Another brilliant, funny, irreverent lecture by Murry Rothbard, here.
Tag Archives: Money/Economy/Taxes
New Year’s Predictions for 2011
My predictions:
1. We will see the beginning of the collapse of the bond market. The truth about flawed fiat currencies will begin to emerge. No one will want government debt. The specter of the choice between government default and hyper inflation will haunt us all.
2. In response to a great, violent threat, President Obama will appear on television and make a heroic speech about security, the American way of life, and preserving our liberty. Despite its design, the speech will not salvage his popularity.
3. Ron Paul will be accused of racism, nazi-ism, and/or homophobia. As Ron Paul popularity grows, and as his long record of accurate predictions becomes increasingly verified by the economic crisis, his message of liberty becomes increasingly threatening to the status quo. Look for slander, followed by more extreme tactics.
4. Governments hate a free press. Look for internet regulation in the U.S. and western Europe. Secret blogging and anonymity services will become increasingly valuable. More scandals will emerge, some directly threatening, incriminating the White House. The Democratic party will attempt to salvage itself by abandoning Obama.
5. Socialist explanations for the economic crisis, which blame greed and private enterprise, will get great exposure on television and in print as government looks for reasons to increase power and taxation to cover its many irresponsible programs. The socialist explanations will gain some support, but the liberty message and the culpability of government will not go away.
6. Faced with plummeting popularity, even in Donetsk, Ukraine’s ruling party, the Party of Regions, will have to chose between failure and tyranny. They will attempt to chose tyranny.
***
Peter Schiff:
* Higher commodity prices will begin to hit consumer.
* Mortgage rates will continue to rise.
***
Gerald Celente:
1. economic crisis wake up call
2. economic unions will splinter
3. government will intensify efforts to take wealth from the people
4. crime waves
5. crackdown on liberty (in the name of fighting crime)
***
Peter Schiff — Year-end review
* Dow’s 10% year gain is BS. Foreign currencies did better.
* US dollar gains is also BS. Gold was up 27%! Silver was up 75%! Does that sound like a strong dollar?
* Mining stocks are beginning to lead.
* Commodities (CRB) up 18%. Oil up 17%. Cattle up 20%. Copper up 34%. Corn 40%. Wheat 43%. Soy beans way up. Sugar up 52%. Coffee 63%. Cotton up 90%.
* China may switch investments from dollars to euros in 2011.
* Kudlow show calls for more government welfare in China & less individual responsibility.
Banks Open Loan Spigot
This is not good necessarily good news. This is the newly printed money, which has been sitting dormant in the form of excess bank reserves finding its way into the economy — a harbinger for further price inflation.
Some big U.S. banks are starting to increase their lending to businesses as demand for loans rises and healthier banks seek to grab customers from weaker rivals.
After declining steadily for most of the past two years, the amount of commercial and industrial loans held by commercial banks inched upward during the past two months, according to the Federal Reserve.
Moody’s Analytics estimates that commercial and industrial lending in the fourth quarter has grown 0.2% from the third quarter, to $1.22 trillion, the first quarterly increase in two years. Moody’s predicts such lending will rise 3% next year.
An uptick in business lending is an optimistic sign for the economy and can help to make the recovery self-sustaining. 
(Read more from wsj.com)
Coming Soon: Municipal Meltdown
George Ought to Pay
A very simple story about socialism for the New Year:
Tom Dilorenzo on “FDR’s Folly”
Great lecture entitled A Recipe for the Next Great Depression. Available here.
Two Views of China’s modern Collectivism
I found this video last week, and couldn’t believe the whole-hearted endorsement of collectivization.
“China’s wealthiest village . . . just five years ago the combined assets of the village were valued at 1.7 billion dollars. Now they total over 6 billion. The village offers a microcosm of China’s success story . . . The village cooperative already owns two helicopters . . . its investing in a fleet of twenty planes . . . the villagers mainly attribute their riches to one man, Wu Run Bau, the former village chief. He kept property under collective ownership and made each villager a stake holder in Huaxi’s fortunes.”
Notice that much of villages wealth is attributed to property values and government spending.
Then I saw this video which more accurately identifies cause and effect in a collectivized economy, and the fraud inherent in GDP figures:
Iceland Recovers — No Bailout, No Euro
Iceland has finally emerged from deep recession after allowing its currency to plunge and washing its hands of private bank debt, prompting an intense the debate over whether Ireland might suffer less damage if adopted the same strategy.
The Nordic economy grew at 1.2pc in the third quarter and looks poised to rebound next year. It ends a gruelling slump caused largely by the “New Viking” antics of Landsbanki, Glitnir and Kaupthing, the trio of lenders that brought down Iceland’s financial system in September 2008. (Read more from telegraph.co.uk)
RIP Congressman Gross
Never heard of this guy, but he sounds like a hero:
30 Idiotic Ben Bernanke Quotes
#1 (October 20, 2005) “House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.”
#2 (On 60 Minutes in response to a question about what would have happened if the Federal Reserve had not “bailed out” the U.S. economy) “Unemployment would be much, much higher. It might be something like it was in the Depression. Twenty-five percent.”
#3 (February 15, 2006) “Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”
#4 (January 10, 2008) “The Federal Reserve is not currently forecasting a recession.”
#5 (When asked directly during a congressional hearing if the Federal Reserve would monetize U.S. government debt) “The Federal Reserve will not monetize the debt.”
