OK, I’m not saying every free market idea is a great idea, but what the hell. If there is demand, then so be it.

Three British Holiday Inns have introduced a new service for ensuring guests get the perfect night’s sleep: human bed-warmers.

On request, staff members will get under the covers wearing a fleece body covering and stay there until the bed reaches the optimal temperature of 20-24 degrees Celcius, Reuters reports.

“The new Holiday Inn bed warmers service is a bit like having a giant hot water bottle in your bed,” a Holiday Inn spokeswoman said.

via Holiday Inn Introduces The Grossest Idea Ever: Human Bed-Warmers.

People much smarter than I have been warning about the market in 2010. Is this the beginning?

In yet another example of what the free market does, Amazon will be adding apps to their Kindle. Do you think this has anything to do with all the e-readers and tablets coming on the market? See Washington! Free markets deliver. In order to compete with Apple, Sony, Lenovo and others, Amazon is adding features and functionality to their products. Eventually you will see prices come down as well opening up the opportunity to own one to more consumers.

Amazon.com Inc. is showing signs of app envy.

The e-commerce giant says it plans to open its Kindle e-reader to “active content”–application programs that would allow the device to take on a wider range of uses.

Amazon's move appears to borrow a page from Apple Inc. and its popular app store for the iPhone. It comes just days before Apple is expected to unveil a tablet computer that is likely to compete directly with the Kindle as a platform for the distribution of electronic books while offering a range of other uses, including music, video and games.

The Seattle-based company said it will invite software developers to build and upload programs that would be sold in the Kindle store later in the year. To aid in that process, Amazon plans to offer programmers access to technology and tools to help them build active content.

via Amazon Plans Kindle Apps – WSJ.com.

During the election, not only did Obama promise to air the health care negotiations on C-SPAN, but he also promised he would pass drug re-importation. As of right now, the health care reform bill explicitly prohibits drug importation as a bribe to the drug companies.

Do you really think the government cares about your health care and how much it costs? Of course they don’t. They only care about control. Drug importation is just another example. Why do you think the drug companies are running to the rescue of the Democrat in Massachusetts?

In a free market, goods and services are not restricted by where they can be purchased or sold, but with government force, drugs cannot be purchased from outside our borders. Why is that? Is it really because the government wants to protect us? Aren’t the Democrats always telling us we need to be more like Europe and Canada? Then they say we can’t trust importing drugs from those nations. The truth is they are closing the market off to us. They want us trapped in this government backed market. This is not the free market.

If we were allowed to import drugs, drug companies would not be able to pillage the American people. The only reason they are able to is because of the gun in the room. The gun is the government, and it is there to threaten you if you don’t buy the more expensive drugs. After all, they promised the drug companies if they do what they’re told, they would protect them. Don Corleone would be so proud.

Yet, we are told the free market can’t provide affordable medical care. This same thing takes place on the state level with health insurance. So, what would the free market really look like without government coercion again the people? Well, Americans would import the cheaper drugs. Drug companies would see the that game is up via lost profits in the US. They would then start stabilizing prices around the world, which would lower the US prices. Drugs are a good, and a good should cost no different in one part of the world as another except for distribution and currency exchange costs.

Can you imagine if Americans were told you can’t import your oil. You have to buy oil from within the US, and the oil company can charge a different price in the US than it charges elsewhere? How much do you think gas would cost?

Isn’t it time everyone starts waking up that we don’t live in a free market. We live under a fascist government. There is no part of our economy where the government isn’t using is monopoly on force to pick winners and losers, to force citizens into giving their money to corporations, or where inefficient companies have to compete to survive against the up and coming little guy.

Captain Capitalism has a great post today on the merits of GDP. GDP is just a formula of economic output, but it does not take into account actual prosperity. If a city is destroyed by a tornado and we rebuild the city, GDP will increase. The problem is you are no better off than you were before the tornado even though GDP tells you there has been economic growth. Actually, you are worse off because the resources that went into getting you back to square one would have been used otherwise to increase your standard of living.  If you’ve studied economics, this is known as the broken window fallacy. Stimulus and government programs are nothing but the broken window fallacy on steroids.

Here’s part of the Captains post. I highly recommend reading the entire article. Even the commentors have great comments. Read those too.

