Anyway, I instantly liked the guy! He seems to be, like I always am, bewailing the fact that we economists are getting a really bad rap because of all the idiots in the world who also call themselves “economists”, with the important distinction between us and them that that they have taken over the schools, the governments and the media to spread their stinking, lunatic, neo-Keynesian econometric bastard offspring “theory of economics”, full of one ridiculous assumption after another, upon which they built an enormous, glittering edifice of Pure Economic Crapola (PEC).

Like what? Well, like “the consumption function” which is at the root of the whole theory, which is that when you get a dollar of income, you spend some and you save some.

I know what you are thinking; you are thinking, “These guys get paid for knowing THAT? Hahaha!”

Well, there is more, as the mysterious, necromantic arts of economics comes in to determine, as a constant – with an astonishing precision out to three decimal places! – exactly HOW much you spend and how much you save of each dollar! Hahaha!

And then they say, “That’s not complicated enough! Let’s adjust it for, ummm, the ‘wealth effect’, which is the phenomenon that when you make a lot of money or you have a lot of money, you spend a little more and save a little less!”

If it stopped there, it would be mildly interesting and make for good fodder for a barroom argument with other drunken sots, but these moronic Modern Economist Establishment weenies thought that they had finally found a computer program, full of equations and countless variables, that could reliably guide monetary policy to maintain the value of the dollar and prevent the business cycle while creating excess money and credit to maintain a boom of governmental deficit-spending and rampant indebtedness! Hahahaha! Morons!

And yet, trust me when I tell you that it will get you nowhere to stand outside the Federal Reserve Building in Washington, D.C. and helpfully yell out, “Hey! In case you ain’t heard, you Fed guys and all your stupid incestuous friends are morons if you think that your stupid econometric equations can possibly, possibly, possibly work, which can be easily proved if you just get up off of your fat, worthless butts and look at the ruinous, Depression-like conditions you produced! The purchasing power of the dollar is now crapola, while the top two industries in America are government spending and trading financial securities back forth between ourselves!”

If you have any time left before the security guards arrive and make you go away, try telling them, “Now the sheer suffocating size and expense of the federal, state and local governments in America are truly gargantuan, thanks to your stupid incompetence and sheer stupidity in actually believing such a ridiculous theory of benign consequences from such enormous expansion of money and credit!!!”

The three exclamation points are an indication that your voice should be at maximum volume at this point for optimal impact, as I can hear police sirens approaching.

Mr. Steil is not amused at our antics, and continues, “on the other hand, we call for trillion dollar stimulus plan on the basis of little more than citing John Maynard Keynes” which “gives us special license to talk economics without knowing any.” Hahaha! Exactly right! Well put!

And like the guy who wears a T-shirt that proudly proclaims “I am not a gynecologist, but I’ll take a look” the results of having economic poseurs and idiots at the Federal Reserve inflict their idiotic econometric theories upon us have been Disastrously, Ruinously Bad (DARB).

Which brings up, as you knew it would, a Powerful Mogambo Suggestion (PMS) to buy gold, silver and oil to protect yourself from insane monetary policies of the Federal Reserve and the insane fiscal policies of Congress, and maybe make a pile of devalued dollars in the process, too!

Whee! This investing stuff is easy!

Source: An Edifice of Pure Economic Crapola

Given that the word “pragmatic” is often used to describe President Obama, it appears that the man of the hour has arrived just in the nick of time.

Not to be a spoilsport, but there is much wrong with this latest entry in the thick and well-worn journal labeled “Popular Delusions.”

First and foremost, the idea that the world’s largest debtor nation should be stood up as role model is laughable. That is like hiring the town’s serial bankrupt to run the bank. Putting aside the irony, the inherent conflict of interest destroys any U.S. credibility as an honest broker in the current scenario.

Secondly, while the incoming team has done a superior job of spinning pragmatism into the Obama brand, it is another thing altogether to actually demonstrate the quality when the shoe leather hits the fast-moving pavement.

And, if you think about it, even the word defies definition. I have heard Obama supporters comment lately that “if the private sector won’t spend money, then the government has to.” Like beauty, pragmatism, it seems, is in the eye of the beholder. In the current context, what Team Obama might consider pragmatic – soaking the successful, slapping on an energy tax, revving up the money engines ever higher – might be considered by others to be very un-pragmatic.

