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Monday, March 28, 2011

Debunking More Keynesian Nonsense!

For those of you who don't know, my foundation within economics is the Austrian School. The Austrian Theory of Laissez-Faire Capitalism has been vastly ridiculed by mainstream economists, politicians, university scholars, pundits on television, etc.

Peter Schiff, president of EuroPacific Capital, has been predicting a economic collapse as early as 2002, while the Keynesians continued to maintain all the way until the collapse that the markets were fine, economic growth was great, the fundamentals are great, fed policy and monetary policy couldn't be better, so on and so forth.

When the collapse happened, the Keynesians decided that it would be best if the federal government guaranteed all of the bad debt by printing up money, and bailing out corporations that should have otherwise failed. And so this pattern continued for a little while. AIG, CITIGROUP, BANK OF AMERICA, JP MORGAN&CHASE, GENERAL MOTORS, all received bailouts. They even made some banks who had too much capital take the bailouts. Many of the bailouts that were handed out so easily weren't even reported in the news.

People were protesting angrily in the streets over the bailouts. Bankers were receiving death threats, and some politicians were even being hanged-in-effigy. It's strange to me that the world's ELITE INTELLECTUALS can't figure out the simple things, like it's a bad idea to spend more than you save, it's bad to print money because that makes your currency worth less, it's bad to intervene and create artificial supply/demand, it's bad to create artificial savings by rigging interest rates really low.

This is simple stuff that a high-school ECON student could understand, yet, the ELITE INTELLECTUALS WHO HAVE THE COLLEGE DEGREES AND ARE RESPECTED EVERYWHERE IN ACADEMIC CIRCLES can't get it.

While the mainstream media continues even to this day to avoid the topic of Keynesian economics and it's disastrous effects, there are a few independent media sources who take it upon themselves to talk about what the mainstream media doesn't want to acknowledge.

The irony is the fact that we let "educated fools" run our nation, our schools, our economic and foreign policy. Until we as a society wake up and realize that a college degree doesn't make you intelligent, we're doomed beyond all hope.

Sunday, March 27, 2011

Gordon Gekko was right. Greed IS Good.

Gordon Gekko is a fictional character from the Oliver Stone movie "Wall Street" and a favorite example of Keynesians/Socialists to point to as an example of what happens when you don't have Government oversight of the markets. In the movie "Wall Street", Gordon Gekko makes a speech where he not only denounces corporate bureaucracy as wasteful, he also makes the case that greed is good.

It's extremely hard to refute what he says in the above video, simply because he is 110% correct. We don't NEED new phones or new computers. The old ones work well for their purpose. We don't NEED new movies, or faster means of delivering information. The old ways worked just fine. But, someone figured out that they could get wealthy if they created these new products for the consumer to purchase. The result is a boom of new products and ideas that wouldn't have existed otherwise.

While greed IS good, like anything good, it can result in disaster if misused. Enron is a perfect example of this.  But before I get into Enron, let's look at a Socialist's point of view.

Bill Maher points to examples of greed having disastrous consequences, like Health Insurance Companies screwing over their customers to save a little money, Food Companies cheapening their products with sugar and fats to save money, Credit Card Companies charging outrageous interest rates, and Environmental Dumping, but what he fails to realize is very simple.

We've had Managed Care since the 70's when the government started endorsing HMOs (Health Maintenance Organizations) during the Nixon administration. We made it cheaper through taxation to buy insurance through your employer .We made it illegal to buy Health Insurance across state lines. Government handed the Health Insurance Industry a monopoly through regulation, and somehow it's a surprise when they start behaving badly?

We have the FDA (Food&Drug Administration) approving dangerous and ADDICTIVE medications like Prosac and Xanax. We have the FDA subsidizing BIG PHARMA by protecting them against competition from alternative medicines, and somehow it's a surprise that BIG PHARMA not only puts mediocre medications out on the market, but grossly overcharges for them?

The Department of Agriculture subsidizes major farming corporations by protecting them from competition of small farmers, and somehow it's a surprise that Major Farming Corporations place tainted food unto the market?

The point is that Greed IS Good, but Greed CAN'T be subsidized by the Law of the Land through legislative and Bureaucratic regulations. The Keynesians would say in response, "Well, the Free-Market fails because it doesn't control corporate greed."

Oh, but that's where you're dead wrong. The free-market doesn't have a LEGISLATIVE PROCESS to control greed, but it has something much more efficient. It has a trigger. A trigger that is built into each and every one of us as human beings, and as societal animals. That trigger is called FEAR! FEAR OF PERSONAL LOSS! 

