Henry Hazlitt wrote Economics in One Lesson in 1946 and it was republished in 1978. I was just re-reading it and noticed these paragraphs on pages 186-7 of the Three Rivers Press edition available through the Foundation for Economic Education:
"The effect of keeping interest rates artificially low, in fact, is eventually the same as that of keeping any other price below the natural market. It increases demand and reduces supply. It increases the demand for capital and reduces the supply of real capital. It creates economic distortions. It is true, no doubt, that an artificial reduction in the interest rate encourages increased borrowing. It tends, in fact, to encourage highly speculative ventures that cannot continue except under the artificial conditions that give them birth. On the supply side, the artificial reduction of interest rates discourages normal thrift, saving and investment. It reduces the accumulation of capital. It slows down that increase in productivity, that "economic growth," that "progressives" profess to be so eager to promote.
"The money rate can indeed, be kept artificially low only by continuous new injections of currency or bank credit in place of real savings. This can create the illusion of more capital just as the addition of water can create the illusion of more milk. But it is a policy of continuous inflation. It is obviously a process involving cumulative danger. The money rate will rise and a crisis will develop if the inflation is reversed, or merely brought to a halt, or even continued at a diminished rate.
"It remains to be pointed out that while new injections of currency or bank credit can at first, and temporarily, bring about lower interest rates, persistence in this device must eventually raise interest rates. It does so because new injections of money tend to lower the purchasing power of money. Lenders then come to realize that the money they lend today will buy less a year from now, say, when they get it back."
When that occurs, only severe disruption of the economy will end the hyper-inflation. The policies of the past twenty-five years, supported by a majority of Americans, is leading us to that point. The Bush-Obama bailout is the tipping point
Saturday, January 17, 2009
Friday, January 16, 2009
Obama on Abortion
Barack Obama discusses his abortion ideas here on the Theologica blog. The talk is long winded and a snoozer, but Theologica writes:
"Note in particular this line: "The first thing I'll do as President is sign the Freedom of Choice Act."
Obama says "It is time to write a new chapter in American history". He implies that the abortion issue is a health issue, and that Christians' moral and religious concerns concerning abortion are reactionary, and overturning them is a matter of progress. He implies that abortion opponents are narrow minded advocates of culture war and lack of public unity. He says he has stood up for freedom of choice and that he opposed the confirmation of Roberts and Alito to the Supreme Court because of the abortion issue. "We're at a crossroads right now in America and we have to move the country forward." He argues that belief in abortion is "science".
Lifenews estimtates that FOCA will mean 125,000 more abortions each year.
Nancy Razik notes that Catholic Hospitals are threatening to close because of the Freedom of Choice Act. If that happens, there will be a health crisis. Nancy Razik writes:
>Dear Family and Friends,
As most of you know, last night Obama made a public announcement that he is going to sign the Freedom Of Choice Act, which will allow all types of abortions including partial birth abortions, also allowing babies who are born alive due to botched up late term abortions, to be set aside without any medical care or nourishment and left to die (most of these babies have no medical problems and most of the ones that do, have things like cleft palates, club feet, things that are correctable, still they are murdered in the most cruel and inhuman way. They feel everything that is happening to them. There is more mercy for dogs that are put to sleep) This Bill also will make it mandatory for doctors and nurses to perform this murderous act even if they do not want to do so. This act also allows under age teens to have an abortion, even partial birth abortions, without parental consent.
Catholic Bishops have pleaded with Obama not to go ahead with this horrible murder of innocent babies. They have also told Obama that if he persists in signing this Bill which would require even Catholic Hospitals to perform these acts of murder, they will have no choice but to close all Catholic Hospitals. Please let us join with these courageous Bishops who will go to any length to change Obama's mind. Please take a minute to sign this statement and let our voices be heard.
This is a great, informative website (also here). You can click on the video of Obama's speech to the Planned Parenthood group where he promised that the first thing he would do if elected President would be to sign the Freedom Of Choice Act. He isn't even in the White House yet and he made a statement last night that he will go forward with his plans to sign this outrageous bill. He still can change his mind because the Bill cannot be signed until he is actually the President.
