KA-POW! #42 - Shostak

This week's “Kick-Ass Post O’th’ Week” (KA-POW) goes to Frank Shostak for “Is Deflation Really Bad for the Economy?” :

A general fall in prices can also emerge as a result of a fall in the money stock. An important cause for such a fall is a decline in fractional-reserve lending. The existence of a central bank and of fractional-reserve banking permits commercial banks to generate credit not backed up by real savings, i.e., credit created out of thin air. Once the unbacked credit is generated, it creates activities that the free market would never support — activities that consume, and do not produce, real wealth. As long as the pool of real savings is expanding and banks are eager to expand credit, various false activities continue to prosper.

Whenever the extensive creation of credit out of thin air lifts the pace of real-wealth consumption above the pace of real-wealth production, this undermines the pool of real saving. Consequently, the performance of various activities starts to deteriorate, and bank's bad loans start to rise. In response to this, banks curtail their loans by not renewing maturing loans and this in turn sets in motion a decline in the money stock.

“The Sound of ‘Tweener Texting”

Although Kaitlyn and her mother left the multiplex together...

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KA-POW! #41 - Kelly

This week's “Kick-Ass Post O’th’ Week” (KA-POW) goes to Kel Kelly for “Give Capitalism a Chance” :

My main message is that most of our economic problems derive from previous government intervention in the economy. In its attempts to "help" us, the government has managed and regulated the economy, and passed laws that sounded constructive but that in fact hurt the economy and us.

Political economic reality is replete with the law of unintended consequences. Our economic problems are the natural result of political forces, not the natural result of (supposedly evil) market forces. We have voted our current problems into existence by electing politicians who promised to help us by means of economic intervention and regulation.

“Pilgrimage to the Holy Land”

Day 1: Staropramen

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KA-POW! #40 - DiLorenzo

This week's “Kick-Ass Post O’th’ Week” (KA-POW) goes to Thomas J. DiLorenzo for “Our Totalitarian Regulatory Bureaucracy” :

It may sound shocking to some, but modern-day America compares "favorably" to fascist Germany of the 1930s with regard to the degree to which the state interferes with and controls economic activity. First of all, government expenditures at all levels of government account for about 40 percent of national income. ... This doesn't count all of the off-budget government agencies that exist at the federal, state, and local levels of government as James Bennett and I documented in our book, Underground Government: The Off-Budget Public Sector. If this is included, government expenditures as a percentage of national income would be at least 45 percent, which is not so far from the 53 percent in Nazi Germany that Hayek alluded to.