The New Terrapin Gazette
Number 214 9 June, 2011
He who wishes to accomplish something grand must know how to limit himself. He who opposes everything will actually accomplish nothing and bring all his efforts to nothing.
None Dare Call It Incestuous
“We don’t actually have a genuine press any more” says a weblogger (no, don’t click and read; that hyperlink is just there to tell you the source of the quotes used here).
To my way of thinking, the saddest part of this story is Barbara Walters (sic) devolution; this once-respected newswoman nears the end of her distinguished career by playing as ghastly a non sequitur as I’ve ever heard, saying (in essence) if Sarah Palin “can ride around on her bus,” Weiner Can Stay in Congress.
When Joy Behar, of all people has to defend Sarah Palin from your bizarrely gratuitous swipe, you know you’ve let your hate lead you too far into Whackyland.
“Once-respected”? Well, Baba Wawa is a veteran limousine “progressive”. Remember — she was one of the luminaries who helped Lenny raise funds for the Black Panthers with a grotesque soiree that Tom Wolfe made infamous. You have to consider the history, don’t you?
Yeah. Meanwhile, here’s more from the weblogger:
Listen (if you can stand the noise of this show) to Walters talking about how she “knows” Weiner and “knows” his wife, who of course works for Hillary Clinton, whom she also knows.
This is the problem with the mainstream media in a nutshell. They “know” the people they’re supposed to be covering, and they consider themselves “friends” of those people. And it has ruined them. As you listen to Walters, all you see is passionate advocacy; not a newswoman concerned with the truth of a story, but a partisan doing everything she can to divert attention from a story she doesn’t like — even to comparing a private citizen on a bus to a sitting congressman having some sort of cyber-engagement in his office — and championing her “friend.”
A whiff of naivete lingers over the weblogger’s words. She almost seems to have just discovered the occupationally diverse but ideologically inbred stratum of society that comprises the falanges of the Bicoastal Elite.
Oh, you want to know why you were told not to click on the hyperlink above. That caution saved you from overdosing on one of the most stupid, pointless and hypocritical non-news stories of this decade. You are welcome.
If things are managed rationally, as the size of the consumer economy grows, the government (well, the Federal Reserve, actually) inflates the currency to keep pace. This balances the amount of goods and services available with the money needed to purchase them. Prices neither rise nor fall, but unemployment drops, more consumers rise economically and purchase more than previously, and profits lure investors. Loans are no more difficult to get, and the economy expands. The point: inflation is not always bad.
It is possible for prices to fall as beneficial inflation continues. As new products and services enter the marketplace and older ones become less popular, the familiar gets marked down in order to convert it into cash. Technological advances reduce the cost and then the price of some items. As the shifting continues, the consumers adjust and generally benefit from the larger economy. When there are more consumers, economies of scale may become possible, and the prices of some products will fall. A large market attracts imports, which creates more options for the buyer and puts pressure on domestic producers to lower their prices in order to compete.
Prices may also rise when the money supply undergoes deflation. When fewer dollars are available, some businesses will drop plans for expansion and try to drive up the price of their products by limiting production. Farmers unable to recoup their expenses due to falling consumer prices dump milk and destroy harvests. Consumers can either pay more, a painful allocation of funds already in short supply, or do without. Eventually shortages drive prices up, and may do so to levels that inspire producers to expand, but in many cases that expansion is either impossible (due to a shortage of money for loan) or considered dangerous: the price bubble may burst suddenly, leaving the adventuresome firms unable to repay their loans.
You can see that a confusion of terminology and the fact of a complex interplay of factors in the real economy means that simply consulting a list of prices of selected items and declaring that to be a measure of inflation is downright silly.
Prices are one thing, and the increases or decreases in the money supply are quite another. Yes, they interact, but there is no mechanism that allows one to control prices by controlling the number of units of currency in circulation.
Now consider some of the things that Bernanke said. First, he repeatedly referred to inflation as if it were identical to and could be measured by price increases. That is wildly incorrect. Second, he actually said at one point that the Federal Reserve could try to prevent higher fuel prices from driving up the price of food. He used the word “inflation” to refer to the phenomenon of higher prices, and implied that inflation could leak across from one commodity to another. That’s not correct, but it gets worse: he claimed that somehow a mysterious process available to the Federal Reserve could be used to prevent businesses from passing higher costs along to the consumer. That is not just false, it is absurd — even insane. That no one called him on it is dismaying.
