The post-stimulus macroeconomy is panning out pretty much the way Austrians said it would. Unemployment is still high, and now that the Census workers are fired, jobs are being shed. Home construction is declining. Manufacturing growth is falling. Stocks: don’t make me laugh.
Everyone is talking about a double dip, as if that would be a shocking thing to see after all the right medicine had been applied to fix the last recession. Meanwhile, says the WSJ, “the latest figures should reinforce the Federal Reserve’s view that short-term interest rates need to stay close to zero to lift the economy.”
Yeah, those zero rates are really lifting the economy, huh? Wow. Meanwhile, saved money is making nearly no money at all, and lenders have no good reason to let go over their over-the-top reserves. More and more, it’s looking like the thirties all over again. This prompts many to wonder: when is the newest war coming? Perhaps the Mises Institute was right in its timing in the release of Pearl Harbor: The Seeds and Fruits of Infamy.
World War II didn’t end the depression — cuts in spending after the war did — but it surely changed the subject in ways that the politicians wanted.
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I don’t find it to be boring, no.
I find it depressing.
I don’t think we’re at the war stage yet. First, we have to see a few more outright, large-scale price-fixing regulations (house prices, oil prices, etc.), maybe even some radical seizures of gold and silver (or at least tight control of its movement), a commensurate development of black markets and draconian punishments for price-rule violators, followed by nationalizations (the fascistic health care legislation and ownership of GM are just the beginning), and only then will we have a really big, fat war.
That doesn’t rule out the possibility of one or two more smaller-scale wars like we’ve been seeing since Vietnam. But the Big One, involving China, Russia, Iran and Israel, won’t get underway until the US economy is more fully corporatist.
(It’s hard to imagine it could be, but yes, it could be, and will be.)
Everyone is talking about a double dip, as if that would be a shocking thing to see after all the right medicine had been applied to fix the last recession.
What stimulus advocate is shocked by the double dip?
All of them.
Well that’s clearly not true. I can think of three that have explicitly said this is exactly what we should have expected to see, and I can think of none that have expressed any surprise.
Could you name some that have been surprised by this, please?
There are stimulus advocates who believe that we should have stimulated more, and faster.
They might expect a second dip.
Anyways Daniel, I thought of a decent argument against against listening to the likes of you pushing for a larger stimulus. (At least a fresh argument)
Keynesianism was invented in the 1930′s. Western civilization had been booming since the 1300s, largely following free market principals.
Right now, the Keynesians want to risk the whole economy by spending on projects with dubious return in order to reap the spending multiplier which results in “social return”.
The Austrians want to simply allow the markets to clear, if painfully, allowing the markets to grow again.
Say the Keynesians are right. There would be a loss following the Austrian path, but according to history, the loss would not be critical.
Say the Keynesians are wrong. There could be a loss that destroys the whole economy. Throw enough resources away and you are in the Stone age.
Not a bullet proof argument obviously.
“There are stimulus advocates who believe that we should have stimulated more, and faster.
They might expect a second dip.”
They’re covering the a#s so that they don’t look like fools the next time around.
1. I’m not aware of any Keynesian that denies the role of the market in booming Western civilization.
2. I’m not aware of any Austrian that thinks we’re going to be sent back to the Stone Age by following Keynesianism (except, apparently, for you).
3. Unemployment is really a modern industrial problem anyway, and the argument is that yes, we are booming, but we are booming at a sub-optimal level. In certain circumstances unemployment is necessary for a functioning market (good matching, search time, etc.). But that doesn’t mean that all unemployment is functional.
Could you stop promoting your blog? I’ve read it once and it is very … You need to work on it a little more, and on your economics a little more. If you don’t know, the best disciples of Keynes were Austrian trained.
Not sure what you mean – I never mentioned my blog.
Are you refering to Hicks and Phelps? I’m not sure Hicks counts as a “disciple” of Keynes if you are, but yes – I’ve remarked on their Austrian training a lot on my blog. I write favorably about the Austrians all the time. I think you’re misunderstanding how I see myself w.r.t. the Austrians.
“Everyone is talking about a double dip, as if that would be a shocking thing to see after all the right medicine had been applied to fix the last recession.”
“What stimulus advocate is shocked by the double dip?”