In the video I posted below about China essentially building a city that nobody is living in, the reporter kept emphasizing the importance of GDP. That the government wanted to boost “GDP.” However, given this “stimulus” plan of Ordos as well as the “stimulus plan” here in the US to boost GDP, I think it's high time we have a simple economics lesson in GDP.

Understand the goal of economics is NOT to increase GDP, but rather to increase standards of living. We simply USE GDP as a measure of all the goods and services produced within an economy, ASSUMING those goods and services when consumed help increase our standard of living. That by eating the grapes we produce and watching the movies we produce, we get utility from that, enjoyment from it, and therefore we enjoy our lives more, thus increased standards of living.

This is a logical assumption in that typically, TYPICALLY, we produce what we want to consume. We produce things that are only going to benefit us. Nobody produces ebola for consumption on account that why would we? Nobody produces styrafoam dogs. Nor do we make our roads out of cake. It not only would not benefit us, it just plain doesn't make sense.

However, this assumes an INCREDIBLY important assumption about how we go and produce things. We ASSUME that the free market is going to be in charge of what is produced. We assume that a free people, in control of their own money, is going to decide how many Big Macs we should make, how many I-Pods we should produce and how much sushi we should make. But what if this assumption is faulty?

The reason why it is faulty is the progressively less and less money is being spent by the people. A higher and higher percentage of our economy is being spent by the government. Going from essentially 3% of GDP in 1900 to 46% today.

Read the full article at  Captain Capitalism: There is No Merit to GDP Unto Itself.

Another one bites the dust…..

The Venezuelan government, already facing power and water problems and a shaky economy, is including scheduled power outages nationwide as part of its ongoing electricity rationing efforts, the state-run news agency reported.

Electricity Minister Angel Rodriguez said the latest energy-saving measures are meant to prevent a power collapse that could occur if water levels in the Guri dam system continue to drop, the Bolivarian News Agency reported. Oil-rich Venezuela relies heavily on hydroelectric power, which has been hurt by drought.

Officials with the state electric utilities in Caracas, the capital, and two other western states today announced plans for four-hour outages every other day, the Associated Press reported.

Venezuela started the year with new government restrictions on power consumption, including a limit on the hours commercial centers may use the electricity grid.

via Venezuela expanding electricity rationing to include scheduled power outages nationwide | La Plaza | Los Angeles Times.

Gotta love socialism! Seriously, why did we elected a socialist again? And why do these idiots think we can make socialism work? Oh, that’s right, “Because we are Americans”. Even though we are all humans, the adjective American apparently means we can defy all historical evidence, economic science, and who knows maybe gravity.

This is what happens every time government is the decider of any economic matter. It does not matter what it is. In the US we are only prosperous to the point of which government isn’t involved in the economy. Our prosperity would be so much more if the government wasn’t involved at all, and it’s going to be so much less now that they have involved themselves so much more.

While I don’t have to say this for my regular readers, for all the new folks, the free market always allocates resources to their highest and best use. That is why you do not have shortages in something that your country has in abundance like you do in oil rich Venezuela. Anytime, and I mean anytime without exception, the government changes the way the free market functions, you get resources being allocated in a less useful way. The bottom line is that means the standard of living is decreased. Venezuela is a perfect example of standards of living being decreased by the government’s misallocation of resources. Now something as simple as energy is going to be rationed. If food rationing has started yet, it will be as will many other things. Producing and distributing of goods requires energy, so what do you think is going to happen now that energy is being rationed?

Considering how stupid governments are, I would not be surprised to see Venezuela reallocate resources to energy, and then have an abundance of energy. The only problem is because it will be centrally planned by an idiotic government (and they are all idiotic), they will have over allocated energy resources and some other resource(s) will be under allocated. This is what happens when a few people, far away from the actual transaction decide what transactions should be taking place months if not years in advance. Think about how inefficient that is. The free market on the other hand adjusts resource allocations by the second based on the constant tweaking of millions of individual transactions.

There is no doubt that America will be facing the same issues soon. Our government is centrally planning the cost of money, the housing market, the auto manufacturers, the banking industry, schooling, energy, the food supply, travel, health care and the list goes on and on. Instead of resources being steered by the end consumer and producer, Washington thinks they know who need what and how much of it they need. While we have been the frog in the increasingly hot water for probably the past 100 years, it seems Obama increasing rate of socialization has caused us to realize the waters boiling. Hopefully, we can stop it before we become Venezuela. Hopefully, the people of Venezuela realize their folly and revolt against their dictorial government. It’s their only hope, and not to far it the future it may be our only hope as well.

