Free Market

Why “Monetary Policy” Will Always Distort the Free Market

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By Richard M. Ebeling – Re-Blogged From Savvy Street

Money is not a creation of the State. A widely used and generally accepted medium of exchange emerges spontaneously.

Carl Menger (1840-1921), the founder of the Austrian School in the 1870s, explained in his Principles of Economics (1871) and his monograph on “Money” (1892), that money is not a creation of the State.

A widely used and generally accepted medium of exchange emerges “spontaneously”—that is, without intentional government plan or design—out of the interactions of multitudes of people over a long period of time, as they attempt to successfully consummate potentially mutually advantageous exchanges. For example, Sam has product “A” and Bob has product “B”. Sam would be happy to trade some amount of his product “A” for some quantity of Bob’s product “B”. But Bob, on the other hand, does not want any of Sam’s “A”, due to either having no use for it or already having enough of “A” for his own purposes.

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Who Knows the Right Interest Rate

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By Keith Weiner -Re-Blogged From Gold Eagle

On January 6, we wrote the Surest Way to Overthrow Capitalism. We said:

“In a future article, we will expand on why these two statements are true principles: (1) there is no way a central planner could set the right rate, even if he knew and (2) only a free market can know the right rate.”

Today’s article is part I that promised article.

Let’s consider how to know the right rate, first. It should not be controversial to say that if the government sets a price cap, say on a loaf of bread, that this harms bakers. So the bakers will seek every possible way out of it. First, they may try shrinking the loaf. But, gotcha! The government regulator anticipated that, and there is a heap of rules dictating the minimum size of a loaf, weight, length, width, depth, density, etc. Next, the bakery industry changes the name. They don’t sell loaves of bread any more, they call them bread cakes. And so on.

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What if Education Was Left to the Free Market?

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By Stephen Hicks – Re-Blogged From Savvy Street

Nothing can come into our minds as knowledge and nothing can become a skill except that we choose to make it so. So the real cost of education is the effort each individual has to put into it.

Higher education can be a path to a successful life. Yet many successful people did not graduate from college and many unsuccessful people have impressive degrees.

So who should go to college? And who should pay for it?

Let’s start by imagining an average student who wants to go to college but has no money and compare that student’s options in socialized and free-market education systems.

In a socialized system, the government pays for it. The student eventually graduates, goes to work, and starts to pay taxes.

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A Trade Deficit Is Never A Problem

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[Fiat Money(paper money) can allow Trade Deficits to continue indefinitely, while under a Gold Standard, the imbalance is corrected automatically. In either case, Trade is good, while restrictions are bad. – Bob]

By Steve Saville – Re-Blogged From http://www.Silver-Phoenix500.com

It’s not just Donald Trump. Many political leaders around the world operate under the misconception that a trade deficit is a problem to be reckoned with. This misconception has been the root of countless bad policies over the centuries.

Trade, by definition, is not an adversarial situation resulting in a winner and a loser. Rather, both parties believe that they are benefiting, otherwise the trade would not take place. Most of the time, both parties do benefit. In general, one side wants a particular product more than a certain quantity of money and the other side wants the quantity of money more than the product. When the exchange takes place, both sides get the thing to which they assign the higher value at the time.

All the hand-wringing about international trade deficits is based on the ridiculous notion that the side receiving the money is the winner and the side receiving the product is the loser, but how could this be? If the side receiving the product was losing-out then it wouldn’t enter into the trade. Furthermore, given that today’s money is created out of nothing, if a trade were to be viewed as a win-lose situation then surely it’s the side receiving the product that should be viewed as the winner.

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What Creates and Sustains Jobs?

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By Dale Netherton – Re-Blogged From iPatriot

The politicians mutter the word “jobs” as if they understood where jobs come from and what conditions are necessary to sustain jobs.

First, without revenue to pay wages no job can exist or if created continue to exist.  The question then becomes, where will the revenue come from?  There are two sources of revenue for jobs.  One is the direct granting of revenue by the government which funds government jobs.  If there is funding available the job can continue until the funding disappears.  The other source of revenue is profit.  If a job is created to supply a good or service and it is sustained by paying for itself, this job is sustainable as long as it is competitive.  This is the only job that can exist that doesn’t rely on confiscation and redistribution.  Jobs that rely on “government funding” are not self sustaining since they must have confiscation and redistribution.  Government cannot create wealth, it has nothing it doesn’t confiscate or borrow.

