Tag Archives: Ben Bernanke

Opportunity Begins With Freedom, Not a ‘Living Wage’

Excellent article as to why with the way the Central Banking system works a minimum wage is a moot argument (E)

Thursday, April 11, 2013 by Staff Report – http://www.thedailybell.com

In favour of the living wage … In the United States and some other developed economies, wages for the least well paid are too low. A mandatory living wage is the best way to redress this injustice. The idea of minimum wages is well accepted, but the American $7.25 an hour does not meet the simple standard of providing enough to support the worker who earns it. For an adult in New York State, self-support requires 55 percent more, $11.25 an hour in a full-time job, according to The MIT Living Wage Calculator. And a just minimum should really be enough to raise a family – something closer to the $23.58 an hour required to support a single wage-earner with one child. The minimum wage is one part of the remarkably complex pay system found in all developed industrial societies. – Reuters

Dominant Social Theme: What the Western world needs is a fair minimum wage.

Free-Market Analysis: This Reuters editorial brings up two points and provides us with two separate conclusions.

Theoretically, we are much averse to the argument that government needs to provide minimum wages. But practically speaking, if government is going to provide money to impoverished people, why not print the money and give it to them directly – instead of sending the money to banking coffers?

So the confusion embodied by this article is compounded by a lack of honesty about the monetary system itself. This article wants to treat our current situation as if the West’s problem is one mainly of governmental fairness. Here’s more:

Economists often suggest that wages are determined by market forces, the supply and demand for labour, and by employers’ calculations of the value of labour. But actual wages influence both the market and the perceived value of labour. It is more accurate to include market forces and economic value somewhere in the middle of the long list of factors which contribute to the ever-shifting social agreement on pay levels.

This agreement is established in the mysterious way that all social orders are built – the powerful push, the weak resist, traditions are followed and evolve, justice is respected and flouted, market forces and economic calculations nudge. By far the most important factor in determining pay is the social judgment of value. The main reason that bankers, advertising executives and doctors are paid more than teachers, childcare workers and street cleaners is that society values the former more than the latter.

And the main reason that the minimum-wage jobs pay too little to support a family is that society has agreed that is what such labour is worth. This is an injustice, because honest labour should always be rewarded with enough to live a decent life. To be fair, the social judgment of these occupations is less harsh than the pay level suggests.

The very poorly paid usually receive welfare benefits from the government, either in cash or in the form of free or cut-price services. It is an awkward arrangement, but unavoidable in societies which have decided that pay should be determined by the job but spending power should be determined, at least in part, by needs and family situation. That division will exist as long as family breadwinners do not receive special pay status.

The macroeconomic objections to higher minimum wages deserve serious attention, but they often hide higher earners’ justified fear of losing out. After all, when those at the bottom end up with more – as they inevitably would with a higher minimum wage, even after benefit cuts – those at the top must end up with less. Doctors would still have much higher incomes than cleaners, but both the doctors’ own pay and the ratio of their pay to cleaners’ remuneration would fall. The desire to maintain consumption and social status is legitimate, but must be set against a higher virtue – solidarity. The fruits of economic success should be shared equitably. A living wage for all is a good standard of success.

You see the argument being made? It is especially clear in this last paragraph. Providing people with a living wage is a “higher virtue.”

But this article in reality has nothing to do with virtue. If it was virtuous, it would tell the truth about how money is produced in the modern era, with a touch of a button. During the height of the financial crisis, Ben Bernanke of the Federal Reserve admits to generating some US$16 trillion in short-term loans to financial enterprises – much of which reportedly was never paid back.

Such spending makes arguments like this one moot. These are 20th century arguments, in fact, based on a time when people did not fully understand the monetary system. Perhaps one could say they are arguments from the 1800s when there was a gold standard and money was truly constrained.

But today these are arguments without a purpose. Were there sufficient determination, proponents of these sorts of solutions would start to argue that central banks ought to print money and deliver it directly to people instead of banks.