Even so, adopting the optimistic spirit of America’s new era, we’ll credit the incoming president and all those who surround him as pragmatics, in the sense that they are the best sort of men and women who can be counted on to make intelligent and, well, pragmatic choices in the face of a rapidly eroding global economy.

Unfortunately, no sooner do we hand Team Obama a laurel than we have to point out a rather large and ugly fly in the otherwise nicely scented ointment. It is this: if the word pragmatic isn’t used as an adjective in direct association with the word “dictator,” then it becomes all but meaningless.

That’s because even if Mr. Obama is a pragmatic, the same can hardly be said of the American public, which, according to the law of the land, are the purported owners and – through the ballot – operators of the economy.

To use one easily understood example, a pragmatic president might look at the insurmountable obligations hanging over the Social Security program and decide that, at the least, some form of means testing might be applied to recipients. But the voting bloc of American elderly, readily ginned up into an elevated emotional state by the AARP and other special-interest groups, assures that anyone proposing even modest modifications to the program will be loudly shouted down and find themselves in heavy waters come the next election.

And I’m not referring just to the next presidential election cycle, which won’t kick off for another two years… but to the next congressional election of November 2010, less than two years hence. In that election, 1/3 of the Senate and 100% of the House of Representatives will be up for grabs.

With only history as my guide, I’m going to hypothesize that few of Mr. Obama’s supporters in Congress, avid though they may be, will be willing to make their reelection campaigns more difficult by supporting unpopular legislation… no matter how pragmatic.

Sure, maybe they’ll inch a little way out on the limb during a brief honeymoon period, but once the 24-hour-news-as-entertainment channels start in with a vengeance, cracks in the coalition of collectivists will begin to appear and Team Obama will turn from making “hard choices” to the “easy giveaways” the American public requires in exchange for continuing to support his party come November 2010.

After that, we move seamlessly into the next presidential election cycle, and things will go downhill from there.

Of course, this situation is not unique to the Democrats – rather, it is an intractable and, in time, terminal disease of our late-stage democracy itself.

The Keynesian Fallacy

Even ignoring the near impossibility of organizing consistent and sensible government policies in a rapidly degrading democracy, the whole idea that a government can effectively manage an economy – Keynes’ central theme – just doesn’t hold water. Despite hundreds and maybe thousands of experiments along those lines, none has shown any real durability.

There have been some examples, however, of long-term free market successes, the most powerful being the early, laissez-faire days of the United States. There are lesser examples such as Dubai in recent decades, or Hong Kong under the British – economies where the operating manual was thin and almost entirely supportive of wealth creation and free markets. Were they perfect? No, because there is no such thing as a perfect world. But in terms of creating the wealth needed for a society to advance to a more refined stage, they performed exceptionally well.

In sharp contrast, today’s freshly minted Keynesians call for increased penalties on success and a steep ramping up of regulation, the very opposite of the prescription needed.

There is another problem with the utopian aura now surrounding Team Obama, and it’s simply that government doesn’t produce anything tangible. So when it comes time to “manage” the economy, government is left with only a couple of tools. One is to force you and me to use our time and capital for purposes they view as important. Bush, for example, felt invading Iraq was a priority. Naturally, Team Obama has a slate of fresh ideas on the best use of your money, and say they want even more of it. I take umbrage at the notion that I should open my wallet even further for “the public good,” especially when the perceived public good so often runs contrary to my own beliefs. For instance, on principle, I am against war – it is always the innocents that suffer the most. And I am against the creation of new and expensive regulatory structures, a government specialty.

The other tool available to Team Obama is, of course, the creation of money. And we are now hearing a steady drumbeat that we the people should pay no attention to the deficits for the next few years.

To which I can only wonder, “Isn’t that exactly what’s been going on for the last eight years?”

It sure seems that way, considering the unprecedented levels of debt already overhanging the economy.

There has rarely, if ever, been a period of time where the economy of the U.S. has been more politicized. Today it is not enough for an investor to paw through the fundamentals and correctly identify the best – or worst – sectors or even individual companies to be invested in or to avoid. Success depends equally, and maybe even more so, on correctly anticipating what actions the government is likely to take (or not) in regards to any particular enterprise. Take GM, for example, whose rise or demise depends to a large part on the question whether the government will prop it up.

The FREE special report Obama’s Newer Deal by Casey Research analyzes the economic and political climate of the incoming Obama administration, providing a “weather forecast” that can help you prepare your assets for a rainy day. Get it now – no cost, no obligation – by simply clicking here.

Source: Obama, Keynes, and Pragmatism