Archive for the ‘Politics’ Category

Why Austrian Economics is Devastating to Libertarians

March 9, 2014 56 comments

Since it’s the weekend, I’m going to take a break from my attempts to reinvent (essentially) the existing macroeconomic paradigm from the ground up using debt (and collateral) as the backing for money and do something much easier–bash Austrians.  This is from a recent post on The Money Illusion.

I constantly hear conservatives complain that elderly savers can’t earn positive interest rates because of the Fed’s “easy money” policy.  Is there any time limit on how long you will make this argument, before throwing in the towel and admitting rates are low because of the slowest NGDP growth since Herbert Hoover was President?  Or is your model of the economy one where decades of excessively easy money leads to very low inflation and NGDP growth?

In other words, is there some sort of model of monetary policy and nominal interest rates that you have in your mind, or do you see easy money everywhere and tight money nowhere?  What would tight money look like?  What sort of nominal interest rates would it produce?

If you have spent any time at all reading econ blogs you should know exactly what answer you will get to this without bothering to check the comments section.  But in this case, you don’t have to wade too deep into the 266 (and counting) responses before you get it.  On the second comment Old Reliable, Major_Freedom, supplies it for us.  (I bet when people see “Free Radical” they expect me to be like that guy but it’s partly tongue-in-cheek!) Read more…



November 14, 2013 Leave a comment

Most of the ground I will cover here I have been over already on this blog but I want to revisit the issue just to point out that it is playing out exactly the way I have predicted and to point out a few important points that some people may be missing about Obamacare.  I wrote this post over three years ago explaining how this bill was meant to destroy the private insurance market.  It deals with the specifics in more detail.

As most people know, a lot of people are losing their plans and experiencing dramatic rate increases in spite of the President’s numerous emphatic promises that this would not happen.  The line from the administration now is that these plans are being cancelled because they are substandard plans which don’t offer all of the coverage that people need.  Leaving aside the fact that the President never once promised that if you like your plan you can keep your plan as long as the government considers it adequate, this is still a complete lie.

It is true that plans are being cancelled because they don’t meet the minimum requirements set forth in the bill.  But these requirements are not in there to protect you from substandard insurance plans.  They are there because the point of the bill is to transfer wealth from the healthy to the unhealthy.  The way this is done is by forcing everyone to buy certain coverage even if they don’t need it and forcing them to all pay (more or less) the same price.  In this way the insurance companies lose money on the sick people but make it up by charging the healthy extra.  This wouldn’t be possible in a free market because companies would compete over the healthy people.  This is why insurance companies support the law, it creates a price-fixing cartel by which they can extract money from their customers without having to worry about that pesky competition.

In light of this it looks like there aren’t going to be enough healthy people signing up to be the cash-cows in this system.  This seems to be engendering a sense of comfort among many conservatives who think that Obamacare will collapse without these people supporting it.  This is a gross misunderstanding.  If you believe that, when healthy people don’t sign up and insurance companies start losing money, the government will wake up and say “hey, maybe our attempt to take over and micromanage the health insurance industry was misguided, I guess we better just let the free market handle it” you haven’t been paying attention for the last hundred years.

It won’t be Obamacare that collapses.  There is no provision in the bill saying that if it doesn’t work, it will go away.  It will be the insurance companies that collapse.  And this is exactly what progressives want because then they will simply say that the evil private insurance companies failed us and the government has to, reluctantly, move in and take over the whole industry.  But don’t worry this means everyone will get all the healthcare they “need” and it will be cheap and easy and provided by pixies and unicorns with breath that smells like sunshine.

Categories: Politics Tags: , ,

Breaking Bad

November 9, 2013 Leave a comment recently did a very short piece about the AMC show Breaking Bad of which I am a fan. One commenter said he (or she) was expecting something longer and as it turns out this is a subject I have put a lot of thought into so I figured I would step into the gap.

Part of what I liked about Breaking Bad was that it was secretly (perhaps unintentionally) a lesson about property rights.  When you really get down to it, on a fundamental level there is only one thing we need government to do.  All governments do this thing in some way and any entity that does this can be considered a government.  This is the establishment and enforcement of property rights.  Read more…

God and Moral Relativism

August 16, 2013 Leave a comment


A couple posts about scarcity, God, and house cats.

