December 30, 2012 § Leave a Comment
Posted below is a response I wrote on Facebook to a friend who felt that particular forms of government are legitimate. Readers of Ryan’s Review know that I certainly don’t agree with this, and hopefully, you don’t either. I’ve reproduced this response to help sway those of you out there who still think government is a necessary component of a peaceful, productive human society. It’s entirely unedited except some re-formatting. The content, though, is exactly what I posted on Facebook (maybe it’ll finally censor me and deactivate my account, like the company has done to Infowars)
All governments, regardless of their form (monarchy, democracy, republic, etc.) have two things in common. First, they are the monopolist of the service of arbitration, i.e. conflict-resolution. In other words, all governments, of all forms, are the sole final arbiters of conflict. In our government, the Supreme Court is the final arbiter, unless they choose not to arbitrate a particular conflict, which in that case a lower court becomes the effective final arbiter. Make no mistake, the Supreme Court is a part of the government. It’s just dressed up with this crap idea of “checks and balances.” Checks and balances may make the inevitable effects of government on society a bit more prolonged in their final completion, but government is government is government and checks and balances don’t change that.
Important to understand is the fact all governments of all forms are the final arbiters of conflict, including those it’s involved in. It’s the functional equivalent of me hitting you in the face, you wanting recourse, and me telling you that you have to come to my house to argue your case in front of my family. When the guilty party in a conflict can mandate that the conflict be resolved in the guilty party’s environment (court), the guilty party, obviously, can get off scott-free.
Second, all governments regardless of form are taxation monopolists. In other words, governments of all forms claim the right to confiscate one’s wealth for any reason. The reasons may be politically palatable like fighting the drug war, or building schools, blah blah blah, but the fact remains that the government is the only institution, regardless of form, in all of human experience that claims the right to confiscate wealth and then allocate resources to what purpose it deems fit. The consequence of not obliging government, is a letter in the mail, then another, then a knock on the door, then a (government) court date, then imprisonment, and eventually, death. This is how all governments operate, regardless of form. This is irrefutable.
Now, I think this is bad. I’m a libertarian anarchist. I think no one, regardless of whether they work on a farm or in some office labeled “FBI” or what have you, has the moral right to confiscate the voluntarily earned wealth of any other person. In other words, in my philosophy, the ONLY moral, legitimate way wealth (in the form of goods and services) can be transferred from one person to another is consensually, i.e. when both parties give consent to some exchange of goods or services.
I and others who agree with this philosophy are criticized for being “out-dated” or “impractical.” These criticisms are nonsensical of course. If any step in any logical progression of a philosophy is illegitimate, then the ultimate conclusion of that philosophy cannot be legitimate. In other words, 2 + 2 + 2 = 6. Always. If you change one of the numbers though, the answer is not legitimate. 2 + 2 + 2.1 = 6 is not a legitimate progression. Many people excuse the nature of the state as monopolist of arbitration and taxation by stating that they build schools and roads and help people (which they don’t). They say the one step in the equation involving theft, expropriation, and violence is excusable because the ends yielded outway the negativity of the a step in the means. If people want to subscribe to this ideology, fine, but the fact remains that it is absolutely morally corrupt. It is not consistent. It is flawed and illogical, however you look at it.
Whew! Ok. Therefore, “ALL forms of gov’t are bad,” because all forms of government are still forms of government. Government is government is government. And anyone engaging in belief in its legitimacy is engaging in either a logical or moral fallacy (perhaps both). Perhaps what you really mean when you say that you believe in the 2nd amendment is that you believe in the right of all people to own guns, which really means you believe in the right to all people of “ownership” of anything. This is a wonderful thing. But one who hopes to be entirely logically and morally consistent doesn’t thus state that he or she believes in some government publication, but rather in the idea of ownership. I hope I’ve been helpful in steering you in that direction.
