Saturday, April 11, 2009

#157 - Reflecting on HR 1207

Hey Guys,

It's amazing to see the Ron Paul and the Campaign for Liberty doing sucha great job of garnering support for HR 1207. While I hope to again make videos explaining lots of the economic concepts in their most basic form to help induct people into an austrian view of economics it's nice to see some true attention being paid to the federal reserve and how it influences the entire world.

Sometimes people just don't understand how the change interest rates could have such an influence on the prices and values of everything. To understand one must understand that all debt investments must key off the risk free rates, which is the rate of treasury debt. Risk Free, how can something be risk free you say, well the only reason Treasury debt is supposedly risk free is through the Federal Reserves open market operations where it enlists primary dealers to always being to meet the supply and demand needed to meet it's objectives.

Thus this processes creates a security that has little or no risk, and also let's the government borrow money cheap, yet when something is cheap demand grrows to unhealthy levels (i.e. Lower the price of soda, I will buy more of it).

So in effect you create a mentality in where the government will overspend with ease, which creates the inflation that pushes the process to devaluate the purchasing power of dollar for citizens like you and me.


It's sad and scary, very scary. Cause in the end the level of freedom is tied to our economic health and this creates a an engine of government spending that quickly has undermined our economic health and freedoms in the process.

So Yes, Hr 1207 is important to create the transparency to make this attrocity visible to those in power who claim ignorance, this bill is important.

Alex Merced

Thursday, March 19, 2009

#156 - An update on things

Hey Guys,

I've been finding it harder and harder to find topics of posts since everyone at mises.org, campaignforlibery.com, etc. have already been doing such a great job. If you not checking those sites out regularly I suggest that you do.

But I guess let me post some of my thoughts on some of todays hottest questions:

Will the markets recover?

Surley, but if you live in the US it doesn't mean your standard of life will be all that great. The markets don't soley depend on U.S. companies or the U.S. Economy. So while years of no savings and dwindling production led to the worlds greatest consumer feeling some hurt along with everyone else. Everyone else will recover as their exports find new consumers now that countries like China who's been lucky to have a lot of saving will need to spend it.

Of course, these are all macroeconomic generalities which got us into the problem in the first place. I plan on putting my money in the market soon, cause I do feel many foreign nations will recover in some capacity sooner than later. I am a little bit more bearish on the U.S. economy cause I'm not seeing where new production jobs will come to fuel everything else. Oh well, maybe it's time for that move to the phillipines :).

If you have any questions you'd like me to write about, email it to me at alexmerced@alexmerced.com

Sunday, February 1, 2009

#155 - Economic Emergency 1-3

I've been spending some time observing the actions of goals of the new administration and reading a lot of media from mises.org before I posted again, well here are some videos with my thoughts.







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Tuesday, December 23, 2008

#154 - GDP... WTF

http://mises.org/story/770

This is a great article on GDP and the problems with it as an economic indicator. I thought I would expand on the premise just a little bit but first let me summarize. The point of the article is that GDP applies a framework where demand/consumption is the ends of of economic growth. Which in the end has the following pitfalls

1) Ignores the reality that demand is meaningless without means to meet the demand

ex. There can be no demand for eggs, but I can still produce an egg which could one day be valuable. But you can have a demand for time machine which doesn't exist so no underlying wealth is created by this demand.

Like if the government did it's job and stayed away from the auto industry and let these companies fail, in there wake there would still be the oversupply of cars which currently is no demand for but as the oversupply was consumed at lower liquidating prices would grow in value.

2) Government spending creates a fictional view of actual demand in the economy

since GDP takes government spending as a factor the growth can be overstated cause most government spending does not improve anyones standard of life, and sometimes is spent with money they don't have.

Like if I max out my credit card, my spending increases GDP, but am I really better off with all this debt?


Essentially, Consumption shouldn't be how you gauge growth, cause this means people must have needs/wants to be fulfilled but isn't the goal for people to have their needs/wants fulfilled. So why should growth depend on people needing more?


The article goes on and explains all this much poignantly than I can. Then goes on to talk about how the Fed foolishly believes inflationary monetary policy can fix the problem by increasing consumption.

Bottom line, when you change the enviroment, behavior changes. People don't save more cause they have more... they have more they spend it, and then spend some more they don't have.

Point is, feeding the consumption fire only feeds debt, like an ecosystem, the economic ecosystem needs to balance itself out and be free from outer manipulation.

Wednesday, November 26, 2008

#153 - What is to come

Well,

working in the financial industry, I've been getting to watch the havoc of the current economic crisis with a nice front row seat. I've met many people who've been laid off, who've lost major amount of money in the market or in houses, and I've seen firms collapse. The house of cards is falling and while it's hard to watch it doesn't change the fundamental reality.

An economy cannot expand on credit alone, savings and production of goods must be at the foundation to sustain it. It's really that simple.

- Overregulation by Congress has pressured businesses overseas to remain competetive. While CEO's of these companies may seem overpaid, it doesn't change the reality previously stated.

- Manipulation of Interested rates by the FRB has incentivised debt and the inflation that has gone with it has destroyed the incentive to save. What's the point of saving, if you actually lose money in actual buying power if the money isn't spent NOW.



Money flows in and out of nations dependant on the imports/exports of the nation, if we don't produce the goods no matter how weak the dollar exports can't keep up with economy steroidal expansion.

If all our money is spent on imports, and no money is saved, what money is left?

So what does someone like nobel peace prize winner Paul Krugmen suggest? Lower Interest rates even more, give people even less reason to save? Expand the credit that's overexpansion caused the problem in the first place?

When a cup of water is overflowing, you don't pour more water in the cup. You let the excess water flow out till it reaches surface tension.

Wow... the current state of economics thought makes me sad.

Friday, November 7, 2008

#152 - Where do we go from here?

Hello Everyone,

I bet your all thinking now that the 2008 election season is over, what do I do? Well before go into what let's reflect on the significant changes in this years election.

- 7 of the many candidates backed by Ron Paul libertyPAC won their perspective races putting us 7 offices closer to REAL policy changes.

- CampaignForLiberty.com continues to grow and organize the grassroots for the 2010 election season, as Republican leaders discuss how to organize a vibrant grassroots organization over the next few years, let's hope they finally wise up that it already exists and just needs to be embraced.

- While I'm no supporter of Barack Obamas policy views, symbolically he represents a very different view of America. While I don't think he'll cause as much damage as his detractors, I don't think much will change other than perception. Although, coming from a marketing background, sometimes perception can make a lot of difference in certain realms.

- Ron Paul is still being interview all the time, and Revolution: A Manifesto is still selling, so the moementum is still growing.


To follow my political efforts, make sure to keep up here and @ http://www.mercedforfreedom.com

I'll keep you guys updated like I always do.

- Alex Merced

Monday, October 6, 2008

#151 - Understand what's to come

The passing of the bailout was the end of an era. The sovereignty of nations and the prosperity held for so many years is climbing to an end. While it's Sovereignty and Liberty that will help reveal the true prices and value of our economy so we can move on from this debacle, the powers that be, the central banks, will more than likely unite into a more global power to continue to prop up the straw man economy they've created since 1913.

All we can do is to change the mainstream mode of though one individual at a time by evangelising individual liberty and austrain economics. Only by being free as an individual can we show others why it's the ideal, and the laws and policies will change along with that.

So educate yourself, here's a good article for doing so by Jesus Huerta de Soto

Make sure to subscribe to this blog and have your friends subscribe too, we must keep the ways of communication open to change things.

Alex Merced
http://www.mercedforfreedom.com