How Stimulus Destroys An Economy

The concept of stimulus as it is practiced today began with John Maynard Keynes’s General Theory of Employment, Interest and Money. Keynes is frequently described as a greateconomist and by some even the greatest
economist who ever lived.

He was in fact of great mathematician but in no
way was he an economist. He had no clear
understanding of markets and held the same
naive beliefs about markets as do countless
uneducated and wishful thinking members of
the general public.

The most common naive belief about free markets is that when a business or industry becomes unprofitable absolutely nothing will emerge to take its place. Free markets provide an optimum in income and production for members of all income classes. Even though there is a 100% chance better and stronger businesses and industries will emerge, allowing that to happen
requires a leap of faith, because there is absolutely no sign that new enterprises will spring up
and generate new and greater economic opportunities. So, initiatives to have government save
what is failing abound. Businesses which fail do so for good reasons.

The one thing Keynes got right in his work was the necessity of complete objectivity in
implementing stimulus plans. This was Keynes’s straw man concept. This was his name for a
totally objective, non-political person to be in charge. Does nature provide this type of
individual. If you find just on example in all of history, please advise me who that person was or
is.

If total objectivity is necessary with fiscal stimulus, it is also necessary in monetary stimulus.
Both styles of stimulus are hashed out politically. Both monetary and fiscal stimulus serve as
political tools. What are politicians going to do when they believe increasing government
spending is good for the economy? Beginning with the Reagan administration stimulus is now
applied no matter what.

Any stimulus program requires an economic forecast. Please provide a list of forecasts by
credentialed economists that turned out to be more accurate than those of the same numbers of
astrologers. When you find a few, which you won’t, I will rethink my view of forecasts by
economists. If any stimulus plan is to be implemented, is a good forecast unnecessary? If a good
forecast is not possible, is there any reason an economy needs to be stimulated even in a case
where a macroeconomic theory calls for one. Should stimulus be applied even though no one hasany idea as to what will happen next? You decide. I have already decided. Show me where I am
misguided. Should congress apply stimulus, just in case the economy gets weak when no one is
looking?

Monetary theory had already been debunked as an economic remedy prior to the 70s. I still
remember a professor from that era explaining to the class that monetary policy had great
promise but in actual practice, it produced no worthwhile results. Monetary theory was
rediscovered and has reemerged as a political tool after the turn of the century.

Today both fiscal and monetary stimulus are political tools. Both are used to reward powerful
interests which support the essence of politicians who administer favors as a means of gaining
and retaining power. Both are very effective in that regard and are used for that purpose.

The effect of both is to create a huge income gap between the working poor and the wealthy.

Who benefits from stimulus? The beneficiaries of stimulus are the parties with enough political
power convince congress to spend in support of what they have to offer.

After forty plus consecutive years of stimulus, resources in the United States are allocated
grossly inefficiently. The economic viability of the poor and lower middle class have been
destroyed. So, the economy is collapsing. Since the free market system has been replaced by
stimulus inspired socialism where benefits go to the top, there is no way the economy will
recover from the severe depression we are entering.

Visits: 10

Stock Market What To Expect From February 27, 2020 Forward

You would think, from all of the talk about the virus, that its emergence is the only reason the market is down.

The magnitude of the decline is rooted in 40+ years of central economic planning. You have heard references to the wealth effect for years. What we are seeing these days is a the beginning of the reversal of the wealth effect. Q.E. and massive deficit spending initiatives are ostensibly for the benefit of the economy.  The Federal Reserve can pump mountains of money into the economy now but they can do just as well by adding grains of sand to the economy. More money is simply more money. When borrowed money has no use to those with the privilege of receiving, adding more of it ,  does them no good.

So, we let the richest 100 use government as a means of running up the value of everything they own and control. What is the final outcome? Either the economy sinks into a depression slowly or something happens that cannot be controlled with self serving legislation or anything else. My expectation has been that reality would impose itself on everyone slowly. It turns out that a virus emerges out of nowhere and the market starts down in a big way.

In an honest and free stock market, prices would respond to the virus, but that alone would not end a bull market. Will a spreading virus cause a depression? No, but the way governments respond to the virus can and that is happening. Without 40+ years of central economic planning behind us it would not.

So, it makes good sense for China and all other  countries to shut down production,conduct massive quarantines and take away the freedoms various populations

Visits: 0

The Most Important Thing

The stock market is the overwhelmingly most important thing in the world for the 10% who own 85% of all stock outstanding. The 100 or so richest people in the world actually are your real government. Americans are busy believing otherwise and promoting their own poverty. Folks in the U.S. are trained from birth to think like they do.

I frequently state that those 100 or so richest people in the world are controlling, acquiring and consolidating ownership of the world’s factors of production. By controlling the media, they also determine what your entertainment is but more importantly what you think and believe. Accomplishing these things allows them to literally write their enormous paychecks and guarantees them ever increasing enormous paychecks for as long as the future can be foreseen.

How do I know these things without having any facts at my fingertip? It is my understanding of natural law and the practice of using it to make forecasts. Here is a relevant point of natural law applicable in today’s economic and political arenas.

Any human being who has an incentive will act on that incentive in the absence of a stronger counter incentive. Anyone who has an incentive to steel will rob a bank if there is absolutely no way he will be caught.

Why would any group of people coral and manage the thoughts of the overall population for profit and use government as a means of increasing the value of everything they own? A better question is, why wouldn’t they? Who is going to stop them? Certainly the public won’t. The upper elite control our law makers. So, of course they will. All that is needed is the will, power and money to do these things.

Is this some kind of conspiracy? Am I a conspiracy theorist? It doesn’t have to be a formal conspiracy. It can be the manifestation of the interplay of symbiotic relationships over time. Regardless, it has the characteristics of a cartel. The exact nature of their relationships to one another would be nice to know but the outcome is the same regardless. All collective action is conspiracy based. In that respect, I am definitely a conspiracy theorist.

One problem the elite have is that of actual damage to their business interest. They also need a perpetual massive supply of unearned money which is funneled to them by way of our Federal Reserve. I have previously forecast that the stock market will drop when the economy tanks and there is nothing that can be done to stop it. I need to change that a little. If business losses are guaranteed because of something external smashing its way into the economy, that will have the same effect as a business decline that occurs because the buying power af the bottom rungs of the economy disappears.

The Coronavirus actually could serve as an exogenous event that stresses the economy to the point of collapse. We don’t know how serious the situation is. The reaction of the Chinese government indicates that it could be quite serious. The American media has for started shelving the story.

The purpose of all of this is to save the stock market. Americans need to be assured stock prices will continue to rise no matter what. The elite will actually see to it that the public gets no information that will scare them into selling their holdings. The lives and means of ordinary people mean nothing to these folks. Americans die because they have no information and have no way to anticipate a coming pandemic? To the elite, you go down as collateral damage.

Until something happens, the same trading patterns in the market will continue as usual. Sometimes the market will fall at the opening of trading. What happens? The market falls and lands in a basket. From there prices are manipulated higher any shorts are squeezed out of their positions. The last hour is devoted to closing the market up for the day or at worst at the high for the day.

On most days, the market is gapped up and then stabilized. A snake like pattern ensues and continues until the last hour. From that point until the close, all efforts are to close it well above the open but up for the day no matter what. In the media, this process is explained as mom and pop being excited about stocks and buying aggressively. It is nothing of the kind.

In politics, the democratic process is being discarded. Our free market system has been destroyed. The situation is ripe for an all out depression. It will happen but the stock market will be manipulated until none who manipulate the market are left standing. Does anyone want to play?

Visits: 0