Issue CCLXXX

March 6, 2011

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Econonics
Caught: Krugman's Shifting Arguments
Robert P. Murphy

March 6, 2011
It's not newsworthy when Paul Krugman contradicts himself. However, in two recent blog posts on the varying economic fortunes of US states, Krugman's about-face was so complete and so fast that Dr. Robert Murphy believes he just has to share.

The New Accounting at the Fed
Robert P. Murphy

March 6, 2011
Back in early January, the Federal Reserve made an obscure announcement in its weekly report. It appeared to be an inconsequential accounting change in the treatment of earnings, and was sold as a step toward greater transparency. The change was buried in such jargon that it took weeks for the financial bloggers to fully digest what had happened — the new move made it effectively impossible for the Fed to go bankrupt! In this article Dr. Robert Murphy explains the rule change and speculates on the Fed's motives.

What's Behind the Currency War?
Antony P. Mueller

March 6, 2011
In September 2010, a short time before the international financial summit of the Group of Twenty (G20) took place in South Korea, Brazilian finance minister Guido Mantega declared that the world is experiencing a "currency war" where "devaluing currencies artificially is a global strategy." Calling competitive devaluation a "war" may seem like a gross exaggeration. Yet in terms of its potential of destruction, the current global financial conflict may well rank at a level similar to that of a real war. Antony Muller writes that, as before, the current crisis of the international economic order is mainly the result of monetary fragilities coming from the unsound national monetary systems and reckless domestic monetary and fiscal policies.

Inflation and the Value of Gold Explained
Rod Rojas

March 6, 2011
In recent times, with gold reaching all-time highs, we have seen people question the valuation of assets in dollars. Basically, the yardstick used to measure your assets — your house, car, or stock portfolio — is a steadily shrinking one. This makes you wonder whether your savings are really growing in value. In other words, if the value of your savings has doubled, but the price of milk and everything else has roughly doubled, you are not getting ahead. If anything, you will likely have to pay taxes on your supposed "gain," which is no gain at all. The way the dollar yardstick is being shrunk is by increasing the stock of money, which means that there are more dollars in circulation. National governments do this. Rod Rojas explains the harms of this inflationary tendency, as well as what distinguishes the value of gold from the value of today's fiat currencies.
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History
The Alleged Unbroken Trend Toward Progress (1957)
Ludwig von Mises

March 6, 2011
In this 1957 excerpt from Theory and History, Ludwig von Mises writes that if people assume that what they call progress is a necessary phenomenon and that there prevails in the course of events a law that makes progress in this sense go on forever, they are badly mistaken. What is called economic progress is the effect of an accumulation of capital goods exceeding the increase in population. If this trend gives way to a standstill in the further accumulation of capital or to capital decumulation, there will no longer be progress in this sense of the term.

Music

Pixie Hollow Dreams
Rodney Rawlings

March 6, 2011
The Rational Argumentator is proud to feature the newest composition by Rodney Rawlings. Mr. Rawlings describes this work as "A fantasy of contemplation and yearning in a sylvan setting." Length: 5:06

Politics
Wind Power: Questionable Benefits, Concealed Impacts
Paul Driessen

March 6, 2011
Energy, shale gas, hydraulic fracturing, and wind power are all much in the news – especially as events in the Middle East continue to unfold, and countries realize new drilling technologies have unlocked previously undreamed-of natural gas riches in formerly inaccessible formations deep underground. This natural gas is a true game-changer. One important aspect of the ongoing debate over energy and economic benefits versus environmental and groundwater risks has not been addressed before, however. It is the comparison between still-undetermined and speculative impacts of hydraulic fracturing on water supplies versus the impacts of “environment-friendly” wind turbines on a wide variety of ecological values. Paul Driessen presents the first analysis of these risks that he is aware of. He also argues that EPA Administrator Lisa Jackson’s proposal to apply a “life-cycle” or “cradle-to-grave” assessment of shale-gas “fracking” technologies would be equally  and indeed more  valuable for evaluating wind-power costs and benefits.

Congress Must Reject the Welfare/Warfare State
Ron Paul

March 6, 2011
During the past few weeks, Congress has been locked in a battle to pass a continuing resolution to fund federal-government operations through September.  Both supporters and opponents of the bill, HR 1, claim it is a serious attempt to reduce federal spending.  However, Rep. Ron Paul writes that an examination of the details of the bill call that claim into question.  For one thing, the oft-cited assertion that HR 1 reduces spending by $99 billion is misleading.  The $99 billion figure merely represents the amount that HR 1 reduces spending from the President’s proposed Fiscal Year 2011 budget -- not reductions in actual spending.  Trying to claim credit for a reduction in spending based on cuts in proposed spending is like claiming someone is following a diet because he had only five slices of pizza when he intended to have 10 slices!

How I Would Fix American Foreign Policy
Fred Reed

March 6, 2011
In this humorous column, Fred Reed lays out a serious agenda for fixing U.S. foreign policy in a manner that would avoid devastating foreign entanglements and the unintended consequences of American military interventionism.

Life on the Pentagon's Dirt Heap
Fred Reed

March 6, 2011
You see them here and there, usually in countries where they can afford to live, barely—Thailand, Cambodia, Mexico. They are the Pentagon’s throwaways. Fred Reed describes the situations of victims of America's wars  the veterans  who are not even given respect, recognition, and adequate health care upon returning.

 "What the workers must learn is that the only reason why wage rates are higher in the United States is that the per-head quota of capital invested is higher." 
~ Ludwig von Mises