American Thinker Post, Hyperinflation in Belarus, Frezza Takes Down Krugman, and Kreuger Debunked

Got a rather snarky blog post on the American Thinker today entitled "Perry's Social Security Truth-Tellling More Than Libs Can Bear" and deals with Gov. Rick Perry's recent admission (some call a gaffe, I say it's the truth) that Social Security is a lie for my generation.  Take a look if you want some good old fashion D.C. and media bashing.


So as the debate between coming deflation/recession and boom/inflation goes on in the U.S., one country is experiencing a phenomena not seen since Robert Mugabe managed to destroy his own country's economy.  I am of course talking about the massive inflation occurring in Belarus:

Belarus’s supermarkets are running out of meat as Russians take advantage of a currency crisis that a devaluation and the world’s highest borrowing costs have failed to stem.
“All meat has gone to Russia,” Alexander Andreyevich, an 82-year-old former tractor-plant worker, said Aug. 25 in Minsk, the capital. “My relatives near the Russian border called me a few days ago and said the shops are empty.”
Belarus is grappling with a balance-of-payments crisis that forced a 36 percent devaluation of its ruble in May. It may need to raise $12 billion by 2013 through state-asset sales and international bailout loans to stave off economic collapse, Moody’s Investors Service said Aug. 23.

*Sigh* Are they ever going to learn that printing money doesn't create wealth and has negative consequences such as this?  It looks like Gresham's Law is taking hold in Belarus as the ruble is getting replaced.  Perhaps if the citizens of Belarus had invested in gold or silver....

Anyway, when it comes to inflationists, none have a wider media platform than good friend of the Miller's Genuine Draft, Mr. Paul Krugman.  Amidst all the talk of alien invasion and earthquake-induced economic boom, the impeccable Bill Frezza donated his whole Forbes column to taking down Krugman's continual idiocy in brilliant prose.  Here are some excerpts from the fictional interview:

Polishing off his second bottle of Brocard Les Clos Grand Cru the dean of the dismal science gave full-throated support to the Obama administration’s plan to launch a National Infrastructure Bank through which freshly printed construction dollars could be funneled. “Roads, bridges, tunnels, trolleys, beaches, subways, causeways, riverbanks, culverts, parking lots, who cares!” shouted the cherry cheeked cheerleader of copious consumption. “What matters is that we pull out all the stops and build as much stuff as we can. We can only hope that the next earthquake or hurricane knocks it all down. And for the maximum impact on unemployment we must place a moratorium on all heavy construction equipment so that workers using picks and shovels can spread the available jobs around.” My growing look of incredulity must have unleashed his primal scream. “What? Are you mocking me? Me? What part of modern macroeconomics don’t you understand?!”
I backed away as the inflamed intellectual advanced, menacingly swinging his Nobel Prize medal like a nunchuk. “Fools! You are all fools!” he sputtered, drops of spittle clinging to his droopy mustache. “You’re one of them, aren’t you! Did Fox News send you? It’s all the fault of the Bush tax cuts. Enemies! I’m surrounded by enemies!”

Yes, what of modern macroeconomics does Frezza not comprehend?  The fact that money dilution doesn't actually create sustainable growth?  That wealth being destroyed doesn't correlate to a net benefit of economic gain?  Clearly Frezza doesn't get it as he is too logical to accept such ludicrous claims.  The whole article is highly recommended and this author has a tough time discerning if the interview actually took place in the end.

While Frezza did a great job taking Krugman to school, also see Gonzalo Lira's wonderful take down of Dick Cheney:

Dick Cheney is taking a lap around all the talk shows, peddling his memoir while giving his reputation one final spit-shine before he dies and goes straight to hell.

Oh—so you actually doubt he’ll go to hell? With the shit he’s pulled? Cabrón, please . . .

It is remarkable that relatively few people seem outraged by Mr. Cheney. Here is the man who, as Vice-President of the United States, violated some of the most important rights, freedoms and liberties that America has defended for over two-hundred years. Not only did he commit what in other times would have been considered war crimes and crimes against humanity—he is proud of having done so!

I couldn't agree more.  Seeing the half-human/half-machine corpse of Dick Cheney making his rounds defending the despicable acts he committed in office is enough to garner a bit of vomit

A few days ago, I talked about Obama's new ingenious pick to head the Council on Economic Advisers Alan Kreuger.  Supposedly Mr. Kreuger found the magic econometric data proving that minimum wage laws don't create unemployment.  This is of course b/s, but logic has never been a strong point of labor economists. Today, Mark Perry has a great post on Carpe Diem showcasing a paper from the National Bureau of Economic Research on just how idiotic Kreuger's theory is:

We re-evaluate the evidence from Card and Krueger's (1994) New Jersey-Pennsylvania minimum wage experiment, using new data based on actual payroll records from 230 Burger King, KFC, Wendy's, and Roy Rogers restaurants in New Jersey and Pennsylvania. We compare results using these payroll data to those using CK's data, which were collected by telephone surveys. We have two findings to report. First, the data collected by CK appear to indicate greater employment variation over the eight-month period between their surveys than do the payroll data. For example, in the full sample the standard deviation of employment change in CK's data is three times as large as that in the payroll data. Second, estimates of the employment effect of the New Jersey minimum wage increase from the payroll data lead to the opposite conclusion from that reached by CK. For comparable sets of restaurants, differences-in-differences estimates using CK's data imply that the New Jersey minimum wage increase (of 18.8 percent) resulted in an employment increase of 17.6 percent relative to the Pennsylvania control group, an elasticity of 0.93. In contrast, estimates based on the payroll data suggest that the New Jersey minimum wage increase led to a 4.6 percent decrease in employment in New Jersey relative to the Pennsylvania control group. This decrease is statistically significant at the five-percent level and implies an elasticity of employment with respect to the minimum wage of -0.24.

Perry brilliantly weighs:

It should be noted that even if empirical evidence suggests that raising the minimum wage has no effect on the level of employment, that finding does not necessarily mean that the minimum wage has no adverse effects.  There could be many other negative effects making unskilled workers worse off, even if they manage to keep their job following a minimum wage increase.  Here are some examples:

1. Reduction in the number of hours worked;

2. Reduction in fringe benefits like reduced cost uniforms, reduction or elimination of reduced cost or free meals at restaurants, elimination or reduction in company-sponsored holiday parties, picnics, events; 

3. Reduction or elimination in any health care benefits;

4. Reduction in on-the-job training, etc.

Cherry picking data to meet expectations is a specialty for Keynesian economics.  Not that it doesn't apply for all schools of economic thought, but Keynesians have tended to be more guilty of it.  This dates back to Keynes' original "sticky wages" theory in which he recognized that wages dropped slowly but didn't take into account government and union interference to artificially hold wages up.  Keynes thought he disproved Say's Law when he only enforced it.

I will end by mentioning a strange coincidence.  So Obama is supposed to speak to a joint session of Congress on September 7th but apparently it occurs at the same time of the GOP presidential debate which has been scheduled for months.  How strange! It's almost as if Obama planned the speech at this time intentionally!  And here I thought he was above politics, silly me!

