Friedrich von Hayek developed a systematic argument against government regulation and government edict. According to Hayek, regulators cannot anticipate consumers' shifting evaluations of goods and services and changes in small facts, knowledge of which is essential to effective management. As a result, a regulated system will lack flexibility, especially when the inflexibility is compounded over a large-scale socialist economy such as the Soviet Union's was. Moreover, innovation is not likely in a system where rewards cannot accrue to innovators because government rules and penalties deflect shifts in demand and distort consumers' valuations of innovation.
Merv of PrairiePundit blogs a tragic episode in the Iraqi War that is covered on Reuters.
According to Reuters, a federal regulation that the Democrats pushed through that emphasizes privacy rights of terrorists may have resulted in the deaths of US military personnel.
"U.S. authorities racing to find three kidnapped American soldiers in Iraq last May labored for nearly 10 hours to get legal authority for wiretaps to help in the hunt, an intelligence official told Congress on Thursday. In order to comply with the law, the government was required to spend valuable time obtaining an emergency authorization ... to engage in collection related to the kidnapping," Ronald Burgess, principle deputy director to McConnell, said in a letter to U.S. Rep. Silvestre Reyes...Some Democrats and civil liberties advocates say a temporary expansion of the eavesdropping authority passed in August threatens the rights of Americans and any permanent law needs more protections...The wiretap began at 7:38 p.m. (2138 GMT). Authorities then had 72 hours to obtain a special court's endorsement of the emergency authority, which was granted, a U.S. official said...
"An al Qaeda-led group in June said it had killed the three soldiers, and showed pictured of ID cards of two of the men..."
It is unknown if the information obtained in the wiretap would have enabled the military to stop the execution. Merv points out that the Democrats and ACLU who are pushing for the bureaucratic rules do not take responsibility for the murders of the three soldiers.
Saturday, September 29, 2007
Drought of Fall 07
Usually the Bushkill Creek, which goes by our cabin in West Shokan, NY, is several times higher at this time of year. There has been very little rain since July, and the Ashokan Reservoir, the largest of the New York City Reservoirs, is showing bald spots for the first time since 2002.
Vaclav Havel, Myanmar and Laissez Faire
Glenn Reynolds of Instapundit (courtesy of Larwyn) has posted the following quote from Vaclav Havel:
"The international community's failure to act means watching helplessly as victims of repression in Burma are consigned to their fate."
Reynolds adds:
"I'd feel better about things if he were Secretary-General of the UN."
Reynolds links to Havel's Guardian article:
>"I fear that, with only a few exceptions, most countries have been surprised and caught off guard - once again - by the rapid course that events have taken in Burma. So they seem to be completely unprepared for the crisis and thus at a loss as to what to do.
"How many times and in how many places has this now happened? Worse, however, is the number of countries that find it convenient to avert their eyes and ears from the deathly silence with which this Asian country chooses to present itself to the outside world.
"In Burma, the power of educated Buddhist monks - people who are unarmed and peace loving by their very nature - has risen up against the military regime. That monks are leading the protests is no great surprise to those who have taken a long-term interest in the situation in Burma.
"...Of course, without universal and coordinated international political, economic, and media support for these brave monks, all development in Burma may quickly be put back nearly 20 years.
"On a daily basis, at a great many international and scholarly conferences all over the world, we can hear learned debates about human rights and emotional proclamations in their defense. So how is it possible that the international community remains incapable of responding effectively to dissuade Burma's military rulers from escalating the force that they have begun to unleash in Rangoon and its Buddhist temples?
"For dozens of years, the international community has been arguing over how it should reform the United Nations so that it can better secure civic and human dignity in the face of conflicts such as those now taking place in Burma or Darfur, Sudan. It is not the innocent victims of repression who are losing their dignity, but rather the international community, whose failure to act means watching helplessly as the victims are consigned to their fate.
"The world's dictators, of course, know exactly what to make of the international community's failure of will and inability to coordinate effective measures. How else can they explain it than as a complete confirmation of the status quo and of their own ability to act with impunity?"
Today, the New York Sun posts an AP report that a UN envoy is "heading to Myanmar" but that there is little hope as protesters suffer government violence. Yesterday, troops opened fire on a crowd, and at least 10 deaths have been reported since Wednesday. America has urged "all civilized nations to press Myanmar's leaders to end the crackdown". In 1988, 3,000 Burmese protesters were slain.
What is the appropriate extent of state action in the face state suppression? Advocates of laissez faire argue that the state has no role to play, and that foreign entanglements should be avoided. When is intervention moral, and when does it become another form of state violence? Can the UN be trusted to play such an interventionist role given the wide range of dictatorships that belong to it? Is there a cost/benefit ratio of severity, such as mass murder, beyond which intervention is triggered? If so, hasn't it been reached in Darfur, as Havel asks, and wasn't it reached in Rwanda, neither of which was sufficient to trigger intervention?
Even if Havel is right, can the US or even the UN be asked to intervene in the terrible events unfolding in Myanmar?
