Bernanke picked apart - yet again

I've admired Frank Shostak's reasoning and sound economic logic ever since he started appearing on mises.org. I especially like the story about how he first picked up Human Action and how it fascinated him.

Here, he does the rather easy job (since Ben Bernanke is such a quack) of picking apart the Fed Chairman's weak statements regarding the U.S. economy.

Thanks to the Mises Institute for the Shostak article. You can pick up your copy of Mises' great work, Human Action, at mises.org.

Mises knew it a long time ago

The greatest economist of the 20th century, Ludwig von Mises, wrote one of his many great works back in 1934. The title: The Theory of Money and Credit. This book is especially important now because of the devastation of American wealth caused by the inflating central bank, the Federal Reserve. An excerpt:

"Native inflationism demands an increase in the quantity of money without suspecting that this will diminish the purchasing power of money. It wants more money because in its eyes the mere abundance of money is wealth. Fiat money! Let the state "create" money, and make the poor rich, and free them from the bonds of the capitalists! How wrong to forgo it simply because this would run counter to the interests of the rich! How wicked of the economists to assert that it is not within the power of the state to create wealth by means of the printing press! - You statesmen want to build railways and complain about the low state of the exchequer? Well, then, do not beg loans from the capitalists and anxiously calculate whether your railways will bring in enough to enable you to pay interest and amortization on your debt. Create money, and help yourselves."

Mises knew back then that the creation of money backed by nothing leads to disaster. As we watch the economy collapse this year and next, we can only hope that Mises' works catch on so we can finally abandon Keynesianism, that economic crap they teach in public schools.

Soviet health care in Massachusetts

No one, especially bureaucrats, can repeal the fundamental laws of economics. As Ludwig von Mises proved in the 1920's with his fantastic work titled Socialism, economic calculation is impossible once prices are removed from an economic system.

As Commonwealth Care proves Mises right with its rising costs, we can predict easily the disaster that awaits us if Hillary Clinton or any president/congress gives us "universal health care." Read the article from the Boston Globe here, and start lining up your doctor friends for future care, reminding them each time you leave that you "were never here."

Once again, as in previous posts regarding health care, you get 5 results with socialized medicine: long lines, shortages, lower quality, higher taxes, and finally, rationing.

U.S. banks getting slaughtered in the carnage

Eighty years ago Ludwig von Mises was writing about what is happening to the U.S. and world financial markets today. As Mises and the rest of the Austrian economists knew, whenever you print money out of thin air (it's not backed by anything), bankers run amok with the easy credit while the populace takes the bait, leading to malinvestment. It's simple - the inevitable contraction follows the peak from the Fed-induced expansion.

As you can see in this article, U.S. banks got creamed in the 4th quarter. Also on prudentbear.com today, the president of the IMF said this worldwide crisis could be quite severe. Well, he finally got something right (after the Austrians have been discussing this for a decade).

The solution? Abolish the Fed, get back on the gold standard, and get the government out of the economy. 2008 and 2009 won't be pretty.

Austrian economics

The market is getting punished today. The bubble has burst. The average American has had little training in economics, and the little they've had has been Keynesian, which has been destroyed by the Austrians.

Now it's time for you to begin your study of Austrian economics. Then you'll know more than most of the people in the country. Eventually, you'll know why bubbles form, and how the government makes us poorer. Start here and invest $10.00 in Henry Hazlitt's book: Economics in One Lesson. It'll be the best $10.00 you've ever spent.

Are Mules Smarter Than Politicians?

The above was the title of a great article written by Lawrence Reed for The Free Market, a publication of the Ludwig von Mises Institute. Every issue is short and to the point, explaining Austrian economics and de-bunking the statist view of the world held by many citizens and, of course, almost all politicians.

This particular article (June, 1990 issue) is one of my favorites because it succinctly explains both the cause of the stock market crash, the Great Depression, and FDR's New Deal (affectionately nicknamed the Raw Deal). The title about mules being smarter than politicians refers to the crazy policies of the Agricultural Adjustment Administration, an agency that ordered the destruction of crops and livestock. Farmers had a tough time getting the mules to trample the crops, since they had been trained to walk between the rows.

The issue is not archived at mises.org for some reason, so if you want a copy just ask in the comments section and I'll send you one. Occasionally I'll lend a copy of The Free Market to another professor. Many interesting responses and lots of questions, to say the least.

Mises got it right

Ludwig von Mises' Socialism details how socialism cannot work. From his book: "Socialist writers may continue to publish books about the decay of Capitalism and the coming of the socialist millenium: they may paint the evils of Capitalism in lurid colours and contrast with them an enticing picture of the blessings of a socialist society; their writings may continue to impress the thoughtless - but all this cannot alter the fate of the socialist idea. The attempt to reform the world socialistically might destroy civilization. It would never set up a successful socialist community."

From Mises' Human Action, which was published in 1947: "The overwhelmingly rapid triumph of the demonstration that no economic calculation is possible under a socialist system is without precedent indeed in the history of human thought. The socialists cannot help admitting their crushing final defeat."

Economic calculation is impossible in a socialist enterprise because of the absence of market prices. Mises knew this almost 90 years ago. What's taking so long for Americans to figure it out?