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Opinion from a Libertarian ViewPoint

Posts Tagged ‘Great Depression’

Trump Can Ensure a V-shaped Economic Recovery by Heeding Lessons of 1921 – LewRockwell

Posted by M. C. on July 31, 2020

Happily, during the 1921 depression, the government of president Warren G. Harding did not intervene with monetary stimulus, and the entire episode was over not in a matter of weeks (the V) or years (a fattish U), but months (a narrow U).

https://www.lewrockwell.com/2020/07/walter-e-block/donald-trump-can-ensure-a-v-shaped-economic-recovery-by-heeding-lessons-of-1921/

By

South China Morning Post

A “U” or a “V”? That is the question – whether the economic recovery from the Covid-19 shutdown will be a long drawn-out process, a wide, flattish “U”, or a sharp, upward-bound one, a “V”.

To best wrestle with this question, let us look back a bit at some economic history regarding recessions and depressions, focusing on the US. Is this of interest to those following the course of the Chinese economy? Of course. When the US sneezes, China catches a cold. And, of course, the opposite is true as well.

Right now, the political relationship between these two countries has soured. But this will not, hopefully, always be true. In any case, economic law still operates, no matter what are the diplomatic relationships between nations.

The depression in 1921 was short-lived – maybe not a V, but at least a very narrow U. It was created by prior governmental monetary mismanagement, which led investors, as if by Adam Smith’s “invisible hand” to engage in more long-term capital goods investments than the voluntary saving investment decisions of the populace would warrant, based on their time preference between present and future consumption.

Happily, during the 1921 depression, the government of president Warren G. Harding did not intervene with monetary stimulus, and the entire episode was over not in a matter of weeks (the V) or years (a fattish U), but months (a narrow U).

The Great Depression, which stretched from 1929-1941 (a morbidly obese U) stemmed from identical causes. Here, I am subscribing to the Austrian analysis of Ludvig von Mises and Friedrich Hayek, not the Milton Friedman monetarist explanation of a lowered stock of money in the 1930s.

But presidents Herbert Hoover and Franklin D. Roosevelt “fixed” this by propping up heavy industries whose extent was overblown by the previous artificially lowered interest rates, in an early “too big to fail” paroxysm. The Smoot-Hawley tariff  added insult to injury, and put the kibosh on any early recovery.

The blunder of 2008 also stemmed from unwise governmental policy. In 1992, the geniuses at the Boston Federal Reserve implied that the banking system was racist, since banks were more likely to reject mortgage applications by blacks and Hispanics compared to whites.

Rather, in my view, their favourite colour was green: the ranking in terms of credit reliability and collateral determined lending practices.

But the US Department of Housing and Urban Development contributed to the eventual crisis by diverting mortgages; billions of dollars were improperly diverted into the housing market. Only when bankruptcies were finally allowed did we escape from that debacle. Call that a fattish, but not an obese, U.

This brings us to present considerations. As an Austro-libertarian, I see government failure as the cause of virtually all depressions, and we are certainly in one now. However, I am forced to admit an exception to this general rule. The depression of 2020 is a product of some very vicious little virus critters, not the state apparatus.

I now predict the sharpest of Vs, but if and only if, all other things being equal, the Trump administration cleaves to market principles. First, and perhaps most important, stop paying people more to stay home from work than the salaries they can garner from their employers.

It is beyond me why US President Donald Trump ever agreed to any such a scheme in the first place.

Does he not want to win the election  in November? Does he not realise that a fast recovery, a V, will help him inordinately in that regard? Does he not realise that if people do not get back to work, there will be no recovery at all?

Second, do not commit the same error as the Smoot-Hawley tariff. Trump should beware this error, because he has a natural protectionist instinct in his intellectual armamentarium. He should mightily resist it.

Third, do not give in to our friends on the left who wish to boost the federal minimum wage level to US$15, or to raise it at all. This is an unemployment creator par excellence, particularly for unskilled workers.

Does Trump not realise that a large part of his success in battening down the unemployment rate for the black community, and particularly for younger, less skilled, African Americans, stems from his holding the line on this matter? The Coronavirus Aid, Relief, and Economic Security programme already has provisions in this direction and they should be strongly resisted.

Fourth, in no particular order, Trump should use all his good offices to stop the maniacal US Federal Reserve from furiously pumping money into the economy. These are the seeds for the next business cycle downturn, and risk another bout of inflation, which we certainly do not need to compound our economic difficulties.

So, Mr President, embrace the free enterprise system, attain a V, a very narrow and sharp one, and the prognostication for November will be significantly boosted.

Dr. Block [send him mail] is a professor of economics at Loyola University New Orleans, and a senior fellow of the Ludwig von Mises Institute. He is the author of Defending the Undefendable, The Case for Discrimination, Labor Economics From A Free Market Perspective, Building Blocks for Liberty, Differing Worldviews in Higher Education, and The Privatization of Roads and Highways. His latest book is Yes to Ron Paul and Liberty.

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For First Time Since The Great Depression, Americans Must Wait In Line For The Most Basic Essential Items | Zero Hedge

Posted by M. C. on July 11, 2020

But other Americans continue to grow more and more skittish about the practice, leading to another vein of increased tension across the nation. Francisco Salazar of East Meadow, New York, concluded: “Earlier in the pandemic, they were checking people for masks, cleaning the carts, giving sanitizer — they’re no longer doing any of it. I feel paranoid. I don’t want to be on these long lines.”

https://www.zerohedge.com/personal-finance/first-time-great-depression-americans-must-wait-line-most-basic-essential-items

The scene can be somewhat dystopian and third world when you look at it: as a result of the pandemic and the new way that our economy is forced to do business, Americans all over the country are waiting in line – even for the most basic of essentials.

