Wednesday, February 16, 2011

Fool You Once, Shame on Fox News. Fool You Twice, Shame on You.

I congratulate myself for avoiding the legacy media.  Many conservatives watch Fox, but its owner, Rupert Murdoch, has economic interests in line with other legacy media owners: General Electric, owner of NBC, MSNBC and CNBC;  Sumner Redstone, owner of CBS; the Ochs Sulzberger family's trust, inheritor of  The New York Times; and Warren Buffett, part-owner of The Washington Post and Capital Cities ABC.   Each benefits from America's Federal Reserve Bank (Fed)-based monetary system and from big government regulation.  The value of their stock increases with monetary expansion.  As a result, the legacy media rarely discusses the Fed; it deliberately keeps the public in the dark about the Fed's actual operations; and its publishing arms refuse to publish books critical of the Fed.

In contrast, Ron Paul is for abolishing the Fed.  So he directly threatens the super-rich, corporate America and the legacy media. It is to be expected that Fox will oppose him. But Fox News's Bill Hemmer's apparent falsification of the news reflects a new journalistic low, even given Fox's pro-Fed, big-government bias.  

Mike Marnell, publisher of Kingston, New York's innovative Lincoln Eagle newspaper, has forwarded the video below, which is posted on Youtube.  The video shows clips from Fox News in which broadcaster Bill Hemmer apparently  falsifies his coverage of the CPAC proceedings.  What is disturbing is not just that Hemmer shows last year's CPAC proceedings, claiming that they occurred this year, but also that he overtly lies, asserting that last year's video is from this year.  Assuming that the Youtube video is truthful, Hemmer's and Fox's deliberate lying about Ron Paul ought to give every viewer pause about Fox.

Fool you once, shame on Fox. Fool you twice, shame on you.

2 comments:

Vivian Yess Wadlin said...

"The value of their stock increases with monetary expansion."

Mitchell,
This does not make sense as the true value of all money decreases as the money stock increases. Monetary expansion hurts them as well as us. The only way it makes sense is if the value of money stayed the same or increased as they inflated...
Viv

Mitchell Langbert said...

The value of dollars decreases as the money stock increases. But the value of ownership shares in companies (stock) increases as the interest rate decreases because the present value of future profis increases with lower interest rates. The reason is that stock in companies is the value of the present value of the firm's future profit flow. A firm which stands to make $10 per year over the next century is worth around 10 times more than a firm which stands to make $1 per year over the next century.

Increasing the money supply reduces interest rates for a similar reason as to why it reduces the value of each dollar. Interest is the price of money. With more money money's price decreases because of the law of supply and demand. The supply curve is pushed to the right, and since the demand curve is downward sloping to the right increasing the supply of money makes its price (interest rates) lower.

Because more money reduces interest rates it raises the present value of future profits. At 1% interest a dollar paid next year is worth a present value of 1 / 1.01 = 99 cents now. At 10% interest a dollar next year is worth a present value of 1 / 1.10 = 91 cents paid now. In other words, if you put 91 cents into the bank now at 10% interest you would have a dollar in a year, but if you put 99 cents in the bank at 1% interest you would have a dollar in a year.

Therefore, stockholders benefit from low interest rates if they sell at the market peak as existed in 2000 and 2008 (or thereabouts). The Federal Reserve Bank keeps interst rates at a consistently lower level than the market would permit. This creates misallocation of resources such as the subprime crisis and ongoing business cycles and market crashes. But it also subsidizes asset owners, namely real estate and stock holders, especially those who are most canny about selling at market tops.

That is why in the 19th century the Whigs and Republicans, who represented financial interests, were in favor of the Bank and Democrats opposed it. They weren't ignorant and confused like the economists of today.