You Make an Excellent Point, Sir

David Malpass is becoming one of my favorite commentators on finance and economics. If you are a follower of economic news and watch networks like CNBC, you'll find yourself adrift in a sea of self-seeking doubletalk. Malpass is a clear thinking man who has a posting at The National Review where he writes about taxes and small business.

In it, he addresses an important issue with the Federal Reserve's current monetary policy of zero interest rates. The question is, what is my incentive to save if my return is zero and how can the money supply grow (and spur lending) if I don't want to save?

Here's the money quote, "The money supply (which includes cash plus the balances of checking and savings accounts) surged after the Lehman bankruptcy in late 2008. But money-supply growth has almost stopped today, meaning there’s no longer much incentive to add to a savings or checking account while the interest rates on them are stuck on zero." Read the whole thing.

The Morality of Freedom

The founders of the United States held a couple of truths to be self-evident that are not commonly discussed today. The first is that the holding of personal property (also knows as property rights) is just as important as something like the right to vote or free speech.

The second is that the ownership of property is, in fact, a moral right. Said differently, theft is wrong because it is immoral for one person to take the property of another. (Why it's immoral is a different discussion.)

Modern libertarian and conservative politicians seldom speak of personal freedoms in moral terms. This was one reason Ronald Reagan was so successful, because he did just that.

Ask the question this way, what gives one agent (a government) the moral right to take property from another agent (you) in the form of a tax? If you have no say in how you are taxed, how is that different than theft?

Libertarians and conservatives would do well to start speaking about the morality of government actions and individual freedoms. This article lends some underpinning to the discussion.

How IT Is Set Up to Fail

Martha Heller is on to something here.

F.A. versus John Maynard, They've Been Going Back and Forth for a Century

I couldn't have said it better myself. Hundreds of writers have spent hundreds of thousands of words trying to say this and not done this well. Check it out.

It's Not What You Think

I am the only person that I know personally who has read Adam Smith's The Wealth of Nations, which is the bible of Capitalism. I contend that what we have in the United States now is not Capitalism but is, instead, Corporatism. Nobel laureate Joseph Stiglitz apparently agrees with me. It's nice to see them come around.

Where Is The Money Going?

The public usually does not understand and often does not follow the gymnastics of the Federal Reserve. Pity. The Fed has more indirect influence over the American economy than any other single institution.

Occasionally I go diving into the money supply movements. What I've just seen is that the multiplier has only crept over 1.0 twice in the last year and has been consistently below 1.0 for most of that time. The most recent number shows that for every dollar the Fed creates, only 85 cents is making it into the economy.

Where is it going? Most likely into bank capital reserves. In other words, banks are either holding it to increase their reserves, cannot find suitable loans to make with it, or both. This is what a buddy of mine calls pushing a rope.