New UT Libertarian organization advocate Mises economics

While the plan is still in its early stages, the Mises Circle hopes to eventually gather enough interest for a course or seminar on Austrian economics through student involvement in their organization.

“Many people are starting to question the Keynesian economic establishment, its economic models and policy prescriptions,” Nino said. “Our goal at UT is to provide UT students [with] a legitimate forum that discusses Austrian economic principles.”

Oh how the mighty tall have fallen. And they are still building despite falling rental rates in Dubai. Elsewhere India and China are building national record setting skyscrapers sending a crisis signal for these two “developing” giants.

ht: JP

Lewis Lehrman, a member of the 1981 Gold Commission who coauthored the Commission’s Minority Report with Ron Paul is calling on Romney and Santorum to join Ron Paul and Newt Gingrich in calling for a restoration of sound Constitutional money.

The housing bubble was a global rather than US event. The bubble outlasted the US experience in several other countries such as Australia and Canada which are experiencing some weakness. However, the one I’ve worried about is in China. Keep your eye on this one.

China’s housing market is set for a hard landing

FORTUNE — The Chinese government’s announcement last week that growth for 2011 slowed only slightly to a still impressive 9.2% was greeted enthusiastically by the world’s stock markets. Investors also remain buoyant on China’s future. They appear to be buying the official line that the gigantic property price bubble is gradually and smoothly deflating, posing little risk to an engine that’s so crucial to the future of global trade.

But the math tells a different story. The housing frenzy has driven prices so high, so fast, that a crash on the scale of the real estate collapse in Japan in the 1990s is a virtual certainty. And China’s already exaggerated official growth rate could take a pounding, all the way to the zone of the unthinkable, into the low single-digits.

Its all over the internet. The Asian office of Barclays is out with a report on the worldwide skyscraper boom and the looming implications for the global economy. The current boom does not have a true record-setting skyscraper under construction but the sheer volume of super high buildings and their locations (mostly China, India, the Middle East, and even in Europe) means it is something to definitely keep an eye on. The current global crisis was correctly signaled by the last record skyscraper in the summer of 2007. The Euro crisis also got a signal.

China, India skyscraper boom may herald downturn

Skyscraper boom heralds economic downfall: Barclays

Also see my article on Skyscrapers and Business Cycles in the Quarterly Journal of Austrian Economics which provides the theory and history of the “curse.”

Isn’t this something they should be doing behind our backs?
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Princeton Brews Trouble for Us 1 Percenters

Across the Ivy League the young people whom our Wall Street division once subjugated with ease are becoming troublesome. Our good friends at Goldman Sachs, to cite one example, have been forced to cancel their recruiting trips to Harvard and Brown. At Princeton, 30 students masquerading as job applicants entered a pair of Wall Street informational sessions, asked many obnoxious questions (“How do I get a job lobbying the U.S. government to protect Wall Street interests?”), rose and chanted a list of charges at bankers from JPMorgan and Goldman Sachs, and, finally, posted videos of their outrageous behavior on YouTube.

What’s Behind the Euro Crisis and How Will It End?

by Antony P. Mueller12/30/2011

The true nature of the current crisis is not that of a currency, be it the euro or the dollar, but a financial system based on fractional reserve banking, which, in combination with the modern warfare-welfare state drives towards an…

Philipp Bagus’s Tragedy of the Euro

hat tip: WB

As an economist I am asked the question “what should I invest in.” With the Fed’s zero interest rate policy this question has been posed to me more times than I could count.

I have one investment suggestion that has always increased in value, pays increasing dividends and has easily outpaced inflation. The worse things get in the economy, the better this investment performs.

I recommend investing in the Ludwig von Mises Institute. It has been a rock solid investment for nearly 30 years. The size, reach and influence of the Institute has only increased and Austrian economics is now regularly mentioned in the media and casual conversation. Get invested in the battle of ideas today!

