There is a considerable degree of media deception about the causes of the recent run up in oil and commodities prices and decline of the dollar. The underlying cause of these phenomena is monetary expansion. Since the mid 1980s the Federal Reserve Bank has been increasing the money supply by about 8% per year. It takes a number of years for monetary expansion to affect prices. In this cycle there has been an additional factor: foreign central banks have supported the dollar in order to inflate in their own home markets. Thus, China now holds in excess of one trillion dollars as does Japan. Note that the entire US money supply is about the same amount, maybe slightly more. The Europeans and Saudis are also holding enormous amounts, as are smaller holders around the world. As a result, there is a possibility of a massive inflation, far greater than what we have seen this year. There is no mystery about it.
Nevertheless, I have not heard mention of this on television news except on the business and financial stations like Bloomberg and then in elliptical, deceptive terms. Secular increases in commodities prices across a range of commodities are not attributable to speculators, and even if there has been some speculation pushing up prices a bit, that factor will correct itself when the three-month and six-month futures contracts are settled (commodities contracts do not trade for ten years as I heard one of the media quacks say on television).
It is important to understand that there are beneficiaries from inflation. The chief beneficiaries are debtors. In the modern world, that would be large financial holding companies such as Time Warner and similar media conglomerates, as well as investment banks and commercial banks.
I have previously blogged that both traditionally Democratic investment banks such as Morgan Stanley and traditionally Republican investment banks such as Goldman Sachs have been backing Barack Obama. Investment banks benefit from inflation because increasing the amount of dollars lowers interest rates and boosts the stock market. Commercial banks benefit because they get to lend the new dollars to mortgage borrowers as well as large corporations. These interests: borrowers, investment banks and commercial banks benefit from inflation. Those who are net savers get hurt by inflation. Those without assets, the poor, also get hurt by inflation.
People sometimes remark that large investors like Warren Buffett and George Soros are left wing, and isn't this inconsistent with the supposed arrangement of political views, that the "left favors the poor" and the "right favors the rich". Obviously, that view of politics is ill-informed. The left in America has traditionally represented feudal (the Roosevelts) and socialistic (the Roosevelts) perspectives. The New York Times, for instance, favors the inheritance tax for people in the five million dollar bracket, but the owners of the New York Times, the Ochs Sulzbergers, have inherited the newspaper for four generations running. The Ochs Sulzbergers believe that the super-rich, such as themselves (last time I heard their fortune amounted to about $800 million, all inherited) should be protected from inheritance tax via family trusts, while up and coming entrepreneurs whose businesses might develop inter-generationally should be heavily taxed to eliminate potential threats to the feudalistic order. Naturally, the likes of George Soros and Warren Buffet have similar interests, as do the investment bankers at Morgan Stanley and Goldman Sachs.
Contrairimarie just forwarded a blog from No Quarters USA indicating that Barack Obama has chosen a lackey of MBNA, Joe Biden, to be his running mate. What a coincidence! Who was saying that the left favors the poor?
Just days ago Mr. Obama was claiming that Mr. McCain represents the rich. What concerns me most about Mr. Obama, besides the likelihood that he will perpetuate the inflationist agenda of the past quarter century, is that he is a conscienceless liar.
Monday, August 25, 2008
Sunday, August 24, 2008
Community and Progressivism
Progressivism expressed the moral impulse of social Gospel Christianity and Populism as well as the social democratic ideas that late nineteenth century American university students brought home from the University of Berlin and other German universities. But the intent of morality is not the same as its execution. We can try to improve a bridge, but if the new bridge does not stand, then we have not helped. Moral action requires efficacy.
Progressivism emphasized large scale. In urban redevelopment, Robert Moses built roads, beaches, highways and public housing, but disregarded the effects on neighborhoods and personal networks within them. Jane Jacobs dissected his work on the Cross Bronx Expressway and New York City's public housing projects in her book Death and Life of Great American Cities. Progressivism aimed to improve efficiency and quality by increasing scale and applying a regularized pattern. But large scale often does not work. It is inflexible and difficult to change.
Robert Putnam has written an excellent book, Bowling Alone, about the decline of community. But the last thirty years has increasingly seen the failure of Progressivism, so it is not surprising that many Americans have chosen to shift from what Daniel Elazar calls the moralistic to the individualistic political pattern. Not only neighborhoods but the individual's relationship to the state, to his family, his employer and his economic future have been modified by the centralizing tendency of Progressivism, resulting in increasing distance from decisions and processes that modify his life. The classic example of this transformation is the Great Depression of the 1930s, which was the first major failure of Progressivism. Caused by a combination of inappropriate central bank tightening (Milton Friedman) or by President Hoover's mistaken attempt to cajole major employers into refusing to cut wages (Murray Rothbard), the Depression followed the establishment of the Federal Reserve Bank by less than twenty years and the implementation of Wilson's World War I economy (in which Hoover played a crucial role as Food Administrator) by less than ten.
Increasingly, government has been centralized and inflexible and incapable bureaucracies have been established. The Progressives claimed that "experts" could solve problems, so a hierarchy of expertise was established, and citizens' opinions became less important. Americans allowed themselves to be convinced that experts knew better. The news media also centralized, in part in response to growing labor costs facilitated by the National Labor Relations Act and the advent of television. The centralized news media became an advocate for government by expertise, the wisdom of Keynesian economics and bureaucracy.
