Great Depression

When the U.S. economy dipped into an inflationary recession in 1969, the Keynesian paradigm could not explain that phenomenon. Given the fact that both the George W. Bush and Barack Obama administrations (not to mention Congress) have followed the Keynesian playbook, the sorry results should be enough to discredit Keynesianism, this time for good. Either a theory explains and predicts phenomena or it does not, and it should be clear that Keynesian theory has failed, but, alas, it seems that the Keynesian paradigm is more influential than ever. Here is a paradigm that claims there cannot be an inflationary recession, yet all of the recessions that have wracked the U.S. economy in recent decades have been inflationary. Alas, the academic “market test” really does not embrace the actual success or failure of a theory.

As Mike "Hidden Secrets Of Money" Maloney has said many times before, the economic crisis of 2008 was only a speed bump on the way to the main event.  He believes that before the end of this decade there will be an economic crisis so historic that it will eclipse the crash of 29 and the subsequent great depression.  He also believes it is both unavoidable and inevitable, because it is merely the free market releasing the stored up energy from decades of economic manipulation. As Maolney notes, "the best investment that you will ever make in your lifetime is your own financial education," and the following provides a succinct reminder of the top reasons to buy gold and silver...

The philosophical roots of Janet Yellen's economics voodoo, it seems, are in many ways even more appalling than the Bernanke paradigm (which in turn is based on Bernanke's erroneous interpretation of what caused the Great Depression, which he obtained in essence from Milton Friedman). The following excerpt perfectly encapsulates her philosophy (which is thoroughly Keynesian and downright scary): Fed Vice Chairman Yellen laid out what she called the 'Yale macroeconomics paradigm' in a speech to a reunion of the economics department in April 1999. "Will capitalist economies operate at full employment in the absence of routine intervention? Certainly not," said Yellen, then chairman of President Bill Clinton's Council of Economic Advisers. "Do policy makers have the knowledge and ability to improve macroeconomic outcomes rather than make matters worse? Yes," although there is "uncertainty with which to contend." She couldn't be more wrong if she tried. We cannot even call someone like that an 'economist', because the above is in our opinion an example of utter economic illiteracy.

What is the common element between Liborgate, the Fed manipulating capital markets, China hoarding gold, and the recent ubiquotous NSA spying revelations? At one point, before they became fact, they were all "conspiracy theories" as were the Freemasons, the Illuminati, McCarthy's witch hunts, 9/11, and so many more. The same theories, which are now part of a Cambridge University study titled Conspiracy and Democracy,  which looks at the prevalence of conspiracy theories and what they tell us about trust in democratic societies, about the differences between cultures and societies, and why conspiracy theories (ostensibly before they become fact) appear at particular moments in history. But, at its core, whether conspiracy theories will, as the BBC summarizes, it, eventually destroy democracy.

September retail sales were a modest miss: that much was made clear earlier. However, what the market may have missed is that this "miss" was on the back of Department of Commerce's favorite fudge factor: seasonal adjustments. The 0.1% "decline" in retail sales was for the seasonally adjusted numbers of $426.3 billion in August and $425.9 billion in September. So what happens when one strips away the Arima-X-12 a la carte adjustment which is always and everywhere in the eye of the beholder? Well, this...

Economics isn't a science. It is a mistake to think it would be so. Science does not have schools. Only philosophies have schools. The difference between a science and a philosophy is the difference between seeking truth while honestly admitting you don't know it and declaring that truth is something you define. The distinction between science and philosophy with respect to economics is important because economists have an annoying ability to set policy - policy that affects the quality of your lives.

When economic troubles strike, policymakers are eager to do something (anything) to try to help the citizenry. But, as Prof. Lawrence H. White argues in this brief clip, government doesn't necessarily know how to relieve economic woes, and in fact, often wastes and mismanages resources. Individuals in the market know better what they need in their circumstances, as economist Friedrich Hayek argued during the Great Depression. Critically, he points out, relying on government to fix our economic woes instead of allowing individuals to make decisions for themselves means putting all of our eggs in one basket. Individual decisions in the market won't be mistake-free, but each individual mistake will be smaller and will correct more quickly. The unusually slow and painful recovery that we have seen in this recession surely points to problems with the "government should do something" view.

The collapse of American society is accelerating.  For the moment, much of our social decay is being masked by the tremendous level of affluence that we are experiencing in aggregate.  It has been reported that 4 out of every 5 adults in the United States "struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives", but in general Americans still enjoy a debt-fueled standard of living that is far beyond what most of the rest of the world enjoys.  When that debt-fueled standard of living permanently disappears, it is going to unleash chaos unlike anything that America has ever seen before. So how can we be so sure that this is going to happen?  After all, the United States didn't descend into complete and utter chaos during the Great Depression of the 1930s.  Wouldn't an economic depression unfold in a similar manner today? Unfortunately, a lot has changed since then.  A lot more Americans were self-sufficient back in those days, and the truth is that the character of our nation has been rotting and decaying for decades.

The future of the US economy with Chairman Yellen at the helm is grim indeed, which provides all the more reason to end our system of central economic planning by getting rid of the Federal Reserve entirely. Ripping off the bandage may hurt some in the short run, but in the long term everyone will be better off. Anyway, most of this pain will be borne by the politicians, big banks, and other special interests who profit from the current system. Ending this current system of crony capitalism and moving to sound money and free markets is the only way to return to economic prosperity and a vibrant middle class.

2013 Prize in Economic Sciences awarded to: Eugene F.Fama, Lars Peter Hansen & Robert Shiller #NobelPrize pic.twitter.com/hOkPHQqi7W

— Nobelprize_org (@Nobelprize_org) October 14, 2013

It’s a Myth that the U.S. Has Never Defaulted On Its Debt

Time is nearly up for Ben Bernanke, the chairman of the Federal Reserve who supposedly applied his scholarly knowledge of the Great Depression to steer the U.S. to safety after the financial crisis. In truth, Bernanke navigated a monetarist course that favored intensive intervention, following in the footsteps of many mainstream economists who grossly misunderstood the lessons of the Crash of 1929 and the ensuing malaise. That lesson is that when corrective crashes occur, intervention is far from the cure — it is the cause.

Another of history’s many lessons is that governments under pressure become thieves. And today’s governments are under a lot of pressure.

TedBits - Newsletter

Five years later, while some are congratulating themselves on avoiding another depression, no one in Europe or the United States can claim that prosperity has returned. The financial system may be more stable than it was five years ago, but that is a low bar – back then, it was teetering on the edge of a precipice. Those in government and the financial sector who congratulate themselves on banks’ return to profitability and mild – though hard-won – regulatory improvements should focus on what still needs to be done. Some are pleased that the economy may have bottomed out. But, in any meaningful sense, an economy in which most people’s incomes are below their pre-2008 levels is still in recession. An The glass is, at most, only one-quarter full; for most people, it is three-quarters empty.