The madness of the monetarists

Citi’s chief economist takes the concept of financial insanity to new heights:

To restore monetary policy effectiveness in a low interest rate environment when confronted with deflationary or contractionary shocks, it is necessary to get rid of the zlb completely. This can be done in three ways: abolishing currency, taxing currency and ending the fixed exchange rate between currency and bank reserves with the Fed. All three are unorthodox. The third is unorthodox and innovative. All three are conceptually simple. The first and third are administratively easy to implement.

The first method does away with currency completely. This has the additional benefit of inconveniencing the main users of currency—operators in the grey, black and outright criminal economies. Adequate substitutes for the legitimate uses of currency, on which positive or negative interest could be paid, are available.

The second approach, proposed by Gesell, is to tax currency by making it subject to an expiration date. Currency would have to be “stamped” periodically by the Fed to keep it current. When done so, interest (positive or negative) is received or paid.

The third method ends the fixed exchange rate (set at one) between dollar deposits with the Fed (reserves) and dollar bills. There could be a currency reform first. All existing dollar bills and coin would be converted by a certain date and at a fixed exchange rate into a new currency called, say, the rallod. Reserves at the Fed would continue to be denominated in dollars. As long as the Federal Funds target rate is positive or zero, the Fed would maintain the fixed exchange rate between the dollar and the rallod.

This helps explain why gold prices have remained so strong despite declining debt and the deflationary environment. The one scenario that makes sense for the price of gold to continue to rise despite deflation (an increase in the value of money due to a decrease in the available supply of it) is if the “store of value” aspect of that money is increasingly under threat. Gold prices rising during deflation indicates that the increasing value of gold as denominated in non-gold goods and services is rising faster than the increasing value of money is rising against them, which is basically what we have been observing for the last two years.

All three of these Citi-endorsed suggestions go significantly beyond the Helicopter Ben’s conventional Keynesian lunacy. It wouldn’t only destroy the global economy, but as Mike Shedlock points out, it wouldn’t even accomplish the increase in credit that the banks are attempting to create in the first place. Implementing any of these three measures, but especially the first, would be rather like burning down the house to collect on fire insurance when you haven’t bothered with the minor step of taking out an insurance policy on the place first.

So this proposal to abolish currency should eliminate any last vestiges of doubt that the banks are a) insane with greed, b) incompetent, and c) totally uninterested in the well-being of the rest of the country. It seems increasingly obvious that abolishing the banking industry would be a much better idea.

Are you ready for some football?

The Vikes will win tonight. The reason is simple. The Vikings reliably beat the team that most recently dealt them a big loss. All Vikings fans know this. In fact, the very first NFL football game I ever attended was a Monday Night Football game in which the Vikings beat the Steelers 17-6 at the old Met stadium. This was, of course, two seasons after the Vikes lost to the Steelers 16-6 in Super Bowl IX.

Minnesota was, and probably is, a better team than the defending champions. (Winning the Super Bowl makes a team the league champion, it does not somehow prove it to be the best team in the league.) The fact that the Vikings took the Saints to overtime despite losing five turnovers as a visiting team is a strong indication that they could have, and probably should have, won last year’s NFC Championship. But they didn’t, and it was not exactly the first time they lost a big game they really should have won. Either way, it’s only Week One, so don’t get too excited or too depressed regardless of how the game turns out.

I’m just glad it’s football time again.

Torture is illegal

But only if it isn’t secret:

A federal appeals court on Wednesday ruled that former prisoners of the C.I.A. could not sue over their alleged torture in overseas prisons because such a lawsuit might expose secret government information. The sharply divided ruling was a major victory for the Obama administration’s efforts to advance a sweeping view of executive secrecy powers. It strengthens the White House’s hand as it has pushed an array of assertive counterterrorism policies, while raising an opportunity for the Supreme Court to rule for the first time in decades on the scope of the president’s power to restrict litigation that could reveal state secrets.

If you don’t understand that the US has completely abandoned even the pretense of the rule of law by now, you’re probably not going to recognize it until either guillotines and/or pyres have been set up on the Mall or you find yourself in a detention camp. This is a truly remarkable and totalitarian decision by the federal court. It has declared that the mere possibility of exposing secret government information to the electorate – in a nominal democracy – trumps all of the unalienable rights endowed by the Creator and delineated in the Constitution.

It was a terrible mistake for the Supreme Court to create the abominable “state-secrets privilege” 50 years ago; this assertion of a privilege to secretly torture and assassinate is merely the inevitable consequence of expanding the central state’s power to conceal its actions from the citizenry.

The anti-book burners

One guess as to my opinion about Terry Jones’s announcement that he intended to burn a Talmud and a Koran on September 11th. Here’s the hint… I’m a libertarian.

I didn’t get outraged by Mr. Myers assaulting a communion cracker or trashcanning a Koran and I’m certainly not bothered by Mr. Jones burning whatever book he wants to burn so long as he happens to own it. What is far more troublesome is the reaction of so many public figures, mainstream and conservative alike, as they fall all over each other to condemn a man exercising his Constitutionally-protected free speech rights. It is obvious that they are far more afraid of provoking the wrath of foreign Muslims than they are of provoking the wrath of the decadent American citizenry.

