Economics

Upside-Down Economic Reporting: Higher Oil Prices Are Good.

"I see. A war looms. Oil will rise in price. The world will pay more to oil-exporting national governments. This is proof of good times ahead. The rising trade deficit (an excess of imports) is good because it will lead to more exports. 'At the same time, a strengthening U.S. expansion is helping companies in the European Union and China boost sales, which will stabilize global growth and, in turn, improve prospects for American exports.' I see. Rising imports mean rising exports. Later. One of these days. Real Soon Now. And so it goes. Economic education marches forward." Continue reading →

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Bill Bonner: A Personal Appeal to Barack Obama

"We don’t share the common fantasy of central bankers: that they can know better than the market what interest rate, employment rate and inflation rate the country should have. We mention the three because the Fed sets short-term interest rates through its conventional monetary policy. And it tries to keep a lid on long-term Treasury yields through its 'unconventional' QE programs. And it does so, it claims, to adjust two other important rates: employment and inflation. Every candidate for the top post at the Fed – except us – believes it is his right and duty to do these things. Which means none should be allowed anywhere near the Fed." Continue reading →

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A Regional FED President Says the FED Is Not Inflating Enough.

"This statement was Big News. It was such Big News that the Wall Street Journal ran a story on it. Why? Because when a regional Federal Reserve Bank president says the obvious is Big News, it means that he is opposed to tapering. It means that he thinks the counterfeiting of a trillion dollars of digital money a year is for wimps. What should the rate of counterfeiting be? He did not say. They never say. Their lips are sealed. This is what is known at the Federal Reserve as transparency. Opaqueness is when an official says something incoherent, which everyone in the media knows is incoherent, and they dutifully report as meaningful." Continue reading →

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Bloody Scenes from the Next Episode of Economic Crisis

"Stand by for round two of the global economic crisis, coming soon to a screen near you. It’s going to be as bloody and chaotic as the scenes on your TV from Cairo and Damascus. Yet, as ever, the chorus on Wall Street manages to keep a straight face and sing the same tune while robbing investors blind. Just listen to them on Bloomberg or CNBC and you would think the Fed has this all under control and the U.S. economy is recovering. Now, admittedly, economists are all facing the wrong way too. There is hardly a man or woman willing to stick their neck out and say the inflation-distorted figures that purport to show a recovery are turning in the opposite direction." Continue reading →

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If You Want To Know Why Things Are Falling Apart, Look at Total Debt

"It's easy to confuse trends and cycles. The Keynesian Cargo Cultists believe that we're in a cyclical downturn that can be 'cured' with more debt-based spending, i.e. worshiping their false god of aggregate demand. They cannot comprehend that we're not in a business-cycle recession, we are in a long-term trend where additional debt undermines the system as the positive returns on that debt turn negative." Continue reading →

Continue ReadingIf You Want To Know Why Things Are Falling Apart, Look at Total Debt

Is College A Scam?

"The system is broken, the middle class is disappearing, being carved through the middle by a trillion dollars in student loan debt, and everyone is still raising tuition faster than inflation. And 50% of kids with college degrees now are underemployed. And that one statistic that 'if you go to college you make a million dollars more' is totally flawed and I explained why using basic Statistics 101 knowledge. I talked about the girl who was practically naked while hula hooping so she could make debt payments from a tip jar. I spoke about the two kids who were now clerks in an eyeglass store getting paid by the hour, and they felt they were 'lucky' because their other friends did not have jobs." Continue reading →

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Student Loan Consequences: Real, Costly, and Personal

"Under the Student Aid and Fiscal Responsibility Act (SAFRA) signed into law as part of ObamaCare in March of 2010, students may borrow money directly from the federal government regardless of their credit score or any other financial 'issues' they may be facing. They are not priced according to any 'individualized measure of risk' nor are there loan limits. They are instead politically determined by Congress with undergraduates receiving lower interest rates than graduate students, but graduate students allowed to borrow more than undergrads. This forced entry by the government into what was once a private market transaction has numerous consequences." Continue reading →

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The Three Types of Austerity

"Reading the financial press, one gets the impression there are only two sides to the austerity debate: pro-austerity and anti-austerity. In reality, we have three forms of austerity. There is the Keynesian-Krugman-Robert Reich form which promotes more government spending and higher taxes. There is the Angela Merkel form of less government spending and higher taxes, and there is the Austrian form of less spending and lower taxes. Of the three forms of austerity, only the third increases the size of the private sector relative to the public sector, frees up resources for private investment, and has actual evidence of success in boosting growth." Continue reading →

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Scandinavian Welfare States Realize Too Many Handouts Are Destructive

"It’s hardly radical libertarianism to reduce unemployment benefits from four years to two years, but it is rather significant when even politicians realize that it’s not good – as illustrated by these powerful cartoons – to lure people into the wagon when nations need more people pulling the wagon. It's a bit depressing that Denmark actually ranks higher than the United States in the most recent Economic Freedom of the World rankings. Yes, their welfare state is too big, their tax system is a nightmare, and they are saddled with one of the world’s most expensive bureaucracies, but Denmark has ultra-free market policies in other areas." Continue reading →

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Obama Calls Income Gap ‘Wrong’ — After Widening It

"The Census Bureau's official measure of income inequality — called the Gini index — shows similar results. During the Bush years, the index was flat overall — finishing in 2008 exactly where it started in 2001. It's gone up each year since Obama has been president and now stands at all-time highs. It's worth underscoring that the growing income gap under Obama isn't the result of the rich getting fabulously richer. Nor is it any sort of indictment of 'trickle down' economics. Instead, it is the direct result of Obama's historically weak economic recovery, which has left the rest of the country falling behind while the wealthy have managed to make gains." Continue reading →

Continue ReadingObama Calls Income Gap ‘Wrong’ — After Widening It