together in Moscow, a vile Russian liquor that reportedly tastes a bit like urine. Senator McCain has the details on that story). And as Maxine Waters has just disclosed, Putin’s armies are recently advancing into Korea! We cannot let this stand, or he’ll invade Kekistan next (note that he already controls Limpopo and Gabon). Who knows where it will end?

We assume this was directed at President Trump. But what Waters meant by this was sufficiently vague. There was no guidance as to how President Trump should be getting ready.

Should he pack his bags? Should he double knot his shoelaces? Should he say a prayer? Naturally, the specifics don’t matter in the darnedest. Rather, these days, it’s style over substance in just about everything. This is why Waters – a committed moron – rises to the top of class in the lost republic of the early 21st century.

At the same time, the individual has been displaced by the almighty aggregate. Economists pencil out the unemployment rate, with certain omissions, as if it represents something meaningful. Then lunkheads like Waters repeat it as if it’s the gospel truth.

Somehow, through all of this, our representatives are oblivious to what’s really going on; that the U.S. government is just months away from a possible default.

…click on the above link to read the rest of the article…

The Long Run Economics of Debt Based Stimulus

March 19, 2017

The Long Run Economics of Debt Based Stimulus

Onward vs. Upward

Something both unwanted and unexpected has tormented western economies in the 21st century. Gross domestic product (GDP) has moderated onward while government debt has spiked upward. Orthodox economists continue to be flummoxed by what has transpired.

What happened to the miracle? The Keynesian wet dream of an unfettered fiat debt money system has been realized, and debt has been duly expanded at every opportunity. Although the fat lady has so far only cleared her throat (if quite audibly, in 2008) and hasn’t really sung yet, it is already clear that calling this system careening toward a catastrophic failure.

Here is the United States, since the turn of the new millennium (starting January 1, 2001) real GDP has increased from roughly $10.5 trillion to $18.6 trillion, or 77 percent. Over this same time government debt has spiked nearly 250 percent from about $5.7 trillion to $19.9 trillion. Obviously, some sort of reckoning’s in order to bring the books back into balance.

Throughout this extended episode of economic and financial discontinuity, the government’s solution to jump-starting the economy has been to borrow money and spend it. Thus far, these efforts have succeeded in digging a massive hole that the economy will somehow have to climb out of. We’re doubtful such a feat will ever be attained.

In short, additions of government debt over this time have been at a diminishing return. Specifically, at the start of the new millennium the debt to GDP ratio was about 54 percent. Today, it’s well over 100 percent.

US GDP and US federal debt, indexed (1984 = 100). Mises noted back in the late 1940s already that “it is obvious that sooner or later all these debts will be liquidated in some way or other, but certainly not by payment of interest and principal according to the terms of the contract.”

…click on the above link to read the rest of the article…

A Mess 30 Years in the Making

March 5, 2017

A Mess 30 Years in the Making

Promises of Slop

“We have assembled a best-in-class team of policy advisors to drive President Trump’s bold plan for job creation and economic growth.”

– Gary Cohn, Chief Economic Advisor to President Trump

The art and science of spending other people’s money is not an occupation suited to just anyone. Rather, it’s a skill reserved for the professional world-improver. To be successful, one must act with a zealous devotion to uplifting the down and out, no matter the cost.

Donald Trump’s chief economic advisor Gary Cohn – as some observers have noted, he represents one of the factions in the wider circle of economic advisors (there are many advisors who are not members of an official body such as the Council of Economic Advisors, but reportedly have the president’s ear). This is considered problematic, or rather confusing, on the grounds that in some cases the views of these advisors appear to be diametrically opposed. The question is whose views will eventually prevail. Photo credit: Kena Betancur / AFP / APA

Lawyers, bankers, economists, and government philosophers with fancy resumes, who attended fancy schools. These are the devoted fellows who comprise President Trump’s team of economic policy advisors. Moreover, these are the chosen associates who are charged with bringing Trump’s economic vision to fruition. Are they up to the task?

Only time will tell. But, already, it is quite evident that Trump’s economic policy advisors have their work cut out for them. During Trump’s speech to Congress on Tuesday night, he called for more jobs, more education, more military, and more affordable health insurance.

