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Month: September 2017

The Fed’s ‘Quack Treatments’ Are Causing The Stagnation

Authored by EconomicPrism’s MN Gordon via Acting-Man.com,

Bleeding the Patient to Health

There’s something alluring about cure-alls and quick fixes. Who doesn’t want a magic panacea to make every illness or discomfort disappear? Such a yearning once compelled the best and the brightest minds to believe the impossible for over two thousand years.

 

Instantaneous relief! No matter what your affliction is, snake oil cures them all. [PT]

 

For example, from antiquity until the late-19th century, bloodletting was used to treat nearly every disease. Reputable medical references recommended bloodletting as a cure for acne, asthma, cancer, epilepsy, gout, indigestion, insanity, leprosy, pneumonia, scurvy, tuberculosis, and everything in between. Bloodletting was even used to treat hemorrhaging.

The practice was simple enough. A surgeon, often a barber, would open a vein and drain blood from the patient. Somehow, this was supposed to cure them of disease.

The fundamental idea was that a sick person could be bled to health. Induced fainting, via bloodletting, was even considered beneficial. However, the results were often fatal.

On December 13, 1799, George Washington returned from a cold-winters horseback ride across his estate with a raspy throat. So, he requested bloodletting to make his sore throat better. Over a ten-hour period, roughly 126 ounces of blood was drained from his system.

The next day Washington’s treatment culminated in perfect success. Because of the bloodletting, Washington never suffered from a sore throat again. He had received a permanent cure. Namely, he croaked.

Wouldn’t a tablespoon or two of honey and lemon have been a better solution to the sore throat problem? Sure, it would have been less effective. But it would have been a great deal less terminal as well.

 

George Washington: so-so land speculator, successful revolutionary & general, founding father, first president of the US, and reportedly no friend of foreign entanglements. Here seen in those all too brief final hours, enjoying a sore throat for the very last time, orbited by family and assorted quacks. We don’t know who’s who in this picture, but this is obviously a room brimming over with decidedly fatal good intentions. There is a picture of Lincoln’s deathbed (which shows his prostrate body crammed into a tiny room with his wife and 15 politicians and generals, who are trying their best to look solemn and grimly resolved to carry on) that gives off similarly morbid vibes. There is a major difference though: almost no-one is contemplating Lincoln with the thoughtful, calculating looks Washington is at the receiving end of here. Lincoln was probably judged a hopeless case and had been crossed off everybody’s Rolodex already (a hole in the head is rarely conducive to one’s continued life and career). By contrast, Washington still offered the quacks a chance to speed up the healing process by devising ingenious ways of killing him. Admittedly, the cure really is hard to beat in terms of its permanence. It is an apodictic certainty that Washington never complained about a sore throat again. [PT]

 

Curing a Debt Problem with Credit

Certainly, repeated observation of the practice must have shown bloodletting’s cure-all powers to be a dubious proposition at best. You’d think that after several thousand years of failure the practice would have been tabled. But it wasn’t.

In fact, by the 17th century, many doctors knew bloodletting was more harmful than beneficial. But the practice persisted for another 200 years. How come?

From what we gather, doctors didn’t want to acknowledge their limitations. Although they had garnered an astute understanding of how the human anatomy functioned, they had yet to discover cures for practically all diseases. Thus, the common belief was that it was better to give a bloodletting treatment than no treatment at all.

These days, many diseases are still without cures. But progress has been made. Doctors and surgeons no longer imagine bloodletting to be the ultimate cure-all. Only a true medical quack would carry out such a barbarous treatment.

Unfortunately, the same cannot be said for present day monetary policy. We live under a system of outright quackery. What else, but a quack monetary system, would prescribe ever increasing expansions of credit as a cure-all for a debt problem?

