Peanut butter prices are suddenly soaring with 40% increases, due to an apparent crop problem. As Hayek might observe, there is no reason to know why we need to conserve if the price signals are working properly.

“The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending.” ~ Lawrence Summers, “Why the housing burden stalls America’s economic recovery” in The Financial Times.

Only government could come up with something like this:

The Obama administration plans to bolster the American military presence in the Persian Gulf after it withdraws the remaining troops from Iraq this year, according to officials and diplomats. That repositioning could include new combat forces in Kuwait able to respond to a collapse of security in Iraq or a military confrontation with Iran.

This is looking great: blog.turgot.org

I’ve never understood the academic obsession with achieving social and economic equality. Isn’t society better off when half the population is well off and half is less poor than if absolutely everyone is poor? Isn’t all the talk about inequality really just an urge to see the poor increase their living standards? And if that is true, shouldn’t the whole idea of equality be thrown out in favor of a hope for everyone in society to benefit on the margin from economic growth?

Well, this video helps flesh out the passion for equality. The speaker goes to great lengths to prove that equality of any sort is better than inequality of any sort. Now, a quick viewing of this sets off a number of alarms. Most of his complaints could in fact be addressed by having the poor grow richer, demonstrating that it is not inequality as such that is the problem but rather the existence of poverty. Another factor that jumps out here to me is that his examples of equality all come from demographically homogeneous nations, so does his data really make a case for that model over a multicultural model?

There are probably a hundred other problems in this perspective that I hadn’t thought of. You might enjoy watching and poking holes in the analysis.

An across-the-board 35% price increase from American Gypsum:

S.978 is truly terrible legislation. It makes posting anything under IP protection a felony. As protest organizations point out, this could make Justin Beiber a jail bird.

Before you cheer (and I’m telling you, that kid has got amazing talent!), consider that this would have a chilling effect to the point that every sector of the wwww might be fall under total state control and effectively shut down.

The movement being organized against it has so far been extremely effective in drawing attention to its point of view.

It is really taking off!

An interesting piece at the New Scientists seems to confirm the worst fears of the occupy protestors.

When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.

So, has reform ever been more urgent? To save capitalism, the banking cartel must be upended.

Monsanto is another example of a great company whose work is morally compromised and discredited by its aggressive patent enforcement. The Broccoli patent, in particular, has fueled incredible blowback in Europe.

Not only do 89 percent of Americans say they distrust government to do the right thing, but 74 percent say the country is on the wrong track and 84 percent disapprove of Congress — warnings for Democrats and Republicans alike. ~ NYT

For what it’s worth, I think the Fed should continue its efforts to stimulate our moribund economy; unemployment is clearly a bigger threat than inflation. But I worry when politicians get involved. Lawmakers need to ensure that Fed actions promote the public welfare… History shows independent central banks do a much better job of controlling inflation than those that give in to political pressures. When the Fed caved into LBJ’s desire for loose money in the 1960s, it set the stage for a decade of high inflation. ~ Donald Marron, CSM

“Consumer confidence is now back to levels last seen during the 2008-2009 recession,” said Lynn Franco, director of the Conference Board Consumer Research Center. WSJ

Auburn residents were supposed to hear the Holland Wind Players tonight but U.S. officials refused them entry into the country for some crazy paperwork reason. It is hardly an unusual thing these days. Traveling across borders is strictly a permission-only activity, and state officials are quick to say no. Even if everything seems fine, anyone can be refused at the last instant, merely for giving a vague answer on a question or for not having contacted the correct bureaucracy in advance. The U.S. is among the worst places in the world at this point, so it is just a bit disingenuous for people to condemn Alabama’s own war on undocumented workers; the state is only following the nation trend. Of course it is a classic case of shooting yourself in the foot, insofar as economic health goes. Farmers are already panicked. If all the undocumented workers (who do most of the farm work, tile work, bricking, street building, housing work, repairs, infrastructure upkeep, etc. etc.) leave, I have no idea who is going to replace them. This whole move is going to have terrible economic repercussions.

The OA News today, with savvy eye to irony, also runs a story on how Dayton, Ohio, sees a market niche in inviting immigrants to the state. Ohio’s gain is Alabama’s loss.