"The international community's failure to act means watching helplessly as victims of repression in Burma are consigned to their fate."
Reynolds adds:
"I'd feel better about things if he were Secretary-General of the UN."
Reynolds links to Havel's Guardian article:
>"I fear that, with only a few exceptions, most countries have been surprised and caught off guard - once again - by the rapid course that events have taken in Burma. So they seem to be completely unprepared for the crisis and thus at a loss as to what to do.
"How many times and in how many places has this now happened? Worse, however, is the number of countries that find it convenient to avert their eyes and ears from the deathly silence with which this Asian country chooses to present itself to the outside world.
"In Burma, the power of educated Buddhist monks - people who are unarmed and peace loving by their very nature - has risen up against the military regime. That monks are leading the protests is no great surprise to those who have taken a long-term interest in the situation in Burma.
"...Of course, without universal and coordinated international political, economic, and media support for these brave monks, all development in Burma may quickly be put back nearly 20 years.
"On a daily basis, at a great many international and scholarly conferences all over the world, we can hear learned debates about human rights and emotional proclamations in their defense. So how is it possible that the international community remains incapable of responding effectively to dissuade Burma's military rulers from escalating the force that they have begun to unleash in Rangoon and its Buddhist temples?
"For dozens of years, the international community has been arguing over how it should reform the United Nations so that it can better secure civic and human dignity in the face of conflicts such as those now taking place in Burma or Darfur, Sudan. It is not the innocent victims of repression who are losing their dignity, but rather the international community, whose failure to act means watching helplessly as the victims are consigned to their fate.
"The world's dictators, of course, know exactly what to make of the international community's failure of will and inability to coordinate effective measures. How else can they explain it than as a complete confirmation of the status quo and of their own ability to act with impunity?"
Today, the New York Sun posts an AP report that a UN envoy is "heading to Myanmar" but that there is little hope as protesters suffer government violence. Yesterday, troops opened fire on a crowd, and at least 10 deaths have been reported since Wednesday. America has urged "all civilized nations to press Myanmar's leaders to end the crackdown". In 1988, 3,000 Burmese protesters were slain.
What is the appropriate extent of state action in the face state suppression? Advocates of laissez faire argue that the state has no role to play, and that foreign entanglements should be avoided. When is intervention moral, and when does it become another form of state violence? Can the UN be trusted to play such an interventionist role given the wide range of dictatorships that belong to it? Is there a cost/benefit ratio of severity, such as mass murder, beyond which intervention is triggered? If so, hasn't it been reached in Darfur, as Havel asks, and wasn't it reached in Rwanda, neither of which was sufficient to trigger intervention?
Even if Havel is right, can the US or even the UN be asked to intervene in the terrible events unfolding in Myanmar?
Thirty-six Years Late and Ten Trillion Dollars Short
Goldbug Howard S. Katz blogs that media coverage of the Fed is rife with fraud. There is no difference, notes Katz, between the Fed's reducing interest rates and increasing the money supply, although the Fed wants to claim otherwise:
"You will usually hear that the Federal Reserve is adjusting the Federal funds (not the T-bill) rate. This is another piece of misinformation designed to keep the public’s eye off the ball. The Federal Reserve does not operate in the Federal funds market...."
Katz notes that in order to purchase T-bills, the Fed must increase the money supply, and it does so through printing more monopoly money, i.e., dollars:
"When the Federal Reserve first received this power, the total money supply of the U.S. was twenty billion dollars. This week it was 1363 billion dollars."
Between 1946 and August 1971 countries operated under the Bretton Woods system under which most countries settled their international balances in U.S. dollars but some redeemed dollars for gold. Because of pre-1971 inflation, balance-of-payments deficits reduced gold reserves. Thus, President Nixon announced that the United States would no longer offer gold. According to the Bureau of Labor Statistics, one dollar in 1971 has the same buying power as $5.13 in 2007. In other words, since the ending of the final link to the gold standard 36 years ago, the dollar has declined to 1/5.13 or 19.49% of its value.
Mainstream economists have developed elaborate rationales for this decline, such as "assuming that all wages are indexed, all savings accounts are indexed, the stock market goes up at a constant rate, and loan payments are indexed, then inflation does not matter". If you believe them you lose money.
After 36 years of post-Bretton Woods inflation, The New York Sun notes that the current real estate bubble has burst. Prices have fallen by the most since 1970 and purchases have fallen by 8.3%, the most in seven years. Construction is in its worst slump since 1991. It is true that there is a bright side to the decline of the dollar, namely, we have become to Europe what Europe was to us in the 1960s: a tourist destination. As the Sun also reports, "New York City's travel, real estate, and manufacturing sectors — which profit from the sale of services to foreigners — will likely benefit." Of course, those who need to purchase real estate in the New York area will pay through the nose, as their monopoly dollars need to be brought in wheel barrows and cannot compete with Euros, Yen or Yuan. But who cares, since those of us who are selling now can retire?
