On Capitalism

     

 

 

Operation 'Perfect Hedge' – the Criminalization of 'Greed'

As most of our readers are probably aware, the ongoing FBI investigations into insider trading at prominent hedge and mutual funds has just yielded another  batch of arrests and indictments. This seems to be still the same investigation  that ensnared the founder of Galleon, Raj Rajaratnam, a little while ago. Apparently the investigation has been going on for four years running.

Read the rest of this entry »

     

 

 

Revisiting the Squid

Back when we wrote a brief critique of Matt Taibbi's latest populist jeremiad against 'God's workers', a.k.a. Goldman Sachs, we were of course aware that the topic would be controversial. Quite a few people seem to have misread that piece as an apologia for Goldman Sachs (judging from some comments on the Seeking Alpha reproduction of the post and e-mails we received), so perhaps we didn't express our point clearly enough. Yesterday, another writer dared to speak up in Goldman's defense, specifically with regards to the questions surrounding its trades and Taibbi's allegation that GS executives are guilty of perjury. Just as we suspected, the case is not as clear-cut as Taibbi makes it out to be – not by a long shot.

 

Read the rest of this entry »

A recent poll suggests that public support for the free market has markedly declined all over the world. The question is though, what do people consider the \'free market\' to be? Most associate the modern-day state-capitalistic system with the term free market, but obviously that is not what it is. Meanwhile, the political establishment and the mainstream media have pawned off the crisis as an alleged \'market failure\' - even a superficial examination of this claim should reveal it as nonsense, but many people apparently believe it to be true. Ironically, Germany is the country where support for the free market is currently deemed the highest. Color us suitable baffled by this revelation. In France, disdain for the market is by now a well-worn tradition. Alas, no French refugees from evil capitalism have as of yet shown up at the border of Stalinist North Korea, so maybe they\'re not really serious about it. However, the French government - nominally \'conservative\' - attempted to introduce price controls for agricultural commodities earlier this year. It had to be lectured by Brazil and Argentina on the merits of such interventions, which inter alia brought down the Roman Empire\'s economy. We would term the French plan the \'Road to Famine\'. Oil market manipulators get \'caught\' - really? Apparently two oil futures traders managed to do what OPEC - a cartel controllig 40% of global oil output - has failed to achieve in many decades - namely manipulate the biggest commoditiy market in the world. The accused traders are rather perplexed by the suit. They bought and sold oil, which is what everybody in the oil market does. So what? According to the CFTC, the bureaucrats have detected that their actions were \'economically irrational\'. It would be laugh-out-loud funny if it didn\'t represnt a serious assault on economic freedom. Contrary to the story the witch-hunting political class is trying to sell, countless studies confirm what we already know from economic theory: the activities of speculators are beneficial. Without them, there would not be a market economy. Read the rest of this entry »
     

 

 

An Empire In Disarray – Russia Prior To The Bolshevik Revolution

Just as the Marxian theory and ideology must be understood as a product of its time – it was conceived in a time of upheaval that marked the beginning of the end of the monarchies of old Europe, and made use of the statist philosophy of one of these monarchies to establish its scientific credentials – so must the actual Bolshevik revolution be seen in the context of its time and place.


Read the rest of this entry »

     

 


Marx and Engels and the Theory of Dialectic Materialism


„A socialist advocates socialism because he is fully convinced that the supreme dictator of the socialist commonwealth will be reasonable from his–the individual socialist's–point of view, that he will aim at those ends of which he–the individual socialist–fully approves, and that he will try to attain these ends by choosing means which he–the individual socialist–would also choose. Every socialist calls only that system a genuinely socialist system in which these conditions are completely fulfilled; all other brands claiming the name of socialism are counterfeit systems entirely different from true socialism. Every socialist is a disguised dictator. Woe to all dissenters! They have forfeited their right to live and must be "liquidated."

The market economy makes peaceful cooperation among people possible in spite of the fact that they disagree with regard to their value judgments. In the plans of the socialists there is no room left for dissenting views. Their principle is Gleichschaltung, perfect uniformity enforced by the police.“

Ludwig von Mises, Human Action, Ch. XXV., The Imaginary Construction Of A Socialist Society


Read the rest of this entry »

     

 

A Theory of Capital

Time, savings and economic progress

The economics of Keynes and the Chicago monetarist school are historical outgrowths of a school of economic thought that has remained curiously untouched by the revolution of subjectivist economics that began with the publication of ‘Grundsätze der Volkwirtschaftslehre’ (‘Priniciples of Economics‘) by Carl Menger in 1871.

