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Showing posts from February, 2012

“Just War” and Debt Becomes Just War and Debt

A just war, in Murray Rothbard’s view, “exists when a people tries to ward off the threat of coercive domination by another people, or to overthrow an already-existing domination.”  Like all wars, a just war is laced with dangers beyond the inferno of the battles, especially if war funding relies to a significant degree on the printing press.  The American Revolution is a case in point. 

On June 22, 1775 the colonial delegates assembled in Philadelphia, under the inspiration of Gouverneur Morris [1], decided to print $2 million in “bills of credit” called Continentals.  The plan was to begin redeeming them in 1779, not with hard coin, but by levying taxes in the Continentals themselves, which would then be retired.  So appealing was the idea of printing money that by 1779 a total of $227 million had been issued.  The bills were everywhere, and everywhere despised.  In a letter to John Jay, president of the Continental Congress, George Washington complained that “a wagon load of money…

Who's the real winner?

The Washington Post ran an article that all but concedes the GOP nomination to Mitt following his big win in Nevada, his second consecutive victory. 
the former Massachusetts governor’s win here, coupled with his enormous Florida victory just days ago, proved Republicans have begun to coalesce around his candidacy in earnest. He swept nearly every voting group in Nevada including those that have been slow to come aboard, such as tea party activists and voters who describe themselves as extremely conservative.But who is really winning here, and who is losing?

Those who are “extremely conservative” apparently find nothing objectionable to the existence of the IRS or the Federal Reserve System, or to the Department of Education that grinds out an increasingly groupthink, uncompetitive population of Americans.  But, you say, conservative Republicans have been trying to get rid of the DoED since Carter created it, except for the neoconservative Bush II who expanded it with No Child Left Beh…

The Heist Known as Fed Accommodation

Fed Chairmen often speak of "accommodation" as if it's the magic needed to solve economic problems.  But what happens when the Fed “accommodates” us by increasing the stock of money?

First, it reduces the value of the dollar.  More dollars means each one buys less, putting upward pressure on prices.  Technology and improvements in production tend to push prices downward, but because of inflation fewer people can afford admission to the market’s bounty.

As a rough idea of how far the dollar has plummeted, $5,000 in 1913 had greater buying power than $110,000 in 2011. [BLS inflation calculator]

Second, a depreciating dollar discourages savings.  Why put money away if it’s going to lose value?  Instead, millions of investment neophytes put their funds in the stock market in an attempt to protect themselves against Fed printers.  Has this been a successful hedge?

During the biggest bull market in history – 1984 to 2001 – the S&P rose 14.5 percent a year.  But frequent tra…