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Bernanke's Solutions Are the Problem - Mark Thornton - Mises Daily: "Historically, deflation was a common feature of the American economy, particularly before the establishment of the Federal Reserve. The one time that there was significant deflation and economic decline was the Great Depression.
Two economists published a study in the American Economic Review in 2004 that examined the association of deflation with depression. They looked at 17 countries and over 100 years of data and concluded that 'beyond the Great Depression, the notion that deflation and depression are linked virtually disappears."
"Possibly the worst of Bernanke's statements occurred in 2006, near the zenith of the housing bubble and at a time when all the exotic mortgage manipulations were in their 'prime.' This was the era of the subprime mortgage, the interest-only mortgage, the no-documentation loan, and the heyday of mortgage-backed securities. At the time, the new Fed chairman admitted the possibility of 'slower growth in house prices,' but confidently declared that if this did happen he would just lower interest rates.
Bernanke stated in 2006 that he believed that the mortgage market was more stable than in the past. He noted in particular that 'our examiners tell us that lending standards are generally sound and are not comparable to the standards that contributed to broad problems in the banking industry two decades ago. In particular, real-estate appraisal practices have improved.'[4] This is the equivalent of the Federal Reserve seal of approval being applied to mortgage lending at the pinnacle of the housing bubble."
"He denied there was a housing bubble in 2005, he denied that housing prices could decrease substantively in 2005 and that it would affect the real economy and employment in 2006, and he tried to calm fears about the subprime-mortgage market. He stated that he expected reasonable growth and strength in the economy in 2007, and that the problem in the subprime market (which had then become apparent) would not impact the overall mortgage market or the market in general.
In mid-2007 he declared the global economy strong and predicted a quick return to normal growth in the United States."
"Austrians were writing about the housing bubble, its cause, and the probable outcomes as early as 2003. Bernanke and others have denied that you can predict bubbles and crises"
Wednesday, November 24, 2010
Tuesday, November 23, 2010
Soak-the-Rich Taxes: Fail! - Robert P. Murphy - Mises Daily
Soak-the-Rich Taxes: Fail! - Robert P. Murphy - Mises Daily: "But with a progressive (or graduated) tax code, the revenues flowing into state coffers increase more than proportionally. This is because the average taxpayer is earning a higher income and is paying a higher proportion of it in taxes.
On the other hand, revenues tend to crash much harder during recessions in those states that rely on steeply graduated income taxes. Not only are taxpayers in the state earning a lower income, but many of them slip into lower brackets and hence pay a lower percentage as well.
Democratic governments are notoriously short-term in their planning. During the boom times, when state coffers are overflowing with revenues, the state legislatures ramp up spending programs. When the bottom falls out during the next slump, the legislatures are caught in a difficult position. It is no coincidence that California and New York — states with very progressive income-tax codes — also have recurring difficulties in balancing their budgets."
"Back when the federal income tax was instituted in 1913, Americans were also promised that it would forevermore remain a slight irritant to the super wealthy. Initially it imposed a mere 1 percent tax on those making under $20,000, and a top rate of 7 percent on those making more than $500,000 — a fantastic sum in those days.
Yet in 1917, a mere four years later, the bottom rate had doubled from 1 percent to 2 percent. Someone in the $500,000 bracket now faced a tax rate of 54 percent. And the highest bracket, applicable to incomes exceeding $2 million, faced a tax rate of 67 percent. (The history of federal income-tax rates is available here.) Needless to say, Americans would not have agreed to a federal income tax in 1913 had they realized what the politicians would do with it."
On the other hand, revenues tend to crash much harder during recessions in those states that rely on steeply graduated income taxes. Not only are taxpayers in the state earning a lower income, but many of them slip into lower brackets and hence pay a lower percentage as well.
Democratic governments are notoriously short-term in their planning. During the boom times, when state coffers are overflowing with revenues, the state legislatures ramp up spending programs. When the bottom falls out during the next slump, the legislatures are caught in a difficult position. It is no coincidence that California and New York — states with very progressive income-tax codes — also have recurring difficulties in balancing their budgets."
"Back when the federal income tax was instituted in 1913, Americans were also promised that it would forevermore remain a slight irritant to the super wealthy. Initially it imposed a mere 1 percent tax on those making under $20,000, and a top rate of 7 percent on those making more than $500,000 — a fantastic sum in those days.
Yet in 1917, a mere four years later, the bottom rate had doubled from 1 percent to 2 percent. Someone in the $500,000 bracket now faced a tax rate of 54 percent. And the highest bracket, applicable to incomes exceeding $2 million, faced a tax rate of 67 percent. (The history of federal income-tax rates is available here.) Needless to say, Americans would not have agreed to a federal income tax in 1913 had they realized what the politicians would do with it."
Put Department of Education in Timeout | Richard W. Rahn | Cato Institute: Commentary
Put Department of Education in Timeout | Richard W. Rahn | Cato Institute: Commentary: "Suppose Congress said to the department, 'We are going to cut your budget and payroll by 20 percent per year until test scores start improving, and if they have not substantially improved within five years, the department will be dust.' What do you think would happen to test scores?"