December 29, 2012 § Leave a Comment
I know, I scoffed a little too. But in the last 15 minutes of a Fox News segment that ran from 10 to 11 am MST, the truth was unleashed. An entire segment from the Competitive Enterprise Institute suggested selling off federal assets to remedy the debt problem in the US. That’s an idea I can get behind. One statement, paraphrased, noted that “selling off 20% of ‘under-performing’ federal real estate assets would yield $2 billion in revenue.”
I don’t like that the entire argument over the Fiscal Cliff dilemma centers around how to maintain or increase government revenue when it should be about how and when to cut government, but the above “means” is a happy solution regardless of the intended “end.” Not only would selling off federal assets immediately put resources in private, productive hands but would eliminate “future goods” possessed by the government. In other words, if the Feds would sell off, they’d have less stuff with which they could hamper prosperity, growth, and all the other positive effects of free markets in the future.
Of course, this is why the government won’t auction off it’s assets. This won’t surprise readers of Ryan’s Review, because we know that government exists to take what it can from its citizens, permitting the use and temporary ownership of resources solely in order to yield some future production from which the government can confiscate its cut and flush its coffers. We hear often that the one effect of the passing the Fiscal Cliff without further legislation will affect higher tax rates on the American public. Subsequently, we hear from our rulers and organizers (all things NBC) that taxes are good things! That individuals like forking over their earned income for causes like bailing out rich crony capitalists. We know this argument as what it really is: nonsense.
If everyone liked taxes so much, they wouldn’t be required by law. This is the driving paradigm that constitutes the foundation of all free markets. If individuals liked doing things (paying taxes) so much, the government — or any institution — wouldn’t need the force of a gun embodied in some piece of legislation to enforce its desired operations. In other words, in a free market, people pay for what they want, willingly. Legislation, by nature, must mandate that people do certain activities. Otherwise, if folks wanted to do thing x or y, we wouldn’t need any laws ushering people to do so.
We can apply this logic to the phenomenon of government
confiscation “ownership.” In a free market, those who possess the productive skills, capability, intention, and funds to own goods have the opportunity to acquire goods. In our mixed, socialist, fascist society of government, certain individuals (bureaucrats, politicians, IRS thieves employees) possess goods like federal land and other assets due to their use of force, as opposed to the non-violent use of productive skills, capability, intention, and funds. So of course the government should sell off it’s assets. It doesn’t have the moral legitimacy to own them in the first place!
Luckily, the wonderful world of economics gives us the price mechanism, the solution to the phenomenon of government possession of goods. Auctions are nothing but a gathering of individuals through which resources are reallocated to the optimally productive individuals. Higher prices prohibit less productive, less capable owners from allocating resources to various ends (that includes government bureaucrats). So when the government managed economy finally self-destructs in the form of the US dollar currency collapse and people look to right-minded, honest, wise individuals for guidance, auctions will be held, and resources will be reallocated to productive means at the hands of private entrepreneurs and the market will flood the economy with low cost, high quality goods and services. All thanks to the price mechanism.
When even Fox News is getting something the right, you can rest easy knowing that it isn’t all bad news for 2013 and beyond.
December 27, 2012 § Leave a Comment
In the economics arena, 2012 was an epic disaster of government deficit-sized proportions. From the extension of military occupation of foreign countries, increased taxes, the beginnings of Obamacare, ever-increasing subsidies, and corrupt state governments pillaging their citizens, economic greats like Rothbard and Mises may very well be rolling over in their graves. Take a look at this chart below detailing how much money government has stolen from people and diverted to what the Washington rulers deem appropriate:
Truly remarkable. Imagine if all that confiscated money had been spent by private, profit-seeking individuals. Imagine the desires satisfied, the demands met, the consumers pleased, the capital production, and wealth creation, the savings, the investment, the plain old growth that would have been. 2012, like every year before it, is a stark example of the immense, barbaric decivilization effect of government.
