Change We Can Believe In: Soak the Rich

Posted on September 27, 2011 by MN Gordon

Sometime in early 1848 French poet Alphonse de Lamartine had a change of appetite.  For whatever reason, he no longer took to gobbling up frog legs but to gobbling up the new, forward thinking, ideas of the day.

It all seemed so interesting, exciting, and enlightening at first.  Yet the more he indulged, the more he went mad.

It was as if Lamartine had been bitten by a rabies sick dog.  In a sense, he had been.  Yet the sick dog was not a French poodle…but that of the gospel of Karl Marx.

This was little cause for alarm to most.  For all Frenchmen were foaming at the mouth at the time.  Again, for the second time in 50-years, they’d gone a little crazy and heaved their leaders into a ditch. Continue reading →

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On Scientific Management of the Economy and Going for Broke

Posted on September 23, 2011 by MN Gordon

Federal Reserve Chairman Ben Bernanke should never have left Princeton.  He’s much better suited for a lifetime of pontification than real work.  Not that chairing the Federal Reserve is real work.  Yet, even so, at least as a professor his theories would’ve been mostly harmless.

But the world doesn’t always operate in the ideal; where politics is concerned this is rarely the case.  Idiots become president practically every election.  Congressmen take digital photos of their most private parts and blast them across the internet.  Maxine Waters casts her vote…this is nearly always problematic.  But, in the end, their actions don’t largely affect people.

The worse kind of central planners are the ones that actually believe in their powers; that, somehow, they have the ability to control the world and make it a better place.  They are the most dangerous.  And they will not stop carrying out their splendid plans until they’ve totally destroyed the world around them.

No doubt, the most ardent central planner always has the best of intentions.  In their dense skull they believe that if people would just behave how they wanted the money problem would be solved, there’d be full employment, and the coming of the new utopia. Throughout history, grand experiments in paper money have always ended in tears. Continue reading →

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Magnifying a Magnificent Debt Bubble

Posted on September 20, 2011 by MN Gordon

Last week it was discovered that, Kweku Adoboli, a 31-year-old equities trader for the Swiss bank UBS, had gone rogue.  In a remarkable misadventure he managed to blow $2 billion of other people’s money at his employer’s expense.  Apparently, UBS noticed a big fat gaping hole in its trading records Wednesday night and promptly arrested Adoboli the following morning.  We don’t know what this has to do with anything, but, perhaps, it offers a valuable example of the current state of European banking.

By now you know that Greece is broke and that even after several bailouts by the European Union they can’t seem to get their act together.  In short, the Greek government promised far too much and borrowed far too much money for far too long.  No doubt, Greece behaved like reckless idiots.

But, it goes both ways. In addition to the Greek government, which borrowed more money than it can possibly repay, is the culpability of the European banks that overextended them credit.  The banks behaved like reckless idiots too.

Why did they lend Greece so much money?  Why did they imperil their finances and the finances of the European banking system making an abundance of bad loans? Continue reading →

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The Economic Shredding Machine

Posted on September 16, 2011 by MN Gordon

Like the U.S. Treasury, President Obama’s recent jobs proposal is bankrupt.  Quite frankly, we weren’t counting on much.  But that doesn’t mean we still weren’t disappointed by its burdensome emptiness.

The most remarkable thing about the President’s latest jobs creation plan has nothing to do with the actual substance – or lack thereof – included in the initiative.  To the contrary, it’s the idea behind it that’s most noteworthy.  In short, the President actually believes the government can use borrowed money to stimulate the economy.

If this were true, the trillions of dollars already spent would have produced an epic boom and job creation renaissance.  By this point in the recovery unemployment would be down and opportunities would be abundant.  Obviously, none of these things have taken place.  Instead, according to a recent Bloomberg National Poll, only 9 percent of the population is confident the economy won’t slide back into recession.

The government, as we’ve seen, is extraordinarily capable of spending boat loads of borrowed money.  Yet there’s no documented proof or empirical evidence that supports the notion that this can grow the economy.  Moreover, simple logic shows it actually shrinks the economy. Continue reading →

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