Friday, October 24, 2014

On The Impossibility Of Rational Calculation Under A Keynesian/Friedmanite Central Banking Regime

The following is an introduction to the Polish edition of  “The Great Deformation:The Corruption Of Capitalism In America”. By Fijorr Publishing, 2014. 

“From Adam Smith to David Stockman”

By Jerzy Strzelecki

There is no doubt that The Great Deformation: The Corruption of Capitalism in America by David Stockman, the Polish translation of which has been made available to the Polish reader by Fijorr Publishing, is a real chefs d’oeuvre, a “magnum opus”. There should also be no doubt that its importance, with more and more people having an opportunity to read it, will

Lefties Believe Higher Gas/Carbon/Cigarette Taxes Will Make People Consume Less, But a Higher Minimum Wage is Different?

Jeffrey Dorfman writes:
Politicians and political advocates seem to suffer from a certain inconsistency on the topic of whether economic incentives can impact behavior. Most of the inconsistency is displayed by liberals, but conservatives are occasionally guilty, as well. Miraculously, they all seem to believe in incentives when the proposed incentive fits their political agenda.

Conservatives are convinced that lower marginal income tax rates will encourage people to work harder and create more jobs. Yet, they seem oblivious to the fact that having more favorable tax rates for investment earnings not only encourages people to invest but also to put effort into receiving their income in a form that is subject to lower taxes. Hedge fund managers receiving what is clearly their pay in the form of lightly-taxed carried interest is an example of such behavior.

On the subjects of taxes, liberals show inconsistency of the highest level. While liberals repeatedly claim that higher marginal income taxes on high earners will not discourage hard work and innovation, they are simultaneously convinced that taxes can discourage other activities of which they disapprove.

Liberals believe that higher gas, carbon, and cigarette taxes will all make people consume less of those items. They even believe that a one cent per ounce tax on sugary beverages could make a worthwhile impact on our epidemic of obesity...However, an inconsistency that the liberals cannot escape is on the minimum wage. Raising the minimum wage is a tax on labor hired by businesses (it raises the cost of the good—labor—with no resultant improvement in that good). Yet, liberals firmly believe that the government can increase the minimum wage, by 40 percent or more, without causing an increase in unemployment. Yet if businesses buy less labor when it is taxed more, unemployment would surely rise.

(via Mark Perry)

Space-Age Oakland Home Lands on the Market for $21 Million

A 14,000-square-foot house with 4 bedrooms, 5 baths is on the market in Oakland for $21 million. The house was built in  1996-1999,

Former Libertarian Presidential Candidate Gary Johnson Related Firm Just Bought the Domain Name for $200,000

The owners of the website have sold the domain for more than $200,000 in cash and stock.

According to a securities filing, the buyer was a Russian-registered firm called Weed Growth Fund, previously known as Ovation Research.

The Oct. 20 filing said the price was $50,000 cash and 19,192 shares of Cannabis Sativa, which promotes medical uses for marijuana. Those shares are worth close to $170,000, reports Yahoo.

The president of Cannabis Sativa is Gary Johnson, the 2012 Libertarian presidential candidate and former Governor of New Mexico.

Financial Fraud Expert: "The Bitcoin Movement Will End in Tears for the Little Guy...It’s Essentially a Pump and Dump Scam"

by  Chris Matthews

Author Jeffrey Robinson argues that the bitcoin movement will end in tears for the little guy.

Jeffrey Robinson has made a name for himself investigating fraud on the grandest scales.

His books on international money laundering and the pharmaceutical industry pulled back the curtain on the nefarious behavior of some in the banking and pharmaceuticals industries. Now, he is turning his attention to bitcoin, with a new polemic called Bit Con: The Naked Truth About Bitcoin.

Of course, unlike the schemes of felonious bankers, bitcoin—the technology and the currency—wasn’t conceived as a malicious scam. But Robinson is convinced that when all is said and done, it will become the vehicle for hucksters to trick both innocents and bitcoin’s ideological backers out of millions.

Fortune spoke with Robinson about the year he spent researching bitcoin and why he thinks the currency will ultimately dissolve into worthlessness. The interview has been edited for length and clarity.

