Everyone IS Someone If You Love Them

Wait for the song: it says what we need to know.
Everyone is someone.

Defining Credit Expansion: Inflation

There is another subpart of inflation called "credit expansion." Some economists say inflation is just an increase in the quantity of money. They differentiate inflation from credit expansion. However, inflation and credit expansion are both a part of the general overall increase in the quantity of legal money available to market participants.

There is a helpful comic strip that appeared in the Washington Star many years ago. In the first cartoon, the banker, sitting behind his desk, says: "Jeff, you have overdrawn your checking account three dollars." Little Jeff replies: "Oh — I'll just write you a check." In the second cartoon, the banker, rather alarmed, says: "Just a minute! You haven't any money in the bank! You overdrew what you had! Now you are using the bank's money!" Little Jeff, not to be taken aback, asks in the third cartoon: "Oh — do you use my money when I have it in the bank?" The banker, astonished, replies: "Er — why, yes, of course!" Jeff then demands: "Well, why can't I use yours?"

This is what happens in modern banking. You put your money in the bank. You think it is there. Yet the bank has been using it. It has been lending your money to others. This double use of the same money is called "credit expansion."

"Credit expansion" is any increase in the number of monetary units loaned that do not represent an equal number of saved monetary units voluntarily made available for lending. Any increase in the purchasing power units of a borrower not offset by an equal decrease in the purchasing power units of a saver is credit expansion, while an increase in borrowing and lending, which is merely an equal transfer of purchasing power units from a lender to a borrower, is not credit expansion.

If you save some money and lend it to somebody else, this is not credit expansion. But if a bank lends money to someone that no one has saved and deposited for lending, if the bank merely creates money by opening or adding to a depositor's account, it is, of course, expanding credit. The bank has increased the quantity of money, but there has been no increase in vendible goods. This means there is more money bidding for the same previously existing quantity of goods. This leads to the great disarray in the market place we call inflation.

So: mortgage credit expansion: housing bubble: bubble pops: generalized financial credit expansion: credit bubble: bubble pops.

Defining Inflation

The old and, to a large extent, traditional definition of inflation is any increase in the quantity of money other than an increase resulting from a switch of the money commodity, gold, from non-monetary uses to monetary uses. For example, the melting down of gold ornaments to increase the quantity of gold coins is not inflation. This is merely a market transaction. Inflation results from (1) new discoveries or mining of gold, and (2) the artificial creation of additional quantities of legal media of exchange.

In our day, however, this definition has been changed. The popular definition is no longer an increase in the quantity of money. Today inflation is defined as one of the results of such an increase — higher prices. Today almost all news commentators use "inflation" as meaning higher prices. Higher prices, of course, are one, but only one, of the important consequences of an increase in the quantity of money.

The Significance of the Altered Definition

In all older books, those written eighty or more years ago, inflation was always treated as an increase in the quantity of money. Almost everyone knows who increases the quantity of money. However, those who increase the quantity of money do not want the public to know who is responsible for inflation, which everyone admits is bad.

They ask, "Who raises prices?" Why, the businessmen, of course. So, if inflation is defined as higher prices, it becomes easy to say that businessmen are responsible for inflation. Today, they are usually blamed for it.

Of course, businesses raise prices. Every business would like to raise prices every day. Employees would also like to raise their wages and salaries every day. Why don't they do it? Why don't businesses raise their prices every day? You and I know why. They cannot get the higher prices. However, in times of inflation, when there is more money, when the government has created more money, there is more money in the market place bidding for their goods. Then they can ask for, and get, higher prices. The party responsible for inflation is the party that increases the quantity of money. This party is not the businessmen who ask higher prices, nor even the labor unions who ask for higher wages, and get them when there is more money or when laws no longer protect free competition for jobs.

Keynes on the Consequences of Inflation

All good economists can agree with one statement Keynes made early in life in his 1919 book, The Economic Consequences of the Peace, which helped make him a public figure, and is well worth taking the time to read:

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls . . . become "profiteers," who are the object of hatred of . . . [those] whom the inflationism has impoverished . . . As the inflation proceeds . . . the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose . . . The governments of Europe . . . are fast rendering impossible a continuance of the social and economic order of the 19th century.

