65 Comments

1. Lifeofthemind:

Congratulations, this video is a priceless or is that unpriceable?, discovery.

The question is always can the class tease out the assumptions from the observations? In the Professors first graph the third line represents labors aggregate purchasing power that fell even faster than the value of the dollar but then is assumed to rise magically faster in the future as all three lines come back into balance. That ignores the fact that all the government activity that is accomplishing this legerdemain is itself expensive. At the least the cost of the government expansion must be deducted from the future wealth of the workers. Then comes the other costs in lost efficiency and opportunities forgone, etc.

Jun 16, 2009 - 10:21 pm 2. wretchard:

I didn’t find it. It was sent by someone else, but that’s Web 2.0 for you.

Jun 16, 2009 - 10:27 pm 3. WillDoMathForFood:

I’m not an economist, but I did stay in a Holiday Inn Express last night. I think that while WWII may have “ended” the Great Depression in the sense that it stimulated massive economic activity – the ultimate Stimulus Package, if you will – it did so at the expense of stupendous borrowing and enormous Federal debt. So you might say, “Hey! America came out of WWII pretty well, right? So why won’t the President’s policies do the same thing for America today?” The difference is that America after WWII was the only major economy in the world left standing, and the world had to come to America to buy all the stuff that backlogged demand left in the wake of WWII. That isn’t going to happen this time around. We’re not only saddling the American economy with debt, but we’re destroying our competitiveness in the process relative to everyone else in the world rather than enhancing it. No one has to come to America to buy stuff anymore. We’re just producing less and less stuff of lower and lower quality at higher and higher prices. This is not the prescription for economic prosperity. It’s a feel-good economic policy brought to you by people who think that wealth is America’s birthright, and we’re all going to pay a painful price for their hubris.

Jun 16, 2009 - 10:37 pm 4. onetailtest:

It’s possible the 1933 pro-inflation policy helped. 1933 was, after all, the bottom of the stock market.

Who knows? No one.

Testing the counterfactual isn’t possible. There are no controlled experiments, no isolation of individual factors so that we could ever know experimentally what worked and what didn’t. Our understanding is vague, tentative, theoretical. One theory advises action X; another action not-X.

I don’t understand it better than Bernanke. But even if Bernanke understands it perfectly, I doubt he can solve it himself. The economy is too big.

Jun 16, 2009 - 10:58 pm 5. ADE:

Math

No one has to come to America to buy stuff anymore.

America’s priceless commodity since WII has been its stability and the rule of law.

That’s what the Almighty is squandering.

ADE

Jun 16, 2009 - 11:03 pm 6. Karen Yvonne:

I like the part of the video where the farmer, with the help of inflation, can pay off the mortgage. Herbert Schlossberg, in his book Idols for Destruction points out, “The inflationary act that wipes out one’s debt, at the same time destroys the other’s wealth. In this way it transfers wealth from one to the other. Inflation is a process of redistribution.”

Again, one recalls the recent dusting-off and rehabilitation of Keynesian economics upon reaching this part of Schlossberg’s book:

“John Maynard Keynes is usually thought of as the architect of modern inflationary policies designed to prevent economic deflations, but before his depression-era work he had made more clear than anybody else, perhaps, why governments embark on inflationary policies. They have discovered what the Roman emperors who debased the coinage knew: such policies are profitable to governments. Keynes asked us to imagine a government that increases the stock of money from nine million to twelve million currency notes without other conditions being changed. In taking this step, it has transferred from the public to itself an amount of resources equal to three million currency notes ‘just as successfully as if it had raised this sum in taxation.’ Who paid the inflation tax? Those who hold the original nine million notes, because each of those notes will purchase 25 percent less than before the inflation. The inflation of currency means its depreciation in value. ‘The burden of the tax is well spread, cannot be evaded, costs nothing to collect, and falls, in a rough sort of way, in proportion to the wealth of the victim. No wonder its superficial advantages have attracted Ministers of Finance.’” [From John Maynard Keynes' Monetary Reform, 1924.]

I guess the upshot here is, if you are not part of the debtor class – and government is the biggest debtor by far – get ready to get taken to the cleaners.

Jun 16, 2009 - 11:25 pm 7. Karen Yvonne:

To elaborate a little more along this line: printing money increases the money supply without increasing the supply of goods that money can purchase, thereby driving up prices. This is what Schlossberg called the modern version of alchemy and what Ludwig von Mises called “the philosophy of stones into bread,” referring to the temptation of Jesus.

