Smart and Not So Smart

Bill Frezza is out with his weekly column today and has a few hilarious yet true reasons why some people push for inflation.  Can you guess who they are?

Did you have a fancy degree in economics and owe your livelihood to the government? Is it a joy to invent new statistics when the old ones start giving you answers you don't like? Are you convinced that most people are so stupid they can be fooled with recycled fairy tales about droughts and greed? Do you adore uttering opaque inanities on TV while fawning pundits tell you how smart you are? Do you believe you know how to allocate capital better than the people who earned it? Are you convinced you can magically create jobs by printing green pieces of paper? Then what's not to like about inflation?

Are you on course to add as much to the federal debt in one term as all 43 past presidents combined? Do you think that spending is an enlightened form of investment? Do you believe you were elected to spread the wealth around even if you have to destroy much of it to do so? Do you secretly dream about making chumps out of the Chinese because they are foolish enough to keep lending us money so we can buy their stuff? Then what's not to like about inflation?

If you guessed Bernanke and Obama, you are correct!  Congratulate yourself by purchasing a federal government bond.  That way you will be able to really experience the impact of exchanging one continuously devalued piece of paper for another.

I always love the double-dose of Bill Frezza and John Tamny on Mondays.  From Tamny's Forbes column today:

Contrary to the popular belief that the central bank must keep credit cheap in times of distress in order to make it plentiful, the greater truth is that credit costs should rise during downturns as a way of luring the savers so essential to capital restoration back into the marketplace.

I couldn't have said it in a more accurate and simple way myself.  Tamny and Frezza both need more respect and attention from the Mises community.

Kudos to the New York Sun today on their genius editorial showing the illogic behind a fiat, or floating, kilogram and tying it to the need for a commodity backed dollar.  Speaking of genius, throw Mr. Tho Bishop on the list for his great Mises Daily showing the relationship between dating and economics.  Both are highly recommended.

I can't let a post on intelligent comments go by without putting some of Mish's latest advice up:

My advice to people has not changed. If you want a house and can afford a house, then as long as you really know what you are getting into, and as long as you are quite sure your job is stable then buy a house. (That's quite a lot of IFs) 

In 2004-2006 I was more vehemently opposed to buying a house than now.

Twenty years ago you could get nice appreciation, but that is no longer true. Moreover, I suspect that once home prices bottom, prices will stagnate for a decade.

Thus, there is no compelling financial treason to own a house. Indeed, from a financial perspective, there are good reasons to not own a house.

However, there are more important things than money. If having a house makes you or a loved one happy, then as long as you can afford a house, and as long as it does not make you a debt slave, it is reasonable to buy one.

The biggest key right now is making sure your job is stable. If it's not, then buying a house might bankrupt you if you lose your job. Unfortunately, many people vastly overestimate the stability of their job.

And now for some not so intelligent deduction.

Upon charting the huge rise in the price of Tungsten, Zerohedge commenter bob_dabolina offers some very insightful advice on the large increase:

"I can't explain it. You can't eat this shit."

Indeed, you can't eat Tungsten.  Thankfully bob pointed this out for all of us.  If I were to guess the reason behind the vast increase in the price of Tungsten, I would say it is directly correlated to the rise in the price of gold within the past few years.  Since gold has risen in price, and Tungsten is often plated and sold as fake gold, it seems like a logical conclusion.  Either that, or Tungsten is used in a commodity or capital good that is in high demand.  In that case, you can thank Bernanke and central banks around the world for its rise.  Not sure whether I would eat Tungsten or paper in the end.