moonbat1775

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    • Mon Dec 1st 16:50 PM
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      Rating: 0 0
      Commented on:
      Not All Savings Is Good Savings
      Smarty,

      Yes, I realize the Fed prints the money. So what I was trying to convey was that evil couple, the Federal Government and the Fed. Between the two them, they do a number on the country.

      As for money, precious metal backing is very useful in gaining initial acceptance for a currency but later, in the event of unavailability or scarcity it would not be needed as long as the issuing bank had a deserved reputation for honesty and fairness in the issuing of new money so as not to dilute existing holders,IMO.
      Honest innovations and convenience would also help. Of course any bank with such a good reputation could become a target of government for its own misuses.

      I sure wish we had free banking. I have some ideas I would love to try.
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    • Mon Dec 1st 15:27 PM
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      Rating: 0 0
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      Not All Savings Is Good Savings
      "Actually, several people are taking their money out of the bank." Winston

      True, but I would bet that that is not what is meant. So my question is still revelant, IMO.

      Smarty,
      We all love ya, even that commenter I would bet. How about "gub'print"? "Mint" is really too kind, don't you think?
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    • Mon Dec 1st 12:57 PM
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      Rating: 0 0
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      Not All Savings Is Good Savings
      "However, when consumers are scared about the future they put money “under the mattress” because they think it will be needed in the future."

      That money isn't literally under the mattress, is it? No, it is in a savings account, CD or checking account where it can be lent out by the bank. How then can money deposited in a bank be called "hoarding"?

      View article »
    • Mon Dec 1st 12:17 PM
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      The Convertibles Collapse Offers Investment Lessons for All Investors
      "But analysts did not stop to think through exactly what the world might be like in the scenarios where underlying equities had fallen by 50 – 80% in a short time period."

      The Austrian Theory of the Trade Cycle explains the "cluster of business errors" that are created in the boom and revealed in the bust. The source of the business cycle is credit expansion through interest rate suppression via the Fed and the banking system. This inevitably lead to "malinvestments&q... not simply "overinvestment&q...
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    • Mon Dec 1st 11:57 AM
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      Rating: +1 0
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      New Month, New Data, Same Old Story
      "For my part, I am not so optimistic; households are in the process of deleveraging, a process that is likely to continue until their balance sheets can be supported by their cash flow (income)."

      Well, let's see. The banks and the Fed inflated several bubbles didn't they? In the housing bubble, prices were driven up and many people bought more home than they could afford, true? Then how about this? How about determining the true free market prices of those homes via auctions in which the owners can bid?
      If the owner wins the bid, the bank is court ordered to lower the principle of the house to their bid. If someone else wins the bid, they pay the bank and get title. In both cases the bank eats the loss but depositors are made whole as necessary via FDIC or the Fed if necessary. This might wipe out many banks but remember banks are in a government backed cartel headed by the Fed. Their privilege via FRB and Fed policy enabled them to blow the various bubbles. So this solution via court orders from judges is not interference in the free market; we have not had that in banking since 1913 when the Fed was founded.

      To prevent another bubble after this intervention and resetting of debt, reserve requirements should then be set by Congress to 100% and the Fed admonished to cool it with monetary expansion.

      I second Smarty on the Austrian Economics. Ludvig Von Mises predicted the Great Depression and his Theory of the Trade Cycle explains how credit expansion via FRB (instead of savings from real savers) causes the boom/bust cycle. In addition, most Austrian Economists have been predicting and warning about these problem for years. They are not perma-bears as is often charged; they simply have a much better grasp of economics than the Keynesians who think a market complex beyond imagination can be successfully managed by interest rate and other monetary manipulation. What they have done in fact is DAMAGE the economy. The analogy of artificially low interest rates to use of stimulant drugs is very close in my opinion. Wealth has been consumed and misdirected under an illusion of prosperity.

      Murray N. Rothbard's "America's Great Depression" is THE definitive explanation of the cause of the Great Depression. It gives a nice explanation of Mises Theory of the Trade Cycle.
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    • Fri Nov 28th 17:28 PM
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      Rating: +1 -1
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      In Search of the Next Reserve Currency
      Having the reserve currency has spoiled us (as in US) and angered others. They will find a way to bypass us if we continue to abuse the privilege and the more we abuse it the more we weaken ourselves which leads to even more abuse. A vicious cycle. The best thing we can do is at least implicitly promise no more currency debasement via increases in the number of US dollars. We could become a huge Switzerland of honest (non FRB) bankers.
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    • Tue Nov 25th 14:43 PM
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      Rating: +1 0
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      Behavior, Risk, Credit and Crises
      You seem to understand the process well except its root cause; it boils down to what Mises, Rothbard and others have said: Credit expansion via fractional reserve banking and the Fed leads to the boom/bust cycle because real investment requires real savings.
      Bypassing savers is futile because their savings are necessary to purchase the products of the investment.
      Afraid of a fixed money supply? Well, let the government issue debt free currency to finance its deficits. We'll have inflation but no more boom/bust cycles. The optimum solution is to allow true free banking with competitive currencies. Let the free market and technology find the ideal money and credit solutions.
      The honest thing is the best thing. The Chinese have saved and we haven't. They have the industrial capacity and we haven't. So, quit debasing the currency, payoff our debts with food and commodities and encourage foreign investment by reforming the banking system.
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    • Tue Nov 25th 12:27 PM
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      Rating: 0 0
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      Squanderville vs. Thriftville: Buffett Simplifies Trade Imbalance Problems
      The inexpensive goods from China suppressed price inflation in the US. Apparently this led Greenspan to think he could keep interest rates low to spur investment. This bypassed savers. But according to the Austrian Economists, true investment can only come from savings. Being denied an honest interest rate at the bank, would-be savers were encouraged to borrow themselves to "invest" in their houses and the stock market. Their paper gains also encouraged consumption. When the bubbles burst, the American consumer was left broke and in debt. The morale: Read Rothbard and Mises.
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    • Tue Nov 25th 09:41 AM
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      Gold's Role Reversal
      "the Telegraph reported that the UK Treasury officials may be mulling draconian laws which could limit the interest rate charged by banks."

