1. We don't carry firearms so we can ignore other basics of personal safety. Every permit holder that I know realizes that almost all dangerous situations can be avoided by vigilance, alertness, and by simply making wise choices about where one goes and what one does. We don't walk down dark alleys. We lock our cars. We don't get intoxicated in public or hang around people who do. We park our cars in well-lit spots and don't hang out in bad parts of town where we have no business. A gun is our last resort, not our first.
2. We don't think we are cops, spies, or superheroes. We aren't hoping that somebody tries to rob the convenience store while we are there so we shoot a criminal. We don't take it upon ourselves to get involved in situations that are better handled by a 911 call or by simply standing by and being a good witness. We don’t believe our guns give us any authority over our fellow citizens. We also aren’t here to be your unpaid volunteer bodyguard. We’ll be glad to tell you where we were trained and point you to some good gun shops if you feel you want to take on this of responsibility for your personal safety. Except for extraordinary circumstances your business is your business, don’t expect us to help you out of situations you could have avoided.
3. We are less likely, not more likely, to become involved in fights or “rage” incidents than the general public. We recognize, better than many unarmed citizens, that we are responsible for our actions. We take that responsibility of carrying a firearm very seriously. We know that loss of temper, getting into fights, or angrily confronting someone after a traffic incident could easily escalate into a dangerous situation. We are more likely to go out of our way to avoid these situations. We don’t pull our guns to settle arguments or to threaten people into doing what we want.
4. We are responsible gun owners. We secure our firearms so that children and other unauthorized people cannot access them. Most of us have invested in safes, cases, and lock boxes as well as other security measures to keep our firearms secure. Many of us belong to various organizations that promote firearm safety and ownership.
5. Guns are not unsafe or unpredictable. Modern firearms are well made precision instruments. Pieces do not simply break off causing them to fire. A hot day will not set them off. Most modern firearms will not discharge even if dropped. There is no reason to be afraid of a gun simply lying on a table or in a holster. It is not going to jump out of my pocket, waistband or holster and discharge on its own.
6. We do not believe in the concept of “accidental discharges.” There are no accidental discharges only negligent discharges or intentional discharges. We take responsibility for our actions and have learned how to safely handle firearms. Any case you have heard about a gun “going off” was the result of negligence on somebody’s part. Our recognition of our responsibility and familiarity with firearms makes us among the safest firearms owners in America.
7. Permit holders do their best to keep our concealed weapons exactly that: concealed. I carry most of the time, and I do NOT want to flip out soccer moms or squeamish citizens. However there are times when an observant fellow citizen may spot our firearm or the print of it under our clothes. We are very cognizant that concerns about terrorism and crime are in the forefront of the minds of most citizens. We also realize our society does much to condition our citizens to have irrational fears about firearms. we would encourage citizens who do happen to spot someone carrying a firearm to use good judgment and clear thinking if they feel the need to take action. Please recognize that it is very uncommon for a criminal to use a holster. However if you feel the need to report having spotted a firearm we would ask that you please be specific and detailed in your call to the police or in your report to a store manager or a private security. Please don’t generalize or sensationalize what you observed. Comments like “there’s a guy running around the store with a gun” or even simply “I saw a man with a gun in the store” could possibly cause a misunderstanding as to the true nature of the incident.
8. The fact that criminals know that some of the population may be armed at any given time helps to deter violence against all citizens. Permit holders don’t believe that every person should necessarily by armed. We recognize that some people may not be temperamentally suited to carry a firearm or simply may wish not to for personal reasons. We do encourage you to respect our right to arm ourselves. Even if you choose not to carry a firearm yourself please oppose measures to limit the ability of law-abiding citizens to be armed. As mentioned before: criminal do not observe “gun free zones” and the world will NOT be a safer place because you feel better about it. Help by not supporting laws that require citizens to be unarmed victims.