Alan S. Blinder wrote another half witted op-ed about financial regulation and Wall Street’s return to “greed”. As all half witted intellectuals, he recognizes a symptom, but never questions the source. Here is a paragraph where he talks about Adam Smith.

When economists first heard Gekko’s now-famous dictum, “Greed is good,” they thought it a crude expression of Adam Smith’s “Invisible Hand”—which is one of history’s great ideas. But in Smith’s vision, greed is socially beneficial only when properly harnessed and channeled. The necessary conditions include, among other things: appropriate incentives (for risk taking, etc.), effective competition, safeguards against exploitation of what economists call “asymmetric information” (as when a deceitful seller unloads junk on an unsuspecting buyer), regulators to enforce the rules and keep participants honest, and—when relevant—protection of taxpayers against pilferage or malfeasance by others. When these conditions fail to hold, greed is not good.

via Alan S. Blinder: When Greed Is Not Good – WSJ.com.

Binder says “in Smith’s vision, greed is socially beneficial only when properly harnessed and channeled”, and I’m guessing he thinks the geniuses in Washington should be the ones to do the harnessing and channeling. Is Binder really this ignorant, or is he so trapped in his own reality that he can’t see past his old ideas? By giving Washington the power to “harness and channel” Wall Street, the economy or anything else, you create the source of corruption. Washington has become Wall Street. Look at who occupies the White House staff. This isn’t just Obama. This was Bush as well.

Greed is only harmful to society when the negative results of greed are forced on society instead of the source of the greed. In this case, Wall Street’s greed led to subprime mortgages, but instead of them being harmed by the negative results, they used government force to dish the negative results on the tax payers.

People aren’t typically greedy, despite all the negative comments by the like of Blinder. Something usually entices you into greed. Someone sees the chance of unearned profits, and they get…. well “greedy” for it. In this case, Wall Street got greedy because the Fed was printing “free” money. Who benefits from this money? Well, the banks are the ones who get the money first before it’s devalued. They get to loan it out and make their profit before the damage is done. In their ability to do this, because of the Fed, would they not be making unearned profits? It would be no different than a man giving you $1,000 and saying go ahead lend that out at whatever interest rate you can to make a profit. You pay the man back one percent interest and keep the rest. You really don’t have any risk there. Inflation is typically three to four percent. Hmm, just think how much you can make with no risk if you make even more of these loans. What if you loaned out $1 million? Now you can see where greed comes from.

If we didn’t have the Fed in bed with Wall Street bankers, we wouldn’t have had the easy money that created the last bubble in which Wall Street so enriched themselves. Then when the bubble burst did Wall Street have to take their punishment? Nope. Because of government force and collusion, they were able to force all of America to pay the bill.

What Blinder doesn’t understand is the problem isn’t an unregulated “invisible hand”. The problem is because of government the “invisible hand” now has a gun in it. When there is a gun, this is when “greed is not good”.

I was reading a blog on Shay’s rebellion and big government on a blog called Right Condition. You should check out the whole article, but here is a paragraph that highlights how the federal reserve is robbing the middle class.

Whether you look at the debasement of the Roman currency or the systematic destruction of the Byzantine gold coin the result is always the same. Debasement of a civilization’s currency leads to the civilization’s demise as the population is systematically robbed while the ruling class grows richer. This is precisely what is happening in America today! If you are not convinced, play around with the inflation calculator. You will find just as an example a 30% inflation rate since 1999. Similarly in 1999 the median income was 42k, while in 2009 the median income stands just north of 46k. So while prices on average went up 30%, median incomes barely went up 10%. This is a systematic plunder of American wealth.

Think about the average household basically being robbed of 20% of their purchasing power. I love how the government keeps coming out with these low inflation numbers, but every citizens knows inflation has been through the roof since 2000. Gas prices are up over 100%, which is down substantially from it’s high. A bag of potato chips that used to cost a dollar is now three or four dollars. Utility bills eat up a larger percentage of your income. Housing prices went through the roof, and even though they have come down, they are still way above their 2000 level. On top of that, the government and the Fed are trying to inflate their way out of the mortgage crisis. Still, the Democrats stand around complaining about the wealth gap. Well, here is your wealth gap. It is expanded by the Federal Reserve.

Is there a modern day Shay on the horizon?