I recommend a diversified portfolio. You should first pay for a membership and sign up to receive the daily articles. Second, you should begin making automatic monthly contributions. Third, sponsor a student scholarship so that some deserving student can attend the most important program of the year, the Mises University. Fourth, tell your young friends and relatives about us and encourage them to go to Mises.org. Most importantly, buy Mises Institute literature and attend Mises Institute conferences to become a more knowledgeable proponent of Austrian economics. Next, consider becoming a sponsor a Mises Circle event in your home city. Finally, put the Mises Institute in your estate. Start today.

I can tell you from first hand experience that it gives you a real sense of accomplishment. Otherwise you are probably just sitting there, doing nothing, living at the mercy of events as they are engineered out of Washington, DC.

As you probably realize, the success of the Mises Institute has now attracted the attention of the opponents of free markets so your support, at whatever level, is more important than ever.

Disclosure: I received a scholarship from the Mises Institute in 1983 and have been working in academia, the popular media, and even in government, ever since, promoting the ideas of free markets, private property, and sound money. I currently work full time at the Mises Institute. Therefore, any investment in the Institute that you make should be considered insider trading.

Dateline: Auburn, Alabama: The Economist tries here to summarize the battle that is going on in modern macroeconomics including Ron Paul, the Austrians, the Free Bankers, Paul Krugman, Keynes and one of my undergraduate professors Scott Sumner. It needs some extensive Austrian analysis and commentary.

Anthony Grafton from the NEW YORK REVIEW OF BOOKS of November 24 provides a useful and concise review of 8 books on the problems of higher education.

Our Universities: Why They are Failing

However, he fails to zero in on the key Austrian explanation for the failure of higher education. Can you guess what that is?

Paul Krugman is at it again. This time attacking Ron Paul and his Austrian economics (probably a very good sign). He claims that Ron is only consistent because he ignores reality. In fact, “reality” has only demonstrated the correctness of Ron’s views.

His first attack is on the idea that paper money is the root of all economic policy evil. Well lets do some history and ask the Romans, the French, the the British, the Germans, the South Americans, and any number of other people to consult their history and get back to us on that issue. The great economist Joseph Schumpeter wrote that even if one did not believe in the merits of the gold standard and was an advocate of big government that you would still want to have a gold standard in order to protect against the kind of economic mess that we find ourselves in today.

Krugman’s next line of attack–his evidence against Austrian economics–is that the monetary base has exploded/increased and the Consumer Price Index has risen very little. This is the type of “evidence” that one should only expect from your barber and a Nobel Prize winning mainstream macroeconomist.

First of all, the Consumer Price Index is meant to be a very inexact measure of the impact of monetary inflation on the purchasing power of consumers–and only that. Even here most economists question the validity and precision of the CPI. It was not intended to measure the entire impact of inflation on the economy, except by the “naive” quantity theorist.

Second, monetary inflation can impact various sectors of the economy and does so in an uneven fashion. One need only recall the housing bubble when home prices soared to record, unsustainable levels while the CPI remained “under control.” The CPI only measures “owner equivalent rents.” There all sorts of goods that have prices that can be impacted by inflation that are not included in the CPI, from famous art work, professional sports salaries, farm land prices, to goods exchanged in the underground and black market economies.

Third, the impact of monetary inflation on the overall economy takes time. Money that enters an economy moves from one sector to another and eventually throughout most of the economy. Anyone familiar with basic money and banking would know this. Anyone familiar with reading the business sector of the newspaper would know that banks have largely been “sitting on” the Fed’s increase in the monetary base and that most of the new money has really not even entered the economy yet.

There are many other reasons why Krugman’s “evidence” is nothing more than evidence of his own ignorance of basic economics. However, one important additional point needs to be made. The idea that increases in the supply of money (i.e. monetary inflation) leads to increases in prices (i.e. price inflation) is a theoretical statement and economists of all sorts express such statements in terms of ceteris paribus, or all other things held equal. Well, things are not exactly equal these days, are they Paul?

In fact, when an economy goes into a depression prices are suppose to fall. Prices, wages, rents, leases, and stocks are all suppose to go down so that resources can be reallocated to profitable uses. We saw this in a minor way with “cash for clunkers” and the “first time home buyers tax credits.” Falling prices increased sales for cars and homes. Falling prices are a key component of economic recovery. However, my point here is that prices would have been lower than they currently are were it not for monetary inflation from the Fed.