By all accounts the speech sounded delightful. Promises were made to spread the government’s slop far and wide. Trump pledged offerings that just about anyone and everyone – with the exception of grumpy face Bernie Sanders – could stand behind and applaud.

…click on the above link to read the rest of the article…

The Art and Pseudoscience of Monetary Policy

February 17, 2017

The Art and Pseudoscience of Monetary Policy

Definitely Maybe

Everyone’s got a plan for sale these days. In fact, there are so many plans out there we cannot keep up with them all. Eat celery sticks and lose weight. Think and grow rich. Stocks for the long run. Naturally, plans like these run a dime a dozen.

All social engineers who get to impose their harebrained schemes on the rest of the world through the coercive powers of the State, as well as all armchair planners regaling us with their allegedly “better plans”, should have this highly perceptive quote by Robert Burns tattooed on their foreheads. In case you’re wondering, “gang aft a-gley” is slightly old English for “usually turn out to be total crap”. The second part that points out that as a rule, we get nothing but grief and pain instead of promised joy, is applicable to interventionism in general; the so-called “unintended consequences” of interventions almost always turn out to be their main feature and defining characteristic.

Good plans, however, are scarcer than hen’s teeth. You can’t possibly see them no matter how closely you look. They simply don’t exist. This was the case on Capitol Hill this week, where money and politics collided at the biannual monetary policy gala.

Despite all the hubbub, no good plans were offered. What’s more, on first glance, no bad plans were offered too. When Fed Chair Janet Yellen’s testimony was finally over, Congress knew less about the Fed’s plans than when it started.

For instance, when asked if the Federal Reserve would raise rates next month, Fed Chair Janet Yellen replied, “I can’t tell you exactly which meeting it would be. I would say every meeting is live.”

What does this mean, really? Does it mean she’ll definitely maybe raise rates? Does it mean she absolutely ‘might could’ increase them? Only time will tell.

…click on the above link to read the rest of the article…

Don’t Blame Trump When the World Ends

February 4, 2017

Don’t Blame Trump When the World Ends

There was, indeed, a time when clear thinking and lucid communication via the written word were held in high regard. As far as we can tell, this wonderful epoch concluded in 1936. Everything since has been tortured with varying degrees of gobbledygook.

The fall from grace was triggered by the 1936 publication of John Maynard Keynes’ The General Theory of Employment, Interest and Money. The book is rigorously indecipherable. What’s more, it has the ill-effect of making those who read it dumber.

Nonetheless, politicians and establishment economists remain enamored with Keynes’ gibberish. For it offers academic rationale for governments to do what they love to do most – borrow money and spend it on inane programs. In particular, Keynes advocated filling bottles with money and burying them in coalmines for people to dig up as a way to end unemployment. Somehow, this public works egg hunt would make everyone rich.

Over the years this reasoning has inspired countless government stunts to save the economy from itself. Not long ago, Keynes devotee, Paul Krugman, took this logic and ran with it to the outer limits of deep space. In the process, he seems to have lost his mind.

According to Krugman, the proper way to propel an economic growth chart up and to the right is to borrow massive amounts of money and spend it preparing for an alien invasion. Naturally, it takes a Nobel Prize winning economist to come up with such nonsense.

Better Markets

Unfortunately, Keynes’ drivel became the archetypical for illogical economic thought, and still infects economic discourse to this day. You can hardly browse the headlines of Yahoo finance without your eyeballs being lacerated by it.

…click on the above link to read the rest of the article…

Doomed to Failure

October 8, 2016

Doomed to Failure

Larded Up and Larded Over

We’ve been waiting for the U.S. economy to reach escape velocity for the last six years. What we mean is we’ve been waiting for the economy to finally become self-stimulating and no longer require monetary or fiscal stimulus to keep it from stalling out. Unfortunately, this may not be possible the way things are going.

fischers As Milton Jones once revealed: “A month before he died, my grandfather covered his back in lard. After that, he went downhill quickly” (his other grandfather drowned in a bowl of cheerios). A similar fate may await the larded up US economy.

