The Fed's Tightening Will Only Drag Out the Economic Slump; Rising Interest Rates May Blow Up the Federal Budget; The Many Evils of Inflation
Frédéric Bastiat on the Connection between Socialism, Communism, and Protectionism; The Curse of Fiat Money; Why criminal bankers must stay out of jail; The Astonishing Implications Of Schedule F
[HIGHLY RECOMMENDED ARTICLES—LESSONS IN ECONOMICS AND INFLATION - JRD]:
The Fed's Tightening Will Only Drag Out the Economic Slump
“Tightening the interest rate hurts both bubble and solid businesses. The Fed should just focus on reducing the money supply.”
By defining inflation as increases in the prices of goods and services, Fed officials have absolved themselves of any responsibility for massive increases in the growth rate of the CPI. By this definition, in addition to various unexpected shocks, producers and businesses are also to blame for the widespread price increases. If Fed officials were to concede that inflation is about increases in the money supply, then they would have to accept that the key cause behind strong increases in prices is the alleged inflation fighter the Fed itself. [READ THIS PARAGRAPH CAREFULLY. - JRD]
Note that we do not say, as the monetarist followers of Milton Friedman, that inflation is caused by increases in money supply. We hold that inflation is the increase in the money supply. (Note that for monetarists, inflation is about increases in prices, which are set in motion by increases in the money supply).
Furthermore, to establish the presence of inflation, what matters is not the growth rate of prices as such but increases in the money supply, which set in motion the exchange of nothing for something. This in turn undermines the process of wealth generation and weakens the pool of wealth. When this pool is expanding the increases in money supply generate the illusion that it is money supply, that provides funding, to both wealth-generating and non-wealth-generating activities.”
Open link for complete article
—
Rising Interest Rates May Blow Up the Federal Budget
“Congress enjoys exorbitant political privilege in the form of cheap deficit spending—but it may soon come to an end.”
“Yet in 2021, with Treasury debt piled sky high and spilling over $30 trillion, Congress was able to service this gargantuan obligation with interest payments of less than $400 billion. The total interest expense of $392 billion for the year represented only about 6 percent of the roughly $6.8 trillion in federal outlays.
How is this possible? In short: very low interest rates. In fact, the average weighted rate across all outstanding Treasury debt in 2021 was well below 2 percent. As the chart below shows, even dramatically rising federal debt in recent years did not much hike the debt service.
This is an exceedingly happy arrangement for Congress. Debt is always more popular than taxes for the same reason starting a diet tomorrow is more popular than starting it today. Austerity does not sell when it comes to retail politics; spending trillions today while merely adding to what seems like a nebulous, faraway debt definitely does. And American lawmakers are uniquely fortunate in this regard. As French finance minister Valéry Giscard d’Estaing infamously announced in the 1960s, the Bretton Woods monetary system created "America's exorbitant privilege." He understood how the US dollar's status as the world's reserve currency would allow America to effectively export inflation to its hapless trading partners while maintaining cheap imports at home. But he may not have fully grasped the political privilege which would accrue to Congress.”
Open link for complete article
—
The Many Evils of Inflation
“Few people are aware of what the Federal Reserve System, acting on behalf of the U.S. Government, is doing to their money, writes Hans Sennholz.”
“Many people know how to earn money, but few are aware of what the Federal Reserve System, acting on behalf of the U.S. Government, is doing to their money. It is inflating and depreciating the dollar at various rates—at double-digit rates during the 1970s and early 80s and at single-digit rates ever since. The present dollar is worth no more than 10 cents of the 1970 dollar and 50 cents of the 1980 dollar.
The reasons and explanations given for this loss may change over time, but the consequences are always the same. Inflation covertly transfers income and wealth from all creditors to all debtors. It dispossessed present creditors of nine-tenths of their 1980 savings and enriched debtors by the same amount. The dollar savings accumulated since then have shrunk at lesser rates but are fading away notwithstanding.
No wonder, many victims readily conclude that thrift and self-reliance are useless and even injurious and that spending and debt are preferable by far. They may join the multitudes of spenders who prefer to consume today and pay tomorrow, and they may call on government demanding compensation, aid, and care in many forms. Surely, the hurt and harm inflicted by inflation are a mighty driving force for government programs and benefits.”
Open link for complete article
—
Frédéric Bastiat on the Connection between Socialism, Communism, and Protectionism
Tyler Brandt
PART OF THE ARTICLE:
“Bastiat's words are just as true today as when he wrote them with a quill pen in 19th-century France.”
édéric Bastiat’s writings truly are a gift that keeps on giving. His economic analysis from the early 19th century still reverberates today, more than 150 years after his untimely death in 1850 from tuberculosis.
