Posts Tagged ‘inflation

02
Oct
08

The Bailout Is Pure Economic Socialism

Hank Paulson Is A Pu$$y

Hank Paulson Is A Pu$$y

Look – I took a BRUUUUTAL beating recently on some mining stocks. If you believe the powers that be, this bailout is the answer to my prayers, a ‘hail mary pass’ that will rescue the markets, refill our home equity and 401-Ks and IRAs, and everyone will live happily ever after.

Even if ANY of it were true, I STILL say DUMP IT. I am standing on principle, on what I know is right, and I’ll be goddamned if I’ll support something so pernicious and evil, even if it would benefit me in the short run.

Because I know what it means. Bailout means socializing losses and privatizing profits. It means massive new inflation, which means more poverty for millions of people around the world, while Wall Street fatcats and the Merchants of Death, who get to spend it first, reap tremendous profits. And, because the government has to spend the money into circulation, it means unprecedented amounts of military spending, and monstrous wars, wars without end.

And it’s empire that creates such horrible things as nuclear weapons and engineered plagues. The anthrax that was used in the only biological weapons attack ever recorded (except for the settlers giving the Indians Smallpox and Syphilis of course) came from the US government lab at Ft. Detrick, MD. The CDC actually sanctioned an Army scientist to reconstitute the 1918 pandemic flu, which killed more people in the aftermath of WWI than the frickin’ WAR did.

This is the kind of madness that is gripping our government. Will you trust your children’s futures to these people?

Even if my balance goes to zero, I defiantly stand and say to the economic fascists “NO BAILOUT – NO WAY!”

21
Sep
08

What I Saw At The Great Inflation

I’m on a mailing list for Guided By Voices, a 4-years-defunct band. What keeps it going, I think, are the people who make up the Postal Blowfish community – largely thoughtful, earnest folks.

I’m feeding an off-off-topic discussion (I didn’t start it, honest) about the current financial calamity, and the discussion turned to government-backed and subsidized mortgages;

David;

> But to scuttle the whole system would also keep people from buying houses
> who can repay the loans.  Put the crooks in jail, but leave the
> baby in the bathtub.

Dennis;

Yes, our first house loan was through fannie may. They put us through the credit check wringer and we had to take out mortgage insurance. We paid our way out of that and were able to refinance at a better rate and get the mortgage ins. dropped. These programs can work but people got too greedy and home buyers were fucked in those hot markets like vegas and arizona. A good friend of mine is sitting on a mortgage that is prob twice what the house will auction for in vegas.

My rejoinder;

One thought on this;

My parents, in 1964, purchased a house. A little run-down, not in the best neighborhood, but good enough. They paid $7000 for it. My dad was a pattern maker in a machine shop, my mom was, well, my mom (NOTE: No disrespect was intended to my mom, after raising 5 of us full-time she has gone on to two degrees and two entirely separate careers.)

My uncle financed the purchase, I think for 5 years at 5% simple interest. It was a duplex, and the upstairs rent paid back the mortgage in that time. I remember the day in first grade when my mom said I was getting my own room, after the renters had vacated (it was the same day I came down with the mumps, silver linings and all that.)

Fast forward 35 years to 1999. We have all moved out, except for my brother. My parents have moved, a couple of steps up the nice-neighborhood ladder (the old neighborhood, now home to numerous subsidized renters, has moved a couple steps down), and my brother, an industrial mechanic, buys the house from them at a heavily-discounted $84,000 or so, 12 times what they paid for it. Even with a healthy discount from market (this was before the boom), he had to get an FHA loan to make the deal.

What happened? There is simply no way that house in real terms was worth 12x what it sold for in 1964. The ‘magic’ of inflation, plus demand artificially stimulated by government-backed and / or subsidized mortgages, helped put a very modest home outside of the budget of a working person without help. It benefitted my parents very modestly. For the first time in 30 years, they had a mortgage. Their new crib consumed much more than the cash from the old home.

I’m not saying I have all the answers. But government interference in any market carries costs. Are they too high?

vini

08
Aug
08

Is Ron Paul Helping Barak Obama’s Campaign?

Almost as astounding as the fact that the War Street Journal editorial page editor has today suddenly awakened to the dire peril of the Fed fiat money system is its concurrent observation that Barack Obama has latched onto the link that everyone else denies, but that Ron Paul makes explicit at every opportunity – that high oil prices are a direct result of the waves of increasingly worthless money that has emanated from the fed since 2000.

We blogged here that in retrospect it is easy to see a precedent for this effect by examining the events before (Nixon’s closing the gold window) and after the 1973 Oil Crisis (oil prices sharply higher than before the embargo; the US Military’s undignified exit from Vietnam). If Ron could make himself valuable to the Obama campaign, he might be able to wield enough leverage to obviate the worst of Obama’s reflexive socialism, while steeling Obama to reverse his cave-in on FISA, and perhaps actually carry out a withdrawal from Iraq.