Needless to say, the anti-book burners won’t decry the Afghans burning American flags and chanting “Death to Christians” in response to the mere suggestion that someone intends to burn a Koran. They are no defenders of freedom or respect for religion, they are already subservient dhimmis.

A futile CYA attempt

It appears that those of us who have been pointing out that Krugman advocated a $600 billion stimulus only two months before claiming a $787 billion stimulus was too small have finally force the man to address the issue. Unsurprisingly, he does so both dishonestly and incompetently:

Oy, it seems that another out-of-context quote of mine is being used to claim that I thought the Obama stimulus plan was just dandy. So: back in 2008, I wrote this piece in which I called for stimulus of 4 percent of GDP, or $600 billion. Didn’t we get that, and more?

No. If you read the actual argument — which explains in detail how I arrived at the number — you’ll see that I was thinking in terms of a one-year program; $600 billion is 4 percent of one year’s GDP. I wasn’t clear about the issue of stimulus spread out over 2 years; but if you apply the math in that post, you’ll see that it implies a two-year program twice that size, which was just about what Christina Romer concluded was appropriate.

There is one little problem here, which should be obvious to everyone. Krugman never said anything about a multi-year stimulus package. The fact that the $787 billion stimulus package covered two years has no bearing on the length of the $600 billion stimulus he was advocating. He can no more claim to have advocated a $1.2 trillion stimulus package over two years than a $6 trillion stimulus package over ten.

Furthermore, as one of his commenters pointed out, he used the specific $600 billion figure – indicating a one year stimulus – only four days later: “All indications are that the new administration will offer a major stimulus package. My own back-of-the-envelope calculations say that the package should be huge, on the order of $600 billion. So the question becomes, will the Obama people dare to propose something on that scale? Let’s hope that the answer to that question is yes, that the new administration will indeed be that daring.”

He was wrong, he was busted and no amount of equivocation on his part can demonstrate otherwise.

Take a look around

What we have here in this prediction of evangelical collapse is a very typically American failure to look beyond the cultural borders while attempting to contemplate global trends:

We are on the verge – within 10 years – of a major collapse of evangelical Christianity. This breakdown will follow the deterioration of the mainline Protestant world and it will fundamentally alter the religious and cultural environment in the West. Within two generations, evangelicalism will be a house deserted of half its occupants. (Between 25 and 35 percent of Americans today are Evangelicals.) In the “Protestant” 20th century, Evangelicals flourished. But they will soon be living in a very secular and religiously antagonistic 21st century.

This collapse will herald the arrival of an anti-Christian chapter of the post-Christian West. Intolerance of Christianity will rise to levels many of us have not believed possible in our lifetimes, and public policy will become hostile toward evangelical Christianity, seeing it as the opponent of the common good.

If the full extent of your cultural awareness is limited to Europe and the United States, as is the case with the New Atheist and most American Christians alike, this perspective makes an amount of sense as long as you ignore the demographic trends. But once you take into account the explosive growth of Christianity in Africa and Asia, the thesis falls apart.

From NPR, of all places: In The land Of Mao, A Rising Tide Of Christianity

Official Chinese surveys now show that nearly one in three Chinese describe themselves as religious, an astonishing figure for an officially atheist country, where religion was banned until three decades ago. The last 30 years of economic reform have seen an explosion of religious belief. China’s government officially recognizes five religions: Protestantism, Catholicism, Buddhism, Islam and Daoism. The biggest boom of all has been in Christianity, which the government has struggled to control….

Some recent surveys have calculated there could be as many as 100 million Chinese Protestants. That would mean that China has more Christians than Communist Party members, which now number 75 million.

I have no doubt that the increasingly “liberal” evangelical church will follow the lead of the old mainline denominations and decline into numerical irrelevance. Once cut off from the nurturing root of the Word of God, Christian churches always die. There are a number of signs, but easily the most reliable one is the establishment of women in the pulpit. An illuminating exercise is to count the number of “I” references in a female “sermon” versus a male one. I can recall one particularly egregious example at Woodland Hills where I finally gave up and stopped counting as the narcissistic monologue was more about this woman and her feelings than the average psychotherapy session.

Because the US government has been fairly successful in bringing the American church to heel through its establishment of federal licenses, it is interesting to note that while China is attempting to utilize the same tactic, the Chinese Christians are familiar enough with the costs of centralization to resist the state’s attempt to control them.

America is following Europe into a secular post-Christian period. But can be seen in Europe, secular post-Christianity is not sustainable and rapidly leads towards rampant paganism. And, as has been repeatedly demonstrated throughout history, paganism is easily trumped by Christianity. It is an observable historical cycle. Unfortunately, History’s cycles are rinsed with blood.

It took them long enough

From the Onion:

At 4:32 p.m. Tuesday, every single resident of New York City decided to evacuate the famed metropolis, having realized it was nothing more than a massive, trash-ridden hellhole that slowly sucks the life out of every one of its inhabitants.

