Lectures on the Origin and Development of Austrian Economics

A few days back Zerohedge posted a couple of lectures by Israel Kirzner on the origin and development of the Austrian School. Among a few salient points is how Austrian Economics are founded on the notion of subjectivism. That is to say that at the bedrock level of all economic activity is the individual and individual preferences that determine demand, and subsequently what is supplied to meet the demand. If you want to kill some time in a way that doesn’t involve your favorite sitcom, this might be a worthwhile pursuit if you are interested in how the Austrian school came to be.

Two Lectures on the History of Austrian Economics

On Campaign Finance Reform

The other day my father-in-law, and all together decent guy, Bill were busy solving the worlds problems, and while we made little actual progress, we did touch on the topic of campaign finance reform. And what do you know, one of my favorite blogs, Jesse’s Cafe Americain posted and summarized a lecture by Lawrence Lessig entitled “Republic, Lost“, which summarizes his new book of the same title. Lessig’s ideas if put into practice might give the so-called 99% in America a voice in government that has been silent for quite some time. The lecture given in Berkeley is almost an hour long. If you want a quicker synopsis, Lessig was interviewed by Jon Stewart on the daily show not too long ago:

Lawrence Lessig 12/13/2011 – The Daily Show

While my own Libertarian party is generally against all limitations to personal or corporate liberty, I must break with this commonly held assumption when it comes to the issue of corporatism and its parasitical symbiosis with American government. If the fundamental axiom of the Libertarian movement is “life, liberty, and property rights”, we must concede that for but a fraction of 1% of the US population, the role of corporate finance in the election process actually serves to inhibit, and in some respects utterly snuff out our national pursuit of these ideals.

Brent Budowsky on Ron Paul’s Big Moment

Progressive columnist, Brent Budowsky has put together a fair piece entitled Ron Paul’s Big Moment on Ron Paul’s ability to seize the political moment in the upcoming primaries. He raises some very interesting points:

1) Budowsky sees Paul as the frontrunner for the Iowa caucuses. This will constitute Paul’s first key victory

2) He also sees Paul’s ongoing success in the primaries predicated on Paul’s ability to distance himself from some of the fringe, and even racist supporters of his campaign.

3) Budowsky does not see see Paul winning the GOP nomination for a few reasons, if you read some of his archives over at The Hill, it will become clear that even if Paul comes close to winning a majority of delegates the nomination could still be taken out of the hands of the voters and decided in the fabled “smoky back rooms” of the GOP convention. However Paul would be a dangerous 3rd party candidate, as he has broad appeal across the political spectrum.

On all three accounts I agree with Budowsky, but not so strongly on the 3rd. While GOP candidates are directing so much focus on Paul’s purported weaknesses in the area of foreign policy,  the situation on the home front continues to deteriorate both socially and economically. For this reason, American voters who are weary of a decade of war and fear mongering from the political elite may opt for a candidate who will opt to set our own house in order, as opposed to a candidate who will again make foreign policy a priority and continue to beat the drums of war. However, Budowsky is right, Paul does need to distance himself from the charges of racism hurled at his campaign, whether or not such accusations are warranted (which I don’t think they are), they do tend to stick in the psyche of the public, especially those who are dependent on traditional forms of media for their information. A good place to start would be to see more ads like this:

Kyle Bass on the Economic Crisis

For those of you who haven’t heard of Kyle Bass, he heads up a hedge fund (Hayman Capital) out of Dallas. In 2008 Bass hit it big by hedging against sovereign debt in Europe in the midst of the mortgage backed security fueled market collapse. Bass didn’t have a crystal ball, simply the clarity to understand that the numbers were pointing to an economic meltdown. His interpretation of today’s market data is frankly refreshing, as lacks the endless optimism, hot air, and outright BS that one can hear from prominent commentators on CNBC or Fox Business.

Toward the end of an interview with a hostile Sarah Montague, host of BBC’s HARDtalk, with regards to the global economic malaise Bass asserts that the world is atoning for its past profligacy, and inability to hold its economic leaders accountable for their misdeeds. He illustrates with the comparison that “Capitalism without bankruptcy is like Christianity without hell…you have to have atonement for the ridiculous amounts of spending that the US and Europe…” His ideas on what this atonement looks like exactly is nothing short of the rending of the social fabric of the West, and the implications of the current economic mess could result in apocalyptic scenarios as the world is forced to pay the piper. You can view the interview here:

Bass has some additional, lengthier interviews at the 2010 and 2011 AmeriCatalyst conferences (Real Estate market), where he outlines his own understanding of the ongoing market crisis, and how it will affect some of the major economies – his outlook isn’t good, as he opines that this crisis can only end in one way – war. If you are going to take an hour, watch the 2011 interview first, since the info is most up-to date.

