You are browsing the archive for 2014 July 07.

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Audio: Christopher Westley on Musician Unions vs. Musicians

July 7, 2014 in Economics

By Mises Updates

Chris Westley discusses how the cartel (i.e., labor union) known American Federation of Musicians has prohibited the creation of new music for video games.  See the original blog post here. 

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Source: MISES INSTITUTE

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The Giants of Austrian Economics, Multilingual Version!

July 7, 2014 in Economics

By Jeff Deist

Poster AE China

Click here for the image in 28 glorious languages! Many thanks to Mises Institute Summer Fellow Dante Bayona.

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Source: MISES INSTITUTE

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FedSpeak Translated

July 7, 2014 in Economics

By Jeff Deist

Federal_Reserve

Paul-Martin Foss provides a helpful translation of Janet Yellen’s recent speech before the IMF, for those who don’t understand the (wildly inflated) language known as FedSpeak.

An example:

FedSpeak:

Although it was not recognized at the time, risks to financial stability within the United States escalated to a dangerous level in the mid-2000s. During that period, policymakers–myself included–were aware that homes seemed overvalued by a number of sensible metrics and that home prices might decline, although there was disagreement about how likely such a decline was and how large it might be.

Translation: Nobody remembers what I said back in the mid-2000s and these journalists are too lazy to go back and fact-check my record, so I can get away with saying this. They’re not going to watch Peter Schiff’s video about me, in which he demonstrates within the first ten minutes that I had no clue during the mid-2000s that there was a housing bubble.

Nor will they read the speech I gave in January 2007, stating that “While the decline in housing activity has been significant and will probably continue for a while longer, I think the concerns we used to hear about the possibility of a devastating collapse—one that might be big enough to cause a recession in the U.S. economy—have been largely allayed.”

And they definitely won’t read my speech from February 2007, in which I said that “I believe that a soft landing is the most likely outcome over the next year or two.”

Or the speech from April 2007 in which I said: “While a tightening of credit to the subprime sector and foreclosures on existing properties have the potential to deepen the housing downturn, I do not consider it very likely that such developments will have a big effect on overall U.S. economic performance.”

And I really hope they don’t find my prediction from July 2008, less than three months before everything imploded: “I expect the economy to grow only modestly for the remainder of the year, but to pick up next year. The earlier policy easing by the Federal Reserve will help cushion the economy from some of the effects of the shocks, and the fiscal stimulus program is helping at present. Over time, the drag from housing will wane and credit conditions should improve.”

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Source: MISES INSTITUTE

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Mark Thornton on GDP and the Present ‘Recovery’

July 7, 2014 in Economics

By Ryan McMaken

Beginning at 2:20:00, Mark Thornton talks with Butler on Business host Alan Butler last week about current economy trends and business cycles.

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Source: MISES INSTITUTE

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The War on Savers Continues

July 7, 2014 in Economics

By Ryan McMaken

1024px-Sparschwein_Haspa02

I noticed a new press release from RateWatch in my in-box today, claiming that “First Change In CD Rates In Over Two Months Offers Hope For Savers.”

It seems that interest paid on CDs has gone up some microscopic amount, so we can now all be generously rewarded by the banks for lending the banks some of our surplus cash. If you put ten grand in a bank for a few years, you may now earn about 0.75 percent on that. If you have $100,000 burning a hole in your pocket, you can get an even better rate.

Back on planet Earth, few people have even $10,000 lying around, and if they are extremely prudent middle-class or lower-income people who managed to scrape together that kind of savings, they can expect it to lose value continually because there is no relatively safe place that pays interest even close to the official rate of inflation for mere ordinary people. If you have access to a hedge fund, it may be another matter, but just as the central banks have planned, with their negative interest rates  in Europe and near-negative rates here, ordinary savers are punished for the good of huge politically-connected investors who don’t need to rely on savings accounts or CDs.

But if you’re in the business of selling CDs, things are looking a little better, I suppose.  Check out these sky-high rates for CDs.

Says RateWatch:

First Change In CD Rates In Over Two Months Offers Hope For Savers

“National averages of CD rates held steady for more than two months, but recent comments from Fed officials suggest that the central bank will begin to raise the benchmark interest rate in the first half of 2015,” reported Joe Deaux, Economics Analyst at TheStreet. “More than five years removed from the 2008 financial crisis, savers are still dealing with historically low CD rates. But the possibility of faster-than-anticipated rising inflation and the near-end to economic stimulus means rates could be going up soon. This is good news for savers looking to park their cash in the intermediate future.”

NATIONAL AVERAGE RESULTS – $10K

This Week

Money Market 0.15

1 month CD 0.11

3 month CD 0.15

6 month CD 0.23

1 year CD 0.36

2 year CD 0.55

3 year CD 0.75

4 year CD 0.93

5 year CD 1.14

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Source: MISES INSTITUTE

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New York Officially Becomes 23rd State with Medical Marijuana as Governor Cuomo Signs Bill into Law

July 7, 2014 in PERSONAL LIBERTY

By drosenfeld

Patients, Caregivers and Healthcare Providers Thank Legislators and Governor, Immediately Turn Their Attention to Swift Implementation: “Patients Are Out of Time and Need Access Now”

New York City: Today, Governor Andrew Cuomo signed a medical marijuana bill into law, making New York the twenty-third state to allow legal access to medical marijuana for seriously ill patients. Patients, caregivers and healthcare providers are attending the bill signing ceremony at The New York Academy of Medicine, along with the bill sponsors, Assemblyman Dick Gottfried and Senator Diane Savino.