Fortune: What drew your interest to bitcoin?

Robinson: About two years ago, given the books I’ve written about money laundering, people kept telling me that bitcoin was the next big thing in money laundering. So I thought I really should find out about it, and I looked at everything that was being said, and none of it added up. Actually, it’s not good for money laundering to start, but it’s also not what it claims to be in other ways. It’s not a real currency and it’s not a real commodity. When you heard the hype coming from the community, and … that people were spending money on this stuff, they needed to know the truth.

Your career has been spent writing about various frauds and cons. If bitcoin is a con, who is the con man?

It’s a con in that it’s not a real currency, but let me back up. There are actually two bitcoins. There’s the blockchain-technology bitcoin, which I think is fantastic, and the future, and all sorts of businesses are investing tens or hundreds of millions of dollars in Silicon Valley and around the world to build businesses on the back of the blockchain technology because it’s so wonderful and can move assets frictionlessly. But then there is this aspect of the pretend currency and the pretend commodity. Part of the con is in the pretend commodity, because this is a completely shallow, liquidless market. When you know that there’s, what, 13 million coins in circulation, and more than 50% of the them are owned and managed by about 950 people, you realize how shallow the market it is and how subject the market is to manipulation.

It’s essentially a pump and dump scam. And then I see these snake oil salesmen like the Winklevoss twins get on TV and tell people that bitcoin is going to be worth $40,000 per coin. And nobody is challenging them, asking, “What are you smoking?” Bitcoin isn’t an investment, it’s a slot machine. Or, more accurately, a loaded roulette wheel.

Read the rest here.

Bankster Meetings Revealed: Yellen's 2014 Calendar To Date

WSJ has posted the calendar of Fed Chair Janet Yellen, to date, that was obtained by a Freedom of Information request. It's here.

I think what is most notable about Yellen's schedule is how limited is the number of people she stays in contact with. It's pretty much other US government officials, global central bankers and typical lurkers near power, such as Alan Blinder and Jeffrey Sachs.

Outside of these tight communities, it seems the only people she has time for are the banksters.

On April 4, she met with Goldman Sachs CEO Lloyd Blankfein and she has a June 5 entry which is identified as a meeting with Blackrock, but lists no individuals.

Why Google's Job Interviews Never Last More Than 30 Minutes

Richard Feloni at Business Insider explains:
As a hiring manager, if you research a job candidate and ask the right questions, there's no reason the interview should last longer than 30 minutes, Google chairman Eric Schmidt and former VP of product Jonathan Rosenberg write in their book How Google Works.

"The shorter interview time forces a conversation that's more protein and less fat," they write. "There's no time for small talk or meaningless questions. It forces people, including (especially!) you, into a substantive discussion."...

It wasn't always that way.

"One time, in our early days at Google, we interviewed a particular candidate over 30 times, and we still couldn't decide if we wanted to hire him," the authors write.

Schmidt and his team decided that they were going to track interviews to maximize efficiency.

They found that after one interview, interviewers were ready to make a decision about 75% of the time. Decision-making ability gradually rose to 85% after four interviews and then plateaued. They decided to round up to limiting interviews to five, since computer scientists appreciate that five is a prime number, Schmidt and Rosenberg joke.

Banker Suicide: DSK's Hedge Fund Partner Jumps From 23rd Floor Apartment

Thierry Leyne, the French-Israeli entrepreneur who last year started an investment firm with former International Monetary Fund Managing Director Dominique Strauss-Kahn, has committed suicide.

Leyne, 48, jumped off the 23rd floor of one of the Yoo towers, a prestigious residential complex in Israel, reports NYT.

Bloomberg reports:
Last year, Leyne joined Strauss-Kahn in establishing the Paris-traded firm Leyne, Strauss-Kahn & Partners after the former IMF head bought a 20 percent stake to help develop the investment-banking franchise of Leyne’s company, Luxembourg-based Anatevka SA. Leyne had taken Anatevka public in March 2013 before joining forces with Strauss-Kahn, commonly referred to in France as DSK.
The new partnership -- usually called LSK & Partners by using both men’s initials -- was part of Strauss-Kahn’s efforts to rebuild his post-IMF life after he was charged in 2011 of criminal sex, attempted rape, sexual abuse, unlawful imprisonment and the forcible touching of a chambermaid at the Sofitel hotel in Manhattan. Strauss-Kahn denied the charges, which were later dropped. He settled the maid’s lawsuit in 2012.