Daniel: Advocates of the stimulus approach all advocate two things: first, that it be applied until it achieves the desired results and second, that it be applied where it can do the most good. This would be directly into the pockets of people out of work, who can’t afford to buy anything and who lose their homes and cars through default. Extended unemployment benefits are the best sorts of stimulus to turn these people back into householders and consumers until the recession finishes working itself out. Without it, the housing and auto sales slumps grow worse, consumer spending is down (as are federal revenues!) and continuing unemployment follows.
A verdict has just been rendered by the governing establishments of both Europe and the United States that stimulus be discontinued. The focus now is on austerity and budget balancing. So it’s quite natural that the Keynesians among us now predict a double dip; that is, when the medicine is discontinued, the patient will get worse. In fact, I think everyone is predicting that. Is it that hard to understand?
Some advocates of the stimulus advocated the bubble created by reduced interest rates by the Fed in the early 2000s too, and I guarantee we’ll pay for the current stimulus with continued liquidations of malinvestment the longer we continue the current path.
The way down is unavoidable, it’s just a matter of how hard we want to hurt when we get there.
Matthew, you take the conversation to an interesting area. Would you admit that the low interest rates offered by the Fed in 2001-02 (lowered eleven times in one year) had a galvanizing effect on the economy, making the burst tech bubble just a blip that quickly passed, despite the instant loss of so much value? As I recall it was around eight trillion in shareholder value that vanished overnight. But the markets recovered quickly.
So to that extent, the medicine cured the patient. Although that recovery, like this one, was derided for being a ‘jobless recovery’.
And would you have said also that once the economy had returned to normal it would have been a good moment to cut off the free money, allow taxes to go back to something like their original rates, and generally act in a fiscally responsible fashion? If so, you’d be in my camp.
Let’s recall that during the late 1990s we were on the way to pay down the entire debt, just by sticking to a program of fiscal responsibility. Getting off that track with all the tax cuts was what fatally entangled us in the mess we’re in today. It wasn’t our spending habits that changed (apart, of course, from starting those wars). It was choking off the government’s revenue stream. Grover Norquist must have been laughing loudly.
I’ve thought about this a lot, and I don’t think there is going to be a war this time. What’s happening is that the USA and most of the western world is birthing into the information age. You can terrorize people here and there, but you can’t shoot information with a tank. As our society moves into the information age, it is becoming harder and harder to control people by controlling information. Information about the value of our money, information through the centralized media, information via the copyright cartel. Instead, this will be more like the protestant reformation when the printing press brought the bible to the masses, and the masses revolted against the Catholic Church. There will probably be lots of little conflicts everywhere, but no war per se. It will become exponentially more costly for the government to maintain control as time goes on. Eventually, they must lose their grip, and a boom will follow till they figure out how to reassert control again.
No massive war when the protestants pulled out of the Catholic church?
The thirty years war was not bloody? I know they were very political as well but it was touched off by religon.
David C.,
I wish I shared your optimism. I think your analogy of the Reformation is apt. And when the centralized powers see their grip corroding, war, big and nasty war, will be their attempted remedy. No, you can’t shoot information with a tank. But information comes from people, and they have proven susceptible to tank fire.
I truly hope you are correct.
As our society moves into the information age, it is becoming harder and harder to control people by controlling information.
When you have some time you should do a search for China’s ‘Golden Shield Project’ and after that do some more reading about the Iranian presidential elections that happened not too long ago. I know this sounds snarky and rude and I appologize but don’t ever underestimate how far governments will go to control their people.
I find it difficult to share your sense of optimism because I see myths both old and new having such a grasp on people’s minds that they end up willingly empowering those that will suck the life blood out of them. May the power of myths break, may it crumble to pieces. Even if it means people’s cherished dogmas are questioned and they feel emotionally injured because of it. It is better in the long run for everyone.
It is just as mundane to know the correct past. The Krugman past is more fantasy than history.
I can’t resist commenting (with encouragement) on LvMI’s foray into World War II revisionism.
And I can’t refrain from warning that there’s revisionism and there’s Revisionism. Revise (or even discuss revising) the wrong World War II “history,” and you’ll end up in Helen Thomas Land.
There’s a limit to this “Tu ne cede malis” stuff, after all. Bastiat would call it “the history not seen.”