In short, the U.S. economy may never reach “escape velocity” unless it is first allowed to crash. It has been too larded up and larded over with debt for any real sustainable growth to take root. More evidence, to this effect, was revealed this week.

For example, the International Monetary Fund (IMF) anticipates the U.S. economy will expand by just 1.6 percent this year. That’s about one percent less than last year’s estimated growth. In other words, the rate of economic growth in the United States isn’t increasing; rather, it’s decreasing.

According to the IMF, “the slower-than-expected activity comes out of the ongoing oil industry slump, depressed business investment and a persistent surplus in business inventories.” Could this be the twilight of the weakest economic recovery in the post-World War II era? Only time will tell, for sure.

But anyone with an ear to the ground and a nose to the grindstone knows the answer to that question. Business ain’t booming. Moreover, it has become near impossible for corporations to grow their earnings.

…click on the above link to read the rest of the article…

Why the Fed Destroyed the Market Economy

September 17, 2016

Why the Fed Destroyed the Market Economy

What Have You Done for Me Lately?

Swing voters are a fickle bunch. One election they vote Democrat. The next they vote Republican. For they have no particular ideology or political philosophy to base their judgment upon.

swing-voter The primacy of the wallet.

They don’t give a rip about questions of small government or big government. Nor do they have any druthers about the welfare or warfare state.

In effect, they really don’t care. What’s important to the swing voter is much simpler. In fact, it can be boiled down to the following essential question. What have you done for me lately?

The answer to this question, of course, comes back to money. As far as the swing voter’s concerned, if their brokerage account’s growing they vote the incumbent party. If it’s shrinking, they vote the challenger party.

It doesn’t matter if the source of the stock market inflation is a fraud. Nor does it matter that a stock market correction will help reestablish financial markets on a firmer foundation.

In this respect, the mere trajectory of the swing voter’s portfolio tells them everything they need to know about whom to vote for.

Truth and Denial

Earlier this week Republican Presidential Candidate Donald Trump took issue with the Federal Reserve’s stock market inflation games.

He remarked on CNBC that the Fed has created a “false stock market,” and that Fed Chair Janet Yellen and central bank policymakers are very political, and should be “ashamed” of what they’re doing to the country, “The Fed is not even close to being independent.”

Certainly, the idea that the Federal Reserve influences elections is not a novel concept. For this reason, at the recent central banker’s summit in Jackson Hole, Wyoming, former Democrat Congressman, and overall repulsive being, Barney Frank, told the Fed, “Don’t raise rates before election.”

cartoon-my-impact-alg-600 …click on the above link to read the rest of the article…

Guided By Nonsense

June 4, 2016

Guided By Nonsense

“Read the directions and directly you will be directed in the right direction.” — Lewis Carroll

U.S. consumers are at it again. After a seven year hiatus they’re once again doing what they do best. They’re buying stuff.

According to the Commerce Department, personal consumption expenditures (PCE), which is the primary measure of consumer spending on goods and services in the U.S. economy, increased $119.2 billion in April. That marks an increase of 1 percent, and is the biggest one month increase since August 2009…nearly seven years ago. Indeed, this is quite an achievement.

The consumer, you know, is the primary engine of U.S. economic growth. Without consumption GDP doesn’t go up; rather, it goes down. Moreover, in a debt based money system, when GDP goes down the whole financial debt structure breaks down.

We don’t condone it. Certainly we’d prefer an honest hard money system where savings and investment drives growth as opposed to borrowing and spending. But our preference has no bearing on reality in this matter.

Still, given the vast array of pretense inherent to a debt based money system, when we hear that PCEs increased by the largest margin in nearly seven years, we take a keen interest. Naturally, we want to know what’s going on. Namely, we ask, where’s the money coming from?

Where’s the Money Coming From?

Middle class incomes, the last we recall, scored a big fat rotten goose egg over the last decade. By this we mean incomes haven’t gone up. To the contrary, they’ve going down.