Poll: Latest on Swiss Gold Referendum

 A proposal to prohibit the Swiss National Bank from selling any of its gold reserves, and would require the SNB to hold at least 20% of its reserves in gold, (SEE:Swiss Gold Referendum: If This Passes It Could Change the Gold Price Overnight) has the support of only 44 percent of the public, a new survey showed.

The group behind the poll also said support was likely to diminish as a Nov. 30 vote on the measure approaches, reports Reuters.

The Troubling Prospect Of Janet Yellen As Leftie Political Crusader

By Carrie Sheffield

ederal Reserve Chairwoman Janet Yellen’s unprecedented speech on income inequality harbingers worrisome policy prescriptions by a central bank created to serve limited functions. Her wide-ranging critique of America’s economic and education systems could well position her as the monetary equivalent of activist judges who legislate from the bench. This would be anathema to a system of limited government.

“The extent of and continuing increase in inequality in the United States greatly concern me,” Yellen said in Boston remarks reminiscent of the junior senator from Massachusetts, Democrat Elizabeth Warren. Yellen continued, “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”

As The New York Times’ Neil Irwin points out, her soliloquy is unusual compared to traditional Fed chief behavior as a public figure “who generally tries to steer as far away from contentious political debates as possible.” Irwin contrasts Yellen’s remarks with her predecessor Ben Bernanke, who said in a 2007 speech that public policy addressing economic inequality “inherently depends on values and social trade-offs and is thus properly left to the political process.”

In her speech, Yellen completely ignored her sole job descriptions: controlling interest rates and money supply. Instead, she touched on a hodge-podge of factors she believes drives income inequality, from family vacations to kids’ nutrition. And as The Wall Street Journal highlights, Yellen failed to address the argument over whether the Fed’s bond buying and zero-interest-rate policies have exacerbated inequality by pushing up prices of assets “primarily held by wealthier Americans,” such as stocks.

“My purpose today is not to provide answers to these contentious questions, but rather to provide a factual basis for further discussion,” Yellen intoned. Yet her facts are disputable.

By comparing prior decades of income distribution with today’s, Yellen is comparing apples and oranges. It is incredibly difficult to compare today’s labor force with that of the 1950s, when America’s economic infrastructure allowed it to tower over war-ravaged competitors, and before millions of unskilled immigrants entered the workforce, exerting downward pressure on wages, particularly at the lower end. Women entering the workforce also drove down wages through further competition.

In terms of scholarly content, Yellen’s speech was all over the map.

Read the rest here.

What Jobs Your City Is Most Known For

Sohan Murthy at the LinkedIn blog published a map Wednesday that shows which skills and jobs are most disproportionately represented in American cities based on data from LinkedIn members.

The map doesn’t show the most common job in each city. Instead, it shows which jobs are observed at a disproportional rate in different metropolitan areas among LinkedIn members

She writes:
A few things stood out when looking at our map of the US.

Follow the oil! Its always fascinating when geological features present themselves in socioeconomic data. Members with skills valued by the petroleum industry are much more likely to found in Texas, Louisiana, Oklahoma, and most recently North Dakota.

Rust belt remnants. The automotive industry’s impact on Michigan and parts of Indiana, Ohio, and Pennsylvania is evident in the manufacturing and engineering skills held by its members.

Some cities really do fit their stereotype. When we looked at Los Angeles and Nashville, we were a bit amused to see the prominence of music, TV, and drama-related skills. After all, LA has Hollywood, and Nashville is the country music capital of the world!
The map is here.