When faced with a HIGH RISK/HIGH REWARD scenario, the company may decide to invest, or to not invest. If there is a major fear that it's a bad investment, then the company won't invest. But when the government eliminates the fear, there is only the HIGH REWARD. So, is it any surprise that corporations would be quick to jump into a bad investment if there's no risk to the investor and could pay off big if the investment succeeds?

Enron is often used as an example of why we need government intervention and regulation, but Enron had received $1,600,000,000 in Corporate Welfare. What happened to Enron is what should've happened to Enron. Bear in mind, that Enron was considered to be invincible. Here we have a power company that's been turning out a profit for close to a century. There's no way they could fail... right?


Enron collapsed. Did the world suddenly stop receiving energy? No, another company took it's place. The TOO BIG TO FAIL DOCTRINE also subsidizes Corporate Greed. Now you might be stupid enough to ask, "Well, what does Corporate Greed being 'subsidized' have to do with anything?"

When you subsidize something, you get more of it. Enough said.

The major philosophical problem with Keynesians/Socialists is that they don't understand human nature, and until they learn the basic principles of Human Nature and Human Action, then there's no hope for any idea they have.

Monday, March 21, 2011

Raising taxes is an idiotic idea!

Ok, so Robert Reich, who we ALL know is my favorite Keynesian *sarcasm*, wrote an article for The Huffington Post on why we should raise taxes on the top earners in the country in order to get our economy back on track. Now, he isn't the first idiot to suggest this. Socialists have been screaming for years that the rich don't pay enough taxes. Of course, common sense should kick in and say to you, "The only time the government raises taxes like that is when they're trying to pay for whatever they're spending on. If they simply cut spending, there wouldn't be a need to raise taxes on anyone because the tax dollars that we pay in would go further, because the government isn't spending so much, thus it has more money, etc etc."

Of course, expecting Keynesians like Robert Reich and his ilk to have any common sense is like expecting the weather to clear up when you scream STOP RAINING at the top of your lungs. Here is the full article in question. Now, I'm going to debunk this type of nonsense step-by-step, like I usually do.

"My proposal to raise the marginal tax to 70 percent on incomes over $15 million, to 60 percent on incomes between $5 million and $15 million, and to 50 percent on incomes between $500,000 and $5 million, has generated considerable debate. Some progressives think it's pie-in-the-sky."

Umm... that's probably because what you're talking about IS pie-in-the-sky.

"Incidentally, during these years the nation's pre-tax income was far less concentrated at the top than it is now. In the mid-1970s, for example, the top 1 percent got around 9 percent of total income. By 2007, they got 23.5 percent. So if anything, the argument for a higher marginal tax should be even more realistic now than it was during the days when it was taken for granted."

This is a major talking point for the idiots who spew Keynesian nonsense. "The top 1-2% have all of the wealth so we need to distribute income through taxation." 

The entire problem with this argument is the fact that the major talking point that is the argument's entire foundation is completely moot. How much money the top 1-2% has is completely irrelevant. Instead of asking, "How much does the top 1-2% have?", you should be asking, "How much does the top 1-2% earn?" Look closely at those two questions. HAVE and EARNED are two different things. 

If they're earning their money, then you simply need to stop complaining. If they have this money, but they didn't earn it in the market place, AND THE VAST MAJORITY OF THEM IN FACT DID NOT EARN THEIR MONEY IN THE MARKET PLACE, then you have a problem. 

If companies are earning their income, then the income is coming from the consumer. If they aren't earning their income, then their income is coming from, more often than not, the government. And in that case, restrictions need to be placed on the government, not the private sector.

So this clown's argument is falling to pieces already. Most of his article is just "RALLY THE PROGRESSIVES" nonsense, so I'll cut to the next point.

"More importantly, it will soon become evident to most Americans that the only way to reduce the budget deficit, preserve programs deemed essential by the middle class, and not raise taxes on the middle, is to tax the top."

Actually, most of the government programs that we have today are not only not essential, they are failed attempts to meet a certain end. For instance, the Department of Energy was created to rid us of our dependence on Foreign Oil. When the department was first created, our dependence on Foreign Oil was about 60%. Now, it's about 70-80%. The Department of Education was created to increase Test Scores in public schools. We all know how that's worked out so far. They continue to put billions of dollars into these departments, but they not only continue to fail in their purpose, they prevent others from succeeding by taking up valuable resources that could be allocated elsewhere. 0.58 of every tax dollar collected goes to paying for military spending, and only 1/5th of military spending is DEFENSE spending.

