Monday, April 30, 2012

Where has that inflation gone?

Something of a puzzle to many commentators is that Obama's vast money printing binge has not produced rapid inflation. A greenback buys less than it used to -- particularly overseas -- but not spectacularly less.

Jerry Bowyer wisely remarks that it often takes a long time for an influence to work its way through the system and he is undoubtedly right so that is clearly part of the story.

But I think the major factor is a straightforward example of what economists call the "velocity of circulation" effect.  Price inflation is a product of the amount of money on issue multiplied by its velocity of circulation and the velocity of circulation has fallen  precipitously just as the money supply has increased  -- the one influence largely cancelling out the other.

My apologies for introuducing a bit of economic jargon into a general political blog but I have been puzzled that none of the discussions of the matter that I have seen have mentioned the role of the velocity of circulation.  Perhaps it is just that other writers have better manners than I do.

To make amends, let me put it less technically:  Most of the money Obama has issued is just sitting still in the reserves of banks, other financial institutions and  major companies.  It is not being spent or lent out.  Its velocity of circulation is nil.  It might as well not exist as far as the economy as a whole is concerned.

And because of general nervousness that is not going to change soon.  But if and when it does change the party will  really be on -- a party for everyone except people who have savings.

Let me suggest a scenario.  Suppose Romney is elected and fires all the Obama cronies running the EPA and other business-obstructing agencies.  That suddenly gives everybody more confidence in doing business.  So the banks start lending again and businesses with reserves start using their reserves to expand.  The money starts flowing again.  The velocity of circulation rises.  There is now a greater demand for resources:  both labour and capital goods.  People might even start building new houses again.   For a   little while that greater  demand for resources will be met from presently idled resources:  Unemployed people  will get employed and shuttered mines and manufacturing facilities will reopen.  So everyone will be having a party.

But parties like that tend to feed on themselves and breed yet more optimism -- and so the demand for resources will soon go beyond what can be met by reactivating idled resources.  With the money now flowing again, prices will be bid up as everybody wants a piece of the action.  And an expanded volume of money chasing a relatively fixed resource base can only lead in one direction  -- to price rises.  Inflation will be underway.  How far it will go is anybody's guess but with everybody now using the extra money  that Obama has created, it could be a whopper of an inflationary process.  What a greenback will buy  could easily drop to (say) half of what it will buy today.

So Romney will inherit Obama's inflation and will probably be blamed for it.  And savers will rightly feel utterly betrayed by the political system that has cut the value of their savings in half.  "Spend it while you can" will  become the new wisdom.  My personal  hint:  Put  most of your savings  into blue-chip company shares NOW.  I did so long ago.


The news from Havana:  The logic of capitalism is evil

Or so says a defrocked Nicaraguan priest who, funnily enough, is also the  UN General Assembly president

UN General Assembly President Miguel d'Escoto Brockmann said on Wednesday that the current global economic and financial crisis proves that the logic of capitalism is evil and suicidal.

During a ministerial meeting of the Coordinating Bureau of the Non-Aligned Countries (NAM) hosted in Havana, d'Escoto said that the current world order promotes selfishness, usury as well as social and environmental irresponsibility.

"Those are the values of the capitalist culture, so bad is the situation that we take seriously our universal brotherhood and its consequences or we all die," d'Escoto said.

D'Escoto said the UN world conference in June is supposed to decide the design of a new global economic and financial architecture.



Anti-Bullying Crusader Bullies  Christian Teens

If you are aware  that "bullying" is the latest Leftist word for expressing views they disagree with, this begins to make sense

Dan Savage, the founder of an anti-bullying campaign that has reportedly reached more than 40 million viewers, and has contributors that include President Obama to Hollywood stars, dove into unexpected territory while giving a speech at a high school journalism conference Friday.

There, instead the planned discussion on the dangers of bullying, Savage seemingly turned into a “bully” himself, albeit a powerful, adult one.

Reports say Savage’s speech quickly turned from the subject of anti-bullying into an event in “Christian-bashing,” causing as many as 100 students to simply walk out of the event.

Savage noted that Americans disregard much of the “bulls*it” in the Bible, from laws about shellfish to those about slavery, and we just need to clear one more “hurdle” in disregarding writings about homosexuality.

“The Bible says that if your daughter’s not a virgin on her wedding night– if a woman is not a virgin on her wedding night– she shall be dragged to her father’s doorstep and stoned to death,” he says, yet “Callista Gingrich lives.”