New Mises Daily, Discontent in Latest FOMC, Ron Paul's Vice President, and Apple Destroying Competitors

I have a new Mises Daily article today on intellectual property and the television show Glee.  The piece is entitled "The Entrepreneurship of Glee."  As for where the idea came from, I just figured the Mises Institute didn't have enough Glee yet so perhaps I should fill the void.

Big news today as the minutes for the latest FOMC meeting that occurred on August 9th came out and show that QE3 may not be too far away.  Here are the highlights via Zerohedge:

• Some participants noted that additional asset purchases could be used to provide more accommodation by lowering longer-term interest rates.


• Others suggested that increasing the average maturity of the System’s portfolio—perhaps by selling securities with relatively short remaining maturities and purchasing securities with relatively long remaining maturities—could have a similar effect onlonger-term interest rates.


• A few participants noted that a reduction in the interest rate paid on excess reserve balances could also be helpful in easingfinancial conditions.


• A few members felt that recent economic developments justified a more substantial move at this meeting, but they were willing to accept the stronger forward guidance as a step in the direction of additional accommodation. Three members dissented because they preferred to retain the forward guidance language employed in the June statement.

While talk of QE3 is predictable, a total of 3 dissenters clearly shows a lack of a complete consensus on where the Fed is going from here.  Of course the money printing will continue, it just depends on what rate.  We are already at a 9% annual growth as far as money supply goes, it's only a matter of time before it starts entering the real economy.  I just watched a news report on some high-tech manufacturer in Michigan that is struggling to fill positions.  Clearly they are going to have to bid up their offering wage/salary to attract workers (which will probably lure some who are on unemployment) which means that whatever boom the business is seeing may be short lived if it is based on funny money printing alone.  As for the 2 day meeting, Tyler Cowen has an interesting thought:

Two-day Fed meeting is a way of setting up the skeptics to take a tumble, a blocking coalition never wants a longer meeting.

Judging by that and this new report on consumer confidence, it's almost a given that Bernanke will try something at the FOMC's September 20-21st meeting:

Confidence among U.S. consumers plunged to the lowest level in more than two years as Americans’ outlooks for employment and incomes soured.

The Conference Board’s index slumped to 44.5, the weakest since April 2009, from a revised 59.2 reading in July, figures from the New York-based research group showed today. It was the biggest point drop since October 2008. A separate report showed home prices declined for a ninth month.

As for home prices:

Nationally, Home Prices Went Up in the Second Quarter of 2011
According to the S&P/Case-Shiller Home Price Indices
New York, August 30, 2011 – Data through June 2011, released today by S&P Indices for its
S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show that the U.S.
National Home Price Index increased by 3.6% in the second quarter of 2011, after having fallen 4.1% in
the first quarter of 2011. With the second quarter’s data, the National Index recovered from its first
quarter low, but still posted an annual decline of 5.9% versus the second quarter of 2010. Nationally,
home prices are back to their early 2003 levels.

Now Mish says this data isn't seasonally adjusted so it's incorrect.  I say we will have to wait and see with Bernanke's chaotic money printing but Mish is a professional and I write intellectual property articles on a show about high school kids in a competitive show choir group, so pick your side wisely.

Walter Block and Stever Berger have an interesting article out at LRC on who Ron Paul's potential vice presidential candidate should be.  My vote goes for Dennis Kucinich, just because I want to see the media shit a brick, but Block and Berger have some interesting selections:

Doug French. The president of the Mises Institute, and a former banker (and former football player as well). A long shot. He is the "favorite son" of no particular state, having spent time in Nevada (getting his masters degree under the tutelage of Murray N. Rothbard), played college football in Kansas and now residing in Alabama. He would, then, be unlikely to be selected as Vice President by any of the ordinary Republican candidates. However, we are now discussing the choices of Congressman Ron Paul, someone likely to judge a VP candidate on his merits. And, here, there is little question: under a French Presidency, we would have peace abroad and economic tranquility at home. That is to say, Mr. French would faithfully follow the Ron Paul philosophy.
Jim Grant, former Barron’s columnist, founder and editor of Grants Interest Rate Observer, author of Money of the Mind, a history of credit booms and busts in the United States, and a frequent guest on Bloomberg and CNBC, is well known for his florid and witty literary style and trenchant criticism of the Federal Reserve and Keynesian economic policies. Jim is an ardent backer of hard money and is admired by legions of investors for his intellectual honesty and wit. He would be a compelling proponent for a return to free market money and for repeal of the Dodd-Frank financial strangulation bill.

Other selections include Rand Paul, Judge Napolitano, Gary Johnson, Lew Rockwell, Tom Sowell, John Stewart, John Stossel, Michelle Bachmann, and Mitch Daniels.  Now if Paul wanted to go full fledged for the mainstream vote, Daniels would be a good choice.  If it were up to me from this list, I would definitely pick Jim Grant, though Tom Sowell would be good too if it wasn't for his war hawkishness.  And of course Doug French and Lew Rockwell would be great selections though I have a feeling Rockwell would have more verbal gaffes than Joe Biden (which isn't a bad thing of course).  By far the best quote of the article came at the beginning however:

Politico has focused on the Vice Presidential sweepstakes, and who are we to demur? Of course, this organization does not mention Congressman Ron Paul as a viable candidate, and, on this, we agree. Dr. Paul will, instead, become President of the United States in 2012, so he will just not be available to be anyone else’s Vice President.

I should also mention this great pick for Paul's veep:

"My vote is for Walter Williams," says Gary North. "We need a secessionist."

I will end with Barry Ritholtz's interesting article on Apple's complete destruction of its competitors.

One of the things that seems to have gotten lost in the avalanche of Steve Jobs coverage has been the impact he has had on technology investors. I refer not to the entire technology sector as an investable asset, but rather, the utterly crushing effect Apple has had on specific competitors as Jobs remade entire industries.
It is creative destruction writ large.

Destroyed
• HP: The printer business may still have some ink left, but the iPad has gutted HP’s PC operations. It has reached the point the company is considering selling the $40 billion revenue division and leaving the PC industry. HP’s tablet entry, the $499 Touchpad, was a disaster — Best Buy was sitting on over 200,000 unsold units. None were selling until the priced was slashed 80% to $99. (Sure, they may lose $200 on each one, but HP makes it up in volume!)

• Dell: About Apple, founder Michael Dell once famously stated “What would I do? I’d shut it down and give the money back to the shareholders.” When Apple’s market cap passed Dell’s back in 2006, Steve Jobs reminded employees of that barb via email. Today, Apple’s profits ($29B) alone are actually larger than Dell’s entire market capitalization.
• Motorola: See Google, below
• Research in Motion/Blackberry: For a very long time, RIMM “owned” the enterprise market for mobile email and text messaging via their “Crackberry.” They are an instructive example of how a leader can get toppled by an innovative competitor. Topping out at $144 per share in 2008, the RIMM now trades in the $20s, with no solid answer to the iPhone. The NYT’s David Pogue just called their latest entry, the BlackBerry Bold 9900, too little, too late.
• Nokia: Not too long ago, Nokia had better than a 50% market share in the mobile phone market. Today? Just 15%, and forced to abandon their own OS in favor of Microsoft’s also ran Mobile OS.
• Ericsson: I’m sorry, but the name doesn’t ring a bell.

