Paul Mladjenovic: Economists Exhibit Lunacy and Confusion over the Gold Standard

"Some conventional and well-known economists have expressed the idea that a gold standard is a bad idea and that the gold standard was a major (and possibly THE major) catalyst for the Great Depression. One well-known fellow surmises that an equivalent of the gold standard is the reason why today’s European financial crisis is going on. In due course, I am sure that they will blame the gold standard for global warming and probably the heartbreak of psoriasis…

The point that critics make is that the gold standard “removes financial flexibility” when a system-wide financial crisis unfolds. They don’t like a gold standard because it is viewed as a “rigid constraint”.
In a monetary system that is on the gold standard, the amount of currency you can produce at will is indeed greatly constrained since the amount of currency (dollars or euros or whatever) is limited to the amount of gold that is on reserve. This condition puts the breaks on the unlimited creation of a currency.

The real problems behind today’s (and yesterday’s) financial crises and depressions have nothing to do with constraints such as a gold standard; the problems come from mismanagement of spending and debt… and governments that are too expansive in their size and scope.

Economists don’t blame governments for spending too much or creating too much debt or printing up too much of their currencies; they blame whatever may stop them from doing so (such as a gold standard). This is insane; it is like blaming the seat belt for a car crash..."

at http://www.munknee.com/2012/03/paul-mladjenovic-economists-exhibit-lunacy-and-confusion-over-the-gold-standard/

Why money-printing is like 'global warming'

"Here's a must-read post by Aussie blogger Jo Nova – and it's not on her usual topic climate change. The title says it all: The Ground Zero of Global Corruption: it starts with The Currency.

It’s like this. The governments and their central banks make as much free money from thin-air through fractional reserve banking and other methods as they can get away with — it benefits those who “spend that new money first”. They spend it at current prices, and pay it back later, after inflation has decreased its value. The people who pay the difference are those who saved and held money while its purchasing power fell. Speculators grow rich, while retirees and savers get poorer.
In a free market this would quickly lead to inflation, and people would rush to the only currencies the government can’t inflate (or “print” for free) — they’d buy and hold gold or silver and keep their purchasing power. Remember, gold and silver are the currencies that evolved in the marketplace over the last 5,000 years and are not directly under the control of government. (And “so?” you say?). The point is, if the prices of gold and silver rise fast, people would abandon bonds and get into metals instead, thus correcting the situation by making the printing and speculating game vastly less attractive while saving and production became more attractive. Essentially, people dump the government money and go for the competitor, which means the government (and or Fed) has to increase the interest rate and pay more for its money, and nobody wants that: God forbid that Governments or Banks should pay people a fair rate for borrowing “their” money.
Bonds and “treasuries” (US Treasury Bonds) are fancy words for loans to the government. But if no one wants to buy them, then the government has trouble raising funds for its massive pork barreling vote-buying schemes, and the investment bankers pay higher interest payments which takes all the fun out of Grossly Huge and Obscene Mergers, the SubPrime Parties and the High Frequency Festivals.

I had a similar awakening a few months back when I went to see Detlev Schlichter talk to a small group of (somewhat terrified) MPs about his book Paper Money Collapse in a meeting organised by the Cobden Centre. Here is Schlichter explaining why Ben Bernanke's, George Osborne's and the European Central Bank's money printing experiment will only prolong the depression..."

at http://blogs.telegraph.co.uk/news/jamesdelingpole/100146037/why-money-printing-is-like-global-warming/

Despite Gains, This is the ‘Weakest Recovery Ever’: Rosenberg

"Recent economic gains have been primarily illusory, driven by weather-related factors that are not sustainable, economist David Rosenberg told CNBC.

“Is it growing? How could it not be growing,” Rosenberg said. “We’ve got four years of trillion-dollar-plus deficits, we have a Fed balance sheet that’s tripled in size, zero policy rates for three years. Of course you’re going to get some growth.”

“If you want to take a big-picture perspective, this goes down as the weakest economic recovery ever, despite all the ramp up in government stimulus, and that really tells you something,” he said.

“Employment data were affected by the seasonal adjustments,” he said. “It felt like March in February, and if you apply the March seasonal factors to February, employment would have actually declined.”

“As you look at the US economy over the next two years, is the US economy going to improve more or less than other economies around the world?” said Richard Bernstein, head of Richard Bernstein Advisors and a former colleague of Rosenberg’s at Merrill Lynch. “We are in the early stages of a long-term period of US asset outperformance.”

at http://www.valuewalk.com/2012/03/despite-gains-this-is-the-weakest-recovery-ever-rosenberg/

Presenting The High Cost Of Armageddon Avoidance

Courtesy of Bloomberg's Adam Johnson

at http://www.zerohedge.com/news/presenting-high-cost-armageddon-avoidance