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Showing posts from June, 2008

Primer on gold coins

Want to buy gold? The late Harry Browne recommended purchasing "bullion coins" -- coins whose price represents the gold content.

From Wikipedia:

A bullion coin is a coin struck from precious metal and kept as a store of value or an investment, rather than used in day-to-day commerce. Examples include Krugerrands, British sovereigns, the American Eagle series and the Canadian Maple Leaf series.The American Gold Eagle is a bullion coin first issued in 1986 under the Gold Bullion Coin Act of 1985. Most of the coins are produced from the West Point Mint in West Point, NY, and by law all gold used in the coins must come from "newly mined domestic sources." They carry the mint's mark ("W") beneath the date and are offered in 1/10 oz, 1/4 oz, 1/2 oz, and 1 oz denominations. They are alloyed with silver and copper for better wear-resistance.

As legal tender, these coins have a face value of $5, $10, $25, and $50, respectively. For example, the reverse side …

Of War and Inflation - 1969

Time Magazine reported on Nixon's efforts to deal with soaring prices during his first days in office in 1969. Already the number of Vietnam war dead (33,641 Americans) had surpassed the Korean War total by 12, making it the fourth deadliest war in U.S. history. Aware that even with conscription a depreciating dollar was touching more people than an overseas bloodbath - "a family that had an income of $10,000 in 1965 would need $11,330 [in 1969] just to stay in place" - Nixon made controlling prices his administration's top priority.

Is War Good for the Economy?

As always, war benefits some while it impoverishes the rest of us, argues Justin Raimondo.
The false prosperity induced by the speeding up of the printing presses over at the Federal Reserve led to what Alan Greenspan once called "irrational exuberance," a delusion created by the very easy money policies he carried out as head of the Fed. No sooner had certain Beltway sages declared that the age of permanent abundance was upon us – and that this rendered the struggle against the Welfare-Warfare State irrelevant – than their economic cornucopia of limitless wealth went empty. As banks are bailed out while ordinary Americans are turned out into the streets, the manic hubris of Fukuyama's historical "endism" and prophecies of universal prosperity via "globalization" stand revealed in all their silliness.This is one of his best articles.

Greenspan says recession likely

According to a Reuters article yesterday:The U.S. economy has been hit by a credit crisis which began in the sub-prime mortgage market, prompting a series of interest rate cuts to help boost the economy. But price pressures are growing, making more rate cuts unlikely.Isn't this a forbidden scenario, according to the More-Money-Will-Always-Save-Us outlook?
Greenspan said he did not believe arguments that the housing problems in the U.S. were due to interest rates being too low during his tenure. "As far as I'm concerned, the data do not support it (that argument). The housing bubble is clearly an international phenomenon."Let's see, Greenspan inflated here, other central banks inflated there. A bousing bubble developed here, housing bubbles developed there. But according to Greenspan's logic, the Fed is not at fault because we had housing bubbles here and there, making it an "international phenomenon."

The author of Gold and Economic Freedom contin…

Don't count on the Fed

"Stocks will limp into the next week at levels not seen since the Bear Stearns debacle, with no hope of a boost from the Federal Reserve."So reads the opening paragraph of a column by Nat Worden.

Don't count on the Fed. No boost from Bernanke.

And the Bear Stearns debacle? Was that in any way related to past Fed "boosts"?

Wages must not rise!

In an interview on Bloomberg Television on June 17, former St. Louis Fed president William Poole warned "that the Fed must prevent higher inflation expectations from feeding through to a surge in wages." Do I understand him correctly? The helicopter that flew over Wall Street shouldn't be allowed to fly over Main Street? Let the little guys pay for the orgy the Fed sponsored for the big guys?

CNNMoney's 18 Ways to Beat Inflation

With a little thought you could come up with at least 18 ways to fight higher prices, as CNNMoney did. They call it fighting inflation, but that's misleading. If they were really suggesting ways to beat inflation wouldn't they encourage their readers to tell the Fed to stop inflating? Or better yet, get their readers to call for the abolition of the Fed and the restoration of sound money?

Nowhere in their little click-and-see article do they mention where all these higher prices come from. Nowhere do they suggest putting a dagger in the Fed and its "monetary policy" of "accommodation."

Central banking threatens Asia

Central banking has infected almost every nation on earth, so it's a matter of logic that every nation prone to their bank's misallocation of resources will go through the illusory phase of good times followed by disaster. And given that more inflation is seen as the cure for past inflation, it's hardly surprising to see headlines such as "Inflation dangers 'threaten Asia.'"