Ritholtz has other columns for Damaged, Challenged, and Benefited but the analysis on who Apple took down a few notches is a good read.

Stuart Varney on Warren Buffet, PIMCO on Keynes, Ron Paul on Libya, and Obama's New Econ Genius

Lots of icon busting today so let's start with Stuart Varney's evisceration of billionaire Obama-supporter Warren Buffet:

I can't believe Sam Antar's candid admission of his light sentence.  You can bet the SEC will issue a statement and appear to be "doing something" while not actually doing a thing. I don't always agree with Varney, but he is on point when it comes to Berkshire Hathaway's financial interests and Moody's.  Speaking of Berkshire's financials, it looks like big profits are coming its way, via Zerohedge:

• BANK OF AMERICA AGREES TO SELL 13.1B SHRS OF CHINA CONSTRUCTION


• BANK OF AMERICA SEES SALE GENERATING $8.3B PROCEEDS


• BANK OF AMERICA KEEPS 5% STAKE IN CCB


• BOFA SEES CUTTING RISK-WEIGHTED ASSETS BY ABOUT $16.1B BASEL


• BOFA SEES SALE GENERATING ABOUT $3.5B ADDED TIER 1 CAPITAL


• BOFA SEES GAIN $3.3B ON SALE

In summary: That's $13.3 billion in new capital in the past week that BofA promises it does not need.

Hmmm, either Buffet got lucky or knew something was up.  Now of course insider trading shouldn't be a crime (see Murphy and Tamny), but hopefully Buffet's upcoming fundraiser for Obama will keep the SEC away for now.

While Varney has jumped on the bandwagon of "let's point out Warren Buffet's hypocrisy," it looks like PIMCO is jumping on the "let's bash modern Keynesianism" bandwagon.  This of course is a good thing:

Saying No to Keynes and Fiscal Folly

• ​Taxpayers have been hoodwinked into believing the cost from profligate government spending is low relative to the benefits.


• The Keynesian revolution ignited a decades-long abuse of the core principle of Keynesian economics:  for government to increase spending when private sector aggregate demand weakens and stymies job growth.


• The central banker is left to shoulder the burden, seeking all the while to pressure the fiscal authority to amend the abuse of Keynesian economics and decades of fiscal folly.

"Politicians and the beneficiaries of their fiscal illusions for the past 80 years abused the Keynesian philosophy, relentlessly and dangerously pursuing the use of debt for self-aggrandizement. Today, the citizens of indebted nations bear a heavy burden and must begin repaying the debts. It is a herculean task, because the debts are mountainous.

Now this analysis is far from perfect economics.  Yes, Keynesianism today is far perverted from the original theory but what do you expect when politicians have a printing press to back up all their pet projects?  Did Keynes really put that much faith in elected officials to turn off the spigot of easy money in good times?  It's one thing to criticize the "animal spirits" of business, but Keynes didn't seem to consider politicians fallible humans.  What PIMCO doesn't realize is that government spending will never be as efficient as private sector spending and that the theory of idle resources is a myth.

Ron Paul has a great commentary out on Libya today as he questions whether or not overthrowing Gaddafi was a good thing:

We already see grisly reprisals from the US-backed rebels against their political opponents.  There are disturbing scenes of looting and lawlessness on the part of the rebels.  We know that some rebel factions appear to be allied with Islamic extremists and others seem to have ties to the CIA.  They also appear to have a penchant for killing each other as well as supporters of the previous regime.  The tribal structure of Libyan society all but ensures that an ongoing civil war is on the agenda rather than the Swiss-style democracy that some intervention advocates suggest is around the corner.
What is next after such a victory?  With the big Western scramble to grab Libya's oil reserves amid domestic political chaos and violence, does anyone doubt that NATO ground troops are not being prepared for yet another occupation?

This will be interesting.  Whoever wins the 2012 election (with the exception of Paul of course) will most likely invade Iran for some miniscule reason.  Think WMD's, political oppression, or posing more of a threat to Israel.  Before then however, I predict that Obama will call for either troops in Libya to "nation build" or some kind of bombing campaign in Yemen.  While I would like to think his base would be skeptical of Obama attempting both, I am losing faith.

Now the big news today was Obama's appointment of a new head for the Council on Economic Advisers, Mr. Alan Krueger.  To see how clueless is Mr. Krueger is, check out the title of the book Kreuger co-authored:

Myth and Measurement:
The New Economics of the Minimum Wage 

Aww yes, these "new economics" surely disprove the law of scarcity as the minimum wage does not cause unemployment.  God knows what this guy will come up with.

I will end with a great quote from Charles Hugh Smith's latest post on Of Two Minds:

"Here is the ugly truth about the Savior State, welfare state, social welfare state, or whatever you choose to call the Central State: The Savior State displaces and destroys community and social capital. By making individuals dependent on the Central State for free money, free food, free housing, etc., then the State has taken over the natural function of community."

A friend of mine is doing a senior seminar project on the destruction of civil society.  This quote could be his whole project.

Ron Paul on Fox News Sunday, Maureen Dowd Rips Dick "Energizer Bunny" Cheney Apart, Greece One Year Hits 60%, and Walmart to the Rescue

Wow, in what has to be Ron Paul's best television interview yet, Chris Wallace gives the Congressman close to 15 minutes to trash FEMA, the Fed, Libya, and espouse the glories of Austrian economics:

It's amazing to hear Chris Wallace mention the likes of Ludwig von Mises and Friedrich Hayek on national tv.  Paul's appearance should have convinced at least a few of the dedicated neo-cons who watch Fox News regularly of his legitimacy as a presidential candidate.

While Paul did a great job articulating libertarianism on national television, Maureen Dowd, in typical Maureen Dowd fashion, didn't take a hatchet to Dick Cheney's record in the New York Times yesterday, she took a chainsaw with a newly sharpened blade:

Having lost the power to heedlessly bomb the world, Cheney has turned his attention to heedlessly bombing old colleagues.

Vice’s new memoir, “In My Time,” veers unpleasantly between spin, insisting he was always right, and score-settling, insisting that anyone who opposed him was wrong.

His knife-in-her-teeth daughter, Elizabeth Cheney, helped write the book. The second most famous Liz & Dick combo do such an excellent job of cherry-picking the facts, it makes the cherry-picking on the Iraq war intelligence seem picayune.

But on all the nefarious things that damaged America, Cheney got his way for far too long.

Vice gleefully predicted that his memoir would have “heads exploding all over Washington.” But his book is a bore. He doesn’t even mention how in high school he used to hold the water buckets to douse the fiery batons of his girlfriend Lynne, champion twirler.

At least Rummy’s memoir showed some temperament. And George Tenet’s was the primal scream of a bootlicker caught out.

Cheney takes himself so seriously, flogging his cherished self-image as a rugged outdoorsman from Wyoming (even though he shot his Texas hunting partner in the face) and a vice president who was the only thing standing between America and its enemies.

He acts like he is America. But America didn’t like Dick Cheney.

