Asset Inflation For Joe Six-Packs - By Matthias Chang (5/6/13) PDF Print E-mail
By Matthias Chang   
Tuesday, 04 June 2013 22:06


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Why The Fed Can't Stop Fueling The Shadow Bank Kiting Machine - By Bill Frezza (4/6/13) PDF Print E-mail
Bill Frezza   
Tuesday, 04 June 2013 10:38

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Japan’s Easy Money Tsunami - By David Howden (4/6/13) PDF Print E-mail
David Howden   
Tuesday, 04 June 2013 10:35

Ludwig von Mises Institute

The Bank of Japan has embarked on one of the most inflationary policies ever undertaken. Pledging to inject $1.4 trillion dollars into the economy over the next two years, the policy is aimed at generating price inflation of 2% and further depreciating the Yen. The idea is to fight “deflation” and increase exports.

The end result of this policy will be an assuredly larger balance sheet at the Bank of Japan (projected to nearly double to $2.9 trillion). Despite being lower than it was 25 years ago, the Japanese Stock Index has increased by 70% since November of last year. However happy people have been about higher stock prices, eventually the economic effects will be harmful; indeed the recent stock price crashes foreshadow still more troubles to come.

In my own contribution to Guido Hülsmann’s recent edited book The Theory of Money and Fiduciary Media, I take a critical look at these exact policies - expansions of the money supply aimed at stimulating output by way of manipulating the exchange rate. At the 100-year anniversary of the publication of Ludwig von Mises’s The Theory of Money and Credit, we can see that Mises had already grappled with the issues of currency depreciation in a manner superior to modern monetary economics. Furthermore, with the refinement of his business cycle theory in his book Human Action, we find that Mises also outlined the detrimental effects of such expansionary monetary policies.

The exchange rate determines the price a foreigner will have to pay for a domestically produced good. Increases in the money supply will generate inflationary price pressures that will in turn increase prices. This leads to a higher exchange rate, which means it takes more domestic currency to purchase a unit of foreign currency. This makes it cheaper for foreigners to buy our goods so exports increase. Conclusion: countries can stimulate exports and increase the number of jobs in export industries by inflating their money supply.



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German Official Warns Of Immediate 'Revolution' If EU Adopts US Model - German Finance Minister Wolfgang Schäuble Urges Adherence To Europe's Welfare Model - By Andrea Germanos (3/6/13) PDF Print E-mail
Andrea Germanos   
Monday, 03 June 2013 09:33

CommonDreams

Europe must not drop its welfare model in favor of US standards or it will spark a revolution "not tomorrow but the same day," Germany's Finance Minister warned on Tuesday.

Speaking at a conference in Paris, Wolfgang Schäuble was joined by other German, French and Italian ministers in issuing warning calls over the soaring unemployment plaguing nearly six million European youths, and that threatens an "entire generation of people" and risks losing "the battle for Europe's unity."

Warning of "catastrophe," Schäuble said, "We need to be more successful in our fight against youth unemployment; otherwise, we will lose the battle for Europe's unity."

Reuters reports:

While Germany insists on the importance of budget consolidation, Schaeuble spoke of the need to preserve Europe's welfare model.

If U.S. welfare standards were introduced in Europe, "we would have revolution, not tomorrow, but on the very same day," Schaeuble told a conference in Paris.
"We have to rescue an entire generation of young people who are scared. We have the best-educated generation and we are putting them on hold. This is not acceptable," added Italian Labor Minister Enrico Giovannini.

French president François Hollande, also at the conference, said “We need to act quickly” on youth unemployment.

"Remember the postwar generation, my generation. Europe showed us and gave us the support we needed, the hope we cherished. The hopes that we could get a job after finishing school, and succeed in life," said Hollande. "Can we be responsible for depriving today's young generation of this kind of hope?"

"Imagine all of the hatred, the anger, it's not anger that we're talking about in fact, it goes more than that. We're talking about a complete breakdown of identifying with Europe.

"What's really at stake here is not just 'let's punish those in power,' no. Citizens are turning their backs on Europe and the construction of the European project," said Hollande.

The New York Times adds:

Werner Heyer, head of the European Investment Bank, said the deepening youth unemployment crisis, alongside obstacles to cross-border lending within the euro zone, represented the region’s two “megaproblems.” But he cautioned that politicians would be mistaken if they believed that the European bank’s resources alone would be enough to solve the unemployment problem.

“Such expectations of the bank are beyond the horizon,” Mr. Heyer said. “There is no quick fix; there is no grand plan.”



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Why Stocks And Gold Are About To Reverse Course - By Toby Connor (3/6/13) PDF Print E-mail
Toby Connor   
Monday, 03 June 2013 09:31

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