• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Guest Post: The Way Out Of Our Economic Mess

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Thu, 10/06/2011 - 22:13 | 1748295 Pool Shark
Pool Shark's picture




"Between a rock and a hard place"

Yep, that's us; we're the "Wile E. Coyote" economy...



Thu, 10/06/2011 - 22:16 | 1748323 living on the edge
living on the edge's picture

"Between a rock and a hard place"

A better analogy is picture your testicles between two rocks, and the rocks are forcefully coming together.

Thu, 10/06/2011 - 22:45 | 1748385 mfoste1
mfoste1's picture

trick question, there is no solution....let markets and economies regress back to means, start over. If not for us, for our children and their children.

Fri, 10/07/2011 - 04:08 | 1748864 Joshua Falken
Joshua Falken's picture

There is a solution - get fiecally nationalistic - Do an Iceland - have a national referendum as to whether you continue pay off interest to your foreign creditors on debt so huge it will never be paid back or default , declare bankruptcy and press reset

Fri, 10/07/2011 - 05:02 | 1748884 Michael
Michael's picture

The ominous tone of CNBC World this evening from guest after guest spelling it out in great detail, the complete and total economic collapse of world economies, I thought they were a televised version of Zero Hedge almost.

Perhaps they're just trying to cover their asses not to look so stupid up against the likes of the ZH crowd.

Fri, 10/07/2011 - 09:37 | 1749372 r101958
r101958's picture

Maybe I missed it but I don't think he mentions marking assets to market price.....instead of the current book fudging mark to fantasy that the TBTF's use. That alone would be a huge first step.

Fri, 10/07/2011 - 01:22 | 1748726 bid the soldier...
bid the soldiers shoot's picture

i'd rather picture your testicles in that situation. :o )

Thu, 10/06/2011 - 22:30 | 1748358 Dick Fitz
Dick Fitz's picture

Look at what Bob Wenzel at EconomicPolicyJournal.com is saying- he's the only "bull" out there right now, because he clearly sees the effect of the monetary inflation.

Have you wondered why the numbers have been "better than expected" in some areas by the Keynesian shills? Why the market seems to be defying gravity, despite the babdbadBAD news from EU, China, etc.? Why real estate is rising (nominally) in some regions?

The money the FED has been pumping for the last few years is finally making its way into the US (and EURO) markets, and although it will be a small (tiny) boom, the next few months of data will show a (marginal) recovery. The Wall St shills will use it as evidence that "our government/FED is working!" while the reality is that it is merely the result of new money entering the system. Look at the real estate/rental prices in SanFran, or the hiring data in NoCal. Look at the "mild" recovery in bigbiz numbers.

The Bernank has printed so much fucking money, and some of it is finally leaking into the "real world" and inflation is going to heat up HARD! The EUCB is printing hard now too. The Chinese CB has been doing it for a decade...and it's hitting them now.

The crash is coming. It's like a junkie that found a stash of Oxy in his mom's medicine cabinet, and has shared them with his friends. They've all put off the withdrawal for a few days, but once those last pills are snorted then the whole group is going to crash HARD.

The next few months, maybe even into the spring, are going to be sweeeeeeeeeeetttttttt for the .01% and their dupes in the stock market. The S&P might even bounce 30% or so, based on hopium.

But once it crashes, and one of their buddies (China, EU, Japan?) crashes, then it's all over for the rest.

Fri, 10/07/2011 - 06:58 | 1748947 ISEEIT
ISEEIT's picture

I follow EPJ and so am familiar with the money supply/boomlet position. I'm not really bought into it though. Seems to me that all depends on what is actually done with the excess $$ and what role inflation plays. With so much uncertainty and fear in the equation it just seems like quite the stretch to call any real bubble blowing. Time will tell though.

Fri, 10/07/2011 - 10:53 | 1749638 Iggy
Iggy's picture

The bubble is already blown--United States Bonds

Thu, 10/06/2011 - 23:18 | 1748482 prophet
prophet's picture

Things are getting so bad don't be surprised if they decide to close the banks on Monday.

Fri, 10/07/2011 - 03:44 | 1748797 Taku
Taku's picture

"Unlimited cash for banks"

Hmmm...who said this on Bloomberg?

I guess the more the financials get their ratings cut, the more free cash they get?

PMs are going to the moon, then.

Printing races are ready, set...

Speaking of ratings, below junk should be a 'totally crap' category (which most fall in to).

