JoNova

A science presenter, writer, speaker & former TV host; author of The Skeptic's Handbook (over 200,000 copies distributed & available in 15 languages).


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We are all Austrians now

The meme is spreading. Rapidly, day after day, I’m meeting more Skeptical-Austrians, and Austrian-Skeptics. I don’t mean the country, but the economics.

James Delingpole-the-brilliant enjoyed my post: The Ground Zero of Global Corruption: it starts with The Currency. He’s had his awakening a few months back. Just yesterday I was talking to Redmond, a skeptic in Canada who turned out to be founder and director on Mises.ca (you can’t get much more Austrian than that). Martin Durkin (the infamous director of Great Global Warming Swindle) is an Austrian too. Back in Bali 07, even then, that Monckton, Archibald, and Balle were discussing gold and currencies (nearly half of all the skeptics there). I’m guessing Chiefio might be. I hear Ray Evans of the Lavoisier Group is too.

…skeptics of government science are also skeptics of government money…

It’s no surprise, really, that skeptics of government science would also be skeptics of government money. My message to all the sleeping skeptics out there is: get with the game. When I said climate science is the second biggest scam in history, I wasn’t joking.

So James, yes, welcome to the club! Absolutely, I’m an Austrian and so, of course, is my other half, Dr David Evans, who introduced the idea to me years ago, so long ago I can’t remember when. (He prophetically wrote: Why Invest in Gold Now? in 2004). In 2006 I submitted a story to Quadrant magazine about “the crunch to come” due to excessive monetary growth. (McGuinness rejected it). In 2008 I wrote every month in The Mining Chronicle – about the M3, and gold trading. We are so Austrian, we were Austrians before we were skeptics. We’ve been watching monetary aggregates and investing in precious metals since before gold was $250/oz.

For beginner Austrians

Some readers will be wondering what all the fuss is. Many scientists have never even heard of the best-kept-secret of economics, and there’s a reason for that (I’ll get to that another day). But you might do what I did — read Hayek (The Road to Serfdom) and revel in how economics really can make sense.

“…it is such an obvious truth that it’s been starved-into-submission for nigh on 70 years.”

Then ask a Keynsian why they’re right and the Austrians are wrong, and hear jargon unleashed. They’ll bedazzle you with reasons that ultimately “explain” why a few elected brains can make smarter decisions than the 22 million Australians, 60 million Brits, or 300 million US brains put together (and …. insert name of any other sovereign state). Remember, the wild successes of the “scientifically-planned” economies like, say, the Soviet Union? Exactly.  It’s a banal sensibility that money is just another good to be swapped like anything else: if there’s more money and the same goods, of course the price of the goods goes up, and value of money goes down. Welcome to inflation.

Its all just supply and demand after all: Money Supply

The simplicity of it steamrolls other more convoluted theories. An increase in money is inflation*. The supply of money counts. If someone creates more of it — well they go to jail, it’s counterfeiting. (Unless of course, they are a government-protected-banker, then they get a three story yacht and a 10 bedroom mansion).

But the Austrian truism that the supply of money drives not just prices but the whole fakola business cycle, sending markets booming as supply grows and crashing as it shrinks, well, it is just such an obvious truth that it’s been starved-into-submission for nigh on 70 years. Ever since Keynes gave the small governments of the world an excuse to be Big-Governments, they haven’t looked back, appointing fans of Keynes to every spot they could think of in universities and ministries. Bankers, likewise, have nurtured the funny money bubble, so they too awarded grants to Keynsian economic departments, offered their graduates hot jobs, and basically pooh poohed anyone who disagreed. (Sounds a bit like warmism?) Before the 1930s, the ideas of Keynes were rightly considered self-evidently crackpot.

Lastly, James thinks (understandably) that I mostly write about climate, but this Austrian background of mine is why I was the skeptic who wrote that Carbon Credits are a Corrupt Fiat Currency (way back in Feb 2009) and why it was yours truly who went hunting for the big-money connections and found Goldman Sachs, JPMorgan, HSBC, and Deutsche Bank and wrote Climate Money. I realized it wasn’t about the science, never about the evidence, and everything to do with a 2 Trillion dollar scheme to make the second biggest cash-cow-in-history-from-thin-air. And I knew where to look.

The secret is out, Jo Nova has been posting on money as an Austrian all along. The credit of course for my visionary early uptake was David (whom I married)–I always thought economics was a bore. Then he opened the door on the real debate, and I was hooked.

Helicopter Ben at work

Two dismal sciences (climate and money)

Carbon credits: another corrupt currency?

Climate Money: Massive climate funding exposed

Six words to expose the scam

The fickle nature of a fake free market

The future of climate alarmism is bogus statistics

The money is leaving the room

We paid to find a “crisis”

The climate industry wall of money

Sub-prime carbon is coming

Keynes versus Hayek: Big government versus individual rights (A seriously excellent rap video).

Skeptics Handbook II! Global Bullies Want Your Money

The carbon market blinks — $130b trainwreck slows

Deutsche Bank — A Wunch of Bankers

Who does the Labor Party represent? Would that be major Financial Houses?

We need a free market in climate science

Tax versus Trade (On why we don’t want to trade a “fake market”)

Carbon-trading supertanker adrift

Carbon ship sinking: Barclays bank closes its carbon desk

Map: The Climate Change Scare Machine — the perpetual self-feeding cycle of alarm

The money – you earn it, they print it. Welcome to the world of Corruption.

The Ground Zero of Global Corruption – it starts with The Currency

 

PS: James Delingpole is coming to Australia to launch his fabulous new book in April. (In the UK it’s released as Watermelons – in Australia: Killing The Earth To Save It. Look out for his tour. I’ll have more details soon.

* For most a hundred years the definition of inflation was an increase in money. In the 1980′s and 90′s it came to mean an increase in prices, and thus the cause was replaced by the effect. What difference does it make? It’s easier to conceal that kind of inflation because it’s easier to mismeasure prices (which we discussed here). Like measuring global temperatures, there are a lot of “ways” to measure the CPI.

 

 

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149 comments to We are all Austrians now

  • #
    Louis Hissink

    My Misean experience dates back to 1975 when I discovered Mises’ The Theory of Money and Credit in the Macquarie University library during my post-grad study in mineral economics.

    For those who want to learn more about Keynes this site is useful as well, and an understanding of the political movement known as “Technocracy” is also mandatory research to understand what is happening. China is essentially a technocratic state, and the long term goal is to replace money with energy credits or carbon trading, which is what is driving the ALP at this point in time. Keynes was a product of the Fabian Society, by the way, as is shown by Dobbs’ exposition linked before.


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    memoryvault

    .
    Basically, the way things work at the moment, is all “money” comes into being as a debt plus interest. But only the debt is created, NOT the interest. So at any given moment there is never enough “money” to pay back the debt plus interest, and so the game can only continue for as long as “new” money is being created.

    The “new” money, in turn, requires somebody to borrow it into existence, and the game can only continue until everybody (from individuals to businesses to corporations to governments) have maxed out their capacity to repay.

    Since at that point there is STILL more owed (debt plus interest) than has been created (debt), the entire system goes belly up and we start over. That’s about where we are now.

    Anybody having trouble grasping the concept need only sit the family down to a game of Monopoly, with one minor rule change. 10% of every transaction – every fine, every rent payment between players, every payout for passing GO – goes to a separate pile called “The Banker’s Interest”.

    The outcome of the game is inevitable.

    .
    PS – Jo or mods – might like to read my post #57 on the previous thread. /Duly noted, thanks. Fly


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    • #
      RJ

      Sorry but this interest is not created is nonsense. As explained by the likes of Steve Keen for one

      Interest recycles. So bank interest income is received. But is then paid out as interest payments, expenses and finally dividends

      Stop believing everything you read and start thinking about these issues. As Jo should do with money

      She initially got it wrong with AGW. As she has now with money.

      And just to make it clear I’m anti big Govt. And on her side with CAGW


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      • #
        memoryvault

        .
        Simple question RJ:

        Since the only “money” created originally was the original debt, where does the “extra money” come from to pay, as you say, the “interest payments, expenses and finally dividends”.

        Remember, even after all these payouts, the original debt still stands. And the only “money” available is the value of the original debt.

        Are you saying this money is not “extra”? If so, at what point did this “money” enter the money food chain? Please let me know; armed with this knowledge I can become a multi-billionaire overnight.


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        • #
          RJ

          Money comes from debt

          The banks do this journal when we loan money

          DEBIT Bank loan (the banks asset but our DEBT liability)
          CREDIT cheque account (our MONEY asset but the banks liability)

          Interest adds to the debt but it recycles back as explained below

          So the banks journal entry for interest is

          DEBIT Our cheque (or loan) account******1
          CREDIT Interest income

          However bank payments are

          CREDIT Our cheque account******2
          DEBIT Bank expenses or bank dividends

          *************1 and ************2 cancel out


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          • #
            Roy Hogue

            Wow RJ, you mean I should just keep on borrowing money indefinitely and I’ll finally enter Eternal-Fat-Dumb-and-Happy-Land? How could I miss thinking of that?

            Well, sorry RJ — the only thing being canceled out here is your silly reasoning cancelling out any credibility you ever hoped to have.


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          • #
            Truthseeker

            RJ,

            I may now work in IT, but I have a full Bachelors Degree in Business Studies, majoring in Accounting and I can tell you that you are talking absolute nonsense. What does the last entry represent? Nothing that bears any relationship to reality.

            From the bank’s point of view the accounting entries are;

            For the original loan the entry is:

            Debit: Loans (asset for the bank)
            Credit: Customer account (liability for the bank)

            When they charge interest the entry is:

            Debit: Loans (increase asset for the bank)
            Credit: Interest income (revenue for the bank)

            When a loan payment is made the entry is:

            Debit: Cash reserves (asset representing money available for further lending)
            Credit: Loans (reduce loan asset balance)

            Nothing here “cancels out” as you say. Since the loan asset is increasing due to interest, more money is paid than was borrowed which was MemoryVault’s point.

            Pick another topic. You suck at this one.


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          • #
            RJ

            Truthseeker

            “When a loan payment is made the entry is:

            Debit:Cash reserves (asset representing money available for further lending)
            Credit: Loans (reduce loan asset balance)”

            When a loan is repaid it simple reverses the initial loan. This should be very obvious despite what you may have read on some misinformation website.

