Jeff Davis is running for Governor in Hawaii and has an interesting campaign strategy. Also, what motivates hackers is revealed and the findings might surprise you. Finally, Ferguson is discussed in a new light. Chris Campbell has more...
When the government pumps trillions of dollars into the economy, they’re not actually printing the money. It enters as digital entries in banks across the country. It’s made the system fast, responsive, and, unfortunately, vulnerable. Now our money is no longer something we hold in our hands, but something that exists on a very susceptible network.
The so-called recovery is only built on debt and printed cash declares our own Byron King. In the long term, the only option for the government to continue financing it's operations is to print too many dollars. Money printing has it's limits, however. It's Byron's opinion that at some point, perhaps very soon, the government will have to turn to more desperate measures. Namely, capital controls. In the following featured essay, Byron outlines 4 probably ways the government will take your cash and one play you can buy through your broker to prepare today. Read on...
Americans expatriate because they want to get out of the country. Corporations expatriate for similar reasons. Clem Chambers explains...
In a 2009 article, the Huffington Post went into considerable detail about the number of people with PhD degrees in economics employed by the Board of Governors of the Federal Reserve System. This is the government’s branch of the Federal Reserve. It is not one of the 12 regional Federal Reserve banks, all of which […]
The U.S. dollar is the dominant global reserve currency. All markets, including stocks, bonds, commodities, and foreign exchange are affected by the value of the dollar.The value of the dollar, in effect, its “price” is determined by interest rates. When the Federal Reserve manipulates interest rates, it is manipulating, and therefore distorting, every market in […]
The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance or the get-rich-quick adventurer. They will die poor.– Jesse Livermore, How to Trade in StocksThe trouble with capitalism’s guardians is that they have no […]
John Foust, a Democrat running for the 10th congressional seat in Northern Virginia, is — like Gov. Terry McAuliffe and other state Democrats — gung-ho to expand Medicaid. His wife’s position is, shall we say, a bit more nuanced.Foust has slammed his opponent, Republican Del. Barbara Comstock, for her opposition to expansion. He has spoken […]
The midterm election season is upon us, and it’s a tossup whether the Republicans will win the Senate, or if President Obama, seemingly oblivious as conflict flares up around the world, will, through his continuous campaigning, keep Harry Reid in his majority leader seat.The only thing we know for sure is that sociopaths will be […]
Alexander Hamilton was America’s first Secretary of Treasury under President George Washington. When he first entered office in 1789, America was an agricultural nation of just 4 million still broke from its financially costly victory over the British Empire in the Revolutionary War.The states had accumulated relatively massive debts to finance that war, which mostly […]
A great technology solves a problem that we didn’t know we had. It makes us aware of deprivations we didn’t know existed until we discover the new thing. Once discovered, we can’t go back.People in the 1950s, for example, never missed the smart phone. They were pleased to have a phone at all. But today, […]
Fifty years after the 1929 crash, a group of money managers and investment thinkers put together a collection of essays looking back at that experience. The result was a distillation of some pretty fine investment wisdom. Timely, I think, to review now.One of the contributors was Arthur Zeikel, then with Merrill Lynch. The title of […]
Although the mainstream media have turned its attention away from the wreckage of Obamacare, don’t think for a second that all is well.As the politicos in D.C. focus their attention on the midterm elections in November, now is a great time to study, prepare, and seek out the most affordable, accessible, and highest quality options […]
Turn on the tube and economic ignorance seems to be everywhere. There is constant shilling for more government. Business is demonized. Man is said to be trashing the environment. “Workers and women are oppressed” is the constant mantra.And members of the clueless media nod their heads in unison.Only John Stossel has provided the fresh air […]
In early July 1944, delegates from 44 countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. A three-week summit took place, at which a new system was agreed to regulate the international monetary and financial order after the Second World War.The U.S. was already the world’s commercial powerhouse, having eclipsed the British […]
In the minds of many people around the world, including in the United States, the term “capitalism” carries the idea of unfairness, exploitation, undeserved privilege and power, and immoral profit making. What is often difficult to get people to understand is that this misplaced conception of “capitalism” has nothing to do with real free markets […]