It's also worth noting that Keynesians, when they talk about taxes, that they NEVER factor inflation into their equations. Inflation is a form of taxation as well. So factor inflation, these proposed tax hikes, AND all of the spending together. The end result is not good at all.

"Some critics worry that if the marginal tax is raised too high, the very rich will simply take their money to a more hospitable jurisdiction. That's surely possible. Some already do. But paying taxes is a central obligation of citizenship. Those who take their money abroad in an effort to avoid paying American taxes should lose their American citizenship."

I laughed my ass off when I read this, because this quote BY ITSELF reveals the sheer stupidity that Robert Reich and his ilk represent. Saying that you have to pay ridiculous tax rates unnecessarily or lose your citizenship? Forget the fact that imposing such a choice on the top earners will simply make them take the entirety of their businesses to another country, thus costing this country possibly MILLIONS of jobs, thus adding to our already disastrous list of problems, thus decreasing the hope of economic recovery... I'm trying my best not to bang my head against the wall. Seriously. How can someone be this stupid and still be taken seriously?

This guy is making me sick to my stomach. I provided the link to the full article above. Go read it.

Friday, January 21, 2011

Repeal all of the Minimum Wage Laws!!

I imagine that I'm going to get a laundry list of critics from what I'm about to say. In this blog, I intend to demonstrate, in ways that it has not been demonstrated before, why Minimum Wage Laws increase the cost of living, and are detrimental to any type of market-economy.

But before that, we have to look at some history. Minimum Wage made it's first real appearance in the state of Massachusetts in 1912 regulating the base amount of wages that an employer could give to women and children. Later on, Minimum Wages Laws were set nationally in the year 1938 which regulated the base amount that any employer could pay any given employee. Click here for more information regarding the history of the Minimum Wage Law.

Now, before you go any further, I'm going to provide a link that argues for the Minimum Wage Laws. Here is the link. Now, I'm going to quote this site and I'm going to debunk this nonsense step-by-step.

Quote from the website: "Everyone should have the opportunity to earn a decent wage. No American should be compelled to work at a rate that, assuming full-time labor, every weekday, all year long, amounts to the $10,712 that the current minimum wage provides. This is equally as true for a middle-class youth working to raise money for college as it is for a single mother supporting a family. The minimum wage is not just about helping the impoverished. It is about fairness, the value of work, and the opportunities that work provides."

If you take a close look at this paragraph, you'll see that it's built on emotional nonsense. The idea of fairness, the value of work, and the opportunities that work provides are completely nulled by the mechanics of the Minimum Wage policy. Labor is a heterogeneous commodity in the market-economy. When you set Minimum Wage regulations, businesses have to increase the cost of their products in order to make up the difference for the involuntary increase in employee salary, but they don't just mark up the cost of their goods and services to that point. Instead, they mark up past that point.

 Basically, they charge even more than they have to, because if Minimum Wage regulations are set, there is more money in the economy than there is supposed to be, and corporations rake in this extra profit by price gauging. So the entire purpose of the Minimum Wage defeats itself right off of the bat. 

Quote from the website: "Furthermore, no employer should be allowed to unreasonably profit by exploiting the lack of negotiating power of low-wage workers. The free market fails to set a fair price when one side holds all the bargaining chips. In another context, this is why laws exist against monopolies. If only one supplier supplies a good, it can charge more than the good is worth because the purchaser is powerless to obtain it elsewhere. Low-wage workers are in the opposite position of the monopolist. They lack the skills that command higher wages, but, because they need to work to survive, they cannot withhold their labor from the market. The monopolist can set the price at almost whatever level it wants, while the low-wage worker must take almost whatever is offered for his or her labor. Minimum wages exist for the same reason that laws against monopolies exist. They deal with situations in which the market fails to set fair prices."

It's worth mentioning that his website has a lot of charts and graphs supposedly proving his point, but it's the graphs he doesn't show that disprove his point. Usually, when sycophants of the minimum wage start spewing their nonsense, they show these little graphs that say things like, "Under the increased minimum wage policy, the average salary of workers went from $13,000 a year to $17,000 a year." Now that seems good at first glance, but the data they don't show tells the most. What is the average cost of living before and after the implication of the minimum wage regulations for the people making these wages? 

