VintonCounty

On Banks: Krugman vs. Krugman

This kind of discussion makes my head hurt. Experience tells me to step back from the data, analyses, and opinions and view a wider field. The purpose is recognizing applicable axions or salient facts about the situation that suggest actions without an analysis that is too complex for any mortal. When I did that I saw that America is drifting into fascism, particularly respecting the banking and auto industries. Politics substitutes for market forces, and consequently these industries are too dangerous. People who can predict political outcomes can make fortunes in short-term trades; but I can't, and I don't know anyone who can.

The insight about fascism guides the cautious investor to industries and countries in which government intervenes little.

What Big Auto Wants from Obama

Rick has mostly bad advice. I'll comment on 5 items.

1. Increased gas tax would be bad for consumers and for auto manufacturers. The reason is told by the economic axiom that "When the price of something rises, people use less of it." If we include operating costs in vehicle prices, raising gas taxes reduces vehicle sales. Auto manufacturers desperately need the opposite.

2. Hydrogen fuel cells are extremely impractical for vehicular applications and always will be. This fact is due to engineering and scientific considerations that are essentially immutable. The extremely condensed explanation is that much energy is needed to separate hydrogen from water, and carrying a useful amount of hydrogen on a vehicle is cumbersome.

3. Car czar. Czars are for Russia. The proper way for the government to protect its "investments" in auto companies is for them to buy voting common stock in those companies. Any czar appointed by politicians would be a politician in fact, even if not nominally. And politicians know nothing of the vehicle business and have no desire to learn.

4. National energy policy. America tried to devise a national energy policy during the 1970s. (Rick looks too young to remember.) It was embarrassing and wasted lots of money. The concept of any group forcing a particular energy plan onto America is tyrannical and foolish. The best energy plan will evolve from technologies and market events that no one can predict.

5. Larry Burns' comment. Burns is annoyed that the public is unenthusiastic about the technologies that Burns favors. So he wants the government to FORCE us to buy products using those technologies.

The Bailouts Are Doomed - All of Them

You use words well, Alan; and blaming Congress is astute. After I realized congresscritters are tyrants, thieves and liars, I was seldom surprised by their actions.

Keynes vs. Von Mises

Good article, Katy. It's rare to find a university graduate who can analyze unstructured problems.

Will the Obama Plan Work?

Craig Brown's opinions are not based on logic, so they are at best useless. Start with the fact that governments can spend only what they take from others. Brown sees the economic activity created by government spending, but he doesn't see the activity that never occurred because the government took the citizens' money. If he realized this, he would wonder whether the citizens or government spend money more effectively. The answer is obvious when one realizes the citizen spends his own money, and government spends other people's money.

Seeing such an elementary error of logic is discouraging. I am convinced that American universities teach students not to think.

Returning to a Gold Standard Is a Bad Idea

Cam Hui jumps from ridiculing James Grant to creating straw arguments to arguing by vigorous assertion. On the subject of gold standard, we have history to show the falseness of his arguments. America had a genuine gold standard from birth to about WWI; and its economy was healthy, with nothing like the Great Depression. Our economic troubles started when the Federal Reserve Bank was created in 1913.

What Constitutes 'Worthy' Stimulus Spending?

Calling these government spending programs stimulating is fraudulent. Governments must first take money from citizens, which is negative stimulus. Citizens will get greater value from the money than will the government, because people spend their own money more carefully. So the so-called government stimulus schemes, to the extent they involve spending, make us poorer.

Southeastern Asset Management: 10 Reasons to Be Bullish on Stocks

Morningstar reports that Longleaf Partners Fund's (LLPFX) total returns trailed its category peers, large blend funds, by 6 and 5 percentage points annually over the trailing 3 and 5 years, respectively. It was a little worse relative to the S&P 500's total return. Are you sure you want to pay attention to the opinions of its managers?

The U.S. Dollar Is Following Argentina's Path

To Armageddon Baby:
Each dollar the Fed creates by buying government bonds adds to the money supply (M1) and so is currency inflation. Each dollar is subsequently loaned numerous times (the multiplier effect), and those credit dollars are money just like the original dollar the Fed created. The credit dollars also add to currency inflation. People's insouciance about inflationary effects from huge federal deficits presumably derives from the theory that, due to scarcity of credit, the number of credit dollars is currently reduced; so currency inflation will not occur. Even if that theory is correct now, the money supply will increase when credit availability returns to normal.

Canadian Royalty Trusts Will Never Return to Their Former Glory

To Paultaut: "Do you actually believe that Virtually Simultaneous stimulus Packages throughout the world will keep Oil prices below $100".

The U.S. stimulus measure was economically harmful, and the prospective one will be harmful also. (That's because it was money transfers at gunpoint.) Any stimulus plans by foreign governments will do only harm, unless those politicians have been visited by an angel. I don't expect any investor to agree, but would it change your actions if I were right?

Reich's Reasons for a New Fiscal Stimulus Bill

Money spent by government ("demand") is first taken from me at gunpoint, and it is that much less that I spend. If the government instead gives the money to citizen B to spend, the effect is still only to substitute another person's spending decisions for mine. In both cases I am a victim of armed robbery, and the economic effect is null at best.

Obama and Taxes: What to Expect

Most senators are tyrants, thieves and liars; and that certainly applies to Hussein Obama. So, Russell, why do you pay attention to anything Obama said about taxes during the campaign? You look too young to remember the 1992 presidential campaign. Clinton promised a middle class tax cut. After he was elected, he said (paraphrasing) "Tax cut? Silly me! I meant increase." And that's what we got. Don't be so naive.

Selective Data: State by State Unemployment

Sometimes grouping data differently is for spin; other times it is to illustrate a point better. It depends on what question you are trying to answer. If you want to know the trend of national unemployment, the national aggregate data is appropriate. If you want to know why unemployment rates differ among states, then ranking states by unemployment rate would be appropriate. Develop the habit of rating the appropriateness of data that people throw at you.

The Most Misunderstood Chart of All Time

Readers' minds are being sidetracked by the irrelevant discussion of the significance of the 1934 peak. The graph's purpose is to show that aggregate interest-bearing debt, relative to GDP, is at record high level. That conclusion remains, regardless of whether you think the 1934 peak is misleading.

It's a Great Time to Be an Inflationista

Re inflation versus deflation, SW mixes his opinion with that of the typical politician; and that is a little confusing. The subject can be simplified. Inflation helps borrowers and hurts lenders and people on fixed incomes; deflation has the opposite effects. (But interest rates adjust for anticipated changes in money supply, so only surprises have surprising effects.) So neither inflation nor deflation (whether of prices or money supply) are inherently preferable. It just depends on whom you want to help or hurt. The best condition for the national economy is price stability. End of story.