Thursday, November 8, 2007
Judge Judy's Producer Sends out Feelers Re O'Malley v. Karkhanis
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Wednesday, November 7, 2007
Abolish the Fed and Go on a Diet
The media continue to avoid the biggest story of the coming decade, the decline of the dollar. The economy is important to everyone, even more so than the Iraqi War. Unfortunately, the progressive movement of the early twentieth century, followed by the Roosevelt liberals of the 1930s and the postwar Keynesian consensus, have enfeebled public conversation about the money supply and about the economy. The macroeconomics taught in most universities is nonsensical but the public has been told that an understanding of it is necessary to participate in public conversation about the Federal Reserve Bank. This is not true. Fed policy is a political variable. But the result of all the obfuscation and pretension is enervated public participation and the facilitation of the financial community's excessive influence on monetary policy.
The result of the twentieth century's institutionalization of progressive propaganda is that banking, Wall Street and corporate lobbies have dominant influence over the country's monetary policy. The major news media are largely in synch with the financial lobby and echo the academic Keynesian propaganda which purposes to legitimize the Fed. The result is the absence of debate about a policy that grievously harms the public in the interest of "well ordered" credit markets and stock market price increases. Although comments that the stock market will almost always go up are common, no major observer has asked why (my friend Howard S. Katz is the sole exception, as far as I know). The reason is that monetary expansion or inflation reduces interest rates and so increases the value that investors place on future income streams (accountants and actuaries call this the present value of future earnings). This distortion of valuations of the future is a government subsidy similar to a welfare benefit. Few Americans believe in welfare but most have been duped into believing in this subsidy.
The absence of debate has crippled the nation's ability to formulate a coherent economic policy. Instead, backroom deals have been made with the public's money supply, and we are learning about them now, when it is too late. Sadly, the interests that are represented, such as Wall Street, are not overly ethical and have learned little from their experiences with Worldcom and Enron earlier in the decade. The Fed will hurt many Americans, much as it did in the 1970s. But the difference between a diet and inflation is that in a diet, the person who suffers pays for self-indulgence. In inflation, the investors, debtors and corporate interests who benefited from the monetary expansion are not the ones who will pay.
The policy that the financial lobby has devised is curious. Foreign investors have been convinced to hold dollars, keeping the value of the dollar much higher than it would be in a market that is not politically driven. In turn, there has been more consumption of gasoline, manufactured goods and other imports. No one knows the extent to which consumption has exceeded the nation's true market power, but it might be by a considerable amount. The result is that suburbs have been developed, large cars driven, obesity increased and jobs disappeared. Jobs have disappeared, contrary to the fundamental claim of Keynesian economics about the effects of inflation and monetary expansion, because the dollar is stronger than it should be so costs look higher here than in other countries. Americans, who were once a muscular, dynamic nation, have become a nation of fat slobs who do not work but rather stay at home watching television and weighing 400 pounds. (I include myself and have recently lost twenty pounds and have been working out four times per week. But that's only the beginning.)
A report that Lenny Rann sent me today that was written by a bearish financial analyst suggests that Wall Street and the commercial banks have acted dishonestly toward the foreign investors who have been bankrolling them and the general public. The last 25 years' increases in the stock market are largely due to these subsidies, so when news came out today that the Chinese are fed up with us and are intending to invest elsewhere, the Dow fell 360 points, better than two percent. Much like Americans' waist lines, the stock markets have flourished because of the something-for-nothing mindset that Wall Street capitalism has created.
America is no longer the nation of innovation; of Edison; of manufacturing; of new ideas; of hard work; of entrepreneurship. Rather, it is the country of investment banks; Jim Cramer's whining for lower interest rates; and selfish indifference to the effects of dishonest money.
America is going to have to go on a diet. Americans have been deceived by the Republicans as well as the Democrats. In past economic declines, the tendency has been to resort to interventionism. That is the likely result now. The problem is that the decline has been caused by intervention. The only way out is to become more athletic, to return to the kind of policies that made the US a leader. Those are policies that foster innovation, entrepreneurship and self-reliance. Regulation will kill American leadership, as will the Fed. This day is no longer far off. It is near. The Fed ought to be abolished and ought to be viewed as the source of all the pain that Americans will feel in the coming decades.
The result of the twentieth century's institutionalization of progressive propaganda is that banking, Wall Street and corporate lobbies have dominant influence over the country's monetary policy. The major news media are largely in synch with the financial lobby and echo the academic Keynesian propaganda which purposes to legitimize the Fed. The result is the absence of debate about a policy that grievously harms the public in the interest of "well ordered" credit markets and stock market price increases. Although comments that the stock market will almost always go up are common, no major observer has asked why (my friend Howard S. Katz is the sole exception, as far as I know). The reason is that monetary expansion or inflation reduces interest rates and so increases the value that investors place on future income streams (accountants and actuaries call this the present value of future earnings). This distortion of valuations of the future is a government subsidy similar to a welfare benefit. Few Americans believe in welfare but most have been duped into believing in this subsidy.
The absence of debate has crippled the nation's ability to formulate a coherent economic policy. Instead, backroom deals have been made with the public's money supply, and we are learning about them now, when it is too late. Sadly, the interests that are represented, such as Wall Street, are not overly ethical and have learned little from their experiences with Worldcom and Enron earlier in the decade. The Fed will hurt many Americans, much as it did in the 1970s. But the difference between a diet and inflation is that in a diet, the person who suffers pays for self-indulgence. In inflation, the investors, debtors and corporate interests who benefited from the monetary expansion are not the ones who will pay.
The policy that the financial lobby has devised is curious. Foreign investors have been convinced to hold dollars, keeping the value of the dollar much higher than it would be in a market that is not politically driven. In turn, there has been more consumption of gasoline, manufactured goods and other imports. No one knows the extent to which consumption has exceeded the nation's true market power, but it might be by a considerable amount. The result is that suburbs have been developed, large cars driven, obesity increased and jobs disappeared. Jobs have disappeared, contrary to the fundamental claim of Keynesian economics about the effects of inflation and monetary expansion, because the dollar is stronger than it should be so costs look higher here than in other countries. Americans, who were once a muscular, dynamic nation, have become a nation of fat slobs who do not work but rather stay at home watching television and weighing 400 pounds. (I include myself and have recently lost twenty pounds and have been working out four times per week. But that's only the beginning.)
A report that Lenny Rann sent me today that was written by a bearish financial analyst suggests that Wall Street and the commercial banks have acted dishonestly toward the foreign investors who have been bankrolling them and the general public. The last 25 years' increases in the stock market are largely due to these subsidies, so when news came out today that the Chinese are fed up with us and are intending to invest elsewhere, the Dow fell 360 points, better than two percent. Much like Americans' waist lines, the stock markets have flourished because of the something-for-nothing mindset that Wall Street capitalism has created.
America is no longer the nation of innovation; of Edison; of manufacturing; of new ideas; of hard work; of entrepreneurship. Rather, it is the country of investment banks; Jim Cramer's whining for lower interest rates; and selfish indifference to the effects of dishonest money.
America is going to have to go on a diet. Americans have been deceived by the Republicans as well as the Democrats. In past economic declines, the tendency has been to resort to interventionism. That is the likely result now. The problem is that the decline has been caused by intervention. The only way out is to become more athletic, to return to the kind of policies that made the US a leader. Those are policies that foster innovation, entrepreneurship and self-reliance. Regulation will kill American leadership, as will the Fed. This day is no longer far off. It is near. The Fed ought to be abolished and ought to be viewed as the source of all the pain that Americans will feel in the coming decades.
Free Speech For Sharad
Phil Orenstein has written an excellent blog about the O'Malley v. Karkhanis case. Phil argues that the PSC aims to silence Sharad and so has encouraged Sue O'Malley to sue. Indeed, the PSC has refused my repeated efforts to arrange for a Judge Judy hearing of the case.
The PSC's attempt to suppress speech and academic freedom is met with indifference by the American Association of University Professors, whom I have contacted about the case (they haven't responded). Phil notes:
(Sharad's newsletter The Patriot Returns) has carefully documented the PSC leadership’s pursuit of revolution instead of their jobs, elaborating on their campaigns to devote more time and resources to future global crusades. This includes such activities as mobilizing the membership to protest the Republican Party at the Republican National Convention in New York. Additionally, the PSC has passed a resolution sympathizing with Hugo Chavez, sponsored a conference called Educators to Stop the War, calling for teachers to develop an anti-war curriculum. The PSC leadership has organized and funded New York City Labor Against the War and Labor for Palestine, donated $5000 to support the legal defense of Lori Berenson, in prison for helping Peruvian Marxist terrorists, and donated...(on behalf of) Sami Al-Arian convicted of conspiracy to aid terrorist group Palestinian Islamic Jihad. According to TPR, the PSC even hosts an “International Committee” replete with a foreign policy spokesperson, who has issued public statements against economic and military aid to Israel and a statement condemning the war in Afghanistan, “joining in solidarity with the victims of U.S. military power,” namely the Taliban. The New York Sun, reported that while the leaders of the PSC have been running amok in politics, their union failed to deliver a new contract and in the past five years the member’s health and welfare fund reserves fell by 97% “with only a trickle of money remaining for faculty members' prescription drug, dental, and medical insurance plans.”
As Phil outlines, the leadership of the Professional Staff Congress are left wing extremists who oppose academic freedom and aim to suppress all who disagree with their reactionary and incompetent left wing views. I have heard that although O'Malley has publicly described her case as silly or frivolous in a New York Sun article, the courts will be willing to waste the taxpayers' money in this transparent attempt at suppression of a union member by a union leadership.