As I said earlier, the mechanics of minimum wage regulations defeats the purpose of the minimum wage regulations. When I asked what is the average cost of living before and after the minimum wage regulations for the people who make these wages, I asked that question with a very specific goal in mind. At bear minimum, the cost of living is going to go up just as much as wages for the people making these wages. And the cost of living doesn't just go up by that much for them, it goes up for everybody. So not only did you not help the poor, you hurt everyone else in the process. And that's assuming that the corporations are going to be honest and not use it as an excuse to price gauge. 

His statement that the free-market fails to set fair prices when one side holds all of the bargaining chips is utter nonsense because in a free-market society, no one side ever holds all of the bargaining chips. He once again fails to realize that labour is a market-commodity. If all of the corporations and firms held the same policy of screwing over their employees, then there would be no motivation to advance or to better yourself within the marketplace. 

Let's say that Company A is competing with Company B. Company B wants the labour that Company A has. How is Company B going to acquire that labour within the marketplace? Company B will have to somehow convince the workers of Company A that they would be better off working with Company B. They could do this a number of ways. They could offer higher salaries, or they could offer health benefits, or vacation benefits, or whatever. They have to have some type of gimmick in order to attract the labour. Company A loses some of it's labour to Company B and it realizes that it has to shape up or it will be in trouble, and it begins thinking of ways it can compete with Company B. The laborers benefit both ways, but Minimum Wage interferes with this process.

Did you get all of that? Good. NEXT!

Quote from the website: "But beyond the principle of valuing work and the economic rationale of correcting for market failures, the minimum wage provides a concrete benefit. Not surprisingly, low-wage workers tend to live in low-income households. Thus, raising the minimum wage provides income support to families in need. While it is important to understand that the minimum wage should not be judged solely on its efficiency at targeting low-income families, research shows that it performs well at doing just that."

Whether or not Minimum Wage targets low-income families efficiently is irrelevant to my rebuttal of this nonsense that I laid out within the first critique. 

Quote from the website: "Opponents of the minimum wage have made much of the fact that many low-wage workers do not live in low-income families. But a careful look at affected workers reveals that, for most of them, the earnings from their low-wage jobs are an important component of their families' incomes even if the families are not technically "poor." The fact that a higher minimum wage would also help some middle-income families is hardly a mark against it."

Do I really need to speak anymore? I mean, the guy is just repeating himself here essentially. 

What I find interesting is the fact that most people love the idea of higher Minimum Wages, but they oppose the idea of bailouts. Essentially, they are the same thing. The only difference is that in a bailout, the government is directly injecting artificial liquidity into the economy. The Minimum Wage works on the same principle, but instead of a direct injection, it's an indirect injection. Through Minimum Wage regulations, governments, through indirect means, inject artificial liquidity into the economy that shouldn't be there. This creates far more market instability than there is supposed to be, prices climb, and failures ensue.

Now I know some people will say, "Well, why don't we just lower the minimum wage instead of abolishing it?" Because, as long as the government is the one dictating minimum wage instead of the market, it doesn't matter what the rate is set at. The process above will continue to happen. 

The person I quoted basically said that we need minimum wage regulations to keep the suits from screwing over the little guy, but minimum wage doesn't prevent this, it enables it. The quicker we realize this, the quicker we can start to get the job situation under control.

Wednesday, January 19, 2011

Forcing people to buy insurance is stupid.

One of the biggest mistakes in the recently passed Patient Protection and Affordable Care Act (otherwise known as Obamacare) is the Individual Mandate that requires most US citizens to have health insurance or pay a tax penalty.

The idea of requiring someone by law to opt into insurance programs is silly at best. The government requires that people buy auto insurance or pay a fine. They say that this is necessary for public safety reasons, but bear in mind, these are the same people who willfully ignore the 40,000 people per year who die on their roads and highways and instead of taking responsibility, would rather pin the blame on proximate causes instead of the ultimate cause. Now how does auto insurance encourage people to drive safely? It doesn't, especially when the government protects the insurance companies' bottom line by requiring the people to buy a product they either don't want or can't afford.

Insurance companies and other corporations will use Individual Mandates to milk the system dry of resources that could have been better allocated elsewhere. How can they do this? Because through an Individual Mandate, corporations and firms don't get their money directly from the consumer anymore, they get their money through a third party entity, like insurance companies, and because they don't get their money from the consumer anymore, they can increase the cost of their services to their customers, and they can do this without jeopardizing their customer base because their customer base is guaranteed to them by the government in the form of the Individual Mandate.