      Who says it's the interest rates that are deterring borrowing by the credit worthy? Now would seem the time to ramp reserve requirements to a permanent 100% and let the market set the interest rate.
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    • Mon Nov 24th 17:58 PM
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      Rating: +2 -1
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      Mission Impossible? Obama Must Rebuild Confidence in Federal Government
      The truth is a minimum for true confidence. And what is the truth? The minimum truth is that we had a single point failure in Alan Greenspan and the Fed. All our eggs were put in one basket. With free banking and competing currencies, Greenspan's folly would have been limited to those who used his bank/currency, assuming he had one.
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    • Mon Nov 24th 15:46 PM
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      Rating: +1 0
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      The Great Experiment
      "That's not to say we shouldn't try to spend our way out of a deflationary trap. We should. We must. And we will."

      Since this is a "balance sheet" depression, why not takes steps to clear it? How about a general amnesty on consumer debt? The consumers were discouraged from saving by artificially low interest rates for the sake of business. The interest rates were suppressed by fractional reserve banking and the Fed. Along with the general amnesty, both should be abolished to prevent a recurrence of this problem. It turns out that investment capital must come savers or else who will buy the products of the investments? Mises figured this out long ago, I reckon.
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    • Mon Nov 24th 13:58 PM
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      U.S. Government: Reflation By Any Means Necessary
      Drugging a race horse seems an appropriate analogy with the addition that all the other horses are drugged too.
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    • Mon Nov 24th 13:12 PM
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      Rating: +1 0
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      The Sun Is Shining on Wall Street
      "Then again, I'm no Mises or Rothbard so maybe I'm missing something. " Smarty

      Well, to be completely honest, Rothbard was referring to installment credit. I can see the need for business liquidation even if it helps the bankers who caused this mess. But I was intrigued that consumer liquidation might not be necessary.
      I hate these banker bailouts. He who lives by FRB should die by it,IMO. Why should they be spared liquidation? Just rhetorical.
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    • Mon Nov 24th 11:38 AM
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      Commented on:
      The Sun Is Shining on Wall Street
      Smarty,
      I was reading in the Good Book that debts were to be forgiven in Israel every 7 years among fellow Jews. Since would-be savers were driven by artificially low interest rates into speculation with houses there would be some justice in allowing them to keep their homes. OTOH, liquidation is an essential part of the recovery process but perhaps business liquidation is the essential part. From Rothbard's <b>America's Great Depression</b>: "The Mises analysis of the business cycle traces causation back to inflationary expansion <i>to business</i> on the loan market ... But loans to consumers <i>qua</i> consumers have no ill effects." page 80. Food for thought?


      On Nov 24 11:12 AM Smarty_Pants wrote:

      > "it will be a two-year, nationwide effort to jumpstart job creation
      > in America and lay the foundation for a strong and growing economy."
      > - B. H. Obama
      >
      >
      > If anyone in the media had any useful knowledge in economics they
      > would recognize this statement as an oxymoron. The only way to get
      > a truly 'strong and growing' economy is to cut spending and increase
      > savings, which is almost certainly NOT what Obama's team will chose
      > as their approach.
      >
      > Instead we will get more of the same old borrow and spend programs
      > that do nothing productive and serve only to dig the debt hole that
      > much deeper. Meanwhile the talking heads continue to blather on as
      > though the light at the end of the tunnel wasn't an oncoming train.

      >
      >
      > Buckle up, it's going to be a bumpy ride.
      View article »
    • Fri Nov 21st 15:33 PM
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      Rating: +1 0
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      What Can the U.S. Learn from Japan?
      "In a healthy economy, businesses borrow to invest in new capacity, households save, and the government alternates between borrowing and saving, depending on the point in the cycle."

      No, the business cycle is caused by fractional reserve banking which enables banks to create money and lend it out in lieu of real savings.
      Apparently the bother of paying an honest interest rate to savers in order to use their funds for loans is necessary to a stable financial system. Who'd o thunk it?
      View article »