While MSNBC is as brain numbing as the other 24 hour news and kindergarten analysis channels, I have always had a soft spot for Morning Joe. The discussion, though lacking in depth, can be pretty entertaining at times. Scarborough takes pot shots at everyone and gives Paul the respect he so rightly deserves for predicting many of our current economic woes. In other words, Scarborough may be a former thief (politician) and a tool of the corporate/statist media, but he is capable of thinking above a 6th grade level. What's great about this interview is that not only does Paul get some respect, he gets a chance to shut down Bob Woodward for repeating the tired old mantra of "cutting government spending would lead to poverty." Paul, like anyone else who understands actual economic theory and history, points out the Depression of 1920 as well as the spending decreases after WWII to show that massively cutting government expenditures does lead to robust economic growth. As much as I pointed this out yesterday during my overly long debate with three individuals on Policymic.com, it didn't sink in. When your worldview is shattered with reality, it can be hard to accept it all at once. Overall, it was a great interview and demonstrates that not only does Paul shine in a friendly environment but also that he keeps up with news like a hawk. I wouldn't doubt that he is watching the happenings in Greece and the EU very closely.
It's too bad most of the news consists of back and forth statements where no one knows what is going on. First the Greek opposition leader has called for G-Pap's resignation and a new election as the PM called off the voter referendum on the bailout deal while simultaneously declaring that democracy died for the banks. This is of course wrong because democracy died not in the past 24 hours but with the advent of central banking a century ago.
And like I said yesterday, it wouldn't take long for new ECB head "Super" Mario Draghi to turn the euro printer up. In a surprising move, Draghi took the axe to the ECB's rate and chopped it down to 1.25%, via Bloomberg:
German 10-year government bonds declined as investors sought higher-yielding assets after the European Central Bank cut its benchmark rate and Greek Prime Minister George Papandreou signaled he won’t call a referendum.
Two-year German notes advanced after the ECB’s Governing Council cut the rate to 1.25 percent, a move predicted by just four of 55 economists in a Bloomberg survey. Italian and Spanish 10-year securities fluctuated after ECB President Mario Draghi said its asset-purchase program can’t sustainably reduce bond yields. Greek two-year yields rose above 100 percent for the first time after France and Germany threatened to withhold aid and said they would treat any referendum on Greece’s second bailout as a vote on its euro membership.Judging by the fact that only 4 of the 55 economists predicted the rate cut, it looks like Draghi is gonna be every banker's wet dream as he keeps the fiat flowing to bolster what has become the sickest joke of a financial system in the history of mankind. Get ready for a bumpy ride.
Update- Wow! Karl Smith embraces the ABCT in regard to China, via Seeking Alpha:
I bring this up because I have never been satisfied with the inevitability argument behind Austrian Business Cycle Theory. I understand why a continuous money-fueled boom would actually lower present discounted living standards. I just don’t know why it has to all come crashing down.
What we should see in the end is a country where eventually the marginal return to investment turns negative and already low consumption rates begin to fall further. An increasing share of income is spent simply maintaining a massive capital stock that no one uses.Well Karl, a continual inflationary policy leads to, well, increasing inflation. That's why it can't last forever despite the wishes of those who want to debunk the limits of reality. China's collapse will be yet another demonstration of the Austrian Business Cycle that will again be overlooked by its detractors.
People are worked to the bone, but have little to show for it. Their roadways and office complexes are massive, but rice takes up half of the family paycheck. Everyone has a job, but no one can afford new clothes. Kids drop out of school at 14 because being a day laborer pays nearly as much as being a doctor. Besides, they’ll have to save for a decade before they can afford a new car and then work double shifts to pay for the gasoline.
That’s the world of massive overinvestment. Its not pretty, but it doesn’t look like ours.
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