The whole article is recommended as Dowd is at her conservative-bashing finest.  It's almost a shame that Cheney has almost become more machine than man and thus may be given a bit a sympathy from Dowd in the future.  I once got into an argument with someone at the Cato Institute on how brilliant Dowd's journalistic prose is.  He vehemently disagreed though he claimed to be a huge Charles Krauthammer fan and I find their style very similar though Dowd is a bit more insulting.  I can only hope to be as a good of a writer as Dowd someday.

Of course to be a great writer, one must practice everyday.  When it comes to fiscal calamities however, doing the same thing over and over again hardly ever yields different results.  Case in point, everyone's favorite democracy Greece, via Mish:

Greece Not Saved

Supposedly "Greece was Saved" on that blue circle when yet another bailout (throwing more good money after bad) was approved.

And to top it all off, check out the one year:

With Finland, Austria, Slovakia, and the Netherlands demanding more collateral for another bailout, it's only a matter of time before Germany and France do the same.  Don't expect this to stop at Greece either, just wait till Spain and Italy need more money.  As the Eurozone continues its descent into insolvency, it's nice to see a small country like Finland flexing its muscles.

So as Ron Paul mentioned in the Fox News interview, FEMA has a wonderful track record of incompetence.  In defiance of the notion that only government can provide in a disaster, check out this story from NPR:

Forecasters don't expect Hurricane Irene to make landfall until Saturday. But for nearly a week now, big-box retailers like Walmart and Home Depot have been getting ready.
They've deployed hundreds of trucks carrying everything from plywood to Pop-Tarts to stores in the storm's path. It's all possible because these retailers have turned hurricane preparation into a science — one that government emergency agencies have begun to embrace.
At Home Depot's Hurricane Command Center in Atlanta, for example, about 100 associates have been trying to anticipate how Irene will affect its East Coast stores from the Carolinas to New York.
At times like this, the Command Center looks much like NASA Mission Control during a shuttle launch, says Russ Householder, the company's emergency-response captain.

Well would you look at that!  Those evil capitalists and their lust for profit are providing people with food and water in a time of need. How horrible! If only FEMA were around to put an end to such exploitation!

I will end with this great interview of Ayn Rand by Mike Wallace conducted in 1959.  While I am not a big fan of Rand's hatred of charity and religion, she provides a brilliant reputation of Wallace's assertion that roads and hospitals are "free" because the government provides them:

It's amazing such idiotic and naive questions from Wallace on government provided services masqueraded as journalism back then.

Back from Seattle, The Week's Econ Events, Topped Off With Jackson Hole, and Harrisburg Ready to Tell Bondholders to Hit the High Road

Got back in from Seattle early this morning.  The 19th annual State Policy Network conference was great! I got to experience the wonderful TSA screening procedure, of which I wrote an article on for the Mises Institute today. Like most conferences however, I was unable to keep detailed track of news.  A few things stuck out, mainly Warren Buffet shoving a few billions into Bank of America, a kind of war of words between Mr. Banker Insider Nouriel Roubini and Zerohedge, Bernanke's much hyped Jackson Hole speech, and Harrisburg readying to miss a bond payment.

On Buffet's BoA investment, clearly he thinks the Bank is a worthy moneymaker.  Giving that Obama's speech on a jobs plan is coming September 5th and will most likely contain a push for the infamous infrastructure bank, it looks like Bank of America will benefit financially:

Wall Street Journal misses big point on Obama's upcoming proposal...The bigger point is that Obama WH apparently doesn’t probe the motives of the bankers who are pushing the infrastructure bank on them. I'm guessing that UBS and others are spinning it as “Hey, you’ll be releasing the efficiencies of the private markets and you’ll get more projects underway and faster.”

They probably leave out the part about why the U.S. government — the most efficient, lowest cost borrower in human history — needs Wall Street banks to step in the middle with a fat margin to finance public works.

Buffet has a history of using the government to shut down or buy out competitors, so it looks like something big may be coming BoA's way via the White House and Congress.  Banktocracy at it's finest.

When it comes to the banks and insider deals, no one knows better than Nouriel Roubini.  It seems like Roubini took offense to the bankster's best friend, Zerohedge, during the week over Twitter:

Check out these Roubini tweets:

@zerohedge knows nothing about keynes & the academic studies fiscal stimulus Read all 9 of them & then talk again about "voodoo keynesians"

---

@zerohedge read 9 studies showing that Keynesian stimulus worked.Then write a scientific rebuttal if you got 1.Enough of your juvenile rants

All Roubini has to do is click on over to the Mises Institute if he wants a good rebuttal of Keynesian economics.  Either Roubini actually believes is own nonsense or is worried that the party is coming to an end and has taking it upon himself to keep the status quo.  John Tamny had the perfect description of Roubini about a week in ago at RealClearMarkets:

Moving to the left, Binyamin Appelbaum of the New York Times referred to Perry's outburst as "horrifying", while the vastly overrated Nouriel Roubini, still clinging to his 15 minutes after an economy call that he got right for all the wrong reasons, viewed what Perry said as "criminal".

The biggest news of the week was the much hyped, and much disappointing Jackson Hole speech by the Bernank.  To sum it up rather quickly, here is the word bubble:

According to Zerohedge, there was 10 mentions of inflation and 0 of deflation.  Krugman may be off weeping somewhere.  While QE3 was rumored, Bernake has put it off for now:

Federal Reserve Chairman Ben S. Bernanke said the central bank still has tools to stimulate a recovery that has been weaker than forecast while sticking to his view that growth will pick up.
Bernanke, in a speech today to central bankers and economists at an annual forum in Jackson Hole, Wyoming, didn’t give details on the measures the Fed might take or signal when or whether policy makers might deploy them. A second day has been added to the next Federal Open Market Committee meeting in September to “allow a fuller discussion” of the economy and the Fed’s possible response, Bernanke said.

Let's add a few things up: Buffet investing in BoA + Obama job plan coming in September + and possibly Bernanke announcing QE3 also in September = more privatizing the profits and socializing the losses.

Meanwhile, Europe continues to be the horny drunk girl who keeps ruining the party:

Capital flight from European banks has now reached such a state that for one undisclosed bank needed emergency funding last week for a mere $5 million. Previously, the ECB stepped in to provide $500 million in emergency liquidity measures to non-disclosed banks.

As money flees Europe, it lands in US banks that do not know what to do with it. Capital flight has led to negative interest rates in the US.

Duration	U.S.	Japan	Germany	UK
3-Month	-.01	0.10	0.97	0.51
6-Month	0.02	0.11	0.56	0.59
12-Month	0.08	0.12	0.59	0.53
2-Year	0.19	0.14	063	0.59
3-Year	0.32	0.17	0.67	0.75
5-Year	0.93	0.34	1.20	1.36
7-Year	1.52	0.59	1.63	1.84
10-Year	2.18	1.04	2.14	2.49
30-Year	3.55	2.01	2.98	3.75

European banks are struggling to stay afloat despite the ECB's help, this is what is holding back a Fed induced recovery here in the states.

