Thursday, July 26, 2012


It's always amusing to hear scolds and cranks on the political right-wing (and I include libertarians here, as this article focuses on economic issues) warning about the possibility of US hyperinflation.  If I had a dollar for every time someone compared the United States to Weimar Germany or post-WWII Hungary or various African kleptocracies--I'd have enough cash to inflate the currency myself.  While the US uses fiat money, it ought to be obvious to anyone that the Fed is strictly under the thumb of banking interests, and that despite persistent 8% unemployment, isn't likely to do a damn thing about it--least of all, go off and print tens of trillions of dollars (and it would take an expansion that large in the money supply to devalue the currency sufficiently to trigger hyperinflation--generally defined as a halving of the value of a currency each month, or worse).  The size of the national debt is of some concern, but at present it is at a level manageable by current GDP.

Hyperinflation generally occurs when there's a very large change in the value of the money supply (money stock, bank deposits, etc) compared to the productive value of a country.  The biggest cause of hyperinflation is warfare and its aftermath, where massive amounts of capital are diverted to fund the war machine.  This is especially true for civil war and/or invasion--where productive assets are destroyed, civil society is disrupted, taxation becomes difficult, and/or punitive reparations are imposed on the loser of a conflict.  The other main cause of hyperinflation is ineffective government running unproductive economies (often also coupled with warfare).  Neither condition presently applies here--while the US is presently engaged in far too many foreign misadventures for my taste, all of the conflict is occurring abroad; US factories are not being bombed and the government remains able to finance its activities through taxation or debt.  And the country still has adequate infrastructure, productive farms and factories, and other ways of generating wealth.

So--could hyperinflation happen here?  The two times the US has come closest were during the Revolutionary and Civil wars.  The US was not yet a country at the time the colonists revolting against Great Britain were issuing "continentals" to finance the war, which quickly became worthless.  No other episode--including the infamous "stagflation" of the 1970s, come close--inflation then was on the order of 10% per year, not 50% per month.  As noted in the opening paragraph, the Fed seems to be in no mood to further expand the money supply, and US debt still is regarded as a highly safe investment.

If it does happen, it won't be in the way the tinfoil hats on the right predict.  My bigger concern would be a significant drop in the productive capacity of the country--caused by a continuing failure to invest in the infrastructure and human resources needed to maintain a first-world economy.   A first world economy requires quality roads and ports for movement of people and goods, an educated populace, a strong financial system, infrastructure for things like electricity, water, sewerage, and telecommunications, and a transparent and honest political and judicial system.  And recently, we have been neglecting all of these, often on the grounds that they are too expensive to maintain.  However, there remains ample money to fund a vast war machine for engaging in dubious adventures abroad.

If hyperinflation occurs here, it won't because the Fed fires up the printing press.  It will occur here because our infrastructure will become so neglected that it fails to function.  Our bridges will fall into rivers; our utility systems will become unreliable.  Our factories, many of which are shuttered due to cheaper labor (and better supply chains) available elsewhere, will become obsolete and no longer capable of high-level production.  Our children, deprived of a quality education, will not be qualified for any tasks other than physical labor.  Our politicians will become more bought, and our culture politics more poisonous.  And eventually, the GDP will plummet as the productive capacity of the land goes down, and all those dollars people have will correspondingly decline in value.

If hyperinflation occurs here, it won't be because of the numerator in the money/wealth ratio gets too high, it will be because the denominator gets too low. And that's actually the common denominator in cases of hyperinflation--a country that, for whatever reason, is poor.  Usually this occurs in a country that has never been otherwise, or which sees its wealth utterly destroyed due to catastrophe or sabotage.  It would be a rare thing indeed for it to happen due to simple neglect.

