Saturday 22 November 2008

It's a YouTube afternoon here at NOT PC

It's a bit of a YouTube afternoon here at NOT PC, and you're invited.

** Here's a compilation video that's deservedly doing the rounds: in 2006 and 2007 economist Peter Schiff was using Austrian economic principles to explain to the mainstream morons why a housing price crash, a market crash and recession were inevitable.  Watch them laugh.  Watch them advise us to buy shares in "underpriced" finance houses like Merrill Lynch. And Goldman Sachs.  "I like Bear Sterns," says one of the grinning morons. Oh how they laughed at Schiff's good sense, based on good Austrian fundamentals. And ask yourself who's laughing now.  Watch The Curse of Cassandra.

** Naturally, interest should now turn to what Schiff's saying now.  Here's what he said yesterday on CNBC:

Our markets are going lower. This is just not a financial crisis. This is an economic collapse. Our entire phony economy is collapsing around us. There is nothing the government can do to stop it. They should just get out of the way, and let it happen.

He's been been promoting gold as a store of value: but it appears that gold hasn't done quite as he would have hoped.  Schiff answers the objection in this video: Peter Schiff: Gold Will Rise, Dollar Will Collapse, and at the link above, which points to the next big worry about this collapse.

And on the present value of gold, bear in mind that, as Hayek pointed out in 1977, "I think it is quite as legitimate to say that under a gold standard it is the demand of gold for monetary purposes which determines that value of gold, as the common belief that the value which gold has in other uses determines the value of [commodity] money."  The flip side of this means that when the use of gold for monetary purposes has been prohibited, we need to value gold slightly differently (or else to recognise the necessity of reinstituting sound money).

Any way, on with the videos.

** I like the new short clips just posted by the Ayn Rand Center, among which are these topical insights: 

And this much longer one (65 min. long):

** Since I'll be up to my ears in 'Tristan and Isolde' tomorrow afternoon in Newmarket, here's the great Waltraud Meir singing music's longest orgasm: the conclusion to the whole four-and-a-half hour music-drama. There's nothing else like it in all music: Liebestod - Tristan & Isolde 'Set it at full screen and turn your sound system up to eleven, and be stunned!

** And finally, if you're keeping up with CricInfo to keep up with how we're unaccountably giving the Australian cricket team heart trouble, you might like to keep an eye on Richard Irvine's hilarious Sport Review blog.  I feel sure he'll have some great things coming once he comes down from the shock of it all.


Berend de Boer said...

I think it's a common fallacy that gold rises in times of crises. It doesn't. It's not a good investment in the sense that it increases a lot of value. But it's good in times of uncertainty to retain what you've got. And have no worries, being able to convert to cash at any time without having to take a devastating loss.

Sean said...

Watching that Peter S video is a surreal experience.

Some of these so-called-experts have become completly divorced from fundamental economic realities.

Unknown said...

The Schiff footage is stunning.

Anonymous said...

I’ve been reading PC’s with more interest than understanding regarding the current financial situation.

Thus I disagree with the notion that the previous level of economic activity was ‘unsustainable’. I don’t see why this cannot go on for ever. Am I being Keynsian?

I mean we haven’t run out of any key resources, or encountered a meteor strike or anything. As PC has convincingly pointed out, this has all come about as a result inflating the money supply. Everyone ends up losing their savings. Bummer.

But the way I see it is the only thing that could get in the way of simply repeating the same expedient, would be if people wised up – like if PC et al had columns in the Herald or something.

Meantime, simply re-convince the people that they are working for themselves, roll over the illusion of private wealth, and off we go again. We all get up on Monday morning, and believe Matrix-like that this has not happened, and keep doing what we were before. No one would starve who would not have before. Builders will build, and teachers will teach on their mint salaries. Skyscrapers can still be built with government endorsed loans - just don’t rely on any accumulated wealth to remain either wealth, or yours. It will probably belong to the government.

This of course is great if you ARE the government – printing your own salary and making a living out of the productive endeavours of others you can’t go wrong – and look forward to your inflation-indexed super scheme, obviously a helluva lot more future-secure than money in the bank.

By my reckoning, while it is a closed system comprising a cunning bureaucracy, easily duped humans and an uninterrupted supply of resources, this system is entirely sustainable?

Berend de Boer said...

mr watchman, first of all, it's a waste. Secondly, who gets hardest hit by these created busts? Yes we all know how. Not John Key.

Thirdly, and that's a biggie, these busts are a chance for government to grow. Historically speaking they have done the most egregious things during these busts, and they don't tend to get rolled back. So with every bust things get a bit worse. Every time the government encroaches more, runs more things. As government cannot run things, i.e. central planning cannot possibly work as has been proved, we might hit upon a time where the government will actually run all things, and that will be the end of civilisation as we know it.

What's Obama gonna do now all the journos shout about greed and no regulation? Take over the banking industry? Watch citigroup. Before the weekend is over, that might be government bank, all but in name. In Europe banks are already taken over. It means the government is taking care of your money for you. If that doesn't worry you now, you might get worried when it is too late.

Historically speaking the only oppression that people have really suffered was from governments. Not from companies. I don't love Microsoft, but they have never oppressed me. Only governments force me, at gun point, to hand over the money.

Big governments are not good for you, whatever benefit you think you might receive at the moment. If the government is big enough to give you everything, it's big enough to take everything away.

Anonymous said...

I agree Berend. I can see how it seems to make sense that gold should rise, but there's no guarantee gold will go anywhere anytime soon.

I read Robert Prechter's Elliott Wave Theory and he says the same thing - and advises to hold mostly cash at this time. And he's been right on the money about this crisis so far. I fear it could be more devastating than many of us want to imagine.

mexaguil said...

This lecture from the Future Freedom Foundation on Austrian Economic's take on the current financial crisis might be of interest, it is in 9 parts, the first part is here: