Socialism Is An Immoral System

Socialism Is An Immoral System

Submitted by Bob Livingston via Personal Liberty Digest blog (h/t Brandon Smith at Alt-Market.com),

The American economic system, and in fact the world’s economic system is failing, and that failure is being attributed by many on the left (and some on the right) as a failure of capitalism.

This false notion has given rise to Bernie Sanders and his preaching of social democracy. How has this happened?

Every writer and every commentator and every politician in America refers to the U.S. as a democracy of free enterprise capitalism with individual privacy and property rights. This is a big laugh to any sober person.

The system and its paid politicians still repeat high-sounding terms like “freedom of the individual” and “free enterprise,” which sedates the madding crowd. The terms “private” and “freedom” no longer mean what they once meant. They are cruel deceptions that fool the mind yearning for human freedom.

The fact is that in America we have massive regulation and regimentation. This is necessary, we are told, because it is “in the public interest.” It all spews forth out of “democracy” as if a Biblical word and a holy sanction. Terms like “public interest” and “common good” are code words that mean police state and reduced liberty.

We live in a fiction of freedom perpetuated with semantic corruption that has evolved us into economic fascism. Language and words that support a free society have been turned inside out.

With this propaganda reverse, opposition has been neutralized. True words, true meanings of patriotism and freedom have become the farce and illusion that cover fascism.

So Sanders has attracted the millennials in droves based on the lie that capitalism is immoral but his brand of socialism is moral because it guarantees “equality.” These millennials tweet or blog their discontent with the present system on their Iphones and Androids and computers created by capitalists who got rich and then became crony capitalist socialists or fascists.

But Sanders doesn’t distinguish between monopoly or crony capitalism and true free-market capitalism. Free market capitalism hasn’t existed in the U.S., or much of anywhere else for that matter, in more than 100 years. So capitalism hasn’t failed and isn’t failing.

There is a silent marriage between big government and big business. It exists around the world. It’s called fascism, or was in Italy, though we have the same thing.

All governments are fronts for monopoly capitalism, and monopoly capitalism has many names: fascism, socialism, communism and democracy. Big business has and will promote every ideology and philosophy known to man to disguise its madness for profits. But one equals the other. They are all immoral systems that use the power of government to exist and to suppress human freedom.

The only moral system is laissez-faire capitalism; the system in which transactions between private parties are free from government interference. It was American free market capitalism that fueled the growth of the U.S. economic engine beginning in the 1800s and raised the standard of living around the globe, before monopoly capitalism began to exert greater and greater control over the U.S. economic system beginning in the mid-1800s and accelerated after the creation of the Federal Reserve in 1913.

Sadly, it’s not just the progressive left and ignorant millennials that oppose free market capitalism. In any discussion forum where laissez-faire capitalism is discussed, “conservatives” are quick to make the disclaimer that “we must havesome regulation” or, “we can’t have unfettered capitalism.” In truth, most so-called conservatives are really closet socialists. This is a testament to the powerful propaganda we are subjected to.

In 1993, C. Bradley Thompson, then assistant professor of political science at Ashland University, described theimmorality of socialism and the morality of capitalism as well as anyone I’ve read. This should be shared with anyone you know – particularly young people who are victims of the public (non)education system — who has bought the lie that capitalism is a failed system and has embraced conventional wisdom and Sanders’ false paradigm:

Socialism vs. capitalism: Which is the moral system?

Throughout history there have been two basic forms of social organization: collectivism and individualism. In the twentieth-century collectivism has taken many forms: socialism, fascism, Nazism, welfare-statism and communism are its more notable variations. The only social system commensurate with individualism is laissez-faire capitalism.

The extraordinary level of material prosperity achieved by the capitalist system over the course of the last two-hundred years is a matter of historical record. But very few people are willing to defend capitalism as morally uplifting.

It is fashionable among college professors, journalists, and politicians these days to sneer at the free-enterprise system. They tell us that capitalism is base, callous, exploitative, dehumanizing, alienating, and ultimately enslaving.

