Wednesday, December 19, 2018

Some prophecy that is looking good

On 30 April, 2012 I asked "Where has that inflation gone?"  I reproduce below the answer I gave then. The answer did contain some predictions so one might ask how have those predictions worked out?  I give below the original predictions folowed by a 2018 update:


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 up a somewhat oversimplified version of my suggestion: 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.

2018 UPDATE: I am writing this update in December 2018 so it is still early days yet but we do seem to be seeing some of the effects under Trump that I predicted for an incoming conservative administration.

A great boom has unquestionably arrived and is reactivating idled resources. Coal and steel production are headlined as up but the striking transformation is in the labor market. All slack there seems to have been taken up. Previously intransigent sectors -- blacks, Hispanics and the over 50s -- suddenly seem to be back into full employment. Labor markets have become so tight that employers have been forced into their last ditch strategy,

Employers are now competing for the available workers. And how do you do that? Offer higher wages. The Trump economy is at last producing higher wages for many American workers. So the process of bidding up prices has already begun. That must to some extent flow through to consumer prices but how far we have yet to see. How far it goes will be interesting, to say the least.

The banking sector is yet to show any sign of exuberance. They were heavily burned in the recent past (2008 etc) so caution may now be entrenched in them. If so, a big inflationary explosion could be avoided -- JR


Pocohontas comes clean

Democratic Massachusetts Sen. Elizabeth Warren admitted on Friday that she is not a person of color, despite recently seeking to prove that she has Native American ancestry.

In October, Warren released a DNA test in an attempt to combat President Donald Trump’s many attacks on her alleged Native American ancestry. The test results showed that she has a Native American ancestor “in the range of 6–10 generations ago.”

But during a commencement address at Morgan State University in Baltimore, Maryland, on Friday, Warren made clear that she does not consider herself a person of color.

“I’m not a person of color. And I haven’t lived your life or experienced anything like the subtle prejudice, or more overt harm, that you may have experienced just because of the color of your skin,” Warren admitted.

Warren’s attempt to prove that she had Native American ancestors was condemned by minority leaders, including the Cherokee Nation, who called her use of a DNA test “inappropriate.”

“A DNA test is useless to determine tribal citizenship,” the Cherokee Nation said in a statement. “Sovereign tribal nations set their own legal requirements for citizenship, and while DNA tests can be used to determine lineage, such as paternity to an individual, it is not evidence for tribal affiliation.”

Warren has been identified as a minority and a person of color multiple times in her past, including in her professional career. A 1997 Fordham Law Review article, for example, identified Warren as Harvard Law School’s “first woman of color.” (RELATED: Harvard Law School Once Touted Liz Warren As Native American Professor)

Warren later admitted that she had listed herself as a minority in an Association of American Law Schools directory from 1986-1994, but claimed she was not using it to advance her career or employment options.



Is Health Care a Right?

Recently, a federal judge ruled that the Patient Protection and Affordable Care ACT (PPACA), also known as Obamacare, is unconstitutional. Of course, there are the usual suspects who are expressing their angst. However, a simple lesson in civics would evidence their blatant incompetence.

First, let’s go back to when sitting Chief Justice of the U.S. Supreme Court Roberts authored the majority decision on the constitutionality of Obamacare. At first, Chief Justice Roberts stated that Obamacare was not consistent, constitutional, when assessed against the Commerce Clause of our Constitution. The Commerce Clause basically states that the federal government can regulate commerce and trade between the United States and other countries, between the states, or with the tribal nations. At no point does the Constitution grant an enumerated power to the federal government to force commerce activity between an individual citizen and a private sector commodity.

This all centered on the Obamacare individual mandate, which “mandated” citizens purchase health care insurance or face a penalty, a tax. And therein lies the bait and switch of Chief Justice Robert’s decision. He voted that under the enumerated power of taxation, Obamacare was constitutional. But what has happened since is that the individual mandate tax has been repealed. Therefore, if the taxing authority has been repealed, then based upon the commerce clause, Obamacare is indeed unconstitutional. The federal government does not possess the enumerated power to force individual citizens (the individual mandate) to purchase a private sector commodity. Also, Obamacare was passed in an unconstitutional manner. The individual mandate tax was introduced in the U.S. Senate, then under control of the Democrats. Anyone that knows a little about the Constitution and Article I powers, knows that measures that deal with revenue generation, taxation, must originate in the U.S. House of Representatives, not the Senate.