Though money printing has accelerated in the U.S., it looks like my hometown is making international news as it threatens to leave bondholders on the hook:

Harrisburg, Pennsylvania’s capital, may miss $3.3 million in general-obligation bond payments due Sept. 15 if council members fail to approve a portion of a fiscal rescue plan, according to the mayor’s spokesman.
The city faces a $5 million deficit and is trying to arrange for a $7.5 million advance on a lease of municipal land to the Harrisburg Parking Authority.

I have written on this issue and the correct solution before.  If the admirably inept Mayor Thompson had any sense of decency, she would lapse on the bond payment.  It would send the perfect signal, that actions have consequences and the city's creditors miscalculated in investing.  Borrowing your way out of debt makes as much sense as Robert Reich playing in the NBA.  The sooner Keynesian clowns realize this, the better.

I will end with a very high profile endorsement of Ron Paul's campaign, the legend himself Jim Rogers!

Fed Bailouts Revealed, Gold On Its Way Up, and Antiwar.com Being Investigated by FBI?

Remember when Bloomberg's "right-to-know" request on the Fed's records during 2008 was held up by the Supreme Court?  Yes, it was a glorious day indeed, and Bloomberg finally has the goods after sifting through almost 30,000 pages of documents:

Citigroup Inc. (C) and Bank of America Corp. (BAC) were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits.
By 2008, the housing market’s collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret.

Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress.

Don't forget about the foreign borrowers of course:

Almost half of the Fed’s top 30 borrowers, measured by peak balances, were European firms. They included Edinburgh-based Royal Bank of Scotland Plc, which took $84.5 billion, the most of any non-U.S. lender, and Zurich-based UBS AG (UBSN), which got $77.2 billion. Germany’s Hypo Real Estate Holding AG borrowed $28.7 billion, an average of $21 million for each of its 1,366 employees.

And of course those ultra low low rates that only the Bernank can supply!:

While the Fed’s last-resort lending programs generally charge above-market interest rates to deter routine borrowing, that practice sometimes flipped during the crisis. On Oct. 20, 2008, for example, the central bank agreed to make $113.3 billion of 28-day loans through its Term Auction Facility at a rate of 1.1 percent, according to a press release at the time.
The rate was less than a third of the 3.8 percent that banks were charging each other to make one-month loans on that day. Bank of America and Wachovia Corp. each got $15 billion of the 1.1 percent TAF loans, followed by Royal Bank of Scotland’s RBS Citizens NA unit with $10 billion, Fed data show.

Here is the real kicker:

The Fed’s liquidity lifelines may increase the chances that banks engage in excessive risk-taking with borrowed money, Rogoff said. Such a phenomenon, known as moral hazard, occurs if banks assume the Fed will be there when they need it, he said. The size of bank borrowings “certainly shows the Fed bailout was in many ways much larger than TARP,” Rogoff said.

Awww, corporate welfare at its finest.  I guess this is why Bernanke got Man of the Year from Time.  Thankfully Bloomberg has put all the data together in a handy interactive graph for all of us, click to be linked:

So how did all this Fed stimulus help the well-connected banks?  See Bank of America today:

How about everyone's favorite Goldman Sachs:

There is a good reason for Goldman's sudden drop though, it looks like the SEC may be starting to do their job, albeit a few years too late.  Via Reuters:

Goldman Sachs Chief Executive Lloyd Blankfein has hired Reid Weingarten, a high-profile Washington defense attorney whose past clients include a former Enron accounting officer, according to a government source familiar with the matter.

Hmm, looks like something big is coming Blankfein's way.  Speaking of big, look at gold prices today:

Silver isn't gonna be left out of the fun:

As the world crumbles, precious metals soar.  And here I thought a correction was coming soon (it still may).  Looks like Krugman has some explaining to do!

Now that it looks like Libya may finally be in the rebels' hands, it looks like the internet's premier news site on everything American imperialism, the great Antiwar.com, is under investigation by the FBI.  I am not making this up:

It was a beautiful Saturday afternoon and it was my day off. Sitting in my rather neglected garden, as the late afternoon light sparkled golden on the tops of the plum trees, I put down my book – the 1995 edition of The Year’s Best Science Fiction, edited by Gardner Dozois – with more than a little annoyance. I was smack dab in the middle of a short story, “Asylum,” by Katharine Kerr, a tale about a future military coup in the US, written from the point of view of a particularly earnest liberal with faintly radical leanings. The main character is a woman writer who is abroad when the generals take over, and is marked as an enemy of the state on account of her book, Christian Fascism: Its Roots and Rise. Her San Francisco office is raided and her files carted away. She gets a call from a friend before the coup plotters cut off all communications with the outside world: “It’s seven days in May – stay where you are!” She stays, but is tortured by the prospect of her daughter being in harm’s way: when communications with America are finally restored, she wrestles with the question of whether to pick up the phone and make a call that might endanger her daughter. After all, what if the Christian Fascists are listening?
The phone kept ringing. I picked it up with annoyance: it was our webmaster, Eric Garris, telling me about this – FBI documents recovered through the Freedom of Information Act that detail surveillance of Antiwar.com, the staff, and specifically yours truly.
A word about the authenticity of the documents and their provenance: they were posted on a public website, Scribd.com: their form, including the extensive redactions, the acronymic bureaucratese, and the lunk-headed cluelessness which dominates the FBI’s corporate culture, so to speak, combine to verify their authenticity.

Now this isn't really surprising considering some of things that are written on Antiwar.com.  The same goes for Lewrockwell.com.  Still, it is quite disturbing to see a site that reports on news with plenty of opinion get this kind of scrutiny from the federal government.  Just see this excerpt:

I saved the best for last: the “action” recommendations contained in the memo. While directing the Washington FBI’s Electronic Communication Analysis Unit (ECAU) to “further monitor the postings of website www.antiwar.com,” the San Francisco office – where both Eric and I lived at the time – is tasked with the following:
“It is recommended that a PI be opened to determine if [redacted] are engaging in, or have engaged in, activities which constitute a threat to National Security on behalf of a foreign power.”
Reading that, I could hardly believe my eyes. Yielding to a sudden need for fresh air, I went out into my garden and just sat there for a few moments, warming myself in the last rays of the setting sun. It all seemed so unreal. Was this really happening, or had I imagined the whole thing? I returned to my computer and read it again, just to be certain, and – sure enough – there it was, plain as the pixels on my screen: I was accused of being “a threat to National Security” and working “on behalf of a foreign power.”
What “foreign power” would that be – Libertopia? Galt’s Gulch?

Tomorrow I am off to a conference in Seattle, expect no posting.  I will happily take bets on whether or not some news will leak that the U.S. financed and provided a lot more support to the rebels then originally let on.  I will also take bets on what kind of government the rebels will implement; something tells me it will be worse than democracy, which is already pretty bad.

Works Progress Administration in Hungary, Nick Gillespie Defending Child Labor and on Bill Maher, and a Revealing Insight on Welfare

Paul Krugman and Robert Reich have got to be salivating over this disturbing report via Spiegel:

They set out at seven in the morning, carrying spades, axes and scythes, and climb one of the hills above Gyöngyöspata, a wine-growing village in northern Hungary: Forty gypsies and their supervisor.

