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Exceellent repub of Mike Shedlock's wonderful article describing the 3 Schools of Economic Wizardry.  Includes a simplified but exacting view of the "why and how"  the Keynesian and Monetarist Wizardry Schools wreck havoc on the world.   ... Keynesian Voodoo Wizards ... Monetarist Voodoo Wizards ... Austrian Realists Remember the voodoo motto: "If it doesn't work, keep doing more of it, even if that is what got you in trouble in the first place!" ..... Excerpt: Once upon a time (today), in a land not so far away (USA), there lived a trio of economic wizards (economists), whose names shall remain anonymous (Paul Krugman, Greg Mankiw, Ben Bernanke). A fourth wizard, Murry Rothbard, is no longer among the living but resides in the netherworld. The above wizards seldom agree with each other because they come from competing schools of wizardry. Three Schools of Economic Wizardry 1. Keynesian School of Fiscal Voodoo and Witchcraft 2. Monetarist School of Monetary Voodoo and Witchcraft 3. Austrian School of Sound Money, Sound Economic Principles and Common Sense. "Dark Arts" Wizardry The first two wizardry schools belong to a class of wizardry promoted to aspiring wizards as the "Dark Arts." Philosophical Beliefs Keynesian wizards believe governments can spend their way to economic health and although fiscal deficits may matter at some point in time, they never matter now, in practice. Monetarist wizards believe money will cure any and every problem if enough is dropped from helicopters and interest rates held low. Austrian wizards believe that economic problems are created by unsound money, haphazard loans, excessive debts, and government manipulations. Keynesian and Monetarist wizards believe in the voodoo principle "the problem is the solution if only you do more of it." The former relies primarily on fiscal voodoo; the latter relies primarily on monetary voodoo. Austrian wizards do not believe "the problem is the solution," no matter ho

Cut to the chase explanation of Austrian economics:  Banksters and their IMF collection arm want to roll over the sovereign debt of EU nations (PIIGS), subsidized by tax paying citizens.  The Banksters want the Sovereign debt of a few nations "nationalized" so that the loses are shared by the entire EU - and taken off the Bankster books. The Austrian economics handbook says that these Sovereign debters should go into default immediately, and declare bankruptcy.  The Banksters should take the hit for making the bad loans in the first place.  No bailouts. 75% of German tax payers support the Austrian plan!

I've said for more than 40 years that "inflation is the cruelest tax of all." In a fiat currency economy, it is robbery, pure and simple; and the poor are hardest hit because they lack the capital to make investments that can outpace inflation. The net effect is to transfer wealth from the lower economic classes to the wealthy, most of all the investment banksters and "old wealth".

Tom Woods speaking in Boulder, Co.  This video is 1 hour long, but it may be the best 1 hour ever spent!  Should be mandatory viewing for every American before they enter the voting booth.  Hayek and the Austrian Business - Economic cycle theory are fully explained and applied to historical cycles of boom and bust, with particular attention, very humurous attention i might add, to the 2001 and 2008 financial collapse. One thing puzzles me though.  I kept wondering how it is we restructure the banking system?  Killing the Federal reserve is just the start.  But how do we "free" the market balance of investment, resources and savings from the disruption of artificial or mistaken interest rates?  It seems to me that Banks have always had difficulty with the allocation of investment resources - "capital" with a K. As i listened to Tom, totally captured by his engaging presentation, the depths of his thinking, and the humorous delivery, i couldn't help but think that one way of ending the vicious cycles of interest rate buffoonery would be to end the Federal Bankster Reserve, put the currency into the hands of the US Treasury, with the States electing currency governors to control the Treasury; but fixing the interest rate of treasury currency to the value of "Lawful money" as defined in the Constitution to be that which is redeemable in Gold or Silver.  As in, the historical value of the dollar = 371.25 troy grains of silver.  The fact is, "Lawful money" is a Constitutional requirement. Today we have two kinds of dollars: fiat, or funny money, and, Lawful money.  The conversion rate between fiat dollars and Gold is once again near $1700 per ounce.  My question is; How do we derive a "Lawful Interest Rate" from the ratio of fiat to "Lawful money"?  Seems to me that for the Austrian business cycle to work, some guidance to a "Lawful Interest Rate" must be outlined.

Maybe the best statement to date as to why we, the people, need to take back control of the Federal Reserve.  Ron Paul has noticeably tempered down his close the Fed rhetoric, moving to a audit-control the Fed position.   excerpt: The Federal Reserve has caused every single boom and bust that has occurred in this country since the bank's creation in 1913. It pumps new money into the financial system to lower interest rates and spur the economy. Adding new money increases the supply of money, making the price of money over time-the interest rate-lower than the market would make it. These lower interest rates affect the allocation of resources, causing capital to be malinvested throughout the economy. So certain projects and ventures that appear profitable when funded at artificially low interest rates are not in fact the best use of those resources. Eventually, the economic boom created by the Fed's actions is found to be unsustainable, and the bust ensues as this malinvested capital manifests itself in a surplus of capital goods, inventory overhangs, etc. Until these misdirected resources are put to a more productive use-the uses the free market actually desires-the economy stagnates. Enlarge Image Bloomberg Fed Chairman Ben Bernanke The great contribution of the Austrian school of economics to economic theory was in its description of this business cycle: the process of booms and busts, and their origins in monetary intervention by the government in cooperation with the banking system. Yet policy makers at the Federal Reserve still fail to understand the causes of our most recent financial crisis. So they find themselves unable to come up with an adequate solution.

