Endless Nonsense About Deflation

September 20, 2010 · Posted in General Economics · 4 Comments

The pitiful and infantile state of the Economics profession is exposed wide in the open, every single day. Whenever you open a newspaper or turn on the TV you enter an uncontrollable shit storm of people making blind assertions, using fuzzy terms, contradicting themselves without caring, in other words taking mental craps all over the map.

Government sponsored economists are indeed the witchdoctors of our secular age.

Another great example is this guy who, in an apparent Scorpions 90’s moment, perpetrated “The Winds of Deflation“:

Three economic reports Friday that should sound warning bells about deflation.

The Labor Department reports ^[2] that consumer prices are essentially flat. Compared to August 2009, prices are up 1.1%. That’s only slightly lower than the 1.2% year-on-year rise in July. Excluding volatile food and energy, however, consumer prices in August were 0.9% higher than a year earlier. That’s below the Fed’s informal inflation target of between 1.5% and 2.0%.

In a separate report, the Labor Department said ^[3] real average weekly earnings were unchanged in August from July, as both the average work week and hourly earnings were flat.

The Thomson Reuters/University of Michigan September reading of consumer confidence ^[4] shows consumers more pessimistic in September than in August. In fact, consumer sentiment is the lowest since August 2009.

Put the three together and you have what could be a recipe for deflation: Flat consumer prices, weekly earnings, and hours, coupled with increased pessimism about where the economy is heading.

Consumers aren’t buying. They’re acting rationally. Their debt load is still huge, they’re worried about keeping their jobs, they know they have to tighten belts, and they’re justifiably worried about the future.

But for the nation as a whole, it spells even more trouble. If consumers hold back even more, prices will start dropping. When and if they do, consumers will hold back even more in anticipation of still lower prices. That means more layoffs and less hiring.

It’s a vicious cycle. And once deflation sets in, it’s hard to reverse. Just ask Japan.

Anyone who spouts out this hilarious price spiral argument … ask them the following:

Q: Over the past 20 years, did prices not constantly fall in the computer and cell phone industries (coincidentally some of the least government regulated industries in the US)?

A: Yes, they did!

Q: And during that time, did people hold back in buying computers and cell phones, stingily awaiting the expected further price decline?

A: No, they did not!

Q: And did employment in those industries grow or fall over the past 20 years all over the world?

A: Why, it went up manyfold!!

Q: And did businesses from those industries not do exceptionally well as compared to other industries?

A: Why, of course they did!

Q: THEN WHAT THE HELL ARE YOU TALKING ABOUT??

A: But dude … don’t you get it? I have no idea what I am talking about. I merely try to skew any event into the direction where it justifies more government stimulus spending, more deficit spending, and higher taxes, don’t you get it?? Why else do you think would I hold my tenure, be respected in the echelons of power, and get invited to Bill Maher’s weekly Obama worship fest to talk about this stuff with more clueless people while looking completely superior and competent? It’s absolutely beautiful, man, you should totally try it on for size!

OK, enough of this hypothetically honest conversation … which is never going to happen of course :)

Here is some more stuff I wrote on deflation:

Deflation

Deflation is defined as a drop in the money supply. It occurs when the central bank or fractional reserve banks reduce the money supply by reversing their inflation by selling goods other than money, thus withdrawing money out of circulation, or when individuals make more re-payments as part of credit transactions (which they entered into with the central banks or fractional reserve bank) than additional money is produced.

As the money supply declines, the price of other goods in terms of money is more likely to drop over time.

Deflation is in essence a correction of the previous misallocations created by inflation.

Addendum: What I was referring to above is monetary inflation. Please see more details in Inflation & Deflation Revisited.

This is more on credit deflation AND money deflation.

And here is what I said over 1 year ago would happen if the US continues to copy the Japanese experience one by one:

From 1989 on, the Japanese government has launched one stimulus after another to no avail, leaving Japanese taxpayers with the largest public debt per capita of all industrialized nations.

A burden that the US government seems to be more than willing to have its taxpayers shoulder over the years to come unless someone picks up a history book and tries not to feverishly repeat mistakes others made in the past.

Thus the long term outlook for the US economy is the fate Japan took: A long lasting correction supercycle with one failing “stimulus” program after another, and with on and off periods where the economy slips out of and back into recessions from time to time.