            Debit: Cash reserves (asset representing money available for further lending)
            Cheque account (as money is required to repay a loan)
            Credit: Loans (reduce BANK loan asset balance)

            And I notice you have not included bank payments for interest, expenses and dividends. Why si this

            But you are close which is better than most economists


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          • #
            Truthseeker

            RJ,

            When a loan is repaid, it does NOT reverse the initial loan. When I make a mortgage repayment, the money leaves my account, it does not magically reappear there. I have not included the other entries for “interest, expenses and dividends” because they are NOT part of the loan transaction. The amount the bank pays in interest is a lot less than the amount of money it makes in interest or else the banks would not make any money. It is the difference between the original credit entry for the interest revenue and the debit entries for general operating costs that is where profit comes from. However, we are not talking the full business cycle here, we are talking about the creation of money.

            I am spot on. You are in another planet on this topic.


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          • #
            RJ

            the money leaves my account,

            Exactly

            So the money is destroyed. By reversing the initial journal entry

            “I have not included the other entries for “interest, expenses and dividends” because they are NOT part of the loan transaction”

            You have not because it proves my point

            Admit it. I’m right on this and you have been taken in my a bulls++t web site.


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          • #
            Truthseeker

            RJ,

            When I said “the money leaves my account” what I had assumed is that you would see the obvious truth that it returns to the bank who loans it out again to start a new loan money creation cycle. Obviously this was not too obvious to you, but then you do not seem to have any actual knowledge in this area to fall back on.

            You are a simple troll and a complete ignoramus when it comes to money transactions.

            The feeding of the troll stops here.


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          • #
            Mark D.

            Here we go again with RJ…..


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          • #
            RJ

            RTG

            Debt has two side. The debt liability and the DEBT ASSET.

            Stop focusing just on the debt liability side. Especially with Govt debt (the liability side) of a monetary sovereign country like Aust, the UK or the US (Euro countries have given up this most valuable asset AND WILL PAY A HEAVY PRICE for doing this).

            Govt debt in these countries is of almost no relevance (despite the misinformation form financiers etc) BUT IS CRITICAL IMPORTANT FOR SAVERS. Without Govt debt (savers need this INTEREST BEARING Govt bond ASSET) it is almost impossible for everyone to save.

            A return to the Gold would devastate the world economy for all but the super rich.


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        • #
          RJ

          TS

          What you still do not understand is that BANK CREDIT / MONEY CREATED BY A BANK JOURNAL ENTRY is real money. It is today and always has been.

          It is the only real money there is. Notes and coins are only a TOKEN representing bank credit.

          Money is just a financial asset ALWAYS CREATED BY JOURNAL ENTRY and is ALWAYS BACKED BY DEBT.


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            Richard The Great

            Yes, money is always backed by debt – you are 100 per cent correct. Money is always created by an act of borrowing. The converse is however, certainly NOT true. Interest charged on money owing by the bank (capitalised income = bank asset = borrowers liability) does not involve the monetisation of debt. Under a fiat money system where money is a negative unit, total debt can only increase. This was the one huge mistake of Keynes and Friedman when gold was exiled from the system. Gold was the ultimate extinguisher of debt as it is is the only form of money that is nobody’s liability. Untimely the debt hitherto kicked upstairs will come tumbling down and with it the monetary system


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          • #
            RJ

            RTG

            Debt has two side. The debt liability and the DEBT ASSET.

            Stop focusing just on the debt liability side. Especially with Govt debt (the liability side) of a monetary sovereign country like Aust, the UK or the US (Euro countries have given up this most valuable asset AND WILL PAY A HEAVY PRICE for doing this).

            Govt debt in these countries is of almost no relevance (despite the misinformation form financiers etc) BUT IS CRITICAL IMPORTANT FOR SAVERS. Without Govt debt (savers need this INTEREST BEARING Govt bond ASSET) it is almost impossible for everyone to save.

            A return to the Gold would devastate the world economy for all but the super rich.


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    • #
      Ted O'Brien

      So please explain to an old farmer whose understanding of the world did not come from textbooks, where in this story do goods, depreciaton and new production fit?

      It seems to me that people have lost sight of the fundamentals. Indeed it has seemed so for more than 30 years. Without goods, their production, and services, all money is worthless.


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  • #
    Streetcred

    Not only am I Austrian in Ludwig von Mises’ theory … but I am mostly Austrian. :)


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  • #
    Pete

    I Read “Human Action” in the late 70s and was amazed at the lack of complexity of the Austrian approach; it all seemed eminently sensible, almost obvious, and certainly corresponded with my experience of the world. No wonder the elites reject it totally, it doesn’t mesh with their delusions; leaving people the f!@K alone to make their own decisions about how they will earn and spend their money – how could that ever work?


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    • #
      Brett_McS

      Same here, Pete, although in the 80s. The essential difference between Austrian economics and all other economics is that it does not participate in the lie that it is possible to compare inter-personal evaluations of value. It sticks to the truth that people value things differently and that there is no a priori>/i> way to measure this difference.

      Economics textbooks start off in the Austrian manner, for the first few chapters, but then, because they want to get into the ‘math’ they make that ‘fatal conceit’.


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  • #
    Treeman

    Brilliant post Jo, absolutely brilliant!

    Turnbull and Rudd must be squirming and their useful idiot Gillard wondering where does it go from here.


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  • #
    Louis Hissink

    Jo, spotted this at Junkscience Link which should become a major post here = Henry Lamb writes a useful summary and he links to Canada Free Press and another site which get into more detail with this new UN sustainable environment treaty. I am noticing it at work with the increasing amount of environmental input I have to put into my Mine Management Proposals for the NT and presumably soon to come in WA.


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  • #
    maltesertoo

    I had been skeptical about wallstreet, world bank, banks in general and global economy and countries’ economies for a many years. I have been skeptical about AGW ever since Al Gore told me that my grand children were all gonna die of the heat and/or inundations and the only way of salvation was to buy a plot of land in Antarctica.

    Ever since the green renewable (RE’s) debacles commenced in Spain in tandem with its economy and then followed by other countries, followed by the global financial meltdown, ESPECIALLY in the EU where RE’s were No.1, I did commence to think that there is a connection between AGW and the money thing. I also read/viewed on the net about fiat money and what it really means, how Nixon had disconnected the dollar from gold, how banks rob us of our savings by inflation etc etc…

    Thanks to you Jo, you helped me connect the dots.


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  • #
    John Brookes

    Yeah, but Keynes is right, governments have a role in stabilising the economy.

    I have a friend who runs a small glazing business. He bemoans his wages bill, and I sympathise with him. If he pays someone $70,000 a year, his costs are closer to $100,000, or $2000 a week. That means that the employee has to bring in $2000 profit a week, just to pay their way. No doubt many small businesses are in the same situation. So would they be better off if they reduced their wages bill? Yes, obviously. However if all businesses manage to cut their wages bills, then it stops working. Why? Because the customers of one business is an employee of another. If one business succeeds in reducing the wages of their workers, it hurts other businesses, because their customers can’t afford their products.

    This is one example where everybody sensibly pursuing their own self interest leads to a bad outcome.

    Another such case is when there is a general economic downturn. In such situations all sensible people cut back their expenditure until things pick up again. However by putting off that new kitchen, you put kitchen renovators out of business, and the people in that industry who no longer have work have no choice but to cut their spending, which puts others out of work, etc etc. So when this happens, the government needs to spend money. Conversely, when the economy is booming the government needs to save money, ready for the next downturn. That is the basics of Keynes, as I, a non-economist, understand them.


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    • #
      memoryvault

      So when this happens, the government needs to spend money. Conversely, when the economy is booming the government needs to save money, … .

      Errrh, you mean like the $80 billion + debt the QLD state Labor government has run up in eight years of record income from mining royalties?

      Would that be a reasonable example of how it works in practice, John?


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      • #
        John Brookes

        Nice example MV. The weakness of democracy is that just enough people will always vote for spending increases and tax cuts to ensure that governments do not successfully implement Keynes. Unless you build up a stockpile when times are good, you can’t act when times are bad – look at Greece, Ireland etc.

        So yes, it assumes reasonable voters and sensible governments, and these are often in short supply.


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        • #
          RJ

          Greece and Ireland are totally different to Aust (and the US and UK etc)

          They have given up their monetary sovereignty. And will pay a very heavy price for this madness. As will one by one all the countries in the Euro until it collapses

          Returning to a gold standard would do exactly the same thing. It would slowly destroy countries in it


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    • #
      Louis Hissink

      John, the reason the economy enters into a downturn is the result of government interference in the first place – and like all lefties, you don’t understand human action at all. That’s why economies world wide are in trouble – Keynesian do-gooders trying to fix something they stuffed up in the first place by applying more of the same.


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      • #
        John Brookes

        Read my response to MV above. Governments did not save enough when times were good, hence their problems now.

        As for not understanding human actions, would you like to explain just where my rehash of Keynes was flawed, and how human behaviour differs from what I said there?


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        • #
          RJ

          stop comparing a monetary sovereign Govt like Aust to a household or company (or state).

          They are different and different rules apply


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          Richard The Great

          John your rehash (mantra dare I say?) of Keynes is word perfect. The main issue is that Keynes did not understand the role of bond speculation which is why the best of John Maynard’s medicine and the US and A is still in huge mess. The US Federal Reserve may not purchase securities directly from the treasury (that would be illegal) and has to use “open market” transactions. Speculators know this. The Fed has to feed to top up the money supply which is imploding as the accumulated debt of fiat money is beginning to avalanche. Speculators preempt the Fed and buy the bonds from the Treasury which they then drop into the Fed’s lap at a profit. Why else would there be such as huge market for securities that pay interest less than inflation (sensu lato)? it’s not the suppression of the inflation figures (Jo). Bond speculators are a smart bunch. The newly created money does not find its way into the economy and drive up prices including commodities. The Fed wishes it did. It goes right back to the bond market which drives up the value of US treasuries and depresses interest rates further (sniff a depression, anyone?). Falling interest rates destroy capital which causes more business failures. Money does not flow uphill. The bond market is about one order of magnitude larger than the share market. The chance of the yield curve inverting at the moment is just about zero which makes the bond speculators’ profits just about risk free.

          Keynes medicine = depression.


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      • #

        John, you’ve shown why government spending in dips of the cycle is wrong with your own comment. Government only ever grows, it spends and pork barrels and wastes money. the fact that most governments don’t save and cut and be careful during the booms is exactly why handing more of the economy to the government is dumb in the first place.

