Tag Archives: Economic mismanagement

A Triple-Barreled Gun Is Destroying African Economies: Inflation, Government Debt, and Taxes, by Manuel Tacanho

You can lump the three under the general category of statism. That philosophy always has and always will destroy, not build. From Manuel Tacanho at mises.org:

Today it is conclusive that Africa’s socialist experiments failed, as did the state-led development approach. Not only was the heavily statist approach unable to develop African economies, but it made poverty worse. In this context of repressive state-driven economic systems, most African countries are trapped in a morass of high inflation, high debt, high taxation, high dependency, worsening poverty, food insecurity, chronic mass unemployment, and other pervasive problems.

Barrel One: High Inflation

Africa’s unstable and inflationary currencies have been a significant impediment to economic development because of their destabilizing and impoverishing effect. Organic and lasting economic growth must necessarily be driven by savings, not by debt, deficit spending, or money printing.

In the long run, inflation ends in the breakdown of the currency. This is what happened in Angola in the 1990s and in Zimbabwe in the first decade of the 2000s.

Evidence from the past and present, from developed and developing countries, unequivocally shows that inflation is a government and central bank policy that cannot go on forever and that does come to a catastrophic end, however long the run may be.

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Some common sense advice from two billionaires, by Simon Black

Be prepared, the U.S. government’s unsustainable debt will have disastrous consequences. From Simon Black at sovereignman.com:

Elon Musk didn’t have a care in the world last week as he hilariously mocked questions in a live interview with the Wall Street Journal.

The Journal’s reporter had essentially prepared a number of softball questions designed for Elon to praise the US government’s new ‘Build Back Better’ bill.

If you haven’t heard, the legislation contains a number of provisions which should greatly benefit Tesla, including major subsidies to build electric vehicle charging stations across the US.

But Elon had no interest in the puff piece.

“Unnecessary,” he interjected when the reporter started to ask what he thought of the subsidies.

“Do we need support for gas stations? We don’t. So there’s no need for support for a charging network. I’d delete it. Delete.”

This left the reporter flummoxed… how could Elon possibly not be excited about “free” government money that would support his business?

But Elon’s point seemed completely lost on her.

“Seriously we shouldn’t pass it,” Elon continued, almost exasperated.

“If we don’t cut government spending, something really bad is going to happen. This is crazy. Our spending is so far in excess of revenue its insane. You could zero out all billionaires in the country… you still wouldn’t solve the deficit.”

So the reporter said, well, let’s change the subject.

Elon then sounded-off on issues like the rise of China and corresponding decline of the US. He also called declining birth rates “one of the biggest risks to civilization.”

Now, Elon Musk is a famously eccentric character.

But another more ‘traditional’ billionaire is also on board with this ethos.

Ray Dalio founded and runs the largest hedge fund in the world, Bridgewater Associates.

He has been very vocal over the past several years about the pathetic state of US government finances, and obvious shift of wealth and power away from the US.

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Doug Casey on the Real Story Behind Collapsing Supply Chains and What it Means for You

It would be surprising if any SLL readers were surprised to learn that governments are behind collapsing supply chains. From Doug Casey at internationalman.com:

supply chain disruptions

International Man: The COVID hysteria and the shutdowns have caused supply chain disruptions. Central bankers and the media were quick to pin the blame for soaring inflation on these disruptions.

It seems like sophistry—a fallacious argument with the intention of deceiving. What is really going on here?

Doug Casey: Government officials always want to be seen as smart and action-oriented. Whenever anything untoward happens, they like to step up and pretend to be saviors.

Today’s public thinks that the government not only can but should run the world. The COVID hysteria is a custom-made excuse for them to do so. Unlike people who produce actual goods and services, however, government employees can only take other people’s property and tell them what to do.

Because the essence of government is coercion, they can solve problems only by creating more problems, and new problems provide excuses for more intervention, making the government look even more necessary.

COVID will go down in history as more than just another mass hysteria. It’s likely to be classed as an episode of mass psychosis. It’s the Salem witch trials times a million. It is even bigger than the Great Cultural Revolution in China. The public has been convinced that a dangerous—but relatively minor—virus is going to wipe out the planet, and now, on top of the virus, we have to deal with experimental vaccines, which are likely to be made mandatory, either directly or indirectly.

Vaccine mandates amount to lighting a stick of dynamite in a nitroglycerine factory. That’s true politically, economically, and perhaps medically.

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100 Years of Mismanagement, by Bill Bonner

Bill Bonner takes apart various idiots and idiocies. From Bonner at acting-man.com:

There must be some dark corner of Hell warming up for modern, mainstream economists. They helped bring on the worst bubble ever… with their theories of efficient markets and modern portfolio management. They failed to see it for what it was. Then, when trouble came, they made it worse. But instead of atoning in a dank cell, these same economists strut onto the stage to congratulate themselves.

The scalawag himself. Keynes provided governments with the “scientific” fig leaf fore interventionism that economists had previously denied them. The cost in terms of economic and technological progress is incalculable. Photo via MIT Press

“The Greatest Depression that could so easily have happened in 2009 but did not is the tribute that the world owes to economics”, wrote Arvind Subramanian in The Financial Times.

Arvind Subramanian: congratulating mainstream economists (a sub-set of society that includes him) for failing to foresee a mess their own advice has produced. The chutzpa of this guy is really admirable. He is of course correct that it is difficult to make forecasts (in fact, economics as a science has nothing to do with making predictions), but anyone who didn’t see the 2008 crisis coming had to be blind as a fricking bat. Even housewives could see it coming, but a very long list of prominent professional economists and “policymakers” evidently couldn’t. Fine, but these are the same people that insist that they know what to do about it. That is decidedly not so. They have now produced what will turn out to be an even greater mess. Photo credit: Bijoy Ghosh

We were lost from the get-go, trying to interpret the sentence. It is as tangled and puerile as the staggering conceit behind it. Then, Mr. Subramanian sets up the stage props:

“In 2008, as the global financial crisis unfolded, the reputation of economics as a discipline and economists as useful policy practitioners seemed to be irredeemably sunk. Queen Elizabeth captured the mood when she asked pointedly why no one (in particular economists) had spotted the crisis coming. And there is no doubt that, notwithstanding the few Cassandras who had correctly prophesied gloom and doom, the profession had failed colossally…”

He then brushes off the Queen’s very sensible question:

“But crises will always happen, and even if there is a depressing periodicity to them as Professors Reinhart and Rogoff have catalogued, their timing, form, and provenance will elude prognostication.”

The Queen, here seen shortly after being apprised of Mr. Subramanian’s excuse in the FT

Photo credit: Mark Stewart

Of course, the record doesn’t show that the crisis eluded prognostication; any dope could have seen it coming. But the prognosticators who had contributed so mightily to the crisis had blinded themselves with their own claptrap. Still, Mr. Subramanian figures that they “vindicated” the profession in the way they responded to the crisis.

“On monetary policy, Bernanke was true to the word he gave to Milton Friedman on the occasion of his 90th birthday: ‘Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.’
Bernanke, the pre-eminent student of the Great Depression, found conventional and some very unconventional ways of not doing ‘it’ again. At the peak of his interventions, the U.S. Fed came to resemble the Soviet Gosbank, more a micro-allocator of credit than a steward of macroeconomic policy.”

It probably wasn’t the point he intended to make, but the Fed does resemble the Soviet era Gosbank – manipulating, meddling, and micro-managing the economy toward destruction.

To continue reading: 100 Years of Mismanagement