“This is the alchemist’s trick of creating something of value without work. Whether the wizard mutters incantations, mixes formulas, or runs printing presses, he attempts to produce bread without bothering to plow, sow, reap, grind, and bake. He tries to create value ex nihilo and imitate the creative power of God. What he really accomplishes is the taking of someone else’s bread.”

This is exactly what Obamessiah has in mind, I think, and he’s just The One to pull it off – and with lots of cheerleaders urging him on. Newfound respect for Keynes is telling.

Jun 16, 2009 - 11:44 pm 8. whiskey:

THis wasn’t anything new. The battle between Easterners and Westerners over the Bank of the United States centered on using inflation to wipe out debts at fixed rates. During the latter part of the 19th Century, the Silver-Greenback vs. Gold (”Dollar of our Daddies”) also centered on inflation, silver being far more plentiful obviously than Gold.

What WAS new was in the 1970’s, the middle class getting hard hit by inflation. The past battles in the 19th Century had generally though not always gone to the farmers who could pay off debts, and also to railroads who could do the same. But more sophisticated debt instruments that were inflation adjusted, and caps on wages while prices rose, screwed over the US Middle Class.

Obama risks a lot, and so do Dems, with inflation. Milk costing, say $10 for a half-gallon, and bread costing $8, is the stuff of riots, revolution, and ruin. Inflation made Nixon vulnerable to Watergate (he would have laughed it off if times had been good), destroyed Carter, and led to Reagan who had some scary moments himself in 1981-83. People don’t like to run the mental tally every week to see how much they have and find it’s less every time, because inflation eats away at things while their incomes are mostly fixed (a huge problem for Obama, and significantly different than for 19th Century Farmers or Railroad companies).

Jun 17, 2009 - 2:02 am 9. pel:

I would instead say that the Great Depression ended with the end of the War.

During the War, the American economy had major governmental intrusions through rationing, nationalizations, and shipping off a not-insignificant piece of the labor force as soldiers. I wouldn’t call an economy functioning with a semblance of normality under these conditions.

This should not be read as an endorsement of an economy mobilized for war effort as a recovery scheme. However, it is interesting how one might be motivated to economic activity after coming out on the winning side of a war.

Jun 17, 2009 - 2:08 am 10. pel:

With respect to inflation itself, I still don’t see it happening here. Yet. Credit is just as fungible as FRNs these days, and credit has been imploding (still) at a tremendous rate.

Absent wage inflation, the credit implosion coupled with continuing job losses are exerting enough downward pressure to more than offset the printing going on at the Fed. Aside from encouraging liquidation, the Fed has only Zimbabwe style printing left as an option, which I really don’t see it doing.

The de facto inflation already happened and is unwinding. The failed treasury auctions are on board next, and once those really take hold, the last pin to fall will be sovereign default. It remains to be seen whether the government will do that or cut spending. A mini version of this is playing out in California now.

Jun 17, 2009 - 2:26 am 11. no mo uro:

“It’s a feel-good economic policy brought to you by people who think that wealth is America’s birthright, and we’re all going to pay a painful price for their hubris.”

The ‘people’ who think this are a majority of Americans. This is why both political parties have, for the last 40 years, had as a central message ‘vote for us and we’ll make it 1954 all over again’.

Until Americans – not just Democrat and Republican politicians, but people of all walks of life, in every neighborhood and demographic – stop believing that showing up for a job 40 hours a week entitles them to a high material standard of living and, more importantly, bulletproof income stream security, we’ll never get to where we need to be.

Until people who are in reality semiskilled or unskilled (given our current technological state) or even in technical jobs for which there is an oversupply of skilled individuals stop lying to themselves about the historical context of the affluence they have had over the last sixty years, and realize that by any historical yardstick, people in those types of situations should only expect to live in rented housing, have limited access to new vehicles, expect to lose your job and have to move one or more times in your life, and have limited ability to send their kids to college unless the kid is so bright they qualify for a scholarship, then we can’t get off the dime.

It may be unpleasant, but it is the reality, and has been since the 1970’s. All the accumulated debt and dysfunction in our economy can be traced to the inability of the public to move on from 1954 and the politicians’ lack of courage in speaking about this (our current president being one of the worst offenders).

The affluence and job security of the late 1940’s and early 1950’s was a unique historical anomaly which will never be repeated again. The more we try to pursue it politically and in the nation’s consciousness, the harder it will be to solve our current problems and get to the new normal, whatever that might be.

And we could lose the nation entirely if we don’t ‘get it’ soon.

