Category Archives: Economics

Quote of the day—Thomas

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When I go into prepper mode (which I occasionally do), some colleague will say, “Oh. I’ll just come to your house.” After I push back the bile, I usually say something tasteful like, “Bring your daughter.”

Thomas
October 9, 2012
Comment to Guest Post: Four Alternative Stores Of Value
[Similar thoughts have come to my mind as well but I had never found the words to express them so well.

If I put a bunch of effort and money into making life possible for myself and my family in an extreme hardship situation and you just assumed you could mooch off of me if you ever needed to then if such circumstance came about you are going to be surprised at the price you pay for a handful of lentils and cup of clean water.—Joe]

Economics 99 (Remedial)

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About this “(multi) trillion dollar tax cut” thingy; First, tax cuts don’t cost anything.  Taxes cost us, but cutting taxes saves us money.


That’s not the main point though.  The main point is that cutting taxes lightens the ball-and-chain that’s around our ankles, allowing us to invest and produce more, resulting in more income, which in turn increases revenues.  Taxing any behaivor reduces the behaivor while incentivising an underground economy (black market) in that behavior.


You might think that taxing something less dynamic, like property values, might be different– that you could actually add up the property values in your district, multiply that by the amount of change in the tax rate, and know exactly the difference in revenue that will result.  Simple huh?  Well you’d be totally wrong for several reasons.  Here in North Idaho we have a whole population of refugees from other states who fled high tax rates in their states, increasing our property values and presumably reducing the values in the areas they fled.


I could barely afford to get new siding on my house and resurface my huge deck, but since it would increase the assessment value, resulting in a higher tax bill, uh, maybe it’s not so important.  Not this year.  And there is why we have a lot of what I call “Tyvek Houses”.  A Tyvek house is one that remains in un-finished condition for decades at a time.  They are ugly, and unattractive to buyers, but if you plan to live in your house you don’t care about buyers.  You care about the assessed value, because you don’t want to pay out huge sums in taxes year after year, so you don’t want it looking too nice.


You lower the tax rate, and because the punished activity (punished by taxation) becomes more affordable it becomes more common.  The result is more tax revenue.  M’kay?  Reducing rates beyond some extremely low level that we haven’t seen in over 100 years will at some point start to reduce revenues, but in that case we will not only have no use whatsoever for 95+% of what government does today, we’ll have no time nor patience for it.


I needed the first paragraph because there is a plan that could be called a multi-trillion-dollar tax cut.  Dramatically slash the income tax rate, and you get trillions more dollars flooding into the treasury.  You get trillions more dollars flooding into the country from everywhere too, essentially, because investments in the U.S. (as opposed to investments in other countries) become that much more attractive.  Capital, along with the people who own it, moves to where it can be safe and free.  Better put it’s; “free and therefore safe”.


The “expert” economists on the left understand all of this perfectly of course, as any kid who ever ran a lemonade stand would.  That proves to us that their intentions are not good.  If they know that lower taxes will result in a better economy, and that ultra low low taxes will result in a super good economy, and they oppose all tax cuts, well, you figure it out. (hint; they think that America is too big and important already)  They want you out in the streets shouting “Eat the rich” while promising to pay for everything in your life through tax revenues.  Do you see the blatant contradiction there or has your mind been taken over?


Meanwhile, the Republicans can’t quite bring themselves to explain it, because they’re afraid.  That or they have brain damage, but I don’t think it’s brain damage per se.


I say that the American people deserve to have the case made, straight up, what it is that we face, verses what it is that America was meant to be.  If the Republicans can’t bring themselves to make the case, we’ll have to take over their stupidshitty, Progressive party and fundamentally transform it from the inside.

Quote of the day—Mostly Cajun

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Retire? I will probably get killed in the early battles of the coming revolution.

Mostly Cajun
January 27, 2012
Potpourri
[Via Kevin who posts about the violence in parts of Europe over the economic collapse in progress.