Some people are saying it is just what the doctor ordered. Others are saying that the cure is worse than the disease.The Affordable Care Act? Reengagement in Iraq? Tea Party bullying in the GOP?Not this time. Just as protracted in the corridors of Congress and the White House is the debate over the proposed reform […]
In 2012, money mandarins running the European Union chose stagnation over restructuring. Here’s a consequence of that choice: expectations for a self-sustaining economic recovery keep getting crushed.Two years ago, European Central Bank (ECB) chief Mario Draghi promised to do “whatever it takes” to hold the eurozone together. He bluffed nervous investors into believing in a […]
People jacked up about income inequality can find a new hobby. The 1% are victims of a doomsday machine, and the countdown is ticking. Machine, thy name is “family.”This came to mind as I was reading a preview of Columbia Professor Andrew Ang’s forthcoming, must-read book on Asset Management. Ang is that oxymoron, an exciting […]
It might sound like the latest new product from Apple, but IPAB is actually the newest major legal challenge to Obamacare.Recently, a three-judge panel in the 9th Circuit Court of Appeals in San Francisco heard arguments about the Independent Payment Advisory Board, or IPAB, a 15-member panel created by the Affordable Care Act and empowered […]
Americans have come to believe that the IRS and the income tax are inevitable parts of our lives. After all, most everyone alive today has lived his entire life under federal income taxation.It wasn’t always that way. For some 125 years, the American people lived without having any tax imposed upon their income.The obvious question […]
Here’s a fun fact: Although we all hate the U.S. dollar, as it continues to hemorrhage wealth, its foothold as the world’s reserve currency isn’t going to disappear overnight.A Russian gas deal with China won’t change that — as we’ll highlight below.But before we get to the nitty-gritty, let’s dive into a story that’s right […]
Franklin Delano Roosevelt famously used the term “forgotten man” in a 1932 speech to describe those at the bottom of the economic pyramid who, he felt, government should aid.But the originator of the phrase “forgotten man” had a whole different meaning in mind. He aimed to expose the seeming good intentions of government to reveal […]
The Keynesian disaster recovery plan has been to lower rates, force people to take more risk in search of yield, and entice others to borrow and spend and, magically, more jobs will be created. If people won’t buy stocks, central banks will.Back in 2011, Ben Bernanke, when asked if QE2 was driving up stock prices, […]
I want to share some insight and give you a front-row seat to America’s next big shale play.Let’s get to it…Over the past 10 years, the U.S. has turned the ship around, quite literally.We’ve gone from a country that was expecting to import massive amounts of oil and gas — to a country that’s sitting […]
Whatever your views on the role of government, one thing is clear: There will be no way to pay for it if the economy doesn’t grow. And I’m not talking by a measly percentage point or two. If we can’t find our way back to 5% annual economic growth or above soon, America’s accumulated federal […]
According to the Bureau of Labor Statistics, consumer prices are rising at a 2.1% annual rate. This suggests to us that the current stock market boom will die with a bang, rather than a whimper.Fed economists say they don’t think inflation rates are rising. They think the most recent reading is a fluke. But why […]
Two years ago, I was the soul of generosity. I had culled through my sizeable collection of CDs and found 30 discs that I was happy to give away. My social circle went nuts, praising me as the great giver. They were so happy to have such fabulous music for free.
This week, I tried the same thing, with an even more generous offering. No takers. I’m sitting here with a pile of CDs containing what was considered great two years ago, yet I can’t find a home for the discs today. There has been no physical change to the stuff. The music is as high-quality as ever.
What changed? The valuation and, therefore, the price. I once held treasure. Now it seems destined to be trash. The only thing that changed is the passage of time — and it so happens that the slice of time in question has seen the most-spectacular innovations in music reproduction ever.
Think about it. The same amount of work went into making the CDs (so much for the “labor theory of value”). The CDs have not depreciated in any physical sense. The music they contain is no less valuable now than it was then (it is mostly Baroque and before, anyway, so we aren’t talking last year’s Top 40). All that changed was the hands on the clock. Yet the value went from high to zero.
What does that tell us about economics of the price system? It tells us that prices are fundamentally a reflection of human values of the moment. They provide no insight into anything intrinsic to the good itself. They tell us nothing about what it took to make the good. They provide no reliable basis for forecasting.