        Actually, it’s worse than that. The whole business cycle is unneccessary — without money created from nothing, it’s virtually impossible to get an economy wide boom. With no broad booms, there are no broad busts, and there no need for a government rescue.

        Jo


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          RJ

          Yes but Govts can run a deficit with TAX CUTS

          GOVT DEBT always = AN INTEREST BEARING NON GOVT FINANCIAL ASSETS

          Govt debt (from tax cuts or spending) is essential if we all want to save for our retirement. Unfortunately many ignorant economists focus on the Govt debt liability but ignore the equal interest bearing DEBT ASSET

          DEBT = MONEY + FINANCIAL SAVINGS

          We need a certain level of money and savings. This can come from either the Govt or non Govt sector (banks).

          Less Govt debt = more bank (and financiers) profit.


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        • #

          Don’t give up your day job as astroturfer will you Jo? You economic explanation is a joke!


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          Richard The Great

          Its more than just that. Structural unemployment and the boom bust cycle were essentially unknown under a gold standard. What most people don’t realize is that the role of a gold standard is NOT to stabilize prices (that would be price fixing) but to stabilize interest rates. The cause of the boom bust business cycle is ALWAYS artificial expansion and contraction of the money supply. Under a gold standard governments and central banks cannot manipulate interest rates. When interest rates are depressed too low, over valued bonds are junked in favor of physical gold. Without gold in the monetary system, there is no competition for bonds. Interest rates can be manipulated downwards and bond values skywards. Businesses fail as their productive capital is sucked into the pockets of bond speculators. Prices plunge as unemployment rockets. Sniff a depression? Thank you JMK


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      • #
        RJ

        I can see austerity and aiming for a balanced budget is working out well for Greece


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        • #
          Truthseeker

          RJ,

          Greece’s problem is that no-one is actually doing anything productive in that economy. They are all waiting around for handouts from Brussels and when the cupboard was bare they were screwed. It was a lack of austerity and balanced budgets for a period of time that caused the problem for Greece. The bitter pill of economic austerity is the price they have to pay to get back to an economy that works. Dropping the Euro would also be a good idea.


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    • #
      Roy Hogue

      John,

      You might actually have an argument for government spending except for the stubborn fact that government spending has never reversed an economic downturn. But it’s worse than that because the money government spends doesn’t represent any kind of wealth. It’s only debt, with interest, that always comes back to bite. That “money” is an illusion. It not only has nothing of value to back it up, it has a terrible cost not very far down the road.


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    • #
      Adam Ruth

      [ However if all businesses manage to cut their wages bills, then it stops working. — JN]

      This is an invalid assumption that makes your entire point moot. Businesses can’t cut their wage bills below the marginal value of their employees.

      Think of employment like any other product where supply and demand constrain prices to within the margin. For the same reason that you can’t just keep cutting what you wish to pay for groceries and continue to buy groceries, an employer can’t keep cutting wages and continue to employ workers.

      Keynes’ concept of “aggregate demand” is just an illusion, it doesn’t exist. Reduced demand is the effect, and not the cause, of shifts of economic activity from one unproductive area to another. Pumping in money to prevent this shift and keeping unproductive areas of the economy afloat is only delaying (and increasing) the inevitable crash.


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      • #
        John Brookes

        But Adam, they try! They get people on 457 visas to run the cash register in service stations – because the labour is cheaper. There is constant pressure on “dole bludgers” to go out and work in jobs like fruit picking which pay peanuts unless you are really good at it. They introduce individual contracts of employment, because you get lower wages without collective bargaining.

        There are any number of ways employers and governments try and push down wages, in good times and bad.

        In Greece, they just cut wages, knowing no one can do anything about it, because the alternative is no job at all. So yes, you can cut wages. Even in the booming mining industry, they lay off local welders and get Chinese nationals on 457 visas to work for less.


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        • #
          Adam Ruth

          Of course they try, the same way that I’m always looking for a better deal on bread and milk. But try and succeed are not the same thing.

          Here’s a simple test: Do you know anyone that makes more than minimum wage? How is that possible, shouldn’t companies have pushed 100% of the workforce down to the lowest legally allowed rate?

          If not, then your hypothesis is clear lacking in some regard.


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    • #

      @John Brookes:

      Yeah, but Keynes is right, governments have a role in stabilising the economy.

      Considering that governments are the largest single source of instability in the market, they should leave it alone and not even try to stabilise it.

      Case in point, massive bailouts to Fannie Mae, and other lenders to solve a problem caused by legislation requiring them to lend to insolvent people, who then defaulted. The proper solution was not to bail them out, but rather to never pass the legislation.

      The proper solution to the problem of poor people not being able to afford homes is to repeal zoning and licensing requirements that drive up the cost of housing.


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  • #
    Hans Labohm

    Those who are interested in the link Austrians-climate might appreciate:

    ‘A new Road to Serfdom?’

    http://www.ideasinactiontv.com/tcs_daily/2003/09/a-new-road-to-serfdom.html


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  • #

    Me too Streetcred.

    Very good post!!!

    W.v.B.


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    Andrew McRae

    The irony is that with the general public’s disinterest and therefore lack of knowledge about economic theories, there is not nearly as much social stigma at the moment about declaring one’s favour towards the Austrian school as there is about declaring CAGW skepticism. If more people understood the far reaching consequences of implementing a more Mises/Hayek approach, they would be stirred up more at “Keynes skeptics”, just moments before accepting the Austrian school as a better alternative, of course.

    I have no formal training in economics, but I hope that gives me the ability to think outside the box by not being taught to believe in the box to begin with. :)

    Keynesians Say the Darndest Things, Episode 1

    Keynesians say that money should not be a store of value, it should only perform the role of transmitting value. Assets, service entitlements, and consumables are the way value becomes tangible so that’s the only way it should be stored.

    All I can say there is, who does the Keynesian think he is to decide what I place value on and what I don’t? What if I do value money because of the variety of things I can buy with it, and the liquidity of it so that I can buy stuff with less lead time, less asset maintenance, less market research, less management fees, and less time spent in asset buyer discovery? Money is a good deal – if the Keynesians don’t herd you into spending it unnecessarily by eroding its purchasing power with inflation.

    Keynesians Say the Darndest Things, Episode 2

    As I like to know both sides of the story I feel compelled to relay the only argument I have ever heard from Keynesians that gets even halfway to making a case. The argument is that the economy can’t grow if the money supply is not increased.
    From what I’ve read in a few blogs, the Austrian counter argument is both theoretical and empirical.

    The theoretical counterargument is that the value available for capital investment emerges through the increased value of savings. If you’ve saved money then you can join with other investors in funding new business.

    I’m not sure if that’s a complete answer. That probably tilts the playing field towards businesses whose startup costs are more in assets and commodities than startups that are service and salary heavy. Why? Think of the investor risk. At least with assets the investors can sell them and recover some money if the business tanks. A startup which produces goods mainly from contractor services will be burning cash and just has to hope the final goods can be sold above their amortised cost, so the quicker the turnaround between staff hiring and customer sales the less capital is needed. A startup which mainly provides services (not goods) has less upfront capital requirements to begin with, but it is sensitive to the time needed to build a self-sustaining customer base. So different kinds of risks there.

    If you can’t get money created from thin air by a bank loan then these different kinds of businesses have even greater differences in risk for investors, whereas the bankers presently allow these differences to be glossed over by providing a single source of up to half the business’ equity. Unfortunately, although the bank takes on the risk and so growth does not demand savers to give up their private savings to ventures, this convenience comes at the price to the public of inflation in the short term and the price to the entrepreneur in the long term of excessive interest payments, shareholder dividends, and partial loss of control.

    Perhaps the polarisation of risks for these different venture types is just a more fair market value of their risks and ought to be accepted as a necessary inconvenience compared to the value of allowing people to take back financial control of their own lives – by preserving the value of savings.

    The empirical counterargument to the inflationist is the history of the USA from 1790 to 1913. Over this 123 year period the USA experienced one of the greatest economic growth and homegrown technological progress eras of any country. It did all of this with basically zero inflation, no federal income tax, and with absolutely no central bank in existence. Whilst this does not take into account money brought into the USA by immigrants, it does prove that central banks loaning money at interest was completely unnecessary for growth and progress.

    ———

    Sorry for the ramble but I’m always interested in the big picture of things, and how they are derived from the atomic. Personally my theory is that economics is nothing more than applied psychology: economists will not understand the flow of the system unless they understand the decisions of the actors within it. This is why macroeconomics doesn’t work, microeconomics misses the point, and “the New Economists” are on the right track. I reckon Economics will reach the status of a successful predictive theory when Thermoeconomics is infused with psychology, but that’s just a mug’s opinion.

    There were no comments on this page when I started writing this 2hrs ago! The version of this page I’m looking at has had a carbon credit added to the top right since I started writing. Wow that inflation happened fast! :)

    I hope others with more understanding of economics will post more episodes. Then we can all learn something about this built environment we live in.


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    Rereke Whakaaro

    Oh boy. This is the Elephant in the room. This is “the problem that shall not be named”, to misquote J.K. Rowling.

    If we (and there is an admission) are going to pursue this line, then it mustn’t be dominated by the US Economy, or by the European Financial Fiasco, or even the parlous state of the Australian economy.

    It must of course, include the above, but also consider the Russian, Chinese and Indian economies as well. You cannot play in just one part of the pool. If you are in the water, then you are in all of the pool.

    Because of the dominance of international trade, there is really only one world economy. National economies are therefore just noise, and no more than tinkering around the edges.


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    memoryvault

    .
    I know this might be hard to believe, but up until the early Sixties anybody hoping to gain pre-selection to run for a seat within the Liberal Party had to be able to present a rebuttal of Keynesian Economics based on the arguments of the Austrian School. They also had to be able to explain Bastiat’s “The Glazier’s Fallacy” with reference to free trade and government non-interference.

    Conversely, anybody hoping for pre-selection in the Labor Party had to be able to refute the Austrian School argument of government non-interference using Keynesian Economics, and explain the alleged fallacies (from the socialist point of view) in Bastiat’s parable.

    Without getting into a debate over the actual issues of either of the above views, it is interesting to note that a goodly percentage of Australian State and Federal politicians today from either side of the fence, would have trouble even spelling “Keynesian” or “Austrian”, and have never heard of Bastiat.

