Is this the end of the American economy?

Bloomberg: Fed Pledges 7.4 Trillion in New Money.

This is it. The Fed has declared war on the economy and thereby every market participant, and they have prepped their weapons of mass destruction.

Quoting the article: “The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago. The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.”

I already knew that 3 trillion in monetary expansion was in the works. I heard it live from the President of the Dallas Fed about a month ago when he came to Austin and talked about this “off the record”. I personally challenged him the about the wisdom of such a decision. I asked him how he could expect the same monetary policies that created this crisis could be used to solve it, and even if it did temporarily how he could expect that even in the mid-term horizon that the same problems would not occur all over again. He said in response, and I quote: “You just gotta have faith – faith in the Federal Reserve, faith in Congress that they will make the right decision, and faith in the Executive, whoever is elected, that he will make the right decision.”

I should have asked him how other faith-based initiatives have been working out for the government lately, or that I thought matters of faith should be reserved only for God, quantum mechanics, and the quality of frozen pizzas. Too bad I’m not THAT quick. Too bad I was too shocked to say anything at the time. Three trillion is disaster, seven trillion is… unspeakable.

They should have listened – to Mises, to Hayek, to Rothbard, to Ron Paul. Heck, even Milton Friedman more or less repudiated monetarism later in life. Instead, they chose Keynes, Stiglitz, Krugman, Greenspan, Bernanke, Paulson, McCain, and Obama. You reap what you sow.

Should The Government Stop Dumping Money Into A Giant Hole?

In The Know: Should The Government Stop Dumping Money Into A Giant Hole?

I'm giving a lecture on business cycle theory today. This seems relevant... Note: there is a smidgen of language...

Plastic Bags and the "Environment"

I watch a v-blog on a fairly regular basis called Rocketboom, and today’s installment is stranger than normal. It’s on plastic bags, of all things. The producers highlight how plastic bags are supposedly destroying the earth, killing marine life, etc. Then they talk about how governments can reduce this so-called damage, by putting a tax on plastic bags. Fortunately, the US has not adopted such measures.

A “plastic bag” tax (or any restriction on these products) is just one more way that governments wage war on the poor, despite insistent pleas to the contrary. A tax on plastic bags is nothing more than a cost that gets passed on to the consumer of the plastic bags through higher grocery prices, and the poor will certainly be burdened the most in the end. Furthermore, the argument about reusing the bags rings hollow. The poor don’t have the luxury of specialized storage containers, buying “high quality” garbage bags, or whatnot. Instead, we who don’t make much money reuse plastic bags all the time for all sorts of various things, from garbage bags, to packing materials, to long term storage. I wouldn’t consider myself poor by any means, and even I reuse plastic bags as much as I can.

With which should a government be more concerned: making groceries cost less so the poor can get by, or the state of the environment? The answer, truthfully, is neither. The government has no right to dictate how people trade groceries; the market will work to their advantage! As long as individuals are producing things that others value, they will have the means to trade for their survival. Nor does government have the right to force people at the point of a gun to give them money for ridiculous environmental protection measures. It’s immoral for individuals to steal, and just because the government calls that money “taxes”, the action is no more moral – it still is theft.

Scientists and engineers make products that people desire to accomplish useful purposes – ultimately these products are both for survival and enjoyment. Allowing the free market to work, and hence allowing we producers to make things that people want, promotes nothing less than the continuation of the human species. These measures of restricting trade, though perhaps well intentioned, are ultimately detrimental. In fact, I am convinced that environmentalists do not value humans much at all, as they are often more concerned with the well-being of non-sentient animals and the non-living “climate” than the well-being and preservation of human life. To make matters worse, they always endorse theft from others as the means of accomplishing their convoluted goals. Now that’s what I call a waste!

One more on the minimum wage

This just came up in the last few days on www.lewrockwell.com. Ron Getty argues that the minimum wage is really about the new tax revenues that the government would get from it. Hmm, it sort of makes sense, but I'm not willing right now to run the numbers to estimate whether this really is the case or not. Regardless, the minimum wage is still a bad idea. You can see for yourself...



Speaker Pelosi – Minimum Wage Queen by Ron Getty

Raising the Minimum Wage???

The House recently passed a bill that will raise the minimum wage from $5.15 to $7.25, proving once again that at least 315 representatives aggregated knowledge of economics barely surpasses that of a dead parrot. The ridiculous notion that a minimum wage actually helps individuals, much less an entire economy, has been documented and debunked so thoroughly by free-market economists that there is no point whatsoever in trying to rehash all of it, but here are some links for your edification...





Minimum wage hike passes House - Homeland Stupidity



Cato Daily Dispatch: House Poised to Raise Minimum Wage



Making Economic Sense



Mythology of the Minimum Wage - Mises Institute



Repeal the Minimum Wage - Mises Institute

Happy Birthday, Ludwig von Mises

Today, September 29, 2006, marks the 125th anniversary of the birth of Ludwig von Mises. Although he has not been with us for quite some time, Mises inspires us regularly through his excellent writing about government, politics, and economics.

I love what Murray Rothbard had to say on the day of Mises's death:

When Mises died, and I was preparing an obituary, Professor Raico kindly sent me a deeply moving passage from Adonais, Shelley's great eulogy to Keats, that, as usual for Raico, struck just the right note in a final assessment of Mises:

For such as he can lend — they borrow not
Glory from those who made the world their prey:
And he is gathered to the kings of thought
Who waged contention with their time's decay,
And of the past are all that cannot pass away.

Of course, the Mises Institute and others are writing essays in his honor.

Mises on his 125th anniversary (J.G. Hulsmann)

Ludwig von Mises: Defender of Capitalism (George Reisman)

Rest in peace, Ludwig von Mises, you have not been forgotten, and your work was not in vain. Tu ne cede malis, sed contra audentior ito!

Update: The Mises Institute is selling Human Action: The Scholar's Edition for 20% for the next two days in Mises's honor. That is an absolute steal. And here is another link to more tributes to Ludwig von Mises.