Jun 17, 2009 - 4:12 am 12. Don51:

ref: WWII and rebuilding the economy

People seems to forget about all those bond drives during the war. Bonds were not only a means to fund the war, but also a mechanism to tie up money for years afterward to avoid inflationary impacts. Twenty years to mitigate lots of printing and/or book transferring of wealth during which other economic factors could come into play to displace the sudden injection/impact of that amount into the overall economy.

Jun 17, 2009 - 4:29 am 13. hdgreene:

I may not be an eminent commenter, but I can be an imminent one: ten minutes after I hit the submit button.

I think a lot of folks making business decisions came of age during the Carter years and remember inflation from that time. Inflation sends out false signals. It mimics an increase in demand for your product when actually it is an increase in demand for all products.

Now, if it is only your product where demand has increased, your cost will stay steady and you can raise prices to help you reinvest and raise production and increase profits. Your resources will come at the expense of some other producer who finds demand for his product dropping. But when demand for everything increases, then cost will increase, too. Then your new investments won’t pay off.

So expanding the money supply is one of many government actions recently that has raised uncertainty for business. So the velocity of money stays low, and the price effects of currency inflation are masked. As velocity picks up, they will have to “deflate” the money supply which will be tricky.

Personally, I would have focused more on business, consumer, and investor confidence — improving it, I mean.

There’s a movie from the 1930’s about Poncho Villa where Poncho has his face put on the currency. The printer shows up with the notes, but then refuses payment in the new notes. Talk about “the low velocity of money,” that stuff didn’t make it out of the box.

Jun 17, 2009 - 5:27 am 14. Leo Linbeck III:

I love the logic:

Beer is good.

More inflation means more beer.

Ergo, inflation is good.

QED.

L3

Jun 17, 2009 - 5:32 am 15. Mongoose:

And pretzels, LL3, don’t forget the pretzels.

Jun 17, 2009 - 5:39 am 16. RWE:

One of the more intriguing things that Leo III has said here is that inflation is good for the investor class. I recall one of my economics professors in grad school saying much the same thing. Not sure I understand it, but I think I believe it.

I am not a rich man but I play one on Form 1040 at tax time. I recall buying a T-bill circa 1980 at the rate of 16.1 %. Happy days are here again? But I also recall buying my first house at 10.5 %, my second house at 11.5% and my third one at “only” 10%; all of these required a down payment. And today we have people whining about predatory lending with rates at 4% that balloon up to a horrid 7%. Already, the Investor Class is expecting inflation and is acting in ways that drive bond rates up, despite the Fed. As Glenn Beck says, we have them surrounded. And as I might add, we have them right where they want us.

Jun 17, 2009 - 6:33 am 17. joe buzz:

That was lovely and I’m still a dummy.

Jun 17, 2009 - 7:09 am 18. bob:

Work is the curse of the drinking class.

Jun 17, 2009 - 7:23 am 19. always right:

I think you over-estimated the intelligence of today’s dummies, those infected/infatuated with the Hopenchange virus.

Anything longer than 30 sec will not go over well with these young highly-educated crowd.

Jun 17, 2009 - 7:32 am 20. buddy larsen:

Homer Simpson once won a free trip to New York City. Standing in front of the fireplace talking about the upcoming trip, he got so upset worrying about the pickpockets of Times Square that he abruptly spun around and threw his wallet into the flames. “There!” he exclaimed, satisfied now that nobody would picking his pocket, “…THAT’ll show ‘em!”

Jun 17, 2009 - 7:44 am 21. programmer:

Is inflation the opposite of recession?

Jun 17, 2009 - 8:02 am 22. buddy larsen:

It is for a little while, programmer. People start “buying ahead”, and commerce thus rises. Real returns on investment soon enough start falling, however –actually, that’s what makes inflation out of what would be expansion: investment should produce enough productivity gains to maintain a dollar’s purchasing power but if for some reason it won’t, then (all else more or less equal) ‘expansion’ becomes ‘inflation’.

If interest rates rise to maintain the real return on investment that is needed to produce that investment, and the ’spread’ between what a borrowed investment dollar costs and what it returns will not adjust for risk and still remain positive, then you have inflation AND recession, AKA that 70s Democrat blue-plate special “stagflation”.

See related “Misery Index”.

Jun 17, 2009 - 8:19 am 23. RWE:

Interesting review of a book on inflation by a author who was highly critical of Bush and thinks that Obama is a crooked lunatic.

http://city-journal.org/2008/bc1231ds.html

Jun 17, 2009 - 8:24 am 24. buddy larsen:

Very broadly put, economies that thrive have achieved a delicate oscillation between the price and the cost of money.