Consider the current financial situation, and decide whether inflation is the problem. First, the USA suffers from high unemployment. This typically occurs when consumer demand falls and businesses cut back, reducing their prices to the buyer and trying to reduce costs. Why has consumer demand fallen? For two major reasons: first, because of unemployment (a vicious cycle is operating), and second, because some goods and services have become much more expensive and are eating up larger percentages of the household budget. Under these circumstances, how will reducing the money supply help the consumer, business and the unemployed?
In other words, fighting inflation is not helpful when businesses need money but can’t get it.
Why can’t they get it? Because loans are not available from the large financial institutions. These corporations lost hundreds of billions of dollars when the hoax perpetrated by many bankers and the folks at Freddie Mac and Fannie May collapsed. And how did that happen?
The scam began with the political determination to make every family in the nation a homeowner (what this newsletter calls “the Waters Scam”). Money was loaned to people who could not possibly repay it, and those mortgages were combined into derivatives — a kind of stock that one can purchase in order to own a percentage of all the mortgages (themselves almost all worthless) held by a given financial entity. The value of that stock was grossly overstated, of course. But it was used in turn to convince incompetent watchdogs that the financial institutions were sound.
Using virtually worthless paper as collateral, these financial institutions misrepresented their wealth and their strength.
Because nobody was willing to examine the actual value of the millions of hopeless loans that had been made to homeowners who would have to default eventually, the system sustained itself long enough to let Raines walk away with over twenty million dollars in bonuses, and line Gorelick’s purse with six million dollars for her failure to spot the flaws in the edifice. Those two are just poster children who represent many others who actually belong in prison.
With the collapse of the value of the assets of large financial institutions and many conglomerates, creditors tried to get their money back as quickly as possible. That pressure could not be survived by a system standing on a weak foundation.
A crisis that did not begin with inflation or deflation soon became one with devastating implications. Something had to be done quickly, but how do you restore the fundamental financial health of huge companies?
It was at this point that the Obama administration realized that astronomical quantities of money were required. Further, some corporations were now termed “too big to fail,” meaning not that they could not collapse, but that they must be rescued lest their defaults throw millions of people out of work and into poverty.
Without gold reserves that might be used to back the printing of more money, the government could only borrow.
Now for the really unpleasant news…the biggest lenders just happen to be the mainland Chinese. What they will do with all that credit remains to be seen, but if you think the Chinese attempts to ruin the industrial base of the USA and break into every computer network in the USA are dirty tricks, you have yet more shocks coming.
Part three of this commentary will appear in a forthcoming New Terrapin.
It’s the economy, Stupid.
A labor union that wants to lock in its members’ access to money the government confiscates from productive people shows just how classy and humane it can be. Lovely.
Choosing between freedom and dependency seems easy: who but morons and weaklings would choose dependency after considering it? The answer is that those who crave security above all else will always prefer to be dependent. As Hitler and Peron showed, voters can be bought.
Related: yes, freedom to choose means positing a free market, which is the essential first step in formulating a rational energy policy. Not that the machine politicians currently in power will understand that.
If there’s one idea that most Arabs and Muslims just can’t tolerate, it’s the concept of true Liberty. The Koran is a set of commandments, after all, and Allah’s marching orders to the faithful are not tolerant of other faiths. Then there are the various dictatorships in the Muslim world. While it’s true that the fear and hatred of freedom have multiple sources, none of them decent, it’s also the case that Muslims in general have a strong predisposition to authoritarian/totalitarian rule. Many plan to export it to their new homes in the West, making the world safe for hate-spawned barbarism.
Should art be supported coercively? No — the world does not need yet more fascism. Then too, art, which is necessarily defined as appreciated, need not be funded at the point of a gun. (If it’s not appreciated, it’s not art. That point was emphasized by a history professor who influenced the foundational principles of this newsletter.)
Here’s some bad, bad news for AGW cultists. They won’t read it, and it is a bit technical in spots, but you should have a look — just so you know the science is still being done and is still debunking the nonsense.
The Obamacare legislation is another in a long string of abuses of the commerce clause of the US federal constitution. Here’s a hopeful report on the lawsuit that’s an attempt to sink the scheme.
An insider explains the significance of Breitbart and Weiner. It’s probably not what you think.
The world economy is explained in a short video. Don’t ignore this accurate and hilarious presentation.
The masthead includes a quote from the works of Georg Wilhelm Friedrich Hegel.
The staff of The New Terrapin Gazette expresses its sincere gratitude to the many people who have gifted the world with Arch Linux, Emacs, Screen, and Chromium.
Publisher: The Eagle Wing Palace of The Queen Chinee