    I suspect a reasonable percentage of them would have trouble spelling “economics”.


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    Luke Warm

    Jo, Tony Abbott needs you in Federal Parliament. You have obvious talents across a number of areas, such as science, research & education, that he needs. We need you in Federal Parliament. What about it?


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      John Brookes

      I don’t think that would be the best use of Jo’s talents.


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        Kevin Moore

        There is no freedom of speech in a political party. Toe the party line? – John Brookes is right.

        You would have to be naive or dishonest to have the desire to be a politician in the present circumstances. Politicians make company policy not law. The Commonwealth of Australia is a registered corporation.

        To be a good politician you must always be sure that the lies you tell today are cosistent with the lies you told yesterday.


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    John Brookes

    I’ve mentioned it before, but for those genuinely interested in the role of money, you could do worse than read “Money: Whence it came, where it went” by John Kenneth Galbraith. Yes, I know JKG was a pinko liberal ratbag, but he was genuinely interested in stuff, and the book is fantastically interesting.

    I particularly liked the description of the banks that financed the westward expansion of America. Each with their own notes, and there being a book which would give a comparative value of these notes. I liked the way that these banks were required by law to hold reserves of gold to back up their notes, and that a coach carrying this gold used to race from bank to bank, staying one step ahead of the inspectors – so that when they arrived at the bank, the reserves were there. This type of behaviour is repugnant to me, but JKG explained that whether it was morally right or not, without it the American expansion would have been slower (which might have been nice for the indians).

    Maybe one day I’ll read Hayek and Mises, but I might skip Rand. Is there a popular readable account of their thinking on the internet that a lefty won’t find too annoying? I once read “Karl Marx for Dummies”, and I’m thinking something like that should do…


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      Kevin Moore

      I’ve read the Communist Manifesto.

      Abolition of private property is its platform.

      Everything is owned and controlled by the State.

      But Marx never mentioned that those of his religious persuasion have private control of the issue of money at interest and own the Banks who own the State.

      As all money issued by Marxists is issued as an interest bearing debt and only the principle is issued into existence then interest can only be repaid by increased borrowings.

      Inevitably total borrowings one day exceed collateral and the Bank takes all.

      Karl Marx’ Manifesto is of itself a book for dummies.


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        John Brookes

        Did you read Das Kapital?


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          Bill

          I’ve heard it’s unreadable by some Economist friends of mine who have tried.

          See my post below with some reading suggestions in answer to your request.


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          Kevin Moore

          Da Kapital -

          It is not money that renders commodities commensurable. Just the contrary. It is because all commodities, as values, are realised human labour, and therefore commensurable, that their values can be measured by one and the same special commodity, and the latter be converted into the common measure of their values, i.e., into money. Money as a measure of value, is the phenomenal form that must of necessity be assumed by that measure of value which is immanent in commodities, labour-time. [1]

          Yep,not a bad lurk. The Marxist Banks lend out a piece of paper or electronic digits which are backed by nothing of value and created at practically no cost. The borrower [collateral] assumes by faith that the paper or electronic digits have equal value to the value [himself and assets] he promises as security.The non-repayable interest on the valueless “money” guarantees that a time will come when the whole world is bankrupt with the Banks are in possession.

          The Marxist wolves are much smarter than the sheeple people.


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      Rereke Whakaaro

      Here you go John – a summary of “The Road to Serfdom” as a cartoon: http://mises.org/books/TRTS/

      Even you should you should be able to follow that …

      [I previously put this on the Victorian election thread, in answer to a commentator there, but then decided it was better here. Apologies for the cross post.]


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    Mark

    Absolutely incredible results in Qld. State Election.
    Ministers booted out in seats that had 13% margins. ALP might struggle to get into double figures in seats won!

    Neverthe less, Joolya will get in front of a camera on Monday and say that it was all based on state issues. Yeah, right Joolya!

    Anna Bligh’s seat (15% margin) in doubt.


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      John Brookes

      Of course this helps the federal ALP. People generally dislike the government they have, and if their state government is conservative, they are more likely to vote for the ALP nationally. With QLD, NSW, VIC & WA having conservative governments, its actually looking better for Julia.


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        Yes, John, having all the state government being Labor really slowed Rudd down in 2007 didn’t it?
        Good luck with that theory.


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        Loki

        I think you are drawing a very long bow there JB. I’m sure Juliar is ecstatic at the massive swings against Labor in both NSW and QLD.
        BTW until 2010 I had always voted Labor in both Federal and State elections.
        Never again.


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        Bill

        John Brookes,

        Happy to see exchanges to and from you that are cordial. It’s refreshing to see real discourse with manners.

        Even though Friedman was not an Austrian, he was fairly libertarian and mentions Hayek a lot.

        So Free to Choose and There’s no Such Thing as a Free Lunch or good places to start.

        Hayek’s essays such as “Why I am Not a Conservative” or The Limits of Knowledge are good as is his The Road to Serfdom. With the Conservative article, there are a few paragraphs on 2 kinds of individualism and Fabian socialism that confuse me. I think they are relics of Europe and the UK in the 20′s and 30′s and not relevant today. Also, keep in mind that he and Mises were writing initially in the 20′s and 30′s when fascism and communism and socialism were still considered the wave of the future and were praised by many in the US and UK. Road to Serfdom is a warning of what COULD happen and is his trying to convince the Brits to NOT keep in place many of the wartime measures such as food rationing and control of the economy.

        From Wikipedia, look up classical liberalism because that’s what libertarianism actually is. Bastiat on WIki is also good. The essay I, Pencil by Leonard Read is excellent although he does refer to God once or twice (in case that bothers you) but it has little to do with the essay. Henry Hazlitt took Bastiat and Hayek’s ideas and put together Economics in One Lesson which you may not want to read all of as it gets repetitive but read the first few essays and spot read others.

        Most of these are available online for free as web pages or for Mises and Hayek at Mises.org

        Hope this helps.


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    Bob Malloy

    7:45 PM Queensland Time, Labor 5 confirmed seats, LNP 65 seats.


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    Nic meredith

    Money as debt creates so much waste and environmental destruction, war etc. etc. etc.
    It’s debt that really drives the slash and burn, ticky-tacky, mass economic throughput model that is truly behind so many environmental and other problems. It is a modern feudalism, it is the rat race.
    A buyer with real money,e.g gold, silver, will value quality, longevity upgrade-ability etc because the buyers money gains purchasing power as society advances.
    Bob Brown votes to use borrowed money for ‘green’ schemes but is apparently oblivious to the fact that Australia’s resources sector (which he hates) pays back our current account deficit. Because debts are payable with compound interest we have the real reason for so called economic growth. While no measure of human progress, GDP growth has a profound impact on our environment.
    Doctor Brown doesn’t understand the disease and is a part of the problem – isn’t it ironic.


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      RJ

      Money is a FINANCIAL ASSET

      Gold is not and has never been real money.


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        Truthseeker

        RJ,

        You really are clueless on this topic aren’t you? Money’s only value is that it reduces transaction costs. It is not an asset, it is the representation of an asset. Gold has always been a medium of exchange and for a long time IT WAS MONEY. Gold is an alternate currency to paper money. If the economy collapses completely then you will see how much gold can be real money.


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          RJ

          Rubbish.

          Coins containing some gold have never been more than a token representing credit (money). And a possibility for settlement if and only if the debt holder is willing to accept gold in exchange for their debt asset.


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            Truthseeker

            RJ, does history for you start at about 1970? For centuries, the value of money WAS the gold or silver content. The coin was a representation of the value of gold or silver. If you have enough gold, I am sure a bank will accept it as repayment for a loan. The exact amount will depend on the current value of the gold, expressed in terms of paper currency which again shows that paper money is a representation of value, a unit of measure it is not the wealth itself.

            Every time you write something RJ, you subtract from the sum total of human knowledge.


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    Mark

    You actually have some historical precedent there John. My bet though is that the electoral cricket bats will stay just behind the door for Joolya next year.


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    Juliar

    Swing AGAINST The Greens. YES YES YES!


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    Agnostic

    I have to say, straying into mixing skepticism of CAGW and economics and politics is extremely dangerous, and I think this post is highly unfortunate, sorry Jo.

    I agree with Steve McIntyres position, which is that if there really were a big problem as a result of our CO2 emissions, I would expect our governments to do something about it and avoid a tragedy of the commons. If there really were a big ‘problem’, then not doing anything because it is too expensive is NOT an argument. Doing something that we can sustainably afford might be though.

    The fact is, we have to characterise the ‘problem’. That is, are our emissions affecting the climate? Well I don’t think that the are many rational people left who know anything about this issue who seriously think we do. And if we are, is it really a problem? Well it might cause some, but not necessarily really bad ones, and in some ways there might be benefits that balance them out. And is there anything we could about it? Well not really – I think Monckton has it right in saying you are better off (ie cheaper and mores efficient) to simply adapt as things change than do anything to mitigate.

    This has nothing to do with politics or economics. As it happens I am skeptical of climate change but supportive of Keynesianism. People mistake Keynesianism for a system when really it is just a tool.

    The science of climate change is a science – it should be about evidence and truth, it should rest on that. The question of whether you agree with the austrian school of economics should not enter into it because the argument of the truth of climate change is confused amongst the dogma and biases of economic and political ideologies.


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    Mike

    Disagree completely with 19. It’s very relevant. CC and economics are closer than most sseem to realise.

    I’ve been a follower of the Austrian school since 2008. Most Austrians these days subscribe to Anarcho-Capitalism, which is basically “we don’t need no government at all” and that is the conclusion that I have come to also. It’s amazing the amount of propaganda that they have filled our minds with so that we don’t think we can do without them. There’s always some great evil that only they can save us from and it’s always either overblown or non-existent. And if there was a major problem why do we require a govt to solve it? Society can organise itself to solve pretty much anything if it’s necessary.