To its credit, the Sun ran another front page article about the dollar's decline , "The Dollar's Fall Starts to Worry". The Sun notes that "foreign investors proclaim that a "for sale" sign has been hung on the city". The Sun quotes Axel Merk:
"No country in the world has ever fought itself to prosperity by weakening its currency"
The Sun also quotes chief of the Fed's counterfeiting operations, Ben Bernanke, as saying that there is a "liquidity crisis". With my TIAA CREF money market fund yielding 3.68%, what kind of liquidity crisis is Bernanke describing? Is he insane? I'm having trouble figuring out whether Ben Bernanke is on hallucinogenic drugs; is a crook; or hopes for a high-paying job from schnorrers* like Jim Cramer.
The Sun also notes that Russia, China and the Middle East countries are starting to exchange dollars for the euro. Given the multi-trillion (not billion) extent of foreign holdings, there is a massive potential for further reductions in the dollar.
Given that the Sun is reporting the dollar decline thirty-six years after the end of the gold standard, and after the Fed has circulated ten trillion dollars in monopoly money around the world, it looks like the Sun's front-page article may be thirty-six years late and ten trillion dollars short. Buy gold and commodities, friends.
*To revise Groucho Marx's song "Hooray for Captain Spaulding"in Animal Crackers (the tune was also the theme to Groucho's 1960s TV Show, You Bet Your Life):
My name is Jimmy Cramer
The Economy's Explorer
Did someone call me a schnorrer?
Hooray, hooray, hooray
"You will usually hear that the Federal Reserve is adjusting the Federal funds (not the T-bill) rate. This is another piece of misinformation designed to keep the public’s eye off the ball. The Federal Reserve does not operate in the Federal funds market...."
Katz notes that in order to purchase T-bills, the Fed must increase the money supply, and it does so through printing more monopoly money, i.e., dollars:
"When the Federal Reserve first received this power, the total money supply of the U.S. was twenty billion dollars. This week it was 1363 billion dollars."
Between 1946 and August 1971 countries operated under the Bretton Woods system under which most countries settled their international balances in U.S. dollars but some redeemed dollars for gold. Because of pre-1971 inflation, balance-of-payments deficits reduced gold reserves. Thus, President Nixon announced that the United States would no longer offer gold. According to the Bureau of Labor Statistics, one dollar in 1971 has the same buying power as $5.13 in 2007. In other words, since the ending of the final link to the gold standard 36 years ago, the dollar has declined to 1/5.13 or 19.49% of its value.
Mainstream economists have developed elaborate rationales for this decline, such as "assuming that all wages are indexed, all savings accounts are indexed, the stock market goes up at a constant rate, and loan payments are indexed, then inflation does not matter". If you believe them you lose money.
After 36 years of post-Bretton Woods inflation, The New York Sun notes that the current real estate bubble has burst. Prices have fallen by the most since 1970 and purchases have fallen by 8.3%, the most in seven years. Construction is in its worst slump since 1991. It is true that there is a bright side to the decline of the dollar, namely, we have become to Europe what Europe was to us in the 1960s: a tourist destination. As the Sun also reports, "New York City's travel, real estate, and manufacturing sectors — which profit from the sale of services to foreigners — will likely benefit." Of course, those who need to purchase real estate in the New York area will pay through the nose, as their monopoly dollars need to be brought in wheel barrows and cannot compete with Euros, Yen or Yuan. But who cares, since those of us who are selling now can retire?
To its credit, the Sun ran another front page article about the dollar's decline , "The Dollar's Fall Starts to Worry". The Sun notes that "foreign investors proclaim that a "for sale" sign has been hung on the city". The Sun quotes Axel Merk:
"No country in the world has ever fought itself to prosperity by weakening its currency"
The Sun also quotes chief of the Fed's counterfeiting operations, Ben Bernanke, as saying that there is a "liquidity crisis". With my TIAA CREF money market fund yielding 3.68%, what kind of liquidity crisis is Bernanke describing? Is he insane? I'm having trouble figuring out whether Ben Bernanke is on hallucinogenic drugs; is a crook; or hopes for a high-paying job from schnorrers* like Jim Cramer.
The Sun also notes that Russia, China and the Middle East countries are starting to exchange dollars for the euro. Given the multi-trillion (not billion) extent of foreign holdings, there is a massive potential for further reductions in the dollar.
Given that the Sun is reporting the dollar decline thirty-six years after the end of the gold standard, and after the Fed has circulated ten trillion dollars in monopoly money around the world, it looks like the Sun's front-page article may be thirty-six years late and ten trillion dollars short. Buy gold and commodities, friends.
*To revise Groucho Marx's song "Hooray for Captain Spaulding"in Animal Crackers (the tune was also the theme to Groucho's 1960s TV Show, You Bet Your Life):
My name is Jimmy Cramer
The Economy's Explorer
Did someone call me a schnorrer?
Hooray, hooray, hooray
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