One student in the audience, Rick Tuttle, remarked, “I thought this would be about anti-bullying…It turned into a pointed attack on Christian beliefs.”

He also reportedly told the students about how good his partner looks in a speedo, and called the students who walked out “pansy a*ses.”

The National Scholastic Press Association and Journalism Education Association, who co-sponsored the event, responded in a statement that they did not have a prior transcript of the speech, and wished he had stayed more “on target.”  However, they wrote optimistically: “We have already heard from some advisers who have turned this into a teachable moment for their students.”

One teacher was more condemnatory, saying the language and material was inappropriate for high school students, and if anything, Dan Savage was bully in this regard.

“If he was doing this with a bunch of college journalism kids, that would be a different story — that’s more rough and tumble. How many of the kids who didn’t walk out felt backed into a corner?  To me, that’s bullying behavior. It has all the symptoms, as far as I’m concerned.”

Candi Cushman, a CitizenLink blogger, concluded:  “Using profanity to deride the bible – and then mocking the Christian students after they left the room — is obviously a form of bullying and name-calling,” she wrote.  “This illustrates perfectly what we’ve been saying all along: Too many times in the name of ‘tolerance,’ Christian students find their faith being openly mocked and belittled in educational environments.”



Barack Obama attempts to intimidate contributors to Mitt Romney's campaign

Psychopathic amorality again:  "Free and fair" means nothing to Obama.  

Try this thought experiment: You decide to donate money to Mitt Romney. You want change in the Oval Office, so you engage in your democratic right to send a check.

Several days later, President Barack Obama, the most powerful man on the planet, singles you out by name. His campaign brands you a Romney donor, shames you for "betting against America," and accuses you of having a "less-than-reputable" record. The message from the man who controls the Justice Department (which can indict you), the SEC (which can fine you), and the IRS (which can audit you), is clear: You made a mistake donating that money.

Are you worried?

Richard Nixon's "enemies list" appalled the country for the simple reason that presidents hold a unique trust. Unlike senators or congressmen, presidents alone represent all Americans. Their powers—to jail, to fine, to bankrupt—are also so vast as to require restraint. Any president who targets a private citizen for his politics is de facto engaged in government intimidation and threats. This is why presidents since Nixon have carefully avoided the practice.

Save Mr. Obama, who acknowledges no rules. This past week, one of his campaign websites posted an item entitled "Behind the curtain: A brief history of Romney's donors." In the post, the Obama campaign named and shamed eight private citizens who had donated to his opponent. Describing the givers as all having "less-than-reputable records," the post went on to make the extraordinary accusations that "quite a few" have also been "on the wrong side of the law" and profiting at "the expense of so many Americans."

These are people like Paul Schorr and Sam and Jeffrey Fox, investors who the site outed for the crime of having "outsourced" jobs. T. Martin Fiorentino is scored for his work for a firm that forecloses on homes. Louis Bacon (a hedge-fund manager), Kent Burton (a "lobbyist") and Thomas O'Malley (an energy CEO) stand accused of profiting from oil. Frank VanderSloot, the CEO of a home-products firm, is slimed as a "bitter foe of the gay rights movement."

These are wealthy individuals, to be sure, but private citizens nonetheless. Not one holds elected office. Not one is a criminal. Not one has the barest fraction of the position or the power of the U.S. leader who is publicly assaulting them.

"We don't tolerate presidents or people of high power to do these things," says Theodore Olson, the former U.S. solicitor general. "When you have the power of the presidency—the power of the IRS, the INS, the Justice Department, the DEA, the SEC—what you have effectively done is put these guys' names up on 'Wanted' posters in government offices." Mr. Olson knows these tactics, having demanded that the 44th president cease publicly targeting Charles and David Koch of Koch Industries, which he represents. He's been ignored.

The real crime of the men, as the website tacitly acknowledges, is that they have given money to Mr. Romney. This fundraiser of a president has shown an acute appreciation for the power of money to win elections, and a cutthroat approach to intimidating those who might give to his opponents.

He's targeted insurers, oil firms and Wall Street—letting it be known that those who oppose his policies might face political or legislative retribution. He lectured the Supreme Court for giving companies more free speech and (falsely) accused the Chamber of Commerce of using foreign money to bankroll U.S. elections. The White House even ginned up an executive order (yet to be released) to require companies to list political donations as a condition of bidding for government contracts. Companies could bid but lose out for donating to Republicans. Or they could quit donating to the GOP—Mr. Obama's real aim.