A Pic Anyone Can Love

Check out the Trekstache:

A Pic Only a Parent Can Love?

Well, maybe so.
World: say hello to my son.

Do Not Be Fooled: The Dollar Is Doomed

Massive Reliquification Will Yield Massive Inflation

Bernanke bets otherwise: I hope he is right.
When the velocity of money returns: well, it won't be pretty.

Oregon Unemployment Rate 60+ Year High and Growing

This graph shows the Oregon unemployment rate since Jan 2000.

The unemployment rate is at the peak level of the 1982 recession - the highest since record keeping started in 1947. The unemployment rate is increasing rapidly, and the rate of increase appears to be accelerating.

Oregon’s seasonally adjusted unemployment rate rose to 12.1 percent in March from 10.7 percent (as revised) in February. The state’s unemployment rate has risen rapidly and substantially over the past nine months, from a rate of 5.9 percent in June 2008. The U.S. seasonally adjusted unemployment rate rose to 8.5 percent in March, from 8.1 percent in February.

In March, Oregon’s seasonally adjusted nonfarm payroll employment declined by 14,000 jobs, following a drop of 22,800 (as revised) in February.

Industry Payroll Employment (Establishment Survey Data)

In March, five of Oregon’s seven largest private-sector industries recorded substantial seasonally adjusted job declines. The losses were widespread with trade, transportation and utilities down 3,600 jobs and four other major industries each down approximately 2,400 jobs. None of Oregon’s major industries gained a substantial number of Jobs in March.

Trade, transportation, and utilities cut 1,800 jobs when a gain of 1,800 would have been the normal seasonal movement. Wholesale trade shed 800 jobs and is down 6,200 over the prior 12 months. This industry has declined rapidly since July 2008, when 81,200 were employed. The March reading was 74,500. Job losses in March were widespread, with both the durable goods side of wholesale ( 500 jobs) and the nondurable side (-200) scaling back for the month.

Retail trade continued to shrink its employment base, cutting 500 jobs in March. The industry is down 14,100 jobs or 7.2 percent since March 2008. In March, food and beverage stores cut 400 jobs, but is only down 100 jobs over the past 12 months.

Transportation, warehousing and utilities cut 500 jobs in March and was down 5,500, or 9.4 percent, since March 2008. The industry has been hit hard by the downturn, with truck transportation, off 3,100 jobs in the past 12 months, seeing the most precipitous decline.

Manufacturing shed 2,100 jobs in March, during a time of year when a flat employment pattern is typical. Employment stood at 171,600 in March, which was by far the lowest employment level since comparable records began in 1990. Following the 2001 recession, Oregon’s manufacturing employment bottomed at 190,900 in January 2004. Following the early 1990s’ decline it reached a low point of 185,600 in January 1992. The severity of the current downturn is highlighted by manufacturing’s current reading of 171,600 jobs.

Durable goods continued to be responsible for manufacturing’s dismal readings. Since September, durable goods manufacturing has dropped at a rapid pace, with seasonally adjusted employment declining 17,500 jobs or 12.5 percent.

In March, wood product manufacturing cut 700 jobs, fabricated metal product manufacturing and machinery were each down 300 jobs, while computer and electronic product manufacturing dropped 600.

Within nondurable goods, food manufacturing continued to be the brightest light in manufacturing, adding 400 jobs for the month and up 2,100 jobs over the prior 12 months. Meanwhile, paper manufacturing shed another 400 jobs in March.

Construction losses steepened, dropping 1,700 jobs at a time of year when a gain of 700 was the expected normal seasonal movement. The rate of seasonally adjusted losses in construction has quickened, as the industry is down 12,600 jobs or 13.6 percent over the past six months.

Seasonally adjusted construction employment, at 80,000, is now below its level of approximately 83,000 jobs seen during much of 1997 through 2000. Despite a drop of more than 25,000 jobs since reaching its peak in 2007, construction is still slightly above its low point over the past dozen years—75,500, which was reached in June 2003.

In March, substantial losses were seen in nonresidential building construction (-400 jobs) and in specialty trade contractors (-1,500).

