The French knife the $

[Starving Steve]

Re: The French knife the $

Price controls work? Since when?

In the 1930s and during WWII, the Office of Price Administration ( the O.P.A) in the U.S. controlled prices, and prices were kept in check. Inflation was banished. Racketeers went to jail.

Somehow, this lesson that our grandparents learned on how to manage an economy and control inflation and control profiteering has been lost. The Republicans got in and quietly doctored the history books... But John Kenneth Galbraith told the story of how the O.P.A. succeeded in controlling inflation. My grandparents also told the story to me in Minnesota.

[SBell]

Re: The French knife the $

Govn't can also screw-up things, and that can happen just as easily. But de-regulated free markets have proved to be no solution at all to economic downturn. In fact, free markets appear to invite booms and busts of biblical proportions.

The argument can be made that the recent boom and bust wasn't the result of a truly "free market" in action, but rather the result of distortions in the free market caused by Government intervention, i.e. Fed setting interest rates too low for too long, government sponsoring/promoting home ownership through Fannie and Freddie, etc. etc.

We need a truly free market without government distortion, but with smart and appropriate regulation. Easier said than done I'm afraid!

[hayekvindicated]

Re: The French knife the $

In the 1930s and during WWII, the Office of Price Administration ( the O.P.A) in the U.S. controlled prices, and prices were kept in check. Inflation was banished. Racketeers went to jail.

Somehow, this lesson that our grandparents learned on how to manage an economy and control inflation and control profiteering has been lost. The Republicans got in and quietly doctored the history books... But John Kenneth Galbraith told the story of how the O.P.A. succeeded in controlling inflation. My grandparents also told the story to me in Minnesota.

Inflation was banished because the money supply crashed in the 1930s. Inflation returned when the US Government devalued the Dollar (look up the rebound in commodity prices all through the 1930s).

And in the 1940s, there was plenty of inflation. Actually, you can get lower prices but you also get rationing and shortages. Rogers has some classic lessons on this in Investment Biker when he drives through post-Communist Russia in 1992; as an example, bread was priced at ridiculously low levels by the commissars but no one could get their hands on it without great difficulty - and that makes sense. If you get lousy prices, why would you try to grow wheat or sell bread? You do something else.

The idea that prices can be controlled by draconian government measures is another popular myth. Governments are usually destructive and there is nothing more destructive than price controls. Prices are nothing more than a signal and an indicator of the factors that are at interplay in the economy - high prices are usually a function of excess money or under-supply (or both).

You have to deal with the root of the problem. What we will see with Fed induced hyperinflation is Government measures so draconian that the US will abandon any pretence to being a free society - as indeed it should since it stopped being one a long time ago. There is more freedom in some parts of Asia than in the US today.

[sadsack]

Re: The French knife the $

What we will see with Fed induced hyperinflation is Government measures so draconian that the US will abandon any pretence to being a free society - as indeed it should since it stopped being one a long time ago. There is more freedom in some parts of Asia than in the US today.

So much for PM hedges against the inevitable POOM - good thing I've got DC (cryptic acronym substituted for my own protection) . . . ;) (I hope . . .)

[GRG55]

Re: The French knife the $

I note that most of the Euro critics live in the dollar bloc.

Except for the ones that live in the Pound Bloc across the Channel...

[GRG55]

Re: The French knife the $

...Rogers has some classic lessons on this in Investment Biker when he drives through post-Communist Russia in 1992; as an example, bread was priced at ridiculously low levels by the commissars but no one could get their hands on it without great difficulty - and that makes sense. If you get lousy prices, why would you try to grow wheat or sell bread? You do something else...

Was with a biz associate this week who grew up in the Republic of Kazakhstan during the Soviet era. He made a comment over dinner about how the shelves in the food stores were always bare back then. But when you went to anyone's house the refrigerator was alway full of food.

Another example of how the resourcefulness of humans to find ways around the rules, and their consequences, is almost boundless. That's why I doubt more regulation of the banks will work. Wasn't it the desire to get around the current nest of regulations the reasons they invented SIVs? Won't they come up with something even more toxic next time?

Does anyone here really think that the level of regulations and laws in our societies, pretty well across the globe, and covering pretty well every aspect of citizens lives, has not increased dramatically over the decades? So how is more of the same supposed to work?

Things have become so idiotic [I was tempted to post this under "You Can't Make This Stuff Up"] here's a timely example of utter stupidity finally being rolled back.

Special note for US bashers/Euro boosters...Some nations and organizations actually objected to relaxing any of the rules. Yep, the Euro currency has a great future with that kind of thinking supporting it...:p

From the International Herald Tribune:

EU relents and lets a banana be a banana

Published: November 12, 2008
BRUSSELS: In the European Union, carrots must be firm but not woody, cucumbers must not be too curved and celery has to be free of any type of cavity. This was the law, one that banned overly curved, extra-knobbly or oddly shaped produce from supermarket shelves.

But in a victory for opponents of European regulation, 100 pages of legislation determining the size, shape and texture of fruit and vegetables have been torn up. On Wednesday, EU officials agreed to axe rules laying down standards for 26 products, from peas to plums.

In doing so, the authorities hope they have killed off regulations routinely used by critics - most notably in the British media - to ridicule the meddling tendencies of the EU...

...One such controversy revolved around the correct degree of bend in bananas - a type of fruit not covered by the Wednesday ruling.

In fact, there is no practical regulation on the issue. Commission Regulation (EC) 2257/94 says that bananas must be "free from malformation or abnormal curvature," though Class 1 bananas can have "slight defects of shape" and Class 2 bananas can have full "defects of shape."

By contrast, the curvature of cucumbers has been a preoccupation of European officials. Commission Regulation (EEC) No 1677/88 states that Class I and "Extra class" cucumbers are allowed a bend of 10 millimeters per 10 centimeters of length. Class II cucumbers can bend twice as much...

...That sentiment was not shared by 16 of the EU's 27 nations - including Greece, France, the Czech Republic, Spain, Italy and Poland - which tried to block the changes at a meeting of the Agricultural Management Committee...

...Copa-Cogeca, which represents European agricultural trade unions and cooperatives, also criticized the changes...

[The Outback Oracle]

Re: The French knife the $

Well this much I know...the housing bubble in Aus is caused directly by the Governemnt!!!! It may not quite be recognised as a bubble by most of it's furry brained inhabitants yet but looking back it will be recognised as one.

[c1ue]

Re: The French knife the $

GRG,

The wacky EU rules on agricultural products are not all that surprising given their pronounced protectionist tendencies in that arena.

The US also has some fairly wacky rules in that regard...