Posts Tagged ‘Socialism’
Who bears the cost of money printing?

This 5 minute video demonstrates how our mind can be tricked by the effect to miss the method:

Luigi Anzivino: Science of Magic

Do watch the portrayal of the experiment at the 2 minute mark.

Money printing has the obvious prominent effect of putting more money into some peoples hands.  Great, we are richer. Some will only see and act on that. It can lead to real world activity. Real world investment, real world education and job decisions. It can immediately affect how much some people are willing to pay for houses, and hence house prices for all. Later it will influence peoples assessment of prices and relative values. The new rates are the market rate and we either pay it or change our consumption bundle.

Naturally the poorest in society have the least options for changing their consumption bundles.You can’t swap from caviar and sirloin steak to chicken mince if you are already eating chicken mince. You may only be able to opt for dog food. If you are already eating dog-food then you may be reduced to fossicking in bins for your protein. You get the picture. Inflation is a personal thing. The poorer you are the more inflation tends to affect you.

The poorer you are the less you are able to adjust your consumption bundles to mitigate the effects of rising prices. The elite and well-off have a significantly reduced level of inflation compared to the middle class. The middle class in turn have more options and experience less inflation than the poor.

But the poorer people are doubly penalized. They also have much less disposable income they can re-direct to necessities. A 10% rise in the price of food can result in their not being able to eat and pay the rent. They may become homeless or starve. A 10%  rise in the price of food may be hard to even detect in the budget of the well off. Hell, I’ll simply eat one more meal a week at home rather than in a restaurant. Or perhaps skip desert or eat at a cheaper establishment. Maybe I’ll only go on one foreign holiday a year instead of two. Or not buy another designer dress or pair of shoes. Gee, tough choices. You get the picture.

There is nothing compassionate, kind or caring about printing money. It shafts the poor. It hurts the old, ill and otherwise disadvantaged most.  It is the height of hypocrisy for the left to claim they have a social conscience and that is why they are printing money. The effects mentioned above are well known. Ignorance is not an acceptable excuse, at least not amongst those supposedly trained in economics.

The economy is complex. It comprises of many products and services. They have different elasticities of demand. Some products people can readily do without. In response to price rises they purchase something different. Producers of these products will either lose lots of revenue or compress their margins in response to rises in their costs of production. Of course there is only so much margin to compress, before prices either rise or the company goes out of business. At an aggregate level the product becomes unavailable or more expensive.

The rate at which cost-push inflation flows through the economy will depend on the interaction of multiple different elasticities of demand. You have Buckley’s chance in of knowing the outcomes of this in advance. Contra Salerno Hayek was certainly correct in the centrality of the problem of knowledge. Clubs and families like corporations make poor decisions all the time. They are rarely fatal. They also are poor in all sorts of different ways, allowing for a wisdom of crowds effect. When a socialist state gets it wrong there is a universality to the error. There can also be fatal consequences for those pointing it out. Thus the errors can persist through time far longer than they will under other social systems:

If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

Although reality always intrudes, as it did with Goebbels and his national socialist comrades.

The beauty of capitalist markets is that multiple decision makers means there are multiple conflicting decisions being made about the future. Normally whatever happens, some prosper. In prospering they hire others and keep us prosperous. It is inherently resilient because of the conflicting often wrong choices being made. Sadly central banks are centralist. When they get it wrong the effects percolate throughout the whole economy. They are run by individuals with all our cognitive failings. One of which is a desire not to have been wrong.

The Bernanke put will go the way of Goebbels great lie. Let’s hope we do not as a consequence suffer as much as the German people did.

Graphic courtesy of Cherchez la Verite. It also contains this quote by German Finance Minister Wolfgang Schäuble:

 “I don’t think they are going to solve their problems that way,” Schäuble told German public broadcaster ZDF in a Thursday evening interview. “They have already pumped an endless amount of money into the economy via taking on extremely high public debt and through a Fed policy that has already pumped a lot of money into the economy. The results are horrendous.”

So far so right. It can’t work, it can but delay at the cost of making the adjustment worse. It may now have tipped to the point where the range of potential outcomes are getting worse. Despotism or anarchy, rather than liberal democracy.