Fri, 10/07/2011 - 01:19 | 1748722 bid the soldier...
bid the soldiers shoot's picture

walkin' on air

Thu, 10/06/2011 - 22:13 | 1748303 Seasmoke
Seasmoke's picture

sure make Social Security further and further away, while they are required to pay thru higher taxes annd less service the public employees, who also receive their pensions and defined benefits at much earlier ages and most of it is PAID by the private sector......

Thu, 10/06/2011 - 22:12 | 1748306 X.inf.capt
X.inf.capt's picture

so, terry, basically you want to really institute austerity here in america...

good luck....

Thu, 10/06/2011 - 23:24 | 1748509 CrazyCooter
CrazyCooter's picture

Not to step out of line, sir, but did you not train/educate to send men into the core of human phobia? When any soldier under your command asked you point blank, "Will I live to see my little girl?" what did you say? There is only one response.

The simple truth is that there is going to be a price paid. Not everyone is going to go home. With training, and a little luck, we might get to see the other side, but I don't think everyone is going home the same. Stop expecting anything other than the hell that is coming.

I mean these words in terms of earning power, standard of living, and consumption.

I hate to sound like an ass, but I read a lot of history these days. I don't think I know what is coming, but I have tried to understand it. I don't think I am prepared, but I am steadily adjusting to compensate (food/lifestyle/spending/etc). I may not "go home" and I may not "be the same", but I can assure you, sir, I will give them fucking hell before I get packed in a bag.

So spare me the austerity cry baby shit.



Thu, 10/06/2011 - 23:43 | 1748545 dlmaniac
dlmaniac's picture

Austerity = Darwinism at work. If you overspend in the past you have to underspend from now on to balance it out. Austerity therefore will be in full swing like it or not.

Fri, 10/07/2011 - 00:06 | 1748569 X.inf.capt
X.inf.capt's picture

yes, good cooter, i did train men for war, and i was very good at it,i had very good teachers, who learned in thecrucible of vietnam....

i served the masters of commerce....till i knew better...

my observation had nothing to do with my personal feelings...just with what i see in the streets of the cities...it hasnt even gotten bad yet, austerity...and there already protesting...

greece is a good example of austerity, only, the greeks do not have nearly the amount of weapons americans have...yeah, something bad comes this way...

no crying here cooter, just observations...

i try not to make battles here personal, for this just so damn educational, the hedge. as a wise ZH'er told once, this is not face book....

p.s. sedley butler was right....

thank you, more food for thought...

Fri, 10/07/2011 - 00:33 | 1748634 CrazyCooter
CrazyCooter's picture

Ah, I got'cha sir. My gift and I suppose my curse, is I don't read things like regular folks. I tend to miss some of the obvious and tend to catch some of the not so obvious. Pays my rent real good, so I can't complain. Doesn't make me lots of friends though.

I kind of feel that folks know its coming, but the most of the comfortable have their head up their ass. The middle class and the not-really upper class are in for a rude awakening me thinks. They don't have the mental plumbing to handle what is coming down the pipe. I shudder to think what urban settings will be like in the not-so-distant future. I bailed as fast as I could; moved to Alaska in my car with nothing else! Best damn thing I ever did my whole life.

I think rural America is going to hang in there just fine. I feel sorry for domestic forces (criminal or otherwise) that show up in armed counties trying to project influence. Small towns are going to be a real rough ride for any outsiders.

I really feel this is what "fast and furious" was all about. The big miscalculation though is that fire power is less than experience/training. Urban will be hellish if things go bad, but rural areas are going to be the opposite. That said, I wouldn't live near a border state for anything.

Not to be pedantic, but its Smedley Butler. Buy his book and read it. Short, sweet, and spot on. We are a modern day colonial power, old story.

Toss this in your reading pile. One of the best PDFs I got off ZH:


I found this really good insight (even if almost 100 years old) regarding how wall street works:


NOTE: Save both PDFs now, they don't last long on the web.

Lastly, head over to KWN and pull down all the Jim Rickards interviews (~40 something of them in total). One of the best free monetary policy educations you can get for free. JR calls it like it is, has great insights, and is a hell of a communicator. I got my head screwed on straight and I learn stuff from him on a regular basis.

Lastly, I recommend you high tail your ass to Alaska. Biggest state in the union. Smallest population. Heaven if you like the outdoors. Stick to the SouthEast, the weather is nice. I carry on about it here at my blog.


**carries on**




Fri, 10/07/2011 - 00:58 | 1748693 X.inf.capt
X.inf.capt's picture

cooter, i would love to go alaska, but my obligation here, plus other factors, will keep me here in the city. yeah, i know, not the best choice....

i am already livin' the SHTF senario, and have contigencies in place, believe it or not, im probably going to do alright...

just food for thought, cooter, NORTHCOM is fully up and running, even has combat units under its operational control, namely the  1st brigade,3rd infantry division. i would advise you to look up the above units, espeasally equipment. field artillery, tanks, bradleys...all to help for civil unrest in america. this is going to be interesting....

Fri, 10/07/2011 - 01:29 | 1748736 CrazyCooter
CrazyCooter's picture

I made a sort-of mistake when I signed up army back in '92. I should have gone O instead of E. My brother retired O from the USMC and my sister went to Kings Point. I understand now that autism runs in my family. I was an odd duck growing up and I didn't have a clue about how anything worked. I joined based on an opinon of a teacher I had and liked (in addition to my passion for constituional freedoms/rights). 

In hind sight I should have done full time instead of reserve. I honestly believe if I had pulled the right gig in the Navy or the AF, I would have been career and of far greater value to our nation. I just fucked up picking my MOS and commitment. Young and stupid, not much more to it.

Civvy, I ended up a software engineer and I am really damn good at what I do. I can't handle stupid. I go off on bosses/clients/whatever when they get full-retard. I found my groove. I understand now how I fit in and what I can offer/do, just getting older I guess.

Crazy as it sounds, I looked at re-upping here in AK at close to 40 years old. I just don't have the opportunities I need to make a difference. I got sucked in via a Navy InfoWarfare officer gig, but it turns out its based in Anchorage (1k miles away). There is an ANG gig in town, but its MP type stuff. I am too old to fold deck chairs. If I had a good O spot up here ANG that let me offer what I got to offer, I would take it in a heart beat. But I am closing in on 40 and I only got to offer what I got to offer.

Just be safe brother. It is all about neighbors; take care of each other. You know the drill better than I.

Drop me a line at my moniker at gee mail dot com some time if you make it up this way. I am in state next Feb. I hope to start hiking to fish once it doesn't cost me an arm and a leg. My Zanotti is on back order for many months, so hunting is on hold for a bit til I can work things out with my old man as far as getting my guns up here.



Fri, 10/07/2011 - 06:34 | 1748935 Surly Bear
Surly Bear's picture

Well said, sir. 

Fri, 10/07/2011 - 02:03 | 1748772 TheMerryPrankster
TheMerryPrankster's picture

Appreciate the links. Alaska is one possibility. I like the idea of being dispersed all over the u.s.

Redundant systems, if everybody is in one place - that place just became a target. Spread out and survive.


Fri, 10/07/2011 - 01:22 | 1748727 AustriAnnie
AustriAnnie's picture

"I may not "go home" and I may not "be the same", but I can assure you, sir, I will give them fucking hell before I get packed in a bag."

Well spoken, and I believe said with sincerity.  Sounds like you have the right idea. I too fear what will come, especially since I am young and have a hard time picturing the lost decades that may be ahead of me.  I know my generation will have to sort out this mess and pay dearly for the losses.  At the same time, I am glad I am young, as I have little to lose.  

" I don't think I know what is coming, but I have tried to understand it. I don't think I am prepared, but I am steadily adjusting to compensate (food/lifestyle/spending/etc). "

I don't think anyone ever really feels prepared.  But just knowing what is ahead is priceless, IMO.  I too am realizing how little I need, and that has been a blessing.  I have re-discovered the joy of books and spent two hours today watching a rainstorm move across the horizon.  Its the little things.  Not all of the "austerity" has to be a bad thing.

Fri, 10/07/2011 - 08:20 | 1749058 kinganuthin
kinganuthin's picture

"At the same time, I am glad I am young, as I have little to lose"
Allow me to correct this statment: 
"I am glad I am young, as I have no idea what and how much I could lose."

Stay safe, stay strong.

Thu, 10/06/2011 - 22:13 | 1748308 Dr. Richard Head
Dr. Richard Head's picture

Make tax rules less stupid by not taking one's property in the first place.

Thu, 10/06/2011 - 22:13 | 1748310 DoChenRollingBearing
DoChenRollingBearing's picture

Even simpler:

1)  Liberty

2)  Transparency

3)  .gov keeps hands off!  No bailouts, no welfare, no intrusion.

Then the USA comes roaring back!

Thu, 10/06/2011 - 22:17 | 1748325 Pool Shark
Pool Shark's picture



You forgot:

4) Shoot unemployed, starving, rioting looters...


Thu, 10/06/2011 - 22:52 | 1748407 johnconnor
johnconnor's picture

5) Kill sick, obese and anyone over 70... that will surely save a lot in medicare and social security

Fri, 10/07/2011 - 02:31 | 1748792 the tower
the tower's picture

And don't forget about the rest of us - not shot because we are too old, sick or fat - living our lives in cut-throat competition (with each other and with asia) just so we can consume our way out of the crisis, and to keep capitalism going forever!!!