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    Yes, I regularly look at different currencies as part of my frequent financial posts. ( I’m an economist by training and refer to myself as “A recovering Keynesian” as that was all I was taught at University). Mostly in my sporadic large “market looks” named WSW as an homage to a local TV program “Wall Street Week” from years gone by. Some mixed in with other topics under general economics and trading topics:

    https://chiefio.wordpress.com/category/wall-street-week/

    https://chiefio.wordpress.com/category/economics-trading-and-money/

    I also do comparative charts of currency vs metals vs other stuff as a standard “race” to see what’s winning. Full set of stock charts here:

    http://chiefio.wordpress.com/category/stock-charts/

    (And in this case “stock” means ‘standard’ not just equities) and the specific one that looks at currencies is:

    http://chiefio.wordpress.com/2011/12/13/gld-gold-vs-silver-and-currencies/

    That is a ‘no analysis just the live charts’ posting, so you can click on it and see how the money metal stacks up against currencies. As I read it right now, it looks like the Swiss Central Bank has stopped pushing their currency down and it’s moving up, while GOld took a tumble lately (up today on “Israel to bomb Iran over the weekend” rumor that is likely not true…)

    The Australian Dollar took a tumble on China Slowdown worries. Expect it to pick up again when China starts placing more orders for coal and metals…

    [sorry EM, your comment got caught in the spam filter due to the high number of links. mod oggi]


    -Hi Cheifio – I sent you an email this morning to ask your views. I see I may have used the wrong address… I’ll try again – Jo


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    Mark

    Kerry O’Brien has just announced that the swing against the ALP is 15.8%
    Greens down by 1% at 7.5%. Still too many addicted to the Kool-aid and God knows what else!


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    Mark

    Just looked up the 2010 Federal election when Greens received 12.76% for 0.89 of a quota.

    Methinks there could be some very adverse Senate ramifications for the Greens next year in Queensland.


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    DougS

    The UK Chancellor of the Exchequer, George Osborne stated (quite correctly) that printing money was a bad idea – when he was in opposition.

    However, strangely enough (not really), now that he’s in government, he thinks that it’s a great idea.

    Well he would wouldn’t he – it debases the currency, causes inflation, steals from savers and rewards borrowers – and guess who’s the biggest borrower in the UK? Surprise, surprise, it’s the government! Whoodah thought it?

    If it was a good idea we should all be doing it, in fact it should be compulsory!


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      RJ

      What do you mean by printing money? Its a term that is often used but few have a clue what it means

      How do Govts print money. Give me the step as IMO they do not do this anymore.

      They pay people through commercial banks using bank reserves (and then Govt bonds to cover deficits when required) NOT MONEY.


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        DougS

        RJ:

        How do Govts print money. Give me the step as IMO they do not do this anymore.

        I wish they didn’t, but hey do.

        It’s electronically created new money, it has no new resources to back it up, hence inflation is inevitable.

        Look up ‘quantitative easing’ (the euphemism for printing money) on Wiki.


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          RJ

          You really haven’t a clue what QE is have you. Govt’s DO NOT print money anymore.

          From Warren Mosler’s MMT web site

          5. What is Quantitative Easing?

          MMT: It is an asset swap. It is not “printing money” and it is not a very good anti-recession strategy.

          Quantitative easing merely involves the central bank buying bonds (or other bank assets) in exchange for deposits made by the central bank in the commercial banking system – that is, crediting their reserve accounts… So quantitative easing is really just an accounting adjustment in the various accounts to reflect the asset exchange. The commercial banks get a new deposit (central bank funds) and they reduce their holdings of the asset they sell…

          Invoking the “evil-sounding” printing money terminology to describe this practice is thus very misleading – and probably deliberately so. All transactions between the Government sector (Treasury and Central Bank) and the non-government sector involve the creation and destruction of net financial assets denominated in the currency of issue. Typically, when the Government buys something from the Non-government sector they just credit a bank account somewhere – that is, numbers denoting the size of the transaction appear electronically in the banking system.

          It is inappropriate to call this process – “printing money”. Commentators who use this nomenclature do so because they know it sounds bad! The orthodox (neo-liberal) economics approach uses the “printing money” term as equivalent to “inflationary expansion”. If they understood how the modern monetary system actually worked they would never be so crass…

          So I don’t think quantitative easing is a sensible anti-recession strategy. The fact that governments are using it now just reflects the neo-liberal bias towards monetary policy over fiscal policy…

          — Bill Mitchell

          ——

          Conventional Wisdom: Quantitative Easing is “money printing”


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            DougS

            So that’s all right then, why not introduce a few trillion (new) dollars into the economy, hell if it’s a good idea there shouldn’t be a limit.

            If it had no effect on the economy they wouldn’t do it – wake up!

            From Wiki:

            “…A central bank implements quantitative easing by purchasing financial assets from banks and other private sector businesses with new electronically created money…”

            “…Quantitative easing can be used to help ensure inflation does not fall below target.[6] Risks include the policy being more effective than intended in acting against deflation – leading to higher inflation,[16] or of not being effective enough – if banks do not lend out the additional reserves….”

            The UK treasury has actually included in a statement their estimate of the amount of inflation caused by their QE.


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      Roy Hogue

      If it was a good idea we should all be doing it, in fact it should be compulsory!

      Now you’re on to something. Make borrowing compulsory. Nothing will teach people what works and what doesn’t any faster than that.

      Amen!


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    Maltesertoo

    @John Brooks, I am from Malta but I have family in oz. I am informed that the only time (or thereabouts) that the fed government was not in the red, actually a very positive balance of payment, was during that great premiership by that great Christian the great John Howard.

    I would dare suggest that the best politicians are honest ones and the honest ones are those who still hold dear their Christian principles.

    Others (left-wingers mostly) are just there to sc*ew us and the economy in the name of political correctness, that sorry excuse meant to replace Christianity and destroy all morals from our society, that society that has taken us 20 centuries to build.


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    Kevin Moore

    Fracking fluoride – what is going to change?


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  • #

    Coincidental, perhaps.

    Just recently I read an article at the Ludwig Mises Institute titled The Seven Rules of Bureaucracy. The article covers Harry Teasley’s observation; which are relevant to how the value of money gets burned up.

    Austrian economics has appeal; but not to bureaucracies.


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    Bernard B.

    I am all for Austrian economics and the Gold standard (or at least, some mechanism to prevent currency from being devalued), but no economic system, as perfect as it may sound, is a decent match to that great force: Human nature.

    First, democracy always undermines itself. At some point, the poor and the lazy figure out they can use the ballot box to steal from the productive. Once they form a majority (in the USA, nearly 50% of the population receives some government assistance), big government is entrenched for good.

    Second, the rich are not better: sooner or later they use their wealth to game the system (to use Ayn Rand phrase, ‘initiate force’ on others). They either find ways to avoid paying taxes (a problem experienced as far back as ancient Rome) and create cartels to effectively suppress competition.

    Finally, capitalism itself is predicated on growth, and humans like growth. They like it when their homes gain in value, they get big returns on investment, and big raises. With governments, once again, too happy to oblige and partake in the fun. This is why you have cycles of boom and bust.


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    Kevin Moore

    http://perfecteconomy.com/index.html
    “If money is introduced to circulation as debt subject to interest, then merely to maintain a vital circulation, we have to perpetually re-borrow whatever we pay against principal and interest obligations. Payments against the previous sum of principal thus are re-assumed as new principal, equal to the old — making it impossible to pay down the sum of debt. But as payments against interest obligations do not count against the previous principal, our perpetual re-borrowing of interest to replenish a circulation means therefore that the sum of debt will perpetually increase so much as periodic interest on an ever greater sum of debt. Not only would this mean that there is ever less of a given circulation to devote to prices, much less increasing prices ostensibly tolerated by the non-existent “inflation,” it would mean that as a consequence of this multiplication of debt in proportion to the circulation, that the system inherently, ultimately collapses under a sum of debt it can no longer afford to service.”

    “So we have several things here — not just some purported ‘inflation,’ which we don’t know even can exist:”

    “We have an inherently, irreversibly multiplying sum of debt, which ultimately engenders collapse, and which, all along the irreversible path to that collapse, imposes ever greater costs of servicing ever greater debt. While I can understand that *these costs* manifest in ever greater prices as industry has to account for their erosion of profit margins, it is also true that ever less of the circulation can be devoted to commerce, as ever more of the circulation is inherently devoted instead to servicing debt. Eventually, even *ALL* of the circulation is devoted to servicing debt.”

    “So it would not be an increase in circulation per goods and services which engenders perpetually increasing prices; it would be the nature of the money; it would be that all the money is subject to interest which inherently engenders perpetually increasing prices by imposing ever greater debt upon the people. And so in fact, while industry can survive this irreversible multiplication of debt, it would be the ever greater costs of servicing this inherently ever escalating multiplication of debt which actually even requires prices to inherently increase at an equivalent, ever greater rate.”


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    John Smith101

    Editor-at-large Paul Kelly wrote in The Australian, on March 21, 2007, an article titled ‘Carbon the currency of the new world order’, from which I paraphrase:

    Last week Miliband (then Britain’s Secretary of State for Environment, Food and Rural Affairs) announced that Britain will become the world’s first nation to legislate a climate change bill setting legally binding timetables for a low-carbon economy. It will put into law the target of 60 per cent emission cuts by 2050, the same target pledged by Rudd’s Labor Party. This decision will affect every British industry, business and household . . . Now he is recasting social democratic philosophy and practice for the coming century . . . The purpose is to impose this system on the world. Britain and Europe are setting benchmarks for a new global order. Miliband’s paper makes this explicit: “By forming a single negotiating block, the EU will be influential in forging a post-2012 framework” . . . [Gordon] Brown outlined the scope of the revolution. The bill will create statutory carbon budgets that will be managed “with the same prudence and discipline” as financial budgets. For Brown, the carbon will be counted like the pound sterling . . . A new statutory body (a variation of central bank powers) will provide independent expert advice on carbon budgets and make progress reports to which governments must respond . . . Brown explains this transformation in relations between state and citizen. He aims to have all new homes rated carbon zero within a decade. For existing homes he wants meters to give an energy efficiency rating that feeds into mortgage and home design policies so that energy-efficient homes have a higher market value. Miliband wants an energy performance certificate for all homes up for sale. These ministers espouse a personal carbon calculator so individuals are able to measure their own carbon footprints . . .What are the implications of this? . . . global targets that carry serious risks for Australia given its fossil fuel economy. And they favour a Big Brother interventionism redolent of the search for a post-socialist meaning for democratic socialism . . . Australia should take heed from these trends. This debate is no longer just about the environment. It is about economics, culture, ideology and foreign policy. The old debate about climate change believers and sceptics is dead (being kept alive only for political gain).
    Full article found here: http://www.theaustralian.com.au/news/opinion/carbon-the-currency-of-a-new-world-order/story-e6frg74x-1111113191601

    I’m glad people are beginning to understand just what is happening. The 5th columnists are already in our ranks.