All government created jobs are necessarily temporary.  Debt and eventual inflation destroys the foundation for government funding of jobs as the private sector that supports sustainable jobs shrinks under the regulation and taxes that eventually destroys the profit motive and therefore the only source of self sustaining jobs.  The CCC camps could not have been retained as permanent jobs.  The demise of the Post Office and Amtrak are examples of where government “jobs” must eventually falter.  The source of these two government jobs comes from the government subsidies.  Neither is self sustaining based on the income they generate.  This means a private sector is being taxed and the confiscation of their earnings is being channeled to the subsidy the government is supplying.

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How to Fix Unemployment

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By Dale Netherton – Re-Blogged From http://www.iPatriot.com

Unemployment is at 4.9% if you believe government figures.  Some have placed it as high as 17%.  Like the fudged figures of global warming and inflation they are probably not only inaccurate but distorted.

When the first jobs came into being they were the result of a businessperson seeking labor to increase his production rate to meet the demand of his customers.  These laborers were hired and paid from the profits the businessperson was able to make.  Anything before this phenomena took place was the result of plunder and confiscation.  The method of confiscation is the way of government and criminals.  Government takes and redistributes but it neither creates wealth or trades for its revenues.  The government could trade if it were confident it could raise revenues voluntarily but it prefers to use the method of the criminal by way of taxation.

In the scheme of things government is a limited agency that is created to protect the individual rights of the citizens.  It cannot be created for anything else without introducing a method of confiscation.  When that occurs its reason for being is negated by the injustice it promotes and enforces.  Eventually all government that ignores this fundamental ingredient of its reason for being evolves from a free society to a slave pen where the government rules by regulation and taxation, eventual deficit spending and hyperinflation which destroys the currency and demolishes the fiscal integrity of the nation which leads to chaos, rioting, revolution and unless a limited government is created, the scenario repeats itself.

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The Next “Advance Auction on Stolen Goods”

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By Doug Casey – Re-Blogged From International Man

It appears there are two candidates running from the left wing of the Demopublican Party (Hillary and Bernie), and two and a half from the right wing (Trump, Cruz, and Kasich). Note: The media identifies the Lefties by their first names, a friendly and personal thing, unlike the Righties.

I find it distasteful discussing current political figures. But since somebody new is going to be president come November, it makes sense to figure out who that might be, in order to insulate yourself as much as possible from the damage they’ll do.

Let me start by saying that this is not just the most entertaining election I’ve ever witnessed. But after the 1860 election, which Lincoln won with 40% of the popular vote (the remainder split between Stephen Douglas and two other candidates), I suspect it will also be the most divisive, hostile, and critical to the future of the country. Ever.

Why do I say that? Because the U.S. hasn’t been this unstable since the unpleasantness of 1861–1865.

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SPIEGEL Interview with African Economics Expert: “For God’s Sake, Please Stop the Aid!”

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Interview conducted by Thilo Thielke – Translated from the German by Patrick Kessler

Re-Blogged From Spiegel Online

SPIEGEL:

Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa…

Shikwati: … for God’s sake, please just stop.

SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.

Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.

SPIEGEL: Do you have an explanation for this paradox?

Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa’s problems. If the West were to cancel these payments, normal Africans wouldn’t even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.

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Dr Copper, The Economy And The Stock Market No Longer In Sync

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By Sol Palha – Re-Blogged From http://www.Silver-Phoenix500.com

Doctor copper, can no longer be viewed as a leading indicator, in fact, a name change might be in order. A change of name from Dr Copper to deadbeat copper might in order, given its dismal record over the years.  After the financial crisis of 2008-2009, the economy, the stock markets and copper parted ways; while the markets and the economy trended higher, copper plunged into an abyss, and it is still trying to find its footing.

All Jokes aside, the reason copper is diverging from the markets is because the Feds destroyed the concept of a free market system long ago.  Copper is indicating that this economic recovery is nothing but an illusion.   However, several rounds of QE, plus interest rates being held down for a record-breaking period, have altered reality.  The markets are moving higher because of hot money, and the economic miracle would end without the low-interest rate band aid.  Against such a backdrop, copper ceased to work. In this environment,  fundamentals and basic technical analysis can lead you astray; in such an environment Mass psychology works the best.  The masses have accepted that Fed intervention is the new norm and that the Fed is the saviour. Hence, this is what investors need to pay attention too, as the psychology of the masses is what drives the markets.  Given the old historical pattern between, copper and the markets, the stock market should have followed copper into the abyss, but instead we find that several indices are dangerously close from putting in new highs.

