The Washington 1 Percent

By James E. Miller

The Associated Press recently reported that half of all new college graduates are either unemployed or underemployed. These fresh-faced bachelor-degree holders are finding themselves opting for waiting tables and serving coffee just to pay off a trillion dollars in student loans. They are coming to grips with a lie perpetuated by university professors, faculty unions, and politicians that deluded them into thinking college by itself was the golden ticket to success.

Meanwhile, the rest of America is still muddling through years of high unemployment. The jobs connected to Alan Greenspan's housing bubble are gone and will likely never return. Federal Reserve chairman Ben Bernanke met the financial crisis with an unprecedented amount of monetary-base expansion, which has failed to significantly affect the unemployment rate. President Obama and his allies in Congress threw $800 billion at the economy to no avail and have been running federal deficits to the tune of over $1 trillion for three years now. This orgy of money printing and spending has done little for the residents of Main Street but has done wonders for Wall Street and other politically connected interests.

Last fall's Occupy campaign was representative of a growing distrust of the American economic system. Although many occupiers were misled into believing capitalism is the culprit behind the sluggish economy, the protest's focus on income inequality was not wholly inaccurate. Of course the inequality in income that is a byproduct of an unhampered market economy is not something to demonize. As Ludwig von Mises wrote in Economic Freedom and Interventionism, “Inequality of wealth and incomes is an… (Read more)

Source: Mises.org

Will Nickels and Pennies Soon Disappear?

By James E. Miller

 

Back in December 2006, the US Mint, in yet another power grab over economic life, made it illegal to melt pennies and nickels in addition to exporting large quantities of either. Though the Mint admitted there was no evidence coin melting was occurring, this was the government's attempt at being proactive to prevent the destruction of its legally imposed currency.

 

So why the concern over people melting down coinage that supposedly belongs to them?

 

Back when the ban was implemented, the high price of copper was responsible for driving up the price of individual nickels and pennies in terms of metal content. Due to their copper content (nickels minted between 1946 and 2011 are composed of 75 percent copper and pennies minted between 1909 and 1982 are composed of 95 percent copper), both coins have a higher value as metal than as legal tender.

 

The irony in the government banning the melting of its own issued currency lies in the fact that its own actions contribute to the higher price of copper. Whenever the Federal Reserve engages in dollar easing (read: money printing), this newly printed "wealth" often translates into higher stock and commodity prices. Even the very announcement of… (Read more)

 

Source: Mises.org

In Defense of Flash Trading

By James E. Miller

 

It's fascinating to watch footage of a trading floor on Wall Street. Here men and women spend hours with their eyes glued to computer monitors while furiously calculating trades that often yield small profits or minimal losses. In the case of Swiss bank UBS trader Kweku Adoboli, it can result in a $2 billion loss and an unfortunate incarceration. The risks run high as trading requires a sizeable amount of dexterity and concentration to be successful in a network of like-minded profit seekers. Still, there is an underlying beauty to the process, as thousands (perhaps millions) of individuals coordinate their knowledge on the allocation of limited resources throughout the world.

 

Nobel laureate Friedrich Hayek dedicated much of life's work (brilliantly summed up in his classic essay "The Use of Knowledge in Society") showing us how knowledge and expertise are widely dispersed throughout society and can never reside in a single mind. That is to say, while individuals may use their own expertise and labor to create, they will never be in full possession of all available knowledge to account for the nuances of market and societal demands. The same concept applies to a government composed of fallible men — much to the dismay of statist ideologues such as Elizabeth Warren.

 

The limit of individual knowledge is what provided the initial need for social cooperation. Primitive man banded together with others, not under the auspices of creating one great state, but as a desire to utilize more resources and raise their own standard of living. Out of this grew the division of labor and… (Read more)

 

Source: Mises.org

Rethinking the Gold Bubble

By James E. Miller

 

There has been a lot of speculation recently on whether or not gold is in a bubble.  With Federal Reserve chairman Ben Bernanke announcing "Operation Twist" last month, gold and other commodity prices have fluctuated erratically.  Immediately following the "Twist" announcement, prices of both plummeted.  Gold then stabilized a few days later.  To make sense of these phenomena, one must utilize Ludwig von Mises's lesson that history must be interpreted with logic and rational deduction rather than empirical evidence alone.

 

As the Austrian business-cycle theory teaches, artificially cheap credit, not backed by real savings, creates intertemporal discoordination in production involving scarce resources that ultimately results in malivestment.  As Roger Garrison explains,

 

“An artificial boom is an instance in which… (Read more)

 

Source: Mises.org

Where Google Gets Its Power

By James E. Miller

 

On September 21, 2011, Google executive chairman Eric Schmidt faced a hailstorm of criticism from senators and rival CEOs alike at a hearing of the Senate Judiciary Committee's Antitrust, Competition Policy, and Consumer Rights Subcommittee. According to Nextag (who?) CEO Jeffrey Katz, "Google rigs the results" of searches to give preferential treatment to its own businesses. Yelp (who, again?) CEO Jeremy Stoppelman claimed, "Google is no longer in the business of sending people to the best destinations on the Web. It has everything to do with generating more revenue." Senator Mike Lee of Utah charged the search engine of having "clear and inherent conflict of interest."

 

Two questions come immediately to mind. First, who cares about Google's business practices? If you disagree with how Google runs its incredibly popular search engine, don't patronize it. There is no need for paternalistic bureaucrats to intervene in such a simple matter. If my local pizza shop bombards me with advertisements for other local businesses every time I walk through its doors, I will think twice about picking up lunch from there next time.

 

Second, is Google's behavior really that unexpected? After all, it is a business pursuing a profit. The better question to ask is why wouldn't Google show preferential treatment to its other business ventures on its own search engine? It doesn't take a… (Read the full article)

 

Source: Mises.org