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(PRICE) INFLATION AT 19-YEAR HIGH

By Pete Moore On October 18th, 2011 at 1:32 pm

Feeling poor enough yet?

The Office for National Statistics has announced that (price) inflation hit 5.2 per cent in September. Demonstrating true economic misunderstanding, The Telegraph reports: “Inflation jumped to a 19-year high of 5.2pc in September driven by higher energy prices, underlining the squeeze on living standards and landing the Government with a bumper bill for increased state benefits.”

Ladies and gentleman, this is Economic Commissar Mervyn King’s fix, and it’s in. He’s been warning of (price) deflation for three years, as if falling prices are a bad thing for most of us, while the Austrians warned against revving up prices by printing money. Well price inflation continues to intensify and it’s only going to get worse, meaning we are becoming poorer more quickly.

The Telegraph fails to see that if higher energy prices alone were pushing price inflation higher then prices of other goods and services must fall as we direct more of our income to energy bills. Since prices are rising across the board we can say that King’s attempts to inflate prices are a rip-roaring success.

Says Bob Wenzel: “Only an understanding of money flows and its impact on the economy, something only understood by Austrian economists, can explain what is going on now. Note to Keynesians: The price inflation is going to get much worse”

The forecast is for “experts” to remain surprised.

TOM WOODS ON ‘OCCUPY WALL STREET’

By Pete Moore On October 11th, 2011 at 4:39 pm

OWC + FEDSTERS + FUTILITY OF POLITICS + FUTILITY OF REGULATION + CRONY CAPITALISM

This is great stuff.

Tom Woods is interviewed on Freedomain Radio in a session which freewheels around the OWC crowd and how they misdirect their protests. Woods is a historian, economist, senior fellow of the Ludwig von Mises Institute and the author of what is still the clearest and most credible explanation for our economic catastrophe. I love these kind of discussions which enlighten and entertain. It’s packed full of great analogies and killer lines which I’ll shamelessly use. Put the kettle on and do likewise.

(I’m not sure what that sci-fi picture’s about; there’s just the discussion when you click to play)

The state would have strangled the internet at birth if it knew where it would lead, of that I have no doubt. As states take control and steadily regulate what you can access there’ll be a day when this kind of thing will be restricted – for your own good of course.

A FALSE CHOICE…

By David Vance On October 10th, 2011 at 9:34 am

The future economic prospects of the United Kingdom are being framed by politicians as if there were two plausible choices. Let’s call them Plan A and Plan B.

With Plan A, we have the Coalition saying we need to stick with the idea of reducing the national budgetary deficit and on the other hand we have Labour and a section of the liberal media demanding Plan B, that we choose “growth” instead.

Which is right?

The fascinating aspect to all of this is that there is NO choice whatsoever but cynical politicians like to pretend otherwise. Let’s consider a few facts

According to that well know organ of the right, “The Guardian”, (sic) the European Commission’s spring economic forecast back in 2010 put the UK deficit in that calendar year at 12% of GDP, the highest of all 27 EU nations and worse than the Treasury’s own forecasts. This mountain of Debt was Gordon Brown’s farewell gift to the Nation and the culmination of almost a decade of profligate government spending. Unless it is cut, and cut savagely, the UK will turn into Greece, that’s the simple economic reality. Against that background, there is no growth but plenty of decline assured.

But to the political left, to the people who ran up the debt mountain, it’s not that simple. They now like to claim that rather than focusing on reducing the Debt mountain, we should be focusing on going for “growth” instead. Yes there should be deficit reduction but this needs to be done more slowly. The magic definition of what constitutes right amount of slowness is left dangling, just one of those pesky details that the boffins can sort out, later.

Shadow Chancellor Ed Balls has suggested that we cut VAT by 2% whilst imposing a tax on bankers bonuses. The problem here is that there is a £10bn gap between these two aspirations and that leads to…yes, you’ve guessed, more borrowing. The law of unintended consequences or a deliberate evasion?

The “growth” being advocated is a growth in spending. The actual economic growth being conjured up as a viable short term option is a pure socialist chimera, but it sounds nice and ever so plausible when dealing with the zombies in the media, the same people who never once questioned Labour during the profligacy years

The UK can only grow when National debt is reduced, when Interest Rates increase, when income taxes fall, when the State shrinks and when politicians stop pandering to uninformed populist appeal. I reckon the 12th of never is the target date for that.

MERVYN KING: “WORST CRISES SINCE 1930s”

By Pete Moore On October 7th, 2011 at 4:17 pm

Hugh Hendry did suggest we should panic early last year.

How bad is it when Mervyn King, the State Economic Commissar, announces that “the world is facing the worst financial crisis since at least the 1930s “if not ever” – ? I’d suggest it’s very bad indeed, as bad as the Austrians suggested all along while the ministers and PhD economists assured us that “recovery summer” is here (or was there in 2010), that if we just spend a little more money all will be well, that just printing a few more billions will lead us to the sunlit uplands of economic redemption.