“There’s a limit…”
sorry, can you explain this point a little more?
Jeffrey Tucker: “World War II didn’t end the depression — cuts in spending after the war did — but it surely changed the subject in ways that the politicians wanted.”The myth that WWII ended the Great Depression is one of the United States government’s greatest propaganda coups, and an exceedingly dangerous one, for if it is believed that the war ended the depression, that ugly “stimulus” may be repeated. Unfortunately there are many depraved, idiotic, pragmatic politicians and bureaucrats in high places who may champion–surreptitiously, to be sure–future wars as a way to end future depressions, such as the present one if it goes on long enough. There is a huge cult of Roosevelt-worshiping statist, Progressives and Keynesians in seats of power and positions of influence who have bought the War-Ends-Deoressions bs, so those here who think we will see a repeat of the 1940s worldwide war have good cause to worry. Mises.org’s good work in publishing Percy Graeves PEARL HARBOR is timely, and should go a long way towards deprogramming members of the FDR cult.
Last year I published these words in an article entitled “On Paul Krugman” (http://www.jesus-on-taxes.com/ON_PAUL_KRUGMAN.html):
No matter how many trillions of dollars Obama and Congress spend on “economic stimulus,” it won’t be enough for Krugman. In an op-ed column entitled “Franklin Delano Obama,” published in The New York Times November 10, 2008 (http://www.nytimes.com/2008/11/10/opinion/10krugman.html), Krugman admitted that another of his heroes, Franklin Roosevelt, failed to end the Great Depression with his cornucopia of Keynesian policies known as the New Deal. The reason, Krugman said: Roosevelt didn’t go far enough. “What saved the economy, and the New Deal,” according to Krugman, “WAS THE ENORMOUS PUBLIC-WORKS PROJECT KNOWN AS WORLD WAR II, WHICH FINALLY PROVIDED A FISCAL STIMULUS ADEQUATE TO THE ECONOMY’S NEED.”I’ve marked the above quote in bold red ink because here you have a Nobel laureate in economics referring to war, unquestionably the most destructive of all economic phenomena, as a “public-works project” and a “fiscal stimulus!” No real economist would ever make such a stupid, odious statement. Moreover, to believe, as Krugman does, that World War II ended the Great Depression is to completely ignore the disastrous economic effects of the War upon people everywhere. Production of consumer goods in the United States was so ravaged by the War that forced rationing was enacted. Many desired goods that were abundant during the Depression became scarce or unavailable during the War. Families that stayed together and even grew closer during the Depression were torn apart by the War when fathers were drafted or enlisted in the military and were paid chump-change wages that could not support a family, so mothers had to go to work to make ends meet, usually making armaments that were worthless for the domestic economy. Many men who may have experienced hardship during the Depression met with death during WWII. Throughout Europe, Asia and the Pacific, millions of children and adults starved to death because war decimated food production and disrupted its distribution. (http://en.wikipedia.org/wiki/World_War_II_casualties#endnote_US). Of course war deaths did reduce the numbers of the unemployed, which is the overweening objective of Keynesian economic policies. But stimulate the economy? Even an economic caveman should know better. So much for the Nobel prize in economics recognizing economic insight or integrity.
Thanks for the heads up Mr. Tucker, I am ordering Percy’s as soon as I post this comment.
Ned, you say “Krugman said: Roosevelt didn’t go far enough. “What saved the economy, and the New Deal,” according to Krugman, “WAS THE ENORMOUS PUBLIC-WORKS PROJECT KNOWN AS WORLD WAR II, WHICH FINALLY PROVIDED A FISCAL STIMULUS ADEQUATE TO THE ECONOMY’S NEED.”
“I’ve marked the above quote in bold red ink because here you have a Nobel laureate in economics referring to war, unquestionably the most destructive of all economic phenomena, as a “public-works project” and a “fiscal stimulus!” No real economist would ever make such a stupid, odious statement. Moreover, to believe, as Krugman does, that World War II ended the Great Depression is to completely ignore the disastrous economic effects of the War upon people everywhere. Production of consumer goods in the United States was so ravaged by the War that forced rationing was enacted. Many desired goods that were abundant during the Depression became scarce or unavailable during the War…” etc.