 

Carl Menger: Author of ‘Principles of Economics’ and founder of the Austrian school.

Read the rest of this entry »

     

 

 

The money multiplier

The practice of creating new bank deposits from thin air has large economic effects. It is important to recognize that from a practical standpoint, deposit money in demand deposits at banks is part of the money supply. It matters not if money circulates in the form of banknotes and coins or is deposited in demand deposits – demand deposits are a perfect money substitute, which is to say, they are money. We have previously commented on measures of the money supply and provided links to the various methodologies attempting to measure it in ‘Monetary conditions in the US‘, but for this article it is enough to state, money is the medium of exchange, and every form of money or money substitute that performs this function from the viewpoint of the individual actors in the economy is ipso facto money.

  moneymultyImage via Pennsylvania Lottery

 

Read the rest of this entry »

     

 

 

Part One: Legal and Ethical Questions – the debate over fractional reserves

We recently came across an article by Robert Murphy, ‘The Fractional Reserve Banking Question‘, in which he briefly comments on a controversy within the Austrian School, between what could be termed the ‘neo-Currency’ and ‘neo-Banking’ schools, a terminology introduced by Joseph Salerno, harkening back to the ‘currency’ and ‘banking’ school debate of the early 19th century.

 

bankrun

 

Read the rest of this entry »

     

 

 

Get me a Job, Ben!

So the demand uttered in a recent article on Slate. The author Daniel Gross refers to the many things the Federal Reserve is responsible for according to its mandate. Plaintively Gross asks:

 

“Fed Chairman Bernanke does not seem to care about high unemployment. Why?”

 

Read the rest of this entry »

     

 

 

A crisis for the Establishment – the One Party State comes under attack

We have speculated for a long time that the day was probably drawing near when the US political establishment would be seriously challenged. Our pet idea has always been that this challenge  could take the shape of the eventual formation  of a viable third political party, or alternatively an independent political movement. You might of course just as well say 'a second political party'.

 

Read the rest of this entry »

     

 

 

Ruminations on the effects of monetary policy in the context of short term and secular cycles: Money supply growth, asset prices and capital over different time frames

Once the growth momentum of money supply wanes, asset prices – specifically stock prices – that have been buoyed by an excess of free liquidity tend to either come under pressure or see their rallies stall out. Normally an economy emerging from a cyclical recession experiences an increase in private sector credit demand. In the early stages of recovery, the Fed’s easy money policy tends to egg this credit demand and credit growth on. Investments in higher order production stages appears more profitable, as low interest rates suggest low time preferences and an abundance of available savings.

 

Read the rest of this entry »

     

 

 

The high priest of interventionist economics

From his perch at the New York Times, Professor Krugman has been dispensing economic and political advice for many years. Unfortunately, he is to economics somewhat similar as Ben ('you have to buy financials here') Stein is to investments, in short, he is potentially capable of causing a lot of damage. For this reason alone, his views must be challenged from time to time, even though we poor bloggers do certainly not have his reach. My fellow blogger and friend Mish has recently done so,  in a blog entitled 'Krugman still wrong after all these years'. He certainly is, and I want to take the opportunity to add a few complementary thoughts to Mish's ruminations on the topic. First of all, I would recommend this paper (pdf) by Daniel Klein and Harika Bartlett, in which Krugman's editorials have been analyzed statistically and then interpreted by the authors.

 

Read the rest of this entry »

Most read in the last 20 days:

