Economy

The Evils of Inflation

Written by Robert Jackson Smith on Thursday, 17 April 2014. Posted in Economy, Business

It's become fashionable to think of inflation as a good thing. Instead, it is like a cancer eating away at the financial foundation of a nation.

The Evils of Inflation

Inflation is the expansion of the supply of money and credit. So what’s so bad about inflation?

What Inflation?

Written by Robert Jackson Smith on Wednesday, 05 March 2014. Posted in Economy, Business

The next time you ask yourself, “What inflation?” just remember…you won’t see it coming until it’s too late.

What Inflation?

First, let’s make one thing perfectly clear: inflation refers to the expansion of the money supply and credit. Price inflation refers to rising prices.

Income Inequality, Part 2

Written by Robert Jackson Smith on Thursday, 20 February 2014. Posted in Economy, Business

As long as the world’s politicians/bureaucrats continue to consume wealth with inflation, taxes, business-stifling regulations, wealth confiscation/transfers, the inequality of wealth will continue to grow.

Income Inequality, Part 2

Income inequality in the United States is still in the news, and probably will be for some time. And it’s no wonder, with all the specious notions about why the inequality is growing. Some people blame globalization, others blame broken homes, crime-filled communities, dysfunctional schools, and personal chaos. Still others blame the rich for having as their one overriding goal “to protect what they have and get even more,” with the result that the rich bribe politicians into giving the rich ever more tax breaks while the poor struggle to make ends meet.

A Second Social Security System?

Written by Robert Jackson Smith on Tuesday, 28 January 2014. Posted in Economy, Business

Today, it is similar to a Ponzi scheme about to collapse. All that stands behind the system is the U.S. government’s ability to tax and create dollars out of thin air.

A Second Social Security System?

When the Social Security System was established in 1935, it was sold to the public as old-age or retirement “insurance.” The idea was that the (usually younger) working people would contribute enough to the system to cover the payments to the (usually older) retirees who hadn’t contributed anything toward their retirement. 

Income Inequality

Written by Robert Jackson Smith on Wednesday, 18 December 2013. Posted in Economy, Business

One hundred years ago, the United States was growing into the richest nation in history. Today, it is declining into a third-world country—but then, that’s what happens when we try to make everyone’s incomes equal…

Income Inequality

I sure am glad I don’t live in a world of income equality! Just imagine what the world would be like if everyone were paid the same regardless of results. It would kill our incentive to produce more. Think about how much poorer all of us would be if Henry Ford hadn’t mass-produced the automobile, David Rockefeller hadn’t mass-produced oil and gasoline, and Steven Jobs hadn’t mass-produced the iPod, iPad, and iPhone! And those are just a few of the people who weren’t equal to their peers and produced more. But then, everyone’s different and very few people are really equal.  (From what little I can recall from high school, we were all trying to be different!)

The Tax that is Obamacare

Written by Robert Jackson Smith on Tuesday, 03 December 2013. Posted in Economy, Health, U.S., Business

Progressives believe that more government, more regulation, and more taxation is the answer to every problem. This is the rationale behind Obamacare. The outcome will be, as it always is with socialism, a disaster.

The Tax that is Obamacare

On June 28, 2012, the U.S. Supreme Court upheld Obamacare as a tax. As with most taxes, money is taken from the more productive people and given to the less productive people. This does two things:

A Review of the Future

Written by Robert Jackson Smith on Friday, 25 October 2013. Posted in Economy, Business

It's easy to see where the road we are on leads: to more fiat money expansion, more debt, and, ultimately, financial upheaval.

A Review of the Future

During the past six years, I’ve written about the economy and what I expect in the future, and now seems like a good time for a review. So, let me try to pull together my various comments into one piece.

The Best Case Scenario

Written by Robert Jackson Smith on Wednesday, 25 September 2013. Posted in Economy, Business

After being taught by experience, perhaps the American people will learn to see the shackles that socialism represents and finally throw them off.

The Best Case Scenario

Ok, so Congress is deadlocked and can’t make a decision, the President is eager to enter a new war, and the Fed can’t taper…all’s well the ends well, right?

Inflation and Gresham’s Law in my Lifetime

on Saturday, 31 August 2013. Posted in Economy, Business

Over time, inflation, along with Gresham’s Law and legal tender laws, has driven out the good money and substituted bad money in its place.

Inflation and Gresham’s Law in my Lifetime

It was the summer of 1968 and I had just finished seventh grade. Rather than "goofing off" all summer, my dad required me to attend his Principles of Economics class at Grove City College.  He and Fred Andre team-taught the class, as my dad was often on the road giving lectures around the country.  It was during this class that I learned (among other things) that just four short years earlier, the U.S. government had stopped minting dimes, quarters, and half dollars out of silver (90 percent)...something about how the money supply had been inflated to the point where it cost more to produce the coins out of silver than their face value. In other words, the silver content was worth more than $.10 for dimes and more than $.25 for quarters. Bottom line: collecting silver coins was a fast way to make some money and a good way to retain value in the long run.