Let me suggest you’re addressing Krugman’s statements emotionally, and not analytically. He was not saying that war was a “good” thing. I think he’d agree it’s a “bad” thing. But when he says that WW Two “FINALLY PROVIDED A FISCAL STIMULUS ADEQUATE TO THE ECONOMY’S NEED”, he is making an accurate statement.
The cause of the nation’s pain was twofold: unavailability of jobs for people who needed the work to support themselves and families, and unavailability of investment capital, which had pulled itself in to hunker down and wait out the slow economy. Wartime weapons production, despite the fact that the products were instruments of destruction rather than products to be marketed at a profit, had the effect of creating jobs and income.
And as that income could hardly be spent, in the existing conditions of shortages everywhere, it was translated into savings. Savings which bolstered and emboldened the banks.
Then when the war was over and factories retooled to make nylons and Studebakers, the money was in consumers’ pockets to enable manufacturing, led by pent-up demand, to take off.
This is a commonplace observation understood by virtually everyone without an Austrian indoctrination. The war was a bad thing in many ways: it killed millions and devastated economies worldwide. It had, however, a silver lining: it got this country back on its feet.
“It had, however, a silver lining: it got this country back on its feet.”
Got the Pentagon on its footings, too.
David C
“As our society moves into the information age, it is becoming harder and harder to control people by controlling information. ”
This is why Joe Lieberman wants to give Obama the ability to just shut down the internet, “because of terrorist attacks”, known as the Kill Bill.
Funny, I seem to remember the bad guys in Metal Gear Solid 2 seemed to have a very similar plan for ‘controlling’ the internet
Depression is always and everywhere a monetary phenomenon.
WW2 didn’t stimulate THE economy, it stimulated OUR economy. The US was the only major power with an intact population and manufacturing capability.
By the way, saving money is not investing because money is no longer a store of value but an IOU for goods and services.
IOU what?
The End Of War Stimulus As An Option.
I think that the deterent to war ‘this time’ – in addition to the ‘birthing into the information age’ – will be the collapse of the economy. Funny money and warmongering can only give the illusion of economic stimulus if the ‘dollar’ has value in peoples’ eyes. That is about to change.
The idea of using war to fix the economy is the ultimate “broken window fallacy”. However, WW II did coincide with the end of the depression and there was strong economic growth after the war. However, Paul Krugman has written that the “New Deal” and deficit spending during WWII were responsible for ending the Great Depression. Since Krugman is nearly always wrong, its an odds on bet that he is wrong here. So why is he wrong here? For the first 3 years of the war, the US was not involved and US industry expanded production to supply the war in Europe. When the US finally went to war at the end of 1941, industrial production increased even further as the result of government contracts paid for with borrowed money. In this case the “Keynesian Multiplier” was positive. Usual economic measurements such as GNP and unemployment indicated an economic boom. But what was actually happening – people were drafted into the army, and the money that was borrowed was used tool up industry to produce tanks,planes, ships, munitions etc. This hardly qualifies as an increase in wealth and well being. When the war ended, the war industry was able to transform to produce peace time needs. The military industrial complex continued to benefit from continued government subsidy. The US continued to run a balance of trade deficit. However, this increase in economic activity was sub-optimal. The situation the US confronts today is very different, Today the “Keynesian Multiplier” is negative, The marginal productivity of debt is negative. Every 2 jobs created by government results in the loss of 3 jobs in the private sector. In this case, deficit spending is a recipe for disaster.
…if you believe in the keynesian multiplier in the first place.
Using Keynesian terminology to prove Keynesian economists wrong will lead nowhere. If they were logical they would have discarded the Keynesian quackery themselves.
“The idea of using war to fix the economy is the ultimate ‘broken window fallacy’.”
No, it works just fine. What our participation in WW II did was create massive new employment. And that created a ‘Keynesian multiplier’, where incomes were created, savings established and, after war’s end, a boom in consumer spending was facilitated.
One way we could create such a recovery would be to break all the windows in America, creating new job openings for armies of glaziers. That’s perfectly valid as a stimulating agent. But we don’t have to do that. All over the country we have windows that are already broken.