Larry White’s Baffling Interview on the Gold Standard

By Joseph Salerno
In his recent three-part interview (herehere and here) on the gold standard, Larry White perplexes almost as much as he enlightens.  Let’s critically review  his responses to a few of the interviewer’s questions.
First, when queried about evolution of the discussion of the gold standard among classical liberals including Austrian economists as well as in academia more broadly, the general literature, and policy institutes, White expresses general optimism.  He concludes his answer with some observations about policy institutes:
Among the policy think tanks, the Cato Institute’s annual monetary conference has kept the fundamental issues alive for more than thirty years. I see their efforts expanding and reaching a wider audience.  The Heritage Foundation is now showing some interest.  The Atlas Network is now championing sound money. The Gold Standard Institute is growing in visibility.
A glaring omission in White’s answer is, of course, the Mises Institute, which held its first conference on the gold standard over 30 years ago.  Since that time it has campaigned tirelessly for the gold standard, devoting many of its conferences and publications to sound money.  Its associated academic economists and other scholars have published thousands of pages on the subject.  The Mises Institute has also served as the main intellectual support for Ron Paul, surely one of the most popular and influential  defenders of sound money as a U.S. Congressman and now as a public intellectual.  The Mises Institute continues to shape the debate on the gold standard.  In fact just today. RealClearMarkets, a website owned by Steve Forbes, published a response by economist and Arthur Laffer disciple Marc Miles to a critical review of Steve Forbes and Elizabeth Ames’ book Money: How the Destruction of the Dollar Threatens the Global Economy - and What We Can Do About It  written by Mises Institute scholar David Gordon.
Remarkably, while ignoring the Mises institute, White finds it fitting to recognize the obscure Gold Standard Institute.
The Gold Standard Institute was founded and is presided over by Keith Weiner, a principal in a for-profit gold fund business.  Weiner received a PhD from the New Austrian School of Economics (NASE), a non-accredited institution founded by Dr. Antal Fekete, a mathematician and a proponent of the gold standard based on the  long discredited real-bills doctrine.
Moving on, when asked if he was familiar with Nathan Lewis’s Gold, The Monetary Polaris, a book he commented on at a Cato monetary conference, White answers:
I offered a few academic quibbles, but the book does a good job marshalling historical evidence to demonstrate the chief merits of a gold standard.
White’s response here is another head scratcher.  It is true that Lewis’s book does provide a valuable historical discussion of different monetary regimes involving gold.  However the analytical part of the book is a mess.  Lewis is not in favor of a gold standard in any meaningful sense of the term and does not even have a clear idea of what the gold standard actually is.  He  treats the “gold standard” as a deliberate invention of government policy, what he calls a “a fixed-value system with gold as the policy target.” For Lewis,  all historical varieties of the gold standard are simply price-fixing schemes in which the monetary authority targets the currency price of gold that it has chosen as the parity .  Indeed under Lewis’s so-called  ”no gold” gold standard, the money manager neither buys or sells gold at the parity price nor  holds any gold reserves.  Rather it “targets” the price of gold by buying and selling bonds.  It may even buy or sell “fine art” to target the gold price.  Furthermore,  Lewis does not view the gold standard as supplying an inherently scarce commodity money.  Rather he sees the gold standard as a clever device for constraining the  ”currency manager” to ensure that the supply of currency, i.e., “banknotes with no intrinsic value,” remains artificially scarce and therefore valuable.  Of course, Lewis’s view is preposterous because it puts the cart before the horse.   A thing could never become money in the first place unless it was an item that was already scarce, valuable, and had a price in terms of other goods and services against which it was actively traded.  Thus bank notes could never come into existence except as claims to an existing , scarce commodity like gold.  No governmental bureaucracy is needed to ensure that money remains scarce.
Lewis also maintains that gold possesses an intrinsic, constant value and therefore serves as an absolutely fixed  ”measure” of value for other goods and services.  Lewis pushes this absurd view to its logical conclusion by calculating “the equivalent gold value of labor,” which he believes more accurately reflects the variation of real wages over time than conventional indexes of real wages based on the fiat dollar.  His calculations using gold as an alleged unit of constant value indicate that annual real wages declined by 86% between 1970 and 2010!  Lewis’s views on money and banking are just as bizarre.  Thus he asserts:
U.S. banks today don’t actually ‘create money’ or ‘reduce money’. . . . They create and reduce credit.  ’Credit’just means a loan of some sort.
I could go on, but given the gross misrepresentation of the nature and function of the gold standard and of money in general that one finds in Lewis’s book , it is hard   to imagine that White could only summon up “academic quibbles” with it.
Finally, when asked about the critics of fractional reserve banking, White responds by falsely implying that all critics of fractional-reserve banking want it outlawed.  By doing so, he deftly side steps the serious criticisms of theeconomics of fractional-reserve banking by those advocates of free banking, such as Ludwig von Mises, Guido Huelsmann, myself, etc.  who are in favor of freeing banks from all political regulations while denying them government bailouts and insurance.  These latter critics believe that a completely free market in banking will lead to the natural suppression of “fiduciary media”, i.e., bank notes and deposits unbacked by the money commodity.  But  White cannot be bothered with addressing such nuanced  arguments when there are  polemical points to be scored with a gratuitously nasty gibe:
 I’ll just say that those who want to outlaw modern intermediation (and by modern I mean post-Dark-Ages), and build our payment system instead on literal gold warehousing . . . It’s a kind of financial Luddism.
I should have thought that such a well versed economic historian like White would be familiar with the Dutch Golden Age, which occurred long after the Dark Ages.  The Dutch had the most prosperous economy and the highest standard of living in Europe from 1600 to 1820.  And they accomplished this feat without “modern intermediation,” by which White means the creation of notes and deposits by commercial banks.  Dutch financial and monetary institutions were strictly separate.  Merchants,and businesses obtained finance via bills of exchange and by selling shares and bonds on the Amsterdam Bourse, the oldest formal securities market in the world.  Deposit keeping, payments, and foreign exchange services were provided by the 100-percent reserve Bank of Amsterdam.  Finance did not create money and money creation did not dissemble as finance
As for financial Luddism, I would think that charge is better leveled at someone who forecasts that a hybrid monetary/financial arrangement which might have thrived in circumstances peculiar to 18-century Scotland would just happen to be the type of arrangement that entrepreneurs in the 21st century would rediscover and implement when modern money and finance is completely separated from government.
The above originally appeared at