Stirring up Envy

Written by Robert Jackson Smith on Wednesday, 26 June 2013. Posted in Economy, Business

To the extent that we allow governments to consume wealth through taxation and profligate spending, we make ourselves poorer in the long run.

Stirring up Envy

I find it interesting that the U.S. Congress is taking notice of Apple, Inc.’s tax planning (avoidance, not evasion) and questioning Apple’s motives.  It would be one thing if Congress were asking Apple executives how they came to be one of the most successful (profitable) companies in the world, with an eye toward improving the way the U.S. government is run, but no! They want to find a way to change the rules to squeeze more money out of Apple!  (Make applesauce and juice out of them!)

The Unconventional Way Bitcoin Can Make You Wealthy

Written by Daniel Shafrir on Wednesday, 19 June 2013. Posted in Economy, Business

Current economic policies are undermining the shaky foundations of national fiat currencies, including the dollar. The situation is making alternatives, like Bitcoin, more attractive.

The Unconventional Way Bitcoin Can Make You Wealthy

Prologue

I am reminded of Sisyphus, King of Ephyra (later, Corinth), who was referred to by Homer as the craftiest of men. He committed terrible crimes against mere mortals and ‘worse’ still, and with great cunning, he offended Zeus and cheated Death. For his crimes he was eternally condemned to thrusting a heavy boulder up a hill, only having it come rolling back down as he got near the top. Had his earthly actions against his fellow men not violated the non-aggression principle, I could have probably warmed up to him as some sort of tragic hero, doing all he can to live life as he wanted it, while beating the gods at their own game. But given his crimes as a ruler over men, it does seem appropriate that his punishment is an ever-repeating cycle of arduous labor, engendering within him hope of a brighter future, yet concluding with dashed dreams and a return to square one. After all, to this day, rulers are notorious for repeating past mistakes while expecting different outcomes (a condition humorously defined by Einstein as insanity). 

How Inflation Affects Wages

Written by Robert Jackson Smith on Tuesday, 04 June 2013. Posted in Economy, Business

We continue to live in an age of inflation, with no end in sight. There are consequences for this, but are we prepared to accept them?

How Inflation Affects Wages

Inflation, i.e., the expansion of the paper (and electronic) money supply, affects wages in several ways:

A Law for Almost Everything

Written by Ira Katz on Monday, 03 June 2013. Posted in Economy, Business, Opinion, Guest Column

The constructal law offers a useful framework for understanding the natural world while also offering insights into economic behavior.

A Law for Almost Everything

One of my favorite professors during graduate school in the Mechanical Engineering and Materials Science Department at Duke University was Adrian Bejan. Dr. Bejan was an émigré to the US from Ceausescu’s Romania. He then received all of his higher education at MIT to prepare himself for his magnificent academic career. He is truly an original thinker and incredibly prolific (over 500 scientific papers and 25 books!). He has received many engineering awards and honorary degrees.

On the ‘Evil’ of Hoarding

Written by Daniel Shafrir on Tuesday, 21 May 2013. Posted in Economy, Business

Sound money is worth its weight in gold. Resist the arguments put forward by inflation fetishists on behalf of entities that are massively indebted – contrary to their rhetoric, there is no evil in hoarding.

On the ‘Evil’ of Hoarding

With gold prices back in the $1,300-$1,400/oz range it is sometimes difficult explaining to non-gold bugs why owning physical gold is still a good long term strategy. Some define buying gold as ‘an investment’, and others as ‘a hedge against inflation’. I tend to look at it as an insurance policy against hyper-inflation or just simply as sound honest money. However, when describing a strategy of accumulating money (in gold form) in some far-away vault, only to be used in some end-of-the-world scenario, it goes without saying that an image of a miserly old man replaces my likeness in the eyes of my conversation partner. Few people stuff dollar bills in their mattress any more, but hoarding of gold and silver when these were de-facto money was not unusual. Commodity money, which tends to increase in purchasing power over time, is predisposed to this ‘problem’. When you ‘love money’ so much that you hold on to too much of it or for too long a time, then you are hoarding. 

The Benefit of Specialization – Bitcoin as an Invented Currency

Written by Daniel Shafrir on Tuesday, 07 May 2013. Posted in Economy, Business

The most interesting thing about Bitcoins as money is not the novelty of the innovation but the potential it has to lead to a freer society.

The Benefit of Specialization – Bitcoin as an Invented Currency

The emergence of money and its importance in enabling trade between people has been well researched and documented in the literature of the Austrian School of economics  – Theory of Money and Credit by Ludwig von Mises and Man, Economy and State by Murray N. Rothbard being prime examples. The contribution of the Austrian greats to the understanding of money and its origin made clear exactly what money is (e.g. the most marketable commodity), the different types of media that are employed in exchange between people (e.g. commodity money, credit money, fiat money and money substitutes) and a theoretical explanation for their origin (the Regression Theorem). The Austrian School has also given arguably the most convincing analysis of the relationship between the money type in use, the manner by which it is controlled and the business cycle – emphasizing the importance of sound money. But except for a few sparse outliers, what the Austrian School has yet to do is fully recognize Bitcoin as a valid scholarly and academic topic. With this article, I hope to contribute to its recognition.

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