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Showing posts from May, 2010

The never-ending saga of economic crises

Austrian economists place the blame for the crisis of 2008-2009 on the Federal Reserve, in particular, for creating the money needed to keep interest rates low to fund the housing bubble. The federal government's policies that aimed to put every American into a house regardless of credit-worthiness was a major contributing factor. But without a seemingly endless amount of credit that only the Fed could provide, those policies would've arrived stillborn.

More crises are guaranteed because the root cause has not been addressed. It is not even discussed, yet it is well-known, at least among bankers, politicians, and economists. The source of the crises is our rejection of market money - a medium of exchange freely chosen by market participants. Market money was rejected to protect the practice of fractional-reserve banking, the practice of banks loaning, and thereby creating, more money than they actually have.

Fractional-reserve banking created the crises of the 19th century…

Ron Paul on the Greek Riots

Monetary theory is boring to most people, but when the world gets it wrong, as it has, the results make headlines. What we're seeing, says Ron Paul, is the inevitable currency crisis following the financial crisis. The fiat money producers of the world have solved the financial problems with counterfeit money - i.e., with money created out of thin air, as any private counterfeiter would do. Why are so many people surprised that it hasn't worked? The DJIA is down nearly 400 points the last few days. The dollar remains strong, but only against other counterfeited currencies. Against gold, it's dropping sharply.

Wow! GDP is on the rise!

The Mogambo Guru notes that, according to a recent Bureau of Economic Analysis report, “Real gross domestic product – the output of goods and services produced by labor and property located in the United States – increased at an annual rate of 3.2 percent in the first quarter of 2010, (that is, from the fourth quarter to the first quarter)."

The Guru notes
that merely computing 3.2% of our $14 trillion GDP, we get the $448 billion dollar figure of the quarterly “growth” in GDP, which comes out to roughly $2 trillion per year, which is – surprise! – roughly approximately nearly exactly precisely how much money the federal budget-deficit spending is now pumping into the economy.

In short, it looks like the entire growth in GDP is due solely to – dollar for dollar! – the deficit-spending by the federal government! Hahaha! “Growth!” Hahahaha!

And this is before another large item is included in the calculation of GDP, which is exports, which are a subtraction from GDP, which means that s…