Ignorant, willfully or otherwise, pundits and talking heads persist on inserting their incongruent, misguided opinions into the public conversation hinging on dull, irrelevant topics like the “Fiscal Cliff” with near fetish-like attention. The Federal Reserve System is left unquestioned, unmentioned, and ignored by every popular
government puppet news host. Petty, whiney, bitchy high school arguments, euphemistically termed “Congressional speeches,” stream constantly into the average American’s home, edited, chopped up, and cut to advertise the most annoying buzz words and punch lines. Of course, the incessant droning won’t stop on December 31, but at least we’ll get some new vocabulary and themes.
There is good news though. The US dollar is losing credibility worldwide, the first step towards the inevitable collapse of this fiat currency system and therefore one step closer to the implementation of a hard, market-money. Countries around the world, which implemented smart-minded austerity, government-reduction plans, in response to the financial disaster in 2008 are seeing the benefits of their unpopular policies. The Ludwig von Mises Institute continues to remain the most-visited economics website in the world. More and more people refuse to consent to the rigged election scam, with 60% of Americans having stayed home on that fateful day in November. Financial innovation like Peter Schiff’s Euro Bank are making the path to an economy founded on hard money that much more realistic. Government false flag schemes to scare the people into sacrificing their liberties for dictatorial control cloaked in an illusion of safety are failing to rile the desired effect. The wonder of the Internet is unleashing information and exposing government for what it really is. Millions of college students are pissing their professors off by denying that consumption drives economic growth, politely explaining how Austrian Business Cycle Theory accounts for every single economic phenomenon in history, ever. Entrepreneurs and capitalists are meeting in what’s left of the marketplace to fight the government attempts to halt progress, keep prices up, and perpetuate debt and deficits. It ain’t all bad folks.
Heading in to 2013, make life better for those you love by bettering yourself. Detach yourself from the medical-pharmaceutical establishment by going paleo, getting rid of wheat, shunning sugar, and exercising modestly. Consider cutting back on alcohol and relishing in that wonderful, medicinal plant, cannabis. Learn about the world around you. Aim to understand the Internet and the digital world in which we live. Study economics! Real economics. It actually is not hard. Real economics is Austrian Economics and Austrian Economics is literary economics, whereas mainstream, Keynesian economics is mathematic economics — the crap that people, rightfully so, often cannot understand.
In other words, get your mind and body right. Whatever government says you shouldn’t do, seriously consider taking up that activity as a hobby. And of course, make sure your loved ones know how much they matter to you.
That’s end of the year advice from Ryans Review. Best of luck to you all!
December 18, 2012 § 3 Comments
A stickler for many statists and modern liberals is this notion that more guns mean more crime. This stems from the belief that people don’t kill people, and that guns do. This is ludicrous of course. Rothbard in “Man, Economy, and State” references Böhm-Bawerk’s example. Paraphrased, Böhm-Bawerk uses the following: if a man throws a stone at another man, and the other man dies as a result, would one then conclude that the stone killed the man? Of course not. How could it? Stones don’t move. The first man mixed his labor with the item, giving it life, so to speak, and in doing so affected the death of the second man. Without the first man’s labor, the stone could not have killed the second; it would be impossible. All that is left to conclude is that either the first man killed the second man, or the stone, by the mere fact of its existence in man’s general environment, killed the second man. The latter is ridiculous and the former is correct. The same applies to guns.
Another article published near the time of “Man, Economy, and State” was released in the Libertarian Forum in 1970. It’s been reproduced today as a Mises Daily article. Though it’s over 40 years old, like Rothbard’s work and Böhm-Bawerk’s before Rothbard’s, it’s still timely and insightful.
“The masses are taught to believe the lie that such laws will reduce crime. Nothing could be further from the truth, because gun ownership by the general population simply does not cause crime. In 1966, twice as many guns per home were owned in Canada as compared with the U. S., yet the gun homicide rate of the former was only one-fifth that of the latter (American Rifleman, Aug., 1968, p. 46). And surely, if one wants to kill another, the absence of a gun will act as no safeguard; in Japan, where civilian guns are outlawed, the murder rate without guns is almost twice as high as the U. S. rate without guns (American Rifleman, Nov., 1968, p. 17).”