Reading through his works is like walking through a garden overflowing with fruit ripe for picking. The hardest part is deciding which fruit to pick.
This time on my walk through Bastiat’s garden, I decided to pick one of his fruits from The Law on the topic of protectionism.”
Bastiat’s Insight
“Four years after that essay, Bastiat released his magnum opus: The Law, a treatise on natural rights written two years after the third French Revolution. In the book, Bastiat observes the similarities between socialism, communism, and protectionism.
It is to be pointed out, however, that protectionism, socialism, and communism are basically the same plant in three different stages of its growth. All that can be said is that legal plunder is more visible in communism because it is complete plunder; and in protectionism because the plunder is limited to specific groups and industries. Thus it follows that, of the three systems, socialism is the vaguest, the most indecisive, and, consequently, the most sincere stage of development.
The commonality of the three systems, Bastiat points out, is “plunder.” A more common word we would use nowadays would be “theft” or “coercion,” all of which are well outside the proper domain of law, as Bastiat says. If the main purpose of the law is to protect individuals from having their persons, life, and property violated, and taxation/plunder is a violation of property, then taxation being legal is a perversion of the law.”
Open link for complete article
—
Why criminal bankers must stay out of jail-Jon Rappoport
—
The Curse of Fiat Money
“Fiat-Money Creation through Circulation Credit
Whenever commercial banks extend loans to nonbanks (private consumers, firms, and public-sector entities) in today's fiat-money regime, they increase the money supply uno actu. Ludwig von Mises called this type of credit "bank-circulation credit."
Bank-circulation credit, which is associated with a rise in the money supply out of thin air, causes malinvestment and boom-and-bust cycles. It causes all the evils that are regularly associated with inflation: rising prices (and a corresponding decline in the purchasing power of the money unit), a coercive redistribution of income, and malinvestment.
However, what happens if and when commercial banks are no longer willing to roll over maturing loans, or borrowers wish to repay their bank debt? Such developments — which are frequently labeled deleveraging and derisking — would lead to a decline in the economy's fiat-money stock.
This is because repaying bank loans basically means that the fiat money that has originally been injected into the economy is literally leaving the economic system. And if this happens, the inflation regime turns into a deflation regime.”
Open link for complete article
—
The Astonishing Implications Of Schedule F
Authored by Jeffrey Tucker via The Brownstone Institute,
“Two weeks before the 2020 general election, on October 21, 2020, Donald Trump issued an executive order (E.O. 13957) on ‘Creating Schedule F in the Excepted Service.’”
“It sounds boring.
Actually, it would have fundamentally changed, in the best possible way, the entire functioning of the administrative bureaucracy that rules this country in a way that bypasses both the legislative and judicial process, and has ruined the checks and balances inherent in the US Constitution.”
“The gradual rise of this 4th branch of government – which is very much the most powerful branch – has reduced the American political process to mere theater as compared with the real activity of government, which rests with the permanent bureaucracy.
From 2020 and onward, the American people got to know this administrative state well.
They ordered us to wear masks.
They deployed their influence to close small businesses and churches.
They limited how many people we could have in our homes.
They festooned our businesses with plexiglass and told everyone to stay six-feet apart.
They demanded two weeks of quarantine when crossing state borders.
They decided which medical procedures were elective and non-elective.
And they finally demanded compliance with vaccine mandates at the penalty of job loss.
None of this was ordered by legislation. It was all invented on the spot by the permanent staff of the Centers for Disease Control and Prevention. We had no idea they had such power. But they do. And that same power which allowed those egregious attacks on rights and liberties also belongs to the Food and Drug Administration, the Department of Labor, the Environmental Protection Agency, the Department of Agriculture, the Department of Homeland Security, and all the rest.
Donald Trump came into office with the promise of draining the swamp, without understanding entirely what that meant. He gradually came to realize that he had no control over most of the affairs of government, not because he had no patience for the legislative process but because he had no ability to terminate the employment of most of the civilian bureaucracy. Nor could his political appointees control it. The media, he gradually came to realize, echoed the priorities and concerns of this administrative state due to long-established relationships that led to nonstop leaks that spread false information.”
Open link for complete article
—
SUGGESTED READING:
Biden Energy Secretary Violated Federal Hatch Act When She Promoted Democrats: Special Counsel
“...when she endorsed the Democratic Party in her capacity as a federal official during an interview last year”
—
"One Of The Worst Downturns In Recent History": Zuck Warns Facebook Employees To Brace For Layoffs
"Realistically, there are probably a bunch of people at the company who shouldn't be here.... I think some of you might decide that this place isn't for you, and that self-selection is OK with me.”