Please let your family and friends know about this Bill and ask them to also sign this petition. Even those who voted for Obama would not want him to sign this Bill. May God have mercy on our country for the sake of the millions who would never agree with this Bill if they fully understood all that it encompasses. Please click on the web site below. It will take less than a minute of your time, doesn't cost anything and God will bless you for standing up for Him and His teachings.
Nancy asks that you please sign this petition.
"Note in particular this line: "The first thing I'll do as President is sign the Freedom of Choice Act."
Obama says "It is time to write a new chapter in American history". He implies that the abortion issue is a health issue, and that Christians' moral and religious concerns concerning abortion are reactionary, and overturning them is a matter of progress. He implies that abortion opponents are narrow minded advocates of culture war and lack of public unity. He says he has stood up for freedom of choice and that he opposed the confirmation of Roberts and Alito to the Supreme Court because of the abortion issue. "We're at a crossroads right now in America and we have to move the country forward." He argues that belief in abortion is "science".
Lifenews estimtates that FOCA will mean 125,000 more abortions each year.
Nancy Razik notes that Catholic Hospitals are threatening to close because of the Freedom of Choice Act. If that happens, there will be a health crisis. Nancy Razik writes:
>Dear Family and Friends,
As most of you know, last night Obama made a public announcement that he is going to sign the Freedom Of Choice Act, which will allow all types of abortions including partial birth abortions, also allowing babies who are born alive due to botched up late term abortions, to be set aside without any medical care or nourishment and left to die (most of these babies have no medical problems and most of the ones that do, have things like cleft palates, club feet, things that are correctable, still they are murdered in the most cruel and inhuman way. They feel everything that is happening to them. There is more mercy for dogs that are put to sleep) This Bill also will make it mandatory for doctors and nurses to perform this murderous act even if they do not want to do so. This act also allows under age teens to have an abortion, even partial birth abortions, without parental consent.
Catholic Bishops have pleaded with Obama not to go ahead with this horrible murder of innocent babies. They have also told Obama that if he persists in signing this Bill which would require even Catholic Hospitals to perform these acts of murder, they will have no choice but to close all Catholic Hospitals. Please let us join with these courageous Bishops who will go to any length to change Obama's mind. Please take a minute to sign this statement and let our voices be heard.
This is a great, informative website (also here). You can click on the video of Obama's speech to the Planned Parenthood group where he promised that the first thing he would do if elected President would be to sign the Freedom Of Choice Act. He isn't even in the White House yet and he made a statement last night that he will go forward with his plans to sign this outrageous bill. He still can change his mind because the Bill cannot be signed until he is actually the President.
Please let your family and friends know about this Bill and ask them to also sign this petition. Even those who voted for Obama would not want him to sign this Bill. May God have mercy on our country for the sake of the millions who would never agree with this Bill if they fully understood all that it encompasses. Please click on the web site below. It will take less than a minute of your time, doesn't cost anything and God will bless you for standing up for Him and His teachings.
Nancy asks that you please sign this petition.
I Fear for My Country
American politics goes through cycles. During the Revolutionary War, the nation issued Continentals to finance its efforts, and was unable to back them up. The result was a hyper-inflation that rendered the Continentals valueless. The government never made good on them. Subsequently, the public was conscious of inflation, and the Second Bank of the United States, while corrupt, did not pursue an inflationary policy. Nevertheless, Andrew Jackson did not renew its charter and closed the bank. Unfortunately, this inadvertently led to an inflation because the state chartered banks lent aggressively. In the end, the gold standard proved resilient to inflation, but the Civil War led to the issuance of greenbacks. The greenbacks led to inflation. In the post Civil War period the government decided to withdraw the greenbacks, but rather than adopt a bi-metallic standard as had existed prior to the Civil War, only gold was monetized. This led to a deflation, which caused resentment among land owners (farmers), silver miners and other special interests. The deflation issue came to a head in 1896, when the "Populist" movement was defeated. Historians can hem and haw about the role of tariffs in this, but if the public had badly wanted to adopt a silver standard, Bryan would have been elected. Contrarily, Bryan ran twice more and was defeated every time. So Populism did not win the hearts of the working man, or of the general public.