With audible murmurs of “This is no way to live,” “What the hell am I doing here—I hate it here,” and “Fuck this place. Fuck this horrible place,” all 8.4 million citizens in each of the five boroughs packed up their belongings and told reporters they would rather blow their brains out with a shotgun than spend another waking moment in this festering cesspool of filth and scum and sadness.

The fact that one of the chief accomplishments of science and technology is to permit people to live in their own filth like factory chickens without dying like flies should tell you all that you need to know about city life. And spare me the blather about the wonderful museums and so forth. No one actually goes there.

Consider: the Metropolitan Museum of Art is the top ranked museum in the country. It has all of 4.9 million visitors per year. If we assume that absolutely none of those visitors were tourists who don’t live in New York City, that means that the average New Yorker visits the museum 0.58 times per year.

Don’t get me wrong, being a libertarian I fully support the right of moronic urbanophiles to live in ludicrously over-priced and over-regulated squalor. I simply don’t find it sophisticated, enviable, or even fathomable.

National Review still supports fake conservatism

And here you would have thought that all those futile years of George W. Bush, Arlen Specter, and Arnold Schwarzenegger would have cured the onetime conservative magazine of its dedication to power and political pragmatism.

Forty Jim DeMints or 60 Lindsey Grahams? Forty Christine O’Donnell’s or 60 Mike Castles?

These are questions conservatives have to think about when they see polls like the latest Rasmussen, which has Rep. Mike Castle, a moderate Republican thoroughly unloved by tea partiers, leading Democratic nominee Chris Coons 48-37 while conservative Republican Christine O’Donnell trails Coons by the same eleven-point margin, 47-36….

So, again: would conservatives in Delaware rather win, or send a message?

For actual conservatives, the only rational answer is 40 DeMints. Daniel Foster has asked a misleading question. The correct one is, would conservatives rather elect a false conservative majority that will vote against conservative principles while ensuring that a Democratic majority succeeds it when the inevitable reaction comes, or continue building towards a genuine and committed conservative majority?

You can take the boy out of the madrassah

But you can’t entirely take the madrassah out of the politician that the boy becomes. Obama whines about his “some powerful interests” and their opinion of him:

“Some powerful interests that have been setting the agenda in Washington for a long time, and they’re not always happy with me. They talk about me like a dog. That’s not in my prepared remarks, but it’s true.”

To me, the most interesting aspect of this is that the first negative thing that sprang to mind when Obama wanted to express how people were badmouthing him, he thought of “a dog”. That is not a normal American expression. One works like a dog, one is as loyal as a dog, one is dog-tired, whereas the negative forms tend to utilize the term “bitch” instead. Using dog in this perjorative sense is much more common in the Arab world.

It seems to me that this is, in addition to demonstrating Obama’s inability to withstand legitimate criticism, an example of his Indonesian Muslim upbringing showing itself in a moment of stress. This doesn’t mean he is a crypto-Muslim, but it is rather yet another indication of his essentially foreign perspective. In support of this interpretation, I would note that while I have seen many distinctly negative terms applied to Obama since he first launched his presidential candidacy, I have never read nor heard of him being referred to as “a dog”.

VDH piles on

He addresses Krugman’s WWII stimulus argument from the historian’s perspective:

I’m not an economist, but as an historian, I consider this an abject misreading of the postwar period, at least through the early 1950s. The war years were characterized by frenetic hyperactivity: Americans worked long hours, women were brought into the work force, new towns and manufacturing centers sprang up, and people gave up necessities — all on the assurance that this furious pace and consumer scarcity would be short-lived.

As WWII ended and the clean-up began, there was an enormous amount of pent-up global demand for goods. Given the wreckage in Europe, Japan, and Russia and the underdevelopment of India, Asia, and South America, we were about the only ones with the industrial and commercial wherewithal to supply the world rebound — often receiving cheap oil, gas, minerals, and interest in exchange, which supplemented our own vast supplies of comparatively cheap and easily recoverable resources. Nor should we forget the psychological element: Americans, after winning two wars, were enormously confident about their newfound international stature and influence.

At home, four years of consumer deprivation during the war and the weak demography of the 1930s had combined to create huge demand, all while society was increasingly leaving the farm for good and becoming suburbanized. The result was that in the late 1940s and 1950s, the birth rate soared and consumers enthusiastically made first-time purchases of washers, dryers, fridges, cars, etc. Thus, the American economy grew by leaps and bounds.

Today’s situation is not comparable: We are in hock to foreign creditors for trillions and have not been a net creditor since the 1980s. A China, Brazil, South Korea, Taiwan, or India is as or more likely to supply recovering demand for food, steel, or electronics.

Krugman should be careful what he wishes for. England, the Soviet Union, Germany, Japan, and Italy all engaged in massive WII spending; England did so to a much greater extent than the USA ever did. And how did it work out for their postwar economies? The Broken Window fallacy only isn’t a fallacy when you win a war while incidentally breaking all the windows and killing all the glaziers in the neighboring towns. And the history of warfare declares that this doesn’t happen very often even when you are fortunate enough to win.