H1-B is America’s secret weapon
I made this case years ago, America will have difficulty attracting new talent. We already have hyperinflation… in the shadow banking system
We have two banking systems, the official banking system and the shadow banking system. The official banking system runs on dollars, the shadow banking system runs on collateralized debt and other derivatives that trade as if they were dollars, I will call those derivatives shadow bucks. The reason dollars increased in value (which many people, myself included, didn’t expect) is due to what I call a “hyperinflation” of shadow bucks. The value of shadow bucks collapsed (as the housing and credit bubbles burst) causing prices measured in shadow bucks to soar. As any intelligent Zimbabwean with Zimbabwe dollars has already demonstrated, when the value of your money collapses you find alternate forms of money. Zimbabweans fled to US dollars, so did the holders of shadow bucks. The effect may not have been that significant if it weren’t for the size of this market — I didn’t appreciate the extent to which the shadow banking system dwarfs the official banking system. The buying pressure from economic refugees overwhelmed any other consideration. Government steals money from bankrupt people to waste on frivolous projects
This is my entry to Nick Rowe’s challenge to come up with a model demonstrating the damages of fiscal stimulus. The belief in government stimulus requires us to believe the previous level of demand is sustainable, desirable and not declining for some fundamental reason. That isn’t necessarily a question of economics, you can’t plot culture on a chart. If people were comfortable in previous decades living with more debt-based consumption and a bias towards equities instead of savings, but the culture changes and people are no longer comfortable with that formula, the economy has changed for a very real and fundamental reason. If people want less, why should the government force feed us things we don’t want? If people are determined to save and the government threatens to destroy savings (with negative interest rates or some other stupid ideas) people will simply find alternate means to save. Maybe they will hoard food or gold and cause other problems like shortages and hunger. Lew Rockwell – The establishment is going down
part 1 of 2 Trickle up economics
The ideological arguments regurgitated by television talking heads, regarding how governments should intervene to resolve our current economic crisis, focus on whether bailouts should be directed at the rich or the poor… a difference without a distinction, in my opinion. Regardless of how money is injected it will always end up in the same place. Money flows in streams like water and it always trickles up because the rich own everything. When money is given to the poor, they will likely just save it in the bank, pay down debt or purchase consumer products — in other words, immediately rush to line the pocket of their neighborhood rich guy. A positive spin on bankruptcies in Dubai
In most developed countries when people go bankrupt they become dependent on a government “social safety net” and drain the nation’s resources with unproductive expenditures. Keeping people fed is important, but it’s not going to help stimulate an economy out of recession. People aren’t likely to increase consumption with diminished income from employment insurance or the credit cards they don’t have. They aren’t likely to become more productive in a job they lost. Social stabilizer, yes. Economic recovery plan, no. Lindsay Williams predicts total collapse within 12 months
This guy claimed back when oil was near its peak that he was given inside knowledge of a coming oil collapse, the purpose of which would be to bankrupt OPEC countries and consolidate control over America. I remember reading his article at the time, and ignoring it, thinking he was nuts. I forgot about it until I came across this interview with Alex Jones. Deflation in Zimbabwe?
How can a currency be in short supply and hyperinflationary at the same time? Economics 101 tells us that reducing supply should increase price, but that doesn’t seem to apply in this case. Perhaps it’s because most banking happens electronically, or perhaps it’s because hyperinflation is as much psychological as monetary. They have lost confidence in the Zimbabwe dollar and there is nothing the government can do about it. Once the process gets going, even if you take away the punch bowl nobody cares. I seem to remember Bernanke making the case US dollars will not lose their reserve currency status because there is a shortage around the world. The Housing Collapse of 2009 May Be Worse Than 2008
Who won WW2?
I’ve been listening to The Tarp Song all afternoon and it reminded me of these clips with Peter Schiff and Stephen Leeb arguing about an auto sector bailout. |
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