Ask a D.C. insider what’s the best way to solve the debt crisis. Nine times out of ten, they’ll recommend taking on more debt. That’s how things operate in the Potomac swamp. Up is down, right is left, digging yourself into more debt is the best way to get out of it. But it wasn’t always like this. In fact, there used to be common sense when it came to the economy. So where did it all go wrong?
Politicians talk about the uninsured. Special interests argue on behalf of those with pre-existing conditions. But why is no one wondering how doctors are affected by the new law? They’re the ones on the frontlines dealing directly with new patients, as well as the red tape that makes bureaucracies go round.
Politicians proclaim the benefits of small business while on the campaign trail. But when they meet in the seedy halls of Congress, they have no problem doing whatever they can to stifle, regulate, and subdue their progress. Instead of siding with entrepreneurs, these politicians often side with political allies and cronies that helped put them into office.
Just because you’re retired doesn’t mean you have to stop working. Especially now that you have all the time in the world to do what you really want. Entrepreneurs don’t only come out of Silicon Valley. They come from all walks of life, from all different ages. If you’re retired and want to stay active while you relax, then find out the steps you need to take in order to start, manage, and grow your next small business.
Austrian economics does more than tell you what happens when the government disturbs market forces. In the hands of knowledgeable investors and entrepreneurs, it can tell you exactly what to expect from the market. Market behavior depends on how people behave. And how people behave is central to the Austrian perspective.
The U.S. dollar has been the world's reserve currency for almost a century, and already there are signs it may be in decline. But that doesn't mean it's not still valuable. On the contrary... As Chris Mayer explains, there are many reasons the U.S. dollar will remain relevant on the world stage for years to come. Read on...
World War II might have dragged the country out of the Great Depression, but it did so at a great price. Central planning took center stage, and politicans and bureaucrats suddenly knew what was best for America, the economy, and your life. On top of that, they replaced the free market with a new economic system… Creditism.
If you’re good at something should you be penalized so others have a chance at success? Should award winning actors and actresses be barred from future Oscar ceremonies to give other men and women the chance to succeed? Success should always be rewarded and encouraged. But what happens when you have a government that wants to even the playing field and take away the spoils of success. Gregory Bresiger finds out...
Practical people often pooh-pooh fiction reading as a time wasting dalliance, dominated by a Marxist coloring of the world. However, fiction readers were given a scientific reason recently for spending hours absorbing fanciful figments of someone’s imagination.
Argentina is suffering the ravages of government debasement of the currency -- i.e., inflation, the process by which government pays for its ever-increasing debts and bills by simply printing more paper currency. The expanded money supply results in a lower value of everyone’s money, which is reflected in the rising prices of the things that money buys.
When government expansion is allowed to continue unabated or when it casts a heavy regulatory shadow on America’s entrepreneurial spirit, the freedoms that we’ve come to know, and perhaps take for granted, slowly begin to slip away.
Its acceptance is as widespread as its justification is important, for it provides the rationale for the Federal Reserve’s unprecedented monetary expansion since 2008. While critics may dispute the wealth effect’s magnitude, few have challenged its conceptual soundness. Such is the purpose of this article. The wealth effect is but a mantra without merit.
Baron Rothschild, the famous French financier, was once heard to say that he knew of only two men who really understood money -- an obscure clerk in the Bank of France and one of the directors of the Bank of England. “Unfortunately,” he added, “they disagree.”
The new reality of Obamacare’s tax credits has left finance reporters to pen articles warning readers to “take care” when considering a tax credit and providing strategies for how best to “protect yourself.” So what do finance reporters know that the White House doesn’t?
Nihilo ex nihilo fit. Out of nothing, nothing comes. First put forward by ancient Greek philosopher Parmenides in the fifth century B.C., Thomas Aquinas and St. Augustine later used this axiom to prove that the universe needed a “first mover” to get things going. Even if the whole thing began with some kind of “Big Bang” moment, it still needed a banger to bang it. Who? God, of course.
Economic theories don’t lend themselves to laboratory testing, so the work of a national appraisal firm is especially enlightening. A new study lends support to the Austrian business cycle theory, which says that the less government is involved, the faster a market will recover.
What positive steps can we take? The energy that is now expended by well intentioned, freedom-seeking individuals on the destructive course of politics can be turned into powerful steps that will have a positive effect on the future. All are moral, right and just. None require aggressing. Consider the following...
The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Politicians and bureaucrats are notorious for manufacturing euphemisms -- clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase “revenue enhancement” entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say “tax hike.”
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The east coast and parts of the southern U.S. were to varying degrees paralyzed by blizzards a few weeks ago. The snow as expected rendered the roads treacherous, and in anticipation of slick streets, shoppers flocked to the grocery stores in advance.The rush into grocery stores, and its aftermath, offers worthwhile lessons in economics.First up, […]
The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.But our systems of state charity — aka welfare — have too frequently had the opposite effect: They have actually created dependency. It is time to rethink the way we help people.I’m going to […]
Last year was quite the year for Bitcoin. We’ve seen exponential growth in Bitcoin’s exchange rate and extensive coverage in the media. Another phenomenon we have witnessed is the proliferation of alternative cryptocurrencies, five of which we’ve provided below.What all of these cryptocurrencies have in common is that they rely on a decentralized network to […]
President Obama crowed in his State of the Union speech about the economy, even mentioning “a rebounding housing market.” Maybe he was referring to friends in high places, like the seller of Penthouse One in New York, which just closed for $50.9 million, all cash. Millions of mere-mortal homeowners likely wanted to throw something at […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the HealthCare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor supply issues. Given the mounting difficulties with and growing concerns about the […]
Our “Crash Alert” flag warns of a crash in U.S. stocks. Readers are advised to proceed with caution.