I can relate to this. Although I would like to think things will collapse slowly enough that I can retreat to a “bug out place” and avoid most of the bloodshed or worst case, as someone told me a few years ago, “You and I won’t have to worry about getting into an armed conflict with the government because they will pick up us on the first pass.” I would then hope I get released after the fighting, if any, is over with.—Joe]

Outlier detection

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As Tyler Durden said, “See if you can spot the outlier in the chart below.”

SeptemberChangeNSA20-24

And after doing the seasonal adjustment:

SeptHistorical20-24

If you can detect an outlier then feel free to draw your own conclusions. Those that cannot detect any outliers probably aren’t reading this, aspire to careers as fence posts, and vote for Obama.

But I only paid X for the gun!

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I’ve brought this up before, but I keep hearing that assertion.  It says you can never pay more to accessorize a gun that the price you paid for the gun.  It should always be less.  I’ve had people mention their free guns– gifts.  “I didn’t pay a dime for the gun, so how can I justify X?” or “I only paid 100 dollars for this Carbine back in the ’60s…!” (Never mind that it may now be worth 800 or more)


There are high-end optics that cost more than almost any firearm made, except for some of the fine double rifles, and you aren’t going to be using these optics on a fine double rifle.  Ditto for some of the hand-made flintlock longrifles and such, and a few boutique rifles.  There are also sound systems that cost more than a lot of used cars, so I guess you have suffer with an inferior sound system until you can afford a more expensive car to put it in.  A friend of mine once had a $50K sound system in his apartment, so I guess he was really breaking the rules.


The way I see it, if you paid some low price for your rifle, and it does the job you need of it, then you now have more money to spend on a good optic.  I don’t see a conflict here.  It’s all about the setup you want, not some spreadsheet of arbitrary rules based on relative prices of the components.


If it makes anyone feel better, I once had a 150 dollar stereo in a 100 dollar car, with a 500 dollar set Michelins under it.  Can someone make the case that I should have restricted myself to crapy tires because I only paid 100 bucks for the car?  I put over 100K miles on that car too, which included some rather long road trips – you want to me run retreads on it?  Uh; no.  It had well over 200K on it when it finally died a violent death, otherwise, 20 years later I might still be driving my 100 dollar 1963 Dodge 330.  What’s your problem?


ETA,  From comments;  “You are not accessorizing your rifle, you are accessorizing your SCOPE!”  That is a better way to look at it.  Get a great scope and find a rifle that’s good enough for it.  Then you have something.

Brace For Impact

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I was asked by Gresham Bouma’s PR guy to speak at a press conference held last Monday.  I had all weekend to think about it.  The idea was to have some local Business people talk about their challenges in running and growing a business in this economy, with emphasis on the old “jobs” meme (a meme I find ridiculous simply because jobs are the side effect of creation and production, which in turn arise from inspiration, which can’t blossum without liberty. If we seek to add “jobs” without addressing all those prerequisites, we’re completely missing the point and if we allow the prerequisites to exist, we don’t have to worry about “jobs”).


It was only as I was driving to the conference that this little thought came;


A lot of people are not so much thinking of hiring right now as they’re just Bracing For Impact.


I wanted to keep it really short, so I just laid out the two visions of government.  In one, I said, the government’s job is to reign us in, control us, direct us, redirect us, tell us what to do and what not to do.  It starts with the notion, which comes to every one of us at some point as we watch other people speaking, debating, or running a company, that WE could do a better job if only WE were in charge.  I made the point that in a free society, that confidence, justified or not, is what inspires us to go out into the market and prove ourselves.  It’s the motivation for the engine of prosperity.


It’s when government comes along, appeals to the spirit that tells us “I can do better”, then promises to take the reins and use the coercive power of government to FORCE people to “do it the right way” that we step off into the abyss.


The other vision of government is that its job is to protect our rights– our property rights and freedom, rather than to direct us.


I looked the press people in the eyes and asked them, personally; “If you were starting a business, under which model of government would you prefer to do it– the one that says government’s job is to rein you in, control you, direct you, pile on requirements and restrict you, and then tax you to pay for public works, or the one in which government is there to protect your rights?  “I think it’s pretty obvious” and I left it at that.  It only took two minutes or so.