Now of course, the progressive, socialist left is hopping mad and about to go into a next-level apoplectic meltdown. To them, the rule of law is meaningless. They only care about the rule, but if their ideas are so good, then why are they always accompanied with mandates?

The left did a phenomenal job this past election cycle in making health care a preeminent issue. And the GOP, as usual, lacked any coherent response. It all comes down to the premise that the left is very adept at using: arguing that health care is a right. When the GOP is confronted with that suggestion, they run, cower, and respond with the same old tired incoherent blather. The answer is no, health care is not a right. But the left is always chirping about your right to health care being taken away from you. The right response is that it was never a “right” for progressive socialists to bestow upon individual Americans anyways.

What the left is so very good at is convincing the American people that the progressive, socialist ideological agenda is based upon rights. You know, the right to free college education, the right to a home, the right to kill unborn babies, and the right to be married. For whatever reason, the left does not comprehend that we are endowed by our Creator, not them, with certain unalienable rights to life, liberty, and the pursuit of happiness. Oddly enough, these things that our founding documents state are rights, are not considered rights by the leftists when it comes to their agenda. The Second Amendment is clear and simple to understand, but not to the left. The freedom of religion seems simple, but your religious rights have no meaning when it is up against the left’s desires, mandates. Your individual right to free speech has no validity, unless your speech is acceptable to the progressive, socialist left. And yes, I could go on.

What the left believes is that they can guarantee happiness. And they will mandate it in order to do so -- and for your own good.

If Obamacare is such a great idea, then why does it have to have mandates, under the penalty of taxation? That, folks, is what we call behavior modification by way of taxation. And could the day ever come when the progressive socialists will mandate, under penalty of taxation, that Americans buy electric vehicles? In California, the test tube for all things leftist, the government there has mandated that all new houses must have solar panels. I mean, doggone, it is supposed to be YOUR house.

Well, ask yourself, do you REALLY want the federal government mandating your health care decisions?

The progressive, socialist left is now pushing “Medicare for all.” Question: what happens to the seniors for which Medicare was intended? And do we really want the gang that cannot shoot straight with the Veterans Administration health care system, mandating health care for all of us? See, when the progressive, socialist left declares that something is a right – in this case health care – what they really want is control. If you do not believe me, then read HR 676, which is the Medicare for all legislation. This measure makes private health insurance illegal. Yes, that is right. You, the individual citizen, lose your right to choose your health care. But weren’t we told we could keep our doctor and our insurance? This, ladies and gents, is the second tenet of socialism, nationalizing economic production.

What the progressive, socialist left wants you to believe is that in declaring health care a right, they can give it to you. But all they are seeking is to control you, your body. Never forget that one of those agencies that still exists as part of Obamacare is the IPAB (Independent Payment Advisory Board). The IPAB is an unelected group of bureaucrats who will be making all pricing decisions on your “right” to health care.

Ok, I hear you, what should have been done? First, seriously start reducing the fraud, waste, and abuse of Medicare and Medicaid. I would recommend the American taxpayer not be paying for these programs to those here illegally. Second, focus on policy solutions for the so-called “working poor” and use free market solutions such as Health Savings Accounts and tax credits to help with health insurance purchases. We need better competition and less state by state mini monopolies by insurance companies because competition lowers cost. And how interesting it is that the health insurance companies were thrilled about Obamacare. After all, if health insurance is mandated, then everyone must purchase your product. Now, the left is demonizing the health insurance companies.

As a reminder, we have been down this road before. Back during the Carter Administration, there was the Community Reinvestment Act. It basically said that every American had a right to own a home. Well, some thirty years later, in 2008, we had a financial meltdown that was tied back to the mortgage industry.

Remember that maxim that came as a result of the Trojan Horse, “beware of Greeks bearing gifts”? Well, beware of progressive socialists when they say you have a right to something. It never does end up well, just like with the Trojans.



