VECKA 13
Fredag
29
Mars
BT-annons
2020-05-05
photo


The real problem
Guru Corner, alltid samma svar.

GURU CORNER
From medical practices to grocery shipments, governments are loosening restrictions in order to keep goods and services affordable.

But if these restrictions are unnecessary now, why claim they are ever necessary?

Experts such as Anthony Fauci are experts only in the narrow field of their expertise. They have almost no knowledge or expertise in other fields, including—apparently—the basics of how human societies function.

The answer is always the same. Whatever the issue, the answer always seems to be creating more money.

From trade barriers to disastrous government regulations, government intervention has crippled society's ability to respond well to the spread of disease.

The Fed is, in effect, a lawless economic government unto itself. It is the lender of first resort, a kind of reverse pawnshop that pays top dollar for rapidly declining assets.

From New York to London to Brussels to Tokyo, central banks in the last two weeks have embraced a wide variety of extraordinary inflationary measures to prop up insolvent banks and governments.

Central bankers think too much saving is a problem that must be solved with more money creation. But the real problem is the Keynesian-style fractional reserve banking system.

So nominal stock price increases could be another trap… disguising a real fall-off in value. That is what happened in the 1970s.

We could soon reach Dow 50,000, in other words. But we could soon reach a $25 cup of coffee, too.

That’s why we keep an eye on the Dow-to-Gold ratio. It shows us how much the Dow is worth as priced in real money – gold.

The ratio hit a peak over 40 in 1999. Since then, it has come down.

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by an endless series of hobgoblins, most of them imaginary.

The Fed's portfolio is now 35 percent larger from the time the Fed promised to "taper" back its portfolio and "normalize." It is increasingly clear that there will not be any normalization. Ever.

Current global bailouts may put off global busts for quite some time. But they will weaken output and employment gains. People's standard of living will stagnate or even fall, even in the short term. With this comes impoverishment and perhaps even social unrest.

Entrepreneurs can offer new ways of serving established markets, but large institutions will keep with what has worked in the past so long as it just continues to work in the present. Radical change happens only in an emergency.

To spread the benefits of goods and services, we must first spread the mindset needed to take on the task of producing goods and services. That is, the mindset of entrepreneurship.

TREVLIG VÅRVECKA! (det skall bli helt underbart väder hela veckan)

 
Göran Högberg

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