Depression risk might force U.S. to buy assets

As the credit bubble unravels, will the bad debts be written off, resulting in a debt-deflation spiral? Or will central banks do everything within their power, including the use of “unconventional methods” to prevent asset prices from falling? I suggest the latter outcome. The benefits to a deflation are deferred and dispersed, and require a considerable amount of pain first; while the benefits of bailing out financial institutions are immediate and concentrated. With 70% of Americans owning homes, public opinion generally favors rising, or at least not-falling home prices.

And Now, It’s Securitization!

The media have made us all aware of how rapacious lenders and (in a few cases) mendacious borrowers foisted the subprime mortgage mess (SMM) on us. Here and there may have come a whisper about chronically forcibly depressed interest rates and profligate creation of money by the Fed, and never, ever will the elephant in the living room of affirmative-action lending gain any traction (just not nice, you know). But from the University of Chicago via The Economist now comes yet another demon: securitization, and with “hard proof,” no less.

The Valentine Story of Ludwig and Margit von Mises

He talked to her after dinner, and they went to a dance club. Apparently Mises was a poor dancer -- at least by Margit’s standards -- and so they spent most of the night talking. Actually she did most of the talking and he listened attentively. Margit was an attractive woman of five-foot-four, with brown hair and grey-blue eyes. Now, as they talked, he discovered she was also a witty and warm person. He must have fallen in love with her that evening. The next day, he sent her red roses and asked her out for dinner.

Garet Garrett: Far Forward of the Trenches

Joseph Sobran discovered these Garet Garrett essays “one night, long ago, at the office of National Review, where I then worked.” As the flagship of modern conservatism, National Review supported the Cold War and the hot war then raging in Vietnam.

“Two questions occurred to me,” Sobran writes. “One: ‘Why haven’t I heard of this man before?’ Two: ‘If he’s right, what am I doing here?”

Downward Dollar Delivers Blow to Outsourcing

The slowdown of the American economy and the ensuing devaluation of the US dollar deliver gloomy headlines as timely as weather forecasts. The weakening currency may excite entrepreneurs anticipating increased exports. As well, it might have a stimulating effect for American professionals who are paid in return for our services. However, the total effect is negative insofar as it will curb the trend toward the expansion of the international division of labor. Less outsourcing means higher labor costs for American business, which means less productivity overall.

Taking Money Back

To save our economy from destruction, wrote Murray Rothbard, and from the eventual holocaust of runaway inflation, we the people must take the money-supply function back from the government. Money is far too important to be left in the hands of bankers and of Establishment economists and financiers. To accomplish this goal, money must be returned to the market economy, with all monetary functions performed within the structure of the rights of private property and of the free-market economy.

Die Early, Save Taxpayers Money

The usual argument about smoking and anti-obesity laws is that people who are sick cost the public money. Time reports on an opposite view: the earlier you die, the cheaper it is for those paying the bills.

“The researchers found that from age 20 to 56, obese people racked up the most expensive health costs. But because both the smokers and the obese people died sooner than the healthy group, it cost less to treat them in the long run.”

A New Golden Age?

The new issue (on sale today) of Worth magazine features an article on “A New Golden Age” by Nathan Lewis which is a nice recap of the history of the gold standard showing that we (along with the Roman’s) thrived on a gold standard only to succumb to paper inflations.

“It is practically a truism that the decline of currency quality is mirrored in the decline of world power.” Lewis has a new book Gold: The Once and Future Money.

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