This group of dark-skinned men and women, consisting of old and young people, teenagers and widows, represents the advance guard of a massive undertaking currently underway in Hungary. Under Hungarian Prime Minister Viktor Orbán's plan to promote national renewal and moral rearmament, more than half of all the unemployed nationwide are to be put back to work.

The 40 gypsies from Gyöngyöspata, who don't even use the more acceptable term Roma to describe themselves, have been assigned the job of clearing hibiscus bushes and undergrowth for four months. They are among 300,000 Hungarians who will soon be performing "community" work under a new law, which dictates that anyone who is out of work for more than 90 days in a row forfeits the right to social welfare and membership in the social insurance system.

Are "forced labor camps" being created here, in the middle of the European Union, as the Hungarian daily newspaper Népszava wrote? Are unemployed people from remote villages being housed in worker camps on large construction sites? No one has to work against his will, but everyone who does show up for work is paid the legal minimum wage, says Karoly Papp, the state secretary in the Interior Ministry in charge of the program.

 Wait, it gets worse:

The government is still searching for projects to put the army of the unemployed back to work, at a monthly wage of roughly €290 ($418). There is talk of building dikes, planting trees and collecting herbs. The crew in Gyöngyöspata is "de-bushing" 16 hectares (40 acres) of overgrown community land to make way for the planting of "real Hungarian oaks," as the local mayor, a member of the radical right-wing Jobbik Party, puts it.

Well blow me down!  Looks like we have a genuine government make-work program creating billions of dollars in wealth!  What? You mean "de bushing" a bunch of brush fields with tax dollars probably isn't an efficient use of resource and money?  Don't be silly, all government stimulus money creates wealth!  Those dastardly rich and their hording of capital are to blame!

But in all seriousness, I can understand why the unemployed in Hungary might like this, but how do the taxpayers put up with it?  Just read this:

The things Prime Minister Orbán and his friends in the Fidesz Party are prescribing don't always make sense. However, there is no mistaking that they are in a hurry. The package of laws, ordinances and guidelines to define labor policies, which Orbán got off the ground in only 15 months, reads like the minutes of a top-down coup d'etat.
Orbán's concept of moral renewal and economic rehabilitation for Hungary has several tenets: Those without work are to be given work; those who are already working should work more in the future, but without being paid more; in the interest of the country's "stability," those who hold political power today should be allowed to remain in office for as long as possible; and those who once had power and did not use it for the benefit of the people should now be punished.

Well if it smells like dictatorship and totalitarianism, looks like dictatorship and totalitarianism, you know what comes next.  I bet this is what Keynes was talking about in his introduction to the German edition of The General Theory.

Yesterday, on the John Stossel show, he had Reason's Nick Gillespie and Vice President of the Cato Institute David Boaz on defending such liberal punching bags like child labor, insider trading, and organ sales:

Also be sure not to miss Gillespie's great appearance on Bill Maher just a few weeks ago:

"I'm the mayor of the poorest town in the U.S."

Gillespie- "You must be very proud."

Classic.  When I was down in D.C., everyone was raving about the video.  Thankfully I finally got around to watching it.

I will end with this very insightful e-mail via the LRC Blog:

My wife works for the state. As an anarcho-capitalist, that drives me crazy. But she is one of those folks who has honest intentions and chose her career path because she wanted to help people. She is a counselor (social worker) whose job is to help single mothers get off of government welfare. However, having worked in this area for years, she sees government welfare for what it is—a means to foster dependency. It breaks her heart to see the people who really do try beat down, and those who are perfectly happy mooching off the system rewarded.
A number of times we have gone into our own pockets to help individuals who we thought were serious about improving their lives but were discouraged by the state. Her employer prohibits this practice, and my wife could lose her job if they found out.
My wife is currently working with a woman who is in desperate need of transportation. She lives in a rural area where there are virtually no employment opportunities, and has no family to help her. She was recently accepted at a local community college to take classes in cosmetology, but the state-provided public transportation service twice failed to pick her up to go to the orientation despite the arrangements being made by my wife. The result is that the woman won't be able to start school until next year.

After looking at what is available from the state (nothing) and the area churches (very little), my wife decided that the only alternative would be for us to buy this woman a used car. So my wife contacted a friend of hers in that business. Of course, as you well know, the government's Cash for Clunkers program decimated the used car market. My wife's friend said that he has never seen prices this high for used cars. So instead of getting her a $500 car, the best he could do was a car for $1,900. Okay, that stinks, but it wasn't like it was totally unexpected.
So now we look into getting the woman a drivers license (she moved from another state and hers had expired). It turns out that it will be a month before the DMV even has an opening so she can take the test!! And now the state requires two separate tests, the written test and then the driving test, on two separate days. This woman lives nowhere close to us, but it will be up to my wife and I to get her to the DMV not once, but twice because of stupid bureaucratic rules.
I cannot express to you how frustrating this has been. Every time you think you're clear, another obstacle is placed in your way. We hear all the time from the Limousine Liberals and the politicians that only the state can take care of the poor. Yet, it is this very institution which hampers us, or, in some cases, completely prohibits us from helping those who really need it. I truly believe that most human beings are compassionate and empathetic. Or, at least, enough of us are that poor people aren't going to be left starving in the streets absent government "assistance." Once again, the state is not the solution. As always, it is the problem.

While it is aggravating to read something like that, this is a good pick-me-up:

Update- It looks like Libyan rebels are finally making headway on overthrowing Gaddafi by capturing his sons.  There you have, our Nobel Peace Prize winning President just financed the overthrowing of a government with our tax dollars and the left has nothing but praise for him.  Oh how the tides do change with the President has a D next to his name.  At this point we can only hope that no blowback (see CIA trains bin Laden and U.S. backing Shah coup in Iran) comes from this.  Seeing as how we don't really know the rebels' true intentions or beliefs, God knows what happens from here.  In other news, it looks like the BBC has finally come clean in its role of promoting the overthrow of the democratically elected government of Iran in 1953.

Why We Got Out of WWII, Ron Paul's Stock Portfolio, and the Benefits of Space Exploration

Mish has an interesting post today highlighting some Bank of England idiocy and F.D.R. revisionism.  While Mish is right that banks in England would be dumb to start lending in such risky economic conditions and that massive New Deal spending didn't get us out of the Depression, I have a slight issue with this claim:

It was war that started the recovery, not the policies of Roosevelt. That statement may sound contrary to Austrian economics but it's not.

Destruction of productive capacity and assets is always a net loss. War is never a good thing in this regard. To believe otherwise is to believe in the Broken Window Fallacy.

However, the US was the only major country that did not suffer major losses in production capacity. Following WWII, the US became the growth engine of the world, further fueled by war-weary soldiers who returned home and started families, kicking off the "baby boom" and all of its ramifications.

Europe followed eventually, but no one in their right mind could suggest that WWII or wars in general are a good thing for stimulating economies.