The New York Times explains a point that has been clear to industry insiders for a very long time but is mostly lost on others. The issue concerns: why does banking seem to be broken? The answer has to do with the ridiculously low interest rates. Banks are drowning in cash – tending toward 100% reserve by default.

Today, banks are paying savers almost nothing for their deposits. As it turns out, the banks are not minting money on those piles of cash. Lending levels have not bounced back from only a few years ago and the loans going out are not keeping pace with the deposits rushing in.

What’s more, the profitability of each new loan has shrunk. Because the Federal Reserve effectively sets the floor off which banks price their lending rates, its decision to lower interest rates to near zero means the banks earn less money on the deposits they lend out.

The banks are also earning less on the deposits left over to invest. They typically park that money overnight at the Fed for a pittance, or invest it in ultra-safe securities, like bonds backed by the government. But with interest rates so low, the yields on those investments have been crushed.

The article also quotes bankers who dream of the day when the economy improves and they can crank out the new money through the credit system. That’s the scary part.

What I don’t get is why the Fed thinks that maintaining 0% interest is going to spur economic activity.

Thomas Woods writes on this for LewRockwell.com and I have a piece in CrisisMagazine.

Then you must read this story about a New York coffee shop, and how it is an impossible proposition to try to run something like this. The story doesn’t even go into taxes and employment mandates. It’s a wonder that any business exists at all. And so what do we do toward the entrepreneurial class? We hate them, blame them for all the world’s problems, attack them as parasites and vultures, and try to drive them into further nonexistence. And we wonder why people with a penchant for doing business have all escaped to the online world?

The Vatican document on the world economy, as issued by the Pontifical Council for Justice and Peace, is very puzzling. It seems to dabble in Austrian business cycle theory, naming credit expansion and loose money as the source of the problem.

In recent decades, it was the banks that extended credit, which generated money, which in turn sought a further expansion of credit. In this way, the economic system was driven towards an inflationary spiral that inevitably encountered a limit in the risk that credit institutions could accept. They faced the ultimate danger of bankruptcy, with negative consequences for the entire economic and financial system

After World War II, national economies made progress, albeit with enormous sacrifices for millions, indeed billions of people who, as producers and entrepreneurs on the one hand and as savers and consumers on the other, had put their confidence in a regular and progressive expansion of money supply and investment in line with opportunities for real growth of the economy.

Since the 1990s, we have seen that money and credit instruments worldwide have grown more rapidly than revenue, even adjusting for current prices. From this came the formation of pockets of excessive liquidity and speculative bubbles which later turned into a series of solvency and confidence crises that have spread and followed one another over the years.

A first crisis took place in the 1970s until the early 1980s and was related to the sudden sharp rises in oil prices. Subsequently, there was a series of crises in the developing world, for example, the first crisis in Mexico in the 1980s and those in Brazil, Russia and Korea, and then again in Mexico in the 1990s as well as in Thailand and Argentina.

The speculative bubble in real estate and the recent financial crisis have the very same origin in the excessive amount of money and the plethora of financial instruments globally.

Whereas the crises in the developing countries that risked involving the global monetary and financial system were contained through interventions by the more developed countries, the outbreak of the crisis in 2008 was characterized by a different factor compared with the previous ones, something decisive and explosive. Generated in the context of the United States, it took place in one of the most important zones for the global economy and finances. It directly affected what is still the currency of reference for the great majority of international trade transactions.

Promising! But then the same document goes on to call for a world central bank administered by a world political authority. This is about as naive as those who favored the creation of the Fed because they imagined that the Fed would control the expansion of credit in the banking system. Actually, it is worse than that because we’ve had a full century of experience to know that central banking does not lead to responsibility, regulated credit flows, and sound money but precisely the opposite. This is the doctor who calls for poison to fix poisoning, who administers heroine to stop a cocaine addiction.

It’s good at the Vatican listen to the Austrian-like message on discovering the problem. The people who wrote this document should have sat through some more seminars before they put pen to paper, because their solution is guaranteed to make the problem worse rather than better.

So says Merrill