The Progressive policies of urban redevelopment led to near-extinction of urban centers and the subsidization of suburbs, which in turn led to increasing commutes. As well, since the abolition of the international gold standard in 1971, declining hourly real wages have led to increasing hours of work as Americans have struggled to keep up with the declining economic opportunity that central planning has caused. The pure exhaustion of multiple jobs coupled with the distraction of television and the need to decompress has increasingly alienated Americans from their communities.
Moreover, a sense of apathy has set in because the centralized, unresponsive firms and government bureaucracies that Progressivim has established seem to be beyond the efforts of most Americans. As a result, a society that is increasingly stratified between those who benefit from Federal Reserve and governmental subsidies and those who do not has been accomplished in the rhetoric of moralistic, Progressive reform. The dissonance created by the discrepancy between the ideology of Progressivism and its assault on human dignity and living standards leads inexorably to loss of community and economic decline.
Progressivism emphasized large scale. In urban redevelopment, Robert Moses built roads, beaches, highways and public housing, but disregarded the effects on neighborhoods and personal networks within them. Jane Jacobs dissected his work on the Cross Bronx Expressway and New York City's public housing projects in her book Death and Life of Great American Cities. Progressivism aimed to improve efficiency and quality by increasing scale and applying a regularized pattern. But large scale often does not work. It is inflexible and difficult to change.
Robert Putnam has written an excellent book, Bowling Alone, about the decline of community. But the last thirty years has increasingly seen the failure of Progressivism, so it is not surprising that many Americans have chosen to shift from what Daniel Elazar calls the moralistic to the individualistic political pattern. Not only neighborhoods but the individual's relationship to the state, to his family, his employer and his economic future have been modified by the centralizing tendency of Progressivism, resulting in increasing distance from decisions and processes that modify his life. The classic example of this transformation is the Great Depression of the 1930s, which was the first major failure of Progressivism. Caused by a combination of inappropriate central bank tightening (Milton Friedman) or by President Hoover's mistaken attempt to cajole major employers into refusing to cut wages (Murray Rothbard), the Depression followed the establishment of the Federal Reserve Bank by less than twenty years and the implementation of Wilson's World War I economy (in which Hoover played a crucial role as Food Administrator) by less than ten.
Increasingly, government has been centralized and inflexible and incapable bureaucracies have been established. The Progressives claimed that "experts" could solve problems, so a hierarchy of expertise was established, and citizens' opinions became less important. Americans allowed themselves to be convinced that experts knew better. The news media also centralized, in part in response to growing labor costs facilitated by the National Labor Relations Act and the advent of television. The centralized news media became an advocate for government by expertise, the wisdom of Keynesian economics and bureaucracy.
The Progressive policies of urban redevelopment led to near-extinction of urban centers and the subsidization of suburbs, which in turn led to increasing commutes. As well, since the abolition of the international gold standard in 1971, declining hourly real wages have led to increasing hours of work as Americans have struggled to keep up with the declining economic opportunity that central planning has caused. The pure exhaustion of multiple jobs coupled with the distraction of television and the need to decompress has increasingly alienated Americans from their communities.
Moreover, a sense of apathy has set in because the centralized, unresponsive firms and government bureaucracies that Progressivim has established seem to be beyond the efforts of most Americans. As a result, a society that is increasingly stratified between those who benefit from Federal Reserve and governmental subsidies and those who do not has been accomplished in the rhetoric of moralistic, Progressive reform. The dissonance created by the discrepancy between the ideology of Progressivism and its assault on human dignity and living standards leads inexorably to loss of community and economic decline.
John McCain Ad
Mairi just forwarded a link to a John McCain ad here. Mairi writes:
"The Very Best Ad For John McCain - Ever!
... and to my knowledge, the McCain camp didn't have anything to do with it (and if they did, they did a fantastic job).
The audio clips of the Obamas in this video - their own words, are stunning; the video itself vividly demonstrates the profound differences between the two candidates for president.
"Don't Tread On Me, Obama," by Miradena. Watch, and enjoy, every second of it."
"The Very Best Ad For John McCain - Ever!
... and to my knowledge, the McCain camp didn't have anything to do with it (and if they did, they did a fantastic job).
The audio clips of the Obamas in this video - their own words, are stunning; the video itself vividly demonstrates the profound differences between the two candidates for president.
"Don't Tread On Me, Obama," by Miradena. Watch, and enjoy, every second of it."
Chris Matthews' Hard Ball's Soft Brains
I do not normally watch MS-NBC but I was flicking the channel and heard Matthews and one of his colleagues crowing about Obama's vice presidential choice of Joe Biden. Matthews or his colleague was saying that the Republicans would be worried about Obama's pick. What a laugh. MS-NBC doesn't know what the news is. Matthews is to television reporting what Dan Nakaso of the Honolulu Advertiser is to newspaper reporting. The Republicans aren't worried about Biden. They're jubilant. Biden is on tape calling Obama inexperienced. Does anyone actually watch MS-NBC? Maybe Matthews calls his show "Hard Ball" because he's trying to compensate for his soft brain.
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