Quotes of the week:
Here’s the thing. The Bernank thinks the Great Recession happened because teenage girls piled to the rafters in export company dormitories in China went on a savings binge. Purportedly, the Fed had nothing to do with expanding credit market debt outstanding by $22 trillion or nearly 6X the growth of nominal GDP during the short interval between the time he joined the Fed in 2002 and the massive Wall Street meltdown of 2008.
Blogger Ben’s Basically Full Of It – David Stockman
Economics may be a dismal science, but politics is a dismal superstition.
Jakub Bożydar Wiśniewski
Genuine enemy of humanity. A literal malefactor.
Tho Bishop, on this mean lady.
If you’re living high on that cheap credit hog
Don’t look for cure from the hair of the dog
Real savings come first if you want to invest
The market coordinates time with interest
Your focus on spending is pushing on thread
In the long run, my friend, it’s your theory that’s dead
So sorry there, buddy, if that sounds like invective
Prepared to get schooled in my Austrian perspective
Ryan McMaken quotes “Hayek” (with an “H”, pronounced like “high explosives”), for Hayek’s birthday, from Papola’s rap, on Keynes’s economics.
U.S. house prices have risen by nearly 25 percent over the past two years, noted Bernanke, currently chairman of the president’s Council of Economic Advisers, in testimony to Congress’s Joint Economic Committee. But these increases, he said, “largely reflect strong economic fundamentals,” such as strong growth in jobs, incomes and the number of new households.
Mises Dailies were saying this (April 2005):
The end of the stock market bubble was followed by the creation of another bubble, this time in housing. Normally during recessions the private sector debt burden falls and household and corporate balance sheets are restored through high net savings. But while corporate balance sheets have been repaired as a result of a sharp decline in business investments and record corporate profits, households have been on an unprecedented spending spree, households are more indebted than ever and saving even less than 5 years ago.
Also, today is the last day of class at Auburn for the Spring semester, so I feel obligated to share this song:
Russia is shutting down 2 out of 5 universities. “The majority of cuts will affect private universities that provide a poor standard of education.” Do we need a similar sort of shakedown?
Robert Murphy has a fun little piece on the importance of market prices using karaoke (his, um, specialty) as an example.
Salerno’s War on Cash bit got Rick Santelli’s attention.
Intervention Mad Libs, by Matt McCaffrey. One day I’ll use this exact form for a blog post just to see if anybody notices.
Peter Klein at O&M: “This may be the most useful document ever produced by a government agency“.
Taxes – The Charlotte Observer observes: “The paperwork headache aside, tax season generates $300 billion in tax refunds each year, a big boost for Americans’ pocketbooks and for the overall economy.” I propose that we tax even more and refund the increase for an even bigger boost to the economy! Bastiat is turning in his grave.
Death – The FDA’s incentive structure for approving or withholding a drug is lopsided toward making Type II errors because they are (speaking of Bastiat) unseen. Ben Powell brushes this well-known issue aside and just asks why patients and doctors have to ask permission from some uninvolved bureaucrat to use a promising treatment in the first place.
Taxes – NYT op-ed urges us to shame people who avoid taxes. It’s not satire.
Death & Taxes – Christine Harbin Hanson surveys the (alleged) pros and (well-cited) cons of the “death tax”, and, well, kills it.
Not Death or Taxes – Louis Rouanet has been working on a paper on Michel Chevalier’s arguments against patents, which predate and anticipate a lot of the contemporary arguments. Some of this work was posted today as a Mises Daily–check it out.
Today is the Sound Money seminar at the Mises Institute. Tune in live!
- 10am – Mark Thornton, “Money and the Development of Human Society: From Barter to Bitcoin”
- 10:20am – Jeff Deist, “A Free Market in Money”
- 11am – Dan Sanchez, “War and the Government Control of Money”
- 11:20am – Jonathan Newman, “Inflation and Business Cycles”
The state government of California has imposed water restrictions on its citizens to combat the drought. Economists everywhere scream, “PRICES!” (Note each word is hyperlinked to a different source. All say the same thing. California needs a higher price of water so that the scarce resource may be allocated where it is most highly valued.)
Speaking of the drought in California, “America’s Finest News Source” has been on top of it: see here, and here. But my favorite thing about The Onion is when people don’t understand that it is satire. Thankfully, there’s a place just for those instances. Here are a couple on recent Onion articles. I especially like the guy that linked the wikipedia page for “Water” in his comment: