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Rationally Choose Your Fields of Ignorance

Ludwig von Mises

John Maynard Keynes

A reader, commenting on a recent post dealing with the coming economic collapse, had this to say:

Unfortunately I share your pessimism, and got into a fairly heated discussion about this very topic in the doctors’ lounge at work yesterday. I am still dumb founded at how very bright minds can still look at the figures and come up with the very illogical conclusion that everything will “be fine”. Economic reality doesn’t get put on hiatus because people OD’d on hopium. Meanwhile, our populace is no longer taught about the founding principles that made this nation great. They are no longer taught about the Constitution. They are more likely to have a class about proper condom usage or fisting rather than one about the Constitution. American Karaoke and iPhones are the new opium of the masses. We are collectively economically illiterate. There is no understanding of the free market. The little “understanding” we DO have is actually false as the media and academia have falsely demonized capitalism ignoring the wealth it generated and all of the amazing goods it created that bettered the world. The only version of economics taught in college involve Keynes and not Friedman, Hayek, Mises etc.

When one looks at the history of nations that have collapsed, one notices that the transition is usually not slow. There is typically some triggering event that leads to a series of events in a domino matter resulting in collapse virtually over night. We saw it in the Czech Republic, the former Soviet Union, Zimbabwe, Argentina, etc etc etc. The same will happen in Europe, and at some point here when people realize that over night our US dollar became absolutely worthless. As you accurately concluded: “There is no easy or safe solution to our problem.”

There is truth in these observations and also a sense of frustration. Others have expressed similar thoughts and concerns, so I thought some comments might be useful.

Arithmetical Ignorance: There is no excuse for arithmetic or logical ignorance, especially by “very bright minds.” Both subjects are learned adequately in grade school. Understanding them does not require bright minds, merely average ones. Thus, I suspect that something else is at work in the comments above.

The Power of the Status Quo: Bright and busy minds often don’t

The Destruction of The US Economy is Assured

The slide toward sovereign bankruptcy and economic collapse continues. The best efforts of politicians and their sycophants in the media to convince you otherwise are being contradicted routinely by the the harsh facts of the marketplace. Their propaganda appears increasingly incredible.

The private economy has shown virtually no improvement despite stimuli in magnitudes never before imagined. After trillions of dollars of deficit spending and similar amounts of Fed monetary chicanery no recovery has occurred. No recovery can occur until massive amounts of debt are liquidated. Current debt levels are unsustainable for many. For others, the debt requires spending reductions in order to reduce it. Others will just have to default in one fashion or another.

Much of the debt will never be repaid and will have to be defaulted upon.  Government is trying to prevent this necessary liquidation from taking place. All that does is lock the economy into sub-standard performance, making a normal recovery impossible. In the process, government is adding massive new amounts of debt to their own over-leveraged situation.

Government strategy is misguided. It contradicts both common and economic  sense. It will make the inevitable adjustment more painful. Instead of admitting their mistakes, government insists on compounding them. What we are seeing is good politics in the short-run and terrible economics, both short and long-term. The political class will not take responsibility for this economic tragedy. Instead, they

Austrian Economics and Its Rising Popularity

The Daily Bell has an interesting post, shown below, on Austrian Economics.

As some of you may know, I went to the University of Chicago and actually took a couple of courses from Milton Friedman (also two other Nobel Laureates in Economics — George Stigler and Ronald Coase). I probably know Chicago Economics as well as Austrian and greatly admire the education I received from these and other gentlemen at Chicago. To this day, I have never seen anyone as good as Milton Friedman in the classroom (although Gene Fama was close). Probably no one was a more effective debater than Milton Friedman and likely no one had a larger effect during his lifetime promoting free market economics.

Having said all of that, I believe Ludwig von Mises was the greatest economist ever. He was never recognized properly during his lifetime so it is fitting that his contributions are now becoming known. He was considered one of the most dangerous men alive by the Nazis. The Soviet Union felt the same way, for when they captured his library it was sealed up secretly and not discovered until about ten years ago. There were many original, unpublished works unearthed from this discovery.

Now it only seems fitting that Mises, dead since the early 1970s, will likely make another list of most dangerous men. As our government approaches the two prior governments in their elimination of freedoms, Mises’s work becomes ever more dangerous as a counter force to its power and intentions.  What a better way to measure his contributions than to note that he was despised by tyrants everywhere.

Mr. Goldberg Apologizes for His Mises/Phone Booth Crack?

Friday, February 10, 2012 – by Staff Report
NYT on the Austrian School … “It was ‘The Road to Serfdom’ by Friedrich Hayek that became the ur-text of Mr. Paul’s emerging ideology, introducing him to Austrian economics and its Manichaean choice between laissez-faire capitalism and a government-run economy destined for disaster. (Mainstream economists have long dismissed the Austrian school, but it retains

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