Of course, most of the people making these arguments are statists with an emotional or professional stake in concealing the way money is really produced in the modern era. And they would rather write these sorts of articles, apparently, then tell the truth about money and poverty in the 21st century.

From our standpoint, an even better solution to poverty would be to shut down central banks and let Leviathan begin to starve. Without an unlimited supply of money, the US in particular would have to shutter its military-industrial complex, the vast prison gulags that dot the country and the larger regulatory state that deprives people of the opportunity to work.

There are estimates that between 50 million and 100 million in the US who want to work cannot find employment. Something has gone drastically wrong with what we call regulatory democracy;  it simply doesn’t work. It’s reached a dead end.

Agitating that this sort of dysfunctional system should prop itself up by providing tens of millions with a living wage is not a solution but a kind of bribe. The idea apparently is to pay people a bare minimum in the hopes that they don’t rise up in protest against a system that is frozen in failure.

What the West and the United States really need is a long, loud discussion about statism, the incompetence of regulation and the abysmal failure of the current money system.

Conclusion: Opportunity begins with freedom.


40 Hard Questions That The American People Should Be Asking Right Now

Repost from infowars.com: http://www.infowars.com/40-hard-questions-that-the-american-people-should-be-asking-right-now/

The Economic Collapse 
December 29, 2011

If you spend much time watching the mainstream news, then you know how incredibly vapid it can be.  It is amazing how they can spend so much time saying next to nothing.  There seems to be a huge reluctance to tackle the tough issues and the hard questions.  Perhaps I should be thankful for this, because if the mainstream media was doing their job properly, there would not be a need for the alternative media.  Once upon a time, the mainstream media had a virtual monopoly on the dissemination of news in the United States, but that has changed.  Thankfully, the Internet in the United States is free and open (at least for now) and people that are hungry for the truth can go searching for it.  Today, an increasing number of Americans want to understand why our economy is dying and why our national debt is skyrocketing.  An increasing number of Americans are deeply frustrated with what is going on in Washington D.C. and they are alarmed that we seem to get closer to becoming a totalitarian police state with each passing year.  People want real answers about our foreign policy, about our corrupt politicians, about our corrupt financial system, about our shocking moral decline and about the increasing instability that we are seeing all over the world, and they are not getting those answers from the mainstream media. If the mainstream media will not do it, then those of us in the alternative media will be glad to tackle the tough issues.  The following are 40 hard questions that the American people should be asking right now….

#1 If Iran tries to shut down the Strait of Hormuz, what will that do to the price of oil and what will that do to the global economy?

#2 If Iran tries to shut down the Strait of Hormuz, will the United States respond by launching a military strike on Iran?

#3 Why is the Federal Reserve bailing out Europe?  And why are so few members of Congress objecting to this?

#4 The U.S. dollar has lost well over 95 percent of its value since the Federal Reserve was created,  the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was created and Federal Reserve Chairman Ben Bernanke has a track record of incompetence that is absolutely mind blowing.  So what possible justification is there for allowing the Federal Reserve to continue to issue our currency and run our economy?

  • #5 Why does the euro keep dropping like a rock?  Is this a sign that Europe is heading for a major recession?

    #6 Why are European banks parkingrecord-setting amounts of cash at the European Central Bank?  Is this evidence that banks don’t want to lend to one another and that we are on the verge of a massive credit crunch?

    #7 If the European financial system is going to be just fine, then why is the UK government preparing feverishly for the collapse of the euro?

    #8 What did the head of the IMF mean when she recently said that we could soon see conditions “reminiscent of the 1930s depression“?

    #9 How in the world can Mitt Romney say with a straight face that the individual health insurance mandate that he signed into law as governor of Massachusetts was based on “conservative principles”?  Wouldn’t that make the individual mandate in Obamacare “conservative” as well?