Lefty subjectivity

The left love their post-modernist, post truth, post Christian, post American world. But what does this mean? Well we are staring to find out. Already we have seen what Lefty subjectivity has done for:

Police: If you are unwilling to kowtow before the diktat of the politically correct they can arrest you or take your children away. Servants of the socialist state will decide who threatens a breach of the peace and who does not. Who has to be photographed naked, felt up or fined.

Thus a mob calling for the beheading of all unbelievers is not threatening the peace. A mob calling for your country to be dissolved into a global caliphate is not threatening the peace. A mob calling for your daughters and grand daughters to be made to wear the veil is not threatening the peace. A mob calling for the killing of homosexuals and heterosexuals who have sex outside marriage is not threatening the peace.  But someone publicly objecting to any of the above is totally beyond the pale, is a threat to the peace and must be arrested. Indeed, they must be a racist.

The potential abuse is almost unlimited. If Christians can be arrested for preaching, then who is safe? Not their atheistic opposite, unless they are behaving in an approved manner.

Judges: Activist judges reject precedent and impose their values when sentencing. This in turn sets precedents other leftwing judges draw on when sentencing. It also sets precedent that conservative judges are obliged to follow. Bleeding heart judges feel good about themselves when imposing lenient sentences or giving criminals another chance. They do not see the hidden costs of their selfish approach to sentencing. Costs such as:

  • Innocent people being harmed or forced to live in fear because criminals who should be incarcerated are preying on them or their neighbors.
  • People sentenced to inappropriately long sentences due to mandatory minimum sentences or three strikes and you are out laws.

Soft sentences cause people to lose faith in the system. Some may take the law into their own hands. Others demand the legislature act to ensure appropriate sentences. There are only so many things the legislature can do. None of them is cost free. Mandatory minimum sentences and three strike laws are ways the legislature addresses the problem. These measures remove the ability of judges to impose overly lenient sentences or to impose appropriately lenient sentences.

Make no mistake. The progressive left and activist judges are directly responsible for the injustice that arises from mandatory minimum sentences and three strikes and you are out laws. They are also responsible for much of the misery caused by criminals who are neither deterred nor locked up due to their light sentencing.

Job security: Politically correct bureaucrats will decide what thought crimes, words or deeds warrant the sack. Again totally subjective, imposed from above and against the values of the people.

Adopting: Christians today, “red necks” or Republicans tomorrow. Only holders of politically correct views can possibly bring up children. Discrimination against Christians, gun owners, entrepreneurs and libertarians is acceptable. You know the types that it is not acceptable to discriminate against. Totally subjective. Totally dependent on the whim of our lord and master, the bureaucrat.

Christmas: It’s got to go. Happy holidays, Seasons greetings or some such. Anything to avoid indicating it has anything to do with Christianity. No discrimination equals no Christmas.

Cultural intangibles: The left have undermined the rule of law, prices, markets, trust, property rights and even truth. The left are undermining what made the West a success. They are doing this deliberately and are totally ignorant of the consequences. They have forgotten what life is like for all peoples everywhere until capitalism arose in the West. Their politically correct value system is opposed by the people and will impoverish any society that adopts them.

The list is endless. My time is not. We will return to this topic periodically. It appears the lefty subjectivity is totally toxic. Another stike against them, to add to the many.

Liberal Fascism

Liberal Fascism reveals that Fascism is simply national rather than international socialism. Mussolini was a Marxist who believed that the Italian workers had more in common with the boss whose kids played football with their kids than workers in South America. The National Socialist German Workers’ Party (NAZI) was exactly what its name implies.

National Socialism, Fascism …etc are offshoots of the progressive movement. Eugenics and later genocide were mechanisms to improve the human race. What is the life of the individual, race or class compared to the creation of a paradise on earth for all people for ever more? The road to hell is paved with good intentions.

Read the book or at least dig around online. It is all there. The blood of the 20 million or so killed by Fascism needs to be added to the 100 million or more killed by Communism in any accounting of the evils of socialism. As should the millions of African children killed because Greenpeace and other environmentalists got DDT banned. Malaria hit the most disadvantaged hardest as will most Greenie policies.

Che Guevara T-shirt wearing socialists and greenies should be treated with contempt at least as great as they would be if wearing swastikas and Hitler portraits. The Left are Scum.