9. The fact that we carry a firearm into any given place does not mean that we believe that place to be inherently unsafe. If we believe a place to be unsafe, most of us would avoid that place altogether if possible. We recognize that trouble could occur at any place at any time. Criminals don’t observe “no guns allowed” signs. If trouble does come, we don’t want the only armed persons to be the perpetrators; therefore, we don’t usually make a determination about whether or not to carry at any given time based on “how safe” we think a location is.
10. Concealed weapons permit holders are an asset to the public in times of trouble.The fact that most permit holders have the good judgment to stay out of situations better handled by a 911 call or by simply being a careful and vigilant witness does not mean we would fail to act in situations where the use of deadly force is appropriate to save lives. Review of high profile public shooting incidents shows that when killers are confronted by armed resistance they tend to either break off the attack and flee, or choose to end their own life. Lives are saved when resistance engages a violent criminal. Lives are lost when the criminal can do as he pleases.
Wednesday, December 23, 2009
Hayek on the modern state.....
Wars expand the power of the modern state because the national planning to fight the war continues even during times of peace. This perennial government planning then expands the social-welfare state over time, with harmful results. Most importantly, economic activity is impeded by the growing state as people and resources become less productive. In other words, because the government does not create consumable goods and services, it is an economic burden to the productive sector of the economy.
Then as the government grows, interest groups become increasingly numerous and powerful, leading to political corruption. More wars or even foreign policy tensions and economic crises can propel demagogues and dictatorial leaders to expand further state powers, to the detriment of each and every one of us
Sound familiar?
Then as the government grows, interest groups become increasingly numerous and powerful, leading to political corruption. More wars or even foreign policy tensions and economic crises can propel demagogues and dictatorial leaders to expand further state powers, to the detriment of each and every one of us
Sound familiar?
Tuesday, December 22, 2009
Do you actually KNOW anything about the bible... besides your opinion of it?
It has been said that one of the unique characteristics of Americans is that our devotion for the Bible is matched only by our ignorance of it. I would argue that there is NO OTHER BOOK like it, and that we would all be better off with a knowledge of it. I have used for years a daily reading pattern put together by a dead Scot named Bobby MCheyne.
Here is a link to it.
If you have never systematically read through that book, I can only say this. You are ignorant. Sorry, no other way to put it. Any person claiming to be quasi-literate should read it through AT LEAST once even if when you get through, you put it aside, reject the premises, and deny what it claims (it claims to be absolute truth communicated by the Creator and detailing the master plan of the Universe).
I myself have found myself alternately offended, inspired, enraged, motivated, shamed, encouraged, discouraged, puzzled, joyful, humiliated, fearful, loved, staggered at my smallness, and a subject to a whole range of emotions as I read it. It deals with profundities that will sink the deepest intellect and presents them in language a child can grasp. I opened it for the first time as a hostile but curious kid at age 17, hating the fundamentalist culture that banged on it, but enchanted by it when I actually read it (I found out the fundies were mostly WRONG about what it taught, btw). I have since read it through hundreds of times and it is a new and relevant today as the first time I opened it.
Maybe this year would be a good time to know what it says, rather than just what other people say about it?
Here is a link to it.
If you have never systematically read through that book, I can only say this. You are ignorant. Sorry, no other way to put it. Any person claiming to be quasi-literate should read it through AT LEAST once even if when you get through, you put it aside, reject the premises, and deny what it claims (it claims to be absolute truth communicated by the Creator and detailing the master plan of the Universe).
I myself have found myself alternately offended, inspired, enraged, motivated, shamed, encouraged, discouraged, puzzled, joyful, humiliated, fearful, loved, staggered at my smallness, and a subject to a whole range of emotions as I read it. It deals with profundities that will sink the deepest intellect and presents them in language a child can grasp. I opened it for the first time as a hostile but curious kid at age 17, hating the fundamentalist culture that banged on it, but enchanted by it when I actually read it (I found out the fundies were mostly WRONG about what it taught, btw). I have since read it through hundreds of times and it is a new and relevant today as the first time I opened it.