The intellectuals’ mantra runs something like this: In theory socialism is the morally superior social system despite its dismal record of failure in the real world. Capitalism, by contrast, is a morally bankrupt system despite the extraordinary prosperity it has created. In other words, capitalism at best, can only be defended on pragmatic grounds. We tolerate it because it works.

Under socialism a ruling class of intellectuals, bureaucrats and social planners decide what people want or what is good for society and then use the coercive power of the State to regulate, tax, and redistribute the wealth of those who work for a living. In other words, socialism is a form of legalized theft.

The morality of socialism can be summed-up in two words: envy and self-sacrifice. Envy is the desire to not only possess another’s wealth but also the desire to see another’s wealth lowered to the level of one’s own. Socialism’s teaching on self-sacrifice was nicely summarized by two of its greatest defenders, Hermann Goering and Benito Mussolini. The highest principle of Nazism (National Socialism), said Goering, is: “Common good comes before private good.” Fascism, said Mussolini, is “a life in which the individual, through the sacrifice of his own private interests… realizes that completely spiritual existence in which his value as a man lies.”

Socialism is the social system which institutionalizes envy and self-sacrifice: It is the social system which uses compulsion and the organized violence of the State to expropriate wealth from the producer class for its redistribution to the parasitical class.

Despite the intellectuals’ psychotic hatred of capitalism, it is the only moral and just social system.

Capitalism is the only moral system because it requires human beings to deal with one another as traders — that is, as free moral agents trading and selling goods and services on the basis of mutual consent.

Capitalism is the only just system because the sole criterion that determines the value of a thing exchanged is the free, voluntary, universal judgment of the consumer. Coercion and fraud are anathema to the free-market system.

It is both moral and just because the degree to which man rises or falls in society is determined by the degree to which he uses his mind. Capitalism is the only social system that rewards merit, ability and achievement, regardless of one’s birth or station in life.

Yes, there are winners and losers in capitalism. The winners are those who are honest, industrious, thoughtful, prudent, frugal, responsible, disciplined, and efficient. The losers are those who are shiftless, lazy, imprudent, extravagant, negligent, impractical, and inefficient.

Capitalism is the only social system that rewards virtue and punishes vice. This applies to both the business executive and the carpenter, the lawyer and the factory worker.

But how does the entrepreneurial mind work? Have you ever wondered about the mental processes of the men and women who invented penicillin, the internal combustion engine, the airplane, the radio, the electric light, canned food, air conditioning, washing machines, dishwashers, computers, etc.?

What are the characteristics of the entrepreneur? The entrepreneur is that man or woman with unlimited drive, initiative, insight, energy, daring creativity, optimism and ingenuity. The entrepreneur is the man who sees in every field a potential garden, in every seed an apple. Wealth starts with ideas in people’s heads.

The entrepreneur is therefore above all else a man of the mind. The entrepreneur is the man who is constantly thinking of new ways to improve the material or spiritual lives of the greatest number of people.

And what are the social and political conditions which encourage or inhibit the entrepreneurial mind? The free-enterprise system is not possible without the sanctity of private property, the freedom of contract, free trade and the rule of law.

But the one thing that the entrepreneur values over all others is freedom — the freedom to experiment, invent and produce. The one thing that the entrepreneur dreads is government intervention. Government taxation and regulation are the means by which social planners punish and restrict the man or woman of ideas.

Welfare, regulations, taxes, tariffs, minimum-wage laws are all immoral because they use the coercive power of the state to organize human choice and action; they’re immoral because they inhibit or deny the freedom to choose how we live our lives; they’re immoral because they deny our right to live as autonomous moral agents; and they’re immoral because they deny our essential humanity. If you think this is hyperbole, stop paying your taxes for a year or two and see what happens.

The requirements for success in a free society demand that ordinary citizens order their lives in accordance with certain virtues — namely, rationality, independence, industriousness, prudence, frugality, etc. In a free capitalist society individuals must choose for themselves how they will order their lives and the values they will pursue. Under socialism, most of life’s decisions are made for you.

