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What Is To Be Done?

March 4, 2017

What Is To Be Done?

The question in the title is V.I. Lenin’s question. His answer was to create a revolutionary “vanguard” to spread revolutionary ideas among the workers, the economic class that Karl Marx had declared to be the class rising to the ascendency of political power. Finally, democracy, frustrated by upper class interests in its earlier manifestations, would become reality. The workers would rule.

Given the presence of evil and human failing, it did not work out in that way. But Lenin’s question remains a valid one. Americans whose economic life and prospects for their children have been destroyed by the offshoring of American manufacturing and tradable professional skills jobs, such as software engineering, answered the question by electing Donald Trump.

The Americans, dispossessed by the offshoring corporations, elected Trump, because Trump was the only American running for a political office who called attention to the problem and declared his intention to fix it.

By standing up for Americans, Trump alienated the global corporations, their executives and shareholders, all of whom benefit from stealing the economic life of Americans and producing abroad where labor and regulatory costs are lower. Neoliberal junk economists describe this labor arbitrage, which reduces the real incomes of the American labor force, as the beneficial working of free trade.

These offshoring firms not only have destroyed the economic prospects of millions of Americans, but also have destroyed the payroll tax base of Social Security and Medicare, and the tax base of local and state governments, with the consequence that numerous pension systems are on the verge of failure. The New York Teamsters Road Carriers Local 707 Pension Fund has just failed. This failure, experts predict, is the beginning of a tsunami that will spread into municipal and state pension systems.

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

Out of the mouths of babes….

January 24, 2016

Out of the mouths of babes…. 

Parents will tell you the most difficult questions to answer sometimes come from their children.

Here are some apparently innocent questions to ask of economists, journalists, financial commentators and central bankers, which are designed to expose the contradictions in their economic beliefs. They are at their most effective using a combination of empirical evidence and simple, unarguable logic. References to economic theory are minimal, but in all cases, the respondent is invited to present a valid theoretical justification for what invariably are little more than baseless assumptions.

A pretence of economic ignorance by the questioner is best, because it is most disarming. Avoid asking questions couched in anything but the simplest logical terms. You will probably only get two or three questions in before the respondent sees you as a trouble-maker and refuses to cooperate further.

The nine questions that follow are best asked so that they are answered in front of witnesses, adding to the respondent’s discomfort. Equally, journalists and financial commentators, who make a living from mindlessly recycling others’ beliefs, can be great sport for an interrogator. The game is simple: we know that macroeconomics is a fiction from top to bottom, the challenge is to expose it as such. If appropriate, preface the question with an earlier statement by the respondent, which he cannot deny; i.e. “Last week you said that…”

Commentary follows each question, which is in bold.

1. How do you improve economic prospects when monetary policy destroys wealth by devaluing earnings and savings?

Central bankers and financial commentators are always ready to point out the supposed merits of monetary expansion, but are never willing to admit to the true cost. You can add that Lenin, Keynes and Friedman agreed that debasing money destroyed wealth for the masses, if the respondent prevaricates. Often politicians will duck the question with the excuse that monetary policy is delegated to the central bank.

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

Greece illustrates 150 years of socialist failure in Europe

June 25, 2015

Greece illustrates 150 years of socialist failure in Europe

Greece cannot pay its debts…ever. Nor can several other members of the European Union. That’s why Europe’s elite are loath to place Greece in default. If Greece is allowed to abrogate its debts, why should any of the other debtor members of the EU pay up? The financial consequences of massive default by most of the EU members is hard to predict, but it won’t be pretty. Europe has built a financial house of cards, and the slightest loss of confidence will bring it crashing down.

The tragedy of Europe has socialism at its core. Europe has flirted with socialism since the late nineteenth century. Nineteenth century Bismarckian socialism produced two world wars. Leninist socialism slaughtered and enslaved hundreds of millions until it collapsed, mercifully without a third world war. Yet, not to be deterred, in the ashes of World War II Europe’s socialists embarked on a new socialist dream. If socialism fails in one country, perhaps it will succeed if all of Europe joined a supranational socialist organization. Oh, they don’t call what has evolved from this dream “socialism”, but it is socialism nonetheless.

Socialism will not work, whether in one country, a multi-state region such as Europe, or the entire world. Ludwig von Mises explained that socialism is not an alternative economic system. It is a program for consumption. It tells us nothing about economic production. Since each man’s production must be distributed to all of mankind, there is no economic incentive to produce anything, although there may be the incentive of coercion and threats of violence.

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

Lenin Was Right …

March 18, 2015

Lenin Was Right …

Bear Markets Do Happen

Today… the second of the speech about the end of the world we recently gave at Doug Casey’s La Estancia de Cafayate. (You can catch up on the first part here.) As Yogi Berra would say, America is going to come to a fork in the road… and it’s going to take it.

Right now, the Fed isn’t as aggressive as the European Central Bank (which is set to pump €1.2 trillion into the financial markets by way of its QE program) or as innovative as the Bank of Japan (which is buying stock market funds as well as bonds by way of its QE).

Valuations are at extreme highs on Wall Street. Take Warren Buffett’s favorite measure – market cap to GDP. With an eight-month exception at the height of the dot-com boom (and you know what happened next), the value of all outstanding S&P 500 shares is the highest it has been relative to US GDP in the last 100 years.

Meanwhile, Deutsche Bank is warning that S&P 500 earnings per share will be flat this year when compared with 2014. Retail sales are down about 9% on an annual basis over the past three months. And the US GDP has slowed to an annual rate of just over 1%… with the possibility of a surprise recession on the horizon. Besides, crashes and bear markets happen. This seems as good a time as any.

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

 

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