Despite the defeat of bimetallism, Woodrow Wilson pushed for adoption of the Federal Reserve during Christmas week of 1913. The act was posed as a technical banking law. It was passed soon after JP Morgan's death in 1913. The public did not get to vote on it, and it is likely that even Woodrow Wilson did not totally understand that he was taking steps that would lead to the gold standard's abolition. Thus, the public never got to vote on the question of hard money, and was unaware that the chief step to abolish it had been taken by Congress and Wilson.
For the next twenty years the gold standard remained in place and the Republican administrations that followed Wilson continued relatively hard money policies. There was an inflation much like the Revolutionary and Civil War inflations during World War I, and then the Fed popped the bubble around 1920, resulting in a depression. Subsequently there was a mildly expansionist monetary policy, which led to the stock market increases in the 1920s. In the late 1920s the Fed popped the bubble again, but this time there was a different response.
The difference between the 1930s and the 1920s response to the stock market bubbles may have been due to public indebtedness. During the 1920s car loans and buying stocks on margins had become prevalent. Also, other kinds of buying on time had become more prevalent. People may have been stretched to a somewhat greater degree than previously. In any case, the high unemployment that followed the 1929 crash created much greater public protest than previous cutbacks. Consumerism may have created additional risks.
Rather than treat the new unemployment problem as just that and stabilize the money supply, the Fed first increased credit availability in the early 1930s and then in 1935-6 tightened again, resulting in a second round of unemployment. First, the banking and media interests had emphasized the dire problem of unemployment, then the Fed ignored it.
In the 1940s there was a new round of inflation and stimulus as the federal government borrowed heavily and also expanded the money supply during World War II. The post-war inflation bubble was never really popped. The emphasis had become heavily weighted toward full employment, and the slightest reduction in monetary expansion became known as a recession.
The problem with hyper-inflation is (a) savers are harmed; (b) savers will respond by withdrawing capital from investment uses and depositing it in foreign countries, gold and commodities; (c) businesses have more difficulty planning, so innovation is squashed even more than it has been since World War II; (d) as a result of volatility and withdrawal of investment, unemployment rises (the bugaboo returns, now created by the policies meant to curtail it); (e) trust in government evaporates as the public realizes that money is deceptive (this is already true, but the propagandists of the state, aka the "mainstream media" have been able to hold the line since 1980); (f) the result is economic decline and instability. Capitalism and greed are blamed and further steps are taken to disrupt innovation.
The current "crisis" reflects many decades of bad policy and bad economic thinking. It can be viewed in two different ways, and much depends on public reaction to the Bush-Obama inflation that will result.
1. Will the public demand a monetarist response to inflation much as it did after the Revolutionary War, the Civil War, and 1979-80, and so elect an advocate of the free market? This time, hopefully, there will be one with cajones who actually will reduce the scope of government, unlike Ronald Reagan.
2. Or, will the public believe the pissant propagandists, their socialist masters on Wall Street and their current puppet, President Obama, and demand ever greater subsidies to business, to Wall Street and increasing government control with the puppet masters, the big Wall Street banks, pulling the strings?
Given America's terrible education system, Americans today lack the ability to think clearly. I am not certain that America will opt for choice 1. It has allowed things to get this bad through self indulgence. I am not certain that the road to tyranny is reversible.
Despite the defeat of bimetallism, Woodrow Wilson pushed for adoption of the Federal Reserve during Christmas week of 1913. The act was posed as a technical banking law. It was passed soon after JP Morgan's death in 1913. The public did not get to vote on it, and it is likely that even Woodrow Wilson did not totally understand that he was taking steps that would lead to the gold standard's abolition. Thus, the public never got to vote on the question of hard money, and was unaware that the chief step to abolish it had been taken by Congress and Wilson.
For the next twenty years the gold standard remained in place and the Republican administrations that followed Wilson continued relatively hard money policies. There was an inflation much like the Revolutionary and Civil War inflations during World War I, and then the Fed popped the bubble around 1920, resulting in a depression. Subsequently there was a mildly expansionist monetary policy, which led to the stock market increases in the 1920s. In the late 1920s the Fed popped the bubble again, but this time there was a different response.