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Ending the US Economic Tailspin

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cropped-bob-shapiro.jpg   By Bob Shapiro

After WWII, with the advent of the jet engine, a race was on to see who could break the Sound Barrier first.

To pick up the final burst of speed in order to get past Mach I, just over 760 mph, test pilots would go up to 45,000 feet, and then point the nose down and fall to earth. At the last moment, they would “pull up” on the stick, expecting for that to pull the plane up and out of the dive.

Several pilots killed themselves in crashes, until in October, 1947, one pilot, Chuck Yeager, realized that pulling up on the stick was making the plane go down even more.

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Bernie Sanders’ Socialism In One Lesson

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By Michael J Hurd – Re-Blogged From Capitalism Magaine

Socialist and Democratic candidate for President Bernie Sanders:

You can’t just continue growth for the sake of growth in a world in which we are struggling with climate change and all kinds of environmental problems. All right? You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country. I don’t think the media appreciates the kind of stress that ordinary Americans are working on. [Source: cnbc.com 5/26/15]

Do you like Sanders’ statement, or do you find it foolish and absurd? If you find it foolish and absurd, can you say why?

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The Problem Isn’t Overproduction — It’s Malinvestment.

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By Patrick Barron – Re-Blogged From http://www.mises.org

Mr. Max Ehrendfreund, writing in the Washington Post’s Wonkblog, believes that he has discovered something new: that the world is producing too much and doesn’t know what to do with it. His solution, of course, is to confiscate the overproduced products, such as oil and cotton, from its rightful owners and give it to the people who need it. This phony problem and its statist solution goes back at least as far at the 1930’s socialist calls for “production for use” vs. the hated capitalist concept of “production for profit“.

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A Tale Of Two Economies: Singapore And Cuba

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By Frank Holmes – Re-Blogged From http://www.Silver-Phoenix500.com

It would be nearly impossible to find two world leaders in living memory whose influence is more inextricably linked to the countries they presided over than Cuba’s Fidel Castro and Singapore’s Lee Kuan Yew, who passed away this Monday at the age of 91.

You might find this hard to believe now, but in 1959—the year both leaders assumed power—Cuba was a much wealthier nation than Singapore.

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The Business Cycle & Government

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cropped-bob-shapiro.jpg   By Bob Shapiro

Sometimes, people make stupid choices.

Wait! Let me be more kind. Sometimes, people make choices which don’t work out as well as they had hoped.

You may have a passion for reproductions of historic horse and buggy rigs, and you decide to invest your life savings to open a plant to produce buggy whips. My expectation (I certainly can be mistaken myself) is that your venture won’t meet your profit hopes.

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Government vs Free Market Solutions

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cropped-bob-shapiro.jpg   By Bob Shapiro

I have written several times about how we should allow the Free Market to provide services rather than give the job to a government agency, mentioning ObamaCare and Medicare specifically. I have said that the Free Market will produce better, more efficient, more innovative results.

Now, it’s not that the people working for the government are trying any less hard to do a good job, compared to their private sector counterparts. When I worked as an outbound mail manager at a large mail service

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What Does Sustainability Mean?

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cropped-bob-shapiro.jpg   By Bob Shapiro

Today’s Sunday Boston Globe carried an “Ideas” piece on Sustainability. Aside from it having become a political buzzword, sustainability makes me cringe every time I hear the word because I haven’t seen a definition which makes sense to me.

From what I can tell, nature isn’t sustainable. It changes constantly on many time frames. A tree grows leaves in the Springtime, and flourishes through summertime. But then, as temperatures drop in the Autumn, the tree loses its leaves, and goes to sleep as Winter’s chill hits.

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Sight, Sound, & Movement – Free Market Solutions

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cropped-bob-shapiro.jpg   By Bob Shapiro

I’ve been very upbeat on the power of creativity & innovation, within the Free Market System, to improve the lives of Americans greatly, an even people world-wide. And I tend to be highly critical of regulatory agencies, such as the FDA, which hold back creativity & innovation and often exist not to regulate their industries but to extend protective benefits to them.

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Thanksgiving

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(Re-Blogged from Silver-Phoenix500.com, by Aubie Baltin)

At this time of the year when most of us have a lot more to be thankful for than we realize, (count your blessings) let us all say a small prayer for those among us who have not been so fortunate. I would also like to take this opportunity to examine that first THANKSGIVING  and to reflect upon a few lessons that might be learned from a few little-known details about the Pilgrims who first

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