RoR: Forum

This video is somewhat dated as it states that the dollar is weak against the Euro and the $CA, when in fact, the $US is highest it's been to the $CA since 2004 and to the Euro since 2006.

Jim Rogers says what's going on here is a short squeeze on the $US. All the hedge funds were/are short the $US and are being forced to cover their positions by buying. This of course will come to and end and a natural process of devaluation of the $US will occur.

Sam

Post 1

Saturday, December 6, 2008 - 7:42am

Both Ron Paul and Jim Rogers think we should abolish the Fed. I think they're right. I'm trying to figure out if we're suffering more from the collectivism of the sham welfare altruists (Fannie, Freddie, and the CRA) or the illegitimate Federal Reserve. The scary thing is that they can use each other as scapegoats.

"Do you see what trouble the socialists Barnie Frank and Chris Dodd have caused?", says Bernanke, "now I've got to print a whole lot of extra money to bailout some private interests and fix it."

"Do you see what trouble the Fed Chairman and Treasury Secretary have caused?", says Barnie Frank and Chris Dodd, "now we've got to pass even more Draconian laws in order to level the playing field."

I would like to see Barnie Frank and Chris Dodd against Ben Bernanke and Henry Paulson in a tag-team, ultimate fighting, cage match. My money is on Bernanke and Paulson, because their cut-throat nature is more pure -- they entirely avoid the question of morality. Chris and Barney get their counterfeit legitimacy by inverting morality. Hank and Ben don't even acknowledge that their legitimacy might ever be suspected to outside evaluation.

Both sides have self-righteous resolve, but Chris and Barney know they have to defend theirs, while Hank and Ben evade ever having to defend themselves.

I picture Chris and Barney getting all hyped-up in their corner, slapping each other in the face to flood themselves with adrenaline and, on the ring of the bell to start the match, both realizing that their throats had been cut -- with Bernanke and Paulson pretending not to notice the "accident" that had mysteriously befallen their opposition.

Ed

(Edited by Ed Thompson on 12/06, 7:56am)

Post 2

Saturday, December 6, 2008 - 9:23am

Monetary policy is the greater problem. They have been doing two things that are very damaging: Controlling the price of money (interest rates) and the supply of money (printing presses, credit creation).

Price controls on something like gasoline would be bad enough, but on something as fundamental to the economy as money it is a disaster.

If our government couldn't 'create' money, politicians would have to live inside of a budget. Fannie, Freddie, and the CRA could not have caused a very large problem without 'new' money/credit and below market interest rates to pump up that housing bubble.

What most people don't see is what we would have achieved if they hadn't been inflating and creating artificial interest rates. Think about the amount of technology that has come into existence since, say, 1950. Add to that all of the increases in knowledge and improvements in procedures or processes. Well, every improvement and all technology would have increased the value available per dollar. In a sensible, non-government controlled monetary system we would constantly find our savings, when we went to spend them, bought more than when we first received those dollars. That is the hidden taxation we have been subjected to.

Post 3

Saturday, December 6, 2008 - 11:02am

Inflation is a quiet form of taxation.

Post 4

Saturday, December 6, 2008 - 1:32pm

Not necessarily so quiet:

Post 5

Saturday, December 6, 2008 - 4:28pm

Steve,

What most people don't see is what we would have achieved if they hadn't been inflating and creating artificial interest rates.

Since a dollar now is only worth what $0.04 was when the Fed began, it's a good guess that we'd all be somewhere in the broad vicinity of 25 times richer than we are -- if the Fed hadn't taken $0.96 out of the dollar with inflation. We'd (almost) all have the economic power that a millionaire has today.

Or is the picture more complex than that?

Ed

Post 6

Saturday, December 6, 2008 - 7:36pm

Ed,

"What if's" usually are more complex, but, yes we would be extremely rich compared to where we are if money had been a free-market commodity.

I think one of the sharpest talents politicians have shown is a cunning ability to sense how much of a load they can put on the economy before it breaks - Decade after decade the extraordinary power of our creative natures, allowed expression through the freedoms we do have, powered us forward while politicians have been loading on more and more deadwood or regulation, pulling more and more capital out of private hands, and eroding capital with inflation.

They nibble away at it with taxes from one side and inflation from the other. We are up to about 60% or our income goes to government - but that doesn't count the part of the purchase price, on everything we buy, that represents the expense of the businesses' taxes. We probably pay about 60% more than we would need to for all things. (Think about just a simple McDonald's hamburger - employee taxes, state and federal, property taxes, income taxes, licenses, and part of everything they pay contains taxes their suppliers paid - trucking companies paid licenses, fees, gas taxes, employee taxes, income taxes, etc. - wholesalers, ranchers, wheat, tomato, potoato and lettuce farmers, bakers, ketchup packers, etc - lots of that hamburger price is just taxes.)

Then you come to inflation that literally destroys capital like some kind of invisible acid that erodes thing away when you aren't looking.

It boggles the mind to imagine the extraordinary wealth that would exist today had we had a sensible government over the last 50 years or so.
--------

Then there is the question of where would science and philosophy be today if we had free-market educational systems in place for the last 50 years or so!

Post 7

Sunday, December 7, 2008 - 8:19am

Over on MSK's Objectivist Living, I reviewed I.O.U.S.A., a film produced by Agora Financial. You can find IMDB and Wikipedia entries for the film. The production company has its own website here.

"Ron Paul reduces Alan Greenspan to a cinder in a movie I never expected to see here in the People's Republic of Ann Arbor." -- MEM

ET asketh: "... if the Fed hadn't taken $0.96 out of the dollar with inflation. We'd (almost) all have the economic power that a millionaire has today. Or is the picture more complex than that?"

Yes, that is a known truth. As Steve W: said succinctly in Post 2, "...Well, every improvement and all technology would have increased the value available per dollar."

There is only so much gold in the world (universe) so, every creation makes each gram of Au that much more valuable. In fact, everything becomes more valuable in relationship to everything else. Value creation is the essence of human action.

In the libertarian science fiction of L. Neil Smith, The Probability Broach, we enter a parallel universe where the American Revolution went to completion: the American colonies remained a confederation; and Hamilton was exiled to Prussia. Our viewpoint character is a detective from our continuum who falls into this other world. One of the things he has to learn is that the victims and witnesses are usually pretty easy to find because they don't do that much actual work. Money goes a lot farther and the older people have a lot of it ... more and more, as more goods and services are created ... The stock of money remains the same of course, but each unit of it acquires more purchasing power. That encourages savings, of course, with all that that implies.

(Edited by Michael E. Marotta on 12/07, 8:55am)

Post 8

Sunday, December 7, 2008 - 10:37am