Archive for the ‘Economics’ Category

Recession

Posted: December 27, 2009 in Economics

Excellent discussion of the problems leading to our current economic downturn:

http://www.claremont.org/publications/crb/id.1662/article_detail.asp

One important thing Keller failed to mention was the inherent dangers of fractional reserve banking for our economy.  While it’s unlikely we will ever go to full reserves, we definitely need to move to higher reserve requirements for banks.

Vern

Gary North at his best

Posted: October 12, 2009 in Economics

I have serious disagreements with Gary North, especially with respect to his view of the American Founding, but the following satire on academia is one of the reasons I used to like Gary’s writings so much:

http://www.lewrockwell.com/north/north768.html

Vern

Purist libertarians are constantly barking at Abraham Lincoln, who was so evil as to liberate millions of people from slavery.  Now, they’re after biblical Joseph, whose great crime was in saving Egypt and the rest of the world from starvation and miserable death.  See:

http://www.lewrockwell.com/chodorov/chodorov16.1.html

It’s true that Joseph oversaw the process that saw the Egyptians giving up most of their money, personal property, and real property, as well as their service, to the king of Egypt, plus paying an excise of one-fifth of the produce from all Egypt.

But surely if the purist libertarians weren’t so caught up in fantasies of stateless, taxless, libertarian utopias, they’d see that the Egyptians had only two choices, either pay up or starve — a good example of the importance of subjective-marginal utility in making economic decisions.

In our opinion, Joseph served under 5th dynasty king Unas.  The following is from our essay, “Egyptian Chronology 3”:

_________

As noted before, if Courville is right that MB1 represents the Exodus & Conquest, and the end of MB2c represents the destruction of Shechem by Abimelech in the late Judges period, we should expect to see Deborah somewhere in the middle of these two periods.  Sure enough, we read in the Mari letters of the MB2b period mention of one Jabin, king of Hazor.  Therefore, on the other side of MB1, we should expect to see evidence of a famine a couple hundred years or so before MB1, a famine that took place in the late Old Kingdom of Egypt.  And of course, this is what we find.  A famine is recorded in the reign of the last 5th dynasty king, Unas. “[O]ne of the most curious, and at the same time, absolutely unique representations, is that of some wretched, famine-stricken men and women.  The curious scene, which was found in a trial sondage over the lower…part of the causeway [of Unas], is puzzling.  The persons represented seem to be foreigners, but nothing remains to afford us a clue as to their identity or the cause of their wretched plight.  Most of the figures are nude, but a few wear narrow girdles, and they are most arranged in groups; they are emaciated in the extreme.” (Nicholas Reeves, Ancient Egypt: The Great Discoveries, quoting Selim Hassan, p. 187; see also, Gardiner, Egypt of the Pharaohs, p. 87; Peter Clayton, Chronicle of the Pharaohs, p. 63; and Cambridge Ancient History 1:2, p. 189; emphasis added.)

If then we take this as our starting point for unraveling the chronology of the pre-MB1 period, we should then correlate this to Joseph and work out who the pharaohs of the Oppression and Exodus could be.  Joseph was 30 when he obtained ruler-ship in Egypt, and he was 110 at the time of his death, and thus ruled in Egypt for 80 years.  Moses was born 64 years later, and led the Israelites out of Egypt 80 years after that, and died after about 40 years in the wilderness, at the beginning of the Conquest of Canaan.  If we match up Joseph as one of Unas’s viziers, or vizier-like official, it is likely that Joseph came to his position after Unas had been on the throne for about three or four years, and thus Unas would have died shortly after the death of Jacob.  The following is a chart to express the possible relations between the biblical patriarchs and the Egyptian kings:

King Manetho Bible Age Event
1.  Unas 33 yrs Joseph 30 famine of Joseph’s time
2.  Teti 30 yrs   59  
3.  Pepi 1 53 yrs   110 21st yr of Pepi 1
4.  Merenre 7 yrs      
5.  Pepi 2 99 Moses 1 Oppression begins; 42nd year of Pepi 2
6.  Pepi 2   Moses 40 flees Egypt, 82nd of Pepi 2
7.  Pepi 2       Pepi 2 dies 17 yrs later.
8.  Merenre-Anty. 1 yr Moses 57  
9.  Nitokerty (Nitocris) 12 Moses 69 foster-mother of Moses
10.  Neferka [1?] Moses 70  
11.  Nufe 2 yrs Moses 72  
12.  Ibi 4 yrs Moses 76  
13.  lost 2 yrs Moses 79  
14.  lost 1 yr Moses 80  
15.  Achthoes 1st yr Moses 81 The Exodus begins.