Maybe this year would be a good time to know what it says, rather than just what other people say about it?
Top 10 predictions for 2010 (National Inflation Association)
For what these are worth:
1) We will learn the 2009 holiday shopping season was a bust.
The Commerce Department reported seasonally adjusted November retail sales up 1.3% from October. However, if you apply the average seasonal adjustments that were used during the years 2006 and 2007, which account for a normal spike in November sales due to the holiday shopping season, retail sales were actually down 1.3% in November.
NIA believes any year-over-year increase in 2009 holiday season retail sales will be bottom bouncing from 2008 and not an indication of an economic recovery. Most likely, adjusted for inflation, retail sales will be flat over a year ago. We expect to see a sharp sell off in many retail stocks, as a full economic recovery appears to be already priced into their share prices.
2) We will see a major decline in the Dow/Gold ratio.
The Dow/Gold ratio is currently 9.3, having bounced from the low of 7 it saw in early 2009. We are likely to see a decline in the Dow/Gold ratio to below 7 in 2010.
Many people who have bought U.S. stocks on the bet of an economic recovery, will soon realize the economy is not recovering and stocks have been rallying only due to inflation. Although some people selling stocks may once again mistakenly move to the U.S. dollar as a safe haven, we believe an increasing amount of people will avoid the U.S. dollar and buy gold as a safe haven.
3) We will see a sharp decline in the Gold/Silver ratio.
The Gold/Silver ratio is currently 64, above the average of the past 100 years of 50. Between the years 1,000 and 1,873 when silver was used as real money, the Gold/Silver ratio traded between 10 and 16. In recent history, the Gold/Silver ratio dipped below 20 on two occasions, once in 1968 and once again in 1980.
NIA believes silver prices will continue to outperform gold in 2010, as the world once again begins looking at silver as money, instead of just an industrial metal. The Gold/Silver ratio could decline to below 50 in 2010.
4) The U.S. Dollar Index will see short-term bounce, then huge crash.
We are at a point where there are more people who are bearish on the U.S. dollar than ever before, which means from a technical standpoint it is overdue for a short-term bounce. However, we would not consider going long the dollar even as a trade. A huge crash in the U.S. dollar could occur at any time.
The world has become flooded with U.S. dollars. Foreigners currently hold over $10 trillion in dollar-denominated assets that can be dumped at any time. With the Federal Reserve continuing to expand its monetary base to record highs, as soon as banks begin lending their excess reserves we could see a spike in consumer prices and a rush to get out of U.S. dollars.
5) Oil will rise back above $100 per barrel.
We expect oil's next rise above $100 per barrel to be fueled almost entirely by inflation. This time around, it won't matter if there's another substantial decline in oil demand from the U.S. We expect oil prices to rise regardless of if Americans can afford it or not.
NIA believes any decrease in demand from the U.S. will be more than made up for by increasing demand from China and India. There hasn't been any major new oil discoveries made in decades and the Federal Reserve's printing of money will surely outpace the discovery of new oil fields.
6) There will be a move towards a Libertarian third-party.
Americans are waking up to the charade that has been taking place in Washington. Power has been going back and forth between two political parties who do nothing but multiply each other's mistakes. Both the Democrats and Republicans are equally responsible for the economic mess our country is in today.
In the last Presidential election, Americans had a choice between two candidates who both supported the government's destructive stimulus plans and bailouts. In the next Presidential election, we believe a third-party candidate will have a serious chance of being elected for the first time in history. We anticipate seeing a new leader emerge and a Libertarian movement begin in 2010.
7) Peter Schiff and Rand Paul will both win Republican primaries and be elected to U.S. Senate.
We are huge supporters of Peter Schiff and Rand Paul who are seeking the Republican nominations for U.S. Senate in the states of Connecticut and Kentucky respectively. They are both Libertarians at heart but realize their best chance to be elected is to run under the title of a Republican.