As many know, i spent quite a bit of time working for a Chinese Company seeking to enter the USA-European software market.  My task was to research the market, discover and define a market opportunity, design the product, and then work as product manager to get that service to market.  I took this job to better understand the Chinese marketplace and how sovereign Chinese companies work.  What i learned is how the Chinese seek to exploit and totally dominate open markets.  Software is just a category whose time has come.  and there are thousands of Chinese companies lining up.  The first step though is to fine tune the existing blueprint used by other Sina sovereigns.  amazing stuff. My take away from this experience is that the USA MUST set up a 30% tariff on ALL imports, and do so IMMEDIATELY!!!  Yesterday is not soon enough! As a newly minted libertarian, i wondered about the obvious conflict with Austrian Economics and their dedication to free markets and free trade?  I found the answer at this Libertarian forum, where many members were in heated discussion.  Comment #7 sums it up best i think.  Including a link to Ron Paul's Tariff-NAFTA speech. The thing is, the 30% Tariff should be part of an overall TAX REDUCTION PLAN.  I support the FAIR TAX and the Balanced Budget Amendment.  As an alternative to the Fair Tax, I would also support a 17% flat tax with no exceptions.  The ideal situation being an immediate, uncompromising, no exceptions 30% tariff on ALL imports coupled with the Fair Tax and the Balanced Budget Amendment.   And yes, i do believe this plan is consistent with the Founding Fathers Constitution.  But it took some kind of research to establish that opinion.   I've also concluded that "conservatism" is a convenient philosophical vehicle for the corrupt crony corporatism of both the military-industrial-complex, banksters and, international corporations.  Free trade and open markets concepts are perverted to become a thin veil

Chris Savvindis followup interview, the day after his infamous End the Fed youtube video. If Chris is in any way representative of America's future, there are better days coming. In the interview he explains how his views and opinions were shaped. He's a libertarian steeped in the Austrian School of economics, his education beginning with Peter Schiff. Not surprisingly, Chris is a supporter of Ron Paul, and he takes the time to explain why. Yeah, he is a rockstar and deservedly so.

Incredible.  A simple explanation that explains everything.  Rchard Ebeling's "Unified Theory of Everything" is something every American can understand.  If only they would take a break from "Dancing with the Stars" and pay attention to the future of their country and the world.  It's a future where either "individual freedom", as defined by our Constitution and Declaration of Independence, will win out; or, the forces of fascist socialism / marxism will continue to roll and rule.  Incredible read!!!!

Excellent discussion of where the Republican Party stands in relationship to the destruction of the dollar and new interest in linking the dollar to GOLD.  Good stuff.  Personally i'm in the Ron Paul camp, hook, line and sinker. excerpt: "In the ferment within today's Republican Party, the gold standard has become almost the centrist position. On the left would be those who favor a system of discretionary activism in which brilliant technocrats, such as Ben Bernanke at the Fed, use their judgment in setting interest rates. A bit to their right would be advocates of a rule, such as John Taylor's rule linking interest rates to various conditions, or one that requires the Fed to target the price of gold but stops short of defining the dollar in terms of specie. In the center would be advocates of a classical gold standard, in which a dollar is defined as a fixed amount of gold. These include, among others, Mr. Lehrman, James Grant of Grant's Interest Rate Observer, publisher Steve Forbes, economist Judy Shelton, and Sean Fieler of the American Principles Project. A bit further to the right would be partisans of the Austrian school of economics, including Rep. Paul. He advocates less for a gold standard than for an idea of Friedrich Hayek, the Nobel laureate who came to favor what he called the denationalization of money and a system centered on private coinage and currency that would compete with government-issued money. Further right are purists such as the radical constitutionalist Edwin Vieira Jr., who would simply price things in weights of gold or silver. A good bit of overlap exists among the camps, but Congress has come alive to all points on this spectrum. Rep. Kevin Brady, a Texas Republican who is vice chairman of the Joint Economic Committee, is seeking to pass the Sound Dollar Act, which would end the Fed's mandate to keep unemployment down, instead having the central bank focus only on stable prices. Rep. Paul is pressing the Free Competition in Curr

Russia takes aim at the Fed's printing press with a U.S. dollar boycott to end the war in Ukraine. There are a lot of incentives for EU investors to join the boycott. Interesting idea; I'll need to think about this.  