The thought that taking away man’s guns makes him less likely to kill is nonsensical and counter-factual. Take a look at this table reproduced at EconomicPolicyJournal.com detailing how people were murdered from 2006 to 2010 in the US:
As Wenzel notes:
“Despite news media impressions to the contrary, there are not many murders in the United States that are committed with rifles or shotguns. Combined, it is under 1,000 per year—more people are murdered with knives. FBI data shows that most murders are done with handguns. Random killings are very rare, most are between people who know each or rival gang members. In other words, stay out of areas, such as parts of Rahamland, andyour chance of being killed by a stranger is very, very slim.“
He also adds that in 2010, “in 32% of murders, no firearm was used.”
By the way, care to know what your odds are of being murdered at all? In 2010 the total population of the US was 308,745,538. Of those 308,745,538, 12,996 were murdered. That’s .004%. Now let’s assume that you’re generally a good person that doesn’t attend local gang meetings or threaten to burn down your neighbor’s house. Your odds of being murdered are even lower. Now assume that you, as an American citizen and human being, are permitted to carry a weapon yourself. Since a killer is more likely than not to kill the unarmed as opposed to the armed, your odds of getting gunned down, strangled, or otherwise murdered are even lower. At this point in our analysis, the numbers are getting awfully small. So what’s the big deal? If so many people are so unlikely to be murdered, why the media craze to seize every last American’s weapon in the name of universal safety?
Because safety is not the government’s goal. If safety was the goal, the state would give up management of roads to private entrepreneurs so they could figure out ways to stop the tens of thousands of deaths on federally and state managed roads each year. Can you imagine if a private company was directly liable for thousands of deaths each year? There would be a riot. But when the government does it, no one pays any attention. If safety was the goal, the government would stop inciting hatred around the world by occupying almost every industrialized country in the world. In other words, they’d stop doing this:
By the way, the above graph uses data from 2002, making this image old news. If you can find a more recent graph, message me. Though I imagine the Department of
Defense Offense tries to keep current data hush-hush.
So the next time some talking head on TV or your clueless neighbor or co-worker frets and whines about how the evil conservatives and silly believers in natural human rights are just plain stupid for not wanting to rip away every person’s tools of self defense, you can inform them of the near-zero chance of being murdered and point out the hypocrisy in government and government-mouth piece (NYT) propaganda. You’ll have them signing up with the NRA in no time.
*** UPDATE ***
What a wonderful little graphic I’ve found. See the bottom line item?
December 17, 2012 § Leave a Comment
Gerald Celente has some advice for people on the basics of living under the rule of governments: the 3 G’s. They are: Guns, Gold, and a Get-away plan. Celente advises that every American should have each in ample supply in the even of social unrest or government intrusions. Guns and gold in particular give the individual power against government excess; gold preserves purchasing power and guns provide self-defense. In true statist fashion, the US Federal Government is out to take both from American citizens.
Forbes is out with an article reporting that the Secret Service [!!!] “contacted” eBay demanding that Liberty Dollar coins no longer be bought and sold on the site. eBay complied. Of course, control of the money is a power that governments covet with extreme envy. Ever ask yourself what branch of the government is responsible for ensuring that the US dollar, and no other currency, be used within the nation’s borders? It isn’t the Treasury. It isn’t the IRS. It’s not even Congress.
“In addition to its mandate of protecting the president, vice president, and others, the U.S. Secret Service is responsible for maintaining the integrity of the nation’s financial infrastructure and payment systems.”
That’s right. The President’s own private army is responsible for stripping the natural right of citizens to use whatever medium of exchange they wish to use. Without any law passed, without any “public discussion,” without even bothering to hide their efforts, the Secret Service is acting unilaterally to restrict and constrict the monetary system.