Drive across America on our state and federal highways, and tell me what you see. They’re all either falling apart or in the process of being rebuilt with federal stimulus money. Such spending does triple duty– creating incomes where there were none, rebuilding an infrastructure we all need to use and enhancing federal revenue by creating more taxable moments, as new funds move from hand to hand and are taxed at every turn.
There’s also a third way to provide such stimulus: put people on the dole. But of the three methods, the second is best: do those things that need doing but that private industry takes no interest in: clean up hazardous industrial sites, repair bridges and flood control mechanisms… in general, just do the things Americans need to have done. And employ those people who need the work in order to be able to contribute economically and not be a burden.
If this worked the way you imagine why hasn’t it worked for Zimbabwe or Weimar in the past? The only reason that we are able to survive this kind of insane thinking is that the Keynesians are kept from doing it to the extent they want to, and we have significantly more real resources at our disposal than they did.
I’ll grant that wars or make-work projects can put a lot of people to work, but it makes everyone poorer to do this. This was unquestionably true also during WW2 where there was mass rationing. Yet you conveniently ignore the rationing and saving that was done to talk only about the prosperity after the war as if it came from the magic of debt and printing.
Matthew, it’s hard to imagine the kind of thinking that must have gone into your response. It’s the kind of reductio ad absurdum idiocy I thought you were above.
Let’s reason by analogy. If we were to raise the minimum wage to $100 an hour, chaos would ensue. Right? So far we’re still together. But if there WERE no minimum, wages would be driven down toward Vietnamese levels, by the logic of supply and demand applied to the global labor market. And that part of the American public that relies on wages to survive (that is, a majority of the country) would be exceedingly ill served.
So let’s go somewhere in the middle, to see where the best compromise is. To me, it’s about eight dollars. Which, by the way, is not a lot of money. The discipline of having to either not hire someone or to hire them at a living wage imposes on the small business employer some constraints. But I’ve been that person. Those constraints are not as serious a problem for our society as having a permanent underclass of wage slaves would be, working for sixty cents an hour and living in barns outside the factory. Seriously. They’d cost us all far more in ancillary costs, like incarceration and repairing the manifold effects of drink, drugs and societal hopelessness than we’d have to pay in raising the cost of a dollar burger to a buck twenty.
My position was that I never wanted to hire someone who was only worth three bucks an hour. They’re dead weight. Instead I’d hire at eight, and look for someone who was worth it to me.
Now let’s extend our analogy to your comment. The reason Mugabe’s Zimbabwe and Weimar Germany lapsed into hyperinflation was that they overextended. They both had weakened currencies to begin with and embarked on a panic plan to print their way out of trouble. Problem is, creditors would not accept the weakened currency. So they printed more in response. Bad move.
Now let’s ask ourselves, do America’s creditors accept our currency? Yes they do. Look at the auction results for T-bills, which is where we see how the world’s big-money people really think about the federal debt. Are the rates going up? Or are they going down?
Answer: they couldn’t get much closer to zero if they tried. Look especially at the 2-year and 5-year rates:
http://www.treasurydirect.gov/RI/OFNtebnd
People who put their money where their mouth is have confidence in the dollar and in America’s government. And one reason they have such confidence is that we were once, in 1945, in much worse shape than we are today. And we paid down that debt without even breaking a sweat. And we did so during a time of unparalleled increase in prosperity– not just for the prosperous class but for the working man and woman.
This American example does not compare to the experience of Zimbabwe. Not in any way.
So let’s revisit your comment: “The only reason that we are able to survive this kind of insane thinking is that the Keynesians are kept from doing it to the extent they want to,” etc.
Going once again to the historical record, your Keynesians tried stimulating the economy back in 1933-37, but didn’t go far enough to make a full recovery. So when the fiscal hawks gained the ascendancy in 1938, the resulting constraints on spending quickly plunged us back into the Depression (round 2). There’s a cause and effect relationship here you really should observe and acknowledge.
Then something unexpected came along: the need to mobilize the country for war. And that pushed Keynesian stimulus spending well beyond the degree any politician would have dared to go. But it worked. And we came out of it– by the simple means of paying down our massive debt in a fiscally responsible fashion.
Let me ask you this: did either Mugabe or the leaders of Weimar Germany do this? I’ll answer my own question. No they did not. So your response does not work.