The PSC's attempt to suppress speech and academic freedom is met with indifference by the American Association of University Professors, whom I have contacted about the case (they haven't responded). Phil notes:
(Sharad's newsletter The Patriot Returns) has carefully documented the PSC leadership’s pursuit of revolution instead of their jobs, elaborating on their campaigns to devote more time and resources to future global crusades. This includes such activities as mobilizing the membership to protest the Republican Party at the Republican National Convention in New York. Additionally, the PSC has passed a resolution sympathizing with Hugo Chavez, sponsored a conference called Educators to Stop the War, calling for teachers to develop an anti-war curriculum. The PSC leadership has organized and funded New York City Labor Against the War and Labor for Palestine, donated $5000 to support the legal defense of Lori Berenson, in prison for helping Peruvian Marxist terrorists, and donated...(on behalf of) Sami Al-Arian convicted of conspiracy to aid terrorist group Palestinian Islamic Jihad. According to TPR, the PSC even hosts an “International Committee” replete with a foreign policy spokesperson, who has issued public statements against economic and military aid to Israel and a statement condemning the war in Afghanistan, “joining in solidarity with the victims of U.S. military power,” namely the Taliban. The New York Sun, reported that while the leaders of the PSC have been running amok in politics, their union failed to deliver a new contract and in the past five years the member’s health and welfare fund reserves fell by 97% “with only a trickle of money remaining for faculty members' prescription drug, dental, and medical insurance plans.”
As Phil outlines, the leadership of the Professional Staff Congress are left wing extremists who oppose academic freedom and aim to suppress all who disagree with their reactionary and incompetent left wing views. I have heard that although O'Malley has publicly described her case as silly or frivolous in a New York Sun article, the courts will be willing to waste the taxpayers' money in this transparent attempt at suppression of a union member by a union leadership.
Needed: Across the Board Deregulation--And Fast!
My old friend Lenny Rann just forwarded a report that analyzes the proximate sources of the current dollar decline. The report argues that the investment banks had packaged sub prime loans with AAA loans when they sold mortgage backed securities to foreign investors. In turn, the foreign investors realized that they had been duped and this in turn eroded confidence in the ethics of the American dollar. They are now withdrawing money from dollar investments and turning elsewhere because of the erosion in confidence in the good faith of the American investment community and declining confidence in the dollar. I had put 1% of my portfolio in Powershares's dollar bearish fund, but it may be smart to put more as the dollar is declining daily. This is a massive phenomenon and will disrupt many of our expectations. A breakfast in Dublin runs close to $100 now. Your bank account is being turned into monopoly money by the Fed and the Bush administration.
The last 30 years has been a disappointment. I had hoped that the early gains in deregulation in areas like transportation would continue and that a trend toward greater freedom in economics would be matched with enhanced emphasis on the rule of law and markets. Instead, America has opted for a different course. Enhanced emphasis on whimsical regulation; the nanny state of Mayor Michael Bloomberg in New York; continued regulation and protection of big business; refusal to repeal tariffs in fields like sugar; continued incompetence in education and refusal to introduce curriculum reforms advocated by Diane Ravitch and others to improve primary education; continued emphasis on credentialism and college degrees as opposed to results and productivity in the marketplace; and a perverse Wall Street Capitalism facilitated by the Fed and high income tax rates that inhibit imagination and new business formation. The result is that more and more Americans work in stores and in pointless economic activity.
The regulated economy will not function when the dollar loses global support. There will be widespread poverty if the left's nostrums, more regulation, more taxation, more power to incompetent elites and more credentialism are put into play. Instead, what is needed to respond to the failure of Wall Street capitalism is a return to fundamentals. It is only through deregulation; hard money; lowered income taxes; and an end to the wholesale waste and corruption of big government that America will be able to return to a leadership position and improve wages.
The last 30 years has been a disappointment. I had hoped that the early gains in deregulation in areas like transportation would continue and that a trend toward greater freedom in economics would be matched with enhanced emphasis on the rule of law and markets. Instead, America has opted for a different course. Enhanced emphasis on whimsical regulation; the nanny state of Mayor Michael Bloomberg in New York; continued regulation and protection of big business; refusal to repeal tariffs in fields like sugar; continued incompetence in education and refusal to introduce curriculum reforms advocated by Diane Ravitch and others to improve primary education; continued emphasis on credentialism and college degrees as opposed to results and productivity in the marketplace; and a perverse Wall Street Capitalism facilitated by the Fed and high income tax rates that inhibit imagination and new business formation. The result is that more and more Americans work in stores and in pointless economic activity.
The regulated economy will not function when the dollar loses global support. There will be widespread poverty if the left's nostrums, more regulation, more taxation, more power to incompetent elites and more credentialism are put into play. Instead, what is needed to respond to the failure of Wall Street capitalism is a return to fundamentals. It is only through deregulation; hard money; lowered income taxes; and an end to the wholesale waste and corruption of big government that America will be able to return to a leadership position and improve wages.
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