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The Guardian’s George Monbiot is talking about the US Tea Party Movement. Which is it, do you think? Has nobody ever told him about the fixed quantity of wealth fallacy, or does he just enjoy winding people like me up? June 15th, 2010 | 21 comments - (Comments are closed)
Andy Duncan. Like Andy, I have read Thomas E. Woods’ Meltdown book and I wrote out some thoughts about it here. And here. Glad to see Andy is writing away. Old Samizdata hands may remember he used to scribble for us occasionally. June 11th, 2010 | 2 comments - (Comments are closed)
Steve Baker MP’s maiden speech. Tried to finish a longer piece involving that link, but failed. There’s the link anyway. Now rushing out to a meeting organised by the very organisation that published that blog posting. Such is life. June 9th, 2010 | 2 comments - (Comments are closed)
The ultimate cause of the problem with the banks was indeed chronic government interference, in the form of implicit and explicit guarantees supplied to them free of charge, which hopelessly weakened the entire industry. Reserve ratios – the percentage of deposited cash which is actually retained by the bank rather than lent out – has fallen from over 50% in the 19th century to 2-3% today (or a negative percentage in Northern Rock’s case). That could not have happened in a free market, at least not on an industry-wide scale; nobody would lend to a bank if it tried to take on that much leverage without a government guarantee. The banking industry had been rendered so unstable by government intervention that it was only a matter of time before it had a crisis, and the crisis could have been brought about by any number of proximate causes. Unfortunately most commentators blame the proximate causes, the particular individuals who happened to be involved at the time, and “free markets”. In a free market, firms fail from time to time; they aren’t bailed out, people don’t expect them to be bailed out, people arrange their affairs accordingly and so the failure of one firm doesn’t bring down an industry or an economy. Banks were a long way from being a free market. – “Some Guy” (that’s what he calls himself) commenting on the Bishop Hill piece also linked to below by Johnathan Pearce in connection with Matt Ridley’s inglorious career as a banker June 4th, 2010 | 26 comments - (Comments are closed)
This is a quick thumbnail of money supply for those of you having trouble finding understanding in the tsunami of Keynesian Kool-Aid coming from our ‘betters’. On October 3rd of 2008, Republicrats and Democans responded to the failure of Lehman Brothers, bankruptcy of Bear Stearns, incipient collapse of AIG Insurance, threatened insolvency of other major financial institutions, and general panic in the financial community, by passing Public Law 110-343. This law contained two basic sections. The most infamous brought us the first of the ‘TARP–ulus‘ genre. But a very important offsetting function was contained in another place in that same law that is known as the Emergency Economic Stabilization Act of 2008. Way down in the fine print, it authorized the Federal Reserve Bank to begin immediately paying banks to not loan out money. That was not their exact choice of words. In fact, read Section 128 where they did it and it is almost impossible to tell what exactly they were doing. Three days later on October 6th of 2008, the Federal Reserve Bank announced it would begin paying banks to not lend money. Again, not their exact choice of words. Within less than a month the Federal Reserve Bank began discreetly ‘monetizing’ by purchasing Fannie and Freddie debt. By March of 2009, attempts at discretion fell by the wayside and the Federal Reserve began buying US Treasurys outright. Put simply this means that the Federal Reserve began ‘printing’ money and giving it to the United States Treasury to spend. During this period of time (from September 2008 through current) the St Louis Adjusted Monetary Base went up by approximately 1 trillion dollars. Since that time, consumer prices have anomalously trended flat (click ‘view data’ for specifics) in spite of the adjusted monetary base more than doubling. How can this be? → Continue reading: Money supply, the stimulus & where is the inflation? June 3rd, 2010 | 52 comments - (Comments are closed)
June 1st, 2010 | 13 comments - (Comments are closed)
Mr Congdon said the dominant voices in US policy-making – Nobel laureates Paul Krugman and Joe Stiglitz, as well as Mr Summers and Fed chair Ben Bernanke – are all Keynesians of different stripes who “despise traditional monetary theory and have a religious aversion to any mention of the quantity of money” – This is the, er, money quote, so to speak, from an article by the erratic Ambrose Evans-Pritchard, quoting Tim Congdon May 27th, 2010 | 11 comments - (Comments are closed)
“The core problem over the past few decades was not bankers’ greed or the complex financial instruments that enabled them to satisfy it. It was the immense pyramids of debt built up by the Anglo-Saxon half of the world, and the equally massive mountains of savings created in the other. Almost everything that occurred in the past couple of years was, directly or indirectly, a consequence of this.” – Ed Conway, Daily Telegraph. He has not bought the whole free market line on what is wrong with finance today, but this is pretty good. May 25th, 2010 | 16 comments - (Comments are closed)
As recounted here in a justifiably passionate editorial about the European Union’s plans to beat up the City of London, we are reminded that, whatever the vote might have been in the May general election, that with qualified majority voting in the EU, states can – and do – gang up to put a particular country’s economic affairs in grave difficulty. Paris and Frankfurt have, in particular, resented the prosperity of the City. And as the recent travails of the euro show, there is precious little to be said for the supposedly wiser governnance of the euro zone. There was a certain amount of gloating after the US and UK got hit by the sub-prime mortgage meltdown (some of that gloating might have been justified) but it is quite clear that the rigidities of the euro zone remain a severe problem. Why we are in the EU again? May 17th, 2010 | 13 comments - (Comments are closed)
“Yes, we might all think that sending a virtual red rose over Facebook is silly but those sending them (and presumably to some extent those receiving them) do value them. And that value is what we measure when we talk about GDP and it is the creation of that value that allows people to make profits. There is absolutely nothing at all in the capitalist system, the free market one (these are two different things please note), the pursuit of profits or even continued economic growth that requires either the use of more limited physical resources or even the use of any non-renewable resource.” Tim Worstall, nicely skewering the idea that economic growth is the same as ever rising consumption of finite resources. Not the same thing at all. May 14th, 2010 | 7 comments - (Comments are closed)
Well, for all you gold bugs out there, here is a spiffy new banking facility, although it so far is confined to the Gulf. Ayn Rand and Ludwig von Mises would have approved, I’m sure. By the way, the price of gold is currently around $1,250, a new record. Given the various “quantitative easing” programmes of central banks in recent months, the hunger for the yellow metal is not surprising. I must say that at current levels, it does seem a pretty risky idea to push even more money into gold, since there has been so much of a rally already. If – and this is one hell of an if – some governments start to reduce their debt burdens and try to squeeze monetary growth in some parts of the world (like in Australia), then some of that “fear premium” in gold may start to fade. May 14th, 2010 | 17 comments - (Comments are closed)
Sam Bowman, whom I mentioned in my previous posting below about the IEA, responded by emailing me further proof that he is taking his Cobden Centre duties seriously:
Outstanding. And good on the IEA for lending them the place to do this. Badgering politicians is worth a go, because you can get lucky, and because even if they don’t listen, someone else might, especially in an age when letters can double up as internet postings. But politicians will mostly just do their thing, which is fire fighting the fires on their desks within the limits set by public opinion, or by what they suppose to be public opinion, and within the limits that they all set amongst themselves. What matters is the long-term intellectual struggle, that is, the process of creating the limits within which politicians and other decision makers will operate in the future. The above enterprise is a fine example of how you go about doing that. In the age of social media, blogs, emails and so on, it is tempting to suppose that personal contact is a bit superfluous. But I suspect that the most lasting impact of such novelties is creating and strengthening old fashioned face-to-face contacts, between people who might otherwise never have been introduced. I wonder if there is an upper age limit. May 13th, 2010 | 4 comments - (Comments are closed)
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