Think of a “see-saw”.

The motion is the fun (the economic opportunity –for the smallest to the largest economic entity); the muscle power needed is worth it because natural gravity reliably compensates it.

If the board is too long or too short for the weight of either end (if government is too intrusive or not enough on behalf of either labor or capital, public or private) it’s no fun and will sit idle, or be used awhile in fits and starts, depending on the attractiveness of other items on the playground.

The fulcrum is the nation and its laws. It can be too high or too low for the board and its loads, or too weak. all those items will be adjusted by the players. But it cannot be too strong or too durable. The cost of building a fulcrum can theoreticall y be too high for the strength and durability purchased, but that’s a side issue, and political –something to argue about and thus to isolate and illuminate the needful primacy of principles over their expression as “rules”.

Jun 17, 2009 - 8:45 am 25. Sylvia:

11/nomouro. One of my DD’s friends who is brilliant and has done everything right got into UC Berkeley on full scholarship, early decision. In February he was informed that the scholarship no longer existed. His mom was just laid off. He’s trying to find a job, any job, and hoping to be able to afford to take a class per term at the local community college. A lot of endowments have been gutted.

Picked up Niall Ferguson’s The Ascent of Money at the library yesterday. Looks interesting.

Jun 17, 2009 - 8:47 am 26. Mongoose:

Chew on this folks:

http://www.breitbart.com/article.php?id=CNG.5df48ce0851221bad106b502bb21bc48.741&show_article=1

Out to take us down. Who would have thought that we could be taken out by such 5th rate people as the Liberal Democrats?

Will we ever recover to anywhere near where we were even 3 years ago?

WE now have someone as low as Lula sticking it to us.

Jun 17, 2009 - 9:05 am 27. Doug:

Leo,
Ergo, your stomach inflates.
(Independent research)

Jun 17, 2009 - 9:08 am 28. buddy larsen:

Obama wants us to hear “Happy Days Are Here Again” but when he spells it out it’s “Hopey Daze Arrear A Gain”.

Jun 17, 2009 - 9:09 am 29. Doug:

Mongoose:
-
Graphic Answer to your Query

Jun 17, 2009 - 9:14 am 30. Doug:

Happy Daze are a return to hangin with Collegial Crackheads.

Jun 17, 2009 - 9:17 am 31. Doug:

Those red areas were almost exclusively Blue @ electiontime, Mongoose, as you no doubt noticed.

Jun 17, 2009 - 9:21 am 32. Doug:

Today’s Cartoon

Jun 17, 2009 - 9:26 am 33. Mongoose:

Doug, I was talking about a wider range of issues, but I appreciate the pointer.

In fact those areas have voted blue for local governments for decades: They are just taking the panhandling to a National Level. And they are likely to get what they want. They lack the self respect to do anything else about it. They are all for Obama bulldozing their cities; they will not try to save them as they have not one ounce of manhood left (that is right, manhood).

The problems here are so much less than what the founders of those communities once faced–these current problems are purely political and behavioral–but it evidently is too much for Americans to deal with these days.

Of course, a rational conservative program could turn around this particular problem in 4 years. To wit:

1) Reduce government across all levels by 50% (80% would be better),
2) Radically reduce all taxes,
3) Do away with Corp income tax, period (all of the corporations of the international Forbes 1000 would relocate here).
4) Cut off all funding to NGO’s and other Liberal gravy trains–including the rot in Academia (but do not create a GOP/conservative gravy train),
5) Start throwing the crooks in jail–the miscreants of both parties–and have them do hard time, no club fed. Start on the hill and Goldman Sachs and do not stop until we jail them all right down to the county level.

6) Drill, baby drill, and build some nuke plants too, whilee we are at it (and do away with ethanol subsidies too),

7) Radically increase defense spending (and reset Aermican foreign policy to where it was 4 years ago).

That would do it. Then all of this would just be a historical anomaly. Deep in their hearts of hearts, the rest of the world would breath one long sign of relief.

It is all quite doable, and would have made sens to anyone even 3 or 4 years ago.

I am not the least bit optimistic that even any one part of this will happen. The Boomer-Bolsheviks have done us in. Not with a bang we go down, not even with a whimper.

Americans will not be please when the dollar is destroyed as a reserve currency and they find that they have been displaced by the likes of the BRIC countries.

So my questions till stand, i think.

