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An Austrian finally agrees with me!

January 31, 2013 Leave a comment

My preferences in monetary systems:

1. Free market gold and silver standard

2. Debt-free money issuance

3. The current insane system, where money is created with an inherently unrepayable “trailing commission” to the Fed bank, and the Fed then turns around and monetizes the debt it created a few years later under the guise of QE eternity.

Austrians and free marketeers have always hated (2) and implicitly preferred (3) over (2) for a reason I simply don’t understand.

Finally along comes noted Austrian monetary economist Jo Salerno to clean up the mess and agree with me.  Woohoo!

Let me be clear: my intention is not to deny that the trillion-dollar coin is a ludicrous and dangerous idea; it is rather to point out that the Fed is a more ludicrous and dangerous idea.

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Absurdity

January 22, 2013 Leave a comment

Interesting discussion of gold by Satyajit Das at Prudent Bear.

It includes the now-famous Warren Buffett quote on gold, when gold was $250 an ounce (it’s now around $1700):

Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.

It’s even crazier when you put it this way:

Gold gets dug out of the ground and refined to be a pure, immortal metal that doesn’t rust and is in limited supply and can’t easily be counterfeited.  It can easily be coined and is ideal as money.  It has utility has money and has many other uses.  But governments periodically stole the people’s coinage and are now hiding it back in the ground away from people so they can’t use it as money because governments want the people to use paper toilet as money.  Anyone watching from Mars would be scratching their head  – that perfectly good gold coin money is being stolen by governments and hidden in holes when it is their supposed duty to protect people from theft.   Anyone watching from Mars would be wondering why the people don’t rebel and get their gold back into open circulation!

The madness is not that we dig gold up only to return it the ground.  The madness is that governments do this.  Real people would never do this because they would trade this valuable commodity like any other.

Krugman changes his mind – and get hammered for being (for the first time) right!

January 17, 2013 Leave a comment

I criticized Krugman for rejecting the trillion dollar coin idea.  Now he gets hammered for changing his mind and supporting it!

Jon Stewart (comedian non-economist) laughed at the “f*cked” idea.

Well, it’s not as “f*cked” as the current system, where the government goes to the Fed and gets a little piece of paper that the Fed produces and then the government has to pay interest on the little piece of paper with taxes you and I pay for – forever.

Jon Strewart and the others don’t realize how ridiculous the CURRENT system is.

The problem with the trillion dollar coin idea is that it exposes just how simple the money making process is when the shell game stops and two shells become one.

Hey Jon, guess what?  There is no difference between Krugman’s idea and the present monetary system.  How’s that for laughs!

I am still a pessmist

January 16, 2013 Leave a comment

Interesting article on the direction of Libertarianism here.

I asked Hans Hermann Hoppe basically the same question: When has a State been overthrown or pushed back without violence, when it only knows intimdation and coercion itself?  Did he own a gun himself?

Incredibly he said no.

Armchair Libertarians are a dime a dozen.

Those who truly understand realise just how dire our circumstances are, and how dangerous monetary socialism really is.  We are slowly been eaten by inflation and by government fiat.

There is no hope.

Any delusion that we are doing something productive is ridiculous.  We can only run once we understand the depradations foisted upon us.  To Singapore, or some other like-minded country.  Or die fighting if we cannot run.  But to laugh?  That, I don’t understand.

Categories: Miscellaneous Musings

Further insanity from Krugman

January 5, 2013 Leave a comment

From Krugman’s blog:

I’ve had communications from a number of people asking an interesting question relating to the debt ceiling and other issues: why does the Federal government have to borrow at all? Why can’t it just print money to pay its bills? After all, haven’t people like me been saying that this isn’t actually inflationary?

Now, it turns out that there really is a problem, or actually two problems — but they’re a bit subtle.

First, as a legal matter the Federal government can’t just print money to pay its bills, with one peculiar exception. Instead, money has to be created by the Federal Reserve, which then puts it into circulation by buying Federal debt. You may say that this is an artificial distinction, because the Fed is effectively part of the government; but legally, the distinction matters, and the debt bought by the Fed counts against the debt ceiling.

The peculiar exception is that clause allowing the Treasury to mint platinum coins in any denomination it chooses. Of course this was intended as a way to issue commemorative coins and stuff, not as a fiscal measure; but at least as I understand it, the letter of the law would allow Treasury to stamp out a platinum coin, say it’s worth a trillion dollars, and deposit it at the Fed — thereby avoiding the need to issue debt.

In reality, to pursue the thought further, the coin really would be as much a Federal debt as the T-bills the Fed owns, since eventually Treasury would want to buy it back. So this is all a gimmick — but since the debt ceiling itself is crazy, allowing Congress to tell the president to spend money then tell him that he can’t raise the money he’s supposed to spend, there’s a pretty good case for using whatever gimmicks come to hand.

But leaving the debt ceiling on one side, isn’t it true that since spending can currently be financed by Fed money printing, we shouldn’t care at all about the notional debt owed to the Fed? Alas, no.

It’s true that printing money isn’t at all inflationary under current conditions — that is, with the economy depressed and interest rates up against the zero lower bound. But eventually these conditions will end. At that point, to prevent a sharp rise in inflation the Fed will want to pull back much of the monetary base it created in response to the crisis, which means selling off the Federal debt it bought. So even though right now that debt is just a claim by one more or less governmental agency on another governmental agency, it will eventually turn into debt held by the public.

We are living in weird economic times, where many of the usual rules don’t apply and there are big free lunches to be had. But not everything is a free lunch, even now. Sorry.

First, I didn’t realise the guy moonlighted as a constitutional lawyer.  His economic argument against printing (spewing) money out of a computer is… guess what… a legal argument that it’s unconstitutional.  Aside from the fact that the Fed itself is arguably unconstitutional and paper money backed by nothing is unconstitutional, what relevance does this legal argument have regarding the difference between printing and borrowing?

Second, the economic argument is that debt is somehow a guarantee of low inflation.  Err… does he remember the 70s?

The simple reality is that the government is printing money with a trailing commission (in the form of interest payments) to benefit the banks.  Printing without debt would undoubtedly be better.  Krugman loves the banks so doesn’t want to ever admit this.

2012 in review

January 1, 2013 Leave a comment

The WordPress.com stats helper monkeys prepared a 2012 annual report for this blog.

Here’s an excerpt:

600 people reached the top of Mt. Everest in 2012. This blog got about 7,000 views in 2012. If every person who reached the top of Mt. Everest viewed this blog, it would have taken 12 years to get that many views.

Click here to see the complete report.

Categories: Miscellaneous Musings