#6 “One myth that’s out there is that what we’re doing is printing money. We’re not printing money.”
#7 “The money supply is not changing in any significant way. What we’re doing is lowering interest rates by buying Treasury securities.”
#8 (November 21, 2002) “The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost.”
#9 (March 28, 2007) “At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”
#10 (July, 2005) “We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”
#11 “Although low inflation is generally good, inflation that is too low can pose risks to the economy – especially when the economy is struggling.”
#12 (February 15, 2007) “Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low.”
#13 (October 31, 2007) “It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions.”
#14 (On the possibility that the Fed might launch QE3) “Oh, it’s certainly possible. And again, it depends on the efficacy of the program. It depends on inflation. And finally it depends on how the economy looks.”
#15 (November 15, 2005) “With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”
#16 (January 18, 2008) “[The U.S. economy] has a strong labor force, excellent productivity and technology, and a deep and liquid financial market that is in the process of repairing itself.”
#17 “I wish I’d been omniscient and seen the crisis coming.”
#18 (May 17, 2007) “All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.”
#19 “The GSEs are adequately capitalized. They are in no danger of failing.”
#20 (Two months before Fannie Mae and Freddie Mac collapsed and were nationalized) “They will make it through the storm.”
#21 (September 23rd, 2008) “My interest is solely for the strength and recovery of the U.S. economy.”
#22 “Economics has many substantive areas of knowledge where there is agreement but also contains areas of controversy. That’s inescapable.”
#23 “I don’t think that Chinese ownership of U.S. assets is so large as to put our country at risk economically.”
#24 “We’ve been very, very clear that we will not allow inflation to rise above 2 percent.”
#25 “…inflation is running at rates that are too low relative to the levels that the Committee judges to be most consistent with the Federal Reserve’s dual mandate in the longer run.”
#26 (June 10, 2008) “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”
#27 “Not all information is beneficial.”
#28 “The financial crisis appears to be mostly behind us, and the economy seems to have stabilized and is expanding again.”
#29 “Similarly, the mandate-consistent inflation rate–the inflation rate that best promotes our dual objectives in the long run–is not necessarily zero; indeed, Committee participants have generally judged that a modestly positive inflation rate over the longer run is most consistent with the dual mandate.”
#30 (October 4, 2006) “If current trends continue, the typical U.S. worker will be considerably more productive several decades from now. Thus, one might argue that letting future generations bear the burden of population aging is appropriate, as they will likely be richer than we are even taking that burden into account.”
(Read more from blacklistednews.com)
Central Bank Propaganda 1800-present
Ron Paul on Fed, Omnibus Spending Bill
A Taxpayer Receipt
Below is an example of what a receipt might look like for a typical taxpayer with a 2009 U.S. median income of $34,140, who paid $5,400 in federal income tax and FICA. It is very easy to generate and extremely informative to taxpayers.
What You Paid For
2009 tax receipt for a taxpayer earning $34,140 and paying
$5,400 in federal income tax and FICA (selected items)
| Social Security | $1,040.70 |
| Medicare | $625.51 |
| Medicaid | $385.28 |
| Interest on the National Debt | $287.03 |
| Combat Operations in Iraq and Afghanistan | $229.17 |
| Military Personnel | $192.79 |
| Veteran’s Benefits | $74.65 |
| Federal Highways | $63.89 |
| Health care research (NIH) | $46.54 |
| Foreign Aid | $46.08 |
| Education Funding for Low Income K-12 Students | $38.17 |
| Military Retirement Benefits | $32.60 |
| Pell Grants for Low Income College Students | $29.75 |
| NASA Space Program | $28.09 |
| Internal Revenue Service | $17.69 |
| Environmental Clean Up (EPA) | $11.67 |
| The FBI | $11.21 |
| Head Start | $10.91 |
| Public Housing | $10.50 |
| National Parks | $ 4.27 |
| Drug Enforcement Agency | $3.14 |
| Amtrak | $2.23 |
| Smithsonian Museum | $1.12 |
| Funding for the Arts | $0.24 |
| Salaries and benefits for members of Congress | $0.19 |
(source)
The Irish Subjugation
While the deficit is huge, the Irish problems are somewhat different than the fiscal problems of other PIIGS governments. Other PIIGS governments suffer from high and structural public deficits due to unsustainable welfare spending and uncompetitive factor markets. Governments, most prominently the Greek one, used deficit spending to artificially increase the living standards of their populations. Deficits financed the unemployed, public employees, and pensioners; this served to sustain inflexible labor markets.
“The euro came with an implicit bailout guarantee permitting governments to overindulge in debt.”
Not so in Ireland. In some sense Ireland was even too competitive. Ireland has the lowest corporate tax rate in the Economic and Monetary Union (at 12.5 percent). The tax rate attracted banks from all over the world to expand their businesses on the island. As a consequence, Ireland’s banking sector expanded substantially. During the boom years, banks earned immense profits through their privilege of credit expansion and their implicit government backing. As a result of the credit expansion, an Irish housing bubble developed. And its burst caused substantial losses and even insolvency for Irish banks.
While banking profits during the boom were private, its losses were socialized on September 30, 2008, when the Irish government guaranteed all Irish bank liabilities. As of late 2010, Ireland has injected about €50 billion into its banking system. The Irish problems were created, not by an excessive welfare system, but by the socialization of the losses of a privileged banking system. (Read more from mises.org)