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Posts Tagged ‘recession’

The Fed’s Destructive Guessing Game – The Future of Freedom Foundation

Posted by M. C. on December 21, 2022

Recession, depression, inflation, unemployment…aren’t these the things the Fed is supposed to prevent?

Instead we have have endless funding for endless wars and other endless government programs that endlessly don’t work.

https://www.fff.org/2022/12/15/the-feds-destructive-guessing-game/

by Jacob G. Hornberger

As expected, the Federal Reserve raised interest rates by half a point yesterday. It was a drop from the .75 point rate increases that the Fed has been implementing for the past several months. 

A big reason the Fed is going slower is the longstanding fear among Fed officials of bringing about another Great Depression by raising interest rates too high and too fast. That’s, of course, what happened in the late 1920s, when the Fed’s actions brought about the 1929 stock-market crash, which then led to the Great Depression.

Yes, I know, most everyone is taught in their public schools and state-supported universities that the Great Depression was caused by the failure of America’s free-enterprise system. But it’s a lie. And it’s been a lie ever since U.S. officials began saying it during the Great Depression.

In fact, it was the Federal Reserve that caused the Great Depression. If the Fed had not over-contracted the money supply in the late 1920s, there never would have been a Great Depression.

At the time, U.S. officials felt it necessary to tell the lie because of the widespread economic suffering the Fed had wreaked with its monetary policies. People had lost their businesses. Multimillionaires who had lost everything were committing suicide. There was massive unemployment and tremendous suffering. 

Imagine if the American people had discovered the truth — that it wasn’t “free enterprise” that had brought all this on but rather the federal government itself. The resulting anger would have certainly had an adverse effect on elected public officials in the next election. Moreover, U.S. officials undoubtedly feared the possibility of violence if people discovered the truth. 

The Fed had been established in 1913. This was during the time when the official money of the United States was still gold coins and silver coins. There was no paper money because the Constitution did not authorize the federal government to issue paper money. It only authorized the federal government to “coin” money. Moreover, the Constitution mandated that every state had to make gold coins and silver coins “legal tender.”

During the 1920s, the Fed began expanding the quantity of federal bills and notes in circulation, creating an artificial economic boon. People began to sense what was going on and began going to banks demanding that their bills and notes be redeemed in gold coins and silver coins, which they had the right to do. 

Faced with the fact that U.S. officials didn’t have sufficient gold coins and silver coins to honor all those paper debt instruments, the Fed panicked and began contracting the supply of paper bills and notes. In the process, they over-contracted, which brought the inevitable “bust” — that is, the 1929 stock-market crash and then the Great Depression.

This shouldn’t surprise anyone. The Fed is a socialist institution, given that it is based on the socialist principle of central planning. A board of bureaucrats plans, in a top-down, command-and-control manner, the supply of money in a very complex economy. It simply cannot be done. The central planners possess what Friedrich Hayek called “the fatal conceit” — the arrogant belief that they actually possess the requisite knowledge to plan such a complex economic phenomenon. As Ludwig von Mises pointed out, central planning produces “planned chaos.”

Today, people are taking the Fed to task because it over-expanded the money supply, which is now reflected in soaring prices of most everything. But what they fail to take into account is that the Fed is still a central-planning socialist institution, just as it was back in the 1920s. Why would Fed officials today be any better at central planning than their counterparts 90 years ago?

The big fear at the Fed is over-contracting. They are terrified of causing another Great Depression. This fear was confirmed some years ago by Fed chairman Ben Bernanke when he observed that Milton Friedman was right about how the Fed’s over-contraction had brought about the 1929 stock-market crash and the Great Depression. The Fed, Bernanke stated, was going to take great care that it never did that again. 

Bernanke’s admission was remarkable, given the lie that had become so widespread — that the 1929 stock-market crash and the Great Depression and been caused by the failure of “free enterprise.”

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Watch “Governments Will Turn The Recession Into A Depression” on YouTube

Posted by M. C. on September 7, 2022

When the Fed counterfeits dollars, creating an artificial economic boom, a recession is inevitable and unavoidable. Recessions are a return to economic reality; the antidote for The Fed’s poison. While recessions are unavoidable, depressions can be avoided. Depressions occur when the government interferes and tries to prevent a return to economic reality. Government implements “policies” that are meant to “help,” but only end up extending the economic misery into a depression.

https://youtu.be/qjBhbusOubY

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How Bad Were Recessions before the Fed? Not as Bad as They Are Now

Posted by M. C. on June 30, 2022

The continental was turned back en masse, as it now held no value. Those who trusted the continental over gold were left with nothing. Certain Founding Fathers, after witnessing people’s livelihoods ruined by fiat paper money, decided to make provisions to make sure this mistake would not happen again.

