Roubini spreading gold nonsense

Good grief. I used to find Nouriel Roubini to be interesting several years ago but then he went wacko. His latest hysterical attack against the use of gold as currency is absurd.

When I pay somebody with legal tender that is any higher than a $20 bill, the first thing they usually do is take a closer look at it to see if it is fake. The hold it up to the Sun. They scan it with blue light. The rub it between their fingers. Somebody even smelled it once. I found out the other day that photocopied $5 bills are becoming very common in tip jars at establishments that usually have dim lighting. That is a pity. Anyway, That is our legal tender for you.

Counterfeit bills appearing in circulation is not the problem with fiat money. The real problem is the central bank increasing the money supply with nothing to back it.

If you pay me with a gold coin, I can test it to see if it is debased too. That may not be easy to do but it can be done. I can weigh it. I can measure its volume. Here is the beauty of using a precious metal: the government debasement of the money supply is on par with the debasement by a common crook. The government just can not hide its debasement the money supply.

Where Roubini is being disingenuous is by omitting the fact that people were forced to accept the King’s debased gold. Such extreme coercion can not happen today with debased metal.

The other good thing about precious metals is that it costs money to extract them. So, a person who wants to increase his wealth has a choice: dig or get a job and trade. It just makes no economic sense to fear an inflation of the gold supply.

One more thing about the monetization of precious metals is that nobody holds a monopoly upon what precious metals people will accept. Currencies will compete. Some people will trade gold. Other people will trade silver or whatever else.

Does that mean people will walk around carrying bags of gold in their pockets? No. They will keep using their plastic cards and trade private notes. However, at the end of the day or week or month, they will likely walk into their bank branch and demand to see their bars of gold in the vault to make sure there is no funny business going on. Heck, private vaults will probably spring up on the market to compete with banks!

A $1.6B Middle Finger

We get it, B.C. You’re ticked off at the Liberals and you want to punish them. The fact that you’re throwing common sense, rationality and self-interest out the window is beside the point. You want to stick it to deceitful politicians. I get that.

But I don’t get stabbing your fiscal stability in the neck.

If you do a quick search of The Politic (the search box is down at the bottom of the right hand column), you’ll see that I have a beef with the idea of a harmonized sales tax. I don’t like the fact that it conceals the source of each part of the tax (though this could be alleviated by having retailers display the taxes separately while keeping all the other wonderful aspects of the HST), but c’mon man, that’s no reason to throw a tantrum when Gordon Campbell dupes you (and I know about tantrums, though my three-year-old is more reasonable when I tell she can’t have a chocolate cookie).

Consumption taxes are good. They’re less distortionary than so many other taxes. They reduce transaction costs. And if you build in the right mechanisms, they’re a hella lot more fair. And, oh yeah, the B.C. HST did that. The reach of the sales tax was, arguably, further reaching than your beloved PST, but the rebates (read: money in your pocket) that would be issued would out-weigh the inconvenience of having to pay more at the cash.

But I get it. The Liberals went about the wrong way, and you just hate it when politicians lie to you. Of course, you don’t seem to mind when Bill Vander Zalm lies to you (though, if that’s the worst thing he’s ever done…), but at least he lets you get some self-righteous populous rage on. Not like those darned elites pretending like they know better than you… oh, wait.

And that’s the point, right? Fiscal sensibility, balanced budgets, economic security, a simplified and fair tax code… that’s all meaningless compared to sticking it to the man. Bra-vo.

So, do you realize how much you’re in the hole for? Did you really think about what will have to be done to switch back to your archaic, sentimental PST? Do you realize you owe the rest of us 1.6 freakin’ Billion dollars? It was mentioned on Twitter that 1.6 million people voted in this act of grandstanding referendum, so that’s $1000 per vote that you owe us.

And to the BC NDP and its supporters, what on earth have you done? Sure, the federal NDP recently ran a fiscally irresponsible campaign, but, damn, if thye didn’t build up the NDP brand like no one else. I think they actually made people forget what ruinous policies the NDP actually stands for. But you wouldn’t let that spoil your fun. The Liberals needed to suffer and you needed to prove your economic illiteracy. Are you, in fact, blind to the reality that you need to expand your tax base to fund all the goodies you want to buy? Do you not realize that the HST was, on balance, a fairer and more efficient way to achieve that?

And to BC voters, do you feel good? Are reveling in the pain Gordon Campbell is, no doubt, feeling as parades around London? Do you think that everything will just be fine, because you’ve slain the bogeyman that is the overbearing elites? Do you actually understand what you’ve done? No matter how good it feels to rebuke the public servants who think so little of you, you have just dealt a major blow to the province that, I assume, you love so dear.

So, yeah, that big ol’ middle finger you thrust in the face of the ruling Liberal party, you just shoved it in your own eye.

South African whites want to be compensated by blacks!?!

When I first read of Desmond Tutu’s appeal to tax white people to compensate the blacks, I was comfortable letting my anti-taxation sentiment rest. I thought: “Right on. Call it a tax but it really is just a reclaiming of stolen property.” [See my post on Free Trade to understand the truth about forced commerce on native inhabitants.] Now, I read this madness:

Soweto alone had more cars, taxis, schools, churches and sport facilities than most independent countries in Africa. The Blacks of South Africa had more private vehicles than the entire white population of the USSR at the time.

