Category Archives: Economics

Underestimating Them and Overestimating Us, by Jim Quinn

People, including SLL, have been saying a cataclysmic crisis is coming for years. It hasn’t happened yet, but that doesn’t make them wrong, just early. From Jim Quinn at theburningplatform.com:

“Do not underestimate the ‘power of underestimation’. They can’t stop you, if they don’t see you coming.” ― Izey Victoria Odiase

Image result for bernanke, yellen, powell

During the summer of 2008 I was writing articles a few times per week predicting an economic catastrophe and a banking crisis. When the biggest financial crisis since the Great Depression swept across the world, resulting in double digit unemployment, a 50% stock market crash in a matter of months, millions of home foreclosures, and the virtual insolvency of the criminal Wall Street banks, my predictions were vindicated. I was pretty smug and sure the start of this Fourth Turning would follow the path of the last Crisis, with a Greater Depression, economic disaster and war.

In the summer of 2008, the national debt stood at $9.4 trillion, which amounted to 65% of GDP. Total credit market debt peaked at $54 trillion. Consumer debt peaked at $2.7 trillion. Mortgage debt crested at $14.8 trillion. The Federal Reserve balance sheet had been static at or below $900 billion for years.

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The World’s Least-Free Countries Reveal Just How Much “Socialism Sucks”, by David Gordon

David Gordon reviews a book with a self-explanatory title. From Gordon at mises.org:

[Socialism Sucks: Two Economists Drink Their Way Through the Unfree World. By Robert Lawson and Benjamin Powell.  Regnery Publishing, 2019. 192 pages.]

Robert Lawson and Benjamin Powell are well-known free market economists, and they do not look with favor on a disturbing trend among American young people. “In the spring of 2016,” they tell us, “a Harvard survey found that a third of eighteen-to twenty-nine year olds supported socialism. Another survey, from the Victims of Communism Memorial Foundation, reported that millennials supported socialism over any other economic system.” (p.8)

Unfortunately, the young people in question have little idea of the nature of socialism. Lawson and Powell would like to remedy this situation, but they confront a problem. Ordinarily, one would urge students to read Hazlitt’s Economics in One Lesson, Mises’s “Economic Calculation in the Socialist Commonwealth,” and similar classic works, in order to understand the basic facts about the free market and socialism, but the millennials are unlikely to do so. One must attract their attention. What can be done?

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Following the Greater Depression on eBay, by Jeff Thomas

Ebay is probably as good or better an economic indicator than anything the government statistics mills churn out. From Jeff Thomas at internationalman.com:

I’m often asked how I see the warning signs that allow me to gauge the timing of the coming economic crisis.

Although careful research into an economy can result in a relatively accurate prognostication, the timing is always the most difficult aspect to pinpoint.

However, a good indicator is to track how others within the economy are surviving the situation. This tells us much more than their questionable claims that they’re doing just fine.

One very telling way to do this is to follow their extravagances. In prosperous times, they’re likely to buy expensive toys. Then, as they increasingly feel the pinch, they’ll sell off those toys first, before resorting to selling their more essential possessions. For example, someone will sell off his beloved sports car before he sells the more essential family SUV. Or he’ll get rid of the vacation house before he puts his primary home on the market.

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An Inflationary Depression, by Alasdair Macleod

The current times bears some ominous parallels to the 1929-1932 period. From Alasdair Macleod at goldmoney.com:

Financial markets are ignoring bearish developments in international trade, which coincide with the end of a long expansionary phase for credit. Both empirical evidence from the one occasion these conditions existed in the past and reasoned theory suggest the consequences of this collective folly will be enormous, undermining both financial asset values and fiat currencies.

The last time this coincidence occurred was 1929-32, leading into the great depression, when prices for commodities and output prices for consumer goods fell heavily. With unsound money and a central banking determination to maintain prices, depression conditions will be concealed by monetary expansion, but still exist, nonetheless.

Introduction

The unfortunate souls who are beholden to macroeconomics will read this article’s headline as a contradiction, because they regard inflation as a stimulant and a depression as the consequence of deflation, the opposite of inflation.

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Greta Thunberg To Poor Countries: Drop Dead, by Ryan McMaken

Greta Thunberg is no humanitarian. From Ryan McMaken at mises.org:

On Monday, celebrity climate activist Greta Thunberg delivered a speech to the UN Climate Action summit in New York. Thunberg demanded drastic cuts in carbon emissions of more than 50 percent over the next ten years.

It is unclear to whom exactly she was directing her comments, although she also filed a legal complaint with the UN on Monday, demanding five countries (namely Argentina, Brazil, France, Germany and Turkey) more swiftly adopt larger cuts in carbon emissions. The complaint is legally based on a 1989 agreement, the Convention on the Rights of the Child, under which Thunberg claims the human rights of children are being violated by too-high carbon emissions in the named countries.

Thunberg seems unaware, however, that in poor and developing countries, carbon emissions are more a lifeline to children than they are a threat.

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David Stockman on the Coming Financial Panic and the 2020 Election

When the next financial crisis hits, there won’t be a central bank rescue. From David Stockman at internationalman.com:

International Man: We seem to be near the top of the “everything bubble.” Almost nothing is cheap… anywhere. What are your thoughts on where people should put their money for prudence and for profit?

David Stockman: I would recommend recognizing that the “everything bubble” is the most extreme, exaggerated, severe financial bubble in world history. It will inevitably collapse, and there will be massive losses, even greater than occurred in 2008 and 2001.

So, the first thing is to stay out of the casino. By that, I mean the financial-market stocks, bonds, and everything else.

These markets are so artificial. They’re just chasing what the central banks are doing. There’s no honest price discoveries or supply and demand; nobody’s discounting the future of economic growth, productivity, and investment. You’ve got the chart monkeys, 29-year-old day traders who are in charge of the market.

When the big correction comes, there are going to be massive losses, and the panic will be great. All correlations will go to 1—which means everything will fall: the good, the bad, and the indifferent.

There’s this old saying among traders that when the cops raid the house of ill repute, they carry out the good girls, the bad girls, and the piano player too. That’s essentially what’s going to happen.

You can’t be saved by picking high-yielding stocks or conservative blue chips or stocks that provide daily necessities like food—it doesn’t matter. Everything’s overpriced right now because of this huge financial distortion.

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Socialism Is Destroying America, by Jacob G. Hornberger

The destruction has been a bipartisan effort; both parties love socialism. From Jacob G. Hornberger at fff.org:

Leave it to the progressives (i.e., liberals or leftists) to point out, indirectly, that conservatives and Republicans are as devoted to socialism as leftists are. The point is well made in an article by Tim Butterworth, a former Democratic Party legislator in New Hampshire.

 

The title of the article pretty much says it all: “’Socialism’ Made America Great.” That’s, of course, the standard mindset of liberals/progressives/ Democrats. But it’s also the standard mindset of conservatives/Republicans! The difference is that the left admits it, proudly, while the right denies it.

Butterworth uses several examples to buttress his point. The big example he uses is the Interstate Highway System, which, he correctly points out, was one gigantic socialist public-works project — the biggest in the history of the world. He points out that it cost $500 billion in today’s dollars, with 90 percent coming from the federal government and 10 percent coming from the states.

Butterworth, of course, has it wrong about socialism making America great, but at least he has a grip on reality. He understands that the Interstate Highway system was a giant socialist project, and he’s proud of that fact. He is also happy to be called a socialist for supporting it.

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