Both socialism and capitalism have incentive programs. Under socialism there are built-in incentives to shirk responsibility. There is no reason to work harder than anyone else because the rewards are shared and therefore minimal to the hard-working individual; indeed, the incentive is to work less than others because the immediate loss is shared and therefore minimal to the slacker.

Under capitalism, the incentive is to work harder because each producer will receive the total value of his production — the rewards are not shared. Simply put: socialism rewards sloth and penalizes hard work while capitalism rewards hard work and penalizes sloth.

According to socialist doctrine, there is a limited amount of wealth in the world that must be divided equally between all citizens. One person’s gain under such a system is another’s loss.

According to the capitalist teaching, wealth has an unlimited growth potential and the fruits of one’s labor should be retained in whole by the producer. But unlike socialism, one person’s gain is everybody’s gain in the capitalist system. Wealth is distributed unequally but the ship of wealth rises for everyone.

Sadly, America is no longer a capitalist nation. We live under what is more properly called a mixed economy — that is, an economic system that permits private property, but only at the discretion of government planners. A little bit of capitalism and a little bit of socialism.

When government redistributes wealth through taxation, when it attempts to control and regulate business production and trade, who are the winners and losers? Under this kind of economy the winners and losers are reversed: the winners are those who scream the loudest for a handout and the losers are those quiet citizens who work hard and pay their taxes.

As a consequence of our sixty-year experiment with a mixed economy and the welfare state, America has created two new classes of citizens. The first is a debased class of dependents whose means of survival is contingent upon the forced expropriation of wealth from working citizens by a professional class of government social planners. The forgotten man and woman in all of this is the quiet, hardworking, law-abiding, taxpaying citizen who minds his or her own business but is forced to work for the government and their serfs.

The return of capitalism will not happen until there is a moral revolution in this country. We must rediscover and then teach our young the virtues associated with being free and independent citizens. Then and only then, will there be social justice in America.

 

Submitted by Bob Livingston via Personal Liberty Digest blog (h/t Brandon Smith at Alt-Market.com),

The American economic system, and in fact the world’s economic system is failing, and that failure is being attributed by many on the left (and some on the right) as a failure of capitalism.

This false notion has given rise to Bernie Sanders and his preaching of social democracy. How has this happened?

Every writer and every commentator and every politician in America refers to the U.S. as a democracy of free enterprise capitalism with individual privacy and property rights. This is a big laugh to any sober person.

The system and its paid politicians still repeat high-sounding terms like “freedom of the individual” and “free enterprise,” which sedates the madding crowd. The terms “private” and “freedom” no longer mean what they once meant. They are cruel deceptions that fool the mind yearning for human freedom.

The fact is that in America we have massive regulation and regimentation. This is necessary, we are told, because it is “in the public interest.” It all spews forth out of “democracy” as if a Biblical word and a holy sanction. Terms like “public interest” and “common good” are code words that mean police state and reduced liberty.

We live in a fiction of freedom perpetuated with semantic corruption that has evolved us into economic fascism. Language and words that support a free society have been turned inside out.

With this propaganda reverse, opposition has been neutralized. True words, true meanings of patriotism and freedom have become the farce and illusion that cover fascism.

So Sanders has attracted the millennials in droves based on the lie that capitalism is immoral but his brand of socialism is moral because it guarantees “equality.” These millennials tweet or blog their discontent with the present system on their Iphones and Androids and computers created by capitalists who got rich and then became crony capitalist socialists or fascists.

But Sanders doesn’t distinguish between monopoly or crony capitalism and true free-market capitalism. Free market capitalism hasn’t existed in the U.S., or much of anywhere else for that matter, in more than 100 years. So capitalism hasn’t failed and isn’t failing.

There is a silent marriage between big government and big business. It exists around the world. It’s called fascism, or was in Italy, though we have the same thing.