Professional and business services continued to trend downward, cutting 700 jobs when a gain of 1,700 was the typical seasonal pattern. The industry is down 14,900 jobs, or 7.6 percent since March 2008. The closely watched employment services shed another 200 in March; at 25,400 jobs, it is down 10,900 jobs or 30 percent from its March 2008 level. Economists are watching employment services closely for signs of an uptick in its employment as a leading indicator of broader economic recovery. One industry showing a positive reading in March was services to buildings and dwellings, which added 800 jobs.

Leisure and hospitality accelerated its employment decline in March as it cut 300 jobs at a time of year when a gain of 2,100 is the normal seasonal movement. Seasonally adjusted losses have been steep over the first three months of the year, with 5,600 job losses or a 3.3 percent decline over those three months. Arts, entertainment and recreation cut 800 jobs in March and is now down 900 since March 2008. Accommodation and food services added 500 jobs in March, but this lackluster gain during the start of this industry’s seasonal upswing meant that the industry is still well below its year-ago level (146,800 jobs).

Educational and health services cut 200 jobs when a gain of 700 is the normal seasonal pattern. The industry is showing signs of weakness after years of steady and rapid growth. Seasonally adjusted employment, at 222,900, is now very close to levels seen during much of the second half of 2008. It remains to be seen if recent job totals in this industry will mark the beginning of a flattening in the industry or will be followed by its long-term trend of continual increases.

Government added only 200 jobs in March, when a gain of 1,200 is the normal seasonal movement. Seasonally adjusted government employment has been close to 300,000 since September 2008. Federal government should be expanding throughout the year as hiring ramps up for work on the decennial census. It cut 200 jobs in March, but is up 200 since March 2008.

Unemployment (Household Survey Data)

In March, Oregon’s seasonally adjusted unemployment rate rose to 12.1 percent from 10.7 percent in February. This tied Oregon’s unemployment rate in November 1982, the highpoint of the early 1980s recession. While historical records prior to 1976 are not exactly comparable, it appears clear that the 12.1 percent level is Oregon’s highest since 1947, when the Employment Department first started publishing unemployment rates.

Oregon’s unemployment rate has now risen in each of the last 14 months, dating back to January 2008, when the rate was 5.3 percent.

- Oregon Employment Department

The Nature of the Liturgy

The liturgy derives its greatness from what it is, not from what we make of it. Our participation is, of course, necessary, but as a means of inserting ourselves humbly into the spirit of the liturgy, and of serving Him Who is the true subject of the liturgy: Jesus Christ. The liturgy is not an expression of the consciousness of a community which, moreover is diffuse and changing. It is revelation received in faith and prayer, and its measure is consequently the faith of the Church, in which revelation is received.

Losing Freedom to Envy

Envy, one of the seven deadly sins, is not unknown to Americans.

The income distribution in the US is so skewed that the rich are found in the top one percent. The truly rich with the accoutrements associated with that class are in the top half of one percent.

Those points were lost on those Americans who regard anyone slightly better off than themselves as "rich." A slightly bigger house in a better neighborhood, a BMW instead of a Toyota, and the ability to go on vacation without going into debt is all it takes to be rich in the minds of those whose eyes are green with envy.

This observation led me to the realization that freedom has been lost to envy.

Read more here.

Princeton Prof on Origins of the Financial "Mess"

Why Geithner Round II Will Suck

The Reinsurance Swindle

Not debacle. Swindle. If you know the size of these reinsurance mega-corporations, you understand this swindle has the potential to cause rioting. At least, if this is born out, I will riot. See the important article linked here, from Institutional Risk Analytics.

How "We" Decide Our Economic Future

CAUTION!
This video clip may make you release urine into your shorts:

BAILOUT!

Axis of (Economic) Power is Shifting: Learn Mandarin, Learn to Farm

American Patriotism

Joe Sobran writes:

G.K. Chesterton, with his usual gentle audacity, once criticized Rudyard Kipling for his “lack of patriotism.” Since Kipling was renowned for glorifying the British Empire, this might have seemed one of Chesterton’s “paradoxes”; but it was no such thing, except in the sense that it denied what most readers thought was obvious and incontrovertible.