Vern

Clunker Economics

Posted: August 12, 2009 in Economics

Whether we’re maxing out our credit cards for bailouts, “stimulus,” or for Obamacare, it still has to be paid for.  For a critique of spending-our-way-to-prosperity economics, see:

http://mises.org/story/3624

Favorite quote: “When you stop doing economics and instead wander into mass psychology, anything goes.  In fact, throwing virgins into a volcano might boost GDP, depending on what the public believes.” — Robert P. Murphy

See also Doug French’s discussion of the harmful effects of inflationist policies:

http://mises.org/story/3616

Vern

The Return of Carterism

Posted: August 4, 2009 in Economics

Many people are beginning to understand what’s wrong with welfare-state liberalism.  It costs money.  They look at the huge federal deficit, and the near-bankruptcy of California, and realize that we can’t just spend our way into prosperity.

Think of a guy who buys lots of stuff and looks to all the world like he’s prosperous.  Only he got that way by maxing out his credit card.  Is he really prosperous?  Most of us would say no, for no matter how little we may understand about economic theory, we do realize that when we max out a credit card, we have to pay it back someday.

When government spends money on bailouts and “stimulus” packages, it’s doing essentially the same thing — maxing out its credit card.  The day of reckoning has to come at some point.  We normally pay off our own cards by painful savings, or in worse cases, make use of credit counseling, or go bankrupt.

Government has two ways of paying off its credit card:  taxes or inflation.  Raising taxes is politically difficult, and a pretty stupid thing to do during a recession.  Taxes depress economic activity which is not the result you want during a recession.  Inflation has been the preferred way government pays off its debts — supported by an economic theory known as Keynesianism.

By inflation, government creates money out of thin air.  Things are economically valuable when they’re rare, and when they aren’t, they lose economic value.  Air is one of our most valuable resources, but it has no economic value.  Why?  Because it is too abundant.  (Pressurized oxygen is another matter.)  Nobody would pay anything for air in its native state.  Have you ever tried to sell air for a nickel?

Money is like that too.  If it’s rare it’s more valuable and if it’s not rare, it’s less valuable.  When government creates money out of thin air and pumps too much of it into the economy, each individual unit of money is less rare and therefore less valuable.  In practical terms, it means higher prices. 

Government has all too often been willing to use inflation as a way of paying off its maxed out credit card, but it’s as harmful to the economy as private counterfeiting is, or as harmful as enemy counterfeiting is during wartime. 

The problem with Keynesianism, or new Keynesianism, is that it believes in effect that you can create prosperity by maxing out your credit cards.  Think of all the wonderful things you can buy now!  Don’t worry about tomorrow.  In the long run, say the Keynesian inflationists, we’re all dead anyway.

If you say, how can I be prosperous if I’m up to my eyeballs in debt, inflationists will answer that “inflation is your friend.”  Since the money is worth less after inflation, your real debt is actually less than your nominal debt, the debt recorded in your books.

Isn’t that a way of robbing from lenders since they will be paid back in less valuable money?  Not to worry, we’ll just lend the lenders some more money.  And yes, it will seem like there’s prosperity all around because of all the lending and money that’s available.  But something deep down tells you it’s an illusion.

It’s an illusion because the money is actually worth less than it was before.  It’s only a nominal prosperity, so to speak, not a real one.  And nominal prosperity is what politicians love, since they can parcel the new money out to their favorite voting blocks.

These voting blocks are happiest because they get access to the new money before it loses its value, while later on old people or people on fixed incomes suffer the loss of their purchasing power.

Then when stagflation finally arrives, you are lectured by inflationists about a crisis of confidence, about losing faith, about worshipping self-indulgence and consumption, and about the need for windfall profits taxes and import restrictions, etc.

You see, it’s not government’s fault that we’re in this mess.  It’s our fault really, for we are the ones who have caused all this malaise.  At least that is what inflationists will tell you.

Recently, we’ve heard talk of a second stimulus bill.  But what would you think of a man if he decided to buy even more cool stuff by maxing out another credit card.  That’s essentially what we have with the idea of a second stimulus bill.

Perhaps the American people will someday realize that they need to think before they vote.

Vern

Insanity at Claremont Institute

Posted: June 30, 2009 in Economics

Does the Claremont Institute not do a background check on some of its guest writers before publishing them? Checking for sanity, for instance? If so, why did they publish Robert J. Samuelson’s loony drivel wherein he says, “prolonged prosperity was the underlying cause of the great financial meltdown.”

For more of the same, see his review at:
http://www.claremont.org/publications/crb/id.1620/article_detail.asp

Samuelson’s analysis of the financial meltdown could best be described as “unspeakably awful,” to quote Simon Cowell.

It’s the old Keynesian song and dance, and even harks back to Malthus.

A meltdown caused largely by government meddling is blamed on prosperity. The solution is in fact a return to prosperity, not inventing new ways to curtail it with more government intervention.

For a better perspective, see:

http://mises.org/story/3413

http://blog.mises.org/archives/006286.asp

Vern

On “inflationist redeemers”

Posted: April 29, 2009 in Economics

http://mises.org/story/3438

Vern