Monday, October 3, 2011

More Confusion for Keynesians: Car Sales Soar

General Motors said its U.S. sales jumped 20% to 207,145 vehicles compared with September 2010. Chrysler sales surged 27% to 127,334 vehicles, marking the company's best September since 2007.

Volkswagen of America said sales of its VW brand rose 36% to 27,036 vehicles in September.

Bottom line: When the Fed prints money, the economy is distorted in favor of sectors of the economy that benefit from capital infusions, e.g. the auto sector.

But Keynesians are confused by it all:

"The pace was ahead of people’s expectations... said Johnathan Browning, chief executive of Volkswagen of America.


  1. Just got done with Man Economy State and am blown away by it, but still have many questions and must admit that I didn't fully grasp everything in the book.

    One question is related to this post--what is it about the auto industry that makes it more of a beneficiary of Fed created $ than other industries?

  2. This chart is already a few months old, but channel stuffing and subprime lending is back in full-swing at Government Motors. While vehicle sales may be responding to ultra-low interest rates, the numbers being reported today should not be taken at face value.

  3. You can live in your car but you can't drive your house. The car is the new studio apartment.

  4. Consumption on credit and autos are complementary goods, which means they are consumed together. When the price of one falls demand for the other increases, other things the same. When the Fed prints money it lowers interest rates, the price of credit, which increase the sales of items bought on credit like cars. It is only the printing of extra "funny money" that causes consumers to complete transactions they otherwise would not have completed.

  5. Brilliant. Guess all the unemployed, underwater mortgage holding, 401 (no K) losing, cost of living drained folks need to replace their fleets.

    Far more likely these purchases are heavily supported by gunvernment at local/state/federal or international levels. All those TNC members being rewarded over in Libya for their sacrifices and such. Truly is a global economy in this new global empire. Hence no competition.

    Who cares what figures are skewed next. Every nit wit on the planet knows the jig is up. Fractional lending has reached its end. No amount of computer modeling will fix it.

    Liquidate the malinvestments. Take the losses and restore the principals of sound money/exchange. Everyone should be subject to the same rules!!!!!

    No more wars for prophets or profits. Resources belong to people and countries/borders where they are. A great day will dawn when the war engine runs out of gas.