Now we come to today. Obama has proceeded FAR more cautiously in a Keynesian direction than Roosevelt did. And unsurprisingly, his results have been tepid at best. History leads us to believe that if the Keynesian faction held sway in Congress (which decides all spending issues) we could have gone on a crash program of job creation to address unemployment directly, instead of merely rewarding the banks for their bad behavior, and pulled the country out into a new period of expansion… one with high taxes but even higher profits.
Instead we’re entering into a reprise of 1938, by initiating our austerity program prematurely, before there’s been any full recovery. Joblessness MUST increase as a direct consequence of tight money policies and federal revenues will obviously suffer as a result… preventing the very thing (a balanced budget) that the exercise was supposed to achieve.
Show me how that’s not so.
so in one post you made you accuse us of accepting the afghanistan war and now in this one you are saying that war brings prosperity
A. I don’t recall accusing you of accepting the war against Afghanistan. My feeling is that most of you don’t.
B. It wasn’t the war that brought us prosperity. It was the massive deficit spending that got a severely under-employed country back on its feet.
Had that spending been on creating material goods that people could buy, the spending would have been far more effective in terms of bang-for-the-buck. But even spending it on items that were only built to be destroyed rather than sold, the stimulus did its work.
BILLWALD said, “.WW2 didn’t stimulate THE economy, it stimulated OUR economy. The US was the only major power with an intact population and manufacturing capability.”billwald, my friend, the war did not “stimulate” the economy of the United States except in the sense that it stimulated destructive–demeaning, unethical, dishonest, murderous activity, which produced nothing good and much that was bad or evil. If you had lost your father, brother, spouse or other loved one to the war, you would never think of the US population as remaining “intact.” If you were required to kill other human beings in the guise of government’s declared enemies or unfortunate collateral damage, people who had nothing against you nor you against them, by means of bombs, bullets or incendiary munitions, your resulting fetid, fevered mind might never recover sufficiently to understand economics or become a productive member of society. If you engaged in some black-market enterprise that made you fabulously wealthy, you would probably become a politician who believed in war or a leader of the military-industrial establishment cultivating future wars. These are but a few of the ways in which the war had a negative impact on US citizens. Can you tell me of the offsetting benefits that were produced by war-making stimulus here in this country? An economists tries to see all of the consequences of government policies, not just those the government wants its subjects to see.
WALT D wrote:”The idea of using war to fix the economy is the ultimate “broken window fallacy”. However, WW II did coincide with the end of the depression and there was strong economic growth after the war.”
Walt, that depends on what you call a depression. The Great Depression measured by the totality of well being of Americans, or lack thereof, continued throughout WWII. Keynesians say the war ended the Great Depression and restored “full employment,” because they have been duped by Keynes’ GENERAL THEORY into measuring a nation’s economic well being against the never-precisely-defined-by-Keynes standard of “full employment.” The war brought about full employment by creating a huge military, killing off many military “workers,” and putting people to work making self-destructing products and the like. If government statistics show that the Great Depression ended with WWII, that is so because those are government statistics, which are part and parcel of government propaganda, and governments are incapable of factoring in the human side and human costs of either depression or war.
Ned: I agree with you – you expanded what I meant by:
” Usual economic measurements such as GNP and unemployment indicated an economic boom. But what was actually happening – people were drafted into the army, and the money that was borrowed was used tool up industry to produce tanks,planes, ships, munitions etc. This hardly qualifies as an increase in wealth and well being. “
As for war, my guess would be that the US launches a pre-emptive war on Iran to distract people from their economic woes. We will see conscription as a part of that new war. If the US goes into Iran, it will pull the world in with it.
The case for invading Iran is much more difficult than it was for saving Europe from Nazi Germany and Stalinist Russia, no?
The case for invading Iran is to neutralize its political power in the world’s premier oil region. Iran offers a counterweight to US influence. And if it comes to power it will very likely liberalize, becoming an attractive ideological force. Either that or decay and collapse.
Nukes? Why shouldn’t Iran have them? They’re not likely to engage in any suicidal first strike. And there’s every reason for them to want them as a defensive measure. Who are they surrounded by? Pakistan, Russia and the US in Iran, all with nukes. Oh, and a hostile Israel with nukes and a hyper-aggressive policy toward Iran. This last would be the danger Iran must defend themselves from: a belligerent Israel initiating a nuclear first strike.
