Arkady's Thoughts

The credit expansion boom of 2009 will eventually go down as yet another period of credit expansion promoted by the Fed that will have lead to another predictable bust.   Today, it will be interesting to examine how the various levels of production are behaving under years and years of artificial interest rate suppression.  It will also be helpful to look at charts and graphs examining the business cycle theory and the impact of time preference as taught by Mises. For starters, those new to the concept - a very brief paraphrasing of the general idea. Under a healthy functioning market people's consumer patterns impact their savings.  More consumption equals less saving and less consumption more saving.  In order to progress the society must save such that it can make investments in machinery, equipment, technology, etc if it hopes to increase the capacity of production.   Sure ,you can harvest 10 coconuts a day, consume them by night and repeat the process...

Today Americans woke up to the news that Hostess, the manufacturer of products like Twinkies, Wonder Bread and other "food" items is shuttering.   The explanation provided is that their unionized strikers crippled production to such a point that it triggered an automatic contract clause.  To be sure, Hostess was already on the ropes and under private equity management due to filing for bankruptcy in January of this year (their second bankruptcy in a decade), but the death knell most certainly came earlier than expected. The closing of Hostess is actually quite tragic,  because the job losses are in the many of thousands : The closing will result in Hostess' nearly 18,500 workers losing their jobs as the company shuts 33 bakeries and 565 distribution centers nationwide, as well as 570 outlet stores. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union represents around 5,000 Hostess employees. "We deeply regret the necessity of t...

I present to you two examples from Europe that continue to demonstrate unequivocally that no matter how often fundamental economic principles are violated, the result is the same. A corollary lesson is that Governments will pursue these violations thinking naively that previous errors do not apply to them. Today's subject: sin tax. The idea of a sin tax continues to be popular on both sides of the proverbial political aisle. Even among those that generally accept that taxation deprives the private sector by transferring capital to the less efficient public sector favor the sin tax.  They justify this error by suggesting that people should not be engaged in sinful practices like:  smoking, drinking, gambling, prostitution or the multitude of other offensive actions and raising revenue from these sinful things is acceptable. Then there are those that are constantly harping on the "common good" and social welfare.  They justify the sin tax on the gro...

It has been four years since the world economy took a dramatic nose-drive from which we are still recovering from and like many historical economic events the perceptions and interpretations vary from person to person.  Even in the midst of the 2012 elections cries about reverting to failed deregulation policies were commonplace.   What will be ultimately be taught in schools, will be very similar to how the Great Depression was historically analyzed and taught.  How the historical analysis gets laid down could potentially build a slippery slope foundation for those relying on that text. Imagine thousands of years ago a historian with religious inclinations observing the destruction of Pompeii.  Those reading the history later would be convinced that the sinners of the city angered the gods and were punished for it and immortalized in liquid magma.  A seismologist would for instance have a very different take on the situation. Economic calamities are ...

The dust is beginning to settle and everyone is coming out to survey the damage.  On the surface, one would think nothing happened.  House is controlled by the GOP and the Senate and the White House are in Democrat hands.  Numbers appear to be largely the same, was there even an election?  One would think by the cries and wails of Romney supporters that the end is near. However upon closer inspection one sees some very interesting dynamics at play.  There were visible winners and losers yesterday.  Do not accept the explanations and excuses that are rapidly coming down the pipe from those with serious egg on their face, like Dick Morris and his assertions that the electorate changed or that no Republican could have won this election because Romney was so perfect.  Morris is blind, his blindness is punctuated by his closing statement: We must stop Obama’s socialist agenda. That’s our job for the next four years. We cannot allow Obama to magnify his...

The election is over, it was over before it even started, but for many of you this is a very bitter pillow to swallow.  I understand that and I am not looking to tout the "I told you so" line, but instead to explain why Mitt Romney losing is the best thing that can happen for the long term. There are three distinct camps in America right now.  The red jerseys, blue jerseys and those that are fed up with both.  Clearly the third camp is tiny and has no way of influencing change so the only way real change is going to come is due to some kind of crisis causing major jersey defections. Given that Obama won re-election despite: - One of the most anemic recoveries since the Great Depression - Sticky and persistent unemployment - A very unpopular health care legislation  - Polarized and partisan House/Senate/Electorate - Creeping inflation, high gas prices and stagnant wages. This suggests that as far as the majority of Americans are concerned, thin...

I find myself in a very different philosophical, theoretical and physical mood today than I found myself 4 years ago on the day before elections.  Last year, I was a nervous wreck and considered the impending election a critical juncture in America's history.  While I found myself objecting to much of what McCain had to offer and ultimately chose to vote third party, deep inside I longed for his victory.  My rationale at the time, heightened by the mysterious nature of Barack Obama, was that someone as Left as Obama will be devastating for the country.  I look at that thought process now and laugh. See, I am not laughing because I was wrong in my assessment of Obama and his propensity for damage, especially armed with a like-minded Congress, I was very wrong for another reason.  I foolishly thought that if McCain had won, our economic and financial health would somehow be different.  I am sure at this point, you - regardless of political persuas...