Here’s a great piece by Ron Paul.

This past week we celebrated the end of what most people agree was a decade best forgotten. New York Times columnist and leading Keynesian economist Paul Krugman called it the Big Zero in a recent column. He wrote that “there was a whole lot of nothing going on in measures of economic progress or success” which is true. However, Krugman continues to misleadingly blame the free market and supposed lack of regulation for the economic chaos.

It was encouraging that he admitted that blowing economic bubbles is a mistake, especially considering he himself advocated creating a housing bubble as a way to alleviate the hangover from the dotcom bust. But we can no longer afford to give prominent economists like Krugman a pass when they completely ignore the burden of taxation, monetary policy, and excessive regulation.

After all, Krugman is still scratching his head as to why “no” economists saw the housing bust coming. How in the world did they miss it? Actually many economists saw it coming a mile away, understood it perfectly, and explained it many times. Policy makers would have been wise to heed the warnings of the Austrian economists, and must start listening to their teachings if they want solid progress in the future. If not, the necessary correction is going to take a very long time.

The Austrian free-market economists use common sense principles. You cannot spend your way out of a recession. You cannot regulate the economy into oblivion and expect it to function. You cannot tax people and businesses to the point of near slavery and expect them to keep producing. You cannot create an abundance of money out of thin air without making all that paper worthless. The government cannot make up for rising unemployment by just hiring all the out-of-work people to be bureaucrats or send them unemployment checks forever. You cannot live beyond your means indefinitely. The economy must actually produce something others are willing to buy. Government growth is the opposite of all these things.

In this last paragraph, Ron Paul pretty much captures everything that is wrong with government.

Bureaucrats are loathe to face these unpleasant, but obvious realities. It is much more appealing to wave their magic wand of regulation and public spending and divert blame elsewhere. It is time to be honest about our problems.

The tragic reality is that this fatally flawed, but widely accepted, economic school of thought called Keynesianism has made our country more socialist than capitalist. While the private sector in the last ten years has experienced a roller coaster of booms and busts and ended up, nominally, about where we started in 2000, government has been steadily growing, because Keynesians told politicians they could get away with a tax, spend and inflate policy. They even encouraged it! But we cannot survive much longer if government is our only growth industry.

As for a lack of regulation, the last decade saw the enactment of the Sarbanes-Oxley Act, the largest piece of financial regulatory legislation in years. This act failed to prevent abuses like those perpetrated by Bernie Madoff, and it is widely acknowledged that the new regulations contributed heavily not only to the lack of real growth, but also to many businesses going overseas.

Americans have been working hard, and Krugman rightly points out that they are getting nowhere. Government is expanding steadily and keeping us at less than zero growth when inflation is factored in. Krugman seems pretty disappointed with zero, but if we continue to listen to Keynesians in the next decade instead of those who tell us the truth, zero will start to look pretty good. The end result of destroying the currency is the wiping out of the middle class. Preventing that from happening should be our top economic priority.

via Keynesianism Delivers a Decade of Zero by Ron Paul.

This is why government should not be involved in markets. In order to cater to their union backers, the government is launching a trade war. Don’t these idiots know that is a big reason for the Great Depression? Oh yeah, I forgot unemployment doesn’t effect elected officials. What do they care?

We were just mentioning how screwed the West will be if in fact the world goes go into “trade war” mode.

Well, here we are. The US International Trade Commission has just sided with US steelmakers in favoring duties on Chinese imports. Their bulletin is here.

via And Just Like That, The US Amps Up The Trade War Against China.

Trade wars are liking pointing a gun at each other’s head and both deciding to pull at the same time. It only harms both sides.

Also, it’s basically a subsidy from the general population to the protected group. Ultimately, the public will have to pay more for products made with steel, so that steel workers can keep their jobs. The result is less prosperity for the rest of us. In addition, there will end up being another group harmed when China decides to retaliate against some other industry.

Oh yeah, and say bye to the little guy. Only the big businesses can afford the increase in material costs. I have a friend who made mattresses. He was able to compete with the big boys, because he got a lot of his materials from China and was able to keep margins low. Then some lobby group got to the government and had them raise prices on something to do with springs. The cost drove his prices up to where he could no longer compete with the big boys. Less than a year later, he was out of business. Now, while the group that was protected may have keep jobs, he lost his business, and his employees lost their jobs. Also, the market no longer has the low cost mattresses he was able to deliver.