This is the long term trend we are and will be in for a long time … whether Robert Reich, Paul Krugman, Ben Bernanke, Barack Obama or any other sociopathic and laughable clowns like it or not. All they can do is make it worse … and they have certainly done great at that over the past few years. Good going guys …

Tags: deflation

Richard Dawkins: The Pope is an Enemy of Humanity

September 19, 2010 · Posted in Philosophy · Comment

This is his great speech at the “Protest The Pope” rally, 18th September 2010:

This is the original text, which is a bit longer:

Should Joseph Ratzinger have been welcomed with all the pomp and ceremony due to a Head of State? No. As Geoffrey Robertson has shown in The Case of the Pope, the Holy See’s claim to statehood is founded on a Faustian deal in which Mussolini handed over 1.2 square miles of central Rome in exchange for Church support of his fascist regime. Our government chose the occasion of the pope’s visit to announce their intention to “do God”. As a friend has remarked to me, presumably we should expect the imminent hand-over of Hyde Park to the Vatican, to clinch the deal?

Should Ratzinger, then, be welcomed as the head of a church? By all means, if individual Catholics wish to overlook his many transgressions and lay out the red carpet for his designer red shoes, let them do so. But don’t ask the rest of us to pay. Don’t ask the British taxpayer to subsidize the propaganda mission of an institution whose wealth is measured in the tens of billions: wealth for which the phrase ‘ill-gotten’ might have been specifically coined. And spare us the nauseating spectacle of the Queen, the Duke of Edinburgh and assorted Lord Lieutenants and other dignitaries cringing and fawning sycophantically all over him as though he were somebody we should respect.

Benedict’s predecessor, John Paul II, was respected by some as a saintly man. But nobody could call Benedict XVI saintly and keep a straight face. Whatever this leering old fixer may be, he is not saintly. Is he intellectual? Scholarly? That is often claimed, although it is far from clear what there is in theology to be scholarly about. Surely nothing to respect.

The unfortunate little fact that Joseph Ratzinger joined the Hitler Youth has been the subject of a widely observed moratorium. I’ve respected it myself, hitherto. But after the Pope’s outrageous speech in Edinburgh, blaming atheism for Hitler, one can’t help feeling that the gloves are off. Did you hear what he said?

Even in our own lifetime, we can recall how Britain and her leaders stood against a Nazi tyranny that wished to eradicate God from society and denied our common humanity to many, especially the Jews . . . As we reflect on the sobering lessons of the atheist extremism of the twentieth century . . .

You have to wonder about the PR skills of the advisors who let that paragraph through. Oh but of course, I was forgetting, his senior advisor is that Cardinal who takes one look at the immigration officials at Heathrow and concludes that he must have landed in the Third World. The poor man was no doubt prescribed a bushel of Hail Marys, on top of his swift attack of diplomatic gout – and one can’t help wondering whether the afflicted foot was the one he puts in his mouth.

At first I was annoyed by the Pope’s disgraceful attack on atheists and secularists, but then I saw it as reassuring. It suggests that we have rattled them so much that they have to resort to insulting us, in a desperate attempt to divert attention from the child rape scandal.

It probably is too harsh to expect the 15-year-old Ratzinger to have seen through the Nazis. As a devout Catholic, he would have had dinned into him, along with the Catechism, the obnoxious idea that all Jews are to be held responsible for killing Jesus – the ‘Christ-killer’ libel – not repudiated until the Second Vatican Council (1962-1965). The German Roman Catholic psyche of the time was still shot through with the anti-Semitism of centuries.

Adolf Hitler was a Roman Catholic. Or at least he was as much a Roman Catholic as the 5 million so-called Roman Catholics in this country today. For Hitler never renounced his baptismal Catholicism, which was doubtless the criterion for counting the 5 million alleged British Catholics today. You cannot have it both ways. Either you have 5 million British Catholics, in which case you have to have Hitler too. Or Hitler was not a Catholic, in which case you have to give us an honest figure for the number of genuine Catholics in Britain today – the number who really believe Jesus turns himself into a wafer, as the former Professor Ratzinger presumably does.

In any case, Hitler certainly was not an atheist. In 1933 he claimed to have “stamped atheism out”, having banned most of Germany’s atheist organizations, including the German Freethinkers League whose building was then turned into an information bureau for church affairs.

At very least, Hitler believed in a personified ‘Providence’, presumably akin to the Divine Providence invoked by the Cardinal Archbishop of Munich in 1939, when Hitler escaped assassination and the Cardinal ordered a special Te Deum in Munich Cathedral,

To thank Divine Providence in the name of the Archdiocese for the Führer’s fortunate escape.