 

 

 

Porter Stansbury on the Decline of the Republic

Zerhedge has quickly become one of my favorite corners of the web, as their articles offer powerful insight into the global economy. Today they posted an article by Porter Stansbury titled The Corruption of America, where Stansbury lucidly outlines the political and economic corruption amongst Democrats and Republicans that have lead to the systematic erosion of American standards of living.

To put it mildly, Stansbury’s article was gripping, as he describes an America that has imported the worst forms of Socialism, and is in fact on the road of becoming a two-headed monster of socialism and fascism. According to Stansbury America’s per-capita GDP, which among other things indicates the purchasing power of the citizenry has been in sharp decline over the last 40 years, with the only thing propping this up being the massive accumulation of personal, corporate, and sovereign debt. The political left has been responsible through it’s social welfare systems of reducing our inner-cities to something resembling a third-world country. Under this corrupt system minorities who are most economically vulnerable and dependent on the system suffer under the welfare system with diminished access to meaningful education and economic opportunity, many of whom are now populating a skyrocketing prison population. The political right gets no better treatment from Stansbury, as they have propped up a corporate welfare system that has benefited the rich unimaginably while saddling the nation with massive debts as we have picked up the bill either directly for corporate largesse through bailouts, tax loopholes, or indirectly through the erosion of pensions and 401ks that have been pilfered by outright fraud and corruption at the highest levels of government and commerce.

What exacerbates this endemic status quo is much of the corruption cannot be properly policed since it takes place so often within the confines of the law. Stansbury does offer some solutions, such as holding elected officials more accountable for the policies which they enact, and making corporate heads personally and criminally liable for any acts of malfeasance that they are inclined to commit. But with the unlikelihood of real change coming without some sort of crisis coming to the surface, we are likely to be in for a very rough road before anything gets better.

I wish I could voice more disagreement with Stansbury on his analysis of America’s maladies, however I fear he is on the right track. As a Christian living in the inter-advental age, I realize that the best one can hope for is a world system that sort-of works, that it functions reasonably well in spite of the fact that it is marred by human depravity. Yet it would seem, without trying to read too much into God’s providential rule of the world, that he has allowed the world to go yet again into a season of incredible uncertainty and instability. As a citizen of the Heavenly Kingdom, I find myself reciting  the Lord’s prayer in our Sunday liturgy to be more urgent as we pray “…Thy Kingdom come, Thy will be done on earth as it is in heaven…”. As a citizen of this world, with a family of my own marching on into an uncertain future, I sincerely hope that Americans will think long and hard about the future that is materializing in front of us and opt for real change. In all likelihood this means being willing to stomach some very real short term pain to restore order to the political and economic system, but the consequences will be unimaginable if the status quo continues and we collectively kick the can down the road

Peak OPEC Production and the Great Iranian Squeeze

I have written for some time on the topic of Peak Oil, as I see it as a very disturbing geopolitical development that negatively effects the global economy’s ability to sustain meaningful growth and thus recovery. On top of this, anyone following the Israeli/American/NATO possibility of striking against Iran for its purported nuclear capabilities, can see that marching off into yet another elective war might not be a good idea after all. Even those who might be otherwise in favor of an Iranian strike and subsequent military invasion, might want to reconsider how paying in excess of $5/gallon at the pump is worth whatever gains might be had in Iran. If you don’t believe me, read non-peaker Greg Sharenow (associate at the leading global bond trader PIMCO of Newport Beach, CA) has written regarding the oil price scenarios that could likely ensue if Iran were attacked:

Below we outline four hypothetical scenarios for output and prices that could materialize if Israel attacks Iran’s nuclear sites. Again, we emphasize that we are not predicting the likelihood of Israel’s action or inaction in any way.