Something’s fishy in recent mass shootings in America. Remember the Aurora theater in Colorado? Well the shooter was the son of the lead scientist at FICO and the shooter in Connecticut was the son of the VP and Tax Director at GE Financial. Both shooters were allegedly crazy, off-their-meds types who broke down and went ballistic. The fathers of the shooters were supposed to testify in court regarding the LIBOR scandal. The blogosphere is up in arms over this due to their complete misunderstanding of the relevance of LIBOR manipulation. The manipulations banks made were minuscule compared to the damage done by central bankers around the world. The LIBOR non-scandal was and is a false flag meant to distract people. So what gives? Is it just a coincidence that two “crazy” mass murderers just so happen to be the sons of corporatist, politically connected players? Something’s up.
Regardless, the mass shootings are the prime rib of propaganda and unconstitutional, immoral legislation. And Diane Feinstein is digging in. The Hillary-wanna-be is out with a psychotic attack on the second amendment:
“I will do another assault weapons ban.”
So modest. Isn’t it remarkable how one government official can take it upon herself to impose her value system on over three hundred million people, all with the stroke of a pen. Robert Wenzel explains how partial gun ban advocates like Hillary 2.0 really aren’t thinking things through:
“Bottom line: Those who want to ban guns, or certain types of guns, really aren’t thinking things out. The fact of the matter is that bad guys will continue to use guns. The solution isn’t screaming at the top of ones lung to ban or control guns. The solution is to find ways to protect oneself against gun carrying bad guys—and that is a lot easier to do if you are free to own and carry any guns you want.”
I would go further than Wenzel, though. I think that Diane Deville is thinking things through. The social unrest that would follow after the imposition of a partial gun ban would turn the masses towards their protectors, the government. Government would again be encouraged to “do something.” Then all the guns go. This is the process of decivilization governments preside over. Remove from the people their ability to defend themselves and you cripple peace, shredding it at the jaws of a confused, misguided, anxious public.
These two stories taken separately may be construed by modern conservatives as just more encroachment on civil rights. But the Libertarian Anarcho-Capitalist sees it as a coordinated attack on liberty — tiny steps toward total tyranny. Luckily enough, gold and silver coins can still be bought and sold in the underground economy on anonymous digital marketplaces like Silk Road. The site used to allow buyers and sellers to trade weapons, but stopped for “humanitarian” reasons. If the site operators knew the meaning of the word, they’d have never stopped the service. In the end the State can never control all transactions. Especially with the advent of the Internet, informed people will prepare themselves.
December 15, 2012 § Leave a Comment
Lew Rockwell, chairman and CEO of the Mises Institute and editor and publisher at lewrockwell.com, an all around Libertarian, Anarchist, and Austrian Economics heavyweight recently wrote that he’s given up cable television. This is something most college students have done if not by necessity then by choice of lower cost entertainment. As an advocate of free markets, I find it crucial that liberty lovers take to the internet. After all, as I’ve touched on before, the internet is probably the last aspect of civilized life that the state isn’t actively destroying. Anyway, Russia Today (which, yes, is funded by the Russian government) is home to the best financial news show in existence: Capital Account.
A recent episode on Friday, December 14 featured Jim Grant, editor, founder, and publisher of Grant’s Interest Rate Observer. I’d highly recommend watching this short interview (29 minutes) below, not only because his main message is largely in agreement with what I’ve written regarding the Fed’s announcement of keeping interests rates near zero for the foreseeable future, but because he’s actually eloquent. He speaks how you might imagine Mark Twain would, except about yield curves at the like.
Additionally, if you are struck by some unnatural desire to check out everything I watch, tune in to my YouTube channel.