We may never know whether Hitler identified his ‘Providence’ with the Cardinal’s God. But he certainly knew his overwhelmingly Christian constituency, the millions of good Christian Germans with Gott mit uns on their belt buckles, who actually did his dirty work for him. He knew his support base. Hitler most certainly did “do God”. Here’s part of a speech he made in Munich, the heart of Catholic Bavaria, in 1922: -

My feeling as a Christian points me to my Lord and Saviour as a fighter. It points me to the man who once in loneliness, surrounded by a few followers, recognized these Jews for what they were and summoned men to fight against them and who – God’s truth! – was greatest not as a sufferer but as a fighter. In boundless love as a Christian and as a man I read through the passage which tells us how the Lord at last rose in His might and seized the scourge to drive out of the Temple the brood of vipers and adders. How terrific was his fight against the Jewish poison. Today, after two thousand years, with deepest emotion I recognize more profoundly than ever before the fact that it was for this that He had to shed his blood upon the Cross.

That is just one of numerous speeches, and passages in Mein Kampf, where Hitler invoked his Christianity. No wonder he received such warm support from within the Catholic hierarchy of Germany. And Benedict’s predecessor, Pius XII, is not guiltless, as the Catholic writer John Cornwell devastatingly showed, in his book Hitler’s Pope.

It would be unkind to prolong this point, but Ratzinger’s speech in Edinburgh on Thursday was so disgraceful, so hypocritical, so redolent of the sound of stones hurled from within a glass house, I felt that I had to reply.

Even if Hitler had been an atheist – as Stalin more surely was – how dare Ratzinger suggest that atheism has any connection whatsoever with their horrific deeds? Any more than Hitler and Stalin’s non-belief in leprechauns or unicorns. Any more than their sporting of a moustache – along with Franco and Saddam Hussein. There is no logical pathway from atheism to wickedness. Unless, that is, you are steeped in the vile obscenity at the heart of Catholic theology. I refer (and I am indebted to Paula Kirby for the point) to the doctrine of Original Sin. These people believe – and they teach this to tiny children, at the same time as they teach them the terrifying falsehood of hell – that every baby is “born in sin”. That would be Adam’s sin, by the way: Adam who, as they themselves now admit, never existed. Original sin means that, from the moment we are born, we are wicked, corrupt, damned. Unless we believe in their God. Or unless we fall for the carrot of heaven and the stick of hell. That, ladies and gentleman, is the disgusting theory that leads them to presume that it was godlessness that made Hitler and Stalin the monsters that they were. We are all monsters unless redeemed by Jesus. What a vile, depraved, inhuman theory to base your life on.

Joseph Ratzinger is an enemy of humanity.

He is an enemy of children, whose bodies he has allowed to be raped and whose minds he has encouraged to be infected with guilt. It is embarrassingly clear that the church is less concerned with saving child bodies from rapists than with saving priestly souls from hell: and most concerned with saving the long-term reputation of the church itself.

He is an enemy of gay people, bestowing on them the sort of bigotry that his church used to reserve for Jews.

He is an enemy of women – barring them from the priesthood as though a penis were an essential tool for pastoral duties. What other employer is allowed to discriminate on grounds of sex, when filling a job that manifestly doesn’t require physical strength or some other quality that only males might be thought to have?

He is an enemy of truth, promoting barefaced lies about condoms not protecting against AIDS, especially in Africa.

He is an enemy of the poorest people on the planet, condemning them to inflated families that they cannot feed, and so keeping them in the bondage of perpetual poverty. A poverty that sits ill with the obscene riches of the Vatican.

He is an enemy of science, obstructing vital stem-cell research, on grounds not of morality but of pre-scientific superstition.

Less seriously from my point of view, Ratzinger is even an enemy of the Queen’s own church, arrogantly endorsing a predecessor’s dissing of Anglican Orders as “absolutely null and utterly void”, while shamelessly trying to poach Anglican vicars to shore up his own pitifully declining priesthood.

Finally, perhaps of most personal concern to me, he is an enemy of education. Quite apart from the lifelong psychological damage caused by the guilt and fear that have made catholic education infamous throughout the world, he and his church foster the educationally pernicious doctrine that evidence is a less reliable basis for belief than faith, tradition, revelation and authority – his authority.

These were the Pope’s hideous remarks he is responding to:

“Even in our own lifetimes we can recall how Britain and her leaders stood against a Nazi tyranny that wished to eradicate God from society and denied our common humanity to many, especially the Jews, who were thought unfit to live.

“As we reflect on the sobering lessons of atheist extremism of the 20th century, let us never forget how the exclusion of God, religion and virtue from public life leads ultimately to a truncated vision of man and of society and thus a reductive vision of a person and his destiny.”