Article 1 Section 10 of the US Constitution states:

No state shall make any thing but gold and silver coin a Tender in Payment of Debts.

This section would be violated throughout US history, from the Civil War to 1933, when President Franklin Roosevelt confiscated US citizens’ gold and prevented them from exchanging the dollar into gold. 

https://mises.org/wire/how-bad-were-recessions-fed-not-bad-they-are-now

John Kennedy

With a recession looming over the average American, the group to blame is pretty obvious, this group being the central bankers at the Federal Reserve, who inflate the supply of currency in the system, that currency being the dollar. This is what inflation is, the expansion of the money supply either through the printing press or adding zeros to a computer screen. It has gotten so bad that in the last twenty-two months, 80 percent of all US dollars in existence have been printed, from $4 trillion in January 2020, to $20 trillion in October 2021.

This is always how recessions start: the expansion of easy money, the creation of bubbles, and heightened prices caused by the devaluation of the currency supply. But recessions occurred long before the Fed’s establishment in 1913.

Were these market failures, as many are taught to believe, or were they still the fault of a central bank or government policy? How bad were pre-Fed recessions? Did they rival the Great Depression or 2008?

The Continental Dollar

During the days of the American Revolution, the Continental Congress convened to figure out how to finance the Revolution. In June 1775, Congress issued six million paper currency notes known as continental dollars in order to pay for the new army and the supplies needed to fight a war. Those who supported the Revolution would jump in line to support this new fiat currency, as it was the patriotic thing to do.

By 1780, the amount of continentals in circulation had reached 241 million, and the continental had done its damage. The patriots who bought into the fiat dollar suffered the most, while people like David Hall, who by order of Congress was permitted to print out fiat bills, and the Loyalists, who kept their gold and silver specie were able to stay financially afloat.

The continental was turned back en masse, as it now held no value. Those who trusted the continental over gold were left with nothing. Certain Founding Fathers, after witnessing people’s livelihoods ruined by fiat paper money, decided to make provisions to make sure this mistake would not happen again.

Article 1 Section 10 of the US Constitution states:

No state shall make any thing but gold and silver coin a Tender in Payment of Debts.

This section would be violated throughout US history, from the Civil War to 1933, when President Franklin Roosevelt confiscated US citizens’ gold and prevented them from exchanging the dollar into gold. 

It’s clear what caused the failure of the continental: Congress and printing presses. This, however, would not be the last economic problem that would face America, the next major downturn came in 1819.

The Recession of 1819

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This Is Not A Recession. This Is A Government Imposed Shutdown Of The Private Sector. – Center for Individualism

Posted by M. C. on March 23, 2020

We are about to enter a production slowdown – a collapse, really – not because some businesses miscalculated their investments, but because government intervened drastically and without warning to shut down all businesses. How did they do that? By taking away the freedoms of the people whose energy and application drive economic growth.

https://centerforindividualism.org/this-is-not-a-recession-this-is-a-government-imposed-shutdown-of-the-private-sector/

by Hunter Hastings

Economists and Wall Street analysts are using the word recession to describe the looming plunge in output in the US economy. We’ll just make the point early that economists, exhibiting the typical emptiness of their failed science, can’t even agree on the definition of recession.

Undeterred by lacking a definition, the geniuses at Goldman Sachs and elsewhere ion Wall Street are unrestrained in predicting the imminent arrival of the condition they can’t describe.

As is always the case, people understand the condition that economists can’t even describe in theory. They understand the lost jobs and wages, the reduction in activity at the businesses where they work, fewer shifts, fewer hours, a smaller paycheck, or layoffs or furloughs, unemployment and the need to ask the government for handouts to get by and to feed their families, when they’d rather be helping themselves. They understand uncertainty and disruption, they feel the fear of not knowing their own economic future. Recessions, like all economics, are subjectively experienced in the human mind, in individuals, in families, in communities.

We have an understanding of why recessions occur cyclically (although economists can’t agree, of course). Business growth, the opposite of recession, is driven by savings and investment in new capacity, new and more productive machines, new software, new roads, bigger ships, and all the capital that people put to work to produce more goods and services. Investment is a calculated bet on time: if a business spends this money now on new production that will occur in the future, they calculate a positive return on that investment. Recessions occur when governments get in the way and distort the calculation. They issue too much credit at too low a price, and the business calculus misfires. The low cost of credit entered into the investment calculation gives a false positive. When the investment is actually undertaken, it fails to deliver the expected profit. Projects are shut down. Jobs are lost.

We have seen this cycle many times. The failed investment calculus may apply to dot.com companies (2000), home mortgages (2008) or one or more of many other sectors. Typically, the malinvestment is quickly shaken out and economic growth resumes.

But wait. The coming recession in 2020, so coldly and unfeelingly computed in the cloud by Goldman Sachs, is not like this. We are about to enter a production slowdown – a collapse, really – not because some businesses miscalculated their investments, but because government intervened drastically and without warning to shut down all businesses. How did they do that? By taking away the freedoms of the people whose energy and application drive economic growth. Government told them to stay home. Don’t go to work. Don’t go to bars and restaurants and cinemas. Don’t take your kids to school. Don’t build cars or airplanes or computers or houses. Don’t provide hospitality at hotels. Don’t perform the tasks that constitute a growing economy where everyone who works serves everyone who consumes and everybody thrives.

Let’s leave aside for the moment the monumental error we made in allowing government to do this – to withdraw our economic freedoms with such damaging consequences. Let us try to understand the thinking and the motivations behind this tsunami of government hubris.

First, it is based on the worst error of government: central planning. Despite all repeated evidence to the contrary, and despite their endless failures, they believe they can predict and change the direction of the future based on mathematical modeling of the human condition. The models are computed using the government experts’ own assumptions, thereby achieving a self-referential circularity. They’re right because they’re right.

In the current case, the government experts input a wide range of unproven assumptions about coronavirus incidence and infection rates, and the exchange of infection between individuals. They arrive at predictions of infection for the population. There are wildly fluctuating model outcomes and predictions, so they pick the worst case.

The second step is the giant leap from the theoretical output of the models to the fantasy that government action can be taken against real people in order to change the inputs to the model. Reinfection rates too high? Order people to change their behavior to get no closer to each other than 6 feet (another assumption from some model somewhere). Tell them to stay home and abandon all economic activity. Lock down the state. Lock down the country.

Why are they doing this? Because they can. They have not actually given a reason. To save lives? Whose? Why now and not in previous flu seasons which are much more deadly? To reduce pressure on the healthcare sector? Find other ways to do it. Which one of us has been asked whether we want to sacrifice our livelihood in return for a theoretically reduced probability of a COVID-19 infection? They have the models and they have the political power to order us around. Control and power over individuals is the only justification.

Worse, this escalation in the power of government, reaching the point where they can order us not to leave our homes, and enforce the order at the point of a gun, will prove to irreversible. We won’t be able to un-remember what they did to us. It will be indelibly recorded in history. Governments will point to this instance to justify future, worse instances.

We must start to resist.

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March Madness – LewRockwell

Posted by M. C. on March 16, 2020

One of the more annoying narratives going viral is the notion that we’re all a bunch of imbeciles and without the authorities herding us around we’d die by the hundreds of thousands.  The assumption is that in times of crisis, central control is superior to letting people fend for themselves.

So why are cruise operators mothballing ships at immense cost when they could be offering cheap rates that would give many young adults the opportunity of a lifetime to travel the world?  Part of the reason is that the government is wielding a big stick...

https://www.lewrockwell.com/2020/03/kevin-duffy/march-madness/

College students are on spring break and the cruise ships have plenty of idle capacity.  While the coronavirus rightly keeps seniors away, the risks to young people are probably not much greater than getting on an airplane.  Fuel costs plunged last week as the Saudis and Russians engage in a price war, putting even more downward pressure on costs.  Amid this free market match made in heaven, the cruise operators are suspending operations for a month.

Wait, what?

One of the more annoying narratives going viral is the notion that we’re all a bunch of imbeciles and without the authorities herding us around we’d die by the hundreds of thousands.  The assumption is that in times of crisis, central control is superior to letting people fend for themselves.  A tiny minority, among them AIER’s Jeffrey Tucker, say the conventional wisdom has it backwards:

I don’t know what should and shouldn’t be shut down.  But neither does the government have some special magical access to information on risk probabilities and the proper way forward. In fact, government is the last institution that should be making this judgment. Government acts out of self-interest; enterprise acts in the public interest. The obvious answer here is to leave the decision to private actors who are in the best position to make a good judgment on what should shut and what should open.

So why are cruise operators mothballing ships at immense cost when they could be offering cheap rates that would give many young adults the opportunity of a lifetime to travel the world?  Part of the reason is that the government is wielding a big stick, interfering in international travel and pushing people into semi-isolation.  The cruise operators also expanded too rapidly, took on debt and left themselves with little margin of safety, another consequence of the 2008 financial bailouts and a decade of ultra-cheap credit.  When the coronavirus first appeared in China, they remained complacent, maintaining dividends and reassuring investors that the outlook was bright.  Rather than take responsibility, pick a fight with the government, and try to claw their way back, they’ve decided to toss in the towel and get in line for potential future bailouts.

Who can blame them?

Barron’s – March 16, 2020

The financial press is back begging for bailouts, just as they did when the first cracks in the credit bubble appeared in 2007, well over a year before the 2008 meltdown.  The weekend issue of Barron’s shamelessly promotes a massive government response to fight the coronavirus and its spillover effects:

This isn’t 2008, when deep problems were rooted in the financial system.  Covid-19 is a health crisis, an economic crisis, and a financial crisis rolled into one – and policy makers will need to get creative to keep panic at bay…  [P]oliticians from both sides of the aisle must find a way to work together – or risk something worse than the financial crisis.

Investors are like spoiled children who go crying to daddy every time they get into trouble.  After decades of moral hazard conditioned a whole host of economic actors to believe any downturn would be painless and brief, they’ve become devoid of critical thinking and prone to emotional reactions.  Since stocks peaked February 14, the S&P 500 has dropped 20%, yet Treasury bonds have been the safe haven of choice – with the “TLT” up 7% – while gold has actually fallen 4%.  Early last week, the yield on 30-year T-bonds hit an all-time low and now stands at 1.55%.

Anyone who would loan money to the U.S. government at 1.55% for the next 30 years needs to have their head examined.

It is $23 trillion in debt.  Its economy is heading into recession.  It is about to take out the bazooka and go on a spending and money printing spree.  As a friend warned me after the 2016 presidential election, “If you are a creditor, the last person you want to see on the other side of the table is Donald Trump.”

Will the confidence game work again?  Will panicked moviegoers rush back into a burning theater?  Don’t bet against it.  Of course, that won’t extinguish the fire.

Most analysts believe the cruise ship industry can survive the coronavirus pandemic as long as it doesn’t last more than a few quarters.  Even so, these companies will be forced to tap into credit lines, making them more vulnerable to the next shock.  Meanwhile, the large banks which provide these loans will become more fragile as well.  The government, too, will become more leveraged (just as the Boomers are set to swamp entitlement programs).  Just as the system’s defenses are dilapidated, a severe economic storm is bearing down.

After decades of lifeboats showing up on cue, there are no more rescues.  Investors and businessmen, you’re on your own.

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Was the Coronavirus Created as Cover for the Imminent Economic Collapse? – LewRockwell

Posted by M. C. on March 12, 2020

I doubt the US government could pull this off in a controlled manner.

I believe it would try. I believe it would screw the whole thing up.

There is little comment I have seen regarding a weapons lab accidental release. That I can believe.

https://www.lewrockwell.com/2020/03/gary-d-barnett/was-the-coronavirus-created-as-cover-for-the-imminent-economic-collapse/

By

A USA Today headline this morning indicated that the Dow was diving as virus concerns counter hope for fiscal steps.

U.S. stocks teetered on the edge of a bear market Wednesday as worries persisted over economies reeling from the coronavirus outbreak.”

“Concerns have grown that a prolonged outbreak may bring on a recession.”

“Goldman Sachs forecast that the longest ever bull market “will soon end” after 11 years.”

“Both the real economy and the financial economy are exhibiting acute signs of stress, analysts at Goldman Sachs said”.

