Blog description.

Accentuating the Liberal in Classical Liberal: Advocating Ascendency of the Individual & a Politick & Literature to Fight the Rise & Rise of the Tax Surveillance State. 'Illigitum non carborundum'.

Liberty and freedom are two proud words that have been executed from the political lexicon: they were frog marched and stood before a wall of blank minds, then forcibly blindfolded, and shot, with the whimpering staccato of ‘equality’ and ‘fairness’ resounding over and over. And not only did this atrocity go unreported by journalists in the mainstream media, they were in the firing squad.

The premise of this blog is simple: the Soviets thought they had equality, and welfare from cradle to grave, until the illusory free lunch of redistribution took its inevitable course, and cost them everything they had. First to go was their privacy, after that their freedom, then on being ground down to an equality of poverty only, for many of them their lives as they tried to escape a life behind the Iron Curtain. In the state-enforced common good, was found only slavery to the prison of each other's mind; instead of the caring state, they had imposed the surveillance state to keep them in line. So why are we accumulating a national debt to build the slave state again in the West? Where is the contrarian, uncomfortable literature to put the state experiment finally to rest?

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Friday, June 15, 2012

Bernard Hickey - The Great Interventionist: Currency Controls

I see on Twitter today mercantilist Bernard - affectionately known on this blog as Kim Jong - is still pushing his  demand for currency controls. Time to reinstate an old post from Life Behind the IRon Drape v.1. for Bernard and all those who want government to intervene in our currency - Hattip to Donald J. Boudreaux at Cafe Hayek :


You seem to believe that a weak currency is an economic advantage, so I offer you the following contract. I shall exchange all the money in your house at the rate of 50 cents for each $1. Further, I will exchange all the income coming into your house, giving you 50 cents for each $1. You now have a weak currency and so will become an economic powerhouse (according to your theory), whereas poor old me am going to be hamstrung with a strong currency. I am, however, quite willing to offer you this contract/service. Do we have a deal? If so, we'll swap bank account numbers, you put all your money in my bank and I'll simply put half of that back in return. If no contact, why not?


Furthermore, I've seen Bernard write before that Singapore's economic meddling in this regard is something to aspire to. Evidence is abundant to the contrary, for example, from a Singaporean:


The high cost of living [in Singapore] coupled with low wages and domestic purchasing power condemns the average Singapore worker to an ignominious, monotonous and stressful working life. Singapore workers have to work harder to earn the same amount of money and save for a longer period to purchase the same product.

In 1991, Goh Chok Tong, then the Prime Minister, promised Singaporeans that we would be able to achieve the “Swiss standard of living” within a decade. Ten years later, we have a living standard which is closer to Russia than Switzerland.  Like Singapore, the Russians has a low wage and domestic purchasing power and Russia, especially the city of Moscow, has one of the highest cost of living in the world.

So, Bernard: do we have a contract?

UPDATE:

No takers. Right, so you wouldn't abide your household being run like this, yet you'd force it on a country. Interesting.

8 comments:

  1. Great Interventionist. Have to give you five out of ten for this. Interventionist, yes. Great? Not so sure!!!

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  2. That was an oversight, wasn't it.

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  3. Mark, I think you're missing the point. The reason we need a lower currency is not out of desire for it but a need to rebalance our current account. Floating currencies were supposed to be the "free market" solution to balance of payments crises and, in the most part, that worked. However, in a world where the capital account is more influential than the trading account, this does not work. As Keynes predicted in 1944, large imbalances in current accounts would lead to a severely unstable system, which is what we have now. Surplus countries are happy to export capital and suck returns from debtor countries. New Zealand has been on the wrong end of this equation for 40 years, which is why it is in its current predicament.

    To pay back our overseas debt requires us to sell more, buy less or sell more assets. A lower currency will avoid the latter. Of course, we could just remain in debt slavery until everything is owned by overseas investors :-)

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  4. No, Raf. My point is Keynes is the enemy. He's done what the Soviets couldn't: break the West both morally (by giving the excuse to big government) and economically.

    My point is we need laissez faire: that one intervention, here, on currency, leads to another future intervention to resolve the distortions to free markets of the first intervention, and so on, until, as Hayek said, we are on the road to serfdom (which we've actually been on for sixty odd years) ;)

    My point is separate the politicians from markets, state from the economy.

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  5. Um, another point. I couldn't care less about overseas ownership. There's nothing wrong with it, indeed, imagine the country if overseas investors didn't want to invest here.

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  6. If I sell you a bottle of milk I get $5NZ.
    If I sell the same milk to someone in the US I get $10NZ.

    guess which one gives me more money to pay wages and my (local) bills.

    If we have a strong currency my bottle of milk will be on shelf at $12US, while their local product will be at $3.50US. I would still get the same NZ as before, but now the foreigners don't want to buy my product, so no money for wages or to pay my bills.

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  7. Yes, mist, that's why 'exporters' like a weak currency. But look at my quotation regarding Singapore: under a weak currency the 'rest' of the individuals in an economy have less buying power, and their standards of living fall, and fall drastically. I've read somewhere, and wish I'd kept a link, anyway, it's estimated that the collapsing $US has technically led to something up to a third of America's middle class not being able to call themselves middle class anymore. Just like the family in my example.

    It's a mercantilist fallacy. Exports are simply the cost of our imports.

    And the real point of this piece, which is partly the point of this blog, and it's the Hayekian one, that once you allow the state to interfere and distort this mechanism, then that's the further justification of the unparalleled interventions into the markets they now make, which, without hyperbole, has created this central banked, fiat money Keynesian hubris that is now destroying western economies. Go look at Bernard Hickey's Twitter stream from yesterday (June 20), where he is tweeting with the economists from TVHE: he wants these large scale interventions in the economy, yet it's quite obvious he's a blind man guessing. I don't want men like him anywhere near markets where they can so adversely affect me.

    What about your view of my post above about 'no cash outflows' from dividends going offshore?

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