    #10 If the one thing that almost everyone in the Republican Party seems to agree on is that Obamacare is bad, then why is the candidate that created the plan that much of Obamacare was based upon leading in so many of the polls?

    #11 What did Mitt Romney mean when he stated that he wants “to eliminate some of the differences, repeal the bad, and keep the good” in Obamacare?

    #12 If no Republican candidate is able to accumulate at least 50 percent of the delegates by the time the Republican convention rolls around, will that mean that the Republicans will have abrokered convention that will enable the Republican establishment to pick whoever they want as the nominee?

    #13 Why are middle class families being taxed into oblivion while the big oil companies receiveabout $4.4 billion in specialized tax breaks a year from the federal government?

    #14 Why have we allowed the “too big to fail” banks to become even larger?

    #15 Why has the United States had a negative trade balance every single year since 1976?

    #16 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of all jobs in the United States are manufacturing jobs.  How in the world could we allow that to happen?

    #17 If the United States has lost an average of 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001, then why don’t our politicians do something about it?

    #18 If you can believe it, more than 56,000 manufacturing facilities in the United States have permanently closed down since 2001.  So exactly what does that say about our economy?

    #19 Why was the new Martin Luther King, Jr. Memorial on the National Mall made in China?Wasn’t there anyone in America that could make it?

    #20 If low income jobs now account for 41 percent of all jobs in the United States, then how are we going to continue to have a vibrant middle class?

    #21 Why do the poor just keep getting poorer in the United States today?

    #22 How can the Obama administration be talking about an “economic recovery” when 48 percent of all Americans are either considered to be “low income” or are living in poverty?

    #23 Why has the number of new cars sold in the U.S. declined by about 50 percent since 1985?

    #24 How can we say that we have a successful national energy policy when the average American household will spend a whopping $4,155 on gasoline by the end of this year?

    #25 Why does it take gigantic mountains of money to get a college education in America today?  According to the Student Loan Debt Clock, total student loan debt in the United States will surpass the 1 trillion dollar mark in early 2012.  Isn’t there something very wrong about that?

    #26 Why do about a third of all U.S. states allow borrowers who don’t pay their bills to be put in jail?

    #27 If it costs tens of billions of dollars to take care of all of the illegal immigrants that are already in this country, why did the Obama administration go around Congress and grant “backdoor amnesty” to the vast majority of them?  Won’t that just encourage millions more to come in illegally?

    #28 Why are gun sales setting new all-time records in America right now?

    #29 Why are very elderly women being strip-searched by TSA agents at U.S. airports?  Does that really keep us any safer?

    #30 The last words of Steve Jobs were “Oh wow. Oh wow. Oh wow.“  What did he mean by that?

    #31 How in the world did scientists in Europe decide that it was a good idea for them to create a new “killer bird flu” that is very easy to pass from human to human?

    #32 If our founding fathers intended to set up a limited central government, then why does the federal government just continue to get bigger and bigger?

    #33 Are we on the verge of an absolutely devastating retirement crisis?  On January 1st, 2011 the very first of the Baby Boomers started to reach the age of 65.  Now more than 10,000 Baby Boomers will be turning 65 every single day for the next two decades.  So where in the world are we going to get all the money we need to pay them the retirement benefits that we have promised them?

    #34 If the federal government stopped all borrowing today and began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the U.S. national debt.  So does anyone out there actually still believe that the U.S. national debt will be paid off someday?

    #35 If the U.S. economy is getting better, then why are an all-time record 46 million Americans now on food stamps?

    #36 How can we say that we have the greatest economy on earth when we have a child poverty rate that is more than twice as high as France and one out of every four American children is on food stamps?

    #37 Since 1964, the reelection rate for members of the U.S. House of Representatives has never fallen below 85 percent.  So are the American people really that stupid that they would keep sending the exact same Congress critters back to Washington D.C. over and over and over?

    #38 What does it say about our society that nearly one-third of all Americans are arrested by the time they reach the age of 23?