While Mish is right that its lunacy to think wars are good for economic growth, he is missing a crucial element on why the U.S. experienced such post war boom following WWII.  The Austrian school, and Say's law for that matter, states that savings and capital accumulation are the keys for sustainable growth.  For conditions of civilian life during WWII, please refer to this great post by Mary Theroux of the Independent Institute:

As Dr. Robert Higgs has more than ably shown, the Great Depression continued, and deepened, throughout the New Deal and throughout World War II. The World War II years were a time of shared privation, with virtually every item that we take for granted today either rationed: e.g., meat, gasoline, sugar, clothing; or not available at any cost: e.g., new cars, appliances, etc. The American standard of living throughout World War II remained at an excruciatingly low level that no 21st century American would accept. Meanwhile, unemployment disappeared simply because 16 million able-bodied people were sent to war, paid below-market rates and subject to danger, death, and maiming they may not have preferred to unemployment.

I have always theorized that government rationing and wage/price controls during WWII practically forced the U.S. population to increase their savings (same with military personnel who were too busy being shot at to buy anything).  Also, during my labor relations class last fall, my union loving professor talked about the huge profits many big corporations made during the War due to such government regulations.  All of this, I believe, laid the groundwork for the post war boom.  Eventually I hope to find data to back up this theory.  While Mish is right in some sense that literally destroying your competitors is good for bolstering your market share, he falls for the broken window fallacy himself.  Even if England, France, Germany, etc. industrial infrastructure miraculously stayed in tact, the capital accumulation and savings achieved in the U.S. would have still ushered in a boom.

It still sickens me to think that the likes of Paul Krugman are practically dying for another war (without explicitly saying it of course) just to show off the great benefits of massive government spending.
Speaking of sickening pro-government quotes, check out this one Bob Wenzel dug up from Mr. Stimulus himself:

Keynes stated:

…the new system is now sufficiently crystallised to be reviewed. The result is impressive. The Russian innovators have passed, not only from the revolutionary stage, but also from the doctrinaire stage….They are engaged in the vast administrative task of making a completely new set of social and economic institutions work smoothly and successfully over a territory so extensive that it covers one sixth of the land surface of the world….Methods are still changing rapidly in response to experience. The largest scale empiricism and experimentalism which has ever been attempted by disinterested administrators is in operation. Meanwhile, the Webbs have enabled us to see the direction in which things appear to be moving and how far they have got.

This is even more damming than his infamous introduction to the Germany edition of The General Theory.

Barry Ritholtz, quoting of a Barron's column by Jim McTague, has a great post today on Ron Paul's stock portfolio:

He looks at the financial holdings of Ron Paul via congressional financial disclosures:

“Gold-mining stocks, where Paul has the bulk of his money, have also hit pay dirt, albeit rising at a slower pace. Gold is up about 28% this year, through Thursday, to $1,823.80 a troy ounce, and 106.8% since 2009. In the same periods, the NYSE ARCA Gold Miners Index is down 2.9% and up 78.6%. The S&P 500 is down 9.3% and up 26.3%.
In his most recent financial disclosure, which covers the year 2010, Paul had $1.6 million to $3.5 million in gold- mining stocks. He also has a stake in three bear-market funds—and has for many years.
In all, Ron Paul’s portfolio amounts to a super bearish bet against the U.S. economy. If the country had defaulted on its debt earlier this month, he likely would have made a bundle. The congressman voted against House Speaker John Boehner’s plan to lift the nation’s $14.3 trillion spending cap.”

Pot of Gold: Ron Paul’s Top 10 Holdings

	Return*	Return*	Size of
Company/Ticker	1-Yr	3-Yr	Holding
Goldcorp / GG	19.13%	17.00%	$500,001 – $1,000,000
Barrick Gold / ABX	12.24	15.49	$250,001 – $500,000
Newmont Mining C Stock / NEM	1.12	12.02	$250,001 – $500,000
Agnico Eagle Mines / AEM	1.13	5.88	$100,001 – $250,000
AngloGold Ashanti / AU	2.02	19.33	$100,001 – $250,000
IAM Gold / IAG	3.69	52.07	$100,001 – $250,000
Mag Silver / MVG	39.97	9.75	$50,001 – $100,000
Pan American Silver / PAAS	22.72	4.71	$50,001 – $100,000
Silver Wheaton / SLW	74.51	49.54	$50,001 – $100,000
Virginia Mines / VGMNF.OTC	28.05	31.11	$15,001 – $50,000
Gold	48.34	31.61
S&P 500	6.04	-1.25
*All returns are as of 8/18/11; three-year returns are annualized.

How the hell The Big Picture qualifies as the 5th most visited libertarian site is beyond me.  Ritholtz, as much as I like him, can be just as Keynesian as Krugman sometimes.  Judging by the comments on the Ron Paul post, many of the readers are as well.  Some accuse Paul of voting the way he does in order to increase his financial profit.  Too bad Ron Paul has consistently voted against the kind of policies that drive up the price of gold!  That fact seems to be lost on those who actually think the U.S. defaulting on its debt would cause economic calamity.

Since I am talking about Ron Paul, I should wish him happy 76th birthday!  As for his birthday money bomb, so far he has raised almost $1,200,000 so far.  Here is a pretty good McLaughlin Group discussion on Paul's growing influence:

Pretty good discussion besides Eleanor Clift's swipe at capitalism toward the end.

I will end with pointing out this intriguing excerpt from a new Doug Casey interview on the potential benefits of space exploration:

L: Let’s talk about that for a moment. You and I see eye to eye on this, but some of our readers may not. At a time when people are worried about basic things like having a job tomorrow and food the week after, why should anyone care about exploring space? Why on earth – or off it – would anyone want to move out there? And how would one make money off it, justifying the R&D expenses?
Doug: Well, on the most fundamental level, getting out there makes the pie bigger for everyone. If it’s done economically, and for economic gain, we’re talking about whole new worlds to develop – that’s valuable real estate. There are vast new resources to make use of, ranging from metals in the asteroid belt to all that solar energy that’s just being radiated off into space right now. There’s the ability to manufacture in zero gravity, which has enormous efficiency implications, as well as other technical advantages. Space access is extremely valuable, and those who get there first are going to make fortunes. Mobilizing that wealth could and would create far more work than there are people to do it – not just in America, but even for the hungry masses in Africa and Asia. Simply put, adding to the net wealth in the world is good for everyone.

And in true Doug Casey fashion, he takes rips apart NASA:

L: Perhaps an ethically superior idea might be to auction the assets and distribute the proceeds to taxpayers who were plundered to pay for NASA in the first place. A sort of delayed restitution. But that would never happen. Getting the government out of space is so important, I’d be willing to encourage them to disband NASA and sell the parts to pay down the national debt. That idea might actually gain some traction in D.C., and the proceeds wouldn’t be enough to really help the government much.
Doug: Yes. But I fear NASA will never be abolished simply because it’s effectively an arm of the military. Anyway, you can never really reduce bureaucracy by trimming it back. It just grows again in subsequent appropriations rounds. The only way is to totally abolish the bureaucracy, cut it out by the roots, and ban the state from getting involved in its former functions.