Part 1

Part 2

Categories: Philosophy, Politics

An Argument for Christian Libertarianism

Categories: Philosophy, Politics

Predictions: The Sequester

February 23, 2013 4 comments

The great thing about having a blog that nobody reads is that you can make bold predictions.  If they don’t come true, nobody notices but if they do come true, you can pull them out and point to them to show how clairvoyant you are, selection bias at it’s best.  In that spirit, here is one such prediction on the upcoming sequester and its economic and political consequences.

The sequester will go through. Right now neither side is making a genuine attempt to avoid it. The President is committed to a political strategy, he thinks he can put the blame for it on Republicans. And he might be right. I think he has his sights on the midterms. It’s absolutely dishonest on several levels to go around and act like republicans are going to cut police and firemen, mainly because he is the one who has the ultimate say in what gets cut. Unfortunately, I fear that segment of the voting public who is not really paying any attention may be a majority at this point.  This makes the real question: will the President actually follow through and cut all the worst possible things and still be able to blame it on Republicans?  I don’t know, but I kind of think yes, sigh….

The real head-scratcher here is that the Republicans aren’t really shielding themselves from this.  It would be pretty simple.  All they need to do is put together a bill that cuts the same amount of spending but out of programs that hardly anyone would support, propose it and go all over TV saying they offered a better alternative to the sequester but the Democrats chose to shut down parks and fire first responders rather than cut subsidies to failing solar panel makers and $50 muffins at the triannual tropical retreat for the department of rubber baby buggy bumpers.  I can’t help but wonder if the “leaders” in the Republican party have motives other than winning more seats for Republicans in order to shrink the government and restore a greater degree of individual liberty.

But the big problem is that conservatives don’t have an adequate macroeconomic theory.  They basically think big government is bad for the economy (I agree) and therefore, shrinking it a little must be good for the economy.  The problem is that our entire economy is now built on a foundation of exponentially increasing debt expanding the money supply and driving inflation.  If these aggregates fall a little bit short of expectations, it can cause serious economic consequences.  To be clear, I think this situation is highly undesirable and it would be good to replace it with a more natural free-market economy.  But that’s not what is happening.  What’s happening is politicians have put a process in place that hacks away indiscriminately at this monstrosity in a way that insulates both sides from direct responsibility.  It’s almost as if neither side expects the results to be that great.  I think this is the case but it’s not the loss of government services that will be the problem, it will be the effect on the overall economy caused by slowing the growth of macroeconomic aggregates.

These seemingly minor cuts, along with the general determination on the part of Republicans to reign in spending, is probably not going to actually reduce deficits but it will probably prevent it from growing fast enough to support the economy.  In theory the Federal Reserve could pick up the slack by engaging in “unconventional” open market operations.  However, murmurs of reluctance to do so are beginning to emerge from those hallowed halls.  (Broken circle, Playing with matches)

So I actually think that the sequester will cause a serious economic downturn, or at least that a serious economic downturn will follow before the end of the year.  It will be the result of a lot of things but the sequester may be the thing that finally touches it off.  This will be a catastrophe for Republicans and could lead to a scenario that is so ridiculous it’s laughable.  Six years after being elected and promising to fix the economy and lower unemployment, having control of the Senate the entire time and the House for part of that time, we may go into the midterm elections with double digit unemployment, negative growth, and a depressed stock market and still blame Republicans for it.  If Democrats get control of both houses of congress and a 60 vote majority in the senate under those circumstances, God help us.


P.S. Did I mention that George Soros sold gold last quarter?  Here’s a piece from the WSJ a few days ago.

Perhaps even more worrisome, Shaoul points out, is mom-and-pop investors aren’t shedding their gold holdings in the same fashion that the “smart money” has. Total global ETF holdings in gold rose at the end of 2012, growing by a total of 3.4%, he says.

“This indicates that there were other, dare we say less sophisticated, buyers of the metal,” Shaoul says. “The transfer of an asset class from stronger to weaker hands is a process known as ‘distribution’ and is normally followed by a sharp move downwards as the new holders discover they have rather less company than they assumed at the time of purchase.

“The unusually broad public dumping of the metal by a number of respected fund managers does therefore create a risk that sentiment towards the metal could start to deteriorate rapidly in the coming sessions,” he adds.

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