Prices are a point of agreement in an instant of time, and nothing more. Yet no institution is as essential in conveying to us the signals and giving us the tools that enable us to manage our lives. The world never stops changing. In a free economy, prices change as a reflection of those changes in the world. We respond to the prices in more ways than we are often conscious of. They provide a means for all of us to interface with — and navigate the shifts and movements in — the reality that takes place outside our own minds.
I’ve known for some time that most of my CD collection would eventually be obsolete. People have been buying digital copies ever more. They have been plugging in their devices to micro speaker systems or using earbuds to listen to music. The old ritual of changing the shiny discs was starting to seem like a thing of the past, like starting your car with an engine crank.
My problem is that I waited too long to finally detach myself from the old technology. I waited until the price fell to less than zero. I took too long to adapt to new realities and act on that information I had acquired and knew in my heart. The reality moved faster than my brain could process data and act on it.
How well I remember the day when I bought my first CD. It must have been 1986 or so. I put it in my player and the sound came out and it played and played for a full hour. It was Bach, I think. I didn’t change it. Days and days went by, but it was all Bach all the time. My long-playing vinyl records sat in the corner untouched. After a week or so, I had come to terms with reality: I would never listen to those things again. It was not that they were bad; it was that I had found something more convenient.
Yet I couldn’t let go. The LPs just sat there. A year went by, and then I moved out of my apartment. It would have taken more room in my car than I had to move 200 vinyl records. I gritted my teeth and did something I never thought I would do. I hurled them all in the dumpster, armload by armload. It was painful. It seemed crazy. But it was the reality. I never looked back.
Yet here we are 26 years later and I’ve made the same mistake all over again.
Now, one reaction might be: Slow this world down so that I can take a breather! The problem with that solution is that it means slowing down the pace at which humanity is permitted to seek a better life through innovation and enterprise. The only reason why some technologies prevail over others is their merit in serving people what they desire.
We sometimes imagine that we are on a ride that we can’t control. The truth is that people are, in fact, controlling the pace of development. CDs outcompeted LPs for a reason. And digital music downloads are outcompeting CDs for a reason, too. If people did not like the new thing, it would have no traction and no future. But people demand ever better ways to achieve their ends, and the purpose of a free economy is to help people in the most-efficient (and least-wasteful) way.
The most-remarkable development in our times as regards music distribution is the subscription service. Let me illustrate. In the early days of the CD, I had one disc with music by Palestrina. It took me many months, or even up to a year, to discover that he wasn’t the only composer of Renaissance music. I had to check out books, spend hours in the CD shops, talk to friends, act on information overheard at parties and the like.
Eventually, I came to discover Victoria, Josquin, Tallis, Byrd, Ockeghem, Sweelinck, Morales, Guerrero and others. This process took me many years of searching and hunting. It was painful.
Today, you get a free account to Pandora or Spotify and make your own channel. One word is enough: Palestrina. What follows are all kinds of music that fit within that genre. You say what you like and don’t like and buy the full album or not, and the software does the magic of putting together a playlist for you based on your tastes. There are no search costs. The knowledge of others becomes your own knowledge in an instant.
And yes, I said that it is free. There is not soul alive who 10 years ago could have predicted that such a technology would exist, much less that the producers of it would be begging us to take it and use it for free, charging us later only if we want fewer commercials. This is genius. This is progress. This is civilization brought to us by the market economy and the entrepreneurs that give it a forward direction, all in ways that are completely unpredictable.
Even with all this seeming upheaval, we aren’t really throwing out the past. It still lives in our hearts, and increasingly, it is documented and digitized in the annals of history available at our fingertips. What we are doing is embracing ever better ways of living and overcoming the limits of scarcity. Society must move forward, and the market-price system is there to coordinate things and help us achieve our goals.
No government regulatory planning apparatus can substitute for the market’s approach to innovation. In fact, if government were in charge, we’d be lucky if technology had advanced beyond the presidential fireside chat. We certainly wouldn’t have the ability — each one of us — to reach the world right now with media blogs, YouTube, video phones, live streaming of anything to anyone and all the other wonders of the world brought to us by the free interaction of thinking, creating, cooperating human beings.