Says King: “This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. We’re having to deal with very unusual circumstances, but to act calmly to this and to do the right thing.” These circumstances are not unusual. Ludwig von Mises explained the outcome of inflationary booms decades ago:

True, governments can reduce the rate of interest in the short run, issue additional paper currency, open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression. 
– Omnipotent Government

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
– Human Action

What fortunate people the Americans now are. We can only hope that one day the likes of Hannan (see above link) can wrest some economic control from the hopeless Osborne and his like. Much sooner, Americans have the opportunity to advance to power a Misesian scholar, an intellectual giant among pygmies, a man who foresaw economic catastophe and warned those around him. This is that man in October 2008 –

We’ve seen enough from the snake-oil economists, the Keynesians and the inflators. I’d suggest that now is the time to listen to those who know what must be done.

BECAUSE YOU’RE NOT POOR ENOUGH

By Pete Moore On October 6th, 2011 at 3:51 pm

If I were to print counterfeit £20 notes and buy goods with them, I’d be perpetrating a fraud: I’d be buying something of real value with something I had magicked out of thin air. Yet when a central bank does the same thing, the half-educated economists who dominate our universities and television stations nod approvingly and mumble cliches about ‘boosting demand’.

You can’t keep boosting demand without producing anything, for Heaven’s sake. That’s what got us into this mess.

So says Hannan on the news that the Bank of England’s economic central planners have observed the direction of bird flight, examined the entrails, read the runes and decided that you, dear readers, are not destitute enough.

It’s a long time since the BoE was anything better than hopelessly innaccurate in its estimates. Yet even as the BoE admits that official price inflation is nudging 5% (reality is twice that), price inflation is likely to undershoot the target rate of 2% in the medium term. Even if they’re right, just look at what they are saying; deflation, which is all of us becoming wealthier because of falling prices, is a bad thing apparently. Well not in my pocket.

Instead, official economic policy remains to steal your wealth via inflation and, today, the BoE has decided to steal it faster.

ATW QOTD

By Pete Moore On September 12th, 2011 at 6:20 pm

For the better part of a decade, bearded survivalists holed up in places like Idaho have been telling us that paper money is finished, and that we should buy precious metals, while sophisticated economics graduates who write for the FT have been insisting that gold is massively over-valued. It turns out that, if you’d listened to the snaggle-toothed mountain men, you’d have made a packet. Yet again, the ‘experts’ got it dismally wrong.

– Hannan

Not just Idaho, but Essex too dear boy. Needless to say, do read it all.

IN THE LONG RUN….

By David Vance On August 19th, 2011 at 9:42 am

Thought this as fascinating insight on every leftists favourite economist and anti-Christian, John Maynard Keynes;

“It has been nearly sixty years since the Keynesian revolution. The effects of the “short- run” and “childless” philosophy of Mr. Keynes are clear: nearly all western governments have followed the Keynesian prescription of spending and consumption, and have run large annual budget deficits for decades. In Canada, the federal debt is now approaching a staggering 550 billion dollars, and the country is joining the ranks of Third World nations in terms of its level of public debt (we are just behind Burundi and just ahead of Morocco). Interest payments on the Canadian federal debt are now the largest single government expenditure.

Our public debt represents our lust to consume today without thought for tomorrow. We have, in large measure, spent our children’s inheritance (as my least favourite bumper sticker reads). We have, to put it very bluntly, practiced homosexual economics, but we have not, as Mr. Keynes expected, spent ourselves into prosperity.

The long-run is now here. And while Proverbs 13:22 says “A good man leaves an inheritance to his children’s children,” the tremendous public debt and, perhaps more importantly, the short-run debtor mentality that we are passing onto our children is a sad inheritance indeed. If there is to be a future we must return to Wisdom. “Know that wisdom is thus for your soul; If you find it, then there will be a future, And your hope will not be cut off” (Prov 24:14).”

RT INTERVIEWS LEW ROCKWELL

By Pete Moore On August 18th, 2011 at 6:47 pm

The Nixon Depression + Dollar Destruction + Needed Bankruptcies

The more I see of RT the more I like the cut of its jib. Check out this great interview with Lew Rockwell, Chairman of the von Mises Institute. The host asks intelligent, informed questions which you won’t hear on the corporate and state broadcasters.

Rockwell, a deeply thoughtful man and great champion of free markets, is allowed space to answer and reveal. How refreshing among the sea of ignorant hosts who cannot keep their traps shut for more than a few seconds while a guest struggles to be heard.

DYLAN RATIGAN, TAKE A BOW SON

By Pete Moore On August 16th, 2011 at 8:48 pm

Glorious!

SCHIFF ON A ROLL

By Pete Moore On August 7th, 2011 at 1:47 pm

S&P – downgrades not enough – prospects – everyone wrong – both barrels – lose your dollars

Peter Schiff – whose credentials, as we know, bear scrutiny – is on fine form this weekend. Barely pausing for breath he lets everyone have it. Cracking  stuff and well worth watching, not only because of his rational, Austrian analysis to economic affairs but because of what he thinks is coming next.

I see Schiff had a chance to cheer everyone up on Newsnight a couple of days ago (do catch that one too). Not so long ago this would have been unthinkable, even if the BBC had heard of him (which I suspect is very unlikely). As the BBC/LSE impliedly acknowledged with the recent Keynes vs Hayek debate, orthodoxy is not the only option anymore and that Austria is the emerging alternative.

To think, Connecticut Republicans had the opportunity to pack him off Washington but voted instead for a showbiz type.