Tags: atheism, pope, religion, richard dawkins

Insurers Hike Rates as Result of Health Reform Bill

September 19, 2010 · Posted in General Economics · 2 Comments

The “Affordable Health Choices Act of 2009″ is making good on its title by accomplishing, as any government program, the exact opposite of the stated objective:

Health insurers say they plan to raise premiums for some Americans as a direct result of the health overhaul in coming weeks, complicating Democrats’ efforts to trumpet their signature achievement before the midterm elections.

Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of between 1% and 9% to pay for extra benefits required under the law, according to filings with state regulators.

These and other insurers say Congress’s landmark refashioning of U.S. health coverage, which passed in March after a brutal fight, is causing them to pass on more costs to consumers than Democrats predicted.

The rate increases largely apply to policies for individuals and small businesses and don’t include people covered by a big employer or Medicare.

About 9% of Americans buy coverage through the individual market, according to the Census Bureau, and roughly one-fifth of people who get coverage through their employer work at companies with 50 or fewer employees, according to the Kaiser Family Foundation. People in both groups are likely to feel the effects of the proposed increases, even as they see new benefits under the law, such as the elimination of lifetime and certain annual coverage caps.

Many carriers also are seeking additional rate increases that they say they need to cover rising medical costs. As a result, some consumers could face total premium increases of more than 20%.

While the increases apply mostly to the new policies insurers write after Oct. 1, consumers could be subject to the higher rates if they modify their existing plans and cause them to lose grandfathered status.

The rate increases are a dose of troubling news for Democrats just weeks before an election in which they are at risk of losing their majority in the House and possibly the Senate.

In addition to pledging that the law would restrain increases in Americans’ insurance premiums, Democrats front-loaded the legislation with early provisions they hoped would boost public support. Those include letting children stay on their parents’ insurance policies until age 26, eliminating co-payments for preventive care and barring insurers from denying policies to children with pre-existing conditions, plus the elimination of the coverage caps.

My comment:

Yes, when you outlaw the denying of policies to people with pre-existing conditions, then costs will go up as a result. That’s not such a tough one to figure out, folks. Did the legislators expect something else to happen? Of course they didn’t. Do they care? Of course they care … about beefing the bill up with things that sound good at first glance, making it appealing to the public to push it through quickly as possible. Do they care about what happens thereafter? Why, of course they do. They care about granting access to positions, offices, projects, and cash to those who invested money in the legislators writing the laws (a.k.a lobbyism).

Now, I can already hear people object: “But Niiiima, health costs were always going up, you are now blaming Obama/Democrats for something that has been happening regardless.” OK, but my point is that these people claimed, and a lot of gullible people listened, that it will be THEY who will make health care more affordable and THEY who will make it universal and bla bla bla.

Republicans and Democrats alike have both been instrumental in socializing the US health care system over the past century. I don’t blame one party more than the other. I blame the idea that a system of organized and centralized aggression can ever be sustained. I support peace and non-aggression as a solution. During abolitionism, people didn’t replace mean slave masters with kinder ones. They abolished the system of slavery, period.

Why will this bill not make real rates drop, at least not lastingly? Because none of the fundamental issues of the health system have been solved while a lot of them have been aggravated through this legislation. As I explained before:

But without addressing the 3 steps I outlined above, all other efforts will be completely and absolutely futile. Without addressing the root of high health care costs, it does not matter whether we let government alone take care of health insurance, or whether we completely liberalize the health insurance market. Nothing would change substantially. We would still be paying high premiums that go into a pool that pays for overly expensive health care products and services. We would still be faced with an inherent shortage of health care goods and services.

Weeks before the election, insurance companies began telling state regulators it is those very provisions that are forcing them to increase their rates.

Aetna, one of the nation’s largest health insurers, said the extra benefits forced it to seek rate increases for new individual plans of 5.4% to 7.4% in California and 5.5% to 6.8% in Nevada after Sept. 23. Similar steps are planned across the country, according to Aetna.

Regence BlueCross BlueShield of Oregon said the cost of providing additional benefits under the health law will account on average for 3.4 percentage points of a 17.1% premium rise for a small-employer health plan. It asked regulators last month to approve the increase.

In Wisconsin and North Carolina, Celtic Insurance Co. says half of the 18% increase it is seeking comes from complying with health-law mandates.

The White House says insurers are using the law as an excuse to raise rates and predicts that state regulators will block some of the large increases.