Had we not followed the advice of Krugman, Bernanke, Geithner, Summers, Paulson, Goldman Saks, etc. this economic crisis would have been over a long time ago. Instead we are forced to follow the madness of Paul Krugman and Ben Bernanke.

One Nation, Under Arms

“The private papers of the late George F. Kennan, Cold War architect and diplomat extraordinaire, reveal his anguish over the way his famous 1947 warning about Soviet expansionism helped transform the America he loved into one he no longer recognized: a national-security state. A half-century after a similarly historic warning—President Dwight D. Eisenhower’s speech about the dangers of a powerful “military-industrial complex”—Todd S. Purdum shows how completely Kennan’s and Eisenhower’s worst fears have been realized, warping almost every aspect of society, deflecting attention from urgent problems, and splitting the country into two classes.”

Can someone explain to me why it is that Vanity Fair is the source of such great articles and investigations?

This is a great story of how the government can cause chaos in markets and in peoples’ lives.

In particular it makes the whole mainstream case for patents look bad.

The United States government has just crossed the magic line where its total national debt now exceeds (more than 100%) of GDP.

See here that ehe U.S. national debt of $15.033 trillion is now higher than the $15.032 trillion gross domestic product. The magic line usually means that a country is plunging into a long term malaise. There are other ways of calculating debt and GDP, but it is still not a pretty picture.

Here is national debt as a percent of GDP by country according to the CIA

Here is a link to an interview of James Grant and James Rickards on the return to the gold standard.

I love the response line to the bogey about returning to the gold standard is going backwards. Rickards responds that if you are headed in the direction of going over a cliff, than going backwards is a good thing.

ht: JRH

The movie is good. Take a look at the trailer here. It seems like an accurate history of J. Edgar Hoover’s life, from what I know. He was clearly a fascist and a psychotic of various sorts. His use of drugs late in his life reminded me of Hitler. He was constantly plotting to get more money, power, and authority for the FBI. He was also constantly breaking the law and using his access to information to blackmail politicians, including many of the Presidents of the 20th century. The movie helps to chronicle the history of the decline of liberty and the rise of the Federal police state.

Has anyone else seen the movie?

This will be no surprise for Mises.org readers, but a recent study published by the Phoenix Center looked at the empirical evidence for the US over the last 50 years and found that government spending/stimulus had zero positive impact on private sector job creation.

An explanation for the downfall of MF Global

Complete article here.

That is why this system has to change at some point. It is exactly designed to be misleading, and the reason is so very simple. In any fractional system there will be a desire to amplify that fraction to the maximum degree. But in doing so, participants recognize that the process of maximization entails creating negative human emotions and perceptions since history is not really that kind to this manner of fractionalization. So the system has institutionalized, abetted by the very regulators that are supposed to cap fractions and leverage, these methodologies of hiding just how much financial entities have engaged in maximizing themselves under the cover of mathematical precision. Trillions in derivatives are no problem because there are powerful and elegant equations to net and hedge them.

The Occupy Wall Street crowd sees this as a problem with capitalism. I believe that they are correct in their target, but wrong in their diagnosis. This is not a problem of capitalism since Wall Street is a practitioner of monetarism. A real capitalist system works through real intermediation creating positive opportunities for productive enterprises (scarce money is actually vital here). Our current system of repo-to-maturity and gold leasing is nothing but empty monetarism’s habit of regularly forcing the circulation of empty paper. And when the system begins to doubt itself, as it did in 2008, the answer is always about finding a way to restart the fractional maximization process yet again, which means disguising the real risks inherent to that process. There is no real mystery as to why prices and values have seen such a divergence, and why that is a big problem to a system that depends on appearances.

Take a look at the fusion of capitalism and communism in the village of Huaxi and the opening of their skyscraper. Its taller than the Chrysler Building and has a Oxen on the 60th floor that is made out of one ton of gold.

The Secrets of China’s Richest Village

Is this a case of what goes up, must come down?

China’s richest village

Building a 1000+ feet skyscraper with a one ton gold bull. It is often hard to tell what is and what is not a malinvestment. In this case, I’d be willing to bet this is the real McCoy.