Recession culprit? No surprise

Government.
More specifically, the government's printing press, the paymaster of its unconstitutional wars, the institution dedicated to devaluing the dollar, the Federal Reserve.
Ben Beranke had a brilliant academic record. An almost-perfect SAT score, graduation from Harvard, then MIT. Teaching at Stanford, then on to Princeton where he chaired the economics department. Does his current job represent yet another step up in a brilliant career?
No, because the Fed is a scam, one of the oldest known to man.
So, what to do about the current downturn? Lew Rockwell has a sound recommendation: What is the right response to a recession? The first rule must be to do no harm. When it comes to government, that is asking a lot and enough. Beyond that, in an ideal world, we would shut down the Fed, reduce the cost of employment, reduce taxes, zap environmental controls on exploring for and refining oil – this would be a good beginning. We could expect the recession to last less than a year u…

Gee, the Fed has such a tough job

An article by Money Magazine called "Inflation: 3 Big Questions" talks about price increases, the BLS' unrealistic CPI, and -- what's this? -- where inflation comes from:
When there are too many dollars chasing too few goods and services, you get inflation. And it's the Federal Reserve's job to get that balance right. When the Fed lowers rates, it pumps more cash into the economy; when it raises rates, it pulls the money back in."When inflation first shows up, people are always wanting to blame other things than Federal Reserve policy," says Brian Wesbury, chief economist at First Trust Advisors. "In the 1970s it was OPEC, today it's China. But in reality, our inflation is coming from easy money."So why does the article not condemn the idea of centrally-planned monetary policy? Why isn't it calling for the abolition of the Fed and the establishment of sound money? All it does is throw some figures at us -- if inflation continues a…

Harvard Class Day Speaker

Ben Bernake spoke to graduating Harvard seniors at Class Day on Thursday, telling them things aren't as bad now as they were when he was in the audience back in 1975. True, we had rising oil and food prices, and slow economic growth then as now, but there are grounds for optimism, Bernanke insisted.

Government is economically wiser since the mid-70s, he claims. Given that government has created a debacle similar to the one in the 70s, what does that say about its ability to learn from its "mistakes"?

He brought up the subject of lessons central bankers have allegedly learned since the high inflation days of the mid-70s, the most crucial of which are (1) "high inflation can seriously destabilize the economy," and (2) "the central bank must take responsibility for achieving price stability over the medium term."

And audience members complained that Bernanke wasn't entertaining?

Let's see, government contributions to our economic well-being in recen…

Kissing . . . something

Somewhat old news now, but on May 19, Forbes ran this bit about the Columbia Business School's tribute to Fed chairman Ben Bernanke:

Kissing The Ring?Think the Federal Reserve could be doing a better job? Don’t tell that to Columbia Business School. The prestigious Ivy League graduate unit just named the 32nd recipient of its annual Distinguished Leadership in Government Award: Fed Chairman Ben S. Bernanke. He was set to get the honor this month as a big draw at a school fundraising dinner at the Waldorf-Astoria in New York. Previous recipients include Bernanke’s four immediate predecessors back to 1970, including the now controversial Alan Greenspan. Columbia declined to answer our written query asking how “distinguished leadership” differed from “mere leadership.” Noteworthy since the Fed’s recent bailout of Bear Stearns: Many of the $1,500 meal tickets have been bought by large banks and other financial entities that are subject to Bernanke’s policies. —William P. BarrettThe onl…

How to cheat the middle classes

For institutionalized cheating, nothing beats a central bank and fiat money. Setting up the institution takes time, but the tools are right at hand.

Promote a central bank as the solution to fractional reserve banking's periodic economic crises, though without blaming or even mentioning the fractional reserve nature of banking. Instead, blame the crises on a lack of an "inelastic" currency, i.e., one that can be created by a central authority at the touch of a finger on the government's printing press. Get the country's leaders to talk up a central bank, then when most of the country isn't watching, say, around Christmas, ram the bill creating the central bank through the national legislature. After the bill is signed into law, have your pundits continue to reassure the public their financial worries are over.

Later, when the public starts to grumble that their currency doesn't buy as much as it used to, tell them speculators are ripping them off. Pass…

Cash drop over Indonesia

In a real-life scene similar to the one in my novel, Flight of the Barbarous Relic, an Indonesian businessman "scattered 100 million rupiah ($10,700; £5,406) in banknotes from a plane to promote his new motivational book," BBC News reported today. Tung Desem Waringin, 42, flew over Serang city, about 40 miles west of the capital city, Jakarta, "dropping four loads of bills of small denomination."

Entrepreneurship lives!

‘Pervasive inflation psychology’ developing?

“Consumers and some on Wall Street are expecting price rises to accelerate, a hint that a pervasive inflation psychology could be developing and posing a serious challenge to the Federal Reserve,” Kelly Evans of the WSJ writes.

What is so serious about this development?

On the welcome page of this blog there’s a quote from Ludwig von Mises’ Economic Freedom and Interventionism, 1951:

“What makes it possible for a government to increase its funds by inflation is the ignorance of the public.”

What relevance does this have to the Fed’s “challenge”? Here’s Mises’ statement in context:

“What makes it possible for a government to increase its funds by inflation is the ignorance of the public. The people must ignore the fact that the government has chosen inflation as a fiscal system and plans to go on with inflation endlessly. It must ascribe the general rise in prices to other causes than to the policy of the government and must assume that prices will drop again in a not-too-distant future. I…