“I would have real deep concerns that the kinds of rate increases that you’re quoting… are justified,” said Nancy-Ann DeParle, the White House’s top health official. She said that for insurers, raising rates was “already their modus operandi before the bill” passed. “We believe consumers will see through this,” she said.

Previously the administration had calculated that the batch of changes taking effect this fall would raise premiums no more than 1% to 2%, on average.

After Regence mailed a letter notifying plan administrators of its intention to raise group insurance rates in Washington state, the White House contacted company officials and accused them of inaccurately justifying the increase. Kerry Barnett, executive vice president for Regence BlueShield, said the insurer is changing the letter to more precisely explain the causes of the increase.

The industry contends its increases are justified. “Anytime you add a benefit, there are increased costs,” said Karen Ignagni, president of America’s Health Insurance Plans, the industry’s lobbying group.

Massachusetts, which enacted universal insurance coverage several years ago, also has seen steadily rising insurance premiums since then. Proponents of that plan attribute the hikes there to an overall increase in medical costs, while insurers cite it as a cautionary example of what can happen when new mandates to improve benefits aren’t coupled with a strong enough provision to force healthy people to buy coverage.

Republicans, who have sought voter support by opposing the health law, say premium increases could help in November’s congressional races. “People are finding out what’s in [the law], they don’t like it, and I think it’s going to play a big factor in this election,” said Iowa Sen. Charles Grassley, the top Republican on the Senate Finance Committee.

About half of all states have the power to deny rate increases. Ms. DeParle pointed out that the law awards states $250 million to bolster their scrutiny of insurance-rate proposals, saying that will eventually curb premiums for people.

“In Kansas, I don’t have a lot of authority to deny a rate increase, if it is justified,” said Kansas Insurance Commissioner Sandy Praeger. She recently approved a 4% increase by Mennonite Mutual Aid Association to pay for the new provisions in the health law.

The process of reviewing rate increases varies by state. For instance, Ms. Praeger said she can deny only rate increases that are unreasonable or discriminatory.

Some regulators say not all insurers have adequately justified their increases. “A lot of it is guesswork for companies,” said Tom Abel, supervisor at the Colorado Division of Insurance. “I was anticipating the carriers to be more uniform.”

Regence BlueCross BlueShield of Oregon, which estimates its increase covers 57,000 members, said its goal is to “anticipate the financial needs of our members as accurately as possible and to collect just enough premiums to cover costs,” said a spokeswoman. Other insurers offered similar explanations or declined to discuss their increases.

A small number of insurers have submitted plans to lower rates and cite the new mandates in the legislation as the reason. HMO Colorado, a Blue Cross Blue Shield plan owned by WellPoint Inc., submitted a letter to state regulators saying small group rates would fall 1.8% starting Oct. 1 because of changes from the law.

Democrats had hoped to sell the bill in the fall elections. But in recent weeks, some Democrats who voted for the bill have shied away from advertising that fact, while the handful of House Democrats who cast “no” votes see it as a potential boost to their re-election bids.

“I think it’s a question of short term versus long term,” said North Carolina Insurance Commissioner Wayne Goodwin, a Democrat up for re-election in 2012. “Thankfully we’re seeing people get more coverage and protections than they’ve ever had before. But until we see the medical-cost inflation affected, you’re likely to see rate increases as long as they are not excessive and in violation of the law.”

… and, dear Mr. Goodwyn, how is this magical “medical-cost inflation” going to be “affected”? Are you going to pray for it? Perform a rain dance? Are you hoping that it’ll just happen somehow somewhere out of the blue? Are you going to will it to happen? Should we maybe write some letters to our health care and pharmaceutical companies asking if they could be a bit nicer and maybe make their goods cheaper?

Haha … you people have got to be kidding !

I am not sure what more I can add than all the things I already wrote, predicted, explained, and reasoned out on the matter of health care. Feel free to explore the links below …

Tags: health care, health care bill, health insurance premiums

Existence, Logic, Evidence, Truth, Knowledge & Bigotry

September 16, 2010 · Posted in Philosophy · 15 Comments

Existence

Matter is everything that has a detectable mass. It consists of elementary particles. Some particles form electrons and protons. Those in turn are the basis for atoms. Multiple atoms can form molecules. Matter is what forms the different objects that we can observe around us.

There are also some other particles which do not constitute matter, but are rather considered force carriers, such as a photon which is a carrier for light.

In any case, the existence of an object is broadly defined as its consisting of one or several connected particle(s).

Human Observation

A human being, too, is an object that consists of matter. He can observe and confirm the existence of other objects via his senses of sight, hearing, taste, smell, and touch, if need be aided by certain devices, which are all means to trigger chemical reflexes in his neural system and his brain. Man’s consciousness, the sequence of all such reflexes, is an effect of the existence of his brain.

