The Bernank’s Plan

The Bernank’s Plan (via http://www.economicnoise.com)

The charade that is represented by world governments is becoming more strained by the day. Ben Bernanke’s decision to do nothing was ridiculous. Not in the sense that he can affect outcomes in any way shape or form, but in the sense that he can prolong the agony that the economy must endure. According…

Bernanke Dutifully (or Ignorantly) Attacks Gold

Bernanke Dutifully (or Ignorantly) Attacks Gold (via http://www.economicnoise.com)

Ben Bernanke spoke out against gold this week. According to Joe Wiesenthal he destroyed the idea of gold returning as a form of money or primary part of a monetary regime:

Ben Bernanke just gave the first lecture of his 4-part series on the origins of the Fed.

… one thing really stood out …

He spent a lot of time talking about the gold standard, and he just murdered it.

Mr. Bernanke’s position should surprise no one who has studied the role of the Federal Reserve. If money were backed by gold, the Federal Reserve would become just another, unimportant Federal agency. Gold would obsolete Mr. Bernanke and his agency. It would also change government, at least as we have known it for the last four decades. Three things that would not have happened had gold remained a part of the monetary system:

1. Government could not have continuously run the massive deficits that threaten to bankrupt the nation.
2. Government would be much smaller and less intrusive.
3. The current financial crisis could not have developed.

Gold is not a perfect solution. It has positives and negatives in terms of playing a role in the monetary system. Clearly, it introduces some inefficiencies as pointed out by Mr. Bernanke and described by Mr. Wiesenthal:

To have a gold standard, you have to go dig up gold in South Africa and put it in a basement in New York. It’s nonsensical.

When discussed in this fashion, gold does appear rather nonsensical. However when the alternative is putting the political class in charge of the value of money, a gold standard appears sensible in spite of this “inconvenience.” In support of that point are the three points enumerated above and an important fourth point: since the Federal Reserve took over management of the currency, the dollar has lost 96% of its value. Most of that loss has occurred since 1971 when gold was fully removed from any constraints against political monetary debauchery.

An entirely different perspective on Mr. Bernanke and gold was provided by Mish (Mike Shedlock). Rather than making the case against gold, Mish argues that Bernanke slandered it and in the process revealed a lot about himself. According to Mish, gold was not the problem but these elements were:

All of the problems allegedly caused by the gold standard are in fact properly attributed to one of the following four things:

1. Central banks and their inept Soviet-style central planning
2. Fractional reserve lending
3. Fed manipulation of interest rates
4. Government sponsored monetary printing, frequently but not always to fight absurd wars that have no justified explanation. The War in Vietnam and the War in Iraq are recent examples.

Gold is to the State as sunlight was to Dracula. Gold is the State’s biggest enemy. If it were to become a meaningful part of the monetary system, government as we know it today would cease to exist. States would be forced to shrink back to the duties for which they were originally intended. The political class has no intention of allowing that to happen. That is why allowing gold to regain credibility must not be allowed.

As an agent of the State, Mr. Bernanke cannot afford to be truthful about the role of gold and its necessity as a political constraint. His predecessor, Mr. Greenspan proved that when you enter the employ of the Devil you leave your principles at the door. We know what Mr. Greenspan believed prior to his role as Fed Chairman.

In 1966 in an article entitled Gold and Economic Freedom Greenspan explained Statists antagonism toward gold:

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

Mr. Greenspan concluded (my emboldening):

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

I am unaware of Mr. Bernanke’s prior beliefs, but suspect they were not too different from those of the pre-political Greenspan. To assume Bernanke did not understand gold as a constraint against political exploitation is to question his intelligence. To assume otherwise is not flattering either, for it is to question his principles. As an aside, these two possibilities are hardly mutually exclusive.

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Gold Bubble? I Think Not.

Gold Bubble? I Think Not. (via http://www.economicnoise.com)

Because gold has risen rather spectacularly over the last ten years, many claim that it has become a bubble. This claim is usually made solely on the basis that the price has risen, rather than any economic argument. Few, if any, of those making the claim correctly identified any other bubbles of the…

Gold Rising or Gold To Fall?

Gold Rising or Gold To Fall? (via http://www.economicnoise.com)

Is this the time to acquire gold? Or is this the time to run away from it? Either answer could be correct, depending upon what course government chooses. Government is at a decision point, one that will determine how our economic malaise next turns. It has two choices: Fight deflation by increasing…

Friedman on Redistribution

Common Sense Video — Friedman on Redistribution (via http://www.economicnoise.com)

Milton Friedman responds to the redistribution issue:

The Quiet Depression, So Far

Common Sense Video — The Quiet Depression, So Far (via http://www.economicnoise.com)

This conversation between Gordon T. Long and John Rubino is an important listen. It deals with our declining standard of living which is expected to get worse. We are early into this economic decline and, as the old saying goes, “you ain’t seen nothing yet!” Thank the political class (and their…

Walter Williams on Role of Government

Common Sense Video — Walter Williams on Role of Government (via http://www.economicnoise.com)

Reagan on Government

Common Sense Video — Reagan on Government (via http://www.economicnoise.com)

They said he was dumb. That was their only defense against his logic. Now he is being proved correct as shown in this video. Isn’t this video a nice prelude to the DNC? Aren’t you proud of the Democrats?

