The Swede’s wife steps up to the tee and, as she bends
over to place her ball, a gust of wind blows her skirt
up and reveals her lack of underwear. “Good God, woman! Why aren’t you wearing any skivvies?” Ole demands.

“Well, you don’t give me enough housekeeping money to afford any.” The Swede immediately reaches into his pocket and says, “For the sake of decency, here’s a 50. Go and buy yourself some underwear.”

Next, the Irishman’s wife bends over to set her ball on the tee. Her skirt also blows up to show that she, too, is wearing no undies. “Blessed Virgin Mary, woman! You’ve no knickers. Why not?”

She replies, “I can’t afford any on the money you give me.” Patrick reaches into his pocket and says, “For the sake of decency, here’s a 20. Go and buy yourself some
underwear!”

Lastly, the Scotsman’s wife bends over. The wind also takes her skirt over her head to reveal that she, too, is naked underneath. “Sweet mudder of Jaysus, Aggie! Where ta friggin hell are yer drawers?”

She, too, explains, “You dinna give me enough money ta be able ta affarrd any.”

The Scotsman reaches into his pocket and says, “Well, fer the love ‘o decency, here’s a comb … tidy yerself up a bit!”

Exactly.

Normal?

Why do people keep referring to the last several years as normal? Over and over again I hear supposed experts on CNBC and other news channels saying things like “normally,” “how things usually are,” or “under normal circumstances” when referring to the economic conditions present over the past several years. I hear the talking heads asking when banks will return to “normal lending practices.”

There is nothing normal about a recession; likewise, a boom phase is equally abnormal. During the boom phase no one asked when the banks would return to normal lending practices.

This is an example of what psychologists refer to as “regression fallacy.” Regression fallacy theory states that individuals are more likely to interpret exceptional events/performance/scores as being average and expect the results to continue. Statisticians refer to this a Regression Toward the Mean.

To illustrate this point consider the following scenario. If XYZ company’s stock shows 80% earnings growth for two years in a row while its closest competitors only show 15% earnings growth over the same period of time then investors are likely to expect XYZ’s earnings growth for next year to be around 80%.

It is important that we are aware of our tendency to make this mistake. If the goal for the economy is to return to “normal” then we must recognize that the last several years have been an exceptional boom, not normal or average.

The “aim” of capitalism, insofar as you can talk about an aim actually existing, is to maximize economic freedom by enforcing (physical) property rights. In a free market, your personal goal can be whatever you want it to be, but only those who create massive value for others get rich.

If the total amount of (even fiat) currency in circulation was fixed, meaning no FDIC insured fractional reserve banking or Federal Reserve shenanigans, and if productivity overall rose, then the purchasing power of the currency would go up over time. Also, historically, there’s a very strong correlation between societies that produce a lot and those which are freest.

My own aim is to live in one of those societies :)

http://www.thisamericanlife.org/radio-archives/episode/397/2010

“Why are you surprised that we can’t predict the future? We can’t even predict the past!”

BoingBoing readers > The Economist

Sounds logical. If there’s plenty to go around and everyone is happy, there’s not much need to deny the people freedom.

Begs serious question: Why, then, is the US imprisoning so many of its people?

An other thing… Historically may not mean much if we keep polluting the top soil.

and galbraith comments here: It will surely be very slow to restore employment. At present writing jobs are being lost at the rate of over 600,000 per month. To reverse this in six months would require a swing to job creation of the same amount, or a net swing of 1.2 million jobs a month for half a year. This is not going to happen – not even close. Among many reasons, homebuilding is likely to be depressed for a long time, while elsewhere production gains will be backed by productivity increases. As a result, we can expect the human wreckage of this slump to persist and to deepen as the period of unemployment lengthens. Without direct employment measures, many of the people most hurt will not again find decent jobs.

- As a result of the administration’s determination to save the big banks, we will emerge from this slump with an unreformed financial sector in the hands of the same people who produced the disaster in the first place. While some bad assets will recover value, many will not, and losses will either go unrecognized or they will be transferred, via the public-private partnerships, first off the balance sheets of the banks and then to the taxpayer, when the mortgages default, via the non-recourse feature of the FDIC’s loans. We could assess the likelihood of this happening, if we chose, by the simple step of auditing the loan tapes underlying a fair sample of sub-prime securities, to determine the prevalence of missing documentation, misrepresentation and prima facie fraud. Such a study would constitute minimum due diligence and that fact that one is not underway is a very bad sign.