Consciousness allows man to formulate propositions, that is statements about (1) the physical observable properties of an object and (2) its actual movements relative to other objects. It also allows him to group objects with similar observable properties into the same conceptual categories and thus to speak of objects in the form of concepts.

Logic & Validity

Logic is the examination of a proposition’s compliance with 3 axioms: the law of identity, the law of non-contradiction, and the law of the excluded middle. These laws are derived directly and objectively from the consistency of reality.

The law of identity says that the statement A = A (at the same time and place) is always true. For example, the statement “that rock on the ground is that rock on the ground” is always true. The statement “I am myself” is also always true in that same regard. The proposition “The law of identity is invalid” implies that A = A is false. This would mean that A = non-A is true. This would imply that the statement “The law of identity is invalid” is identical to saying “The law of identity is valid”. Thus anybody who tries to oppose the validity of the law of identity affirms the law of identity in the very process, making it an irrefutable axiom.

The law of non-contradiction says that claiming A AND non-A (at the same time and place) is always false. No proposition can be true and false at the same time. The statement “I am sitting at my desk and I am also not sitting at my desk at the same time” is always invalid. The proposition “The law of non-contradiction is invalid” validates the law of non-contradiction. For if it was invalid, then the proposition “The law of non-contradiction is invalid and valid at the same time” would be correct. But then the person advancing the proposition would always have to affirm as valid the statement “The law of non-contradiction is valid” as well. Thus the law of non-contradiction, too, is an irrefutable axiom.

The law of the excluded middle says that either A OR non-A is always true. This means that, for example, the statement “I am either sitting at my desk or I am not sitting at my desk” is always true, there is nothing in-between. The proposition “The law of the excluded middle is invalid” validates the law of the excluded middle. For if it was invalid, then the statement “The law of the excluded middle is either valid or invalid” would be false. But that would mean that “The law of the excluded middle is invalid AND valid at the same time” would have to be true. But in that case the party advancing that proposition would always have to affirm as valid the statement “The law of the excluded middle is valid”.

The logical examination of a proposition is very helpful because it can save you a lot of time. If a proposition fails the test of logic, there is no need to move on and look for evidence. If I say that there are cookies in the jar and these very same cookies are also on the moon, then you don’t need to open up the cookie jar, fly out to the moon, search the whole planet for cookies, etc. Since reality is consistent, and logic is just a derivative of reality’s consistency, any proposition that fails the logic test is by definition false.

A proposition that passes the logic test is valid. In order for it to be considered true, however, it still needs to pass the test of evidence.

Evidence & Accuracy

Evidence is the sensual, sufficient, and direct observation of objects in reality with the objective of testing the accuracy of a certain proposition. If the observed properties and/or movements of existing objects match those advanced in the proposition then it can be said that evidence exists to corroborate that proposition.

Any proposition that cannot be confirmed by evidence is inaccurate and thus its truth, if any, cannot be confirmed until proven accurate.

Any proposition that is confirmed by evidence can be considered accurate. The more evidence exists to corroborate a proposition the higher its degree of accuracy.

Truth

A proposition that is both valid and accurate can be considered to have been proven to be true. But as humans are fallible in their observations and thinking, they may, at times, make mistakes that lead them to ascribe truth to propositions that are actually false. Thus, there is always room for correction in the pursuit of knowledge. This of course does not mean that reality or truth are in any way relative.

Knowledge vs. Bigotry

One’s knowledge is the set of those propositions that one subscribes to that have been proven to be true via logic and evidence. Any activity that involves the discovery of true propositions may be referred to as the pursuit of knowledge.

Bigoted beliefs are the false propositions one subscribes to in spite of missing or even contrary evidence. Any activity that involves the defense of false propositions in the face of missing or even contrary logic and evidence may be referred to as bigotry.

Tags: bigotry, evidence, existence, knowledge, logic, truth

Gold Prices Hit All Time Record High

September 14, 2010 · Posted in Investing · Comment

Today gold bugs are happy as Gold Prices Surge, Top $1,270:

NEW YORK (TheStreet ) — Gold prices were popping Tuesday as investors turned to gold as safe-haven asset after a slew of disappointing economic data.

Gold for December delivery was adding $27.30 to $1,274.40 an ounce — a record high — at the Comex division of the New York Mercantile Exchange.

The article obligatorily drones on about the cause for the gold price surge now suddenly being inflation fears again, which is of course the purest nonsense as I outlined a while back.