 

This chart depicts causes and effects of the snake-oil cure applied by our vaunted central planners. It shows federal debt, corporate debt, the broad true money supply, and lastly, economic output as measured by GDP – all indexed to 100 in 1986, the year bubble blower extraordinaire, Alan Greenspan, took the helm at the Fed. However, we want to direct your attention to the cesura of 2008, when Greenspan’s successor, Ben Bernanke was tasked with bailing out yet another imploding bubble of the fiat money era. According to “experts” of his ilk, these things kin of “just happen”. The boom-bust cycle is seen as akin to a natural catastrophe, like an earthquake or an asteroid strike. No-one is ever responsible for it, least of all the people who directly and indirectly manipulate all the figures charted above, and certainly no-one ever “sees it coming”. The latter assertion involves a rather glaring omission – it requires one to ignore the hundreds, or more likely even thousands, of people who did and do see it coming. Why are they so studiously ignored? The problem is probably that the people with the slightly better functioning crystal balls often have a tendency to assign blame correctly. You see, it is not an earthquake after all, and it certainly isn’t a “market failure”, or a “lack of regulations” that is behind the increasingly dangerous succession of ever larger credit expansions and crashes. Stop and think about this chart for a moment. At the time when the Greenspan/Bernanke housing bubble co-production (implemented in line with the unsolicited advice dispensed by another bunch of “experts”*) blew up in everyone’s face, was there anyone who didn’t understand that a giant debt problem had been discovered? There is of course more to it than that; business cycle theory is a tad more intricate. But credit expansion is at its heart, and there always comes a moment in time when understanding that part of it requires nothing but a smattering of common sense. And now ponder the response of the central planners to the debt crisis. What on earth made them think that expanding money and credit at accelerated rates was the “solution” to a giant debt problem? Common sense is evidently in very short supply at the Eccles building – contrary to money from thin air, which they can never run out of. [PT] – click to enlarge.

 

Nonetheless, perpetual increases of credit underpin today’s wild and zany debt based fiat money system. This, no doubt, is akin to attempting to bleed a patient to health. It also guarantees a slow and painful death.

 

Fed Quack Treatments are Causing the Stagnation

On Tuesday, Fed Chair Janet Yellen, a quack, reeled back her78-month plan for the national monetary policy of the United States. If you recall, this was the grand plan she rolled out last week. Apparently, she’s already having some reservations.

At the National Association for Business Economics in Cleveland, Yellen said:

My colleagues and I may have misjudged the strength of the labor market, the degree to which longer-run inflation expectations are consistent with our inflation objective, or even the fundamental forces driving inflation.

 

Although we judge that inflation will most likely stabilize around 2 percent over the next few years, the odds that it could turn out to be noticeably different are considerable.

 

In my view, it strengthens the case for a gradual pace of adjustments. Moving too quickly risks over-adjusting policy to head off projected developments that may not come to pass.”

To be fair, Yellen was speaking about the pace at which the Fed will raise the federal funds rate. Though this is different than her plan to unwinding the Fed’s balance sheet, we suspect that, in time, this same rationale will be used to justify further Fed asset purchases.

The point is, the Fed only knows only one cure-all treatment for the economy’s stagnation. Always wrong, but never in doubt. Credit expansion is the Fed’s perennial solution.

 

This seems a very good opportunity to quote Ludwig von Mises, who pointed out: “However conditions may be, it is certain that no manipulations of the banks can provide the economic system with capital goods. What is needed for a sound expansion of production is additional capital goods, not money or fiduciary media. The boom is built on the sands of banknotes and deposits. It must collapse.” [PT]

 

Alas, like bloodletting barbers of the 19th century, it’s a quack treatment that has buried the economy under irreconcilable levels of debt. Yet the quacks who deliver it are oblivious to the fact that their treatment is not a cure for the economy’s stagnation, but rather the cause. Perhaps in two thousand years from now they’ll come to grips with this.

Footnote:

* The “money quote” Paul Krugman will never be able to live down follows below; not for a lack of trying, mind – once he expended an entire NYT column in a vain attempt to deny that his words actually meant what they obviously mean:

 

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

 

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California Assemblyman Promises Bill To Ban Gas Cars By 2040

San Francisco Assemblyman Phil Ting would like for you to know that he has every intention of introducing new legislation in 2018 that will (i) make it much more difficult for low-income Californians to buy affordable vehicles and (ii) increase greenhouse gas emissions.  Of course, Ting didn’t word it in exactly that way but his proposal to ban combustion-engine vehicles will inevitably result in both of the unintended consequences above.