• Scenario 1: Exports minimally effected. Concerns would drive initial price response. IEA would likely make statements about willingness to meet any shortfall in supplies. Oil could spike initially to $130 to $140 per barrel and then settle in a higher range, around $120 to $125, in relatively short order as a premium (mostly a risk premium) becomes embedding into the market, at least for a while. The timing of the spike would depend on how much the market is taken by surprise and whether or not the strike is priced in ahead of time.
• Scenario 2: Iranian exports cut off for one month.  IEA would likely swing into action and Saudi Arabia could begin to offer more oil into market. In this case, we would expect prices could reach previous all-time highs of $145/bbl or even higher depending on issues with shipping. The IEA and Saudi Arabia can meet market needs, but the increase in uncertainty and the loss of spare capacity would affect pricing. In this case, after a few months, we would expect prices could fall back to $130 to $135/bbl range.
• Scenario 3: Iranian exports are lost for half a year. This is where the potential outcomes get quite dicey. We think oil prices could probably rally and average $150 for the six months, with notable spikes above that level. The IEA would likely release oil steadily, but consumption will need to take a hit from prices and slower economic activity. Once Iranian crude oil returns to the market and the environment stabilizes, oil would likely return to around $110/bbl or even lower depending on global strength at the time.
• Scenario 4: Greater loss of production from around the region, either through subsequent Iranian response or due to lack of ability to move oil through Straits of Hormuz. This is the Armageddon scenario in which oil prices could soar, significantly constraining global growth. Forecasting prices in the prior scenarios is dangerous enough. So, we won’t even begin to forecast a cap or target price in this final Doomsday scenario.

Read the full article published over at Zerohedge: Pimco’s 4 “Iran Invasion” Oil Price Scenarios: From $140 To “Doomsday”

In other words, if the Iran strike gets the go-ahead, which we should certainly hope it does not, it should inform not only your driving decisions, but also how you might ask your portfolio manager to move assets around in your 401k or investment portfolio. But, don’t ask me for advice on how to manage your assets, that is what you pay asset managers for.

An Austrian School Perspective on the End of Fiat Currency

My blog has morphed recently into a twofold discussion, on the one hand theology, and on the other economics. While they might seem opposites, one can, through the study of economics gain a very practical insight into the systemic realities of the human condition. I wish I could say that economics paints a rosy picture of that condition, but it does just the opposite, but at least it’s real right?

Anyway, there is a great article over at the Whiskey and Gunpowder website by the economist, Detlev Schlichter, discussing the impending, and likely catastrophic end of the fiat money system. Here’s an excerpt from the post “Why Policy Advise Is Futile And What You Should Do Instead”:

Here is another, less well-known quote from the great man, Mises:

“Political ideas that have dominated the public mind for decades cannot be refuted through rational arguments. They must run their course in life and cannot collapse otherwise than in great catastrophes…”

We are approaching such a catastrophe with full force. Rather than coming up with a monetary reform (and there is only one true reform: a return to gold) that will certainly be rejected by the powers that be, I think the most sensible thing one can try and do is to protect oneself, one’s family and one’s wealth as best as one can from the ensuing fall-out.

My recommendation has been and still is to reduce exposure to banks and to governments – the two grotesquely bloated entities that have for decades benefited from their privilege to be unconstrained paper money producers and who are now close to OD’-ing on that privilege. Hold gold (and maybe silver) instead of paper money, bank deposits and fixed income securities. Real assets, not paper assets.

The coming monetary meltdown will wipe out vast amounts of paper wealth, and it will facilitate one of the largest transfers of real wealth in human history. Many people will lose a lot.

Sadly, it will be mainly those who produce more than they consume and who save the difference — and then save it in the form of cash, bank deposits and bonds.

All paper money collapses decimate the middle class. No, I certainly don’t wish for this but the chance of this being avoided is practically zero.

It is a riveting read, and if the Austrian School has it right with respect to currency, savings, and the role of banking (I think they do); and the Keynesians have it wrong, we are in for a very, very bumpy ride in the future.

James Barr – Natural Theology, Barthianism, and the Anti-Philosophical Tendency Within Biblical Theology

This third entry picks back up on my ongoing series on James Barr’s defense of natural theology as a legitimate field of inquiry in biblical theology (See Part 1 and Part 2). I am simply going to let Barr speak for himself on how modern biblical studies, following Barth has neglected natural theology, and has taken an anti-philosophical tenor. This extended quote comes from Barr’s book Biblical Faith and Natural Theology, which was derived from his invitation to The Gifford Lectures in 1991, which are sponsored annually at the University of Edinburgh:

For at least the last century scholars have ceased to work seriously with natural theology. It was no longer part of their work or their interests. They were interested to work with the minds of biblical people, and they no longer cared whether these minds conformed to the ideas of modern reason, logic, or psychology. They no longer thought that it was part of their work to ‘validate’ the thoughts of biblical writers by showing that they fitted with modern requirements, or even by showing that they fitted with modern Christian beliefs. On the whole they chose the opposite path: if the thoughts of biblical people were entirely different from what modern rationality might demand, then so much the better for biblical people. The discovery of the mentality of ancient people might uncover a thinking that, while different from modern modes, was valuable and constructive when taken in its own right. Again, unlike biblical scholars of an earlier period, modern biblical scholars were no longer interested in apologetic arguments, in proving for instance, from scientific discoveries that it was possible for the earth to be flooded with water in the time of the Flood, or that Jonah might quite probably have been swallowed up by a whale, or in showing that the plagues of Egypt had really happened as described in the Bible. Such matters now lay for the most part outside the realm of serious biblical study. All this was a setting already existing before Barth, into which the Barthian approach to theology fitted very well.