These people try to fit in day to day events into their tiny mental box and spout out knee jerk platitudes as quickly as they possibly can, whenever they observe one isolated incident. Gold prices rising? Inflation! Economy not growing meanwhile? Stagflation! Interest rates dropping. Deflation! Prices not rising quickly enough? Disinflation! Dollar AND gold up?? How weird!!

Few people ever dare to go ahead and attempt to explain the big picture, that is why since 2007 Treasury yields and mortgage rates have moved near or BELOW historic lows, why the dollar is up, gold is up, silver is up, and soft commodities, stocks, and home prices are down, rents are falling, and why you can get a meal at Taco Bell for under $1 …

The answer is one word: Deflation.

Tags: deflation, gold

The Next Failed Socialist Experiment – Cuba to Lay Off 1,000,000 Government Workers

September 13, 2010 · Posted in General Economics · Comment

Historically, I would say this will certainly be remembered as a memorable event.

BBC reports Cuba to cut one million public sector jobs:

Cuba has announced radical plans to lay off huge numbers of state employees, to help revive the communist country’s struggling economy.

The Cuban labour federation said more than a million workers would lose their jobs – half of them by March next year.

Those laid off will be encouraged to become self-employed or join new private enterprises, on which some of the current restrictions will be eased.

Analysts say it is biggest private sector shift since the 1959 revolution.

Cuba’s communist government currently controls almost all aspects of the country’s economy and employs about 85% of the official workforce, which is put at 5.1 million people.

As many as one-in-five of all workers could lose their jobs.

“Our state cannot and should not continue maintaining companies, productive entities, services and budgeted sectors with bloated payrolls and losses that hurt the economy,” the labour federation said in a statement.

“Job options will be increased and broadened with new forms of non-state employment, among them leasing land, co-operatives, and self-employment, absorbing hundreds of thousands of workers in the coming years,” the statement added.

Free enterprise?

To create jobs for the redundant workers, strict rules limiting private enterprise will be relaxed and many more licenses will be issued for people to become self-employed.

Private businesses will be allowed to employ staff for the first time.

The self-employed will have access to social security and will be able to open bank accounts and even borrow money to expand their businesses.

They will also have to pay tax on their profits and for each person they employ, something which could dramatically boost the government’s income.

And they will be able to negotiate contracts to provide services to government departments.

A minority of Cuban workers already work for themselves, for example as hairdressers and taxi-drivers, or running small family restaurants.

There is also a thriving black economy, with many people working independently without proper permission from the state.

The BBC’s Fernando Ravsberg in Havana says salaries in Cuba’s state sector are so low that many employees could be better off working for themselves.

But he says not everyone has the skills and initiative necessary to be self-employed.

He adds that the government plan does not foresee any kind of advice being offered to people seeking to set up their own businesses.

Economic crisis

President Raul Castro outlined some of the changes in a speech in August, saying the state’s role in the economy had to be reduced.

“We have to end forever the notion that Cuba is the only country in the world where you can live without working,” he said.

Cuba’s state-run economy has been gripped by a severe crisis in the past two years that has forced it to cut imports.

It has suffered from a fall in the price for its main export, nickel, as well as a decline in tourism.

Growth has also been hampered by the 48-year US trade embargo.

Mr Castro became Cuba’s leader when his brother, Fidel Castro, stepped aside because of ill-health in 2006.

Almost 100 years ago, Ludwig von Mises already explained with precise and uncompromising rigor why Socialism is flawed and will never work. It is due to socialism’s inherent inability to allow for accurate prices to emerge in order to optimize the allocation of factors of production.

Is this a sudden enlightenment on the part of Cuban officials? An epiphany that government intervention is immoral, always and everywhere? Hardly so … But what is going on is that Cuban leaders are realizing that there will be a lot more to loot via taxation if you leave people a little bit more freedom.

History has shown always and everywhere that when the government shrinks, the economy thrives, more valuable goods are produced and services provided, people have more disposable income, and thus more money to get ripped off from them.

There is a reason why farmers prefer free range cattle farming to locking their animals up in a small box. There is a reason why slave masters made it a point to convince slaves that they are where they belong and should police themselves. The lower the cost of ownership, the easier it is to rule over people.

Cuba has a perfect example of such an interventionist experiment right next door in the US. And it has indeed bestowed upon its politically connected people enormous riches in a relatively shielded and domestically peaceful environment. That experiment is coming to an end and the country is headed for the inevitable and slowly creeping culmination of interventionism: A complete collectivization of the economy, viz. socialism … Ironically, the exact opposite of what’s now happening in Cuba.