December 13, 2012 § Leave a Comment
The Federal Reserve is out with a press release announcing its plans for monetary easing in 2013 and beyond. To put it bluntly, they’re making all the wrong choices, at least from the perspective of the American economy that us normal, non-government officials live in. I’ll break down the release paragraph by paragraph, so when the house of cards comes tumbling down, at least there will be evidence of those of us who knew better.
Information received since the Federal Open Market Committee met in October suggests that economic activity and employment have continued to expand at a moderate pace in recent months, apart from weather-related disruptions. Although the unemployment rate has declined somewhat since the summer, it remains elevated. Household spending has continued to advance, and the housing sector has shown further signs of improvement, but growth in business fixed investment has slowed. Inflation has been running somewhat below the Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.
Government statistics are remarkably useful to government agencies or agencies otherwise created by the government. The “unemployment rate” that is sited as “declining” has nothing to do with the real employment picture. As I wrote about before in response to a group of NYU students’ forecasts for the economy in the 2012 Fed Challenge, a more accurate metric for analyzing the state of the labor market is the labor market participation rate. This figure represents the people that the government refuses to count as unemployed. The government uses totally nonsensical logic to filter the “unemployed” and those who “have left the labor market” when calculating its “official” unemployment rate figure. As mentioned before, these reasons include things like whether the individual has “stopped looking for work” — an astonishing criteria really, unless I fell asleep and missed out on the government developing a new ability to read the mind of every American.
Here is a more accurate picture of the labor market, and its certainly not as rosy as the government would have you believe:
In contrast, here is the official unemployment rate figure, which the Fed refers to in its release. Notice how the trend since 2010 is downward, as would be politically valuable:
Can you see the idiocy here? If the “unemployment rate” were truly going down, i.e. more people were being employed, why in the world would the “labor participation rate” also fall? These two graphics disagree with each other. The top one states that less people are working, while the bottom one implies that more people are working. Therefore in any honest analysis, one would use the more realistic metric based on the desired research question. If we want to know how many people either have a job or don’t, we would use the top graph, and conclude that the Fed is either ignorant of its own government’s statistics, or is willfully trying to deceive the public.
The Fed mentions how business investment has slowed. Though this statement is written with a hint of surprise, it should have been expected. Below-market interest rates prevent savers from earning a return. One cannot invest, if there exists no savings to invest with. Therefore when the Fed sets up an incentive to spend and consume by lowering interest rates below what the market would have, less savings will occur than otherwise. Less savings, less investment.
Of course longer-term inflation rates are likely to “remain stable!” The Fed has the ability to drive down interest rates in the future through its Open-Market purchases! So it’s no surprise that the Fed feels confident that it can forecast a number that it itself has the power to influence.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.
If the Fed wants maximum employment, it would stop manipulating the interest rate downward so that people would have an incentive to save. Saved money would be converted into investment, fueling business growth, leading to greater demand for labor. I’ve written before on the Fed’s record of price stability. If you call the consistent increase in the price of every commodity priced in US dollars (most of which are factors of production in the manufacturing of many other goods) “stable,” then maybe the Fed has you fooled. But if you can read a chart, prices are not stable. Remember, just because prices of factors of production have increased and the price of consumer goods hasn’t risen proportionately, does not mean that monetary inflation doesn’t significantly impact prices. Monetary inflation offset by increases in productivity have contrasting effects, the former pushes prices up, the latter pushes prices down. This is what happened in the Great Depression. Massive money printing by the Fed kept asset prices rising, though didn’t have much effect on consumer good prices. But the inflation was still there in the inflated money supply. The consequences of which became evident when the Fed stopped printing and asset prices deflated rapidly. This is what will happen eventually.
