The Errant Miscalculation of a Generation

Man’s desires are unlimited, as far as we can tell.  There’s always an upgrade or deluxe version of the latest doodads to chase after.  Some go after them with the stubborn resolve of a donkey going after a dangling carrot.  Others come up with resourceful ways to outflank their competitors.

Where money’s concerned, it doesn’t matter where an individual falls on the income scale…a little more is always yearned for.  A middle income earner may think a $10,000 raise would satisfy all their longings.  But after attaining this, they’ll come to find that another $10,000 is what’s really needed.  Similarly, for a successful business owner, if $1 million in profits is good…$2 million is better.

When it comes down to it, money is just a means to satisfy one’s desires.  But these desires amount to more than just stuff.  They also include experiences.

That’s why, time, above all, is the commodity par excellence.  One can always earn more money.  Once time is spent, it can never be regained.

Just ask 16th century Spanish explorer Juan Ponce de León. Continue reading

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Mandates and Morons: Twisting the World into a Madhouse

A win-win deal is a contract or transaction where both participants benefit.  Usually this means both parties receive profits.  Here’s a simple example how…

An entrepreneur pencils out a money making enterprise…say an automatic car wash station.  He makes some assumptions, runs the numbers, weighs overhead against projected revenue, and sees a worthwhile profit potential to exploit.  Then he borrows money from his local credit union to get the venture off the ground.

If he’s a good business man, the deal will work out for both he and the bank.  He’ll cover his costs and have a healthy profit to take home.  The credit union will have a performing loan on their books.  But if things don’t pan out, the credit union will take a loss and the would be entrepreneur will have to find a wage job until he comes up with a new – hopefully better – venture.

In private enterprise, win-win deals are commonplace.  What’s more, they bring wealth to the world.  In public dealings, or when an element of political engineering’s involved, win-win deals are humbug.  They don’t exist.  Moreover, they subtract wealth from the world. Continue reading

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How to Sleep Well During the Great Dollar Panic Ahead

Periods of epic price deflation have occurred several times in American history.  The Great Depression, of course, is the only period still within living memory for some.  But peering back another 100 years, there’s an instance of price deflation that was far greater.

Without coincidence, the Panic of 1837 followed a grand experiment in central banking.  Over issuances of unbacked paper money by the Second Bank of the United States – the U.S. central bank from 1817 to 1836 – led to rampant speculation and price inflation.  Much like today, the combination of the central bank, legal tender law, fractional reserve banking, and government deficits, dramatically increased the supply of money and credit…compelling people to borrow money to buy things they couldn’t afford with money they couldn’t repay.

Murray N. Rothbard documented the massive monetary inflation in his historic tomb Continue reading

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Disgraceful and Insulting

New discoveries were made on the economic front last week.  The Labor Department reported that 163,000 jobs were added in July.  Yet even with the new jobs, the unemployment rate rose to 8.3 percent.

“We’ve still got too many folks out there who are looking for work,” said President Obama.  Fortunately, for those folks who are looking for work, Obama has a solution: pizza and roads.

No kidding.  According to Obama, pizza and roads are the solution to the economic problem.  At least that’s what he explained to the good people of Ohio last week.  If you don’t believe us, you can witness the lecture here.

Who knows?  Perhaps President Obama is right.  Maybe pizza and roads do grow the economy.

However, there is an important distinction to make.  In particular, where the money comes from to buy the pizza and pay for the roads.  Does it come from an economy funded by savings and investments in capital markets?  Or does it come from an economy funded by debt based government stimulus? Continue reading

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