You keep using that word IV: fiat

Economics has become a pseudo-science and one of the reasons why the education bubble is real and will result in the demise of the university system.  It will collapse under its own weight of stupidity.  Here I am a university-trained PhD telling you that much of what goes on in academics is just a bunch of  fantasies created in the mind of the scholars.  In my own field it consists of such scholarly imaginations as Q, the Secret Gospel of Mark, or the anti-Semitic source theory of the Pentateuch (JEPD [pdf]).

So it is not at all surprising to me to learn that the same foolishness inhabits other fields of study, including economics.  So now a certain Prof. Willem Buiter has produced a blog post entitled, “Gold – a six thousand year-old bubble“.  Rather than just simply admit that gold has intrinsic value because of its rareness and unique properties, Prof. Buiter, that colossus of economic brilliance, concludes that mankind throughout recorded history has kept gold in a bubble.  In my view, wisdom would dictate that 6000 years as a currency would make gold the most secure form of money known to man.  But alas, then Prof. Buiter writes these lines:

Gold has become a fiat commodity or a fiat commodity currency, just as the US $, the euro, the pound sterling and the yen … [snip] are fiat paper currencies. (From Financial Times Blog, [snip because of 30 word limit imposed by Financial Times])

The term fiat actually refers to currencies with nothing, such as gold or silver, backing them.  Such currencies are predestined for failure as the temptation to make too much of it seems to derive from human nature.  On the other hand, gold has intrinsic value, so it requires no backing.  To call gold a “fiat” anything is as stupid as Nouriel Roubini saying that gold has no intrinsic value.  These economists don’t even understand what the terms “fiat” or “intrinisic” mean.  This is disgusting and pathetic and it is no wonder that the world is in such economic chaos with such dunderheads running the show.

For the correct definition of fiat currency, see Investopedia.

And now for the video clip, which I dedicate to Prof. Buiter :


You keep using that word … III. Investment

Previous posts:  I. Consensus; II. Recovery.

The lamestream media loves Obama.  When it comes to this man, they lose all semblance of objectivity and their critical faculties, if they ever had any, get flushed down the toilet.  Consider Henry Blodget, stock analyst par excellent–though you have to catch him off the record if you want his real opinion–did a cynical piece yesterday saying that well both President Obama and Trig Palin should be disclosing their birth certificates publicly.  I like you Henry, I real do, but that’s really, really stupid.  Business Insider is a bit like the National Enquirer and Forbes magazine all combined in a single publication.

So when the media classifies Obama as a conservative and smart investor, it is really malpractice.  So MSN reported about candidate Obama during the presidential election had dumped some stocks of companies who had made contributions to his campaign:

The 50th-richest senator, with a net worth at the end of 2005 of between $1 million and $2.5 million, has most of his assets in bank and retirement accounts, owning only three publicly traded securities.

All three, two Vanguard mutual funds and a Nuveen closed-end fund, are partly or entirely invested in fixed income securities. Despite providing little opportunity for capital appreciation, they delivered combined returns of around 15% in 2006, only slightly less than theS&P 500 Index ($INX).

“The man is conservative and smart,” says Linda Gadkowski, a financial adviser with CFP Beacon Financial Planning in Centerville, Mass.

Sycophantic worship is what that’s called.  Obama has a lot of capital but a completely unimaginative portfolio that requires no research, no knowledge and no gumption.  And the media portrays that as conservative and smart.  Gimme a break.  But the man has shown that he knows little about investing when he said that “profits and earning” ratios looking enticing, recommending that Americans  invest in the stock market.  So there is no reason to believe that Obama has any knowledge of investing.

While his use of “investment” in the place of “spending” is a huge lie, don’t expect the sycophantic adoring media to ever call him on it.  You see government spending is lost, never to be recovered.  Investment on the other hand, looks to preservation of capital and a return on investment (“profits and earning ratio”, in Obamatalk).  When governments borrow money, they only rarely put the money into anything that will have a ROR.  Even its so-called “investments”, which are just subsidies, like ethanol and wind energy, are money losing ventures.

You keep using that word … II. Recovery

When Bush was President the lamestream media kept talking about “recession” and yet now, with a handpicked media President in the Whitehouse, they talk about a recovery.  And yet some of the real statistics belie the idea that things are recovering–sure asset prices, except real estate, are up, but compare that to how many more people are on food stamps.

This post was inspired by this headline:
Global recovery fragile, uneven: IMF

You keep using that word … I. Consensus

Apparently, Al Gore, David Suzuki, and many other experts in global warming, have said that there is an international scientific consensus that man is the cause.  Looking out the window, I long for global warming, dreaming of returning to Grand Cayman Island for a month of summer weather.

Oh, and this is just in from Human Events (I don’t know why I get these e-mails everyday, but this one was worth sharing):