That would create the space for a phoenix to rise from the ashes. That’s important, because a lot of people who should know better are still sympathetic to NASA. When it was a brand-new bureaucracy with a clearly defined and powerful mission, full of young, idealistic hotshots, it actually was an organization that got things done. That was before it became corrupt, stodgy, concrete-bound, and constipated. People remember the glory days and don’t see that NASA is just another bureaucracy today. It’s not quite like the post office playing with rockets, but it is unfocused and inefficient. I wonder if NASA even could put a man on the moon today, if it were given the green light to do so. It’s not a certainty, even though the technology has taken quantum leaps forward since 1969. Do you realize it’s been 39 years since a man last walked on the moon?
L: Yes – and if the government hadn’t been left in charge of space exploration, I think we’d be able to vacation there as easily as Argentina these days. The technology exists.

Not to long ago, I heard a report on how even if we tried going to the moon again, we wouldn't be able to.  That should strike everyone as incredibly absurd.  How do we now have the internet, iPads, and cell phones, yet we don't have the ability to replicate something we did almost 40 years ago?  The answer is obvious from the interview.

Stephen Moore the Austrian, Tamny Rips Apart Bernanke, Rick Perry Getting Help from BoA, and Robert Reich on the Downgrade

A few mainstream commentators actually had some pretty lucid economic insight today.  First up is Stephen Moore in his latest Wall Street Journal piece "Why Americans Hate Economics" who does a terrific job of tearing modern day Keynesianism to shreds:

Mr. Carney explained that unemployment insurance "is one of the most direct ways to infuse money into the economy because people who are unemployed and obviously aren't earning a paycheck are going to spend the money that they get . . . and that creates growth and income for businesses that then lead them to making decisions about jobs—more hiring."

That's a perfect Keynesian answer, and also perfectly nonsensical. What the White House is telling us is that the more unemployed people we can pay for not working, the more people will work. Only someone with a Ph.D. in economics from an elite university would believe this.

Economic bimboism is rampant in Washington. The Center for American Progress held a forum earlier this summer arguing that raising the minimum wage would create more jobs. For this to be true, you have to believe that the more it costs a business to hire a worker, the more workers companies will want to hire.
A few months ago Mr. Obama blamed high unemployment on businesses becoming "more efficient with a lot fewer workers," and he mentioned ATMs and airport kiosks. The Luddites are back raging against the machine. If Mr. Obama really wants to get to full employment, why not ban farm equipment?
Or consider the biggest whopper: Mr. Obama's thoroughly discredited $830 billion stimulus bill. We were promised $1.50 or even up to $3 of economic benefit—the mythical "multiplier"—from every dollar the government spent. There was never any acknowledgment that for the government to spend a dollar, it has to take it from the private economy that is then supposed to create jobs. The multiplier theory only works if you believe there's a fairy passing out free dollars.

Wow, if only Moore would write like this more often maybe the Wall Street Journal wouldn't be such a laughing stock amongst those who actually understand economics.  Look for the editorial page to embrace Rick Perry for president (or better yet Mitt Romney) sometime soon.

Next up we have Mr. Ronald Reagan cheerleader himself Larry Kudlow who talks a lot about the dilemma we are facing of either an oncoming recession or a Fed-induced boom:

Amidst the financial flight-wave to safety, with stocks plunging, gold soaring, and Treasury bond rates collapsing -- and all the European banking fears which go with that -- there's an important sub-theme developing: An almost-forgotten monetary indicator, M2, which is mostly cash, demand-deposit checking accounts, savings deposits, and retail money-market funds, has been soaring.
According to the St. Louis Fed, M2 is up 24.2 percent at an annual rate over the past two months. Almost out of the blue, that comes to a near $500 billion increase. In rough terms, the M2 explosion breaks down to $165 billion in demand deposits and $335 billion in savings deposits.
What's going on here? There's a flight to government-guaranteed accounts. Some people believe Europeans are withdrawing from their own banking system and parking their money in the U.S. banking system, guaranteed by Uncle Sam. Kelly Evans reports in her Wall Street Journal column of a $30 billion outflow from equity mutual funds that has probably gone into cash.
This is a very disconcerting development. Normally, big M2 growth would signal a faster economy, and maybe even higher inflation. But as economist Michael Darda points out, the velocity, or turnover, of money seems to be plunging.

What's going on indeed.  While the Euro crisis is contributing to an overall reluctance to lend, such lending will most likely translate into inflation.  As Bob Murphy points out in a new post, it looks like the excess reserves stored at the Fed are indeed starting to leak out while reserve requirements are being increased.  In other words, not a good sign.

John Tamny has an interesting RealClearMarkets article today on whether or not Bernanke's policy of money printing is treasonous.  While Tamny has been a continual critic of the Fed over the years, his comparison of Osama bin Laden to Bernanke is compelling:

Back to reality, Perry's words hit a nerve because he spoke honestly about what many voters feel. As Keynes long ago noted, currency devaluation is the best way to inflame society, and voters are mad.

Osama bin Laden was a terrorist by all accounts, and by many accounts the terrorist act that he helped orchestrate on 9/11 inflicted great economic damage on the United States beyond the generalized horrors of that day. But were bin Laden's actions worse for the economy than those of Ben Bernanke? Let's see.
On 9/11 the price of gold was trading around $286/ounce, a gallon of gasoline (according to the Energy Information Administration) went for $1.53, and the U.S. unemployment rate stood at 5%. One year later, with the economy having absorbed the bin Laden body blow, gold traded at $317/ounce, a gallon of gas sold for $1.35, and unemployment had risen to 5.7%.
So while gas actually ticked downward somewhat, it's fair to presume that the risk aversion wrought by Osama's act had some kind of negative impact on the dollar such that gold was trading higher.

Looking at the numbers, Bernanke took over in February of 2006. At the time an ounce of gold was selling for $569/ounce (notably, gold spiked from $480 upon his nomination; this jump presumably the markets pricing in what was ahead), a gallon of gas retailed for $2.24, and unemployment had fallen back down to 4.8%. Not great numbers, particularly those of gas and gold, but somewhat calm.
Fast forward 5 ½ years later, however, and the situation is ugly. Gold, the most devaluation/inflation sensitive of all market indicators has more than tripled to over $1,800/ounce, the price of a gallon of gasoline has jumped to $3.58, and the rate of U.S. unemployment has nearly doubled to 9.1%. In the real world our blundering Fed Chairman would be gone by now, but in a Washington largely oblivious to market discipline, Bernanke has failed upward; graduating to "the world's foremost Great Depression scholar" despite economic instincts that suggest he would have felt right at home in the Hoover and FDR administrations that gave us the 1930s.

Now Tamny is smart and doesn't call Bernanke a terrorist, but the comparison of bin Laden's economic damage to Bernanke's is riveting.  Of course killing thousands of people shouldn't be compared to making the lives of millions a lot more difficult, but if commodity prices continue to soar and inflation takes hold round the world (if Ben won't let market clearing deflation do its job), Bernanke may have blood on his hands.  Arab spring wasn't due to discontent with political leaders alone.

Now this is interesting, here we have James Mahoney, Bank of America's Director of Public Policy, pledging his support to Governor Rick Perry:

"Bank of America...We will help you out.."

Any bets on whether they are bankrolling Obama's reelection too?  You gotta love plutocracy.

I will end with this humorous video from none other than Robert Reich on what the downgrade for the U.S. credit rating means:

Of course the end point Reich makes is wrong, but if the chowder Bernanke makes is as good as his monetary policy, I will pass.