Financial topics

[aedens]

http://library.mises.org/books/Ludwig%2 ... tality.pdf

[aedens]

I keep talking about how our culture has fallen completely into fraud
and extortion, but this is really the limit.

Layers of Deceit

Why do recipe writers lie and lie and lie about how long it takes to
caramelize onions?
http://www.slate.com/articles/life/scoc ... ingle.html

Is there no end to the fraud?

John

No, There is no economic difference between socialism and communism. Western countries do not yet permit the liquidation of such offenders in the Russian way. They voted Ruere in servitium. They are dead and do not even know it. Springing up of the second crop. Two groups of men quarreling about how much of the "national income" each of them should take for themselves.

[aedens]

These associations, or political parties, are actual armies which have been trained to pursue power; their immediate objective is to so increase the number of their adherents as to control an electoral majority. Influential electors are for this purpose promised such or such share in the profits which will follow success, but such promises—generally place or privilege—are redeemable only by a multiplication of "places," which involves a corresponding increase of national enterprises, whether of war or of peace. It is nothing to a politician that the result is increased charges and heavier drains on the vital energy of the people. The unceasing competition under which they labour, first in their efforts to secure office, and next to maintain their position, compels them to make party interest their sole care, and they are in no position to consider whether this personal and immediate interest is in harmony with the general and permanent good of the nation.

The French economist Gustave de Molinari (1819-1912)

[OLD1953]

The issue with capitalism as with every other pure system of managing our worldly affairs, is simply that we have human beings running these affairs, not incorruptible angels. Were corruption impossible, then any system will function, though some better than others.

The corruption of capitalism does have this advantage, it's obvious and utterly ugly. The ultimate goal of a real world capitalist is to gain the advantage of a monopoly by obtaining government backing for such a monopoly, unrestricted and for all time. In earlier times this was done by direct decree of the Pope or the King, now it's done by decree of Congress or the judicial branch by extending the rights of patent or copyright or assigning the rights of patent to something that does not meet the standard or removing rights of patent from something that does meet the standard. The former two are so well known as to need no mention to any inhabitant of the internet in these days of the RIAA and nearly unlimited copyright spans, the latter two are not as well known, but I could mention both Adderall (simple remixture of a well known drug for time release) and the weed eater (patent granted but later overturned as "obvious") as gross examples of the latter. There is also outright theft of patentable ideas or patents, as the inventor of the time delay windshield wiper or the inventor of the push button - pop off socket wrench would testify, and did testify, in court. There is also direct theft of property from private citizens under the aegis of eminent domain, as in the constant and unending condemnation of land for private enterprise, such as ball parks or industrial parks.

In short, a major goal of a successful capitalist is to capture the government as a servant. This is not a necessary goal, but it's evident in every capitalist society in history, so evident that it becomes a major feature of such societies.

Just as Marx glossed over the obvious problems of governance under a system of bureaucracy that controls production, so does Mises gloss over the obvious problems of how one controls wealth in such a manner that it does not attempt to capture the government. Railing at government "interference" is not productive when the bulk of that interference is done at the behest of the capitalists involved. Simply adding up the bills for the USA since 1970 in government "rescues" of financial institutions and major industrial plant and gifts to same, most of the latter unknown to the public, shows this clearly to be one of the largest items of public expenditure over that period, very likely the largest. These vast sums were not disbursed over the objections of the recipients.

Every social system ever developed is subject to exploitation and corruption. If you have a king or a feudal system, the road to easy profit is to control the king. If you have a religious system, you simply buy the Pope. If you have a socialist or communist system, you want to be the top bureaucrat. While many people are attracted to anarchistic systems such as Libertarianism for its lack of control, this quickly leads to total corruption and will degenerate into a feudal system, as the anarchy left behind the Roman Empire showed.

Control of this corruption and exploitation means every successful government must govern with an eye to the practical and prosecute corruption whenever found and in whatever office. Those that do not perform this task will eventually perish.