    #39 Why do so many of our politicians think that it is a good idea to allow the U.S. military to arrest American citizens on American soil and indefinitely detain them without a trial?

    #40 A new bill being considered by the U.S. House of Representatives would give the U.S. government power to shut down any website that is determined to “engage in, enable or facilitate” copyright infringement.  Many believe that the language of the new law is so vague that it would allow the government to permanently shut down any website that even links very briefly to “infringing material”.  Prominent websites such as Facebook, Twitter and YouTube would be constantly in danger of being given a “death penalty”.  The American people need to ask their members of Congress this question: Do you plan to vote for SOPA (The Stop Online Piracy Act)?  If the answer is yes, that is a clear indication that you should never cast a single vote for that member of Congress ever again.

    So do you have answers to some of the questions posted above?

    Please feel free to leave a comment with your thoughts below….


Paul calls Fed’s Bernanke “cocky” in House hearing

Source: http://www.reuters.com/article/2011/02/10/us-usa-congress-paul-idUSTRE7190CZ20110210?pageNumber=1

By Andy Sullivan

WASHINGTON | Wed Feb 9, 2011 8:25pm EST

(Reuters) – Republican Ron Paul, an outspoken critic of the Federal Reserve, called Chairman Ben Bernanke “cocky” on Wednesday in the first hearing he held as the head of a House of Representatives panel that oversees the U.S. central bank.

Paul, a former presidential candidate who has waged a fierce battle for decades against the Fed, earned a platform to air his views after the Republicans won control of the House in November elections and made him chairman of a banking subcommittee.

Paul’s 2008 presidential bid earned him a fervent grassroots following and many Republicans now share his skeptical view of the Fed after its unprecedented actions to fight the worst economic downturn since the 1930s.

At his first hearing of the subcommittee, Paul reiterated some of his unvarnished criticism of Bernanke.

“He is really cocky about this,” Paul said about Bernanke’s plans to unwind the toxic assets the Fed took on from troubled banks during the height of the 2007-2009 crisis.

But Democrats were more concerned by the writings of one of the witnesses, who has authored books and essays that harshly criticize President Abraham Lincoln and support the right of states to secede from the union ahead of the U.S. Civil War.

The Southern Poverty Law Center says Loyola College professor Thomas DiLorenzo has links to the League of the South, which it classifies as a hate group.

Democrats asked why Paul had invited DiLorenzo to testify about the link between monetary policy and job creation.

“You work for a southern nationalist organization that espouses very radical notions about American history,” Democratic Representative Lacy Clay told DiLorenzo.

“I still do not understand you being invited to testify today on the unemployment crisis, but I do know that I have no questions for you,” Clay said.

Paul said he was unfamiliar with that side of DiLorenzo’s work.

“I think that that’s typical of people who can’t compete on ideas, they have to try to discredit the individual,” Paul told Reuters as he signed copies of his book, “End the Fed,” after the hearing.

DiLorenzo told the subcommittee that the federal government should not have the power to seize failing banks in order to protect depositors’ assets, and that the economy would have been better off had the Obama administration allowed tottering businesses like General Motors to fail.

NO BETTER THAN RUSSIANS

“I see no reason why we Americans are better at central planning today than the Russians were in the 20th century, and that’s basically the mind-set you’re talking about,” DiLorenzo said

 

Ohio University economics professor Richard Vedder accused lawmakers of corruption for supporting mortgage finance giants Fannie Mae and Freddie Mac and said the banking industry would be better able to manage financial crises on its own, as J.P. Morgan did in 1907.

“At least J.P. Morgan had some skin in the game. When the banks failed, he failed,” Vedder said. “What does Bernanke have in the game? He gets his salary anyway, then he goes off to work for Goldman Sachs.”

Josh Bivens, an economist at the liberal-leaning Economic Policy Institute, represented the view held by many mainstream economists who say the recession would have been much worse had the Fed not lowered interest rates and pumped money into the economy through quantitative easing.