"Most of the increase in spending has gone to education bureaucrats — including more and more layers of 'administrators' (assistant principals, deputy assistant principals, and on and on) — and much of it is needless overhead. So, as those in Congress cut back the department's funding, they must be smart about it — both for the sake of the students and for their own political protection. They need to insist that the funds be reduced for the middlemen and not the classroom teachers."
"Most of the increase in spending has gone to education bureaucrats — including more and more layers of 'administrators' (assistant principals, deputy assistant principals, and on and on) — and much of it is needless overhead. So, as those in Congress cut back the department's funding, they must be smart about it — both for the sake of the students and for their own political protection. They need to insist that the funds be reduced for the middlemen and not the classroom teachers."
Some gov't officials to skip airport security - FoxNews.com
Some gov't officials to skip airport security - FoxNews.com: "'Government officials traveling with approved federal law enforcement security details are not required to undergo security screening,' TSA spokesman Nicholas Kimball said, speaking about checkpoint security at airports. 'TSA follows a specialized screening protocol for federal law enforcement officers and those under their control, which includes identity verification.'
The TSA would not explain why it makes these exceptions. But many of the exempted government officials have gone through several levels of security clearances, including FBI background checks, and travel with armed law enforcement, eliminating the need for an additional layer of security at airports."
"Gainer added that members 'with sworn protection' are able to avoid security because 'their secure posture is affirmed by the law enforcement process established by TSA.'"
The TSA would not explain why it makes these exceptions. But many of the exempted government officials have gone through several levels of security clearances, including FBI background checks, and travel with armed law enforcement, eliminating the need for an additional layer of security at airports."
"Gainer added that members 'with sworn protection' are able to avoid security because 'their secure posture is affirmed by the law enforcement process established by TSA.'"
Gore: U.S. corn ethanol 'was not a good policy' | Green Tech - CNET News
Gore: U.S. corn ethanol 'was not a good policy' | Green Tech - CNET News: "'First-generation ethanol, I think, was a mistake. The energy conversion ratios are at best very small,' he said 'It's hard once such a program is put in place to deal with the lobbies that keep it going.'
He explained his own support for the original program on his presidential ambitions.
'One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.'"
He explained his own support for the original program on his presidential ambitions.
'One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.'"
Gore: U.S. corn ethanol 'was not a good policy' | Green Tech - CNET News
Gore: U.S. corn ethanol 'was not a good policy' | Green Tech - CNET News: "'First-generation ethanol, I think, was a mistake. The energy conversion ratios are at best very small,' he said 'It's hard once such a program is put in place to deal with the lobbies that keep it going.'
He explained his own support for the original program on his presidential ambitions.
'One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.'"
He explained his own support for the original program on his presidential ambitions.
'One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.'"
Monday, November 22, 2010
How an Economy Grows - George F. Smith - Mises Daily
How an Economy Grows - George F. Smith - Mises Daily: "the economy didn't grow because they consumed more. They consumed more because the economy grew"
"As productivity increased, prices fell, benefiting the producer as well as his customers. Falling prices induce people to save, which swells the amount of capital available for loans. The Keynesian fear of falling prices was yet unknown."
"As productivity increased, prices fell, benefiting the producer as well as his customers. Falling prices induce people to save, which swells the amount of capital available for loans. The Keynesian fear of falling prices was yet unknown."
Economists want to stop teachers' degree bonuses - FoxNews.com
Economists want to stop teachers' degree bonuses - FoxNews.com: "Every year, American schools pay more than $8.6 billion in bonuses to teachers with master's degrees, even though the idea that a higher degree makes a teacher more effective has been mostly debunked.
Despite more than a decade of research showing the money has little impact on student achievement, state lawmakers and other officials have been reluctant to tackle this popular way for teachers to earn more money."
Despite more than a decade of research showing the money has little impact on student achievement, state lawmakers and other officials have been reluctant to tackle this popular way for teachers to earn more money."
Cybersecurity bill gives DHS power to punish tech firms | Politics and Law - CNET News
Cybersecurity bill gives DHS power to punish tech firms | Politics and Law - CNET News: "Section 224 of HSCPIPA hands DHS explicit legal 'authorities for securing private sector' computers. A cybersecurity chief to be appointed by Napolitano would be given the power to 'establish and enforce' cybersecurity requirements."
Will computers with anti-government info be considered "unsecure"?
"Those requirements include presenting 'cybersecurity plans' to the agency, which has the power to 'approve or disapprove' each of them."
Will those plans need to include sensitive info that DHS might accidentally leak and increase security risks?
Will computers with anti-government info be considered "unsecure"?
"Those requirements include presenting 'cybersecurity plans' to the agency, which has the power to 'approve or disapprove' each of them."
Will those plans need to include sensitive info that DHS might accidentally leak and increase security risks?
Friday, November 19, 2010
Bernanke hits back at critics of bond-buying plan - FoxNews.com
Bernanke hits back at critics of bond-buying plan - FoxNews.com: "Without more stimulus, high unemployment could persist for years, he said."
We've heard that before and the forecast wasn't accurate.
We've heard that before and the forecast wasn't accurate.
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