The notion that price inflation is at 2% is ridiculous. Here’s ShadowStats:
Why does the government refuse to acknowledge what the real interest rate is? Because if the interest rate were to go to even 4%, servicing Federal Debt obligations would be nearly impossible. In other words, if interest rates were allowed to rise, the US government’s huge amount of debt would become way too expensive. The Fed would have to print until eternity to cover its cost of borrowing. Even the Fed knows this would be bad news for the US credit reputation.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and, in January, will resume rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
There’s the big announcement. This means the Fed will pump $85 billion into the economy every month. My favorite word in this paragraph though, is “initially.” Read between the lines. The Fed is telling us all that the $85 billion figure is just a baseline. Monetary inflation is wild and price inflation is going to be wilder. The Fed is right about a few things though. Housing prices will likely continue to rise. And interest rates will stay unnaturally low. That is, until the music stops.
Mark these words, eventually the game will end. Fake, printed money is supporting unnaturally high prices in capital goods industries (like housing). Unnaturally low interest rates are fueling US government bond purchases and stock prices. One of two things will happen: the Fed will stop printing in which case a massive realignment of resources will occur marked by a stock market collapse and bank failures. Asset prices will tumble. Government will intervene to keep prices high. Real unemployment will soar and will remain high for as long as the government attempts to “do something” about the deflation, i.e. the Great Depression. On the other hand, the Fed will continue to print and current trends will continue. Interest rates will remain down. Savings will be eliminated. Businesses won’t invest. Depreciation will eat capital alive. Real economic growth and wealth production will stop. Population growth will outpace employment creation even faster than it is now. The real unemployment rate will skyrocket. Cue social unrest. This will happen until a new currency is adopted or massive monetary deflation occurs. In either case, the remedy is elementary: permit the deflation to occur. Allow the malinvestments to be liquidated. The federal government admits it cannot pay its debts. Cut government expenditures. Shut down the Fed.
I don’t know when the above events will occur; however, they are inevitable if and only if the government continually intervenes in the market. The beauty of the market is that it’s super fast. In 1920, depression was cured in 9 months. The government had plans to intervene to “make things better,” but the market beat them to it. The future of the American economy will depend on how hellbent the federal government is in remaining active in the economy.
The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
The Fed is promising to prevent real growth. The effects of the current policies are bad and more of the same will only make things worse. There will be no slow unwinding of the mess we’re in; the Fed is baking economic collapse into the cake.
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. The Committee views these thresholds as consistent with its earlier date-based guidance. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.
The official, corrupt unemployment rate may in fact hit 6.5%. Let’s hope it does and the Fed keeps its word to get its hands out of the pockets of future generations. No one knows what a “balanced approach” to removing “policy accommodation” is, namely because it’s never happened. The approach taken in the Great Depression sure as hell wasn’t balanced. And a quick look at money supply reveals that the Fed has never deflated, at least since the Fed began recording M2 Money Supply figures:
In other words, don’t buy the Fed’s cutesy double speak. There will be no balanced endgame. The Fed said so itself when it promised in Paragraph 4 to remain active if positive results don’t surface. To be clear, real economic growth cannot occur in the Fed’s fake economy. Investment will continue to decline. Capital consumption will continue. (Real) Unemployment will continue to rise for as long as the Fed keeps printing.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed the asset purchase program and the characterization of the conditions under which an exceptionally low range for the federal funds rate will be appropriate.
We learn here that Lacker is the only person with a single iota of intelligence. Perhaps Lacker understands that monetary inflation to keep asset prices afloat and manipulating interest rates downward to stimulate lending and consumption is the exact opposite of what the Fed should be doing if it wants to achieve real growth. Perhaps not. Either way, like Lacker, the opinions expressed in this post are the minority. However, as of this posting, the stock market is largely unmoved, most metrics moving horizontally. This could indicate that the market is starting to lose faith in the Fed’s (nonexistent) ability to stimulate economic growth. Let’s hope so. The quicker this rigged game collapses beneath its own weight, the faster the market can work its magic and remedy the havoc caused by government intervention.
UPDATE: After writing my own analysis of the Fed release above, I took to some of my favorite news and commentary outlets to see what they thought. Here’s Peter Schiff and Jim Rickards (both of which I think you’ll find agree with me, though they both offer slightly different insights):