Can’t Appreciate the Private Economy? You Don’t Deserve the Plenty It Provides

By Ilana Mercer

The voluntary free market is a sacred extension of life itself. The free market—it has not been unfettered for a very long time—is really a spontaneously synchronized order comprising trillions upon trillions of voluntary acts that individuals perform in order to make a living. Introduce government force and coercion into this rhythm and you get life-threatening arrhythmia. Under increasing state control, this marketplace—this magic, organic agora—starts to splutter, and people suffer.

While the argument against the free market presses its case with an impressive array of economic fallacies—even the Hollywood “Idiocracy” is hip to the logic of the free market.

Just for a change, the menstruation lobby is moaning about the movies and its members’ representation therein. By Variety Magazine’s telling, “[Female] characters are still significantly under-represented on the big screen. … The numbers for minority females are even lower. African-American female representation on screen [has] climbed to 14 percent, from 8 percent in 2011, but [is] down from 15 percent in 2012.”

The presence of minorities in movies often signals a two-hour long, oppressive racial lecture. Most movie-goers are no more inclined to turn to “12 Years A Slave” for fun, than they are to subject themselves to Oprah Winfrey and her M.O.P.E. (Most Oppressed Person Ever) “Butler.”

Anti-man moaning notwithstanding, the general public must be on to this, because it is quite clear that Hollywood is giving viewers what they want to see: men in lead roles. If film executives listened to the loathsome Lena Dunham, rather than to the demands of consumers—the industry would go under.

Alas, most liberals (and that includes “conservatives” aplenty) are foolish enough to lump business with government as an eternal source of disappointment to Americans. Noodles Ron Fournier of National Journal:

“Steadily, over the past four decades, the nation has lost faith in virtually every American institution: banks, schools, colleges, charities, unions, police departments, organized religion, big businesses, small businesses and, of course, politics and government.”