An accidental find, the full text online of USMC Maj. Gen. Smedley Butler's 1935 book, War Is a Racket. Butler served in the Marine Corps from 1899 to 1931 and at the time of his retirement was the most-decorated Marine in history, for both valor and accomplishments. Following his retirement, he became a vehement anti-war activist and public speaker.  This book is easily his most-cited and most-quoted published work. You can capture the flavor from an article he published in a magazine that included the following lines: "I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents." http://en.wikipedia.org/wiki/Smedley_Butler#Lectures  I look forward to reading this book. The book was reprinted in 2003 and is available from the linked web site, together with two bonus titles. 

"WAR IS A RACKET" - free online book CHAPTER ONE WAR is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives. A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small "inside" group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes. In the World War [I] a mere handful garnered the profits of the conflict. At least 21,000 new millionaires and billionaires were made in the United States during the World War. That many admitted their huge blood gains in their income tax returns. How many other war millionaires falsified their tax returns no one knows. How many of these war millionaires shouldered a rifle? How many of them dug a trench? How many of them knew what it meant to go hungry in a rat-infested dug-out? How many of them spent sleepless, frightened nights, ducking shells and shrapnel and machine gun bullets? How many of them parried a bayonet thrust of an enemy? How many of them were wounded or killed in battle? Out of war nations acquire additional territory, if they are victorious. They just take it. This newly acquired territory promptly is exploited by the few - the selfsame few who wrung dollars out of blood in the war. The general public shoulders the bill. And what is this bill? This bill renders a horrible accounting. Newly placed gravestones. Mangled bodies. Shattered minds. Broken hearts and homes. Economic instability. Depression and all its attendant miseries. Back-breaking taxation for generations and generations. For a great many years, as a soldier, I had a suspicion that war was a racket; not until I retired to civil life did I fully realize it. Now that I see the international war clouds g

The Federal Reserve and central banks in general are running a grand experiment on the economic body, without the benefit of anesthesia. They are testing the theories of Irving Fisher (representing the classical economists), John Keynes (the Keynesian school) Ludwig von Mises (the Austrian school), and Milton Friedman (the monetarist school). For the most part, the central banks are Keynesian, with a dollop of monetarist thrown in here and there. Over the next few years, we will get to see who is right about debt and stimulus, the velocity of money, and other arcane topics, as we come to the End Game of the Debt Super Cycle, the decades-long cycle during which debt has grown. I have very smart friends who argue that the cycle is nowhere near an end, as governments are clearly increasing debt. My rejoinder is that it is nearing an end, and we need to think hard about what that end will look like. It will not be pretty for a period of time. The chart below shows the growth in debt, both public and private.

Jaw dropping libertarian analysis.  Hoppe argues that democracy, or more correctly called "mobocracy" results in "The Competition of Crooks".  Fascinating stuff.  I've highlighted some of the more resounding libertarian bites. excerpt: "Are taxes nothing but protection money? The state a kind of mafia? Democracy a fraud? Philosopher Hans-Hermann Hoppe is not only considered one of the most prominent pioneering intellectuals of the libertarian movement, but also perhaps the sharpest critic of the Western political system. Professor Hoppe: In your essay collection 'Der Wettbewerb der Gauner' ('The Competition of Crooks') you write that '99 percent of citizens, asked if the state was necessary, would answer yes.' Me too! Why am I wrong?"

Good summary of a very important issue in this election - the role of the government in a "capitalist" free market economy (cough cough).  If you have trouble loading this locked WSJ article, the solution is simple.  Paste "Michael Boskin: The Anatomy of Government Failure" into a google search.  The article with link will show up as "online.wsj.com/...../  Just click the headline and read.  The google paste gives you a free pass to WSJ articles.  ........ Great cartoon image with this post :)  http://goo.gl/7QQZh excerpts: In a market economy, price signals automatically steer society's scarce resources to the uses people value most, and at minimum cost. This is Adam Smith's famous Invisible Hand. But sometimes markets aren't competitive, or they generate effects such as congestion or pollution that are not accounted for in the price system. These "market failures" potentially justify government intervention......... "More generally, the costs of government regulation may be higher than the benefits-the cure may be worse than the disease. Before undertaking a new government intervention or adopting a new rule, instituting a new program or expanding an old one, the problem of "government failure" has to be considered. Government failures include the cronyism and pork that arise from spending and subsidy programs. Helping people experiencing hard times to get back on their feet is proper, but if overdone it may induce dependency. Laws are administered by agencies, from the EPA to banking regulators, with their own bureaucratic incentives-and they are prone to capture by the very interests they are supposed to regulate. Government failures are as pervasive as market failures due to monopoly or externalities, such as pollution, that arise because of ill-defined property rights. The potential for such failures grows as government grows. More government spending or regulation doesn't necessarily lead to better outcomes. If that were true, Washingto

Left unsaid in this Moscow TImes article: if the E.U. did as requested by the Ukraine coup government, Russia has the ability to cut off its gas supply to the E.U., which accounts for some 30% of the E.U. gas supply. With the business community in the E.U.already upset with sanctions on Russia that are cutting into exports from the E.U. to Russia, I'll be surprised if this proposal has wings, unless the U.S. pushes it.  

Small Government. End the Fed. Sound Currency.