Giuliani Snorts: Trump Has ‘Several Unpaid Parking Tickets’ from 1986-7 ‘That Haven’t Been Explained’

In a somewhat combative interview on two Sunday morning newsmaker shows, President Trump’s attorney Rudy Giuliani used sarcasm to make a point about the special counsel’s ongoing Trump-Russia investigation.

Chris Wallace, the host of “Fox News Sunday,” asked Giuliani if Special Counsel Robert Mueller is still trying to arrange an in-person interview with President Trump:

“Yes,” Giuliani said. "There are several unpaid parking tickets that night -- back in 1986, '87 that haven't been explained. You know, we've got to –"

“Seriously?” Wallace interrupted.

“Seriously, unpaid parking tickets--” Giuliani started to say, as Wallace said, "No, no, no."

“It was a movie theater,” Giuliani continued. “He didn't pay the proper fee.”

Wallace asked again if Mueller wants to do a sit-down interview with Trump:

“Yes, good luck. Good luck,” Giuliani said. “After what they did to Flynn, the way they trapped him into perjury and no sentence for him -- 14 days for Papadopoulos. I did better on traffic violations than they did with Papadopoulos.”

“So, when you say good luck, you're saying no way, no interview?” Wallace asked.

"They're a joke," Giuliani replied. "Over my dead body, but you know, I could be dead.”

A bemused Wallace asked Giuliani once again, “Do they want to speak to the president?”

“I do have -- I do have other lawyer -- I am disgusted with the tactics they have used in this case,” Giuliani said, changing the subject. “What they did to General Flynn should result in discipline. They're the ones who are violating the law. They're looking at a non-crime collusion, the other guys (Southern District of New York) are looking at a non-crime campaign violations, which are not violations. And they are the ones who are violating the law, the rules, the ethics and nobody wants to look at them.”

Giuliani also told Wallace that even if Trump did direct Michael Cohen to pay hush money to two women, "It's not a crime."

But Giuliani said Trump did not know about the payments arranged by Cohen "until some time into it. He did find out about it and eventually reimbursed him."

Giuliani said Trump is telling the truth and Cohen is lying. "The man is a complete pathological liar that cannot be believed."

On ABC's "This Week," Giuliani again slammed Michael Cohen for saying that Trump directed him to pay hush money: "The man is pathetic. That's a lawyer you were interviewing, and he says he -- oh, he directed me to do it and, oh my goodness, he directed me. He's a lawyer. He's the guy you depend on to determine whether or not you should do it this way or that way, whether you're Donald Trump or you are me or you."

Host George Stephanopoulos told Giuliani that Cohen was saying Trump knew the payments were wrong but directed Cohen to make them anyway:

"Well, the president said that's false," Giuliani responded. He noted that Cohen himself has said that he made the payments on his own, and later went to Trump for reimbursement.

"OK, now he says the opposite. You're going to tell me which is the truth? I think I know what the truth is. But unless you're God, this man -- you will never know what the truth is. He lies to fit the situation he's in."

Giuliani said the payments arranged by Cohen to keep two women quiet just before the election were not campaign contributions:

“It's not a contribution if it's intended for a purpose in addition to the campaign purpose," he said. "I can produce an enormous number of witnesses that say the president was very concerned about how this was going to affect his children, his marriage, not just this one but similar -- all those women came forward at that point in time, that -- that tape with Billy Bush and all of that. It's all part of the same thing. And I know what he was concerned about and I can produce 20 witnesses to tell you what he was concerned about."



For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCHPOLITICAL CORRECTNESS WATCH, AUSTRALIAN POLITICS, and Paralipomena (Occasionally updated),  a Coral reef compendium and an IQ compendium. (Both updated as news items come in).  GUN WATCH is now mainly put together by Dean Weingarten. I also put up occasional updates on my Personal blog and each day I gather together my most substantial current writings on THE PSYCHOLOGIST.

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1 comment:

John said...

Good post on inflation, but with one correction. It is not true that there was no inflation. Inflation can come in two flavors, price inflation and asset inflation. That money didn't sit idle, it went into the stock market and created the massive stock market explosion post-2008.