I was watching an old episode of Glen Beck a few nights later.  It was almost year old and I’d never seen it, but I was randomly searching the site– something I’d never done because I don’t have the level of subscription that allows me to watch much on there.  But there was that old episode under some other heading, way down on the menu, and in it were those exact same words that Beck said had come to him last summer;  “Brace for Impact”.


So what if things aren’t going to get all that bad.  Maybe we somehow can avoid hyper-inflation, energy and fuel rationing, and all the unrest combined with blatant and not so blatant attacks from all directions by multiple enemies of liberty.  If you’re somewhat ready anyway, the worst that can happen is that you’ll have some extra food, backup power, expanded capabilities and overall greater independence.  That doesn’ seem like a bad thing.

Quote of the day—Roberta X

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Mitt’s probably the best practical hope — and a thin, thin reed indeed. Changing the slope isn’t the same as reversing the slope.

Roberta X
September 27, 2012
“Not Getting it” Less Is Not The Same As Having A Clue
[I agree. And as near as I can tell the slope is such that sliding off the “cliff” is pretty close to inevitable. No set of viable politicians will be, or can be, elected that have the political capital to reverse the slope. Approximately 47% of the population is dependent upon the slope remaining the same or increasing. Reaching them and getting them to vote against their own short term best interest is extremely unlikely.

I see the communists and socialists passing out flyers on the street corners and signs, speeches and chanting in the park across the street from where I work. I feel a chill up my back when I wonder if these are the same indicators that foretold the coming to power of the tyrannical governments of the USSR, China, Italy, and Germany and the deaths of 100+ million people in the last century.

I understand the psychology of postponing the chaos, hardships, and horrors of the “safety net” (it’s really more of a trampoline that bounces people up and then off into the dirt at a later time) and the “guarantees” of other “free” stuff people have come to depend on going away. But it’s going to happen. The only questions are when, how massive the disruption will be, and the form of society as we reboot. Is postponing it going to make it less painful or more? Without data and very little rational thought to support the belief I believe it will make it more painful.

I will vote in a few weeks but without passion or even “practical hope”, as Roberta put it, the elections can change much. I’m betting my best interest is in continuing to invest in copper, lead, brass, nitrogen based chemicals, food production, and smart capable friends as my hedge against inflation and the big “splat” at the bottom of the cliff.—Joe]

Random thought of the day

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If people “are crazy, can’t be trusted, and need to be regulated and controlled”, as one Socialist recently told me, then doesn’t that mean that government which are made up of people need the same type of supervision?

It would seem to me that, if you value consistency and hence truth, you must conclude that either both people and governments made up of people need to be controlled or governments/supervisors must be made up of greater beings.

Governments which rule by divine authority have an extremely poor record of generating peace, prosperity, and happiness. Hence I think we can dismiss them outright. That leaves us with governments which have some degree of control over their actions or no control.

Again it would seem the choice is clear. Governments with no controls upon them are historically hostile to peace, prosperity, and happiness. Hence the only question would seem to be how much control. What is the optimal amount of control for a government and it’s people such that some measure of “public good” is optimized?

I suspect we have all the data we really need to answer that question. We have 50 states with various amounts of controls upon the government and the people living in those environments. The question can thus be refined a bit more. How do you measure “public good” and how do the various states rate using that system of measurement? Do there exist states with too much or too little control of government and/or their people? Or can it be shown that all states have too much/little control over government and/or the people and we need to increase/decrease the scope of the regulation of government/people in our experiments to find the optimum?

I think I know the answer but I’m willing to look at the data to see if my hypothesis is correct.

Or course there is also the valid concern of natural rights and where government gets it’s authority to regulated and control people. That is my preferred domain to have a discussion about limits on governments. But it’s challenge enough to get people to think about facts and results. Getting them to think about fundamental principles is generally an advanced topic beyond the scope of ordinary discourse.

Quote of the day—Tyler Durden

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The US is no longer the cleanest dirty shirt, or least syphilitic hooker in the whorehouse as we so responsibly noted previously.