Jun 17, 2009 - 9:47 am 34. Charles:

More on the 143 billion in a suitcase in Italy story. Japanese hi jinks? Still just speculation,.

Jun 17, 2009 - 9:50 am 35. Doug:

Mongoose,
Yup.

Jun 17, 2009 - 9:56 am 36. joe buzz:

And Putin advising us against the perils of business taxes….Putin warning
These are interesting times.

Jun 17, 2009 - 10:10 am 37. Doug:

You Scratch My Back and I’ll . . . never mind, I’ll scratch my own.

Jun 17, 2009 - 10:22 am 38. buddy larsen:

David Gordon is a senior fellow of the Ludwig von Mises Institute and editor of The Mises Review. He has a great article here in The American Conservative. He wants to rein in the Fed –to do the exact opposite of the new regulatory proposals O just made –wherein a sort of glossed-over nugget is a potentially limitless empowerment of this private bank bank. Last few paras are dynamite.

be sure and read the inset para referring to “a rogue nation” (about midway) with Charles’ link @ #34 in mind.

Jun 17, 2009 - 11:03 am 39. John Work:

Slightly off topic, but has everyone seen this story on Drudge (http://www.washingtonpost.com/wp-dyn/content/article/2009/06/16/AR2009061601923_pf.html)? If this is enforced, it’ll open the door (if it’s not already) to censuring what’s said on this and many other sites.

Jun 17, 2009 - 11:07 am 40. buddy larsen:

BTW, why would anyone powerful enough to put 143 billion in a suitcase GET CAUGHT by the cops at a border crossing?

Either they meant it to happen (and the implications are astounding) or else there’s so many dollars sloshing around that it didn’t matter all that much.

And #2 ain’t likely. Two other chances, counterfeit or turncoat, obtain of course but if a bear and a dog are both charging you, forget about the dog until the bear is out of the way.

BTW, how do you know what’s in the vault at Fort Knox? Whose word do you depend on? How many people verify, and how often? I dont know. Do you?

Jun 17, 2009 - 11:20 am 41. buddy larsen:

BTW, btw, O’s proposed new regulatory opera will in addition to Fed empowerment also, via creating a new unitary regulating authority uber alles, “close the gap between the CFTC (Commodity Futures Trading commission) and the SEC (Securities and Exchange Commission)”.

His people running those two entities, Gary Gensler and Mary Shapiro, happen to be, respectively, the designer of the weapon of mass destruction in this current crisis, the Credit Default Swap (in yr 2000 as deputy sec of treasury) and until O gave her the SEC, the head of FINRA (Financial Industry Regulatory Authority) under the William Donaldson SEC (featuring Chris Cox ‘fronting’), and the regulator who um, “missed” Madoff and Stanford, not to mention Bear Sterns, LEH, Indymac, Wachovia, WaMu, Countrywide, GMAC, etcetera, the whole shebang of unregistered (hey thanks ‘Privacy Act Gary”!) CDOs, including those that self-destructed AIG (tho not the bonuses of the apparats) via Gensler’s CDSs.

–after which of course the gov’t took over AIG, keystone of the global insurance industry. and all that other stuff. GMAC to GM. Et cera, ad infinitum, nauseum.

(I wish instead of words i could reproduce the mental pic of these glowing three dimensional vectors, the lines that chess-playing develops that let one ’see’ a chessboard –the stuff above are just the interstate hiways. ‘Search’ takes ya onto the farm-to-market roads, which then make ya wanna learn Mandarin so you can move to the real America, China that is, and start your business all over again.)

Jun 17, 2009 - 12:16 pm 42. Mongoose:

Buddy, more to the point: who would set them up?

Russia or China, or one of their minions I would bet.

The question is, have they gotten arrogant in thinking that Obama is “dependable”

Will America shake him off? Will we renew ourselves?

Who knows?

I do think, however, that we are beginning to find out who sent him.

Jun 17, 2009 - 12:17 pm 43. buddy larsen:

OOps, forgot the ribbon and bow; the new regulatory regime proposed is essentially a repair of those things that the new repairmen themselves actively themselves broke in the first place. did they break ‘em so that the next Dem Pres (guaranteed after human nature, thinking it was a football, ran with the rotten tomato for awhile) could fixum?

Fixum real good, forever?

If so, then what was it that was broken, in these people’s minds, before they really did break what they broke?

Oh, i don’t know…CAPITALISM ?

