Last Updated: Oct 22nd, 2010 - 15:35:08 Newsletters : 2008 Newsletters : 19 September 2008 Thought for the Day The USA has now pushed nearly US$1 Trillion out of the helicopter to stop the economy from failing. $168 Billion refund to taxpayers, $85 Billion to AIG, $100 Billion to each of Fannie and Freddie and $29 Billion to Bear Stearns - pity about poor old Lehmans. Plus who knows how many billions into the various stressed banks around the country. Where does all this money come from. Is the Federal Reserve really worth that much that it can just parcel up $1 Trillion and hand it out. Of course not. This is just more debt on which taxpayers of the future will have to pay interest. It is hard to envision them actually paying it back - they have never done so before! The USA is in big trouble. We are told that private enterprise is the wealth generator for society and that governments can only tax, spend and redistribute that wealth. Many politicians don't seem to see this. They also don't see that it is their interference that causes all the problems! Meanwhile, back here in Kiwiland/Aotearoa our Labour Led Government is trying to be a wealth generator by buying businesses (Railways and Kiwibank) and investing on the international stock markets. I don't see how the Railways can be a success and didn't the old BNZ go bust 25 years ago? Buying at the peak of the stock market mania is not a recipe for success either. I wish them luck because it is my money they are using - they will need lots of luck because this strategy has never been successful before! Sep 18, 2008, 10:23 Newsletters : 2008 Newsletters : 19 September 2008 Are Fannie and Freddie Too Big to Fail? Our society consists of wealth generators who make real wealth and savings and the government who takes savings from wealth generators (the TAX system) and distributes it to those who might vote for it in the next election; ie students in 2005 who voted for a Labour Led Government and got "free" money as a reward. This way of running economies has its downside as Frank Shostak explains with Freddie and Fannie as the example: "We suggest that the seizure of Fannie Mae and Freddie Mac (FF) by the government cannot help the housing market or the economy. Most people hold the mistaken view that the government has extra real resources that can be used in emergencies. This is erroneous. The government is not a wealth generator; it can only consume and redistribute real wealth. What is needed to revive the economy is a growing pool of real savings. Neither the US Treasury nor the US central bank can create real savings. In order to keep the failing FF going, the taxpayers will be forced to foot the bill. This means a further squandering of the already depleted pool of real savings. Only wealth generators can revive the economy by accumulating enough real capital. In this regard, no government or central-bank policies can replace wealth generators. The only way wealth generators can act effectively is when they are not disturbed, i.e., in a free-market environment. The sooner the government allows them to move ahead, the sooner we will have economic improvement. Any government or central-bank policies that are intended to improve on the free market — in particular during difficult economic times — are likely to make things much worse and prolong the economic crisis." Read the full explanation here: [ Visit Website ] Sep 18, 2008, 12:21 Newsletters : 2008 Newsletters : 19 September 2008 From Now On Every Trade By AIG Is A Trade By The Government Government Bails Out AIG with $85 Billion Loan More paper money from the long suffering tax-payer. You will recall that Ben Bernanke the Chairman of the USA Federal Reserve Bank stated that the way to solve an economic bust was to provide plenty of cash to stop the banks from defaulting. He famously remarked that he would distribute money, "even if he had to hire a helicopter and drop bags of money into the streets." We are reaching that point. Sep 18, 2008, 10:41 Newsletters : 2008 Newsletters : 19 September 2008 Chinese Government Paper Urges New World Financial Order Those of you who have been following our never ending economics story will understand that with paper currencies nations will have a continual procession of boom and bust followed by more of the same. Now that the world has become the "global village" we find that all the nations and their paper money are becoming inextricably entwined. And, to make things worse the booms and busts are starting to occur in unison. It would seem that this is natural consequence of Central Banks working together to "solve" the problem. Their solution of course being to overwhelm the bust with more paper money which inevitably procures the following bust. A series of boom/bust conditions in the USA has finally led to the current housing/mortgage boom/bust. Just as other nations are having their own housing busts. This may be the big "crack up boom/bust" as envisaged by von Mises but if it is not then rest assured that the next one will be even closer to it. What can we do? Sep 18, 2008, 10:10 Newsletters : 2008 Newsletters : 19 September 2008 Global Credit System Suffers Cardiac Arrest on U.S. Crash "The global credit system came close to total seizure yesterday. Key parts of the derivatives market shut down and a panic flight to safety depressed the yield on three-month US Treasury bills to almost zero for the first since the Great Depression in 1934." So says Ambrose. Click the heading to read his full article. Sep 18, 2008, 09:20 Newsletters : 2008 Newsletters : 19 September 2008 The Glories of Change I remember more than 30 years ago reading a notice on the wall of Burroughs' (now UNISYS) computer room. Constant change is here to stay. And so it is in the market place. [ Visit Website ] Sep 16, 2008, 15:08 Newsletters : 2008 Newsletters : 19 September 2008 Why Taxes Don't Matter Much Anymore No more wars and misery - no more boom and bust povertising the population - no more paper money! This tax thought is interesting. [ Visit Website ] Sep 15, 2008, 12:37 Newsletters : 2008 Newsletters : 19 September 2008 Right and Left Thinking an Ideological Straitjacket Other people are coming to the realisation that the old political shibboleths are dying a shabby death. Left and right are just meaningless in today's world. Have a look at our "New Century Politics" diagram on our web site and you will see what we mean. The new Ozzie PM agrees with us! Sep 15, 2008, 11:19 Newsletters : 2008 Newsletters : 19 September 2008 Quote for the Week The strict limitation of government power imposed by the Constitution must be respected. We must accept the principle that government's function is not to regulate and plan the economy, protect us from ourselves, arbitrarily attempt to make us better people, or police the world by interfering in the internal affairs of other nations. Its proper function in a free society is to protect liberty and provide for a common defence. When that proper role is assumed, our problems will vanish. Dr. Ron Paul is a Republican member of Congress from Texas and a 2008 US presidential candidate. Aug 19, 2008, 10:06