Monday, April 16, 2012


Charles Kaldec writes:

To see more clearly how the price of the dollar has changed, it helps to
view price changes over a 10 year period. Since 2002, the price of a barrel of
oil has increased four-fold, to $107 last Friday from $26 in 2002. To suggest
that oil companies had enough power to impose such a price increase, or that
speculators are responsible for a quadrupling of the price of oil is, on its
face, preposterous. Instead, the price of oil and gasoline are up because the
Federal Reserve has driven the value of the dollar down.

For example, if the dollar since 2002 had been as good as the:

Chinese yuan, the price of oil today would be $82 and a gallon of
regular gas would cost about $3.10;

Euro, the price of oil today would be $77 and regular gas would cost
about $2.90;

Japanese yen, the price of oil today would be $71 and regular gas would
cost about $2.75;

Swiss Franc, the price of oil today would be $63 and regular gas would
cost about $2.50.

Thanks Mr. Bernanke!


Manufacturing in Alabama

"As manufacturing picks up across the United States, Alabama has become an unexpected beneficiary. The state -- best known for agriculture and textiles production -- is enjoying the best pickup in industrial manufacturing in five years as U.S. and foreign companies flock there. The credit goes to the state's low taxes, top-grade trade schools, a statute that curbs union power, and other incentives spurring many manufacturers to move to or expand in the state, experts said.

In 2011, 70 domestic manufacturers announced plans to set up a factory in Alabama. They're expected to create 4,879 jobs and $1.6 billion in capital investment over the next two to three years. In the same year, an additional 313 manufacturers, already in the state, announced expansion plans that would create another 12,369 new jobs and pour $2.5 billion in capital investment."


Tuesday, April 3, 2012

Problems with Fiat Currency

1. There Is No Spoon

2. Coercion

3. Rent Seeking

4. Immorality

5. Central Planning

6. Price Instability

7. Economic Volatility

8. Currency Debasement

9. Wealth Redistribution

10. Concentration of Wealth

11. Moral Hazard

12. Corruption and Cronyism

13. Confidence Failure

14. Counterparty Risk

15. Transaction Settlement

read the essay

David Stockman on the Fed

I blame it on the Fed. I blame it on the 1971 decision by Nixon to close the gold window and let the dollar float. Because out of that has evolved -- or morphed -- a central banking policy in the world that absorbs unlimited amounts of government debt. And so we went on what I call the "T-bill standard" or the "federal debt standard." And the other central banks of the emerging mercantilist Asian economies -- Japan, Korea, and now, especially, the People’s Printing Press of China -- have absorbed this massive emission of debt that otherwise would’ve created powerful negative consequences that would’ve forced politicians to act long ago. In other words, higher interest rates, pressure for inflationary monetary policy, and the actual appearance of price inflation. But because all the bonds on the margin were being absorbed by the central banks, we got away for twenty or twenty-five years with “deficits without tears.”

David Stockman