But since the start of September, the news for stocks has not been bad. If you want to buy stocks, the financial press and Wall Street can give you plenty of reasons to do so.
There is hope, they will tell you, for the Empire of Debt… and its capital structure.
Yes — reporters, analysts and commentators are back at work. They’re finding problems. Risks. Worries. And reasons to be bullish too.
Fracking, for example, will add $1,200 to the average U.S. household income.
“Surging oil and natural gas production brought on by hydraulic fracturing is lifting the U.S. economy by lowering energy costs for consumers and manufacturers, according an industry-funded report.
“In 2012, the energy boom supported 2.1 million jobs, added almost $75 billion in federal and state revenues, contributed $283 billion to the gross domestic product and lifted household income by more than $1,200, according to the report released today from IHS CERA.”
Maybe Bloomberg is right. Maybe fracking will give the American Empire of Debt a new lease on life… much like how Imperial Rome limped on 200 years after the Crisis of the Third Century.
Fracking will reduce the trade deficit, goes the logic… turn the U.S. into an even greater manufacturer… and beef up household incomes.
But we wouldn’t rush out to spend that money, if we were you…
It would be nice if the U.S. were entering a new golden age… like the time between the end of World War II and the end of the 20th century. But that brought the seeds of its own destruction, remember.
The first part of that boom was genuine — with rising wages and improving standards of living. The second part — in the 1980s and 1990s — was largely fraudulent, funded almost entirely with borrowed money.
People spent more… they lived better… but they went further into debt. Now they are faced with years of debt reduction and lower living standards.
The Age of Granite Countertops
So far, the 21st century has been no golden age either. It is more like an Age of Granite Countertops. It is an age where appearances count for more than reality.
First, most Americans who are improving their standards of living are doing so by spending money they don’t have on things they don’t need. They buy bigger houses and fancier cars.
Second, when the credit bubble pops the feds try to engineer a “recovery” by unleashing even more cheap credit.
The things that really matter — savings, investment, peace and prosperity — haven’t happened.
The things that have happened have been big disasters — pointless wars and jackass economic policies that encouraged spending and zombieism.
One of those policies is in the news again: student loans. It is another corrupt government program bearing another bitter fruit. From Reuters on what we don’t know about the $1.2 trillion student loan problem:
“$1.2 trillion — the estimated amount in outstanding student debt.
“$260 billion — what that amount was in 2004.
“37 million — Americans with student loan debt outstanding, according to estimates from the New York Fed.
“$28,000 — The typical 2012 college graduate’s debt load upon Graduation Day, according to Hamilton Place Strategies.
“$9,000 — That debt load in 1993.
“$810 billion and $670 billion – The total outstanding auto and credit card debt held by Americans, respectively, putting student debt into a clear lead.
“The default rates:
“13.4% — the national default rate for borrowers whose loans entered repayment from fall 2009 to fall 2010. (This is the first year for which the government has released three-year default data.)
“22.7% — defaults in the first three years for graduates from for-profit colleges. ‘For-profit institutions had the highest average three-year default rates at 22.7%, with public institutions following at 11% and private non-profit institutions at 7.5%,’ according to the Department of Education.
“Nearly 47% of all defaults were from for-profit colleges, the Institute for College Access & Success said, even though those institutions have just a 13% share of college enrollment.
“7 million — Number of student loan borrowers in default, out of an estimated 37 million total. That includes public and private loans, according to the CFPB.”
Everyone Wants to Be an Insider
Student loans are only a small part of a big tableau. But everywhere you look the scene is the same. The insiders are taking more and more wealth from the outsiders.
Everyone wants to be an insider. And in a democracy especially, over time, more and more people find ways to game the system and join the insiders.
Finally, everyone seems to have an angle.
And soon civilization is on the road to decline and ruin. This happens when there are more parasites than producers… and more voters with their hands in the cookie jar than there are people making cookies!
Thanks to Richard Russell at Dow Theory Letters, we can pass along this picture of a zombified America. From The Week:
“In America, 7 out of 10 people are on the dole, said Michael Tanner. That’s the percentage of people who receive more in government benefits than they pay in taxes, according to a new Tax Foundation study.
“Some of these beneficiaries of Uncle Sam’s largesse are the poor; another new study, by the Cato Foundation, found that families collecting various welfare benefits, including food stamps, ‘temporary’ cash assistance, and Medicaid, could bring in the equivalent of $35,000 a year — more than someone would earn in a $20-an-hour job.
“But it’s not just the poor who feed at the trough of our vast welfare state. Most seniors get far more from Social Security and Medicare than they contribute in payroll taxes.
“Giant corporations get $100 billion in direct payments and subsidies from the government, in the form of farm and ‘green’ energy subsidies, and Export-Import bank loan guarantees. The military squanders billions on weapons systems it doesn’t need, to fund jobs in key lawmakers’ districts.”
Yes, dear reader. A little democracy — restrained, say, by a Bill of Rights and a Constitution — may be a good thing. But sooner or later, the zombies take over.
Then it is best understood by the old definition. Democracy: a political system in which two wolves and one sheep vote on what to have for dinner.
Hark… is that the dinner bell we hear?
– Bill Bonner
Article originally appeared here.