All governments are fronts for monopoly capitalism, and monopoly capitalism has many names: fascism, socialism, communism and democracy. Big business has and will promote every ideology and philosophy known to man to disguise its madness for profits. But one equals the other. They are all immoral systems that use the power of government to exist and to suppress human freedom.

The only moral system is laissez-faire capitalism; the system in which transactions between private parties are free from government interference. It was American free market capitalism that fueled the growth of the U.S. economic engine beginning in the 1800s and raised the standard of living around the globe, before monopoly capitalism began to exert greater and greater control over the U.S. economic system beginning in the mid-1800s and accelerated after the creation of the Federal Reserve in 1913.

Sadly, it’s not just the progressive left and ignorant millennials that oppose free market capitalism. In any discussion forum where laissez-faire capitalism is discussed, “conservatives” are quick to make the disclaimer that “we must havesome regulation” or, “we can’t have unfettered capitalism.” In truth, most so-called conservatives are really closet socialists. This is a testament to the powerful propaganda we are subjected to.

In 1993, C. Bradley Thompson, then assistant professor of political science at Ashland University, described theimmorality of socialism and the morality of capitalism as well as anyone I’ve read. This should be shared with anyone you know – particularly young people who are victims of the public (non)education system — who has bought the lie that capitalism is a failed system and has embraced conventional wisdom and Sanders’ false paradigm:

Socialism vs. capitalism: Which is the moral system?

Throughout history there have been two basic forms of social organization: collectivism and individualism. In the twentieth-century collectivism has taken many forms: socialism, fascism, Nazism, welfare-statism and communism are its more notable variations. The only social system commensurate with individualism is laissez-faire capitalism.

The extraordinary level of material prosperity achieved by the capitalist system over the course of the last two-hundred years is a matter of historical record. But very few people are willing to defend capitalism as morally uplifting.

It is fashionable among college professors, journalists, and politicians these days to sneer at the free-enterprise system. They tell us that capitalism is base, callous, exploitative, dehumanizing, alienating, and ultimately enslaving.

The intellectuals’ mantra runs something like this: In theory socialism is the morally superior social system despite its dismal record of failure in the real world. Capitalism, by contrast, is a morally bankrupt system despite the extraordinary prosperity it has created. In other words, capitalism at best, can only be defended on pragmatic grounds. We tolerate it because it works.

Under socialism a ruling class of intellectuals, bureaucrats and social planners decide what people want or what is good for society and then use the coercive power of the State to regulate, tax, and redistribute the wealth of those who work for a living. In other words, socialism is a form of legalized theft.

The morality of socialism can be summed-up in two words: envy and self-sacrifice. Envy is the desire to not only possess another’s wealth but also the desire to see another’s wealth lowered to the level of one’s own. Socialism’s teaching on self-sacrifice was nicely summarized by two of its greatest defenders, Hermann Goering and Benito Mussolini. The highest principle of Nazism (National Socialism), said Goering, is: “Common good comes before private good.” Fascism, said Mussolini, is “a life in which the individual, through the sacrifice of his own private interests… realizes that completely spiritual existence in which his value as a man lies.”

Socialism is the social system which institutionalizes envy and self-sacrifice: It is the social system which uses compulsion and the organized violence of the State to expropriate wealth from the producer class for its redistribution to the parasitical class.

Despite the intellectuals’ psychotic hatred of capitalism, it is the only moral and just social system.

Capitalism is the only moral system because it requires human beings to deal with one another as traders — that is, as free moral agents trading and selling goods and services on the basis of mutual consent.

Capitalism is the only just system because the sole criterion that determines the value of a thing exchanged is the free, voluntary, universal judgment of the consumer. Coercion and fraud are anathema to the free-market system.

It is both moral and just because the degree to which man rises or falls in society is determined by the degree to which he uses his mind. Capitalism is the only social system that rewards merit, ability and achievement, regardless of one’s birth or station in life.

Yes, there are winners and losers in capitalism. The winners are those who are honest, industrious, thoughtful, prudent, frugal, responsible, disciplined, and efficient. The losers are those who are shiftless, lazy, imprudent, extravagant, negligent, impractical, and inefficient.