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    Mike Williams

    Running along on the same sort of meme.
    The documentary “Inside Job” is brilliant.
    Video
    Its now at many local video and on Amazon.


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    That sounds like a wild conspiracy theory, Jo!

    Neoconservatism based on Austrian–School economics has wrecked lives and economies: just look at the USA, went down the path of huge debt and deficit starting with the Reagan tax cuts.

    No surprise Jo is spruiking this failed economics theory, of course.


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      Kevin Moore

      The sky is not falling “because we created money out of thin air.”

      The sky is falling because 1) when you hold in your hand “a dollar,” it actually represents an obligation to pay… and because 2) that *eventually impossible* obligation to pay is *already* so incredibly far much greater than the wealth most of us hope that false dollar could otherwise represent.

      The purported “confidence” in “the dollar” therefore ultimately tumbles because there was no real basis for “confidence” in the first place.

      The lie of the false dollar was always a deception; and it was never the inexpensiveness of the lie which hurt us. The sky is falling instead because of the inevitable ramifications of a purposed process, which in fact was the original, principal intended object of a privatized currency.

      From the very beginning, the issue — and the only distinguishing process even — was “interest.”
      http://perfecteconomy.com/index.html


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      Mike Fomerly of Oz

      That’s a peculiar reading of history, Maxine; very peculiar indeed. It’s the Keynsians-cum-Marxists who have racked up the massive debt.

      The Reagan “tax cuts” actually were cuts to the tax rate. I understand how it’s possible for people to get confused when they hear the term, but, in fact, it is frequently the case that a cut to tax rates increases government revenue. You may want to do a little reflection on why, but here’s a hint: At a tax rate of 0, the government would, of course, receive 0 revenue. At a tax rate of 100%, the government would also receive 0 revenue (it’s why communists need to compel people to work). We know that there is a tax rate that does produce government revenue of more than zero, so therefore tax revenue does not always increase with the tax rate — there must be at least one possible increase in tax rates that would cause revenue to decline.

      So, you see, a cut to the tax rates that increases tax revenue can’t increase the deficit (and thereby the debt) unless government increases spending beyond the additional tax revenue raised by the tax cut. That this is true has been shown in numerous empirical studies that, were you interested in the truth, you could research yourself.


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      Adam Ruth

      [ Neoconservatism based on Austrian–School economics — Maxine]

      That makes about as much sense as “Labor party policy based on anti-union thinking”. Neoconservatives are anything but Austrians.


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    Oh, and money is created by governments who spend it into existence. Banks don’t create nearly as much money as once thought.

    In a boom the Budget should be in surplus—the government taking more from the private sector than it gives.
    In a bust/recession the Budget should be in deficit so the government is putting more money into the private sector than it takes.

    Funny how there are so few comments on this blog. I guess Andrew Dolt hasn’t told you what to think?


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    Kevin Moore

    The Reserve Bank of Australia and the Australian constitution

    http://rainmakers-ozeania.com/4-the-immediate-economy/who-really-owns-the-reserve-bank-of-australia.html

    The Reserve Bank is a foreign ADI. A “foreign ADI” means a body corporate that:
    (a) is a foreign corporation within the meaning of paragraph 51(xx) of the Constitution; and
    (b) is authorised to carry on banking business in a foreign country; and
    (c) has been granted an authority under section 9 to carry on banking business in Australia.

    Prior to 1959 the Commonwealth issued and printed its own money and had control of the printing of money. However after the 1959 Reserve Bank Act, the Reserve Bank was established as a stand alone independent
    foreign ADI, which took over the printing of money and lent the money it printed to the Commonwealth at interest. So instead of the Commonwealth printing its own money, we have a foreign body corporate printing our money and lending it to the Commonwealth which the Commonwealth needs to pay back!

    “RESERVE BANK ACT 1959 – SECT 77
    Guarantee by Commonwealth
    The Commonwealth is responsible for the payment of all moneys due by the Bank” (The commonwealth of Australia is paying money is borrows back to the stand alone bank)
    (Source: http://www.austlii.edu.au/au/legis/cth/consol_act/rba1959130/s77.html)

    “RESERVE BANK ACT 1959 – SECT 27
    Bank to be banker for Commonwealth
    The Bank shall, in so far as the Commonwealth requires it to do so, act as banker and financial agent of the Commonwealth” (The reserve bank is the Commonwealths banker and lender and the Commonwealth must pay the money back to the Bank!)
    (Source: http://www.austlii.edu.au/au/legis/cth/consol_act/rba1959130/s27.html)

    EVIDENCE THE BANK IS A FOREIGN ADI WITH FOREIGN LINKS AND BRANCHES:

    The below act shows how foreign coroporations have power of attorny over the Reserve Bank of Australia:

    RESERVE BANK ACT 1959 – SECT 76
    Attorney of Bank
    The Bank may, by instrument under its seal, appoint a person (whether in Australia or in a place beyond Australia) to be its attorney and a person so appointed may, subject to the instrument, do any act or execute any power or function which he or she is authorized by the instrument to do or execute. (Source: http://www.austlii.edu.au/au/legis/cth/consol_act/rba1959130/s76.html)

    Foreign Agents in control of the Reserve Bank of Australia:

    RESERVE BANK ACT 1959 – SECT 75
    Agents etc.
    In the exercise of its powers and the performance of its functions, the Bank may:
    (a) establish branches and agencies at such places, whether within or beyond Australia, as the Bank thinks fit;
    (b) arrange with a person to act as agent of the Bank in any place, whether within or beyond Australia; and
    (c) act as the agent of an ADI carrying on business within or beyond Australia.


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    Joe V.

    Here ! Isn’t Arnie an Austrian ? Why is CA in such a mess then ?


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    Sal Khan has a nice treatment of the monetary system and current issues in:

    http://www.khanacademy.org/#core-finance

    Sadly the electorate has been convinced they are not smart enough to understand these issues, even though this is the first skill everyone is forced to learn. Then again, we are increasingly innumerate.

    http://www.youtube.com/watch?v=1C7FH7El35w&t=2036s

    We’ve no life experience that taking the easy option ever works out beyond “no pain, no gain.” So eventually the electorate will figure out that there allways is an accounting when governments interfere with the individual’s vote with their pocketbook – the most important democratic process – much more important than the ballot box. Or any model (repeat after me: “models are not reality, by definition.”)


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    cb

    Hippies do NOT care about facts. Logic. Reason. You may ask what is it that they do value: the answer is simply this – hippies LIKE evil. Since they do not care about facts, logic, reason, they can and do hide this from themselves: they have placed themselves beyond such things as truth, correctness, honesty, integrity. Yet, is there any specific reason for you all to do the same? Or is that issue one of cowardice? Weakness?

    Trying to argue, debate, reason with a hippie is an act of deep stupidity. This is an absolute truism. If you have not realized this yet, then you are indeed stupid.

    Under the auspices of the hippies, the last few generations have been raised to attach no VALUE to fact, logic, reason. Zip. Zero. Zilch.

    So. No matter how much you may natter on about Austrian economics, (or climate change, etc,) it does not matter, since the hordes of hippie-mind-f@cked people DO NO CARE.

    Cause, not symptom. This is obvious: very much more so than it once was. Once all these words would have been met with direct rejection, direct ridicule, direct contempt. Not so easy to do that anymore, is it? Yet, despite how EASY it has become to see the true state of affairs, still you all run around like mindless little retards.

    Biblical Christianity is ceasing to be the joke: the joke is humanism, and what it spawned. You do realize that the very first part of this reply describes what it means to be lawless? (I.e. to be such that you are without LAW.) That the hippies are consumed with what the bible calls the spirit of the anti-Christ (the man of lawlessness)? Hippie-ness does make its adherents sociopathic (and psychopathic, secondarily), but what lies underneath that is actual bible-to-real-world LAWLESSNESS. And under that, lies the love of evil: not so easy to spit on that anymore either, is it.


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    Kevin Moore

    Orwell warned of a world where books were banned. Huxley warned of a world where no one wanted to read books. Orwell warned of a state of permanent war and fear. Huxley warned of a culture diverted by mindless pleasure. Orwell warned of a state where every conversation and thought was monitored and dissent was brutally punished. Huxley warned of a state where a population, preoccupied by trivia and gossip, no longer cared about truth or information. Orwell saw us frightened into submission. Huxley saw us seduced into submission. But Huxley, we are discovering, was merely the prelude to Orwell. Huxley understood the process by which we would be complicit in our own enslavement. Orwell understood the enslavement. Now that the corporate coup is over, we stand naked and defenseless. We are beginning to understand, as Karl Marx knew, that unfettered and unregulated capitalism is a brutal and revolutionary force that exploits human beings and the natural world until exhaustion or collapse. [.....] Our manufacturing base has been dismantled. Speculators and swindlers have looted the U.S. Treasury and stolen billions from small shareholders who had set aside money for retirement or college. Civil liberties, including habeas corpus and protection from warrantless wiretapping, have been taken away. Basic services, including public education and health care, have been handed over to the corporations to exploit for profit. The few who raise voices of dissent, who refuse to engage in the corporate happy talk, are derided by the corporate establishment as freaks.

    But the hopeful and ‘cheerful’ truth is:

    The façade is crumbling. And as more and more people realize that they have been used and robbed, we will move swiftly from Huxley’s “Brave New World” to Orwell’s “1984.” The public, at some point, will have to face some very unpleasant truths. The good-paying jobs are not coming back. The largest deficits in human history mean that we are trapped in a debt peonage system that will be used by the corporate state to eradicate the last vestiges of social protection for citizens, including Social Security. The state has devolved from a capitalist democracy to neo-feudalism. And when these truths become apparent, anger will replace the corporate-imposed cheerful conformity. The bleakness of our post-industrial pockets, where some 40 million Americans live in a state of poverty and tens of millions in a category called “near poverty,” coupled with the lack of credit to save families from foreclosures, bank repossessions and bankruptcy from medical bills, means that inverted totalitarianism will no longer work.

    http://www.greanvillepost.com/2011/12/07/dont-look-but-now/


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    Beale

    In 2000, Andrew West wrote a two-part article about economic theories, which included this:

    In my view, the Austrian school, at least in its current mainstream manifestation, is perpetually negative, forecasting since the ’80s near-term ruin that has never materialized.