Our understanding of this unfortunate situation isn’t based on anecdotes we overheard at the corner donut shop. Nor is it based on experiences shared by the crusty fellows casting their lines off Belmont Veterans Memorial Pier. Instead, we have hard evidence and solid proof. Specifically, we point to the distilled findings of Pew Research released earlier this month.

…click on the above link to read the rest of the article…

The Cure is Worse than the Disease

May 7, 2016

The Cure is Worse than the Disease

A Week to Remember

Today we look back to the recent past with singleness of purpose. Context and edification for the present economy is what we’re after. We have questions…

How come the recovery has been so weak? Why is it that, nearly seven years after the official end of the Great Recession, the economy’s still mired in a soft muddy quagmire? Squinting, focusing, and refocusing, there’s one particular week that rises above all others.

Hank the scaremonger – in meetings behind closed doors, he threatened Congressmen with financial apocalypse and even martial law if they didn’t hand over $700 billion in tax payer money with essentially no oversight. This has been independently confirmed by several Congressmen. Griffin’s “The Creature from Jekyll Island” is often decried as “conspiracy theory” by establishment shills, but it inter alia contains an eerie prediction of practically everything that eventually happened in 2008.Photo credit: Talks at Google

On Saturday September 20, 2008, Treasury Secretary Hank Paulson delivered a draft of the Troubled Asset Relief Program (TARP) to Congress for review. If you recall, it had been another wild week. On Monday, September 15, after 158 years of operation, Lehman Brothers vanished from the face of the earth…Dick Fuld, “The Gorilla,” be damned.

All week the sky relentlessly fell on financial markets. Even money market funds were in full panic. In fact, a record $169.03 billion of capital had vacated money market funds in the week ended September 17.

That same day, the Wall Street Journal’s headline was, “U.S. to Take Over AIG in $85 Billion Bailout.” On top of that, the Primary Fund broke the buck – falling to $0.97 cents a share. The SEC also went so far as to impose a 10 trading-day ban on short sales of 799 financial stocks.

…click on the above link to read the rest of the article…

The Other Problem with Debt No One is Talking About

April 4, 2016

The Other Problem with Debt No One is Talking About

Nearly 7 years have elapsed since the official end of the Great Recession. By now it’s painfully obvious the rising tide of economic recovery has failed to lift all boats. In fact, many boats bottomed out on the rocks in early 2009 and have been taking on water ever since.

Last week, for instance, it was reported that U.S. credit card debt topped $714 billion in the third quarter of 2015. That’s up $34 billion from the year before. Shouldn’t the economic recovery allow consumers to pay down their debts?

Indeed, it should, if only the economic recovery was the result of real, economic growth. To the contrary, the recovery has been faux growth driven by cheap Fed credit and financial engineering. Mutual increases in prosperity haven’t occurred.

In particular, those outside the financial services business, and other bubble industries, like government lobbyists, have largely missed out on any increase in income or living standard. Good paying professional jobs that vaporized during the downturn have been replaced with low paying service jobs. Consumers have used credit card debt to pick up the slack.

Unfortunately, this short term solution sets up consumers for pain in the future. At some point, as debt increases faster than incomes, the ability to pay down the principle becomes near impossible. Even making the minimum payment becomes more and more difficult as new debt is added to the burden each month.

Playing with Fire

“We’re playing with fire now,” said Odysseas Papadimitriou, chief executive of credit statistics and analysis site CardHub. “Either an unexpected economic downtown or the continuation of current spending and payment trends could be enough to unleash an avalanche of defaults.”

…click on the above link to read the rest of the article…

The Other Problem with Debt No One is Talking About

April 1, 2016

The Other Problem with Debt No One is Talking About

Faux Growth Recovery

Last week, for instance, it was reported that U.S. credit card debt topped $917 billion in the fourth quarter of 2015. That’s up $71 billion from the year before. Shouldn’t the economic recovery allow consumers to pay down their debts?

Annual increase in credit card debt load….via cardhub (more data here) – click to enlarge.

Unfortunately, this short term solution sets up consumers for pain in the future. At some point, as debt increases faster than incomes, the ability to pay down the principal becomes near impossible. Even making the minimum payment becomes more and more difficult as new debt is added to the burden each month.