Chesterton, himself a “Little Englander” and opponent of empire, explained what was wrong with Kipling’s view: “He admires England, but he does not love her; for we admire things with reasons, but love them without reason. He admires England because she is strong, not because she is English.” Which implies there would be nothing to love her for if she were weak.

Of course Chesterton was right. You love your country as you love your mother — simply because it is yours, not because of its superiority to others, particularly superiority of power.

This seems axiomatic to me now, but it startled me when I first read it. After all, I was an American, and American patriotism typically expresses itself in superlatives. America is the freest, the mightiest, the richest, in short the greatest country in the world, with the greatest form of government — the most democratic. Maybe the poor Finns or Peruvians love their countries too, but heaven knows why — they have so little to be proud of, so few “reasons.” America is also the most envied country in the world. Don’t all people secretly wish they were Americans?

There is more, and more interesting, to read here: worth the time to read.

More on Obama Stem Cell Deception

And duplicity. This is morally egregious.
The details are here (a good read).

I Have a Daughter, I Work for a Food Bank, This Kills Me

Yes, this kind of stuff happens more often in these times.
Be careful. Shun false pride.
Seek help when needed (usually, before you think it is).

Murder: Error of Intellect, or Error of Will?

Can it be that Bill Clinton and Dr. Gupta (Obama's pick for Surgeon General), don't really know what an embryo is? Watch the clip for yourself. Clinton speaks of embryos as non-fertilized, and said if embryos were ever on their way to being fertilized, they shouldn't be used for experimentation. Surely Dr. Gupta might point out an embryo is an embryo because it has been fertilized, that it is a genetically complete fully fertilized egg. Gupta said nothing.

Could simple ignorance of basic medical science be at the heart of this culture war? Could it be we are seeing mistakes of the intellect, not so much mistakes of the will . . .? Nah. I don't think so either.

How Is the Dow Doing?

As of last Friday: adjusting for inflation, the Dow is basically where it was in 1966:


This doesn't include dividends.

From February 9, 1966 to Friday’s close, the Dow gained 562.7%. The CPI from February 1966 to January 2009 rose 559.8%. That works out to a whopping real gain of 43 basis points stretched out over 43 years.

Keep this in mind when the Dow begins falling again, which it will soon. Keep this in mind when people tell you America's is the most productive economy in the world. How is that measured, and does the measurement account for inflation?

Our Government's Credit Card Interest Payments

The spreadsheet linked here shows the equivalent: promissory notes bought by foreign creditors, and the interest paid by the US. Now - given the new US deficit this year - either the monthly/yearly interest payment is going to sky-rocket (further ensuring larger deficits (because we cannot restrain our own spending, nor can taxes be increased sufficiently)), or we will see "quantitative easing" (increasing the quantity of the supply of money (inflation)).

You guess which. I have here already.

Pay attention to whether the forecasts offered by the Feds are done on an accrual or a cash basis of accounting. You'll noticed they are intertwined: when it comes to income, accrual basis; when it comes to expenses, cash basis. This is a systematically misleading reporting method. Now why would a government (or any organization) do that - unless it is trying to hide something? Umm, insolvency?

Philosophy: Causality

I like xkcd.

Politics in Science: Science in Politics: Politics in Science

Everyone lies: but these lies are about human lives.
Read this for background.

Even better: look at this.
Then go to this site: Stem Cell Research news.

Cultural Issues Cannot Be Solved By Political Means

And this is a good article discussing some cultural issues we keep trying to solve by political means: redefining prosperity.

Great Antiwar Song

So we make jokes back home,
and we lighten the mood,
but growing up my parents saw,
what sending a kid to fight can really do,
but now with the war I can tell they're a little shook up,
'cause just a few mothers sons will never really be enough,
not 'til half our names are etched out in the wall,
and the other half ruined from the things we saw.

Investor to Farmer

What do you make of it when one of the most successful investors in the world is now buying farmland - and actually farming it?

You might want to consider this: Tiny Farm.
Not convinced? Think of this.
Not possible? What about this?