Tyler Durden
September 14, 2012
Europe and US Un-Decoupling
[This is in worldwide economic terms.—Joe]

Who wants to move to Honduras with me?

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Via Say Uncle.

This is very appealing to me. It almost sounds like Galt’s Gulch:

Small government and free-market capitalism are about to get put to the test in Honduras, where the government has agreed to let an investment group build an experimental city with no taxes on income, capital gains or sales.

Proponents say the tiny, as-yet unnamed town will become a Central American beacon of job creation and investment, by combining secure property rights with minimal government interference.

“Once we provide a sound legal system within which to do business, the whole job creation machine – the miracle of capitalism – will get going,” Michael Strong, CEO of the MKG Group, which will build the city and set its laws, told FoxNews.com.

Strong said that the agreement with the Honduran government states that the only tax will be on property.

“Our goal is to be the most economically free entity on Earth,” Strong said.

…

The laws in the city will be separate from those in the rest of Honduras. Strong said that the default law that will be enforced in the city will actually be based on Texas state law, which has relatively few regulations.

“It will be Texas law with more freedom of contract. Texas scores well on state economic freedom rankings,” he explained.

Hmmm… I wonder what I could build and export using native labor and materials.

Quote of the day—Atlas Shrugged Part II Trailer

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If you think you have the right to use force against me bring guns.

Atlas Shrugged Part II Trailer
September 5, 2012

That really resonated with me. But then the entire book did.

There are a bunch of other good quotes in there too.—Joe]

Quote of the day—Brandon Smith

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What is it that makes Keynesians so insanely self destructive? Is it their mindless blind faith in the power of government? Their unfortunate ignorance of the mechanics of monetary stimulus? Their pompous self-righteousness derived from years of intellectual idiocy? Actually, I suspect all of these factors play a role. Needless to say, many of them truly believe that the strategy of fiat injection is viable, even though years of application have proven absolutely fruitless. Anyone with any sense would begin to question what kind of madness it takes to pursue or champion the mindset of the private Federal Reserve bank…

Quantitative easing has shown itself to be impotent in the improvement of America’s economic situation. Despite four years of free reign in central banking, employment remains dismal in the U.S., the housing market continues its freefall, and, our national debt swirls like a vortex at the heart of the Bermuda Triangle. Despite this abject failure of Keynesian theory, the Federal Reserve is attempting once again to convince you, the happy-go-lucky American citizen, that somehow, this time around, everything will be “different”.

Brandon Smith
September 14, 2012
Get Ready For An Epic Fiat Currency Avalanche
[I have nothing to add.—Joe]

In the search for meaning

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We often come up empty-handed.  There are always a lot of words being said and written, but the far less meaning.  Our job is to search for the meaning.  It’s fun.


Seen on a paper grocery bag;



“[Big grocery chain] has partnered with [presumably Obama stash money-funded green energy company] to convert their waste into power for the community.


This initiative will help produce 3 mega-watts of power.  Enough to power 3,000 homes for one year!”


What does that mean?  It’s only a one-year project?  What happens after that?  Or is it that someone flunked their high school physics classes and doesn’t know the difference between power and energy? 


Then there’s that all too convenient, catch-all word in there; “help”.  Let’s say for sake of argument that all the Columbia hydroelectric projects combined produce on average 100 gigawatts.  All by myself then, I could help produce 100 gigawatts by pissing in the river.  I could help produce 100 gigawats for one year, each year, by pissing in the river once per year.  Hope and Change.


In fact it doesn’t mean anything as written, but either we are supposed to believe that it means something anyway, and love them for it, or the people who wrote it are ignorant and can’t be bothered with looking things up, or both.  And among the listed items of “output” from this “initiative” are “green power” and “carbon credits”.  Oh goody.  I guess the recycling of the paper into new paper is no longer good enough, and the use of food waste as animal feed is no longer a good thing.  So we can burn this stuff, cut down more trees and use more farmland.  For carbon credits.  Hope and Change.