Just because the Fed’s actions failed to prevent a recession does not mean they were ineffective, he said.

“Imagine a town that is building a levee wall in response to a flood. You can say, ‘It’s the biggest wall we’ve ever built, the water keeps coming over, we should stop,'” Bivens said. “You have to build a wall as big as the shock.”

(Editing by Mohammad Zargham)

 


My Associations with Liars, Bigots, and Murderers

by Thomas J. DiLorenzo
by Thomas J. DiLorenzo
Recently by Thomas DiLorenzo: How the Fed Fuels Unemployment

I speak of course of my recent visit to the U.S. House of Representatives to testify at Congressman Ron Paul’s first hearing on the Fed as chairman of the House Financial Services Committee. The Rayburn House Office Building, like most government office buildings in Washington, D.C., is a very creepy place. Knowing that the majority of the congress critters who reside in those offices support the unnecessary wars in Iraq and Afghanistan (and worse), and all the senseless death they have been responsible for, should send chills up any decent person’s spine.

As for the liars and bigots, one of the bigger ones, William Lacy Clay, a congressman from St. Louis who is (unfortunately) a member of the House Financial Services Committee, was in fine form. When he got his turn to question me he first denounced Austrian economics as some kind of fraud because it does not utilize the same positivistic methodology that, say, the Fed economists do. You know, the ones who were completely clueless about both the existence of the housing bubble and what to do once it burst. As Congressman Paul pointed out in the hearing, as late as 2008 Fed Chairman Ben Bernanke was still forecasting an increased pace of economic growth. As seen in a YouTube video entitled “Ben Bernanke was Wrong,” as late as mid 2007 Bernanke was assuring the public on CNBC that there was no sub-prime mortgage problem, and that the world economy was in fine shape. “He had no idea what he was talking about,” Congressman Paul correctly stated.

It was Austrian economists like Mark Thornton, on the other hand, who were warning of a housing bubbleyears before it burst. The Nobel Prize committee would be shocked indeed to learn that Austrian economics is fraudulent, having awarded the best-known Austrian of the twentieth century, F.A. Hayek, the Nobel Prize in Economic Science in 1974. But hey, what does a hack politician from St. Louis know about economics anyway?

Fed apologists are apparently in a state of panic over the first sighting of two economists – Richard Vedder and myself – appearing before their committee to (horrors!) criticize the Fed. Rather than ask me a single question, Congressman Clay decided to lie about my background with a libelous smear. First, some background information: About thirteen years ago three fellow academics from Emory University, the University of South Carolina, and the University of Alabama asked me if I would deliver a few lectures on the economics of the “Civil War” to a group of about twenty students at a week-long summer seminar. Two of them were historians and one was a philosopher, and they wanted to add some economics to the curriculum. They had just started something called “The League of the South Institute.” Since I lecture to students all over the country, and these were three fellow professors who I respected, I enthusiastically agreed. I recall it being a very enjoyable experience, as it always is when I get to teach students who attend a summer seminar for no college credit, just for the sake of learning. Such students are always among the very best that I encounter. That is the only connection I have ever had with the League of the South, which apparently still lists the titles of those old lectures somewhere on its Web site.

Clay lied through his teeth by stating that I “work for” the League of the South, and further stating that, consequently, I must endorse everything everyone associated with that organization has said in the succeeding thirteen years since I spoke to those students about the economics of the Civil War. This makes as much sense as saying that I endorse everything Congress says and does because I gave a presentation there on February 9.

Nor am I bigoted toward the people at the League of the South either, as is Congressman Clay. The oh-so-easily-offended Congressman Clay once told a white member of Congress whose Memphis, Tennessee district is 60% black that he could not collaborate with the Congressional Black Caucus for the benefit of his black constituents “until your skin turns black.” He’s apparently an Obama-style “racial healer.”