Panic has certainly settled in, and that was no accident. One thing for sure in my mind is that this crisis was created, and not accidental. Regardless of the severity of this so-called virus, in the end, as has happened on multiple occasions before with MERS, SARS, West Nile, swine Flu and others, it is likely that all the wild predictions will once again prove to be overstated or downright false. But the serious economic fallout will remain. The propaganda is being pushed at every level possible, from governments worldwide, to government “health” organizations, to all mainstream media, and from all those that stand to gain from this, including the pharmaceutical companies.

Many have been talking about the markets and economic risks apparent in this country and around the world for a long time. I began sounding alarms before 2008, and since that time have attempted to make aware the fact that from an economic standpoint, the markets and the economy have become much worse, and more suspect ever since. After all the manipulation, the Quantitative Easing (QE), and the continued debt growth, it seemed apparent that a massive economic failure was likely in the future. Is that damning future about to come to fruition? Do the controlling powers that have created this likely economic disaster understand this, and seek to place blame on this new coronavirus outbreak as the cause of all financial ills to come? Was this new coronavirus (COVID-19) purposely created and released so that central bankers, investment bankers, corporate heads, and government puppets could use it as cover for an imminent economic collapse that has become impossible to contain? This in my opinion is a distinct possibility. Political convenience at this level is rarely accidental.

With any financial collapse in the wake of a pandemic, real or not, control over world populations is much easier to implement. Once martial law or medical martial law is in place due to panic, all of society is crippled in the sense that individual liberty and power is lost, economic freedom is restricted, and societal controls such as quarantine become reality. All monetary policy rules will be non-existent, as scrutiny for these tyrannical measures will be lacking during times of extreme strife. In other words, total control of entire populations becomes possible, and without some sort of mass uprising, there is little that any individual can do in situations like these. As James Corbett so rightly said, this panic will cause the cures to be much worse than the disease. But was that the plan all along?

This virus has become a Trojan horse for total population control, but what is the primary objective of those creating this panic? What end game is sought and why? What other factors are guiding these policies, and who stands to benefit? Was this so-called pandemic meant to be a false flag event in order to cover-up a much larger problem? Answers to these questions are not perfectly clear at this point, but given the severity of the panic and mind control of the public, these questions should be asked.

One thing that is certain in my mind is that this virus is purposely being blown out of proportion. Because of this, extreme population control measures have been put into place around the world There is a reason for this maniacal hysteria, and if it has been manufactured as an agenda, as I believe to be the case, that agenda would have to be sinister. It would also indicate that something very dangerous is lurking just behind the curtain, and exposure is not desired. This should not be ignored.

As I write this, world markets are in turmoil, economies are struggling, travel and movement are being more and more restricted, quarantine is rampant, and has reached the U.S. Globalists are gaining strength, and with all this, the stupidity of humans is now exposed for all to see.

Anyone succumbing to the headlines, and especially the predictions, is likely to go insane. There are projections that up to 70% or more will get this dreaded virus, and many millions will die. Quarantine is becoming universal, and getting worse by the moment, and this virus as it is called, will spread wildly around the world with no possibility that any can escape the risk. As of today even with this much hype, there has been outside of China, only 1,417 deaths reported worldwide due to COVID-19. All this while according to U.S. News, the CDC reported as of February 21, that 26 million Americans have fallen ill with flu-like sickness just this flu season so far, 250,000 have been hospitalized, and at least 14,000 have died. Given this comparison, is it not obvious that government deception is more than evident?

Fear is dictating the behavior of the masses, and this looks to be a planned outcome. Entire populations are allowing themselves to be manipulated. People are accepting quarantine, medical martial law, and all other forms of medical dictates. Many are being harmed by the horrible economic ramifications of this madness, and families are being torn apart.

It is time to fight back, and to find the real cause of this manufactured panic. This panic is desired by those at the top, so what is the real agenda here? Why is this happening, and what is being hidden from view? I believe there is a connection between this faltering economy and this most likely false pandemic. That connection seems clear, and the timing is very suspicious. There is massive deceit and lies are ever present, but the worst is yet to come. As the Federal Reserve pumps $175 billion more today into the banking system, can any not connect the dots? Is the end of our financial system now in sight?

Today the WHO just declared the coronavirus a global pandemic, and all hell is about to break loose. In this environment, natural freedom will become a faded memory.

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