We will go on record right here and right now that if such an unlikely pipe dream ever came to pass, we would be mighty tempted to vote Democratic this November. Just imagine – a sound economic policy combined with a principled anti- intervention policy. Could Christmas be coming early this year?

26
Jul
08

How Zimbabwe’s Inflation Relates To Our Own

Coming To A Table Near You?

Barbecued Rat - Coming To A Table Near You?

We are having a running argument among ourselves as to what, if anything, Zimbabwe’s hyperinflation has in common with our own inflation.

Three of us say it’s relevant, one of us (the smart one – the professor in the group) says it’s bullfeathers.

I disagree with him. Here’s why I think it relates.

1) “Inflation is, always and everywhere, a monetary phenomenon” – Milton Friedman

Friedman may have invented the hated witholding tax, and been an enthusiastic enabler of autocratic and totalitarian governments (as well as obfuscating the real causes of the Great Depression), but he was right on the money here – inflation is caused by central banks’ creation of money out of nothing, for no better reason than to fund wars that the people oppose and generate profits for the banks by impoverishing everyone else. In our two cases at hand, Zimbabwe and the US, both country’s inflations are fundamentally creations of their respective central banks for the purpose of funding wars, Mugabe’s war against his own people (the productive class), and Bush’s Wars also against brown Muslim people as WELL as his own people.

2) “Thanks to a weakening dollar, companies in the United States are selling more goods and services overseas…But the biggest U.S. export right now isn’t tractors or ball bearings or computer consulting or anything else American industry does. Our biggest export is inflation.” Jim Jubak, MSN Money

Our financial structure isn’t just busy printing money, it is also judiciously packaging government debt into securities that it sells all around the world to eager buyers. In other words, trade in goods and securities with China, et al, gets a lot of the funny money out of circulation here and into China before the excess can bid up prices too overtly. Zimbabwe, while once a food exporter, now has no goods to export, thanks to Mugabe’s “Land Reform”, which consisted of little more than killing or deporting the most productive farmers, most of whom happened to be white. Those farms are idle now, and Zimbabwe has nothing to export except its bad paper, which no one wants.

So, why is this bad? Sooner or later, sellers of goods stop accepting inflated currencies at face value, because they realize that the unit has lost value. This is a major contributing cause of the Arab Oil Embargo in 1973. Even more than our support of Israel, the OPEC nations turned against our money (as evidenced by oil prices that stayed well above the pre-crisis price even after the embargo was removed), the debasement of which Nixon had previously accelerated. It’s why first Iraq and then Iran formulated plans to open oil bourses trading in euros instead of dollars. Particularly important is when foreigners stop purchasing US government paper, or start shedding our paper. This hurts the economy.

3) “Please China, Sell Your Treasury Notes” – Felix Salmon

Even worse is if those same foreign buyers of paper start selling in a panic. In this case, the flow of money out would stop, or even reverse, causing massive spikes in prices due to this reversal. Foreigners currently hold approximately $2.6 TRILLION of US-dollar-denominated debt. How much of this paper would these other countries have to shed to cause massive inflationary destruction in the economy? As bad as Zimbabwe is, everyone who ever held Zimbabwean paper has long ago cut his losses.

4) “These are my principles. If you don’t like them, I have others” – Groucho Marx

Inflation is effectively a stealth tax levied on the poor, the middle class, and the elderly by the government for the benefit of the armaments manufacturers, banks, and oil companies. Any amount of inflation does this, which means any amount of inflation is evil. Some governments are simply more evil than others.

As bad as that is, inflating into the teeth of a big recession could spell disaster. The system is so overleveraged, any significant loss of confidence in the dollar would trigger an unstoppable wave of rebound inflation that the Fed would be simply overwhelmed, an inflation that would utterly destroy the US economy. I hope I’m wrong.

27
Jun
08

Thanks, Alan and Ben

I have been looking forward to my photo workshop in Venice, Italy for some time now. The trip is all-inclusive and was paid for several months ago (or so I thought) so all I had to do was not go crazy waiting until October. Then I get this email from the organizer of the trip (chart not included):

I have booked all that is necessary for each of us and …. a few little surprises to ensure an even greater time together in Bella Venezia!!!

I have one little bad news…. the USD$$$   has plummeted by 14.3% against the EURO since lat year !!   We ADVERTISED  hotel rates in USD $ , but will be paying the hotel in EURO.

The deficit is quite significant when booking 20 or so rooms per week, so I am afraid we need to charge you an extra USD$300 for the WEEK for the accommodation component of the costs.

Sweet. The trip isn’t for another few months so I wonder how many more emails like this I’ll get before I actually take off?  The $300 kinda makes me mad but it got me thinking about how aware everyone else in the world is of our monetary policy and how numb Americans are toward anything but reality teevee shows. The Euro is inflating like crazy (in terms of gold) but Da Fed is making Brussels look like a bunch of monks.