To be sure, such a system of interventionism, too, will not last forever. It will fail. But for as long as it’s in place, it allows the ruling class a lot more riches, comfort, and pseudo moral justification than the overt all round management and controls of socialism.

Two little references that I always like to remind people of:

Ayn Rand wrote in Atlas Shrugged in 1957:

“Politicians invariably respond to crises — that in most cases they themselves created — by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.”

Ludwig von Mises wrote in his analysis Interventionism in 1940:

The various measures, by which interventionism tries to direct business, cannot achieve the aims its honest advocates are seeking by their application. Interventionist measures lead to conditions which, from the standpoint of those who recommend them, are actually less desirable than those they are designed to alleviate. They create unemployment, depression, monopoly, distress. They may make a few people richer, but they make all others poorer and less satisfied. If governments do not give them up and return to the unhampered market economy, if they stubbornly persist in the attempt to compensate by further interventions for the shortcomings of earlier interventions, they will find eventually that they have adopted socialism.

On a sidenote: Observe how many socialists will immediately tell you how Cuba was not a socialist experiment, and how they completely misinterpreted true communism/socialism/collectivism. And then ask to what extent they are, in their rigorous and relentless fight for logical consistency and evidence, giving the ideas of capitalism that same benefit of the “misinterpretation tale” :)

Tags: cuba, socialism

How the Depression is Changing Families – More Families in Shelters; More Children Living With Grandparents

September 13, 2010 · Posted in General Economics · Comment

The NYT points out the tragedy that The Number of Families in Shelters Rises:

…from 2007 through 2009, the number of families in homeless shelters — households with at least one adult and one minor child — leapt to 170,000 from 131,000, according to the Department of Housing and Urban Development.

With long-term unemployment ballooning, those numbers could easily climb this year. Late in 2009, however, states began distributing $1.5 billion that has been made available over three years by the federal government as part of the stimulus package for the Homeless Prevention and Rapid Re-Housing Program, which provides financial assistance to keep people in their homes or get them back in one quickly if they lose them.

More than 550,000 people have received aid, including more than 1,800 in Rhode Island, with just over a quarter of the money for the program spent so far nationally, state and federal officials said.

Even so, it remains to be seen whether the program is keeping pace with the continuing economic hardship.

Don’t hold your breath from these government programs to affect any change in this grim trend. Rather expect it to fuel and cement the problems at hand. As we all know, the government is inherently incapable of and uninterested in fighting poverty. Bureaucrats do, on the other hand, have every incentive in the world to maintain and keep in place a permanent underclass of dependent and poor people to justify programs such as the ones that are mentioned in the NYT article, the funds of which of course mostly, as always, end up in the hands of bureaucrats and other politically connected groups, rather than poor people who will of course receive a mere pittance so they keep quiet.

On another related note (I guess), More Children Being Raised by Grandparents:

The number of American children being raised by their grandparents rose after the recession began, according to a report from Pew Social Research.

The report, based on an analysis of Census data, found that the number and share of children who lived with their grandparents had been slowly rising over the last decade but increased sharply from 2007 to 2008:

The sharpest increase in the number of children who had a grandparent as a primary caregiver was among white children, though in general this family set-up is more common in black and Hispanic families.

Not all of these children live alone with their grandparents; in fact, only 43 percent of these children have no parent in the household. Nearly half (49 percent) of children being raised by grandparents also live with a single parent, and 8 percent live with both parents in the household in addition to the caregiver grandparent.

… these changes in family lifestyles, habits, and child raising are the all to expectable side effects of The Great Depression 2.0 and its corollary, the end of consumerism. One thing is for sure: These children are learning lessons they will never ever forget.

Tags: children, poverty

Mortgage Rates 8/26/2010 – Yet Another All Time Low

September 2, 2010 · Posted in General Economics · Comment

… mortgage rates for the conventional 30 year mortgage have continued their decline to now 4.36%, a historical all time low.

Actually there is also an update for this week from Friddie Mac, according to which rates have already dropped to 4.32%:

Mortgage rates fell to the lowest level in decades for the tenth time in 11 weeks, as investors worried about the economy.

The average rate for a 30-year fixed loan was 4.32 percent this week, down from 4.36 percent last week, mortgage buyer Freddie Mac said Thursday. That’s the lowest since Freddie Mac began tracking rates in 1971.

The average rate on 15-year fixed loan dropped to 3.83 percent from 3.86 percent the previous week. That’s the lowest on records starting in 1991.

Tags: mortgage rates