- In the expansion the early easy buck, especially for speculators, may well be in commodities, especially oil. A rapid increase in imported energy costs would reverse the effective stimulus now being given by low oil prices. It will also generate CPI inflation, perhaps inducing the Federal Reserve to slam on the brakes. There is little reason to hope that the recovery will be allowed to march us all the way back to full employment unless we overcome our vulnerability to volatile oil prices, and nothing in the plans so far suggests we have faced up to that elementary necessity.

- A turnaround could bring the deficit hawks back out of the woodwork, arguing vociferously that “now is the time” for tax increases and entitlement cuts. Should they prevail, the process could be thrown into reverse, in a recapitulation of Roosevelt’s balance-the-budget recession of 1937-38.

Takuan, is this a paraphrased allusion to a classic Bruce Jay Friedman story? Either way, genuine LOL. Got me.

;…

Absolutely. Too many economists confuse finance with economics. They study the parasite, not the host.

It is enough to mention the commercial crises that by their periodical return put on its trial, each time more threateningly, the existence of the
entire bourgeois society. In these crises a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises
there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity–the epidemic of over-production. Society suddenly finds itself put back into a state of momentary
barbarism; it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed; and why? Because there is too much civilisation, too much means of subsistence, too much industry, too much commerce. The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions, by which they are
fettered, and so soon as they overcome these fetters, they bring disorder into the whole of bourgeois society, endanger the existence of bourgeois property. The conditions of bourgeois
society are too narrow to comprise the wealth created by them. And how does the bourgeoisie get over these crises? On the one hand inforced destruction of a mass of productive forces; on the
other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.
From: MANIFESTO OF THE COMMUNIST PARTY 1888
The one danger which no one has talked about is what will happen if a political movement starts up with this issue in it’s teeth?

The government controlled fiat-money regime is highly inflationary, as it allows for an increase in the stock of money mostly through bank credit in excess of real savings (circulation credit). The rising money stock pushes up prices — be it consumer or asset prices (such as stocks, housing, etc.).

Expanding the money stock through circulation credit sets into motion an illusionary boom, leading to malinvestment. However, the latter does not come to the surface as long as the credit and money supply keeps growing.

If money supply growth slows down all of a sudden, however, investor expectations are disappointed, and investment projects, which were — in a world of ever more money and rising prices — considered economically viable, become unprofitable.

The slowing down of money growth reveals that the production structure does not comply with actual demand, thereby unmasking the squandering of scarce resources. And so the artificial boom, induced by new money injections, turns into bust.

A policy of holding up the artificial boom would require ever-greater increases in money. Ludwig von Mises saw that this would lead to disaster:

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

So, is this saying that Deflation could set in, especially considering sinking fuel costs?

Because sinking fuel costs will continue to be sinking? Or stay at their present sunken levels. How bad would things be on the off chance that fuel costs will in fact rise again?

Instead of getting a bank loan to fix your car or roof, trade your services/goods/food with an unemployed friend who needs the work.

The bankers run everything, and have it rigged so that they win no matter what. War and homelessness and mass starvation notwithstanding, they WILL have their luxuries. And everyone else will pay for it. Democracy at work!

From teh wikis: Jubilee (Christian), the year of Jubilee is a special year for the remission of sins and universal pardon where debts are forgiven, slaves and prisoners freed, and the mercies of God would be particularly manifest. In the Old Testament book of Leviticus, a Jubilee year is to occur every fifty years.

Considering we’ve gone about… oooooh… a millennium without one I’d say it’s about time, eh?

Leviticus hates bond holders as much as gays! Who knew?

I’ve been wondering that myself lately. It’s one thing to mix in the occasional issue the bloggers care about, it’s another thing to have an endless stream of “you should be outraged by this!”

I don’t think we’re even close to a communist revolution in the US. If anything we are much closer to a populist uprising that could easily turn authoritarian or fascist.

The solution is to allow the necessary deflation correction to bring prices back down to levels that yield market clearing.

The easiest way to do this would be to raise, not lower, interest rates. Banks will be compelled to refinance existing loans accordingly, or risk default and bankruptcy. (Furthermore, banks must not be allowed to be shielded from bankruptcy through government intervention.)

This would also induce the “save more and spend less” agenda that Obama et. al. claim to desire in the long-term. Instead of an economy centered on credit, it will return to one centered on savings.

Deflation favors those who independently save money. Inflation favors the cartel of creditors. But deflation is what we would naturally expect as an outcome due to division of labor and advancement in the technology of production (i.e. producing more with less). The fact that we observe steady inflation in the real world goes a long way towards explaining the partnership between bankers and politicians for their fleecing of everyone else.