We need Peter Schiff and Rand Paul to join Ron Paul in Washington so that we at least have three elected representatives that understand the truth about our economy and the need to reverse the hyperinflationary course our country is currently on. Although they may be underdogs because they don't have the support of special interest groups, Peter Schiff and Rand Paul will have huge grassroots support from educated Americans who will travel from all states to volunteer for their campaigns.
8) Large 'End the Fed' Protests.
In 2009, hundreds of people gathered for several 'End the Fed' protests in front of Federal Reserve buildings nationwide. However, the turnout for these events paled in comparison to the millions of Americans who participated in health care protests and town hall meetings.
In 2010, more Americans will realize that it is the Federal Reserve that is the cause of most of our nation's economic problems. While the health care debate divided our nation 50/50, we believe 100% of all Americans will want to end the Federal Reserve as prices of food and other goods needed to live start rising through the roof.
9) Major Food Shortages.
For the past several decades, most Americans went to college to get a non-productive job on Wall Street and nobody went to school to become a farmer. There is currently a major lack of farmers in the U.S. and to make matters worse, the Real Estate bubble destroyed immeasurable amounts of farmland to build houses we didn't need and couldn't afford.
Inventories of agricultural products are the lowest they have been in decades yet the prices of many agricultural commodities are down 70% to 80% from their all time highs adjusted for real inflation. Catastrophic food shortages are possible in 2010, not just in the U.S. but all around the world.
10) Paul Volcker Resigns.
This may be a long shot but Paul Volcker, Chairman of President Obama's Economic Recovery Advisory Board, could become frustrated with the Obama administration and resign in 2010. Paul Volcker, as former Chairman of the Federal Reserve, was responsible for getting our economy out of the inflationary crisis of the 1970s by raising the federal funds rate up to a peak of 20%.
With interest rates currently being held by the Federal Reserve at an artificially low level of 0%, we believe Paul Volcker must know that a currency crisis is coming that will make the inflation of the 1970s look miniscule. If Paul Volcker wants to preserve his reputation and legacy, he must leave the Obama administration, which is unlikely to seriously consider any of his advice.
Why I hate television
Maybe it is just because I am a cranky old curmudgeon. I dunno. I have found my life MUCH richer, though, since getting rid of my TV. I am not less informed. I would argue that I am MORE informed than most of my contemporaries, although I cannot name the latest lover of Tiger Woods, nor who that British star was who just died.
I was scouting around and found this reference.
In his book Four Arguments for the Elimination of Television (1978), Jerry Mander (after reviewing totalitarian critics such as George Orwell, Aldous Huxley, Jacques Ellul, and Ivan Illich) compiled a list of the "Eight Ideal Conditions for the Flowering of Autocracy."
Television helps create all eight conditions for breaking a population. Television, he explained, (1) occupies people so that they don't know themselves -- and what a human being is; (2) separates people from one another; (3) creates sensory deprivation; (4) occupies the mind and fills the brain with prearranged experience and thought; (5) encourages drug use to dampen dissatisfaction (while TV itself produces a drug-like effect, this was compounded in 1997 the U.S. Food and Drug Administration relaxing the rules of prescription-drug advertising); (6) centralizes knowledge and information; (7) eliminates or "museumize" other cultures to eliminate comparisons; and (8) redefines happiness and the meaning of life.
I was scouting around and found this reference.
In his book Four Arguments for the Elimination of Television (1978), Jerry Mander (after reviewing totalitarian critics such as George Orwell, Aldous Huxley, Jacques Ellul, and Ivan Illich) compiled a list of the "Eight Ideal Conditions for the Flowering of Autocracy."
