Monday, January 26, 2009

Money and Our Future (Lew Rockwell)

Lew Rockwell delivers another excellent speech at the recent Mises Circle in Houston:

(Listen here)

We are fortunate to be living in these times, for we are seeing the unfolding of events long explained and predicted by the Austrian tradition.

Maybe that sounds implausible. What is fortunate about our times? The economy is tanking, stocks have been pummeled, unemployment is rising, and Washington is pursuing the worst combination of economic policies since Hoover and FDR. Nor does the new guy in charge seem to have a clue about the limits of what government can do.

Consider what it means to live through our times in the light of economic understanding. Even in the face of calamity, there is no mystery and hence fear is reduced. You look at department stores going belly-up, and you know why. You see parking lots empty, and you know the reason. You have friends losing their jobs, and there is clarity concerning the cause. You see depositors in failing banks lose their money, and you are not surprised. Prices behave in ways that shock and surprise everyone else, but you know what's what.

In many ways, it is like watching the movement of stars and planets with the scientific knowledge provided by astronomy, or observing the effects of a plague with medical knowledge.

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1 comment:

eco said...

Heres the problem. The Fed is owned by the banks, and regulates the banks , and the transfers to the banks, and the banks are owned by people with major investments in treasury bonds, e.g saudi and china. thats why the new treasiry secretary speaks chinese, an asia expert from kissinger associates. He worked for citigroup rubin in the clinton treasury, and when at the ny fed, sent billions to citigroup. makes sense doesnt it. a kind of circular friends look out for friends mutual benefit circle, called a pool ,or unification of interests in accounting. so the investment pool is trying to fix the mess of mbs real estate derivaives. but wait, they created the mess. Blackrock blackstone bought the junk mbs from bear and lehman, at the direction of rubins agent at the fed, but blackrock blackstne was run by peterson, who chaired the ny fed board who appointed the rubin citi blackstone agent. another circle. and the saudi chinese r stuck, cuz they own all the paper , their friends r saying stayp out we'll fix things thru more debt. which might work actually if u remember that the us never left the depression until fds geared up for ww ii . basically the same problem, major global overcapacity in manufacturing. so watch the trade deficits, japans surplus is down 94%, china is hiding their deficit numbers. once trade stabilizes, the the twin deficit pressure on the dollar shrinks. so what r we left with, the criminal foreign syndicate running the circle basically transgers obligations to the chinese saudis to taxpayers in return for new infrastrucre, think dubai ports. except the pots and roards have a toll price sream. so its basically a way to increase tazation formal and informal. and the superrich which own lots of paper investments r ok, cuz their dollar holdings stay relatively ok,indeed deflation benefits lenders of capital to the fed and joe six pack. but joes debt in real terms increase, and his tax levels increase. but none of this heralds hyperinflation,just deflation and a more sticky bureaucratic economy, which is great for multinationals who excel at competing in regulated markets. so expect the media hyped hyperinflation argument to diminish, gold to crater, and the economy to slowly recover, aka 1939. the overcapacity problem requires some fixing. how about carbon tax? tjat stifles production for those without the green credits. tat might work.