Or why the credit crunch of recent times and its solution(s) seem rather off base:
“There is a strange idea abroad, held by all monetary cranks, that credit is something a banker gives to a man. Credit, on the other hand,is something a man already has. He has it, perhaps, because he already has marketable assets of a greater cash value than the loan for which he is asking. Or he has it because his character and past record have earned it. He brings it into the bank with him. That is why the banker makes him the loan. The banker is not giving him something for nothing. He feels assured of repayment. He is merely exchanging a more liquid form of asset or credit for a less liquid form.”
Henry Hazlitt, Economics in One Lesson.
This is a fundamental issue of what Credit means – in so much as the lender of capital has something to give, the user of capital has also something to offer – this is a transaction of promises. Several aspects of our current situation follow a definition of credit apart from this fundamental transaction – in many aspects, our current situation can be ascribed to a focus on the mechanical aspects of credit transactions.
The solutions engaged in by the Fed also smacks of the same – printing out more money and asking (and when that fails, forcing) the banks to lend it. Lend it to whom? To those who need it (even to survive) or to those who have a track record of value creation? In so far as much, lending takes places or doesn
The meaning of Christmas:
Love, not life, is sacred; Love lends life itself.
Love beggars death in rejection
No greater Love than to envelop rejection, thus extinguishing
Then all birth redeemed, set free
Muse this most radical act: Love risked all,
Set twirling in the cold of one unexpected night.
Tags: Christmas Time, Meaning of Christmas
It is that time of the year where we chart through the snow… No, we never do that. But these are extraordinary times. So I share a couple of charts with you minus the commentary. The lack of commentary is part amazement and part “What the heck does this mean going forward?” – I
A news item today points to the return of an experiment in liberty – Milwaukee neighborhoods could print own money. I love it, absolutely love it.
Residents from the Milwaukee neighborhoods of Riverwest and East Side are scheduled to meet Wednesday to discuss printing their own money.The idea is that the local cash could be used at neighborhood stores and businesses, thus encouraging local spending. The result, supporters hope, would be a bustling local economy, even as the rest of the nation deals with a recession.
If it
What has been unfolding over the last two days in Mumbai has been shocking to say the least – I’ve been glued to CNN practically non-stop. My prayers are with those killed and wounded by the terrorists, with the families who wait outside to know the fate of their loved ones and for India’s bravest who took the fight to the terrorists to the bitter end. The time for questions and blame is after.
When that last terrorist is killed, I wait to see my Tricolor fly on the dome of the Taj and Trident hotels…
Tags: Terror in Mumbai
For this Thanksgiving day, I have but two posts to share:
The Pilgrims’ Financial Crisis
First they [Pilgrims] migrated to the Netherlands, which practiced religious tolerance of alternative religions. But the English Puritans wanted their children to grow up in an English culture, not as Dutchimen. That is why after a few years they sought to establish their own colony in the New World, where they could control their own government, religion and culture.
…
In these precarious conditions, it was natural for them to work together and share their food and shelter. Even so, 45 of the original 102 died that first winter, including 13 of the original adult women, with one more passing away in May.
….
But as the colony grew, this initial quasi-socialist community of share and share alike was not working to produce enough for essential basic needs, let alone the prosperity that was expected in the new world. Available wild supplies of food, in particular, were no longer enough.
All this while no supply [of wild corn] was heard of, neither knew they when they might expect any. So they began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not thus languish in misery. At length, after much debate of things, the Governor (with the advice of the chiefist amongst them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves; in all other things go on in the general way as before. And so assigned to every family a parcel of land, according to the proportion of their number, for that end
From time to time, I check out Dr. Doom himself – Marc Faber