Then there was this “Halftime in America” ad from Chrysler that many people thought meant something really great.  It’s one of the more artfully meaningless, and/or misleading bits in television.  In fact, if it means anything at all, it means that the government bailout and takeover of Chrysler, using taxpayers’ hard-earned dollars to hand a company over to the unions, is The Way to get out of an economic downturn.  It also implies strongly that if one auto company goes into receivership, we stop making cars– a wildly ignorant idea if ever there was one.  In fact there is the very real and very well-proven concept of “creative destruction” wherein one badly-run company goes out, making the way for the next, better-run company to flourish, the end result of which is more and better, and more affordable cars, with more stable car-making jobs as a side benefit.  “Halftime in America” conveniently ignores all that, instead using pure (false) assumption and building on it with innuendo.  And if there is a “halftime” provision written into the U.S. constitution, at which time we were presumed to have entertained the Central Planners for 100 years, started going broke as a result, then regrouped with more central planning to fix the destruction from the earlier Central Planning, then I am Karl Marx’s uncle.  In fact we are under attack by the Progressive movement and the only way out is to rid ourselves of it and get back to our beautiful American Principles of Liberty.


The arena with probably the least meaning of all is politics.  When millions of people were swooning over Sarah Palin during the Palin/Whatshisname campaign, I went over to her personal web site to see if I could find any meaning.  I have to hand it to her– she is very, very good at combining words, thousands of them, into sentence after sentence, without a scintilla of meaning.  Total blank-out.  Very impressive.


At the same time, Obama told us he wanted “Redistributive Change” and that “When you spread the wealth around everybody benefits” out of one side of his mouth, while telling us he would have the most transparent, open and fiscally responsible administration ever.  Right there, at that moment, he proves to the whole world, with just those two assertions, that he is a lying piece of shit.  Then we elected him.  I guess searching for meaning isn’t a hobby for many people.


Make a point of it.  Next time you see a politician speaking, or an advertisement, or anything really, try to see if there is any meaning, and what, exactly, is the meaning.

Quote of the day—Richard

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I told my broker about 5 years ago, “I wish I had had $150,000.00 worth of rifles instead of all that stock.”

Richard
September 16, 2012
Comment to We Are Of Different Worlds.
[I don’t own nearly as many guns as many people I know. But I can’t think of any gun, except those with exceptionally heavy use, that might have gone down in value. Nearly all have gone up in value. I have a lot of ammunition components (and a far amount of factory ammo). All of it has gone way up in value. Investing in lead and copper has paid off. Not as much as gold and silver has but you can’t eat gold or silver. And you can’t defend yourself, your family, or your possessions with a piece of gold or silver.—Joe]

Au *= (1 + 0.023/s);

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Gee… I wonder could have caused that step change in the price of gold yesterday…

gold20120914

Could it be that QE3 means dollars are worth less today than they were yesterday?

Graphic from http://www.goldprice.com/.

*Electrical Engineers who write software will understand the title.

Quote of the day—Mark McHugh

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My Doctor’s an idiot. A few years ago, he started expressing concerns about my weight, pointing at this chart supposedly showing how much a man of my height should weigh. One glance at his stupid chart and it was clear to me that he had completely misdiagnosed my condition. There was nothing wrong with my weight, I just wasn’t tall enough. Clearly I needed to grow my way out of this. So I went home and googled “how to stimulate growth.” Once I got past the all the baldness cures and penis pumps (it’s not my bag, baby), I found hundreds of papers so incredibly boring I knew they had to be true. In no time, I was able to design and implement my own stimulus plan based on the irrefutable scientificky principles of Nobel prize winners and other people so smart they never had to do an honest day’s work in their lives. Despite the difficulty climbing stairs, I was feeling pretty good about things until my last check-up….

“Hi, Doc.”

“Hi,” he said, examining my file. He looked up, “You’ve put on twenty pounds since the last time I saw you”

“Thanks for noticing,” I beamed.

He frowned. “I remember now. You’re the guy on the diet designed to make you grow. What’s that called again?”