Television helps create all eight conditions for breaking a population. Television, he explained, (1) occupies people so that they don't know themselves -- and what a human being is; (2) separates people from one another; (3) creates sensory deprivation; (4) occupies the mind and fills the brain with prearranged experience and thought; (5) encourages drug use to dampen dissatisfaction (while TV itself produces a drug-like effect, this was compounded in 1997 the U.S. Food and Drug Administration relaxing the rules of prescription-drug advertising); (6) centralizes knowledge and information; (7) eliminates or "museumize" other cultures to eliminate comparisons; and (8) redefines happiness and the meaning of life.
The Gold that ain't there
There are increasing signs that the gold being traded on exchanges is simply not there. This has been a charge of the folks at GATA for some time, but has been ignored by the regulators and central banks..... unsurprisingly, as the central banks and big investment houses are behind the manipulation.
What is interesting is how many large entities are demanding physical delivery of gold. This clearly has the markets worried. There was a panic at the end of September at the London Metals Exchange (the world's largest gold market) when several large participants refused generous cash settlements and instead demanded physical delivery of bullion. There was simply not enough gold to deliver and the exchange had to deliver bullion they "borrowed" from the central banks.
If you have investments in GLD or SLV, or other so called "paper" gold market instruments, be aware that all you may really have is paper. The situation in silver is, if possible, worse than gold.
Here is a nice link describing the above
What is interesting is how many large entities are demanding physical delivery of gold. This clearly has the markets worried. There was a panic at the end of September at the London Metals Exchange (the world's largest gold market) when several large participants refused generous cash settlements and instead demanded physical delivery of bullion. There was simply not enough gold to deliver and the exchange had to deliver bullion they "borrowed" from the central banks.
If you have investments in GLD or SLV, or other so called "paper" gold market instruments, be aware that all you may really have is paper. The situation in silver is, if possible, worse than gold.
Here is a nice link describing the above
Thursday, December 10, 2009
Faked Climate Data? NO!
Megan McCardle quotes Richard Feyman in "The Atlantic" on how the scientific world could be WRONG about their observations re: climate data. The quote is outstanding. I have reproduced it below. Here is the link
We have learned a lot from experience about how to handle some of the ways we fool ourselves. One example: Millikan measured the charge on an electron by an experiment with falling oil drops, and got an answer which we now know not to be quite right. It's a little bit off, because he had the incorrect value for the viscosity of air. It's interesting to look at the history of measurements of the charge of the electron, after Millikan. If you plot them as a function of time, you find that one is a little bigger than Millikan's, and the next one's a little bit bigger than that, and the next one's a little bit bigger than that, until finally they settle down to a number which is higher.
Why didn't they discover that the new number was higher right away? It's a thing that scientists are ashamed of--this history--because it's apparent that people did things like this: When they got a number that was too high above Millikan's, they thought something must be wrong--and they would look for and find a reason why something might be wrong. When they got a number closer to Millikan's value they didn't look so hard. And so they eliminated the numbers that were too far off, and did other things like that.
We've learned those tricks nowadays, and now we don't have that kind of a disease. But this long history of learning how not to fool ourselves--of having utter scientific integrity--is, I'm sorry to say, something that we haven't specifically included in any particular course that I know of. We just hope you've caught on by osmosis.
The first principle is that you must not fool yourself--and you are the easiest person to fool. So you have to be very careful about that. After you've not fooled yourself, it's easy not to fool other scientists. You just have to be honest in a conventional way after that.
We have learned a lot from experience about how to handle some of the ways we fool ourselves. One example: Millikan measured the charge on an electron by an experiment with falling oil drops, and got an answer which we now know not to be quite right. It's a little bit off, because he had the incorrect value for the viscosity of air. It's interesting to look at the history of measurements of the charge of the electron, after Millikan. If you plot them as a function of time, you find that one is a little bigger than Millikan's, and the next one's a little bit bigger than that, and the next one's a little bit bigger than that, until finally they settle down to a number which is higher.