The Federal Reserve Is Destroying What Is Left Of The Country

The Federal Reserve Is Destroying What Is Left Of The Country (via http://www.economicnoise.com)

Economics is little more than common sense, unless you are a politician or an economist employed by government. Those economists who do go into the employ of government seem to be educated beyond their level of competence. Or, perhaps they are prostitutes willing to do or say anything for the pay,…

Common Sense Video — John Stossel on Freeloading

Common Sense Video — John Stossel on Freeloading (via http://www.economicnoise.com)

Another example of the entitlement society that appears to have taken over every aspect of American life:

Why Obamanomics Did Not Improve The Economy

Why Obamanomics Did Not Improve The Economy (via http://www.economicnoise.com)

Almost three years ago, I argued that Obamanomics, President Obama’s version of economics, would fail and explained why. In reviewing Why Obamanomics Will Not Improve The Economy, I found it as relevant in hindsight as it was when it was first written. For the many new readers to this site, I hope…

The Non-Politically Correct Economic Report Card on The Recovery

The Non-Politically Correct Economic Report Card on The Recovery (via http://www.economicnoise.com)

All politicians treat the truth the way Dracula reacted to a Cross. They are threatened by it. They run away from it. The prelude to an election is especially difficult for anyone seeking the truth. Politicians from both sides assault, distort and manipulate it beyond recognition. Media rarely calls…

Why This Depression Will Be Known As The Greatest Depression

Why This Depression Will Be Known As The Greatest Depression (via http://www.economicnoise.com)

Probably the last thing regular readers of this website need is additional evidence supporting the coming governmental and economic collapse. I apologize for yet another article on this topic, but newer readers need to understand what is coming and do what they can to protect themselves. Government…

Economists — What Good Are They?

Economists — What Good Are They? (via http://www.economicnoise.com)

Economists, as a group, are mostly useless. That was not always the case, although it has been so for much of the last fifty years. Captured by “physics envy,” economists sit in the halls of academe trying to impress one another with increasingly useless and arcane studies. This intellectual masturbation…

Welfare States R.I.P.

Welfare States R.I.P. (via http://www.economicnoise.com)

This post appeared over two years ago, but remains relevant today. Bloggers post what they claim to be the “scariest economic chart” or the ”chart of the century.” Indeed, many data sets are frightening, but none more so than the one to the left. Modern government has failed. These countries…

Neither Keynes Nor Marx Understands This Economic Problem

Neither Keynes Nor Marx Understands This Economic Problem (via http://www.economicnoise.com)

  One doesn’t usually expect to get relevant information from a website entitled “World Socialist Web Site.”  But sometimes truth penetrates agendas. Such appears to be the case in the following article by Nick Beams. The author, not beholden to the mainstream State-supporting media, provides…

Western Democracies Are In Collapse

Western Democracies Are In Collapse (via http://www.economicnoise.com)

Most people cannot conceive of an economic collapse. Normalcy bias is common and distorts expectations, especially in areas outside of personal expertise. If it didn’t happen yesterday or last month or in their lifetime, then many people consider the outcome “impossible.” Those who can conceive…

Our Highway To Hell

Our Highway To Hell (via http://www.economicnoise.com)

The Role of The Government in The Economic Crisis At this point, everything the government is doing – and not just the US government but governments everywhere − is not only the wrong thing but exactly the opposite of the right thing. They’re passing more laws, raising taxes, creating more currency…

Bernanke Continues to Pretend He Has Control

Bernanke Continues to Pretend He Has Control (via http://www.economicnoise.com)

QE (quantitative easing), whether it be QE1 or QE10, is a euphemism. It represents the expansion of the money supply (printing money). An expansion of the money supply is inflation. Rising prices are not inflation, they are an effect of inflation. The disease is printing money (or QE if you want to…

All Economic Interventions Make Us Poorer

All Economic Interventions Make Us Poorer (via http://www.economicnoise.com)

Every government intervention is an attempt to thwart the freedom of the marketplace. Markets are nothing more than willing buyers and sellers agreeing to what the consider fair. These voluntary transactions benefit both buyer and seller or they would not take place. When government intervenes to impose…

Ponzi Scheme Government

Ponzi Scheme Government (via http://www.economicnoise.com)

It is interesting to go back and look at thoughts and interpretations of events from the past. Sometimes it is embarrassing. This post from almost three years ago, seems rather accurate in light of subsequent developments. The Ponzi Scheme that government had become only continued, as expected. At…

When will America Collapse? .....answers from Jim Rogers, Marc Faber

http://www.economicnoise.com/2012/09/19/common-sense-video-the-coming-collapse/

http://www.economicnoise.com/2012/09/20/common-sense-video-why-an-economic-collapse-cannot-be-avoided/

Greed - Thomas Sowell

http://www.economicnoise.com/2012/09/19/logic-is-harmful/

Redistribution - Monty Perlin

Redistribution (via http://www.economicnoise.com)