Capitalism is the only social system that rewards virtue and punishes vice. This applies to both the business executive and the carpenter, the lawyer and the factory worker.

But how does the entrepreneurial mind work? Have you ever wondered about the mental processes of the men and women who invented penicillin, the internal combustion engine, the airplane, the radio, the electric light, canned food, air conditioning, washing machines, dishwashers, computers, etc.?

What are the characteristics of the entrepreneur? The entrepreneur is that man or woman with unlimited drive, initiative, insight, energy, daring creativity, optimism and ingenuity. The entrepreneur is the man who sees in every field a potential garden, in every seed an apple. Wealth starts with ideas in people’s heads.

The entrepreneur is therefore above all else a man of the mind. The entrepreneur is the man who is constantly thinking of new ways to improve the material or spiritual lives of the greatest number of people.

And what are the social and political conditions which encourage or inhibit the entrepreneurial mind? The free-enterprise system is not possible without the sanctity of private property, the freedom of contract, free trade and the rule of law.

But the one thing that the entrepreneur values over all others is freedom — the freedom to experiment, invent and produce. The one thing that the entrepreneur dreads is government intervention. Government taxation and regulation are the means by which social planners punish and restrict the man or woman of ideas.

Welfare, regulations, taxes, tariffs, minimum-wage laws are all immoral because they use the coercive power of the state to organize human choice and action; they’re immoral because they inhibit or deny the freedom to choose how we live our lives; they’re immoral because they deny our right to live as autonomous moral agents; and they’re immoral because they deny our essential humanity. If you think this is hyperbole, stop paying your taxes for a year or two and see what happens.

The requirements for success in a free society demand that ordinary citizens order their lives in accordance with certain virtues — namely, rationality, independence, industriousness, prudence, frugality, etc. In a free capitalist society individuals must choose for themselves how they will order their lives and the values they will pursue. Under socialism, most of life’s decisions are made for you.

Both socialism and capitalism have incentive programs. Under socialism there are built-in incentives to shirk responsibility. There is no reason to work harder than anyone else because the rewards are shared and therefore minimal to the hard-working individual; indeed, the incentive is to work less than others because the immediate loss is shared and therefore minimal to the slacker.

Under capitalism, the incentive is to work harder because each producer will receive the total value of his production — the rewards are not shared. Simply put: socialism rewards sloth and penalizes hard work while capitalism rewards hard work and penalizes sloth.

According to socialist doctrine, there is a limited amount of wealth in the world that must be divided equally between all citizens. One person’s gain under such a system is another’s loss.

According to the capitalist teaching, wealth has an unlimited growth potential and the fruits of one’s labor should be retained in whole by the producer. But unlike socialism, one person’s gain is everybody’s gain in the capitalist system. Wealth is distributed unequally but the ship of wealth rises for everyone.

Sadly, America is no longer a capitalist nation. We live under what is more properly called a mixed economy — that is, an economic system that permits private property, but only at the discretion of government planners. A little bit of capitalism and a little bit of socialism.

When government redistributes wealth through taxation, when it attempts to control and regulate business production and trade, who are the winners and losers? Under this kind of economy the winners and losers are reversed: the winners are those who scream the loudest for a handout and the losers are those quiet citizens who work hard and pay their taxes.

As a consequence of our sixty-year experiment with a mixed economy and the welfare state, America has created two new classes of citizens. The first is a debased class of dependents whose means of survival is contingent upon the forced expropriation of wealth from working citizens by a professional class of government social planners. The forgotten man and woman in all of this is the quiet, hardworking, law-abiding, taxpaying citizen who minds his or her own business but is forced to work for the government and their serfs.

The return of capitalism will not happen until there is a moral revolution in this country. We must rediscover and then teach our young the virtues associated with being free and independent citizens. Then and only then, will there be social justice in America.