Why didn't they discover that the new number was higher right away? It's a thing that scientists are ashamed of--this history--because it's apparent that people did things like this: When they got a number that was too high above Millikan's, they thought something must be wrong--and they would look for and find a reason why something might be wrong. When they got a number closer to Millikan's value they didn't look so hard. And so they eliminated the numbers that were too far off, and did other things like that.
We've learned those tricks nowadays, and now we don't have that kind of a disease. But this long history of learning how not to fool ourselves--of having utter scientific integrity--is, I'm sorry to say, something that we haven't specifically included in any particular course that I know of. We just hope you've caught on by osmosis.
The first principle is that you must not fool yourself--and you are the easiest person to fool. So you have to be very careful about that. After you've not fooled yourself, it's easy not to fool other scientists. You just have to be honest in a conventional way after that.
Monday, December 07, 2009
Shamelessly stolen (mostly) from Bill Bonner
Slow Motion Depression
Early this week, the world's largest central bank, the Federal Reserve, announced plans to exit its monetary stimulus efforts. It unveiled a new tool - reverse repos - to help speed the work.
The private sector debt crisis of 2008-2009 will almost certainly lead to a public sector debt crisis sometime between now and eternity, if not sooner. In the standard narrative, governments must stimulate their economies out of the slump. Leading economists propose it, then defend it...and then, when it doesn't work, they call for more of it.
Now those economists are claiming victory and many are calling on the Fed to withdraw its monetary stimulus before it shows up as consumer price inflation. They're hoping the Fed can head it off by sopping up the surplus liquidity before it is too late.
Optimists expect mild inflation in a decent recovery. Pessimists fear the feds may have waited too long; they think they see higher rates of inflation coming. Here on the back page we see no recovery...nor any inflation. At least, not yet. Instead, we are blind. We see nothing. But as for what is coming...a slow motion depression wouldn't surprise us. Neither would the collapse of the public debt market
There is always a wide gap between the feds' reach into the economy and their grasp of what they are really doing. When the Fed increased reserves in the banking system, the idea was simple enough. More reserves would allow the banks to lend more. In turn, more credit would allow consumers to spend more. Ergo, the recession would soon be over.
But the more reserves the Fed pumped into the banking system, the more reserves the bankers didn't lend out. In 24 months, excess reserves (beyond what was needed for loans) expanded 500 times from the level they had been for the previous 30 years. If the banks chose to lend these reserves they could multiply them into another $10 trillion to add to the money supply. Instead, in the third quarter, the US suffered a record contraction of bank lending, according to the Federal Deposit Insurance Corporation. Lending to households and business is in a steep decline. Nothing like it has happened since WWII. Total credit outstanding is falling too. The banks are barely even lending to the US government from which they got the money in the first place.
"Banks, in aggregate, just absorbed the additional reserves by allowing their ratio of reserves to deposits to balloon," reports Charles Goodhart in The Financial Times, "...so the multiplier collapsed to zero... Why?"
Quantitative easing had "unintended consequences." Bankers competed for yield with the deepest pockets in the monetary universe - the central bank itself. When the feds bought Treasury bills they drove yields down to such skimpy levels that the incentive for risky private loans was nearly lost all together. Better to leave the money on deposit at the Fed.
No loans, no multiplier. No multiplier, no recovery. Instead, the feds take a dollar's worth of supposedly "idle" resources out of the private economy (actually, savings that people hoped to spend or invest later); squander it on bribes, bailouts or boondoggles; and get 90 cents worth of 'recovery.' Then, when a real recovery doesn't come, they spend two dollars.
Where this will end up? With the multiplier out of action, consumer price inflation - and a recovery - seem far away. And the feds are helpless. What? What about more government spending? Or dropping hundred-dollar bills from airplanes? But those tools have self- mutilating effects too. They jeopardize governments' access to deficit financing.
"Britain risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full-blown debt crisis over coming months," said an article in Tuesday's Daily Telegraph.
