Thursday, September 13, 2012

Idle dollars will become inflation drivers

If Mitt Romney wins the White House an unintended consequence will loom large on his presidency. With a Romney win, optimism and confidence will in all likelihood roar back into the market. Unfortunately this will unleash the trillions being held by banks and corporations. As a result, we can expect to see substantial inflation and a sharp rise in interest rates. In short, idle dollars will become inflation drivers.

This inflow of new cash will bring about yet another round of resource misallocation and the creation of the next asset bubble. You see, instead of cleaning out the previous misallocations of easy money, weeding out inefficiencies, and creating incentives that push markets forward; the FED's monetary and government fiscal policies have stepped in to soften the blow every time the results of their previous meddling of the economy have gone south.

The next bust but will be the result of the FED's handling of the housing bubble. Of course the housing bubble was caused by the FEDs actions after 911 and the Dot com bubble along with legislation like the Community Reinvestment Act and public risk taking by Fannie Mae and Freddie Mac.You get the picture.

In short, the multiple boom bust cycles have been created and exacerbated by the central planners who are unable or unwilling to admit their vision of a command and control economy is fatally flawed..The next bubble will not be caused by a President Romney but you can be sure he will be blamed.

The Bernanke / Obama team know that providing fluffy landings by removing the pain of tying costs to choices made in the free market inflate egos, score politically in the short term, and hide the evidence of their failures. Unfortunately, warm fuzzy rhetoric has ever growing consequences in the long term.

Well folks, the long term has arrived. If you need any proof, look at the $16,000,000,000,000 we are in debt, that's 12 zeros. This time however, the sharp cuts and stings of a crash  landing will be felt. The fuse has been lit, the inflation bomb is primed and the FED can't put salve on the injury any more. Of course asking the Obama administration to step in and solve our looming crisis is like giving a crack addicted accountant the company credit card.

It is too late to stop the inevitable inflation that is heading our way. And the only way to muffle the blast of the next bubble is to allow the productive entrepreneurial market economy and its people the freedom to minimize its effects. One specific suggestion is to unleash America's existing energy resources and technology to counteract the effects of damaging inflation.

Will we see more pain, yes. Should we run from the free market, no. We have to, for once and for all, trust fundamental principles of capitalism that as Nixon said "works better than it sounds," instead of chasing the utopian fallacy of socialism "that sounds better than it works."

Buckle-up, it's going to be a rough ride.

Tuesday, September 11, 2012

Michelle's strange psychology

I am confused. If Michelle Obama was raised by her father Fraser Robinson,..

Who according to Rich Lowry in National Review, citing Michelle Obama’s DNC speech, had an: 
insistence on paying his small portion of her college-tuition bills on time, because “that’s what it meant to be a man.” 
Who led a life of self-sacrifice. He was a working-class father who raised two Princeton University graduates. 
Who was a high-school-educated man who married and stayed married, who worked and kept working despite considerable adversity. Whatever his relative lack of education and skills, he was a hero of character, shaped by mores that have been eroding for decades. 
(Who) according to Michelle’s convention speech and to published accounts, her father was a pump operator at the city water plant in Chicago. He was diagnosed with multiple sclerosis as a young man and still got up to work every day. The first lady described how she watched him “grab his walker, prop himself against the sink, and slowly shave and button his uniform.” When he came home, he’d reach down to lift one leg after another to make it up the stairs and greet his kids. 
It’s difficult to imagine a more affecting depiction of everyday dutifulness than that. With his wife of 31 years, Marian, Robinson built a family deeply invested in his children’s future. 
Too few men in his position now do the same. Forty years ago, Fraser Robinson left for work in pain every day — walking on two canes — and now a small army of his fellow Americans schemes to get paid for doing nothing. 
Through his faithfulness, Fraser Robinson gave Michelle and her brother an incalculable gift. That being according to Susan Meyer, “The parental characteristics that employers value and are willing to pay for, such as skills, diligence, honesty, good health, and reliability, also improve children’s life chances, independent of their effect on parents’ income,”
…then why would Michelle marry and tolerate her husband, President Barack Obama’s actions and record in office; which goes against everything she was taught by her courageous father she so obviously admires and loves? It really is a confusing nature/nurture question that offers what I am sure is a fascinating answer.

Generational consistency strengthens a nation. In this case much of it must have been lost.

I’m saddened for the culture of our nation to lose such values. It's a shame her two children may never get to learn the lessons from their father the first lady should have learned from her's.

Friday, September 7, 2012

Machiavellian danger

Regarding the DNC:

What I am hearing and seeing are speakers looking directly into the camera and flat out lie about who they are, what they believe, and where they want to take the country.

It really is a stunning display of ignorance or hubris.

They are either pathologically unfit to serve, or are driven by the most dangerous of motives, that being the direct undermining of the American way of life.

The old Machiavellian game of saying one thing so as to gain power and do the opposite is the fountainhead of totalitarianism.

They have decided their self-anointed central planning trumps the most fundamental of natural laws, FREEDOM.

God help us all.

Tuesday, September 4, 2012

Get ready for poverty

Peter Schiff sends a clear warning based on facts and reasonable assumptions:

On the current trajectory, the national debt likely will hit $20 trillion in a few years. If, by that time, interest rates were to return to 5 percent (a low rate by postwar standards) interest payments on the debt could run around $1 trillion per year. Such a sum would represent almost 40 percent of total current federal revenues and likely would constitute the single largest line item in the federal budget. A balance sheet so constructed would create an immediate fiscal crisis in the United States.

The depression that will follow will not be called “The Greatest Depression,” it will be called “The End of America.”

Read more: SCHIFF: The real fiscal cliff - Washington Times 

Dean Kalahar

Bernanke is not the Chair, he sits on a throne of his own making

Chairman Bernanke and the FED either have their heads in the ground (or up someplace else), or are intentionally destroying the economy of The United States so that it can more resemble the rest of the wretched world. The ideology is to redistribute the wealth worldwide by bringing down America.

The main policy paper at the FED’s Jackson Hole conference was: William White’s, Ultra Easy Monetary Policy and the Law of Unintended Consequences.

The paper and warnings are obviously being ignored.

Some excerpts:

“Ultra easy monetary policies have a wide variety of undesirable ... unintended consequences. They create malinvestments in the real economy, threaten the health of financial institutions and the functioning of financial markets, constrain the ‘independent’ pursuit of price stability by central banks, encourage governments to refrain from confronting sovereign-debt problems in a timely way, and redistribute income and wealth in a highly regressive fashion.”

Using monetary policy, White concludes all the central banks have done is “to buy time” for governments: “If governments do not use this time wisely, then the ongoing economic and financial crisis can only worsen as the unintended consequences of current monetary policies increasingly materialize.”

Dean Kalahar

Source: Niall Ferguson