Economics

Why Suppressing Feedback Leads to Financial Crashes

"The suppression of feedback only dams up risks and imbalances: out of sight, out of mind. But the imbalances haven't vanished; they're piling up unseen in the system, where they eventually break out at the system's weakest point. Central-planning manipulation 'works' by closing all the safety valves of market feedback, creating a dangerous but politically appealing illusion of stability and 'growth.' But the consequences of removing or suppressing feedback are catastrophic longer term, as the imbalances and risks pile up unseen until they bring down the entire system." Continue reading →

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Part-Time Track Jobs For Mainstream Professionals?

"'Ford didn’t offer paternity leave, but it did offer a part-time track so long as an employee’s manager approved it. When baby Dylan arrived, Trombley went to his bosses and told them he wanted to drop down to 70 percent and work from home two days a week. [...] There are now three other men in his department with similar part-time setups; there were none when Trombley started.' Is there a list of large, Fortune 500 employers that offer such a 'part-time track' option? Hopefully the idea of breaking down the traditional 'full-time' job into smaller pieces is gaining momentum in the corporate world." Continue reading →

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Everything Created Digitally Is Nearly Free–Including Money

"The key feature of digitally creating credit/money is this: it is immeasurably easier to digitally create claims on real-world assets than it is to create real-world assets. This is why the digital creation of trillions of dollars in credit/money is distorting and disrupting the real economy of real-world assets: the claims on those assets keep expanding while the actual assets remain stubbornly tied to the real world. This widening disconnect between rapidly multiplying digitally created claims on real assets and the actual assets has spawned a multitude of pernicious consequences." Continue reading →

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Polish PM laments opinion impasse keeping Poland out of Eurozone

"Because opposition conservatives reject the European single currency, the government lacks the two-thirds parliamentary majority needed to push through necessary constitutional changes. Central Europe’s largest economy, Poland has maintained growth each year since it shed communism two decades ago. It is the only EU member to have done so through the 2007-2009 financial meltdown and the ongoing eurozone crisis, thanks in part to the zloty easing in value against the euro. Opinion polls show most Poles are opposed to adopting the euro." Continue reading →

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How You Can Quickly Make It into the World’s 1% Richest

"You might already be there. If not, get a job at McDonald's and work overtime. It only takes $34,000 a year, after taxes, to be among the richest 1% in the world, according to World Bank economist Branko Milanovic in his book The Haves and the Have-Nots. CNN reports on Milanovic data: 'The true global middle class, falls far short of owning a home, having a car in a driveway, saving for retirement and sending their kids to college. In fact, people at the world's true middle -- as defined by median income -- live on just $1,225 a year. (And, yes, Milanovic's numbers are adjusted to account for different costs of living across the globe.)'" Continue reading →

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And how would you like to pay, sir – cash, credit card, or Bitcoin?

"In Iceland, people liked to build their own houses at the time, but they couldn't put the money they were saving to build their homes into the bank, because it disappeared. Somebody had the idea to buy certificates in building materials in advance, and those certificates were denominated in cubic metres of concrete. It became very popular on payday, and our company would issue the certificates. One day the company got a call from the inland revenue asking if we had issued these vouchers. We confirmed it, but asked why they wanted to know. The official said somebody was trying to use the vouchers to pay his taxes." Continue reading →

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Can the Fed Become Insolvent?

"In light of my recent posts on Morgan Stanley’s analysis of this question–which show that a rise of less than a percentage point across the yield curve would render the Fed 'bankrupt'–let me direct you to my original Mises.org essay on this question. I walk through various hypothetical Fed balance sheets to show what we mean by saying it could become insolvent. Then, in this article I walk through the January 2011 change in accounting rules that was instituted so that technically, the Fed can’t have negative equity from a fall in its asset prices. It would, however, drive home to more people around the world just how screwy our 'modern' monetary system really is." Continue reading →

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Marc Rich, King Of Commodities, Dead At 78

"He sold Soviet oil to apartheid South Africa, despite a UN embargo, and between 1979 and 1994 made profits of around $2 billion there. He sent Soviet and Venezuelan oil to Cuba in exchange for sugar, ignoring America’s ban on trade. He sold on the global market surplus Iranian oil that had flowed to Israel down a secret pipeline, and kept the arrangement going seamlessly despite the Iranian revolution of 1979, another embargo, and the American hostage crisis. In 1983 he fled to Switzerland with his family. Thereafter he became a fugitive, a star of the FBI’s most-wanted list. In 2001 Bill Clinton pardoned him." Continue reading →

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China signals will cut off credit to rebalance economy

"China said on Friday it would cut off credit to force consolidation in industries plagued by overcapacity as it seeks to end the economy's dependence on extravagant investment funded by cheap debt. The State Council said it would ensure credit kept flowing to businesses that it thought had competitive products, but it would work with banks to oversee a gradual winding down of other businesses. Friday's announcement was the latest sign that China's policymakers are determined to bring debt-fuelled expansion under control, after the central bank allowed a cash crunch last month that sent short-term lending rates to record highs." Continue reading →

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Obamacare Strikes: Part-Time Jobs Surge To All Time High; Full-Time Jobs Plunge By 240,000

"As a reminder: jobs have quantity and quality components. The quantity component was good enough to convince the 10 Year the taper is imminent (if not stocks, which continue to trade dislocated from any and all fundamentals). But how about the quality? In a word: not good. In June, the household survey reported that part-time jobs soared by 360,000 to 28,059,000 - an all time record high. Full time jobs? Down 240,000. And looking back at the entire year, so far in 2013, just 130K Full-Time Jobs have been added, offset by a whopping 557K Part-Time jobs. And there is your jobs 'quality' leading to today's market euphoria (if only for now)." Continue reading →

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