Barth was in this [way,] very much a man of modern times. He perceived and followed their trend. The rejection of natural theology, apologetics, and the like suited very well the way in which biblical scholarship had long been going. This is why, in spite of the strangeness of Barthian theology to most biblical scholars, and in spite of the contemptuous attitude Barth showed toward their work, there was never any great outcry from biblical scholarship against that rejection. It suited them very well. Added to this is the concentration of biblical scholars on the Bible, their ‘biblicism’ in the sense of their occupational unwillingness to see anything decided by factors without the Bible and beyond their range of competence or expertise. Contrary to general opinion of recent times, the obvious weakness of the average biblical scholar lay not in  his or her bias toward historical approaches, but in his or her lack of philosophical insight or ability. Their professional expertise encouraged this. Most were not very sorry that natural theology was forgotten about. Their own natural sympathy with the idea of the Bible as the supremely revelational document made them all the less willing to discern the traces of natural theology within it, all the more willing to do like Barth, and use exegetical means to obscure these traces. – (pp.118-119)

Barr pulls no punches, in his typically lucid style here, as he seeks to redirect biblical studies to a mode of theological reflection long neglected. What strikes me, is that concurrent with the almost total abdication of Scripture to ‘revelational’ categories, dialectic theologians like Barth, and too many conservative Reformed Christians today, have squared neatly with the ecological policy of neglect embodied by so many modern institutions. While there may have been an admirable effort mustered to shore up the effects of revelation on mental and spiritual categories, Christian theological reflection in the 20th and on into the 21st centuries have neglected one of the fundamental concepts in scripture, that being the land, the very ground beneath our feet. Setting aside the NL/2k debates for a moment, this lack of a collective creational conscience among Christians who occupy the common realm with so many others has, in my opinion, damaged the Christian’s testimony of the goodness of the coming creation. The fact of a good creation, that is a useful vehicle not only for human prospering, but for Divine self-disclosure should not be lost on us.

Economy, Energy and Decline

This gets at the crux of the current economic crisis. If only leadership would be so bold as to address it. (HT: Zero Hedge)

Must Read: UBS’ Andy Lees On Why The US Economy Is, All Else Equal, Doomed

On the Future of Two Kingdom Theology

There’s a lively conversation going on over at The Confessional Outhouse on a recent post: “Guess the Good-Guy” , where some of the age-old debate is raging with respect to the place of apologetics and philosophy in the Two Kingdoms model. My buddy Paul is sticking up for philosophy and apologetics as a vital component of church life. Paul is arguing, fairly I might add, that 2k adherents haven’t adequately grappled with some of the philosophical and ethical implications of the position. I’ll re-frame an open ended question I directed toward Paul:

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1) I do agree with the philosopical theologians making waves on the internet that 2k needs some intense work on the philosophical end. Here’s some questions I have of the enterprise:
A) Does 2k necessarily entail arguments for NL and natural theology (NT), or are the two independent concepts?
B) If 2k and NL are bound up together, why; or if they can be decoupled, why?
C) If 2k and NL can or should be decoupled, what does 2k look like?
D) Is there sufficient biblical warrant to affirm NL/NT arguments, if so to what extent are such arguments affirmed in Scripture?
E) If NL/NT is affirmed in Scripture, what by necessary consequence applies in ethics and philosophy outside of the scope of Scripture.
F) To what extent is NL/NT binding upon the public sphere, and to what extent (if any) does the state have to uphold NL as a fundamental underpinning of its legal system?

 

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For those readers who aren’t familiar on 2k issues, take a look at some of the stuff I have posted in the past:

The Role of the Church In Society

Two Kingdom Resources

I would be interested to hear some perspectives from both sides of the spectrum here. If this thread gains some traction I’d ask to keep the fighting above the belt (i.e. no motive mining, sloppily stated positions and arguments, and no blatant misrepresentations).