[aedens]

https://www.youtube.com/watch?v=05R_Ehw ... re=related

cui bono - problems reaction solution as always. Cheerfull and usefull idiots abound.

http://library.mises.org/books/Ludwig%2 ... tality.pdf read it again

The Metz Accord was fun also.

Vote what you deserve.

[OLD1953]

I will, but socioeconomic philosophy is always bent towards the prejudices of the author of course, or they wouldn't bother to write it. Very few are willing to stand on a corner and simply say "vanity, vanity, all things are vanity" or "the days of a man's life are as grains of sand in the winds of time". I am willing to say I believe it's impossible to build a system of socioeconomics that is just, fair and lasting as long as human beings are involved in the process, but I don't make my living working in that field, either. Such views tend to make one unpopular as you are essentially saying that everyone from Smith to Marx was wasting their time, and would have been better advised to grow flowers.

And if robots are programmed to run our economic policy, then the goal will be to become the policy director for the robots, who would then doubtless find that certain humans were just very very important and needed to have vastly greater means than those around them as a reward for being so very important. Or something. Ever think about how funny it would be if business leaders had to compete on stage like rock stars? Would they have groupies? Just how hearty would they party? Just what percentage of a popular performer's "wage" is actually vastly increased opportunities for sexual experience? And I'd give a great deal to see someone put that on a spreadsheet, I'd laugh myself sick.

[vincecate]

It seems that China's $1.5 trillion, or whatever, in US bonds is in a US bank and so subject to US law. If people in general were selling bonds and inflation picked up one of the responses that would follow normal patterns is for the US to limit how fast each person could sell bonds or take money out of a bank. This helps let the little guys get out before hyperinflation is in full force (and more voters are little guys). But this really hurts big guys as they can't get access to their money till after it is worthless. In China's case this could amount to stealing $1.5 trillion from China.

If China was selling at all it would be easy for US politicians to blame the bond/dollar problems on China, so voters would not feel any sympathy for China.

China would probably be upset though. They might feel that Tiawan was reasonable compensation.

One of the reason Japan was pissed enough to attack the US in WWII was the US froze their assets.
http://www.history.com/this-day-in-hist ... ese-assets

[Trevor]

They're not selling their bonds and yet we're still blaming a lot of our problems on the Chinese. We're talking about enacting protectionist measures against them, and ironically, it's about the only thing that the two political parties agree on. If we piss them off enough, they could decide to dump our bonds on the open market, an act of mutually assured destruction, but their pride could easily drive them to take that step.

[John]

Pundits and faux economists have been wondering for years why the
Fed's ZIRP (zero interest rate policy) and quantitative easing have
not led to hyperinflation. I've explained it in generational terms,
but here's an interesting analysis of how QE actually contributes to
deflation by creating a "negative money multiplier effect," because
the Fed is competing with shadow banks that had previously provided
liquidity, and which now are absorbing liquidity instead.

The era of the ‘negative money multiplier’ – Part 1
http://ftalphaville.ft.com/blog/2012/05 ... er-part-1/

The era of the ‘negative money multiplier’ – Part 2
http://ftalphaville.ft.com/blog/2012/05 ... er-part-2/

John

[vincecate]

[...] here's an interesting analysis of how QE actually contributes to
deflation by creating a "negative money multiplier effect," because
the Fed is competing with shadow banks that had previously provided
liquidity, and which now are absorbing liquidity instead.

Hussman has real data to show that the velocity of money is a largely a function of the interest rate. As interest rates go down the velocity of money goes down, if they go up the velocity goes up. So when the Fed makes new money to buy bonds it is increasing the quantity of money but lowering the velocity of money, at least for awhile. But the odds are the impact on interest rates is temporary and the increase in money is permanent and so we will get inflation eventually. So I think when you see interest rates in the US start going up is when the wheels are really going to fall off.

http://pair.offshore.ai/38yearcycle/#delay