As the Sacramento Bee points out this morning, Ting has promised to introduce his destructive legislation in January saying at some point you just need to “put a line in the sand.”

France and the United Kingdom are doing it. So is India. And now one lawmaker would like California to follow their lead in phasing out gasoline- and diesel-powered vehicles.

 

When the Legislature returns in January, Assemblyman Phil Ting plans to introduce a bill that would ban the sale of new cars fueled by internal-combustion engines after 2040. The San Francisco Democrat said it’s essential to get California drivers into an electric fleet if the state is going to meet its greenhouse gas reduction targets, since the transportation sector accounts for more than a third of all emissions.

 

“The market is moving this way. The entire world is moving this way,” Ting said. “At some point you need to set a goal and put a line in the sand.”

 

“California is used to being first. But we’re trying to catch up to this,” Ting said.

Meanwhile, we suspect that Ting will ignore the fact that California’s previous attempt to push electric cars on consumers has been a complete failure…presumably because people would prefer to not spend way more for a car that has half the performance of a gas car and doubles their electricity bill…just a hunch.

California already committed five years ago to putting 1.5 million “zero-emission vehicles,” such as electric cars and plug-in hybrids, on the road by 2025. By that time, the state wants these cleaner models to account for 15 percent of all new car sales.

 

But progress has been modest so far, as consumers wait for prices to drop and battery ranges to improve, or opt for large trucks and SUVs that are not available among electric offerings. Slightly more than 300,000 zero-emission vehicles have now been sold in California, and they accounted for just under 5 percent of new car sales in the state in the first half of the year.

Phil Ting

On the upside, Ting’s proposed ban on gas vehicles would come a full 10 years later than the timeline floated by Mary Nichols of the California Air Resources Board last week.  Per Bloomberg:

Governor Jerry Brown has expressed an interest in barring the sale of vehicles powered by internal-combustion engines, Mary Nichols, chairman of the California Air Resources Board, said in an interview Friday at Bloomberg headquarters in New York. Brown, one of the most outspoken elected official in the U.S. about the need for policies to combat climate change, would be replicating similar moves by China, France and the U.K.

 

“I’ve gotten messages from the governor asking, ‘Why haven’t we done something already?’” Nichols said, referring to China’s planned phase-out of fossil-fuel vehicle sales. “The governor has certainly indicated an interest in why China can do this and not California.”

 

California has set a goal to cut carbon dioxide emissions by 80 percent from 1990 levels by 2050. Rising emissions from on-road transportation has undercut the state’s efforts to reduce pollution, a San Francisco-based non-profit said last month.

 

“To reach the ambitious levels of reduction in greenhouse gas emissions, we have to pretty much replace all combustion with some form of renewable energy by 2040 or 2050,” Nichols said. “We’re looking at that as a method of moving this discussion forward.”

 

“There are people who believe, including who work for me, that you could stop all sales of new internal-combustion cars by 2030. Some people say 2035, some people say 2040,” she said. “It’s awfully hard to predict any of that with precision, but it doesn’t appear to be out of the question.”

Of course, the irony that seems to be lost on Phil Ting, Jerry Brown and Mary Nichols is that, according to Morgan Stanley, electric cars generate more CO2 than they save.  As a stark reminder to our left-leaning political elites who created companies like Tesla with massive subsidies, Morgan Stanley pointed out that while electric cars don’t burn gasoline they do have to be charged using electricity generated by coal and other fossil fuels.

This is where Tesla, along with China’s Guoxuan High-Tech fall short.

 

“Whilst the electric vehicles and lithium batteries manufactured by these two companies do indeed help to reduce direct CO2 emissions from vehicles, electricity is needed to power them,” Morgan Stanley wrote. “And with their primary markets still largely weighted towards fossil-fuel power (72% in the U.S. and 75% in China) the CO2 emissions from this electricity generation are still material.”

