'CEPR is the organization that has in the past published glowing reports about the Marxist policies of Hugo Chavez in Venezuela, even as oil production collapsed, inflation soared and food shortages became a recurring feature of life in Caracas.'<blockquote>'In the context of Greece's troubles, we would like to point out that left-wing US based economists like Mark Weisbrot of CEPR and ex-IMF man Joseph Stiglitz are now counseling Greece to drop the euro. Of course a re-adoption of the drachma would mean an instant dispossession of Greek savers, as the drachma could be expected to fall by 50% or more. CEPR is the organization that has in the past published glowing reports about the Marxist policies of Hugo Chavez in Venezuela, even as oil production collapsed, inflation soared and food shortages became a recurring feature of life in Caracas. If we were the Greek government, we'd rather opt for deflation, as politically difficult as it may be. Anything must be better than following the advice of these people. When Mr. Weisbrot hails the 'millions' that have allegedly been 'lifted out of poverty' in Argentina after the devaluation, he conveniently forgets to mention the theft of savings and deposits by means of confiscatory deflation, the subsequent theft of pensions by the government, and the fact that at present, those 'millions' are all eager to get rid of the government's scrip as fast as they can before it becomes utterly worthless. Whatever Greece and the EU decide to do, not listening to Weisbrot or Stiglitz should be regarded as the number one priority. Let's rather not 'euthanize another bunch of rentiers' who have worked hard for their savings all their lives just to satisfy the experimental urges of a gaggle of socialism supporters.
Meanwhile, it appears as though the latest general strike called by Greece's unions has been a bit of a flop anyway – far fewer people turned up in the associated demonstration than expected. This may actually remove some of the political pressure from the government, making it easier to push through economic reform.'
- Acting Man,
Euro Area – The Waiting Game Continues, May 12th, 2011</blockquote>
'However, a general, widespread increase in prices across the entire spectrum of commodities is invariably the result of monetary inflation. In other words, the only important 'fundamental' datum commodity speculators need to focus on is the speed at which money gets printed.'<blockquote>'..During bullish phases the market tends to ignore allegedly bearish fundamental reports, while seizing on bullish ones. The opposite is true during bearish phases. It is important to realize in this context that rising commodity prices – an enduring and recurring phenomenon of the business cycles since 2002 – are largely a side effect of monetary inflation. Genuine supply shortages or the threat thereof do of course also lead to price increases in the specific commodities concerned (e.g. after a series of bad harvests, or a cut-off of supplies due to geopolitical upheaval). However, a general, widespread increase in prices across the entire spectrum of commodities is invariably the result of monetary inflation. In other words, the only important 'fundamental' datum commodity speculators need to focus on is the speed at which money gets printed. With regards to the US dollar, over the past decade the broad US 'Austrian' money supply measure TMS-2 has grown by nearly 150%. Need we say more?
..
Also, inflationary policy not only in the US but also China and elsewhere has furthered numerous 'bubble activities' in the economy, this is to say, economic activities that would not exist absent monetary pumping, as they would not be deemed profitable without it. These activities register as 'economic growth' in GDP statistics, regardless of the fact that they do not create wealth. China's building boom is a pertinent example for such 'growth' that is empty of meaning and in fact consumes capital. As Gillem Tulloch of Asianomics once remarked, the erection of empty shopping malls, empty apartment blocs, empty office towers and entire empty cities is the functional equivalent of pyramid building. It will tend to 'increase GDP growth', but not create any true wealth. When monetary policy is tightened, many of these manifestations of phantom wealth are eventually unmasked for what they are – namely massive capital malinvestments.
Depending on the severity of the discovery, economists will then speak of a 'bust' or 'recession' or, if the monetary pumping effort is redoubled before a full unmasking has the chance to emerge, a so-called 'growth scare'. This is a temporary glimpse of the ugly reality of capital consumption that is quickly forgotten again in light of fresh showers of 'free money' from the central banks. The summer of 2010 can be classified as such a 'growth scare'. It was officially triggered by the beginning euro area sovereign debt crisis, but the true culprit was likely that one month earlier, the Federal Reserve's 'QE1' money printing effort had ceased.
- Acting Man,
Liquidation In Commodities Resumes, May 12th, 2011</blockquote>