Sooner or later, lenders will worry about inflation and the risk of default. They'll demand higher interest rates. Treasury bond yields will rise, in real terms, even in a deflationary world. These higher rates affect public finances like a cold draft on a pneumonia patient. As governments pay more to borrow, their condition deteriorates. The odds of default increase. Some, like Dubai World, will be forced to postpone payments. Others just shake and shiver. The slow motion depression continues. If we are lucky...and nothing goes wrong.
Early this week, the world's largest central bank, the Federal Reserve, announced plans to exit its monetary stimulus efforts. It unveiled a new tool - reverse repos - to help speed the work.
The private sector debt crisis of 2008-2009 will almost certainly lead to a public sector debt crisis sometime between now and eternity, if not sooner. In the standard narrative, governments must stimulate their economies out of the slump. Leading economists propose it, then defend it...and then, when it doesn't work, they call for more of it.
Now those economists are claiming victory and many are calling on the Fed to withdraw its monetary stimulus before it shows up as consumer price inflation. They're hoping the Fed can head it off by sopping up the surplus liquidity before it is too late.
Optimists expect mild inflation in a decent recovery. Pessimists fear the feds may have waited too long; they think they see higher rates of inflation coming. Here on the back page we see no recovery...nor any inflation. At least, not yet. Instead, we are blind. We see nothing. But as for what is coming...a slow motion depression wouldn't surprise us. Neither would the collapse of the public debt market
There is always a wide gap between the feds' reach into the economy and their grasp of what they are really doing. When the Fed increased reserves in the banking system, the idea was simple enough. More reserves would allow the banks to lend more. In turn, more credit would allow consumers to spend more. Ergo, the recession would soon be over.
But the more reserves the Fed pumped into the banking system, the more reserves the bankers didn't lend out. In 24 months, excess reserves (beyond what was needed for loans) expanded 500 times from the level they had been for the previous 30 years. If the banks chose to lend these reserves they could multiply them into another $10 trillion to add to the money supply. Instead, in the third quarter, the US suffered a record contraction of bank lending, according to the Federal Deposit Insurance Corporation. Lending to households and business is in a steep decline. Nothing like it has happened since WWII. Total credit outstanding is falling too. The banks are barely even lending to the US government from which they got the money in the first place.
"Banks, in aggregate, just absorbed the additional reserves by allowing their ratio of reserves to deposits to balloon," reports Charles Goodhart in The Financial Times, "...so the multiplier collapsed to zero... Why?"
Quantitative easing had "unintended consequences." Bankers competed for yield with the deepest pockets in the monetary universe - the central bank itself. When the feds bought Treasury bills they drove yields down to such skimpy levels that the incentive for risky private loans was nearly lost all together. Better to leave the money on deposit at the Fed.
No loans, no multiplier. No multiplier, no recovery. Instead, the feds take a dollar's worth of supposedly "idle" resources out of the private economy (actually, savings that people hoped to spend or invest later); squander it on bribes, bailouts or boondoggles; and get 90 cents worth of 'recovery.' Then, when a real recovery doesn't come, they spend two dollars.
Where this will end up? With the multiplier out of action, consumer price inflation - and a recovery - seem far away. And the feds are helpless. What? What about more government spending? Or dropping hundred-dollar bills from airplanes? But those tools have self- mutilating effects too. They jeopardize governments' access to deficit financing.
"Britain risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full-blown debt crisis over coming months," said an article in Tuesday's Daily Telegraph.
Sooner or later, lenders will worry about inflation and the risk of default. They'll demand higher interest rates. Treasury bond yields will rise, in real terms, even in a deflationary world. These higher rates affect public finances like a cold draft on a pneumonia patient. As governments pay more to borrow, their condition deteriorates. The odds of default increase. Some, like Dubai World, will be forced to postpone payments. Others just shake and shiver. The slow motion depression continues. If we are lucky...and nothing goes wrong.
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