 


 

Reality Is A Formidable Enemy

Submitted by Pater Tenebrarum via Acting-Man.com,

Political Correctness Comedy

We have recently come across a video that is simply too funny not be shared. It also happens to dovetail nicely with our friend Claudio’s recent essay on political correctness and cultural Marxism. Since this is generally a rather depressing topic, we have concluded that having a good laugh at it might not be the worst idea.

safe space
How to most effectively create a “safe space” on campus

Cartoon by Nate Beeler

It is especially funny (or terrifying, depending on one’s perspective – we prefer funny) to what extent political correctness has invaded colleges. Frankly, we actually had no idea just how far this malady has advanced by now.

A recent article in the conservative journal National Review listed the “13 most ridiculously PC moments on college campuses in 2015” – readers can check the details out over there, but below are a few examples from the list. They read like a dispatch from the stand-up comedy universe:

Hating pumpkin-spice lattes was declared sexist.

A university language guide stated that the word “American” was “problematic.”

A university study declared that we have to accept people who “identify as real vampires.”

The word “skinny” was deemed “violent.”

A university declared the phrase “politically correct” to be politically incorrect.

A room full of white people was determined to represent a “micro-aggression”

A Harvard study declared that micro-aggressions can make people die sooner

Some students were ‘triggered’ by an anti-micro-aggressions exhibit.

A yoga class was canceled on the grounds that yoga is “cultural appropriation.”

Just in case readers are wondering what “micro-aggressions” are, according to Psychology Today, the term refers to “everyday verbal, nonverbal, and environmental slights, snubs, or insults, whether intentional or unintentional, which communicate hostile, derogatory, or negative messages to target persons based solely upon their marginalized group membership.”

A World Scrubbed of Offense

Surely no-one would want to micro-aggress on his fellow human beings lest they “become depressed, develop low self-esteem, eating disorders, body image issues or experience sexual dysfunction” or God forbid, begin to suffer from“invisibility syndrome”, all of which are symptoms that could impact victims according to Wikipedia.

In order to make sure readers are properly prepared to avoid wreaking such havoc, here is an in parts slightly Orwellian-sounding set of guidelines published by UCLA, entitled “Tool: Recognizing Micro-aggressions and the Messages they Send”. Mind, there is no need to be unnecessarily rude to people, we agree with that as a general point (it can be dangerous too: if you’re rude to Hannibal Lecter, he’ll eat your liver). However, these guidelines may be taking things a tad too far.

Apparently, even asking people where they’re from is actually a no-no these days. If one really wants to find out, one will presumably have to knock the person unconscious (“macro-aggression”) and grab their ID. One is also no longer allowed to insist that “the best qualified person be given the job”. We were hitherto unaware of that, but we have a feeling it might actually explain a lot.

Also, if one still thinks that “America is the land of opportunity”, or that hard work is the basis of success, one should better keep such thoughts to oneself. It is no longer permitted to say any of this out loud (let us not forget the danger that someone might contract invisibility syndrome upon hearing such travesties!).

Anyway, let us move on to the hilarious video mentioned above. It shows an interviewer asking students a number of questions on “identity” which veer ever further into the realm of the absurd. Almost regardless of how ludicrous the putative scenarios he offers up for inspection become though, the students are making every effort to avoid offending the good man even hypothetically (we want to take this opportunity to apologize if we have micro-aggressed against women and/or assorted hybrids by identifying him as a “man”):

Whatever you do, don’t tell him that he’s wrong!

We want to point out that we know absolutely nothing about the makers of the video (some Washington-based family policy advocacy group), so this is not meant to be an endorsement of them. We are also not interested in addressing the bathroom law controversy that has apparently triggered this “identity debate” in greater detail – except for pointing out that this particular situation is less clear-cut than many people seem to think.

For instance, women in North Carolina could in future be astonished to find this person entering their rest-rooms – by law; then again, in Seattle this can happen. We happen to believe that what is needed are not laws, but common sense (we have yet to consult the handbook to find out if the application of common sense is still considered politically correct – it may not be).