Author: Tom Lester People seem to go ape with an announcement of anything free.  They will often stand in line for hours to get some bobble-head or trinket.  This malady seems to affect most of us and, I admit, free airline miles are my weakness, the means of visiting children and grandchildren too…

Bernanke’s QE Makes Matters Worse

Bernanke’s QE Makes Matters Worse (via http://www.economicnoise.com)

The euphoria initially expressed by markets to unending Quantitative Easing (money printing) may be playing out. The last couple of days were mediocre in terms of stock market performance. For investors, it is a difficult time. Do you play for the inflation-induced bounce in stocks? That is the likely…

For the country, nothing good can come of Bernanke’s latest attempt to kick the can down the road. The problem is caused by overlarge government that is unable to fund itself. This problem is beyond the Fed’s responsibility and one that the Fed cannot solve. All Bernanke has done is enable the political miscreants to continue behaving badly. He has provided them with another hit of heroin when “cold turkey” is the only treatment to which they and the economy will respond.

Tyler Durden discusses the issue and provides some video:

On Santelli’s Queasiness About Bernanke’s Quantitative-Easiness

Submitted by Tyler Durden on 09/21/2012 12:58 -0400

Between CNBC’s Rick Santelli and PIMCO’s Mohammed El-Erian, this brief clip succinctly sums up the ‘less than ideal’ reality of Bernanke’s all-in bet and how the world is trying to ‘trade’ it. Santelli analogizes: “Visualize the biggest fire hose in the world, 20 miles away from a little Geranium plant? Now this hose is going and going and going, and ultimately, that Geranium plant gets a little bit of water but everything around it and leading up to it for miles around is just underwater. That’s QE, in my opinion.” To which El-Erian retorts: “at what point do you tell investors stop focusing on the benefits and make the collateral damage the investment theme?” It seems, given gold’s outperformance, that this is exactly what is occurring as the hose-pipe’s flood spills out everywhere.

 The discussion ensues, with Santelli noting that the Fed-heads (especially Charles Evans) have admitted QE is not ‘ideal’ but ‘We’ve got to do something!!”

From currency manipulators, to China’s problems, to our iGadget obsession, and the destruction of future generation’s wealth – epic rant!

http://www.economicnoise.com (http://s.tt/1oaG9)

Freedom and Economic Performance - Monty Pelerin

Freedom and Economic Performance (via http://www.economicnoise.com)

The rise and fall of countries has everything to do with the industriousness of its people. Wealth is created only by the productive sector, not by government. Governments grow large and powerful only by exploiting the wealth creation of the productive sector. Large and powerful governments are generally…

http://www.economicnoise.com (http://s.tt/1p7QQ)

Why The Economy Is Not Recovering - Monty Pelerin's World

Why The Economy Is Not Recovering (via http://www.economicnoise.com)

That this economy is not recovering in a normal fashion is not in dispute. Why it is not, is. Some believe that government hasn’t done enough in the way of stimulus. These “Krugmanites” have an obsession with the belief that the economy must be managed and that some central planning agency must…

But what if government were the problem instead of the answer? There are an increasing number of observers who believe that may be the case. History favors this latter position. The belief is not new, held by the Austrian School of Economics for about a century and their predecessors, the Spanish Scholastics, of the 15th Century.
http://www.economicnoise.com (http://s.tt/1oaED)

History is not and never was on the side of central planning and intervention. Yet that is what we have because politicians override economists. In order to work for government as an economist, you must parrot the big government line. Unfortunately the same cancer kills employees in other fields like the environment, global warming, etc.

We have reached a point where even the dullest of the political class understands it cannot improve matters. Torn between the desire for increased power and a dying economy, politicians are helpless. Even those who see the need to abandon the Keynesian paradigm are unable to do so and remain in office.

Voters have been brainwashed into believing that government was responsible for their economic success. Politicians always take credit for good things. Now they are cornered. Having convinced people that government is responsible for the economy, it must be government’s fault that the economy has faltered. In a very real sense, that is true — just not in the sense that politicians have convinced voters. As a result, no politician can advocate the proper economic policy — leave the economy alone . Given the brainwashing of voters over the years, anyone who advocated such a position would be voted out of office.

Quite simply, government is not the answer. Government is the problem. Thomas Sowell provides his answer:

The Obama party line is that all the bad things are due to what he inherited from Bush, and the few signs of recovery are due to Obama’s policies beginning to pay off. But, if the economy has been rebounding on its own for more than 150 years, the question is why it has been so slow to recover under the Obama administration.

The endless proliferation of anti-business interventions by government, and the sight of more of the same coming over the horizon from Barack Obama’s appointees in the federal bureaucracies, creates the one thing that has long stifled economic activity in countries around the world — uncertainty about what the rules of the game are, and the unpredictability of how specifically those rules will continue to change in a hostile political environment.

Economies are self-correcting when left alone. Government attempts to remedy an economy always make matters worse, by delaying the correction and by embedding price and allocation distortions into an economy. These distortions are responsible for the next downturn.

http://www.economicnoise.com (http://s.tt/1oaED)
http://www.economicnoise.com (http://s.tt/1oaED)

http://www.economicnoise.com (http://s.tt/1oaED)