Playing with Fire

…click on the above link to read the rest of the article…

Deficit Spending is Not the Answer

March 28, 2016

Deficit Spending is Not the Answer

The Growing Chorus for Fiscal Stimulus

Central bankers and monetary adherents the world over are united in the common grouse that fiscal policy is lacking. Grander programs of direct stimulation are needed, they grumble. Monetary policy alone won’t cut the mustard, they gripe.

1-global debt Global debt-to-GDP ratios (excl. financial debt). Obviously, it is not enough. More debt is needed, so we may “stimulate” ourselves back to prosperity.

Hardly a week goes by where the monetary side of the house isn’t heaving grievances at the fiscal side of the house. The government spenders aren’t doing their part to boost the GDP, proclaim the money printers. Greater outlays and ‘structural reforms’ are needed to spur aggregate demand, they moan.

For example, last month, just prior to the G20 gala, the Organization for Economic Cooperation and Development (OECD) asserted that “Getting back to healthy and inclusive growth calls for urgent policy response, drawing on monetary, fiscal, and structural policies working together.”

The OECD report also stated that “The case for structural reforms, combined with supporting demand policies, remains strong to sustainably lift productivity and the job creation.”

4295203312_1ec36291bc_b The Chateau de la Muette in Paris – this magnificent building that once housed members of France’s nobility nowadays ironically serves as the headquarters of the socialistic central planning bureaucracy known as the OECD. This parasitic carbuncle is high up on the list of globalist institutions that must be considered an extreme threat to economic freedom and progress. Photo via oecd.org

Several weeks later, on March 10, European Central Bank President Mario Draghi offered a similar refrain. At the ECB press conference Draghi remarked that “all [Eurozone] countries should strive for a more growth-friendly composition of fiscal policies.”

Then, wouldn’t you know it, former Fed Chairman Ben Bernanke also added his alto vocals to the chorus. Last week, in his Brookings Institution blog, he wrote:

…click on the above link to read the rest of the article…

Alan Greenspan’s Pickled Economy

March 6, 2016

Alan Greenspan’s Pickled Economy

Winter of Discontent

Former Federal Reserve Chairman Alan Greenspan resurfaced this week. We couldn’t recall the last time we’d heard from him. But, alas, the old fellow’s in desolate despair.

Alan-Greenspan Unexpectedly rising from the crypt: Alan Greenspan Photo credit: AP

On Tuesday, for instance, he told Bloomberg he hasn’t been optimistic for “quite a while.” Obviously, this is in contrast to the perennial Goldilocks attitude he had during the 1990s. So what is it that has the Maestro playing a low dirge?

China, the dollar, Dodd-Frank, and associated unknowns are all part of his negative outlook. But the long winter of his discontent is something else. Greenspan said he “won’t be [optimistic] until we can resolve entitlement programs.”

“Nobody wants to touch [entitlements]. But it is gradually crowding out capital investment and that is crowding out productivity and that is crowding out the standards of living,” said Greenspan.

Indeed, funding entitlement programs is becoming more burdensome by the year. As a greater percentage of the economy’s GDP goes toward entitlement programs, a lesser percentage goes towards capital investment. The effect of this negative feedback loop, as Greenspan infers, is quite simple.

ramirez-entitlement-cartoon An enticing lure…. Cartoon by Michael Ramirez

Less capital investment leads to lower productivity. Lower productivity leads to slower GDP growth. Slower GDP growth leads to an economy that can’t keep pace with entitlement programs. Thus, an even smaller percentage of GDP is, in turn, available for capital investment…to propel future growth. And so on, and so forth.

A 2012 forecast of entitlement spending by the Heritage Foundation. This seems not exactly sustainable – click to enlarge.

What Drives Economic Growth?

Certainly, this is a basic insight. But perhaps Greenspan is on to something much larger than just the issue of entitlement programs. From what we can tell he’s getting at the question of economic growth. Namely, what drives it?

…click on the above link to read the rest of the article…

Tag Archives: mn gordon

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

Where’s the Money Coming From?

Post navigation

Latest Posts