Tag Economy

Posts: 9

Unmitigated Disaster

You have to love Jim Rogers and the interviews he gives Bloomberg. He’s a wise man that comes across as a cranky at times but we should listen carefully to what he has to say.

I don’t know where these guys get the audacity to take our money, taxpayer money, and buy stock in Fannie Mae,‘’ Rogers, 65, said in an interview from Singapore. So we’re going to bail out everybody else in the world. And it ruins the Federal Reserve’s balance sheet and it makes the dollar more vulnerable and it increases inflation.‘’ via Bloomberg

Commenter and blogger Kevin H posted this reply to my \$5 Trillion Dollars of Debt post yesterday,[]{.push-double} [“]{.pull-double}How in the world is the U.S. going to bail Fannie and Freddie out of 5 trillion? We are already in debt 9.5 trillion dollars.

Yes, the question is[]{.push-double} [“]{.pull-double}how” and[]{.push-double} [“]{.pull-double}can we?” Stay long Euros, Gold, and Oil for now.

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Economics For Real People

Economics for Real People

I finished reading Gene Callahan's, Economics for Real People, a while ago but never had the chance to write a blog post about it. I can sum up the book in three words, I loved it!

This book lays out the basic building blocks, in layman's terms, to what Austrian school of economics is and how it should be the preferred method of organizing an economy at both the macro and micro levels.

What I really liked about this book was how simply any reader can grasp the Austrian school of economic theory and apply it to real life. Callahan uses many examples in the beginning by creating a hypothetical society, beginning with one man on an island and then applying the principles of the theory as the population expands.

After reading this book, the reader will understand the argument and relevance for the Austrian school of economics and be a convert for sure.

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Undocumented Workers & Inflation

Rio Grande River

About a week ago I met up with the MarketDoctor for drinks. We do this from time to time to lament on the sad state of the economy and all that’s wrong with this country, while downing a few beers. Our usual topic of discussion is about the rampant inflation rate that’s been hidden in our economy and reported as part of the "volatile” food and energy portion of the CPI.

That particular night we talked about how the undocumented worker actually helps keep inflation lower than what it should be. With an estimated workforce of about 12 million undocumented workers doing the jobs you don’t want to anymore, imagine what the true price would be for apples and oranges in the supermarket if they had been picked by American workers? The volatile food part of the misaligned and outdated CPI index would probably shoot off the charts!!!

Remember kids, there’s no inflation as long as you don’t eat or drive to work! What a crock of [BS]{.small-caps} that we’re fed from Bernanke and our Government. We should be ashamed to believe those monkeys.

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A True Threat Of Failure Makes You Conservative

Bluesherry left me a comment a few days ago that had a link to a Libertarian bashing article.  Columnist George Monbiot so eloquently titles his article,[]{.push-double} [“]{.pull-double}Governments aren’t perfect, but it’s the Libertarians who bleed us dry.” In it he writes how Northern Rock pushed for deregulation, got themselves in big trouble, and then asked for a government bailout. His stance is that Libertarianism and its ideal of self interest lead to this incident and its the taxpayer who’s left to foot the bill.

Personally, I disagree with his article. In a true free market, Northern Rock wouldn’t have the safety net of a Government bailout. Failure, in that case, would mean extinction and complete loss of shareholder wealth. Faced with a[]{.push-double} [“]{.pull-double}true threat” of that nature, the majority of businesses would adopt conservative policies and not engage such risky behavior.

The best line of that article was from Presido, a commentor (emphasis mine):

This taxpayers’ money being made available to bail out these banks is precisely what causes the moral hazard that leads to these banks knowing that they cannot lose. They can lend recklessly and make huge profits for their management and when it goes sour the taxpayer will foot the bill. This is called privatise the profits and socialise the losses.

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Neural Market Trends is the online home of Thomas Ott.