Tuesday, July 24, 2012

More Gilbert and Sullivan--this time for the President

When the GOP's not causing unemployment (unemployment)
And trying to drown the baby in the tub (in the tub)
On the golf course Speaker Boehner gives enjoyment (gives enjoyment)
Though he thinks that I should carry 'round his clubs (round his clubs)

Our feelings we with difficulty smother (-culty smother)
When polliticary duty's to be done (to be done)
Ah take one consideration with another (with another)
A president's lot is not a happy one.

Ahhh, when politicary duty's to be done, to be done,
A president's lot is not a happy one.

When the press corps is not rummaging through my laundry (through my laundry)
And seeking soiled linens I may got (I may got)
At parties they're quite charming, what a quandry (what a quandry)
Holding forth on Edmund Burke and Oakeshott (Oakeshott)

When the banker's finished robbing your grandmother (your grandmother) He loves to see the Yankees score a run (score a run)
Ah, take one consideration with another (with another)
A president's lot is not a happy one.

Ahhh, when politicary duty's to be done, to be done,
A president's lot is not a happy one.

Tuesday, July 10, 2012

Honest politician refuses to kiss ugly baby

Sabine Parish, LA (AP)

A candidate for the Louisiana House of Representatives caused a minor stir today when he refused to kiss a baby offered by a supporter at a political rally, saying that the child was too ugly.

Edwin G. Beauregard III, a Republican running for the legislature's seventh district who has developed a widespread representation among constituents for honesty, was gladhanding supporters in the town of Many when Blanche Johnson, a local housewife, handed him her 4 month-old son Bo Jr, for the traditional political ritual of receiving a kiss from the candidate.  Beauregard astonished the crowd when he took one look at the child, audibly shouted "My Lord", and handed the infant back to his shocked mother.  Visibly shaken, the rally was ended soon after, and the candidate canceled the remaining events on his schedule that day.

Asked about the event at a press conference the next day, Mr. Beauregard told an assembled group of reporters that "I'm sorry, folks, but I jes' cannot tell a lie.  Dat dar baby was uglier'n an alligator.  Now I done grew up in da bayou, and I seen lots of gators in my time--done killed a bunch of'm, too.  While de chil' wasn't uglier dan de ugliest gator I ever saw, he was definitely uglier dan de prettiest one.  I'm sorry if I offended da lady--she seems like a nice woman an' all, but I nearly fainted right dere on de spot when I saw what was inside dat cute lil' outfit.  Dis may cos' me de election dis November, but Lord al-mighty, dat kid was ug-LY!"

When reached for comment, Mrs. Johnson surprisingly defended the candidate, indicating that she still plans to vote for Mr. Beauregard.  "I know that little Bo. Jr ain't 'xactly the cutest thing in the world.  He kinda looks like his father, if y'all wanna know the truth.  But he's a gift from th' Lord, and pretty or not, he's our son and we love him with all our hearts.  I feel bless'd to have him, jes' like I feel bless'd to have an honest politician like Ed Beauregard runnin' for th' Legislature."

Mr. Beauregard's opponent, the Democratic incumbent Jefferson Babineaux, blasted the Republican, calling it an outrage that he would treat a child so cruelly.  "It's one thing t' lie 'bout your background, or what you plan to do when you get 'lected to office.  But to tell a poor woman that her child is ugly?  That has t'be the mos' despicable thing I ever heard of--and tell yew what, I heard a lot down in Baton Rouge, and I heard a lot more durin' my time at Angola."  Mr. Babineaux, who's current term in office has been marked by scandal, previously served time in the Louisiana State Penitentiary for corruption after a bribery conviction related to a prior stint in the state Senate.  He has steadfastly proclaimed his innocence in the scandal to this day, and despite the conviction and jail sentence, won election to the Legislature in 2008.

A spokesman for Mr. Beauregard's campaign indicated that the candidate would not change how he conducts political events in the future.  "Mr. Beauregard has been in politics for over twenty years.  This is the first time, that I can recall, that he has encountered a baby that was too ugly to kiss.  State has a better chance of losin' a football game to Vanderbilt than this does of ever happenin' again."