Today Soweto has modern shopping malls like, Dobsonville Shopping Centre. In 2005 the Protea Gardens Mall opened. This was followed by the Baramall Shopping Centre and the Jabulani Shopping complex and the Maponya Mall. Experts say that Soweto has as much as 25% oversupply of retail space.

— like, these are all universally good things?

So what if they have all the toys, the jobs, the schools and the playgrounds? This insane outlook from Chris Kritzinger seems to assume the unknowable. Namely:
1) the black people could not have done the exact same things for themselves
2) all of the black people want all of this stuff
3) forcing natives to conform to a western lifestyle of trinkets and gadgets is good
4) trinkets and gadgets are enough to ignore the hardship, misery and out-right theft endured by black South Africans
5) maybe the black people would be happy enough with the peace of being left alone all these years even without trinkets

This demonic idea that Blacks should be grateful to the Whites deserves to be smothered. It is insane. It is cruel. It is selfish. It is wrong.

A State Funeral for Jack Layton

When the idea of holding a state funeral for Jack Layton was first proposed (or, at least, when I first heard about it), I didn’t have particularly strong feelings, one way or the other.

I still don’t have strong feelings about it, but, all in all, I think this was the right move. Right now, his impact on the nation cannot be questioned. There is wide-spread mourning, and it seems many Canadians felt a sort of connection to the man. A state funeral is quite appropriate.

Goodbye, Jack

Jack Layton has lost his battle with cancer. As a nation, we are less for the loss.  My prayers are with his family, large and small.

Neutralize anti-Islamic dress laws by paying fines

This is too beautiful:

“J’en appelle aujourd’hui à une désobéissance civile”, déclare-t-il à France 24. “Je voudrais dire aux femmes de ne pas avoir peur de sortir voilée intégralement. En payant leurs contraventions, je neutralise la loi. Je veux montrer qu’elle ne fonctionne pas, que c’est un échec pour les acteurs politiques qui l’ont promulguée.”

— Rachid Nekkaz, 38 years old, real-estate businessman in Paris.

Stockwell Day sugar-coats Canadian monetary policy

Stockwell Day is tooting his own horn on the CBC:

Neither individuals nor nations can dig themselves out of debt by plunging further into it. And you don’t encourage workers to work harder by punishing their efforts with higher tax brackets.

Sounds good, right? The only problem is that Jim Flaherty and Mark Carney have been demanding an increase in credit and monetary expansion for the past few years. They are getting it too. The Conservatives are not following what Stockwell Day is suggesting.

I know. Conservatives will just say that they are following a balanced approach but that is nonsense. The Bank of Canada sustaining interest rates near zero is just a devious way to slowly redistribute wealth from the working class to the parasitic elite without anybody noticing.

Italian brute force tackling financial markets

The Italian government’s desperation to fight the market is laughable:

As stock and bond markets across the world tumbled on fears about Italy and Spain, it emerged that police acting on orders from prosecutors had raided the Milan offices of rating agencies Moody’s and Standard & Poor’s as part of continuing investigations into their role in the recent financial turmoil.
—SNIP–
A separate inquiry is being conducted by prosecutors in Rome into market panics in June and July. Italy’s stock market regulator, Consob, last month summoned Moody’s and S&P for meetings and urged them not to release their statements during market hours.

Elio Lanutti, president of one of the consumer groups that sparked the inquiry, said: “The three ‘sisters’ – Standard & Poor’s, Moody’s and Fitch – are an erratic danger to state sovereignty in the areas of economics and finance”.

Credit Rating Threat Level Orange

I always found the recent downgrading of U.S. debt to be more theatre than sound analysis. It reminded me of many of those silly terrorism warnings. S&P had to downgrade the U.S., because if they didn’t, and that remote chance of default came through, they’d look really bad – just like all those terrorism threat colours that changed with the bulk of air travel. If you claim that there’s a darned good chance every plane is going to blow up this weekend, and none do, well, good work, CIA. If you don’t make the silly warning, and some weird dude sneaks some malfunctioning bomb material onto a plane in his drawers, you can start packing up your desk.

Anyway, I found this analysis by Noah Millman on the silliness of the downgrade and the potential silver linings quite interesting:

But there is at least a bit of a silver lining: S&P has downgraded American sovereign debt to below AAA for the first time in, to all intents and purposes, forever.

Since the manifest culpability of the ratings agencies in the financial crisis obviously hasn’t done enough to dent their credibility, perhaps this ludicrous decision will be the straw that finally breaks the camel’s back.

Why ludicrous? Because the United States has the strongest credit in the world, as evidenced by the extraordinarily low rates of interest demanded for our debt and by the fact that when there is a financial crisis – even one caused by purported fears of an American default! – investors flee to the safety of . . . American government debt.

Read the whole thing. His predictions may not come true, but I’d say the odds that they do are Double-Aubergine.

Anarchy is dead in Somalia

Wow. The US administration is financing mercenaries to avoid the appearance of US troops on the ground.

There is no anarchy if there is government intervention.

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