As Israel’s patron and facilitator, we have to stand behind them even as they go over the cliff. So we naturally favor a pre-emptive war with Iran. We just won’t be the ones sending in troops once the war turns hot. Only money and weaponry, as is our custom with Israel.
The US can’t handle the wars its got, never mind a new one.
IMHO the Chinese warned the US and Israel off Iran in 2007 : it’s not just the US whose top priority is energy security, and China exercised an economic veto the way the US did over the Brits at Suez.
Since then it’s all been noise which suits both the Israelis and the Iranians as a distraction.
Iran is not remotely a threat. It definitively ceased to be a theocracy and became an oligarchy last June in what was essentially a hostile takeover by an IRGC/Intelligence ‘siloviki’.
The prize, as it was in Russia, is the ongoing oil etc privatisations in Iran. All the top people in the key oil ministry positions have been changed – that’s where the money is. To get the money, you have to be in power and to be in power in Iran you have to be, or appear to be, religious.
US sanctions are a joke. The finance sanctions actually protected Iran from the Credit Crunch, while gasoline sanctions are actually what the elite want, because that way they can cut consumption -which they have been trying and failing to do – and blame the Great Satan.
US policy is completely dumb. The quickest way for the US to achieve its goals would be to flood Iran with dollars and bandwidth….
Chris, it is clear from the many reports on problems in the military that the US indeed cannot handle its current wars, and it seems to me that our illustrious politicians must realize that is the case. However, there is no accounting for the obstinate stupidity of people in power who may see war as potentially disastrous for the nation but valuable as a way of protecting their turf. Power corrupts to the depths of one’s soul.
I couldn’t agree more with your assessment that the top priority of the United States is “energy security.” There isn’t a Republican nor Democrat in the legislature or the administration, with the possible exception of Ron Paul, who has the wisdom and fortitude to condemn the concept of “energy independence” for the stupid dangerous policies it inevitably provokes. It is exactly what Mises referred to as “lebensraum,” and it was the primary motivating force that led Nazi Germany and Imperial Japan to invade their neighbors during the 1930s.
Please define ‘lebensraum.’
Literally, it means “living space”. One of the reasons that Hitler invaded the countries in eastern Europe was to secure a supply of oil.
WALT. Thanks for correcting me. Sorry, in my haste I overlooked the important part of what you said.
BRUCE KOEBER, perhaps the most comprehensive definition of lebensraum is the one found on Wikipedia, here: http://en.wikipedia.org/wiki/Lebensraum. I’m sure that Ludwig von Mises defined it in HUMAN ACTION. Imperialist Japan was following the same imperialist policies during the 1930s when it invaded Manchuria, China, Korea, Indonesia, etc. (To some extent American foreign policy intended to deprive Japan of access to what it regarded as critical resources encouraged if it did not provoke Japanese lebensraum. I haven’t read it yet, but I guessing Percy Graeves book, PEARL HARBOR will address America”s “containment” policies in advance of WWII. Of course the rational, peaceful intelligent alternative to lebensraum is free trade, by which any and all resources vital to the well-being of a vibrant, growing population and economy can be had at a fraction of the cost of lebensraum. (Just asked any of the remaining Germans who lived through it in Germany.) Energy DEPENDENCE on other nations by means of free trade is really not dependency, it is reciprocity. Instead of war, it produce good will and harmony with one’s trading partners, who in the case of US oil purchases, are frequently dependent upon us for something far more crucial to a nation’s health and welfare than even oil. That something is food. (Psst, shhhh, don’t mention that fact too loudly within hearing of any of our government’s “statesmen,” or they may try blackmailing our trading partners with legislation restricting food exports.)
The post-stimulus macroeconomy is panning out pretty much the way Austrians said it would. Unemployment is still high, and now that the Census workers are fired, jobs are being shed. Home construction is declining. Manufacturing growth is falling. Stocks: don’t make me laugh.This is the real economy, has been threatened, considerate and democracy that some things just shout slogan is ok.The prize, as it was in Russia, is the ongoing oil etc privatisations in Iran. All the top people in the key oil ministry positions have been changed – that’s where the money is. To get the money, you have to be in power and to be in power in Iran you have to be, or appear to be, religious.
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