Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Keynesian

Economic Forecasting is a Dangerous Business

This article first appeared at The McAlvany Intelligence Advisor on Monday, February 9, 2015:

English: New York Yankees catcher Yogi Berra i...

Yogi Berra

Nearly everyone has an opinion about forecasting and its dangers. Some, like Yogi Berra, will tell you, “It’s tough to make predictions, especially about the future.” Others, like John Kenneth Galbraith, will say, “The only function of economic forecasting is to make astrology look respectable.” Still others will warn about setting either the exact event, or its timing. Do either one, they say, but not both.

Apparently the forecasters enlisted by the Wall Street Journal last week to give their best estimates of growth in China weren’t listening, or didn’t care. Or perhaps they believe in Keynesian miracles alongside those of the Tooth Fairy.

Nevertheless, when asked about import and export growth in China for the month of January, they missed reality by a country mile. The Journal tallied up the results and their seers and prognosticators concluded that

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Swiss Bank Referendum Fails, Franc Drops

This article first appeared online at TheNewAmerican.com on Thursday, December 4, 2014:

Banknotes of the Swiss franc

Banknotes of the Swiss franc

The Swiss voted down the initiative “Save Our Swiss Gold” on Sunday, November 30, by a margin of three to one, rejecting efforts to shore up the Swiss National Bank’s (SNB) balance sheet. Switzerland, a direct democracy, entertains an average of five such referendums every year, and most of them fail. This initiative would have required the SNB to boost its gold bullion holdings from its current eight percent level to 20 percent over the next five years. It would also have required the central bank to repatriate its foreign-held gold reserves, while prohibiting it from ever selling any of those reserves in the future.

When first proposed, speculators bought the Swiss franc cheap, hoping to sell it dear if the initiative passed. Investors in gold were holding their breaths as well, noting that

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Crude Oil Price Declines Reveal Who’s Swimming Naked

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, December 3, 2014: 

Ali Al Naimi

Ali Al Naimi

One of the most famous homespun quotes Warren Buffett ever uttered is this: “Only when the tide goes out do you discover who’s been swimming naked.” With the decline in crude oil prices of nearly 50 percent since June, more and more people are finding themselves swimming naked, or they’re about to.

Consider the formerly invincible oil cartel, OPEC, which seems to be suffering from delusions of its former glory by taking on oil producers in America. Instead of cutting production in order to “stabilize” oil prices, the cartel, led by the aging big kahuna, Saudi Arabia, has decided to

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Oil Market: Lower Gas Prices not the Only Reason to be Thankful

This article first appeared at TheNewAmerican.com on Thursday, Thanksgiving Day, November 27, 2014:

When news from Vienna arrived on Wall Street early Thanksgiving morning that OPEC wasn’t going to cut its production quotas to stabilize crude oil prices, those prices immediately fell even further, touching lows not seen in four years. West Texas Intermediate briefly touched $70 a barrel while Brent crude was close behind, at $73.

Oil hit a high of $147 a barrel in July 2008, so Thursday’s drop represents an astonishing 52-percent decline in just over six years. This coincides with an 80-percent increase in crude oil production by the United States over that same period. As economies around the world struggle to regain their footing, thanks to failing Keynesian policies, the demand for crude remains about where it was 10 years ago. With flat demand and increasing supply, it was only a matter of time before prices started to fall.

American consumers are benefitting enormously,

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Mexico Doubles Car and Truck Production in Five Years, Thanks to NAFTA?

This article was first published at The McAlvany Intelligence Advisor on Monday, September 8, 2014:

English: A North American Free Trade Agreement...

In her promo for her article titled “America’s Car Capital Will Soon Be … Mexico,” which appeared in Forbes on Monday, Joann Muller claimed that “wise trade policies south of the border have quickly created the global auto industry’s factory floor” and wondered rhetorically if Washington was listening or watching to learn Mexico’s lesson. She wrote:

Seemingly overnight, Mexico’s automotive output has soared, bolstered by a flood of investment from foreign-based carmakers, including Nissan, Honda, Volkswagen, and Mazda. With $19 billion in new investment, production has doubled in the past five years to an estimated 3.2 million vehicles in 2014.

And it’s all because of NAFTA, she claims:

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Foreign Affairs: Give Away Free Money!

This article first appeared at the McAlvany Intelligence Advisor on Friday, August 29, 2014:

Foreign Affairs

Foreign Affairs

What happens when a college professor meets up with a graduate student from Oxford University, intending to solve the world’s economic problems? What happens when they consider that the previous attempts to revive the economy have failed and their recommendation is to do more of the same?

The title of their resultant article in Foreign Affairs – the premier publication of the Council on Foreign Relations – explains it all:

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Article in CFR Magazine: Give Away Money to Stimulate Economy

This article first appeared at TheNewAmerican.com on Thursday, August 28, 2014:

 

Los Angeles Police Department (LAPD) Bell 206 ...

Mark Blythe, a professor at Brown University, and Eric Lonergan, a hedge fund manager living in London, have conjured the ultimate solution to a stagnant economy: Central banks should give away free money.

These two authors of a lengthy and allegedly erudite article in the September/October 2014 issue of Foreign Affairs, published by the Council on Foreign Relations (CFR), appear to be living in an alternate universe, as their suggestion, if it were fully implemented, would push the world’s economy back to the Dark Ages.

The article, entitled “Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People,” rests on the false assumption that

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Tax Cuts of Kansas Already Improving the State’s Economy

This article was first published at TheNewAmerican.com on Monday, July 14, 2014:

Kansas City Skyline 1

Kansas City, Missouri’s Skyline

When Kansas Governor Sam Brownback signed into law the first of several reductions in his state’s income taxes back in May 2012, he wrote:

Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy. It will pave the way to the creation of tens of thousands of new jobs, bring tens of thousands of people to Kansas, and help make our state the best place in America to start and grow a small business.

By cutting the top tax bracket by 25 percent and eliminating taxes on small businesses altogether, he expected great things to happen:

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Chinese Economist at IMF warns of Global Housing Bubble

Board of Governors - International Monetary Fu...

Board of Governors – International Monetary Fund (IMF) (Photo credit: Wikipedia)

The false assumption that regulators can be safely counted upon to steer economies – local, national or global – to full employment with minimal inflation while avoiding booms and busts was unknowingly exposed in the latest yelp from the Deputy Managing Director of the International Monetary Fund (IMF), Zhu Min. In Chinese, his name means “people rule” or “democracy” but his ideology is firmly rooted in the Keynesian fallacy that economies can be successfully managed by experts without assistance or input from the common folk.

In announcing that the IMF has launched a new website, Global Housing Watch, Min delights in thinking that the world’s economy can be driven by looking through the rear view mirror. He said:

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Latest Survey: Small Business will lay off Workers if the Minimum Wage is Raised

Bob Funk, the entrepreneur who founded and now operates Express Employment Professionals (claimed to be the largest privately owned employment service in the country), holds that the best way to determine the impact of a proposed law is to ask those who would be directly affected. It reduces confusion, avoids extended discussions among economists who have never held a real job in their working lives, and eliminates spending on empirical studies designed with the desired outcome in mind. Said Funk:

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Standard & Poor’s Downgrades Puerto Rican debt to junk status

Now that credit rating agency Standard & Poor’s has ended the suspense by announcing that it is cutting Puerto Rico’s $70 billion worth of general obligation bonds to junk status, questions about the island’s economic future abound. Will Fitch and Moody’s follow suit

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Controversial Harvard Professors predict high inflation and defaults for the US

The two Harvard professors who made themselves famous, and then infamous, are at it again, now predicting that America will soon be forced to

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1.3 million Lose Federal Unemployment Benefits, Another 2 million to Follow

Because the budget deal signed into law last week didn’t extend federal unemployment benefits, some 1.3 million people won’t be getting their $1,166 monthly checks, starting in January. By June another 1.9 million will be cut off.

Keynesians are sputtering nonsense about the need to extend benefits. President Obama called it an

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The Bitcoin and Paris Hilton

This article first appeared in The McAlvany Intelligence Advisor on Wednesday, November 27th, 2013: 

 

In a dismissive article in The New York Times on Monday, the author quoted a Bitcoin skeptic who predicted: “In a matter of months you won’t be hearing about it. It will go the same way of Paris Hilton.” He failed to follow the old rule: keep your words sweet and tender because someday

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Summers is out, Yellen is in, the Fed rolls on

Just when it appeared that Larry Summers had the nomination for the next Fed chair all wrapped up, Summers called the White House on Sunday and told his good friend, President Obama, that he was withdrawing his name from consideration. He then sent a formal withdrawal letter to the president:

I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation’s ongoing economic recovery.

The president dutifully responded with the appropriate accolades:

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CNBC says Larry Summers to replace Ben Bernanke at the Fed

Citing an unnamed source from “Team Obama”, CNBC announced that Larry Summers will be named head of the Federal Reserve by President Obama to replace outgoing chairman Ben Bernanke whose term expires on December 31st.

Despite much media conversation about other potential candidates for the position, chief among them Fed Vice Chairman Janet Yellen, Summers always had the inside track. Summers served as

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Central Banks’ bubble is bursting, sending markets down worldwide

When the Japanese stock market lost more than 6 percent of its value on Wednesday in a massive selloff, pundits jumped on the move to try to explain what happened, and what it all means. Evan Lucas, a market strategist at IG Markets, wrote:

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Could a Professional Wrestler be the next Senator from Tennessee?

This article first appeared at McAlvany Intelligence Advisor:

 

In gearing up for the 2014 Senate election in Tennessee, the Tennessee Alliance Tea Party & Liberty Groups announced in its newsletter last week that current Senator Lamar Alexander was ripe for extinction:

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Who is Jason Furman?

This was initially posted at McAlvany Intelligence Advisor:

 

With Monday’s announcement that Jason Furman will be taking over from Alan Krueger as chairman of President Obama’s Council of Economic Advisors, some have asked: who is he?

The short answer is that he is a

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Slowing Economy Confirmed

The report from Automatic Data Processing (ADP) on Wednesday morning surprised economists once again by coming in substantially below their expectations. The 135,000 new private sector jobs created in May were way below the

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.