By Monty Pelerin, on February 16th, 2010 These three articles are must reading for anyone interested in the future of the economy. No investor or citizen should be ignorant of the possibilities raised in these articles.
Ponzi Scheme by Puru Saxena
Editor, Money Matters
Let’s face it, the government-bond market in the West is a gigantic Ponzi scheme. Most governments in the ‘developed’ world are drowning in debt, they are running mind-boggling budget deficits and printing money like there is no tomorrow. Furthermore, under the guise of quantitative easing, their central banks are buying their own newly issued debt!
US debt will keep growing even with recovery by Tom Raum
For the U.S., the crushing weight of its debt threatens to overwhelm everything the federal government does, even in the short-term, best-case financial scenario — a full recovery and a return to prerecession employment levels.
Sovereign Default: Stuck Between Dire and Disastrous by John Mauldin
Our economic future is more and more a product of the political choices we make, and those are increasingly difficult. We have no good choices. We are left with choosing the best of bad options.
Share/Save
related_posts();
By Monty Pelerin, on October 18th, 2009 Death of Muddle Through
The US government is on an unsustainable path. Deficits are soaring and the Obama administration is planning massive tax hikes.
Moreover, businesses have little reason to hire already because of massive overcapacity. Add increasing health care costs to the list of reasons for businesses not to hire.
Given that government spending crowds out private investment, these policies all but assures that unemployment is going to remain high for a long time as noted in Structurally High Unemployment For A Decade.
Killing The Goose
Last week in Thoughts on the Economy: Problems and Solutions I listed the problems and some of the solutions facing the economy. It was a discussion between John Mauldin and I about his weekly E-Letter Killing The Goose.
John and I agreed on many, but not all solutions. I would also like to add something I have proposed before, killing the Davis-Bacon prevailing wage act.
Muddle Through Where Art Thou?
Back in 2002, the usually optimistic Mauldin proposed the economy would somehow manage to “Muddle Through”.
However, because of the unsustainable path we are on. John has changed his mind. Please consider these excerpts from Muddle Through, R.I.P?
I defined a Muddle Through Economy in the past as one of slow growth (in the area of 1-2%) and a slack employment environment, such as we had in 2002 and the early part of 2003. In early 2007, I suggested we would return at some point to such
Continue reading Mish on Mauldin
related_posts();
By Monty Pelerin, on October 10th, 2009
Image by JAShapiro via Flickr
John Mauldin is one of my favorite analysts. Here he states a serious concern: “…the monster looming up ahead of us has the potential (my interpretation) for not just plucking a few feathers from the goose that lays the golden egg (the US free-market economy), or stealing a few more of the valuable eggs, but of actually killing the goose. Today we look at the possibility that the fiscal path of the enormous US government deficits we are on could indeed kill the goose, or harm it so badly it will make the lost decades that Japan has suffered seem like a stroll in the park.” In his latest newsletter, which you can read below (I suggest you subscribe; it is free), he talks about applying “turnaround” management to the government. His approach, while correct, would be considered “draconian” by many. In fact, it doesn’t go far enough.
Government itself has become a bubble. It has grown consistently faster than the productive sector of the economy. Government has no money other than what it takes from the productive sector. It produces few goods, most of which (except defense and some would not even exempt that) could be produced better for less expense by the private sector. As government grows larger, the private or
Continue reading The Golden Goose is Dying and Time is Short
related_posts();
By Monty Pelerin, on September 19th, 2009 The manner in which the government keeps its books would shame Enron. Ditto for the statistics they report as economic data. Here is the latest example described by John Mauldin. His comments are always insightful.
“Speaking of deflation, let me mention something I find totally outrageous. Normally, I actually take up for the bureaucrats who are stuck with the task of trying to monitor inflation. It is a tough job, and like Monday-morning quarterbacks, everybody thinks you should have done it differently. I can understand the rationale for hedonic measurements, housing rent equivalents, etc., even if I don’t agree with them. You have to set some rules and live with them. But the latest imbroglio is disgraceful.
It seems the US Bureau of Labor Statistics, in the CPI next week, will treat the subsidy received by those 800,000 car buyers who bought a car in the “Cash for Clunkers” program as if the price of a car fell by $4,500. Really? My tax dollars account for nothing?
This does several things. It will decrease the inflation used to adjust the GDP for this quarter. Not the end of the world, but annoying But what really matters is that the CPI is used to calculate Social Security increases and interest paid on TIPS.
If I tried to defraud one of my clients using such accounting legerdemain, I would be shut down, sued, and taken to court
Continue reading Deceptive Government Accounting
related_posts();
By Monty Pelerin, on September 7th, 2009 An economic analyst with a free weekly newsletter. His take on conditions is first-rate and not to be missed. It is a free newsletter: http://www.frontlinethoughts.com/subscribe.asp
Share/Save
related_posts();
|
Friedrich von Hayek
Friedrich von Hayek founded the Mont Pelerin Society.
“Monty Pelerin” is a pseudonym chosen by this blogger to convey general agreement with the philosophy, goals and spirit of the Mont Pelerin Society. No other connection exists between the blogger and the Society.
|