As I type, I consume a plate of seven different fruits topped with nuts. Many of the ingredients on my plate are organic. These used to be exorbitantly priced; out of reach. But as demand for organic produce has grown, production has increased and prices have dropped dramatically.

Each day I give thanks to the businessmen who, against all odds, bring such abundance to market and provide such plenty. There is nothing in my home that comes courtesy of the blessings of bureaucrats. I guarantee that it’s the same in your home.

If you, like Fournier, fail to distinguish the blessings of the private economy from the blight of government—you deserve none of the former and all of the latter.

Ilana Mercer is author of Into the Cannibal's Pot: Lessons for America from Post-Apartheid South Africa©2014 By ILANA MERCER

Thursday, October 23, 2014

Breaking: Doctor in NYC Has Tested Positive for Ebola

Details here.

PLAN AHEAD The Best Time to Buy Airline Tickets

The lowest price for domestic tickets is roughly 2 months in advance of a flight. For international flights the best price is just short of 6 months out.

(via WSJ)

Salaries by State and Occupation: Where Can You Really Earn the Most?

A new salary-comparison tool from Rasmussen College is out. It draws on data from the Bureau of Labor Statistics and the Bureau of Economic Analysis to compare what workers in a given occupation earn in each state, both before and after adjusting for the cost of living.

The interactive tool is here.

The 15 Most Rat-Infested Cities in America

Pest control manufacturer Orkin has released its list of the rattiest cities in the United States.
With the advent of colder weather in the fall, rodents tend to infiltrate households to search for food and to build nests, says Orkin. Rats can squeeze through a hole the size of a quarter; mice need only a dime-sized opening.

 The markets are ranked by Orkin based on the number of rodent treatments the company performed in 2013.

1. Chicago
2. Los Angeles
3. Washington, D.C.-Hagerstown
4. New York
5. San Francisco-Oak-San Jose
6. Seattle-Tacoma
7. Detroit      
8. Cleveland-Akron-Canton
9. Baltimore
10. Miami-Ft. Lauderdale
11. Dallas-Ft. Worth                      
12. Denver          
13. Houston                                      
14. Atlanta            
15. Boston-Manchester                            
16. Minneapolis-St. Paul                                      
17. Sacramento-Stockton-Modesto                  
18. Syracuse                                    
19. Indianapolis                          
20. Charlotte

Orkin recommends the following tips to help prevent rodents around the home:

Regularly inspect the home – inside and outside – for rodent droppings, rub marks or burrows.
Seal all cracks and gaps around utility penetrations larger than 1/4 of an inch, as well as install weather stripping at the bottom of exterior doors.
Trim overgrown branches, plants and bushes near the home, and consider keeping a 2-foot barrier between any landscaping and the home.
Store all food (including pet food) and garbage properly in sealed containers both indoors and outdoors

New Study: The Middle Class is Collapsing in the United States

By Simon Black

When I was growing up, my father was able to support his family of four on a single income. And when he was growing up, his father could do the same.

This sort of security simply doesn’t exist anymore.

These days, it typically takes two working parents just to be able to afford a comfortable standard of living. And even then, just barely.

Today people have to borrow on their credit cards just to get by. And young people are forced to indebt themselves decades into the future simply to pay for an increasingly worthless university degree.

In 1970

Biggest Spenders on Lobbying

Politico ranks the top spenders on lobbyists in Washington D.C: during the third quarter of 2014

 U.S. Chamber ($28.4 million)

 National Association of Realtors ($18 million)

U.S. Chamber Institute for Legal Reform ($9.1 million)

General Electric ($5.3 million); Boeing ($4.4 million)

CVS Health ($4.3 million)

NAM ($4.3 million)

American Hospital Association ($4.3 million)

American Medical Association ($4.2 million)

Comcast Corporation ($4.2 million)

Koch Companies Public Sector ($4 million)

The National Association of Broadcasters ($4 million)

Google ($4 million)

National Cable and Telecommunications Association ($3.8 million)

PhRMA ($3.7 million)

United Technologies ($3.6 million)

Lockheed Martin ($3.4 million)

AT&T Services ($3.5 million)

American Chemistry Council ($3.2 million)

Occidental Petroleum ($3.2 million)