    I can’t find that he’s written anything since 2004. Would he now admit, I wonder, that the consequences predicted by Mises and others have proved real enough.
    See here and here.


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    Roger Colclough

    Milton or Keynes or Marx ,who gives a damn.

    The failure of Capitalism is that it is built on a belief of the inherent good of money. The failure of Communism is that it is built on a belief of the inherent good of no money.


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      Mark D.

      The last time I looked, Capitalism hasn’t failed.


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      BobC

      Roger Colclough
      April 5, 2012 at 9:33 pm · Reply
      Milton or Keynes or Marx ,who gives a damn.

      The failure of Capitalism is that it is built on a belief of the inherent good of money. The failure of Communism is that it is built on a belief of the inherent good of no money.

      You’re seriously confused Roger. Money is a concept accepted equally by both Capitalists and Communists. Money is simply a medium of exchange — a way to exchange goods and services that is more efficient than barter — but is no different than barter philosophically and is no more intrinsically good or evil than barter itself.

      Your definition of “failure” is equally eccentric: Most people would call a system a failure if it failed to produce the intended results. According to Friedman and Marx, both Capitalism and Communism are intended to increase the standard of living for Humanity. It is clear that Capitalism has succeeded at this and Communism has been an abject failure. This is totally independent of whether you think that money (or barter) is inherently good or evil.

      You share with many a confusion about “economic systems”. “Capitalism” isn’t an economic system, but is simply what happens when people are free to choose how to apply their labor and dispose of their property. To have anything other than “Capitalism”, you must limit people’s freedom to act, or to own property.

      Churchill summed it up aptly:

      Capitalism is the uneven distribution of wealth.
      Socialism is the even distribution of poverty.
      Communism is Socialism with a gun at your back.


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        Roger Colclough

        Yeah Bob I am seriously confused.

        When you talk about money merely being an exchange for barter ,originally you are correct at least a far as
        Venice in the 14th century when the Rothschilds decided to trade in money thus making it fall into the category of tradable goods.
        That my dear fellow was when the trouble started.
        After that instruments of gambling flourished, futures,options derivatives etc which have led us to this sorry scenario.
        Cash allowed us to gamble and bet on commodities not yet produced. Cash is printed and sold by reserve banks who hold no loyalty to the countries in which they operate.
        The candlestick method of predicting market moves was developed by the Japanese in the 12th century. More rice was traded than ever existed – it was merely an exercise in throwing darts at a board.
        Warren Buffet does not trade on the market but picks a company with solid foundations and invests for the long term. (His autobiography) You would find it difficult to portray Mr Buffett as a snivelling socialist.
        Now if you can still find solace in a clearly collapsing system which is driven purely by greed and fear I wonder who is really confused


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          BobC

          Roger Colclough
          April 6, 2012 at 10:55 am · Reply
          Yeah Bob I am seriously confused.

          Well, at least we agree on that.

          As far as:

          Venice in the 14th century when the Rothschilds decided to trade in money thus making it fall into the category of tradable goods.

          Wow, that’s obviously inherently evil. Perhaps you could elucidate the philosophical system you are using to make these judgments — it’s not exactly clear why trading money, which can itself be traded for goods is inherently worse than trading goods.

          And then there’s:

          …gambling flourished, futures,options derivatives etc … gamble and bet on commodities not yet produced. Cash is printed and sold … The candlestick method of predicting market moves … More rice was traded than ever existed

          &etc. &etc.

          I take it you disapprove of these things — things that were invented by peoples free to risk their labor and property as they saw fit. The profusion of invention seems to gall you. If you were “King of the World” you would certainly have clamped down on such frivolities and enforced … what? What would your cramped imagination have allowed?

          Somehow, I think we would still be living in grass huts cooking dinner over buffalo chips, if we depended on your insight for progress.

          Does freedom always work out for everyone? Of course not. Somethings are tried that fail — if they damage the ones who try them, they are shunned by others — if they damage others, they are regulated away by democratic governments for the common good. There is even a term for this, “Creative Distruction”. The philosophy of Classic Liberalism, which tries to maximize personal, political, and economic liberty has created a cornucopia for the Human race in the last 200 years that would have been literally unimaginable in centuries past.

          But trying to enforce a centrally controlled economy has never achieved anything but inhibiting human progress at the best and creating massive suffering, poverty, and death at the worst.

          Despite all of modern history , collectivists like you still think you can do better. You learn nothing from history and you still think I’m confused?


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          Andrew McRae

          Roger, are you talking about Capitalism, or are you really talking about the quasi-communist crony capitalism as obviously practised in the USA government today? Because that government doesn’t represent everybody.

          It may be that BobC and yourself agree on Capitalism being the best system, and one which should be resurrected and cleaned up in some libertarian manner, especially in lieu of any proven alternative.


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            Roger Colclough

            Andrew I agree with you.

            Perhaps the only difference between BobC and myself is that he blindly follows ideological doctrine and I blindly hope for a balance between extremes.

            Clearly fundamentalist communism is the same as fundamentalist capitalism, both ultimately fail.

            Human nature precludes a scenario wherein we will all someday hug each other.

            Might be kind of boring anyway but surely we should be able to overcome the continual cycles of boom and bust.

            Makes it very hard to forward plan anything


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            BobC

            Roger;
            I don’t blindly follow any ideological doctrine. I can see the effects that the philosophy of Classic Liberalism (the maximization of personal, political and economic liberty) has had on Human society: A huge increase in living standards, wealth, and potential in the last 200 years — totally unprecedented in all of previous Human history.

            Does any current (or past) government completely embody this philosophy? Of course not.

            Is the philosophy of Classical Liberalism without any down side? Again, of course not — freedom can be hard on people (but nothing compared to Nature!).

            (What is called “Capitalism” is simply what people who are free do with their labor and property. Planning or Collectivism can only work if the planners can coerce people into following their plans. No country is completely free, as no country is completely coercive — although I’m not totally sure about North Korea — so it is all a matter of degree.)

            The opposite of Classic Liberalism is Communism (or a top-down planned society, if you will). This has never worked out well in history for reasons well articulated by economists Ludwig von Mises and F.A. Hayek — the economy (not to mention society at large) is far too complicated and the knowledge of what is happening is far too distributed for any one person (or group of persons) to understand well enough to predict and control. Attempts to do this via central planning usually just make things worse.

            but surely we should be able to overcome the continual cycles of boom and bust.

            This is extremely unlikely for the reasons stated above. Cycles seem to be the price we pay for freedom, which is the engine of progress. Planned societies sometimes escape cyclic economic behavior by staying in perpetual depression (e.g., N. Korea and Cuba).

            Clearly fundamentalist communism is the same as fundamentalist capitalism, both ultimately fail.

            This statement makes no sense to me. Fundamentalist Capitalism would be Libertarianism — Fundamentalist Communism would be slavery. Both might fail, but they are clearly not the same.


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      Adam Ruth

      “Libertarians don’t believe that greed is good, or that capitalism channels greed to do good. Libertarians simply take greed as a given and act accordingly.”

      – Russ Roberts (paraphrased)


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    Roger Colclough

    Then you are myopic. If this is not failure how do you measure success?


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      Mark D.

      The successes are evident all around you. If you can’t perceive them then you are an idiot. I’m not going to waste my time with your silly comment.


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    Roger Colclough

    MarkD

    Not going to waste your time but cannot resist comment – what an enigma

    Please be a little gentler on those of us without your massive intellect.

    All I see is a global financial meltdown, the weakest US economy in decades,( Time magazine – April), a trashed housing market in the US and a generally falling or flat NYSE.

    Please explain success in simple terms.


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      Mark D.

      Well for starters why don’t you learn to reply by clicking on “reply” so the posts stay grouped?
      .
      .
      So you say Capitalism is failed. Yet I bet you can go get prescriptions for brand new drugs (brought to market by capitalists).
      .
      .
      Drive brand new vehicles made by no end of Capitalist manufacturers.
      .
      .
      Fuel up anything with product supplied by Capitalist fuel companies.
      .
      .
      Drive that vehicle across roads and bridges built by Capitalist contractors.
      .
      .
      Shop at Capitalist retail stores (Large and small).
      .
      .
      Have your stuff repaired by almost unlimited sources of Capitalist mechanics.
      .
      .
      Stop at the grocer (a Capitalist) and buy foodstuffs provided by other Capitalists.
      .
      .
      Then go home to a house built by Capitalist contractors.
      .
      .
      Wipe your ass with paper made by Capitalists.
      .
      .
      Flush a toilet made by Capitalists.
      .
      .
      Type your bullshit on a computer built by and software written by Capitalists.
      .
      .
      THE LIST GOES ON AND ON.

      I’m sorry, WHAT WAS FAILING?

      There, I wasted my time for the benefit of people stopping by (possessing more than half a brain) to see.

      Was that easy enough?


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        Roger Colclough

        Click reply.

        As usual you have not addressed any issues but merely ranted ideological statements.

        Without addressing too many:

        Your Capitalist car industry is broke and is being financed in a Socialist manner by the US taxpayer.

        The same with your largest financial institutions.

        You have studiously avoided commenting on the parlous state of the Capitalist US economy.

        Or of the beginning of the GFC – Wall Street and the collapse of the US housing market as the result of sub-prime mortgage loans by your Capitalist banks.

        In short the woes you are experiencing are purely of your own making – unfortunately you have dragged the rest of the worlds economies with you. Cogratulations.

        By the way I am not against capitalism per se but if you cannot see the cracks forming in the present system and see no need for an overhaul I give up.

        To blindly disregard what is actually happening is really strange – talk about fiddling while Rome burns.

        etc


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          Mark D.

          As usual you have not addressed any issues but merely ranted ideological statements.

          Certainly you mean like this:

          The failure of Capitalism is that it is built on a belief of the inherent good of money. The failure of Communism is that it is built on a belief of the inherent good of no money.

          Your argument is incoherent, dumb and useless. Your point fails, your rebuttal fails. You are wrong in every way. What is your motive here?


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            Roger Colclough

            Just to piss you off I guess Mark.

            I am a retired businessman.