  • The Gold Debate – Where Do Things Stand in the Gold Market?
      A Recurring Pattern When the gold price recently spiked up to approach the resistance area even Aunt Hilda, Freddy the town drunk, and his blind dog know about by now, a recurring pattern played out. The move toward resistance fanned excitement among gold bugs (which was conspicuously lacking previously). This proved immediately self-defeating - prices pulled back right away, as they have done almost every time when the slightest bit of enthusiasm emerged in the sector in recent...
  • Monetary U-Turn: When Will the Fed Start Easing Again? Incrementum Advisory Board Meeting Q1 2019
      Special Guest Trey Reik and Board Member Jim Rickards Discuss Fed Policy On occasion of its Q1 meeting in late January, the Incrementum Advisory Board was joined by special guest Trey Reik, the lead portfolio manager of the Sprott Institutional Gold & Precious Metal Strategy at Sprott USA since 2015 [ed note: as always, a PDF of the complete transcript can be downloaded further below].   Trey Reik of Sprott USA.   Also at the meeting, Jim Rickards, who is inter...
  • Watch Europe - Free Pass for the Elliott Wave European Financial Forecast
      Europe at an Important Juncture European economic fundamentals have deteriorated rather noticeably over the past year - essentially ever since the German DAX Index topped out in January 2018. Now, European stock markets have reached an important juncture from a technical perspective. Consider the charts of the Euro-Stoxx 50 Index and the DAX shown below:   The Euro-Stoxx 50 Index already peaked in early November 2017, the DAX followed suit in January 2018 – such divergent peaks...
  • Why Warren Buffett Should Buy Gold
      Riding the Tailwinds of Fiat Money Inflation to Fame and Fortune Warren Buffett bought his first shares of stock when he was 11 years old.  He saved up $114.75 and “went all in,” purchasing three shares of Cities Service preferred stock.  The day was March 11, 1942 – nearly 77 years ago.  Buffett recently reminisced about this purchase in his annual letter to shareholders:   “I had become a capitalist, and it felt good.”   The Oracle of Omaha – he was...
  • Fake Money’s Face Value Deceit
      Not the Brightest Tool in the Shed Shane Anthony Mele stumbled off the straight and narrow path many years ago.  One bad decision here.  Another there.  And he was neck deep in the smelly stuff. These missteps compounded over the years and also magnified his natural shortcomings.  Namely, that he’s a thief and – to be polite – a moron.   Over-educated he ain't: Shane Anthony Mele, whose expressive mug was captured by a Florida police photographer first in...
  • Rise of the Zombies - Precious Metals Supply and Demand
      Rise of the Zombies - Precious Metals Supply and Demand Last week, the prices of gold and silver fell $35 and ¢70, respectively. But what does that mean (other than woe unto anyone who owned silver futures with leverage)? The S&P 500 index and the euro was up a bit, though the yuan was flat and copper was down. Most notably, the spread between Treasury and junk yields fell. If the central banks can lower the risk of default premium, they can make everything unicorns and...
  • Bitcoin Bottom Building
      Defending 3,800 and a Swing Trade Play For one week, bulls have been defending the 3,800 USD value area with success. But on March 4th they had to give way to the constant pressure. Prices fell quickly to the 3,700 USD level. These extended times of range bound trading are typical for Bitcoin Bottom Building in sideways ranges. This 60 minute chart of Bitcoin shows (represented by the yellow candlestick wicks) how the bulls defended 3,800 USD :   BTCUSDT 60 minute chart...
  • The Magic Doesn't Always Work - Precious Metals Supply and Demand
      The Week Ends with a Surprise The weekly closing prices of the precious metals were up +$5 and +¢11. But this does not tell the full story of the trading action. Prices were dropping until Friday. More precisely, Friday 8am in New York, or 1pm in London.   Gold and silver - back in demand on Friday... [PT]   At that moment, a light cabal conspiring to jack the price struck traders began buying. The end result was the prices, especially of silver, rose on the day...
  • Intraweek Profit Opportunities
      In 6 of 10 Countries a Single Day Outperforms the Entire Week! In the Seasonal Insights issue of 13 February 2019 I presented a study illustrating the power of intraweek effects. The article was entitled “S&P 500 Index: A Single Day Beats the Entire Week!” The result of the study: if one had been invested exclusively during a single day of the week since 2000  – namely on Tuesday – one would have outperformed a buy and hold strategy, beating the broad market. Moreover,...
  • In Gold We Trust 2019 – The Preview Chart Book
      The new IGWT report for 2019 will be published at the end of May... ...and for the first time a Mandarin version will be released as well.   Gold compared to other financial assets – from the IGWT chart book   In the meantime, our friends at Incrementum have decided to release a comprehensive chart book in advance of the report. The chart book contains updates of the most important charts from the 2018 IGWT report, as well as a preview of charts that will appear...

Support Acting Man

Item Guides

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!