(btw, “capitalism” one of Marx’s terms –it implies a construct formerly known as “freedom” or “liberty” wherein people doing what they want to do and thus what they do best will reliably market their offerings and thus, like an invisible hand, help each other grow and prosper and advance toward the ideal)
*****

Mongoose/42; re ‘who sent him’ yes, i think so, too. lots of clues –icluding summer ‘08 oil mkt, the dark pools that the FBI probably already has id’d but can’t say, the ties among Soros, LEH-the-panic-inducer, the invasion of georgia, Soro’s involvements in Georgia & Russia, and the pattern of the whole crisis as a fractal of which were both the Asian crisis of late 90s and the collapse of the Pound Sterling a few years before that. Soro’s stated ambition is to end the Dollar as reserve currency –in order to ‘level the playing field’ as he benignly and humanistically says. wish someone could look into HIS moneymen!

Jun 17, 2009 - 12:44 pm 44. buddy larsen:

mongoose/42; Will we renew ourselves? the question of the age –my hunch is that our enemies are already rather astonished at our resiliency. i’m sure this resiliency is affecting the course of their future initiatives. The Dow should have been 4000 by now and the Dollar not at 138-96 euro-yen but much much lower. We’re fighting back hard just by being what we are –including good things and also such not-so-good things as being too ignernt to realize how bad we got it (a fool’s paradise is still paradise to a fool, yee haw!). i’m already seeing O sliding a little to the right here and there –atmospherically/rhetorically at least –responding to what i’m sure they hoped was going to be an easier task of demoralization.

Jun 17, 2009 - 1:10 pm 45. buddy larsen:

i kind of (’kind of’ because i’m no expert) think that we WILL be able to fix things if only we can lose the freaking Marxist politicians. No need to purge the academy –the Marxists are getting old and the Iraq/Afghanistan vets are starting to show up on campus. The MSM is also graying out. The debt monster that the marxists are Cloward-Pivening us with is a horror but expectations will adjust policy and optimism will return if only we can regain the animal spirit, ie, get the marxist moral succubus off our back. And of course avoid nuclear destruction by an enemy who might have got the fix in on us by installing a resistor in the retaliation circuit.

Jun 17, 2009 - 1:34 pm 46. Mongoose:

That is how I see it, Buddy, or at least how I want to see it.

But it will take a major sea-change, and it might take, heaven forbid, white consciousness, or at least “western civilization consciousness”. We have to put much of the 21st century behind us. we have to renew ourselves and our civilization. It will take much soul searching and much hard work.

Ultimately, it is a spiritual crisis and challenge, not a political one.

Jun 17, 2009 - 1:52 pm 47. buddy larsen:

long hard road, mongoose. we need to keep our head out of our ass, as a people, from now on. ‘white consciousness’ is practically inevitable, now that the marxists have sold so many of us on color-coded voting. another fine marxist dumb-ass retrograde mess, on the come.

Jun 17, 2009 - 2:03 pm 48. Alexis:

Interesting propaganda. What this newsreel fails to explain is what happens when new money is printed and people still refuse to spend it. Even if the money’s value decreases over time, people may simply sit on the money they have due to a fear they might need it later.

Moreover, even if such a model worked in 1933 for the sake of argument, the model presumes the existence of a closed system. There is a limit to how well any stimulation of an economy can work when a large proportion of the consumer goods come from abroad and particularly when a considerable proportion of a nation’s industrial economy has been deliberately outsourced to China.

When Juan Peron’s policies increased worker salaries in Argentina during the late 1940’s, the effect was (1) importing more consumer goods from abroad which had the effect of depleting Argentina’s foreign reserve currency and (2) eating more meat which had the effect of Argentina’s ability to earn foreign currency to replace its reserves. The result was rioting in 1953, which ousted Juan Peron from office and ushered in an era of intermittent civil war for the next thirty years.

The United States was considerably more self-sufficient seventy years ago. Since then, the United States has embraced a model of “free trade” that has raised living standards at the cost of dependency upon trading partners whose fondness for America is distinctly limited.

Rather than rely upon either fiat currency or various metallic standards, I think it would be wiser to tie the value of America’s currency to the value of staple crops that the United States produces in abundance. Fiat currency empowers the inflationary banking of demagogues such as Slobodan Milosevic and Juan Peron. Metallic currency empowers the mining sector of the economy and implicitly empowers petroleum-exporting countries (due to a strong Arab-Islamic appetite for gold). In contrast, an agricultural currency would not only empower farmers (to essentially print money by increasing yields), but would also empower nations with a strong agricultural sector to their economies, such as the United States, Canada, Europe, Australia, New Zealand, Argentina, and Brazil. Such a currency may even advance the economic power of Africa over that of the Middle East while encouraging Russia to shift its economic focus from mining to agriculture.

Jun 17, 2009 - 2:12 pm 49. no mo uro:

Sylvia, sorry about your friend. If he’s truly a smart kid, with a good work ethic and imagination, he’ll be OK in life whether he goes to college or not. If he really wants to go to college, perhaps he can join the service and get help that way.

As the economy continues to tank over the next five or six years and endowments tank with it (the mechanisms for this would require a thread unto itself) scholarship money will dry up. Entire colleges will become insolvent and go away. The first scholarships to be cut will be those for white males, but eventually all of those which originate from within the colleges themselves will dry up (well, maybe not athletic ones).

I’m sure you know a lot of folks who didn’t go to college who are highly successful – and as a side benefit don’t have a lot of the cultural Marxist baggage common to most people who majored in the arts, humanities, and social science in the past 25 or so years. Part of the reason the Dems want everyone in college is that it represents a good opportunity to propagandize our youth for another four years.

But what you’re seeing with your friend’s son is how it’s going to be from now on. Like many other kids he won’t have the typical 4 year full-time experience that is what we’ve become used to seeing.

Many colleges should close over the next ten to fifteen years. Generally speaking college education is both overpriced AND the market is flooded. The education bubble is already bursting and your friends’ experience is proof of this. Just as we have built too much housing designed to be owned (rather than rented) for what our economy can handle, so too have we created too many seats at colleges for people who will major in what are useless subjects. Gender studies, art history, sociology, French literature, etc., all may be interesting, but they don’t help people be better workers or Americans, and may actually be detrimental in some cases. Many of these kids would have been better off in trade schools.

If this contraction in the number of colleges doesn’t happen, it will be due to massive subsidization by the Dems in return for the valuable political and rhetorical support (not to mention the indoctrination) that the education industry provides for the left.

The idea that anyone can go to college regardless of how little money their parents have or make is a construct of late 20th century living. It’s a lovely idea, but it isn’t sustainable or practical, and has no real historical context.

Jun 17, 2009 - 2:17 pm 50. RWE:

By the way, isn’t the message in the video oppose the Broken Window theory? It would follow that broken windows are good things because they stimulate the economy, not that they are bad things because they stimulate bad behavior.

In any case, the real message from the video is not that inflation is good but that deflation is bad. And technology tends to cause deflation by making things obsolete, or at least less desirable than newer things, as well as easier to manufacture. The 55 Chevy was a great car. But how many would you sell today instead of Toyota Corollas?

I recall hearing back around 1980 that if the same manual switching system was in use that was employed in 1910 it would require the entire female population of the USA just to run the phone system. Some people would think that would be great for employment but in reality it would make owning a phone prohibitively expensive.

no mo uro #49. The key thing about college is whether it teaches you anything useful. Now most do not do that very well, but some people don’t even seem to consider the concept when they go to college. I fear that many Obama voters think that they should be able to take what they want in college and then get paid what they want as well and live where they want to.

Back in 1993 I saw a report on ABC TV that I found infuriating. It profiled the plight of 3 new college graduates who could not find jobs, using it as an example of how bad the economy was.

On girl had majored in Art History. She wanted a job running an art museum but they economy was so bad that she was working as a waitress.

One girl had majored in French. She wanted a job working for a company that did a lot of business with France but the economy was so bad that she was working as a nanny.

One guy had majored in international relations and wanted a job as a U.S. Senator. The economy was so bad that no senatorial positions were open and he was working as a door to door salesman.

Not one of these people had taken anything in college that prepared them for any job they could expect to get. And then ABC asked the Secty of Labor, Robert Reich, if they should have taken some more useful courses. His replay was stunning: “No, it does not matter what you take in college because the company that hires you will train you to do what they want.” So college is a 4 year very expensive initiation ceremony, not a practical training period?

Jun 17, 2009 - 2:58 pm 51. Bonzo:

Happy Days are here again?

What’s with Obama dissing my girl, what has he got up front?

http://www.youtube.com/watch?v=FiIC5qcXeNU

(Who is pulling his strings?)

Jun 17, 2009 - 3:01 pm 52. Bonzo:

Is there a consensus on what might come next?

Inflation? Hyperinflation? Deflation? I see no POV that is convincing for any of the above. China is buying ’stuff’. My gut feeling is that they, the Chinese elites, must be stupid, for the simple reason that all central planning elites are stupid. China is buying ’stuff’.