            My wife is a director of Power Technology Trading Pty Ltd. We have business associations with a major import/export company based in Perth WA.
            My wife and I are currently directors of Dimbulah Option Pty Ltd
            Feel free to check the Australian Business Register.
            Your right wing conservative ideology does not sit well with many in business. We prefer to treat people as having intrinsic value.
            Your ideology reeks of McCarthyism and a desire to return to slavery.


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            Mark D.

            Pissed off? I’m not pissed off. I’m just trying to urge you to recognize where you differ from reality.

            From what you’re telling me here, you and your wife are both Capitalists.

            Test questions:

            1. Did you ever invest time, talent and/or money in your business ventures?

            2. Do/did you expect (or hope for) a wage or profit exceeding the investment made?

            Now I know, if you were/are a “business man”, the answer to both will be yes (you Capitalist Pig).

            According to you; failed?
            .
            .
            .

            Your right wing conservative ideology does not sit well with many in business. We prefer to treat people as having intrinsic value.

            What are you on about here? Where have I suggested ANYTHING about how businesses treat people?????

            Further, Capitalism is not exclusively a “right wing conservative” ideology. Are there no Democrats invested in business?

            Your ideology reeks of McCarthyism and a desire to return to slavery.

            Here you step off the deep end making more absolute nonsense statements. I have not accused you of being communist, and I have said nothing about slavery.


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    Kevin Moore

    http://www.cmi-gold-silver.com/blog/how-banking-works/

    ………But at the end of the day, for every new dollar deposited into a bank, almost 99 new dollars can be created out of thin air by the banking system. But here’s the best part: The bank earns interest on all of those dollars it just created! You and I must work for our dollars before they can earn us interest. No such requirement for a bank.

    And, it gets better. Let’s say there was some sort of collateral promised against a loan and the loan goes bad. The bank then gets ownership of real stuff (a house, a car, a boat, etc.) even though the money it “loaned” was nothing more than a number keyed into an account.

    That’s quite the business model. No need to actually produce anything when the government grants you the legal right to create new money. Bankers figured out long ago that working for a living was for the middle class.

    And speaking of the middle class – and the rest of the 99% – I’m afraid the bad news doesn’t end there.

    There’s a larger price to pay for all of this banker privilege beyond just having to work for a living. You’ve heard the expression “There is no free lunch.” Well, it’s true. When a bank creates new money, it reduces the purchasing power of all other money, including the money in your savings account and your paycheck.

    The average person – who doesn’t know how banking works – observes this as the price of things going up. “Gee honey, the price of milk just went up again. It must be getting more expensive to produce milk.” Wrong. It’s actually getting cheaper to produce most things due to increases in productivity. It’s just that your money and your savings and your income are losing their value faster.

    Computers and electronics are an interesting case. They get cheaper every year because the gains in manufacturing productivity are so great, that even bankers can’t devalue the money that fast. But this is the normal action of prices in a sound money system. Sound money retains its purchasing power, and almost all manufactured goods cost less to produce every year. If our monetary and banking systems weren’t based on fraud, a person would never need to get a single raise or increase in pay to see their standard of living rise every single year. Please take a minute and contrast that with your experience in our current system.

    That 3-10% price inflation we see is how much purchasing power our incomes lose every year. To say it another way, our standard of living falls 3-10% every year after year after year. It wasn’t that long ago that a middle class family in America could comfortably get by on a single income. It is now often necessary for a household to have two full time incomes just so it can struggle by..

    So how did the 99% become the 99%? It’s because that is exactly what our monetary and banking systems are designed to do. It is an institutionalized system of wealth transfer that acts slowly over time. Like the boiling frog, most don’t realize what has happened until they’ve been cooked.

    Perhaps at some point you’ve stumbled across the famous quote by Henry Ford:

    “It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

    Now you know what he was referring to.


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      BobC

      The solution is simple Kevin — you should stop using banks and money. Let us know how it works out. (Usually libraries have free computers you can use.)

      Either that, or you can start your own bank — there’s nothing stoping you but your own lack of motivation and effort.


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      Roger Colclough

      Good one Kevin,

      A bit of fact and sanity introduced.

      Some would have us believe that the middle classes, including many small businesses are happy with the present situation.


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        Kevin Moore

        Roger,

        It is the same today.

        Exodus 14

        It seems that the Israelites prefer Egypt to the desert, slavery to freedom, Pharaoh to God and Moses, the past to the future, and the secure and known world to the insecure and unknown world. In other words, slaves desire to remain as slaves! Why? Because of fear – they fear freedom; likewise, they fear death and are afraid of their masters. The Israelites have therefore returned to being a slave or a prisoner – of the false comforts of Egypt and their own fear of the unknown!


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          Kevin Moore

          Part of an essay -

          “Chinese Crackers” Historian Humphrey Mcqueen

          …….Once bitten, twice bitten
          The failure to question China’s future is endemic in Australia where the economy
          is again being derailed by mineral exports. In the era of deregulation, policy
          makers are left with no strategic options beyond predicting that the China boom
          will go on, and on. Australians have been down this yellow‐cake road more than
          once before. Our forebears believed that they would grow rich if only the Chinese
          wore woolen socks and put sugar in their tea. In The Glugs of Gosh (1917) poet C J
          Dennis portrayed his fellow Australians as exchanging
          … pianers and pickles and spanners
          For seventeen shiploads of stones.
          From the late 1950s, Australians transferred that cargo‐cult mentality across to
          Japan’s mineral imports, leaving Australia ‘a lucky country run mainly by secondrate
          people who share its luck’, as Donald Horne recognised in1964. Until Rex
          Connor became Minister for Minerals and Energy in 1973, no Swank of Gosh had
          thought it necessary to put a number on ‘the contribution of the mining industry
          to Australian welfare’. The answer came in the 1974 Fitzgerald Report, which
          calculated that, far from adding to the national coffers, the Australian tax‐payer
          had subsidised BHP, CRA and Aloca to ship our dirt to Japan to the tune of
          $137m.15
          Five years later, then Treasury Secretary John Stone warned that a
          coming boom in energy exports meant that we must dismantle our still
          substantial manufacturing sector to manage a new bout of currency
          appreciation.16 Stone’s resources boom confirmed ‘Banjo’ Paterson’s conclusion
          from observing cattle booms and Northern Territory booms: ‘They all went bust’.
          Within seven years of Stone’s pronunciamento, treasurer Keating was bleating
          about a banana republic as the exchange‐rate plunged.
          Statistical inflation
          These memories and experiences would have done no more than keep me wary
          of a China boom. The catalyst for my becoming a China sceptic was a 2003 article
          titled ‘Gold into Base Metals’ in one of the most prestigious publications in
          bourgeois economics. From an examination of the evidence between 1978 and
          1998, its author, Alwyn Young, documented the unreliability of Chinese statistics,
          thereby turning ‘the extraordinary into the mundane’.17 My mentions of Young’s
          evidence encountered blank stares, although Crickey accepted a version in mid‐
          2007. Because of the seminal place that Young’s article had in my outlook on
          China, and because so much of the popular belief is based on very big numbers
          about its growth, I shall open with his material.
          Instead of fiddling with the final figures published by central
          administrators, Young tracked how those results had been constructed from the
          results forwarded from below. Lower‐level officials were rewarded for meeting
          expectations and punished for failing to come in on target, as had been the case
          for millennia. From time to time, the central authorities tried to correct the
          errors. For instance, ‘the 1994 gross industrial output estimates were revised
          downward by about 9 percent’. That year, the government identified 70,000
          cases of misrepresentation. Another reason for the gulf between the hype and
          the performance has been a ‘systematic understatement of inflation by
          enterprises’. Young concluded that ‘the growth rate is not the highest in all…


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            Roger Colclough

            Kevin I have said for some time now that we have been exporting just about every mineral on the atomic table since the 1870′s and we still have the ass out of our dax. It is really beyond me how we have allowed this to happen.
            All we have is a lot of dirty holes in the ground left by such environmental luminaries as CRA, ( Consolidated Rio Tinto Zinc Australia).
            Check out the Rio Tinto in Spain. Don’t bother going to the Moon – it’s there.


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            Kevin Moore

            A bit odd – whatever link I type in here to “Chinese Crackers” ends up in outer space.


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      Roger Colclough

      Sorry a late addition, last week we were advised by a supplier of normally closed Solid State Relays in the US that they have gone down the spout. We now have to source from China or India. Sad because the US company guaranteed a high quality product and had the only suitable design with all necessary certifications.


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        Mark D.

        I see, one failed business means all capitalism has failed………..

        Try here to source your relays: http://www.digikey.com

        Or if you’d rather, provide the specifications needed and for a small fee (I am a Capitalist after all), I’ll do what I can to source your part from a US manufacturer (as most of them are still in business).


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          Roger Colclough

          Sorry Mark I neglected to thank you for the kind offer but a Normally Closed SSR is a specific order and is not generally available. In fact our initial order took some nine months as the line had to be closed and re-jigged to manufacture these items for us.

          As you can understand our product is subject to the process of international patent and therefore I must close this conversation.


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        Mark D.

        PS, how do you feel about Communist China unfairly competing in world trade by their government subsidies and child labor?

        Is this what caused the relay manufacturer to fail?


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          Roger Colclough

          I don’t suppose that your agribusiness is subsidised to a massive degree?

          As for the electronics I’m really not sure but I do surmise that they were a major supplier to the failed and subsidised car industry in the States.

          You talk about the Chinese. Come on Mark how many times will you deny that the US government has bailed out the motor vehicle industry, major financial institutions and has massively subsidised farmers for decades.

          You don’t have to be an economist to see a recipe for disaster.


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    Ralph Prestage

    Shame on you Jo you are exposing the greatest financial wrought I am aware of. Businesses and major Corporations are bleeding western governments, at all levels, of massive amounts of public money in the hysteria of environmental protection.
    This is while they are reaping billions in the development of pristine environmental areas in third world countries in the name of progress.
    Hypocrisy or a game ?


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    Beale

    I think we have overcome the cycle of boom and bust, but not in the way we wanted. That is, we are now experiencing a bust not preceded by a comparable boom. How did this happen? I think the reason is one that Mises anticipated. He pointed out that knowledge of the Austrian theory of the trade cycle was widespread enough that events might in the future take a different course; and so they did. Enough businessmen and investors were warned that, although there were bubbles, the boom was much attenuated. But governments, still driven by Keynesian ideas (because, of course, those ideas exalt government), continued the path of inflation and credit expansion, weakening their countries economically to a degree that eventually could not be hidden.


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