It is better to know some of the questions than all of the answers.
James Thurber
Tweet of the Day
Which exchange vendor will win the title of ObamaCare's Solyndra? http://t.co/FFKboG8m2B
— Ronald Guillemette (@raguillem) December 26, 2014
Chart of the Day |
| Courtesy of Mercatus Center |
Guest Quotation of the Day
Once someone approached me and asked a leading question: "Do you know why people hate libertarians?" To which I quickly cut him off, saying: "Because they are economic illiterates?" -Austin PetersenImage of the Day
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| Via Devin Manning on FB |
QE 4? Not a Prediction, But Knowing the Fed, It's Probable
If the familiar reader has noted, I've been noting with some concern the strength of the dollar in a world where other countries seem to be slipping into a stalled or shrinking economy--of particular note are the yen, euro, and most conspicuously lately the ruble. Ironically the one currency that seems to be holding its own is the Chinese yuan; there is all sorts of speculation about the Chinese slowly building up the second biggest gold reserves, which I think may be the advent of a second world reserve currency, potentially backed by gold--and a potentially serious longer-term challenge for a Fed and US Treasury run amok. Right now the Chinese are trying to muddle through chronic banking problems and a slowing economy.)
But here's my point: assuming ongoing currency wars and beggar-thy-neighbor policies, what political whores notice is a weak currency makes exports cheaper to foreign customers and imports more expensive. For consumers and businesses importing resources or components, this is a dubious blessing, leaving themselves worse off (higher prices or costs). So while the US may be celebrating its best reported quarterly GDP figure in a decade and more consistent employment, there are some troublesome signs; for example, our exports will take a hit, and a Saudi Arabia-induced oil price war may adversely affect a major growth segment of the post-2008 economy--many of the smaller shale energy companies are in trouble. It's like trying to turn the Titanic; there are contracts for production schedules which may take months to run their course. In the long run, the oil is still ready to be extracted at feasible prices.
To a certain extent, some of these problems can be mitigated by easy money policies, e.g., an imported barrel of oil is more expensive. But how do you get to a cheaper dollar? Well, the strength of a currency can be improved by raising interest rates. But with Fed interest rates already near zero, it can't get to a weaker currency by cutting rates. There are other tools, though. You can increase the money supply by buying bonds or other financial securities, say mortgage backed securities or even stocks, like Japan is experimenting with. The law of supply and demand tells you security prices should increase which has an inverse effect on yield. Corporate bond yields should be an offset to Treasury yield.
The bottom line is with two inflation hawks moving off the Fed, Yellen has no intention of raising interest rates which would bolster the strengthening dollar. So I think it's probable we'll see a QE 4 if and when the economy hits a rough patch next year. Do I support it? No. I want a strong dollar and a more restrained/rule-based Fed.
More ObamaCare Kaleidoscope Accounting
I do hesitate to use the term "bailout" to describe federal money reimbursed to insurance companies for costs due to an unsustainable regulatory regime. We now have an example of a (preferred) non-profit in Iowa in bankruptcy, taken over by the state, despite nearly a $150M loan/other funding from the Administration (which healthcare company will win the title of ObamaCare's Solyndra?). ObamaCare is replete with opaque smoke and mirrors accounting gimmicks and "free" and new benefit mandates, all of which cost real money.
While we are discussing the absurdity of ObamaCare, notice how some economic illiterate ObamaCare advocates are trying to take credit for a recent GLOBAL slowdown in medical costs and certain preexisting trends (fewer new expensive blockbuster drugs, etc). Consider the following excerpt from the Gray Lady:
The economic crisis drove down demand for new medical services, as people lost their jobs and coverage, or simply decided to put off elective procedures like knee replacements. Tougher times also led to policy tightening by federal and state officials — and employers, who have increasingly moved from generous health insurance plans to those that expose their workers to more out-of-pocket costs.Many people who are buying individual policies (even modified employer plans) face high deductibles and/or co-pays. Notice this is something those of us promoting free market policies have been arguing for some time: when people are vested more in their own healthcare economic decisions, they will be more frugal than if the apparent cost is "free" or negligible. Of course, you don't need a Statist Frankenstein like ObamaCare to imitate free market results: you simply get the hell out of the way of the free market.
