The Nationalization Train Has Left The Station ~ MISH SHEDLOCK

[peaceandlove]

The Nationalization Train Has Left The Station

Global Economic Trend Analysis
Mike Shedlock
Tuesday, February 17, 2009

Excerpt:

Those who think Greenspan is the "high priest of laissez-faire capitalism" have holes in their heads. The very existence of the Fed and its micro-mismanagement of interest rates is in direct conflict with capitalism.

The Fed directly setting interest rates is more like the failed policies of the Soviet Central Planners than anything remotely to do with capitalism.

Excerpt:

Everyone proclaims the Swedish nationalization "worked". However, correlation is not causation. The miracle Swedish recovery is more likely to have stemmed from a global economy that was starting to boom and strengthened by an internet and productivity revolution in its early stages, than a brilliantly executed nationalization plan.

Here's the deal....

1. You cannot save a village by destroying it.
2. You cannot save capitalism by destroying it.
3. You cannot save a free market when you don't have one in the first place.

Full Article Here: http://globaleconomicanalysis.blogsp...t-station.html



Can Tax Cuts Deepen The Recession?

Mike Shedlock
Wednesday, February 18, 2009

In one of the more ridiculous Keynesian theories to date, Gauti B. Eggertsson at the New York Fed comes to the conclusion Tax Cuts Will Deepen The Recession. Simple logic would dictate that letting people and businesses keep more of their money would be a good thing but amazingly Eggertsson comes to the opposite conclusion.

The belief is based on a bunch of incomprehensible (to the non-economist) equations such as this one....

Article continues here: http://globaleconomicanalysis.blogsp...recession.html

[peaceandlove]

Fiat World Mathematical Model

Thursday, February 19, 2009

In a fiat world, money is printed into existence by the central bank - in the United States the Fed. Given there is nothing backing up this money, it is inherently worthless. However, one can think of it as real. It was printed (even if only electronically), therefore it exists.

In addition to the previously mentioned money supply, fractional reserve lending allows credit to be extended by banks and financial institutions on top of that inherently worthless money. Indeed, banks and financial institutions have leveraged credit to base money at ratios of 30-1, 50-1 or even higher.

It's pretty amazing if you think about it: Credit is extended with 30-50 times leverage on inherently worthless paper.

Ponzi Financing

Borrowers have to pay interest on the amount borrowed. However, the interest and the debt cannot possibly be paid back except by an ever expanding Ponzi scheme of lending. That scheme can last only as long as everyone believes the debt can be paid back and the market value of that debt keeps rising.

Article continues: http://globaleconomicanalysis.blogsp...cal-model.html