 

In other words, “the carbon emissions generated by the electricity required for electric vehicles are greater than those saved by cutting out direct vehicle emissions.”

 

Morgan Stanley calculated that an investment of $1 million in Canadian Solar results in nearly 15,300 metric tons of carbon dioxide being saved every year. For Tesla, such an investment adds nearly one-third of a metric ton of CO2.

Meanwhile, despite Brown’s desire for “Hope & Change,” even the U.S. Energy Information Administration says that “renewables” will represent less than 20% of electricity generation in the U.S. by 2040.

Energy

Oh well, when Ting succeeds it making it impossible for low-income California families to afford cheap transportation to work, we’re sure he’ll be all too happy to introduce additional legislation deeming electric cars to be a “right” of all U.S. citizens and mandating that “millionaire, billionaire, private jet owners” pay more in taxes to subsidize that “constitutionally protected right.”

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Elon Musk Wants to Use Rockets for Intercity Travel on Earth

TheMerkle Elon Musk Rocket TravelEveryone will agree Elon Musk is a visionary who isn’t afraid of throwing some wild ideas around. One of his new projects would allow humans to travel between different cities with rockets. It would certainly be an interesting way to address traffic congestion, although traveling by rocket sounds pretty scary. The big question is whether or not this plan is feasible to begin with, and if so, how it could be achieved in a safe and affordable manner. Elon Musk has a new pet Project While no one will deny Elon Musk is by far one of the bolder visionaries our society

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“They Won’t Know What Hit Them” Shocking Undercover Footage Exposes Antifa’s “Premeditated” Violence

As if the public needed any more evidence that violence is a central part of Antifa’s mission, conservative comedian Steve Crowder has published footage that he and his producer surreptitiously recorded after infiltrating a local Antifa cell and accompanying it to a protest at the University of Utah.

The shockingly candid footage offers a disturbing glimpse into the innerworkings of Antifa – a loosely organized band of far-left agitators – and the central tenant of violent resistance that encapsulates the group’s philosophy. The footage primarily focuses on a transgender woman, the purported leader of a small cell of Antifa protesters, who can be heard telling Crowder’s producer that she’s armed with a handgun, and that she expects reinforcements to arrive later with “two AKs”. The organizer can also be heard recommending that Crowder’s producer buy a small blade at a military surplus store and strap it to his ankle “just in case.”

What they show appears to confirm that the group protesters were planning to disrupt a speaking event hosted by conservative commentator and Daily Wire founder Ben Shapiro, whom Antifa has accused of being a nazi despite the fact that he is Jewish. Shapiro’s recent appearances at UC Berkeley and other university campuses drew protests, with demonstrators labeling him a “fascist.”

But perhaps the most surprising thing about the footage was the fact that mainstream media reporters AND police essentially told Crowder & Co. to get lost when they shared it with them.

In another shocking excerpt, the Antifa leader – whom Crowder didn’t name because he said he didn’t want to “dox” anybody, though he added that police have confirmed that they have been monitoring her – described a plan to lure right-wing demonstrators to a secluded area where, presumably, they would be attacked by Antifa.

“Plain clothes, hard tactics, I don’t think they’ll know what hit them. Because they’re not prepared for what we’re planning,” the organizer says at one point.

In the video, another unnamed Antifa member who goes by the pseudonym Clark can be heard explaining that the difference between Antifa and other activist groups is a “willingness to respond with violence.”

As we’ve reported time and time again, Antifa protesters have been inciting violence across the country since Trump’s upset victory in November, beginning with protests during Trump’s inauguration that quickly turned violent in destructive.

According to Fox 13 News in Salt Lake City, Crowder published the undercover video Thursday that purports to show far left-wing protesters distributing weapons ahead of the speech. Crowder’s production team presented the video to police moments after it was recorded.

Yet after evaluating the video, the police determined that there was no credible threat.

“Police looked at the video, evaluated other information available to them, and determined the individuals did not pose a credible threat that warranted action,” Nelson told Fox 13 News.