Fri, 10/07/2011 - 11:06 | 1749691 tsx500
tsx500's picture

...and speaking of liberty and .gov hands off :        RON PAUL 2012 !

Thu, 10/06/2011 - 22:29 | 1748319 DormRoom
DormRoom's picture

most ppl criticize the fiscal & monetary stimulus of 08-09, without addressing the mechanism used for the distribution of capital.   Namely wallstreet, and too big to fail banks.


The big banks, a hydra of retail & investment banking, are notorious for obscuring, or overlooking risk for short term quick profits from financial engineering, instead of investing in low risk, productive enterprises.  So capital has been misalllocated to the non real, speculative parts of the economy, while the real economy is starving for fresh capital.  This can in part explain the failure of the stimulus programs to create jobs, and/or the same level of output, prior to the financial collapse.


So any more stimulus using a broken mechanism, like the current financial structures, processes, and incentive schemes, in the banking system, will lead to further misallocation. And once again tax payers will need to bail out the banks.


Keep in mind that FDR nationalized the banks, cleansing them of their financial inefficiencies, and myopia for quick risky returns, before applying his stimulus programs.  So the mechanism woould once again distribute capital to the productive parts of US economy.


Thu, 10/06/2011 - 22:34 | 1748365 bigmikeO
bigmikeO's picture

That's right, dipshit - take the power from the bankers and give it to the government. Problem fixed. You're a fucking idiot.

Thu, 10/06/2011 - 22:49 | 1748373 DormRoom
DormRoom's picture

oh yeah, and the better solution is to let the investment side of banks continue to pour capital into speculative plays so they can cash out from big bonuses and stock options, instead of having the retail side loan out capital to small, productive businesses, but having lower ROI.


yeah that's a brilliant  idea.   Ignore the productive part of the economy.  How are you going to get a higher national income, if the US becomes less productive over time?  Higher national income correlates with higher wages for the median worker.


your solution is to watch the world burn, while licking yoru bar of gold, like it was a petitle 100lb street hooker.


I still believe in government, becuase I've studied history, and know governments can function to life everyone up.


governments can function, if everyone wasn't so polarized by their ideologies, thereby limiting policy options.

Thu, 10/06/2011 - 22:56 | 1748410 akak
akak's picture

Oh, of course governments can function --- and it's what they do when they function that is precisely the problem.

Government is nothing but a disease masquerading as its own cure.

Throw off your self-imposed mental shackles and see the abomination of government (i.e., institutionalized coercion) for what it really is: slavery to sociopaths.

Thu, 10/06/2011 - 22:58 | 1748423 DormRoom
DormRoom's picture

you do know what happens when you lose the leviathon, that is government, or nation states, don't you?


societies tend to degenerate into tribalism.  

Thu, 10/06/2011 - 23:07 | 1748455 akak
akak's picture

Or they "degenerate" into liberty, as the early USA did --- for a while.  Too short a while.

Thu, 10/06/2011 - 23:21 | 1748486 DormRoom
DormRoom's picture

oh--early US liberty--the great libertarian period when women were considered property, yall had slaves, and murderously stealing land from the Natives, and Mexican, was the norm  That US liberty?  The liberty where, if you were male and white, it made right. 


yes.. let's bring that version of liberty back.

Thu, 10/06/2011 - 23:24 | 1748501 akak
akak's picture

I see that your historical ignorance and crippled logic is on par with your intellectual bankruptcy.

It is nothing but a strawman argument, and a logical absurdity, to suggest that because one desires to live in society significantly more free than that of today's, as the early USA certainly was, that one therefore desires to turn back the clock and recreate that exact society down to the last jot and tittle. We need to move forward to liberty --- not backward to the past, however freer it may have been.

Please go back to Logic 101.

Thu, 10/06/2011 - 23:35 | 1748521 DormRoom
DormRoom's picture

errr.. did you not read the part about woman being treated as property and slavery?  Those conditions existed in the early US.  If you were male, and white you had freedoms.  Everyone else did not.  And you didn't have a Christian name, oh lord help you.


So if you're going to appeal to the idllyic early US, I wanted to remind you of the material conditions of other parts of US society, then.


ok let's move forward.. let me ask you this hypothetical moral question:


let's assume for a minute advance human cloning is possible.  This is the future afterall.  Should you be able to human clone yourself, and use (its) body parts to regenerate your own, due to old age, or the accidents of life, but killing, or maiming it, in the process?

subtext: if a human organism. through cloning, becomes property, can you use it  for your own purpose?  Or is liberty innate to the human condition, so that would be taboo, or 'illegal'.  It seems to me that there will be an eventual conflict between property, and liberty, once advance human cloning comes to be.

