Meltdown humor

In Meltdown, Tom Woods accomplishes two things no other author I know of has done. One, he's correctly assessed the primary and secondary causes of the current financial debacle (the Fed's cheap credit being primary, the cheap credit feeding a spending orgy, especially in the mortgage and home building markets, as secondary). And two, he explains the follies of the last several years with a healthy dose of humor. On page 40, for example, he says

The Fed's bailout of AIG was, in the words of the New York Times, "the most radical intervention in private business in the central bank's history." The Fed would lend AIG $85 billion in exchange for 80 percent of the company. Congress, as usual, was not consulted. Meanwhile, social studies teachers across the country continued to report for work to detail how a bill becomes a law, how the will of the people is the guiding principle of the U.S. government, and how the public good motivates their government officials.

Treating stats in this manner keep the eyes from glazing over.

Cheering the unemployment news

The unemployment rate is now at its highest point since July, 1983, surging from 8.9 percent in April to 9.4 percent in May. But a "glass-half-full" government report says the 345,000 jobs lost last month were the fewest since September and was far less than forecast.

But it was both a surge in new labor force entrants and a drop in employment that pushed the jobless rate up a half-percentage point. The May report showed a jump of 350,00 in the labor force. In April, the increase was just 120,000.

The good news, apparently, is that economists contacted by Briefing.com expected May's job losses to hit 520,000. They also expected the unemployment rate to reach 9.2 percent. So, even though the 9.4 percent jobless rate is 0.2 percent higher than expected, we can cheer the data for May.

And accompanying this pleasant surprise is the not-unexpected reaction of the dollar:

The dollar index (DXY 80.53, +1.12, +1.41%) , which measures the performance of the greenback against a basket of currencies, rose to 80.520, up 1.3% from 79.446 in North American trade Thursday afternoon.

Meanwhile, the DOW turned positive for the year and hated Wal-Mart had this announcement:

Wal-Mart surprised investors Friday at its annual meeting, announcing that it authorized a new program to buy back $15 billion of its shares, replacing a similar program from June 2007 that had only $3.4 billion of remaining authorization. This comes a day after the world's biggest retailer said it would hire 22,000 new employees.

Tom Woods on Money

From his best-seller, Meltdown:

Money . . . comes about spontaneously as a useful commodity on the market. It is not arbitrarily introduced by government decree. Nor could it be. [111]

And

A money economy means that goods are exchanged indirectly for each other. [111]

Read that last statement again and never forget it. Money enables people to exchange goods for goods (services included).

Fiat money changes this relationship. It amounts to an exchange of something for nothing for those privileged to be the first users.

Through so-called open-market operations, the Fed usually purchases government bonds with money it created from nothing. Firms feeding at the federal trough that get this money first

are in effect taking goods out of the economy without providing anything themselves. . . The money they pay for their goods didn't originate in a good or service that they themselves had previously provided; it came from nowhere. The analogous case under a system of barter would be one in which, instead of trading my bread for your orange juice, I just take your orange juice. [123]

SC Court orders Sanford to take loot

According to AP writer Jim Davenport:

South Carolina's Supreme Court ordered Gov. Mark Sanford on Thursday to take $700 million in federal stimulus money aimed primarily at struggling schools.The decision brings a likely end to months of wrangling between the nation's most vocal anti-bailout governor and legislators who accused him of playing politics with people's lives.The Republican governor had refused to take the money designated for the state over the next two years, even after legislators passed a budget requiring him to do so. He became the first governor to defend in court his desire to reject money from Washington.

Evidently the SC Supremes have not read Bastiat, Woods, or Murphy. But then, neither have Obama and his team of economic wizards. For the political class -- Governor Sanford and Congressman Paul excepted -- this is no time to get academic and make a fuss over something like economic law. Printing money has always and everywhere led to economic calamity, but that's not a practical consideration apparently.

It will soon be painfully obvious who's been playing politics with people's lives.