July 7, 2014

Drug Policy Alliance

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Source: DRUG POLICY

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America's Relationship with Poland: Military Alliance or Social Club?

July 7, 2014 in Economics

By Doug Bandow

Doug Bandow

At the same time, Poland can’t be bothered to sacrifice to build up its own military. Ambassador Schnepf proudly announced that “during President Obama’s trip to Warsaw, Polish authorities pledged to spend 2 percent of GDP on defense expenditures, thus being one of very few Alliance members to reach this NATO benchmark.” That’s not much of a standard, however, given the Europeans’ willingness to take a cheap, if not completely free, ride on America. Moreover, the United States, facing no serious existential threat, makes twice as much effort in order to defend everyone else.

America should maintain alliances only when doing so makes Americans safer. Backing Poland against Russia does not.”

Indeed, despite enjoying rapid economic growth, Warsaw has made no extra effort to improve its defenses as a “frontline state.” After reducing outlays and demobilizing troops following the Soviet collapse, Polish military outlays ran around 2 percent of GDP in the mid-1990s. After nearly two decades, Poland remains where it was—despite now screaming about the renewed threat from the east. The ambassador spoke of Warsaw’s “multibillion-dollar modernization of its armed forces.” Let’s hope it occurs. However, economic considerations—and America’s defense promises—have short-circuited similar programs in other European countries.

Of course, it should be up to Poland to decide how large of a military it needs. But if the Poles really are worried about the prospect of Russian aggression or coercion, they should be doing much more. Instead, they want America to do the job for them, by establishing a military tripwire at their border.

Which leaves the ambassador to argue, who cares about strategic importance? Washington should guarantee Poland’s security because the Poles are nice people and it would be, well, kind of ignoble for Americans to risk their future only when their community had something fundamental at stake. There’s a certain appeal to that argument, but it’s always easier to be generous with other people’s lives and money on your own people’s behalf.

Moreover, the contention proves far too much. The same case can be made for Brazil, Chad, Myanmar, India, Georgia, Kyrgyzstan, Bolivia, Belize, Fiji, Ukraine, and just about everyone else. There are lots of nice people in the world. But that’s no reason to turn 18-year-old Americans into personal bodyguards for other peoples, bankrupting Washington in the process.

Most alliances are costly and risky, like NATO. Handing out security guarantees is not the same as …read more

Source: OP-EDS

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End the Export-Import Bank

July 7, 2014 in Economics

The ostensible purpose of the U.S. Export-Import Bank is to assist in financing the export of U.S. goods and services to international markets. So what’s not to like? Well, according to Cato scholar Daniel J. Ikenson, the U.S. Export-Import Bank does more harm than good: “It assists some – mostly large, politically savvy, deep-pocketed – U.S. companies at the expense of others. …It is an exercise in picking winners and losers with the winners being those firms and industries with the most effective K Street operations.”

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Source: CATO HEADLINES

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Stagnant for Decades, Japan Needs Supply-Side Tax Cuts

July 7, 2014 in Economics

By Alan Reynolds

image

Alan Reynolds

The Japanese economy grew by 4.7% a year from 1983 to 1991, but by less than 1% ever since.

Despite all the media buzz about Prime Minister Shinzo Abe’s effort to boost the economy, the first two arrows of Abenomics missed their target.

Some observers appeared deceived by the fact that consumers rushed to stockpile goods before April, when the consumption tax was increased.

That created an illusory spike in first-quarter GDP, and in inflation, that some mistook as progress. Yet household spending collapsed once the consumption tax went up — by 4.6% in April and by 8% in May.

Revenues can’t grow unless the economy does, and the economy can’t grow with the current tax system.”

In January 2013, the first arrow of Abenomics consisted of spending an extra $110 billion, pushing government spending above 43% of GDP — up from 35.8% in 2007. The budget deficit rose to 9.3% of GDP, but deficits were already well above 8% from 2009 to 2012.

An endless series of failed “fiscal stimulus” schemes have nearly quadrupled the taxpayers’ national debt from 64% of GDP in 1991 to 240% today.

If gargantuan budget deficits stimulated economic growth, then Japan, Greece, Egypt and Venezuela would now be the fastest-growing economies in the world.

The second arrow, launched in April 2013, consisted of quantitative easing — monetizing more government IOUs and stuffing the banks with excess reserves.

One ironic effect was to raise the yield on 10-year Treasury bonds from 0.5% in March 2013 to 0.9% in May.

Quantitative easing might have contributed to a greater devaluation of the yen, but most of the yen’s tumble had already happened since October 2011.

The weaker yen may have helped raise inflation (and thus lower real wages), but it also had the very harmful effect of inflating the cost of production for Japanese industry — notably, the cost of oil, metals and other imported raw materials priced in dollars.

The third arrow is really a bunch of darts — 249 regulatory reforms, some potentially useful yet scarcely decisive. An April report from the Organization for Economic Cooperation and Development makes the “Third Arrow for a Resilient Economy” sound promising, even though “the tax and social security systems … create work disincentives for secondary earners.”

The OECD’s forecast of GDP growth “around 1.25%” through 2015 seems a weak endorsement, depending as it does on stronger foreign growth to “support the (modest) expansion.”

Small ideas …read more

Source: OP-EDS