Thu, 10/06/2011 - 23:39 | 1748531 akak
akak's picture

I refuse to allow you to divert the topic of discussion.

I said that the early USA was demonstrably, even vastly, freer than our society today --- and if you were honest, or had an inkling of a clue about American history, you would have to agree.  Notice that I did NOT say that it was perfect, or that some members of that society were treated abominably, because they were.  But for the overwhelming majority of citizens, it was almost an anarchy (i.e., without government, i.e., without institutionalized coercion) than the near-total police state into which we are degenerating today.

BTW, your human cloning question is irrelevant to the discussion --- whether produced by natural birth or cloning, a human is a human is a human, so such a person would have every right that any other human has.

Thu, 10/06/2011 - 23:50 | 1748549 DormRoom
DormRoom's picture

yes, but in that hypothetical, and likely future world, the human(oid) is property, and as a libertarian, shouldn't you support property rights? Thus the owner can do what s(he) pleases.


And what of life or death events?  Like if the owner need the clone's heart to live, or else the owner dies (yes this question is loaded).


So in the case of clone v. owner, you would side with the clone?


There's no right or wrong answer.  I was interested in your logic.  And I do forsee a time in the near future when  a possible contradiction between liberty, and property arises, and will need to be addressed.

Thu, 10/06/2011 - 23:51 | 1748559 akak
akak's picture

The "contradiction" is entirely within your own mind --- I fail to see it whatsoever.

A clone would no more be "property" than any other baby would be; the method of conception is irrelevant to the status of the individual as a human. 

Fri, 10/07/2011 - 00:08 | 1748578 CrazyCooter
CrazyCooter's picture

Not to be the creepy, pedantic, autistic ZH freak-a-zoid, but I found your profile/history quite interesting. I expected a troll profile, but you are around (officially) about as long as I am.

So, I felt I needed to look closer, maybe you are real, and maybe I am missing your point. I am here to learn and I really like a good contrary opinion. So, I ripped through your last 20 posts or so, via your profile, and I must say its ... curious. Very curious.

My history is very consistent, for those so inclined. However, you seem to waffle from semi-cognizant posts to out-there-bat-shit-crazy, depending on the thread. There were a few posts were your position was reduced to "..." and nothing more.

I think you have more than one face. Maybe, a worker bee face to earn some street cred, then you suck up an 8 ball and go nutso like tonight.

What say ye?



Fri, 10/07/2011 - 00:45 | 1748668 RockyRacoon
RockyRacoon's picture

We always supposed that Johnny Bravo (MasterBates), the notorious gold-hating troll, was more than one person.  Posts were too close together and overlapping for one person to have actually done the writing and posting.   Who can say?

Fri, 10/07/2011 - 02:02 | 1748766 bid the soldier...
bid the soldiers shoot's picture

dr, have you seen the film 'Never Let Me Go'? it totally plays around with this subject

it's kinda great ;- )

Fri, 10/07/2011 - 00:23 | 1748613 Aeonios
Aeonios's picture

That's a stupid question, since organs can be cloned on organ-shaped biodegradable scaffolds. You don't need to clone a whole human just to produce a kidney; that would be unbelievably expensive, pointless, and wasteful.

Why is it that in any discussion of liberty, someone chimes in and compares freedom to converting humans into expendable meat sacks?

Freedom = slavery, right?

Fri, 10/07/2011 - 03:06 | 1748823 Caggge
Caggge's picture

Keep the wealth and power amongst the many. The middle class. I think this is what the forefathers intended. TBTF will fail every time. Humans can't handle that type of responsibility. Just look at how our elections and political system operates. We elect our representatives to represent us th majority, yet they represent the few instead of the many. Jefferson told us not to make this mistake. Rothchild said...if you make this mistake...I can defeat any standing army. What will be coming is what we deserve.

Fri, 10/07/2011 - 09:34 | 1749359 Calmyourself
Calmyourself's picture

Small thinkers like Dem's who need to be told what to do descend into tribalism and howling mobs.  People like me build communities, alliances and systems to take care of people like you.  Once taken care of you slither your way into power because we are too damn busy to care then real .gov takes hold and the cycle begins anew..

Fri, 10/07/2011 - 01:50 | 1748759 bid the soldier...
bid the soldiers shoot's picture

unfortunately, dr, governments, like 100 lb petite street hookers, get ugly, worn out and irreparable.

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