Category Archive: 6b) Austrian Economics

Eugen von Böhm Bawerk
“Value does not come out of the workshop, but out of the wants that goods satisfy” The quote by Mr Eugen von Böhm-Bawerk is as true today as it was more than 100 years ago, even though modern pundits often ignore the simple fact. This blog is not an attempt to revive Mr Böhm-Bawerks thoughts, life and deeds, but from a sober view of the world comment on and analyze ongoing events. We aim to take the analysis a step further. We question accepted truths and always strive to answer the simple question “why?” We are opinionated.

Guided By Nonsense

  Seven Year Achievement   “Read the directions and directly you will be directed in the right direction.” — Lewis Carroll   See? It’s easy Janet! Just read the directions! Illustration credit: Walt Disney   U.S. consumers are at it again.  After a s...

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Grasping Parasites and Bernie the Underdog

The system changed in 1971, when President Nixon took the dollar off the gold standard. Since then, the powers that be no longer depended on Congress… or savers…or voters… to raise the funds they needed. What about Bernie Sanders?

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OPEC’s Game within a Game

The fact OPEC just agreed to agree on nothing in Vienna. What next? Lots of noise about collective output vs. country allocations.

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Notes from ECB Press Conference

ECB press conference June 2 2016 Q; Risk to inflation balanced? April meeting, no conclusive evidence of second round effects, are they now? A; Additional stimulus beyond CSPP and TLTRO2 not necessary as we expect higher inflation. We do not see evid...

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Arrant Star Trek Socialism

  Robotic Utopia In spite of the fact that Marx expressed nothing but disdain for his Utopian socialist predecessors such as Henri Saint-Simon and Auguste Comte, variants of Utopian socialism evidently live on. The latest iteration of the socialist d...

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On the Road to Panicville

  An Alert for the Global Posse of Liquidity Junkies In the summer of 2015 and again in December-February this year, global stock markets were rattled by weakness in the yuan’s exchange rate vs. the US dollar. Yuan weakness is widely held to exacerba...

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Economy “Improves”, Americans Get Poorer

  No Surprises BALTIMORE – We were not surprised by the big news last week. We saw it coming. Figures from the Conference Board research group revealed productivity sinking for the first time in three decades. We promised to explain why it was such a...

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The Stunning Idiocy of Steel Tariffs

  Victims of the Boom-Bust Cycle The world is drowning in steel – there is huge overcapacity in steel production worldwide. This is a direct result of the massive global credit expansion that has taken place over the past 15 years. Much of this capac...

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A Thank You to the Jackasses Running the Economy

  Rolling Back 200 Years of Growth BALTIMORE, Maryland – The press reported mixed financial news on Thursday. House sales, oil, unemployment figures… up, down… the news left investors puzzled.   Two of many symptoms of the much-bewailed “populist bac...

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Venezuela’s Gold Reserves Plunge To Lowest Ever As Maduro Repays Debt With Gold

Several months ago, as Venezuela's hyperinflating, imploding economy was spinning in freefall, leading to the dramatic episodes of total social collapse such as those profiled in "Scenes From The Venezuela Apocalypse: "Countless Wounded" After 5,000 ...

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How Elon Musk Helps Fools to Part Ways with Their Money

  Tesla Goes Fishing Tesla Motors is up to something remarkable.  But what it is, exactly, is unclear.  According to the Tesla Motors website, the company’s mission is: to accelerate the world’s transition to sustainable transport.   Tesla Model 3: t...

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The Power Elite: Bumbling Incompetents

Is there any smarter group of homo sapiens on the planet? Or in all of history? We’re talking about Fed economists, of course. Not only did they avoid another Great Depression by bold absurdity…giving the economy more of the one thing of which it clearly had too much – debt. They also carefully monitored the economy’s progress so as to avoid any backsliding into normalcy.

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Democratic Fun in Tajikistan

  Capo for Life! The people of Tajikistan love their president Emomali Rahmon deeply. And as we now know, nearly all of them do. The last time a leader of similarly exalted stature enjoyed such unconditional and unshakable support from the entire cit...

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Sloppy Decisions at Greenlight Capital and Pershing Square

  Not Just Wrong, but Monumentally Wrong Massive flaws at SUNE (Sun Edison) + VRX (Valeant) were somehow missed by both of these high profile/ well resourced hedge funds.   David Einhorn (Greenlight Capital) and Bill Ackman (Pershing Square) – both f...

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Time to Raise the White Flag at Gualfin?

  Who Cares What Voters Want? BALTIMORE, Maryland –  There were two newsworthy developments last week, neither of them really important – the first because it won’t happen, the second because it won’t matter. First, the Fed let it be known that it ha...

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Nigeria Currency Devaluation Looms As FX Forwards Crash To Record Lows

Despite US equity investors' exuberance over bouncing crude oil prices, the world's crude producers continue to suffer and while Venezuela is in the headlines every day (having already collapsed into chaos), Nigeria appears the nearest to that abyss ...

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Three unintended consequences of NIRP

Central bankers use low or negative interest rates so that it leads to more investment. For them interest rates are a consequence of the currently very low inflation rates. Patrick Watson argues differently: Falling prices are a consequence of low interest rates.

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Are Investors Idiots?

  Black-and-Blue Crash Alert Flag Let us  begin the week “on message.” The Diary is about money. Today, we’ll stick to the subject.  Old friend Mark Hulbert has done some research on the likelihood of a crash in the stock market.   Ye olde tattered C...

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Austria’s Presidential Elections – Europe’s Social Mood Keeps Worsening

Austria is a small European nation that has made the grievous mistake of needlessly joining the EU in 1995, together with Finland and Sweden. Austria’s neighbor Switzerland, which is of roughly similar size and likewise militarily neutral, proved to have far better instincts. The Swedes subsequently at least had the good sense to stay out of the euro zone. It seems if there is a mistake to be made, Austrian governments will eagerly make it.

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Academic Skulduggery – How Ivory Tower Hubris Wrecks your Life

In the 1970s economists started to incorporate rational expectations into their models and not long after the seminal Kydand & Prescott (1977) article named Rules Rather than Discretion: The Inconsistency of Optimal Plan was published. Their work has...

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