For example, Bloomberg points out that food banks in Vermont have to deal with “miles long” lines of cars and at Covid testing sites in Florida, people have to show up with full tanks of gas because of how long they have to wait.

People applying for unemployment have similar horror stories – as we have detailed – trying to pile onto an overwhelmed website to collect benefits and left with no one to call when the system doesn’t function properly. The physical waits in unemployment lines are similarly distressing.

Kara Eaton, a 27-year-old industrial welder from Eufaula, Oklahoma, said: “We have to hope that the person next to us in line will hold our place while we use the bathroom — Subway usually doesn’t mind if we use theirs.”

Rachelle Basaraba of Oregon said: “Having to be patient and wait your turn — I don’t know if that’s necessarily the American way.” She says that a “herd mentality” and respect for rules bring order to waiting in line in Denmark, where her company is based. She called this a “a positive thing,” though was unsure about how it would catch on the U.S.

This time in America is the first since the Great Depression to make Americans wait in line for limited resources.

J. Jeffrey Inman, a marketing professor and associate dean at the University of Pittsburgh’s Katz Graduate School of Business, said: “The U.S. is getting a dose of the scarcity economy, and we don’t like it. The U.S. has gotten spoiled where we’ve always had a plentiful, efficient supply chain. Now we’re seeing what can happen once it gets disrupted.”

But capitalism is trying to swoop in and solve the problem. For example, a company called Lavi Industries, that usually makes post-and-rope systems for Homeland Security, is now involved in making plastic sneeze guards and portable stations for lines to make the waiting for bearable. They are also working on their “virtual queueing technology,” which is a smart phone technology that can summon customers out of line from afar.

Perry Kuklin, Lavi’s marketing director, put it simply: “People hate to wait. If you make it more pleasant, make it more efficient, you as a business can not only profit from it, but you create a better passenger experience or theater experience.”

Richard Larson, a Massachusetts Institute of Technology professor and expert on queuing theory, says the issue is just temporary: “My parents had to wait in a bank queue line between 10 a.m. and 3 p.m. and now ATMs are everywhere. We have umpteen more gas station pumps you can stop at. A lot of traditional pesky queuing is gone.”

Some Americans are trying to make the best of the situation. “It was time to stop and notice, to look around and watch, to not be on my phone. I tried just to be there,” said Dena Babb of Torrance, California, about trying to be mindful while enjoying waiting in line.

But other Americans continue to grow more and more skittish about the practice, leading to another vein of increased tension across the nation. Francisco Salazar of East Meadow, New York, concluded: “Earlier in the pandemic, they were checking people for masks, cleaning the carts, giving sanitizer — they’re no longer doing any of it. I feel paranoid. I don’t want to be on these long lines.”

 

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The 75 IQ Version of American History – LewRockwell

Posted by M. C. on January 12, 2019

https://www.lewrockwell.com/2019/01/thomas-woods/the-75-iq-version-of-american-history-strikes-again/

By 

Tom Woods Show

From The Tom Woods Letter:

There’s still lots of talk about that 70% top marginal tax rate, and why it’s supposed to be a great idea.

Heck, they say, we had rates even higher before, and everything was fine!

Ahem.

I emailed you last week about that, and then I devoted episode #1314 of the Tom Woods Show — subscribe for free at TomWoods.com/iTunes — to further detail on the subject.

The (very quick) answer is that thanks to deductions and outright evasion, those high rates were essentially not paid.

Here’s how someone in my private group described the simpleton manner in which the topic is being discussed: Read the rest of this entry »

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Green Socialism – LewRockwell

Posted by M. C. on January 5, 2019

Sandy sounds like a poorly-educated-but-well-indoctrinated young communist with a ninth-grade mentality.  She proudly labels herself a “democratic socialist” but as Ludwig von Mises explained, there really is no difference between communism and socialism: they are both attacks on private property and economic freedom.  She seems clueless about just about everything she talks about in public, whether it is the Constitution, especially the economy, the structure of government, history, etc.

https://www.lewrockwell.com/2019/01/thomas-dilorenzo/green-socialism-is-still-socialism/

By 

Upon taking control of the U.S. House of Representatives the first thing America’s Marxist Party did was to propose a Soviet-style, communistic destruction of American capitalism labeled a “Green New Deal.”  The Party chose as its spokesperson for this totalitarian venture a young woman named Sandy Ocasio who grew up in one of the wealthiest enclaves in America, Westchester County, New York, but who decided to lie about this to get into politics by calling herself “Alex from the Bronx.”  Sandy sounds like a poorly-educated-but-well-indoctrinated young communist with a ninth-grade mentality.  She proudly labels herself a “democratic socialist” but as Ludwig von Mises explained, there really is no difference between communism and socialism: they are both attacks on private property and economic freedom.  She seems clueless about just about everything she talks about in public, whether it is the Constitution, especially the economy, the structure of government, history, etc.  This is the person the American Marxist Party has chosen as its front person in its proposal to destroy American capitalism, prosperity, and the American dream forever—and to give itself totalitarian control over virtually all aspects of American life.

The first thing to understand about the proposed “Green New Deal” is that the first New Deal not only failed to end the Great Depression but made it more severe and longer-lasting… Read the rest of this entry »

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