Important Message

Anyway, we do have a message for the young people in the video: Yes, reality can often prove to be a tenacious and formidable enemy. But together, ensconced in our hate-free safe zone, we shall be able to over-comb it! Friendship, comrades!

friendship

 


 

“Worse Than 2008” World Trade Collapses To 10 Year Lows

Submitted by Wolf Richter via WolfStreet.com,

This wasn’t part of the rosy scenario.

The Merchandise World Trade Monitor by the CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs, tracks global imports and exports in two measures: by volume and by unit price in US dollars. And the just released data for January was a doozie beneath the lackluster surface.

The World Trade Monitor for January, as measured in seasonally adjusted volume, declined 0.4% from December and was up a measly 1.1% from January a year ago. While the sub-index for import volumes rose 3% from a year ago, export volumes fell 0.7%. This sort of “growth,” languishing between slightly negative and slightly positive has been the rule last year.

The report added this about trade momentum:

Regional outcomes were mixed. Both import and export momentum became more negative in the United States. Both became more positive in the Euro Area. Import momentum in emerging Asia rose further, whereas export momentum in emerging Asia has been negative for four consecutive months.

This is also what the world’s largest container carrier, Maersk Lines, and others forecast for 2016: a growth rate of about zero to 1% in terms of volume. So not exactly an endorsement of a booming global economy.

But here’s the doozie: In terms of prices per unit expressed in US dollars, world trade dropped 3.8% in January from December and is down 12.1% from January a year ago, continuing a rout that started in June 2014. Not that the index was all that strong at the time, after having cascaded lower from its peak in May 2011.

If June 2014 sounds familiar as a recent high point, it’s because a lot of indices started heading south after that, including the price of oil, revenues of S&P 500 companies, total business revenues in the US…. That’s when the Fed was in the middle of tapering QE out of existence and folks realized that it would be gone soon. That’s when the dollar began to strengthen against other key currencies. Shortly after that, inventories of all kinds in the US began to bloat.

Starting from that propitious month, the unit price index of world trade has plunged 23%. It’s now lower than it had been at the trough of the Financial Crisis. It hit the lowest level since March 2006:

World-Trade-Monitor-2006_2016-01-prices-unit-usd

This chart puts in perspective what Nils Andersen, the CEO of Danish conglomerate AP Møller-Maersk, which owns Maersk Lines, had said last month in an interview following the company’s dreary earnings report and guidance: “It is worse than in 2008.”[Read… “Worse than 2008”: World’s Largest Container Carrier on the Slowdown in Global Trade.]

But why the difference between the stagnation scenario in world trade in terms of volume and the total collapse of the index that measures world trade in unit prices in US dollars?

The volume measure is a reflection of a languishing global economy. It says that global trade may be sick, but it’s not collapsing. It’s worse than it was in 2011. This sort of thing was never part of the rosy scenario. But now it’s here.

The unit price measure in US dollars is a reflection of two forces, occurring simultaneously: the collapsed prices of the commodities complex, ranging from oil to corn; and the strength of the US dollar, or rather the weakness of certain other currencies, particularly the euro. It didn’t help that since last summer, the Chinese yuan has swooned against the dollar as well. So exports and imports from and to China, measured in dollars, have crashed further than when measured in yuan.

And these forces coagulated at a time of lackluster global demand despite, or because of, seven years of QE, zero-interest-rate policies, and now negative-interest-rate policies. It forms another indictment of central bank policies that have failed to stimulate demand though they have succeeded wonderfully in stimulating asset prices, malinvestment, and overcapacity.

World trade in goods is just one factor in the global economy. Now the global financial sector is getting hit too as the artful QE bonanza is bumping into real-world limits. And for global investment banking revenues, a key income source for “systemically important” banks, it has been one heck of a terrible first quarter. Read… The Big Unwind Hits Investment Banking

Be the first to comment on "Socialism Is An Immoral System"

Leave a comment

Your email address will not be published.


*


This site uses Akismet to reduce spam. Learn how your comment data is processed.