Freedom, liberty, rule of law, property rights, individual initiative are the enemy of central planning.

Jun 17, 2009 - 3:42 pm 53. buddy larsen:

Robert Reich once went after the seafood industry, really hard –seems he had gone to a seafood restaurant and asked the maitre’d if they served shrimp, and the guy had answered, “Of course we do, sir, and we can even offer you a comfy booster seat”.

Jun 17, 2009 - 3:45 pm 54. Mongoose:

Buddy, was that The Chinese Dinner for three for two, or was that the other way around?

Jun 17, 2009 - 3:57 pm 55. Doug:

Flied Lice for Robert Reich.

Jun 17, 2009 - 4:02 pm 56. no mo uro:

Speaking as a lifetime private sector guy, I can say that yes, business will train you, but not from the ground up, and not over and over. If you don’t know the basics and can’t think mathematically I’m not interested in hiring you. I don’t care what your knowledge of pointillism or Moliere is, and I never will be.

Beyond having basic technological, math, and statistics skills and knowledge, when young people ask me what isthe most important skill are when looking to succeed in private business, I tell them be the kind of person who only needs to be told ONCE how to do something. It’s been my experience that people in majors like you mentioned, RWE, are almost always incapable of that, not really sure why.

If all college was for you was beer drinking, chasing skirt, and learning about fun but not really challenging subjects (ie., something not math and science), then congrats on the vacation, but don’t expect a prospective employer to be impressed. Getting a bunch of A’s and B’s by regurgitating what your Western Civilization and Christianity hating leftist humanities and/or social science professors fed you doesn’t denote intelligence of skill.

Jun 17, 2009 - 4:02 pm 57. Mongoose:

no mo uro

There was once a time when those humanities degrees where quite meaningful, and they also required reasonable mathematics course in order to graduate.

Repeated studies by the Pentagon have shown that linguists and musicians tend to make the best computer programmers for instance.

Of course, in those days they actually taught courses that focused on what is great (and difficult) in our civilization.

Jun 17, 2009 - 4:07 pm 58. buddy larsen:

It’s absolutely astounding what the enemies of liberty have accomplished with three words: greed, racism, exploitation. The pendulum will swing back (provided no too-efficient secret police get involved) and when it does, the pop cultural new answer to all three of those words will no longer be “I’m Sorry!” but “So What?”

mongoose/54; that Chinese feller, every time he used Yuan to pay for dinner in that LA bistro, he got charged a different amount for the same dish. He finally got a little miffed and asked the cashier why that was. Cashier answered “Currency fluctuations”. Chinese guy replied “Oh yeah? Well, sometime currency gonna fluc you Amelicans too!”

Jun 17, 2009 - 4:34 pm 59. heyyoukidsgetoffmylawn:

Did someone say 1930’s?

“Puttin’ on the Ritz”

http://www.youtube.com/watch?v=a5Hr6NTsbtg

Jun 17, 2009 - 6:01 pm 60. no mo uro:

Agreed, Mongoose, I’m just talking about the last 25 or so years.

Jun 17, 2009 - 6:23 pm 61. julietalphakilo:

Capitalism is a great model. Capitalism without a moral and/or ethical compass gets you what we’ve got today. If we can’t or don’t regulate our behavior as free people, there will always be someone happy to step in and regulate us for us.
Secular decay….

Jun 17, 2009 - 7:34 pm 62. Mongoose:

no mo uro: Gotcha.

Jun 18, 2009 - 7:51 am 63. veracious:

Mongoose,

USA recovery will be decided by its return to Adonai. The principles of the Kingdom of Heaven are far superior to the best we’ve incorporated into republics, democracies, monarchies, juantas etc. Monetary and government systems built of principles contrary to the Kindom, shall not stand! Not being founded in eternal principles, they can not.

Jun 18, 2009 - 11:22 am 64. veracious:

All,

I strongly believe USA is actually built on Free Enterprise which encompasses Capitalism. Small business is the backbone of our economy.

Jun 18, 2009 - 11:38 am 65. presbypoet:

Interesting to note difference between society that knows God is watching, versus a shame culture where it only is a problem if you get caught. Republicans tend to think God is watching. Democrats lean to the as long as you can get away with it it doesn’t matter. “It was wrong”, not I was wrong. Or if we can cover it up it’s OK. That is why you fire the IG.

This has significant results in things like tax paying, and following laws even when no one else is around. The Chicago way instead of doing what is right.

We live in interesting times.

Jun 19, 2009 - 1:09 pm

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