Beito Wins This One: Charity, Yes; Government, No
This is the first Beito clip I've seen; he wrote a nice history on mutual aid societies, fraternities, etc., which I've referenced in past. One talking point I really despised from Progressive Baldy is the assertion that government takes out all the major components of poverty like old-age. (Note: not everyone qualifies for social security; not everyone social security covers is poor. Moreover, government has never adequately funded social security. Finally (not implying there aren't other responses), social security is morally hazardous, and people have a right to fund their own retirement. Baldy does not address the stagnation of poverty since the 1970's, not to mention a cycle of government dependence.
Facebook Corner
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| Via Libertarian Republic |
I am so sick and tired of leftists, including left-libertarians, bashing corporations, which are entities in a voluntary association. The obvious point of the meme is if straw man corporations control the government, when do they stop? The bigger and more complex the regulatory empire, the more anti-competitive to the entrepreneurs and upstart companies. Corporations are useful idiots for the economic fascists. The corporations, as Ron Paul points, are in nominal private hands, but the real power is in government regulation. If a government program (say, ObamaCare) fails or policy costs skyrocket because of government mandates, the providers become scapegoats.
The fact is that American businesses often have conflicting agendas (consider domestic sugar producers vs. candy makers) and politicians make corrupt bargains (consider farm bill subsidies and the food stamp program--there was an unsuccessful attempt in this Congress to break this link). Austrian economists have generally debunked the concept of natural monopolies in the private sector, while the federal government is itself the biggest monopoly and the only one that can dictate prices and services.
The only way to eliminate the corrupt bargain practices of government, including parasitic crony capitalists, is to shrink the government and rely more on the natural competitive forces of the free markets and transparency of the market and voluntary market transactions.
(Libertarian Republic). If we want to reduce the instances of cops unjustly killing citizens, we could make them more accountable by disbanding their unions and privatizing their duties. - Austin Petersen
Yeah... No. Profit driven law enforcement prolly ain't the answer...
Only an economically illiterate troll could be so dismissive of "profit driven law enforcement". Profits have to do with a competitive, dynamic marketplace and are a reflection of managerial effectiveness. Capitalists take on risk, and profits are a return for taking on risk. What matters is delivering goods and services that attract buyers. Local government has a monopoly on public safety for which taxes are mandated from residents--never mind monopoly police unions. You have little if any incentive at the public manager level to economize, say, by hiring temporary, part-time, seasonal, or contract cops. The public safety market is no different than any market; privatization would look for ways to adopt disruptive technologies, say, displacing the need for perm staffers. This does not mean a compromise of public safety objectives; in fact, streamlining of laws (e.g., decriminalizing victimless crimes) would free up manpower to be more efficiently and effectively used. In any case, the salient issue is revenues minus costs. A business can make a profit without additional revenues or without a compromise in service, simply by controlling costs. There is nothing virtuous about "use it or lose it" city administrators with taxpayer revenues at stake. A private-sector safety concern that payed short shrift to customer expectations would find itself out of business, losing to competitors. Today's police still have jobs even if most crime goes unsolved.
(Reason). Rising inequality does not justify class warfare. Here's why.
Maybe, but "class warfare" doesn't mean changing a tax policy or raising the minimum wage. Class warfare means guillotines. Class warfare means the rich running for their lives. In short, class warfare is warfare. So let's not use it as a term to hyperbolize when we talk about a simple policy proposals to address income inequality through legal, rational means.
"Progressive" economic illiterate OP trolls who actually believe that plundering the economically successful to redistribute to the ethically undeserving is "good" policy. Statist policy is a monopoly with all the undesirable consequences.
Political Cartoon
It's been more difficult finding cartoons I agree with recently...
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| Courtesy of Larry Wright via Townhall |
Arthur Fiedler and the Boston Pops, "Sleigh Ride"