Having lied about my non-existent working relationship with the League of the South, making it sound like I pack my lunch and go to work there every day, Clay then declared that the Southern Poverty Law Center (SPLC) apparently disapproves of the League of the South. What a shocker! This is the same SPLC that accused the American Enterprise Institute in Washington, D.C. of “mainstreaming hate” by sponsoring a public debate on immigration policy. Their modus operandi is to label any individual or group that effectively criticizes their far-left, socialistic agenda as a “hater.” Apparently, associating with anyone south of the Mason-Dixon line in any way qualifies one as a “hater” and potential KKK recruit in the warped minds of the hateful and libelous SPLC.

Congressman Clay was not yet finished with his lies. I sent the committee 100 copies of my testimony along with a short one-page bio, as they requested. The bio listed several of my latest books, including Hamilton’s Curse and How Capitalism Saved America. The former discusses such economic topics as the origins and evolution of central banking in America, how America became a corporate welfare state, the economics of public debt, the founding of the Fed, the economic consequences of adopting the income tax, and more. How Capitalism Saved America covers such topics as the meaning of capitalism, anti-capitalism, the superiority of private versus government-operated transportation systems, the benefits to “the working class” of capitalism, the “robber barons,” the history and economics of antitrust, the role of the Fed in igniting the Great Depression, how the New Deal made the Great Depression worse, and the economics of the energy crisis of the ‘70s, among other things. And of course The Real Lincoln tells the story of the seventy-year political war over the “American System” of protectionism, corporate welfare, and a nationalized banking system that was finally cemented into place during the Lincoln administration.

The sleazy Congressman Clay, however, claimed that his crackerjack staff informed him that I have written nothing about economics in the past 15 years. My writings are all about history, he said, oblivious to the fact that economic history is a very relevant field to the question of the performance of the Fed over the past century. Indeed, Ben Bernanke himself claims to be an economic historian, having published numerous academic journal articles on the Great Depression. Several of my books discuss the origins of the first central bank, the Bank of the United States; its (abysmal) performance; its destruction by President Andrew Jackson; its replacement by the Independent Sub-Treasury System, Abraham Lincoln’s critiques of that system; the adoption of the National Currency Acts and Legal Tender Acts by the Lincoln administration; how that system performed over the next fifty years; the creation of the Fed; and its performance. Clay claims that, according to his crackerjack staff, there was nothing in all of this that would be relevant to a hearing on monetary policy.

Congressman Clay slithered out of the hearing room (shortly after the notorious Barney Frank vacated the premises) while a couple of his equally odious, far-left compatriots threw softballs at “their” witness, whose main argument was that the so-called Great Recession was caused by the bursting of the housing bubble, which in turn caused consumers to begin acting more responsibly by spending less and saving more. He didn’t put it that way, of course, but instead made the age-old (and thoroughly discredited) Keynesian argument that spending, and not savings, investment, production and work, is what causes economic growth and job creation. He made no mention at all in his prepared statement of any possible cause of the housing bubble in the first place. That would have been dangerous, for everyone in the room would have pegged the Fed as the Prime Suspect. But at the very end of the hearing he did offer his theory of the boom-and-bust cycle: Prosperity comes about whenever the government hires more bureaucrats and/or gives them more responsibilities; recessions occur whenever government cuts back on the number of bureaucrats and/or their meddling in the private sector. Bursts of regulation, he said, are the cause of prosperity, whereas deregulation is the cause of recessions and depressions. The Democrats on the committee sat there smiling and nodding their heads in approval. Do I really have to comment about such an asinine theory?

February 11, 2011

Thomas J. DiLorenzo [send him mailis professor of economics at Loyola College in Maryland and the author of The Real Lincoln; Lincoln Unmasked: What You’re Not Supposed To Know about Dishonest Abe and How Capitalism Saved America.His latest book is Hamilton’s Curse: How Jefferson’s Archenemy Betrayed the American Revolution – And What It Means for America Today.

Copyright © 2011 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

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