The difference between the 1930s and the 1920s response to the stock market bubbles may have been due to public indebtedness. During the 1920s car loans and buying stocks on margins had become prevalent. Also, other kinds of buying on time had become more prevalent. People may have been stretched to a somewhat greater degree than previously. In any case, the high unemployment that followed the 1929 crash created much greater public protest than previous cutbacks. Consumerism may have created additional risks.
Rather than treat the new unemployment problem as just that and stabilize the money supply, the Fed first increased credit availability in the early 1930s and then in 1935-6 tightened again, resulting in a second round of unemployment. First, the banking and media interests had emphasized the dire problem of unemployment, then the Fed ignored it.
In the 1940s there was a new round of inflation and stimulus as the federal government borrowed heavily and also expanded the money supply during World War II. The post-war inflation bubble was never really popped. The emphasis had become heavily weighted toward full employment, and the slightest reduction in monetary expansion became known as a recession.
The problem with hyper-inflation is (a) savers are harmed; (b) savers will respond by withdrawing capital from investment uses and depositing it in foreign countries, gold and commodities; (c) businesses have more difficulty planning, so innovation is squashed even more than it has been since World War II; (d) as a result of volatility and withdrawal of investment, unemployment rises (the bugaboo returns, now created by the policies meant to curtail it); (e) trust in government evaporates as the public realizes that money is deceptive (this is already true, but the propagandists of the state, aka the "mainstream media" have been able to hold the line since 1980); (f) the result is economic decline and instability. Capitalism and greed are blamed and further steps are taken to disrupt innovation.
The current "crisis" reflects many decades of bad policy and bad economic thinking. It can be viewed in two different ways, and much depends on public reaction to the Bush-Obama inflation that will result.
1. Will the public demand a monetarist response to inflation much as it did after the Revolutionary War, the Civil War, and 1979-80, and so elect an advocate of the free market? This time, hopefully, there will be one with cajones who actually will reduce the scope of government, unlike Ronald Reagan.
2. Or, will the public believe the pissant propagandists, their socialist masters on Wall Street and their current puppet, President Obama, and demand ever greater subsidies to business, to Wall Street and increasing government control with the puppet masters, the big Wall Street banks, pulling the strings?
Given America's terrible education system, Americans today lack the ability to think clearly. I am not certain that America will opt for choice 1. It has allowed things to get this bad through self indulgence. I am not certain that the road to tyranny is reversible.
Wurzelbacher versus Geithner: America's Right Asks Embarrassing Questions
Jim Robbins just forwarded Jeff Schreiber's America's Right blog to me:
>For the Treasury Department, There's No Standard Like the Double Standard
>So let me get this straight -- Joe "the Plumber" Wurzelbacher was found to have delinquent taxes, and suddenly he was deemed the bad guy and vilified for, as a prospective business owner, voicing concern about an increased tax burden designed to advance a socialist agenda, but Barack Obama's pick for Treasury Secretary, Timothy Geithner, is found to have had similarly unpaid taxes, yet everything is kosher because he merely "forgot" to pay...
Hmmm. Reminds me of Obama not understanding the importance of Jersusalem to the Arabs, but Sarah Palin being called ignorant of international affairs. Double talk doesn't bother pissant propagandists, but sometimes even their acrobatics are worthy of a chuckle.
>For the Treasury Department, There's No Standard Like the Double Standard
>So let me get this straight -- Joe "the Plumber" Wurzelbacher was found to have delinquent taxes, and suddenly he was deemed the bad guy and vilified for, as a prospective business owner, voicing concern about an increased tax burden designed to advance a socialist agenda, but Barack Obama's pick for Treasury Secretary, Timothy Geithner, is found to have had similarly unpaid taxes, yet everything is kosher because he merely "forgot" to pay...
Hmmm. Reminds me of Obama not understanding the importance of Jersusalem to the Arabs, but Sarah Palin being called ignorant of international affairs. Double talk doesn't bother pissant propagandists, but sometimes even their acrobatics are worthy of a chuckle.
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