“The Keynesian Plan.”

Mark McHugh
August 31, 2012
Gold Is A Barbeque Relish
[Read the whole thing.—Joe]

Atlas is shrugging

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Although it doesn’t show up on balance sheets I’m sure there is intellectual capital that is headed for Gault’s Gulch as well as the financial capital:

Spain saw close to a 40 percent rise in capital outflow in June, Bank of Spain data showed on Friday, as investor confidence in a country struggling to balance its public accounts eroded further.

The central bank reported that net capital outflow, not including central bank operations, was 56.6 billion euros ($71 billion) in June, after an outflow of 41.3 billion euros in May.

A total of 315.6 billion euros of capital has left the country in the year to end-June, equivalent to nearly one-third of the country’s economic output. In the first half of 2012 capital outflow was 220 billion euros.

Emphasis added.

This is one of the Achilles Heels of the “tax the rich” schemes. Those that demand “tax the rich, feed the poor, until there are rich no more” can succeed, but the success is achieved in an unintended manner. The rich, in essence, evaporate. They either leave the country and take both their intellectual and financial wealth with them or they say, “It’s not worth it” and just stop producing wealth. In either case the looters run out of places to loot. The end result is that everyone is worse off than if the looters had produced wealth on their own rather than demanded they be given the wealth of others.

Socialism is like a herd of hogs turned loose in a corn field. They feed extraordinarily well for a few days but destroy the crop that should have lasted through the winter and provided seed for the following year.

Brains, learning, and school

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I had started writing a essay on learning and the brain and
current understandings about it, and realized as it grew HUGE that it revolved around examining some rhetorical
questions. Here are some of the core questions, with their import and details left
as an exercise to the readers and commenters, unless there is significant
interest in a particular one being addressed in some future essay.

Compare and contrast data,
information, and knowledge.
                Why do people use them
interchangeably, and what problems arise when people do?

Compare and contrast school
and education.
                Must one imply the other
(or the other, one)?

Compare and contrast smart
and educated.
                Why do educated people get
them confused so much more often than smart people (both in themselves and
others)?

Compare and contrast teaching
and learning.
                How do you measure the
effectiveness of a teacher?

Compare and contrast knowing,
understanding and wisdom.
                How does one get turned
into the other?

Compare and contrast intrinsic
aptitude and interest.
                Can one be leveraged into
the other, or are they merely randomly connected?

What is the most important thing a human should learn?
                Rank, in order, the top 10
things one should learn by voting age. Why?

How can you tell truth from falsity?
                How often do you ask
yourself “how do I know that? What
are my assumptions?”

At its most basic (biological) level, what is learning?
                What makes this happen?
How are repetition and strong emotional tagging different?

Is it important for children or young adults to learn how the brain learns and works at some point, before they become an adult?
               How could learning this help children in school?

How can a neural connection be strengthened, or made more interconnected
with others?
                Compare and contrast a
single, strong connection, with highly interconnected knowledge.

How many strong emotional “tags” are there in a very safe,
nearly risk-free, environment?
                Would this present a
challenge to learning?

What makes the brain think something is important enough to
learn (that is, remember and think about enough to apply the knowledge later)?

What is the brain designed to do, and in what sort of
environment?
                WHY? HOW? Can we use this to help teach and learn?

Random thought of the day

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How is it people can think communism is viable when even very small children and animals defend their property and territory?

I have to conclude either they are incredibly naïve, stupid, or intend to be the enforcers and hence are incredibly evil.

Quote of the day—Mark McHugh

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The path we’re on ends with mountains of corpses when the great experiment fails.

Mark McHugh
August 19, 2012
Shhhh…It’s Even Worse Than The Great Depression
[H/T to Tyler Durden.

One of his main points to support this prophecy is that the velocity of money in this country is lower than even during the Great Depression. That alone is a scary data point.

The prophecy that a lot of people are going to die as a result of government interference with the free market is consistent with what I have been saying for years. The only questions I see unanswered are the relative contribution of economic policy versus social policy and who, in what order, and how high people are stacked.—Joe]