'..sanity..'

<blockquote>'But rather than a problem to be dreaded and combatted, falling prices through increased production is a wonderful long-run tendency of untrammelled capitalism. The trend of the Industrial Revolution in the West was falling prices, which spread an increased standard of living to every person; falling costs, which maintained general profitability of business; and stable monetary wage rates--which reflected steadily increasing real wages in terms of purchasing power.'

- Murray Rothbard, Deflation, Free or Compulsory</blockquote>


'..gold is being chosen by markets as an alternative to money issued by government diktat.'

<blockquote>'An article by Professor Lew Spellman has caught the attention of the sharp-eyed, and may indeed be important. Spellman, who in the past has been an economist at the Fed and served as an assistant to the Chairman of the President’s Council of Advisors, makes the point that gold is quietly becoming a core banking asset for collateral purposes, at a time when the alternative, sovereign obligations, is becoming dangerously unstable as a bedrock of value. This is an establishment economist suggesting that gold is being chosen by markets as an alternative to money issued by government diktat.

He even suggests that ownership of gold would allow banks to increase leverage of their balance sheets. The London Bullion Market has been lobbying for this for the last six months, and at government level the Chinese have long pressed for gold to have a monetary role on a supra-national basis. Powerful forces recognise the benefits, and if the Basel Committee which is considering the matter agrees to banks using gold as Tier 1 Capital, it would create substantial demand for physical bullion, for any such gold would have to be physically held on an allocated basis.'

- Alasdair Macleod, A plea for sanity, April 25, 2012</blockquote>


'So the question that suggested itself was: perhaps the Fed itself is at fault?'

<blockquote>'This is what we concluded, but not merely from the empirical data, as supportive as they are of this particular case. It follows logically that whenever an inflationary policy is pursued, the richest citizens will profit from it, while the poorest will lose ground. Inflation is effectively a reverse redistribution scheme from the poor to the rich. This is so because the wealth of the rich is largely parked in assets the prices of which tend to rise disproportionally due to the inflationary policy. Moreover, they have easier access to credit and thus can get 'first dibs' on newly created money. By the time this money has percolated through the economy and reaches the wage earners and the poor, prices have already risen and they will be confronted with the fact that their purchasing power has declined.'

- Wealth Inequality – Spitznagel Gets It, Krugman Doesn’t, April 24, 2012</blockquote>


'A number of Western economists (such as Paul Samuelson) were still wondering in the late 1980's when the Soviet Union would finally overtake the West economically.'

<blockquote>'The big mistake in the Keynesian recipes to get economic growth going is that they insist to view the economy as consisting of blobs of aggregates. From this perspective, all spending is 'good'- this is to say, spending is spending and output is output in the Keynesian view, regardless of what it actually consists of. The Keynesian aggregations make it easy to construct mathematical models of the economy, none of which are actually saying something useful. Robert Higgs once called this approach 'the intellectual equivalent of a baby toy'.

A number of Western economists (such as Paul Samuelson) were still wondering in the late 1980's when the Soviet Union would finally overtake the West economically. Shortly before the SU collapsed in a heap in 1990, it became known (due to Gorbachov's 'glasnost' policy) that of 277 'essential consumer goods' 234 were simply missing from the Soviet distribution system – and yet, GOSPLAN, the Soviet central economic planning agency, always reported that the 'economic plan was exceeded' – which presumably was the reason for Samuelson's ruminations ('see, they exceeded the plan. X tons of steel were produced and Y tons of copper. They're going to overtake us!')

Now, the reason why nothing seemed to work was of course that a socialist economy can not calculate, as it lacks market prices. However, we don't want to discuss this aspect here. We merely want to point out that 'GDP' as such tells us about as much about the economy as the fulfilling of the 'plan quotas' of the GOSPLAN agency. It is essentially a meaningless number.'

- Growth versus Austerity – A Phony Debate, April 30, 2012</blockquote>


'..The reason is that by 'papering over' the downturn with bailouts, money printing and deficit spending, the government has created the foundations of the next major bust..'

<blockquote>'..somehow Krugman must have missed what happened over the past four years in the United States with regards to deficit spending and the growth of the public debt. Or maybe he means they just didn't spend enough?

So what about those tightwads in the euro area? Have they been spending less? The total euro area government debt in euro terms at the end of 2007/beginning of 2008 was at € 5.985 trillion, or 66.3% of GDP.

It was clocking in at € 8.215 trillion as at the end of 2011, or 87.2% of GDP.

And the euro area wide annual budget deficit? That was € 60 billion at the end of 2007, or 0.7% of GDP. At the end of 2010 this had risen to € 571 billion, or 6.2 of GDP.

Some austerity!

In 2011 the data finally seemed to turn for the better, with the deficit falling to 4.1% of GDP euro area-wide, or € 388 billion – an inevitable result of several nations simply going bankrupt in the meantime.

..

Now let us first of all note here that it takes time for the investment errors of a major boom to be corrected. However, it takes even more time than it otherwise would when the government goes on a deficit spending spree and the central bank inflates like there's no tomorrow – which is exactly what has happened thus far in the US and to a smaller extent in the euro area.

Krugman is asking the wrong question – he should actually ask how it comes that the policies he recommended have not worked. Not only is the US public debt about 55% higher today than at the beginning of 2008, but the true money supply has been increased by roughly 60% as well. How can anyone argue that the government has not hewed to Krugman's Keynesian advice? The argument seems totally absurd.

Next let us counter the idea that 'stopping the stimulus measures will be a mistake'. This is a rather bizarre stance to adopt. After all, the Keynesians insist that the interventions they recommend will eventually create a 'self-sustaining recovery'. So at what point have we reached this happy state affairs? All we ever hear from them is that we're 'not there yet'. In Japan this song and dance has been heard for 23 years running. So we ask, when is it going to be enough?

We can actually answer this question: never.

The reason is that by 'papering over' the downturn with bailouts, money printing and deficit spending, the government has created the foundations of the next major bust..'

- A Barrage of Keynesian Advice for Europe, May 1, 2012</blockquote>


Context

<blockquote>On the Origins of Money

Carl Menger's Theory of the Origin of Money

'Here are the details surrounding my speech at the New York Federal Reserve Bank. First, I am surprised it actually occurred.'

- Robert Wenzel, New York Fed: Leave the Building! Afterword, April 30, 2012

'First, Let's Fire All the Managers' - Gary Hamel (2012)</blockquote>