Similarly violent clashes instigated by members of the far-left group erupted on the campus of UC Berkeley in early February, where members of the group hurled Molotov cocktails and attacked “facists” and “nazis” who were attending a speaking event by Milo Yiannopoulos, causing extensive property damage on campus.

While both the mainstream media and more mainstream leftists initially defended the group, public sentiment has soured on the group.

Several media organizations – including the LA Times, Washington Post, the Atlantic, Bloomberg and the Wall Street Journal – have criticized the group’s violent tactics. A month ago, it was reported that the FBI and the Department of Homeland Security classified Antifa as a “domestic terrorist” group in internal communications that described them as “primary instigators of violence at public rallies” going back to at least April 2016 when the reports were first published.”

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Bali urges many who fled volcano to return home

Author: 
AP
Sat, 2017-09-30 03:00
ID: 
1506797211451224000

KLUNGKUNG, Indonesia: Authorities were trying to convince more than half of the 144,000 people who fled a menacing volcano on the Indonesian island of Bali to return home Saturday, saying they left areas that are safe.
The Mount Agung volcano on Bali, a tourist hotspot known for its lush interior, Hindu culture and beguiling beaches, has been at its highest alert level for more than a week, sparking an exodus from an official danger zone and areas farther away.
Authorities say the no-go zone, which in places extends 12 km from the crater, is the area at risk of lava, lahars and searing hot clouds of ash, gases and rock fragments if there is a powerful eruption.
“Those who live outside the danger zone, we urge them to go back home and carry on with their daily lives,” said Putu Widiada, head of the disaster mitigation agency in Klungkung district south of the volcano where some 22,000 people have fled. “We are trying to identify those who lived outside the danger zone.”
Bali’s governor has warned that people leaving what the government classifies as safe villages have become a “burden” on genuine evacuees and the temporary shelters set up to receive them.
Agung’s last eruptions in 1963 produced deadly clouds of searing hot ash, gases and rock fragments that traveled down its slopes at great speed. Lava spread for several kilometers and people were also killed by lahars — rivers of water and volcanic debris. About 1,100 people died in total.
Archive footage of the 1963 eruption shows buildings with roofs shredded by falling debris, a massive plume of ash gushing sideways from the crater and children in a row of hospital beds with their arms and legs bandaged.
Government volcanologists last week warned Agung could erupt at any time following a dramatic increase in tremors from the mountain.
Despite the government warning of temporary camps being overburdened, three visited by Associated Press reporters on Saturday were calm and orderly.
“I will stay here for as long as it takes,” said Suryani, a mother of two living with extended family in a tent on the grounds of a public sports center that is the main camp in Klungkung district.
Inside the center, families whiled away the time on mattresses, watching a giant TV screen, while cheerful music blared in the background.
“They are treating us well. I don’t want to go home if the mountain hasn’t exploded yet,” said Suryani, who goes by one name and is from a village inside the danger zone.
She said she sympathized with people who had fled from areas designated as safe by officials.
“If it’s not safe yet, they should allow them to stay,” she said. “We can stay here together so they’re not in danger.”
At another smaller temporary camp, officials said a dozen people had left of their own accord after the Bali governor’s statement and they were in the process of identifying others who can go home but would not compel them to.
Widiada, the disaster official, said longer-term plans for evacuees from the so-called red zone are still being worked out.
“This is a temporary shelter so it’s not as comfortable as your own house but we are trying to make it as good as we can by providing entertainment, counselors, a school for the children.”
Agung, about 70 km to the northeast of the Kuta tourist mecca, is among more than 120 active volcanoes in Indonesia. Another volcano, Mount Sinabung on Sumatra, has been erupting since 2010.
Officials say tourists on Bali, which had nearly 5 million visitors last year, are not in danger but they have prepared evacuation plans if ash fall from an eruption forces the closure of the island’s international airport.
Indonesia, an archipelago of thousands of islands, is prone to seismic upheaval due to its location on the Pacific “Ring of Fire,” an arc of volcanoes and fault lines encircling the Pacific Basin.

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