Free Market

Who Knows the Right Interest Rate

usissuescom Monetary Policy , , , , ,

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?

usissuescom Education, Taxes & Spending , , , ,

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

usissuescom Foreign Policy, GDP & Employment , , , ,

[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?

usissuescom GDP & Employment, Monetary Policy, Regulation, Taxes & Spending , , , , , ,

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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