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Unlimited and open-ended Detlev Schlichter’s latest posting – Stimulus, to infinity and beyond – is up.
Beginning:
There was a beautiful symmetry to last week’s policy announcement by the Fed. Precisely a week after the ECB had pledged its commitment to unlimited purchases of Euro Zone government bonds, the Fed declared that its new round of debt monetization – ‘quantitative easing’ or QE3 – would be open-ended.
Unlimited, open-ended. The concept of stimulus has certainly evolved since the crisis started.
End:
This will end badly.
Nothing to add to that myself. Other than: do what I am about to do, which is to read the whole thing.
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“Nothing to add to that myself. Other than…..”
buy all the gold & silver you can afford, NOW, while it is still relatively cheap.
Something we should settle before the question becomes acute: is it pronounced ‘WY-mar’ or ‘VY-mar’?
There is a story from Weimar…
A bloke going to buy a loaf of bread with a wheel barrow full of “money” gets mugged and the mugger (presumably to lighten his load) tips the money out and makes off with the barrow.
It’s probably apocryphal but o are Aesop’s fables and they contain deeper truths than like what actually happened. I mean does the moral point of “The Good Samaritan” depend upon whether or not it is a true story?
Sadly, the entire transcript of Kevin Warsh’s 9/14 two hour appearance on CNBC’s SquackBox is not readily available (tho’ it is cited in the 9/15 Telegraph).
He made a truly telling point that central banks are trying to fill in for deficiencies in political Fiscal Policy with Monetary Manipulations (my phrase).
We hear the term “accomodative” policy. These policies do not accomodate production or ditribution. The central bankers are now “accomodating” politicians, who do not want to face the harsh realities that must result from fiscal restructuring.
As the “cans are kicked down the road,” we have to wonder – which will we run out of first, road or can?
My bet is the road will end first.
One would hope against hope that eventually people will realize this is all politics, not economics at all.
None of the massive problems that threaten us are economic. They are all—every last one—the product and logical end result of politics above everything else.
Watching these utterly incompetent and totally arrogant fools destroy the most powerful economic engine the human race has ever constructed in their pathetic attempts to hold on to power for just a little while longer is the most painful spectacle I have ever experienced.
That it’s all so unnecessary just makes it all that much worse.
The book speaks of a banquet at which the arrogant and self-important take all the top places at the table, and when a modest man enters and sits in the lowest place, the host unseats the big shots, and calls the modest man up to the foremost place.
I believe in a form of cosmic justice that brings about those sorts of just desserts, like hitler in his bunker or saddam in his hidey-hole, ar any number of other big time a–holes that ended up at the foot of the table, or in the parking lot, or in jail.
I just hope I live to see some of it happen.
Of course it will end badly. Even Bernanke must realize that; he’s not stupid. The problem is that the Fed has just one tool and so he uses it repeatedly, even though it is totally ineffective for the stated purpose. So why keep using it? Merely to provide an illustration of the common definition of “insanity”? I rather think not; Bernanke is no more insane than he is stupid. There must be another, unstated, purpose behind this action, a deeper game afoot.
I suspect that Graham Summers of Phoenix Capital Research is on to something in this article. He observes that consumer prices (notably food and energy) are now quite high (monetary stimulus will inevitably push them up even higher), interest rates are already historically low (and realistically can’t get much lower), and the unemployment rate, while unpleasantly high, at 8.1% (reported) isn’t really all that bad. So why now, when there is no logical reason for QE?
Summers opines that “the fact that Fed piggy-backed this announcement after the ECB’s announcement of its open-ended bond purchasing program makes this a coordinated central bank intervention.” [His emphasis.] He asks: “Why would the Fed and ECB do this? Because they’re scared stiff of what’s happening and are trying to shock and awe the markets into submission with terms like ‘open ended’ and ‘unlimited’. There is only one reason to do this: things are in fact much worse than anyone has admitted.” [Also his emphasis.]
Summers concludes that the very fact of this announcement “should be cause for serious concern about the stability of the financial system.” I concur. QE3 should be seen as a “desperate move to support the ECB in its attempt to rein in a European Crisis that is rapidly spinning out of control.” We should all be very frightened now.
Yes Laird, but even more—in Europe the bank actions are just more desperate attempts to shore up the new aristocracy of the EU and its political cadres.
In the US, the only true purpose is to prolong the pretense that the current regime is acting positively to deal with the supposed “economic situation”.
Neither these charades, nor the continuing lunacy of the Chinese regime whistling while its economy totters, will forestall the storm that is on the horizon.
For we have all sown the wind, and we will reap the whirlwind.
(SWMBO says I sow a bit more wind than most, but that’s just because she sits downstream and gets the full effect)
Personally, I am investing in as many video cards as possible to crank out bitcoins while the electricity is still flowing.
Seriously though, I have way too much invested in crap that will be the first thing to go when it all goes south (or whichever direction will be the order of the day). Probably time to take a serious look at emergency supplies & ammunition. Though as I’m in good health and still have my wits, I’m not terribly worried about starting from scratch.
While “the fed” practices the very definition of inflation,
and “the rich” are furiously spending their previously held cash reserves on durable goods of sustained productivity, as well as the “international” currency of gold and silver, what is the time lag before buckets of
paper cash, sent as “aid”, and hoarded in third world leaders personal accounts, will be “invested” in the “universal” coin of THOSE realms, before it’s deemed worthy only as sanitary toilet tissue-for which there is apparently no value there.
The “universal” coin of deserts, jungles, and “refugee” camps, eventually runs out of clean syringes, ammo, gub’mint cheese, and “spare parts”.
NOW who “controls” the sex, water, and increasingly ineffective penicillin? What is the return on cess pits and graves, dug with “improvised” explosive devices, detonated by hand?
Anyone remember how to make moveable type operate, or how to make vellum/parchment-without offending stick/rock wielding “Green” folks?
But it will end badly later.
Speaking of interest rates, I am looking over my savings today.
I could put $10,000 into a US Treasury bond money market fund. It is tax free, and will earn me one dollar per year. That’s right, it pays 0.01%.
I could opt for a Citibank CD, and get 1.1% (I didn’t look at the maturity.)
Thank goodness inflation is under control. In the USA, they don’t count energy or food in the inflation index, so not to worry.
Meanwhile, our friend is going to have to move out of her house. She is retired on a fixed income, and watches every penny. She bought her house three years ago with cash from an inheritance. She intended to live a frugal life in the country in a place she loves. She is now being hit with increases in home oil heating, real estate taxes, car registration, and home insurance. And food, of course.
I can’t figure out why those costs are going up in a low inflation environment, can you?
It is time to stop assuming good faith on the part of our “leaders.” They are all living very well.
The original post and the comments (such as those by Laird and Very Retired) have said all that needs to be said.
So saying more than “I agree” would be pointless.