The White House has couched its attacks in the language of "disclosure" and the argument that corporations should not have the same speech rights as individuals. But now, says Rory Cooper of the Heritage Foundation, "he's doing the same at the individual level, for anyone who opposes his policies." Any giver, at any level, risks reprisal from the president of the United States.

It's getting worse because the money game is not going as Team Obama wants. Super PACs are helping the GOP to level the playing field against Democratic super-spenders. Prominent financial players are backing Mr. Romney. The White House's new strategy is thus to delegitimize Mr. Romney (by attacking his donors) as it seeks to frighten others out of giving.

The Obama campaign has justified any action on the grounds that it has a right to "hold the eventual Republican nominee accountable," but this is a dodge. Politics is rough, but a president has obligations that transcend those of a candidate. He swore an oath to protect and defend a Constitution that gives every American the right to partake in democracy, free of fear of government intimidation or disfavored treatment. If Mr. Obama isn't going to act like a president, he bolsters the argument that he doesn't deserve to be one.



Another return to Zion

During the 1990s, Israel's elite took a vacation from reality and history and they brought much of the public with them.

Then-foreign minister Shimon Peres said that history was overrated. The so-called "New Historians," who rummaged through David Ben-Gurion's closet looking for skeletons, were the toast of the academic world. Radicals like Yossi Beilin, Shulamit Aloni and Avrum Burg were dictating government policy.

The media, the entertainment establishment, and the Education Ministry embraced and massively promoted plays, movies, television shows, songs, dances, art and books that "slayed sacred cows." Everywhere you turned, post-Zionism was in. Post-Judaism was in. And Zionism and Judaism were both decidedly out.

To understand the distance Israel has traveled since then, consider Tuesday night's Memorial Day ceremony at Rabin Square in Tel Aviv. None of the performers attacked their fellow Israelis. And the best-received artist and song was Mosh Ben-Ari and his rendition of Psalm 121 - A Song of Ascent.

The psalm, which praises God as the eternal guardian of Israel, became the unofficial anthem of Operation Cast Lead in Gaza in 2008-2009. And Ben-Ari's rendition of the song propelled the dreadlock bedecked, hoop earring wearing world music artist into super-stardom in Israel.

IT WAS impossible to imagine Pslam 121 or any other traditional Jewish poem or prayer being performed as anything other than an object of scorn in 1998. Back then, it would have been impossible to contemplate a crowd of tens of thousands of non-religious Israelis reverently singing along as Ben-Ari crooned, "My help is from God/ Maker of Heaven and Earth/ He will not allow your foot to falter/ Your Guardian will not slumber/ Behold he neither slumbers nor sleeps - the Guardian of Israel."

Israel's return to its Zionist roots is the greatest cultural event of the past decade. It is also an event that occurred under the radar screen of the rest of the world. No one outside the country seems to have noticed at all.

The outside world's failure to take note of Israel's cultural shift owes to its failure to recognize the significance of the failure of the peace process with the Palestinians on the one hand and the failure of Israel's withdrawal from Gaza on the other hand. The demise of the peace process at Camp David in July 2000 and the terror war that followed launched the Israeli public on its path away from its radical post-Zionist rebellion and back to its Zionist roots. The failure of the withdrawal from Gaza, and the international community's response to Operation Cast Lead, marked the conclusion of the journey.




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1 comment:

Robert said...

Re: Obama's attempts to intimidate even private citizens from contributing to Romney, I say that's all the more reason to do everything possible to defeat that sworn enemy of America and evict him from our White House.

Re: "Where has that inflation gone?", times of negative social mood are times when you see velocity of money slow down, economic activity slow down, the economy go into recession or depression, bonds and other debt instruments become valued less and less, people are afraid to borrow for fear they won't be able to pay back the loan, lenders are afraid to lend for fear they won't be paid back, and political incumbents generally lose re-election bids. The credit/debt part of the money supply (currency + credit) can contract MUCH faster than new credit can be created, or even new currency printed, if actual currency were being printed. With total debt outstanding around $1 quadrillion, just seeing that debt decline in value from 100 cents on the dollar to 99 cents on the dollar wipes out $10 trillion from the credit portion of (currency + credit). Actual currency is only in the billions. And we've barely begun the BIG wave down (if we've even started it yet), by the end of which most bonds and other debt instruments will be worthless. Once the credit portion of the money supply has contracted into the billions, comparable to just a few times the amount of currency, AND social mood turns up (with all the opposite effects of negative social mood), THEN we could very easily see inflation explode.