Auto Insurance that is required by law discourages people from driving safely. Why is that? Because if you get into an accident, chances are you're not paying for the damages. The insurance company is. It's the same with healthcare. Mandated health insurance discourages people from being careful about their own health, thus more people get sick or injured, thus costs go up, thus quality of healthcare goes down, all the while corporations get richer... oh and the fact that most states won't let you buy health insurance across state lines doesn't help. The government pretty much hands the insurance companies a monopoly and you wonder why there are people out there who oppose government regulation and interference in the free-market.

According to the New England Journal of Medicine, the Individual Mandate is a good thing. The article points out that many experts have been arguing for an Individual Mandate for years, but I would argue that anyone who argues for an Individual Mandate are economic illiterates who aren't to be taken seriously. If the current pattern of Mandated Insurance keeps up, eventually our society is going to become so stupid in regards to their health, we'll have to teach people how to use an inhaler for asthma.

Hopefully, the new Congress repels the abomination the idiots who put it together call HEALTHCARE REFORM, but I don't have my hopes up on that happening.

Monday, January 17, 2011

Was the Swine Flu Outbreak of 2009-2010 Really a PANDEMIC?

We remember the outbreak of the H1N1 Influenza Virus (otherwise known as Swine Flu) of 2009-2010, but was it really as dangerous as the mainstream media and organizations like the WHO (World Health Organization) told us? According to the New England Journal of Medicine, 70,000,000 doses of Swine Flu Vaccine were wasted in the United States.  With the current United States population around 300,000,000, that's 70,000,000 people we know for a fact did not take the vaccine. That's not counting the people who probably don't get any flu shots, Swine Flu or otherwise. I myself being one of those people.

Now, I'm not some conspiracy theorist who thinks that mercury in the flu shots give you AUTISM, but I do believe in letting the immune system do it's job. I've caught the flu every year for the last 10 years, but that's not a bad thing. I don't even go to the doctor for it. I take Tylenol or Ibuprofen for the fever, and sleep it off. I'm better within 3-4 days. So I know from personal experience that the flu isn't always dangerous, but that's seasonal flu.

My stepsister who was 14 during the "pandemic" contracted the H1N1 virus. Actually, a lot of people did. They ended up shutting down a bunch of schools in my state of Mississippi as a result of the outbreak. My stepsister went to the hospital, was given some medicine (of which I can't remember the name), and took it like she was supposed to. But instead of getting better, she got worse. Come to find out, the medicine that was prescribed for her symptoms has a laundry list of side-effects, and she was experiencing the side-effects, which among other things, included anxiety and hyper-tension. Needless to say, when I found and read the paper to her mother that was given with the drug prescribed, her mother was mad as hell and was ranting about how she was going to go to the Wal-Mart pharmacy she'd gotten the medicine from and demand a refund.

Well, that never happened, but she did however personally take her daughter off of the medication. My step-sister never went back to the doctor, and she didn't take anymore medicine other than Ibuprofen for the fever. She finally got better within a week of being taken off of that medication. In hindsight, the medication they gave her was hurting her more than the Influenza was, and the schools that shut down were back up and running within two days of shutting down.

I seem to remember a time back when President Bush was declaring a national emergency over the H5N1 Influenza Virus (otherwise known as Avian Flu or Bird Flu). They dolled out massive amounts of vaccine to contain the impending epidemic, but hardly anyone contracted the H5N1 Influenza Virus, and no epidemic occurred.

Now, some of you may be wondering why people like the WHO and the CDC (Center for Disease Control) are paranoid when new strains of Influenza appear. Well, to answer that question, we have to look at a little history. In the early 1900s, a massive outbreak of Spanish Flu occurred, and took with it 50,000,000 people before it could be contained. The "Asian Flu" in the mid 1900s killed 2,000,000 worldwide. 10 years later, the "Hong Kong Flu" killed 1,000,000 worldwide. We can that as time progresses and advances in medical technology are achieved, less deaths occur. Back then during the outbreak of the Spanish Flu, doctors could barely treat the common cold, much less Influenza. Today, you can still die from Influenza, but you have to already be standing on your last legs. Pneumonia is fatal without treatment, but your chances with treatment are very good.

40,000 die from Seasonal Influenza every single year. That's about the same number of people who die on our public roads and highways every year. Yet, roughly 14,000 died from H1N1 worldwide. The 40,000 who die every year from Seasonal Influenza comes from the United States alone. Worldwide it kills 250,000-500,000 every year. Click here for more information.

Declaring H1N1 a pandemic was the equivalent to screaming FIRE in a crowded theatre. We've become very adept in dealing with Influenza Viruses, and apparently, people who head organizations like the WHO and the CDC haven't figured that out.