Free In Idaho!

It appears the markets are expecting the Fed to give the U.S. economy another goose tomorrow

Interest rate futures now expect just a quarter-percentage-point cut from the Fed Wednesday, which would bring the benchmark rate down to 2.0%. There is even a small camp that believes the Fed may leave rates on hold at 2.25%.

Tell me again how all of this easy money and this serial rate cutting is going to “save” the economy?  I’m amazed that not many people seem to make the connection between huge liquidity, inflation, and rising prices.  Falling dollar?  “Yeah, it’s because George Bush has screwed up the economy, man… it’ll be all better once we get a change.” Oh yeah, are you sure?  Along with math, science, American History, and American Government, another subject no one seems to learn anymore is basic economics.  From 1951, Ludwig von Mises

There is nowadays a very reprehensible, even dangerous, semantic confusion that makes it extremely difficult for the non-expert to grasp the true state of affairs. Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term “inflation” to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise.

I wonder if that’s why the government changed the Consumer Price Index about 5 years or so back, so nobody would notice that bread is over 2 bucks, gas is over 3, and milk is over 4?  If the CPI doesn’t go up, nobody needs a raise, and there isn’t any inflation, right?  von Mises continued

The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. It follows that nobody cares about inflation in the traditional sense of the term. As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this technological confusion is not entirely wiped out, there cannot be any question of stopping inflation.

Remember that, when the radio news guy comes on tomorrow afternoon and tries to tell you what a great deal it is that the Fed cut rates again, and now they’re going to “pause”.  And remember that rate cuts (increasing liquidity) take 6 to 9 months to work their way into the system.  Over the last 10 or 12 years the economic magic of the Fed has blown up and crashed a stock market bubble and then a housing bubble.  Where will all this liquidity go next?  Commodities, like wheat, corn, and gold (and rice)?    How much more micro-managing can this economy take?  I guess they’re bound and determined to find out.  Remember, these are the same geniuses that have given us the TSA, the ethanol program, and the “forever stamp”.  Kinda gives you that sour taste in your throat, doesn’t it?

Say, what are you gonna do with your “stimulus check”?  Me?  I might lay in a hoard of Tums…
 

How about a new state, to act as a buffer between us and the Peoples Republic of Oregon?  I noticed this little piece of wishful thinking news this morning, from late last week

The state of Eastern Oregon?

That’s what a small group from Hood River wants to see happen by 2010 if enough Eastern Oregonians show interest in creating the 51st state that would stretch from east of the Cascade Mountains to the Idaho border.

Their reasoning?  They don’t like the way the government in Salem treats the rest of the state.  What?   Oregon is pretty much Portland and Salem, right?  But that isn’t the way they feel in Eastern Oregon.  The dry side of the state is much more independant and conservative minded than the “all wet” side… rather like Washington in that respect.  The culture and the politics are very different on the two sides of the state. And I hear the same grumblings here in Idaho (what do you mean, Boise isn’t a state?  That’s why they named the college that, didn’t you know?  And all the Lefty bloggers live in Boise, don’t they?  Who cares about Jerome, or Twin, or Grangeville, except the twenty people who live there?  It’s all happening in Boise, right?).  Haven’t we all seen these efforts before?  I seem to remember a couple of attempts over the last 30 years in Washington, and there is at least one fiction novel about such a thing taking place. But so far, all have remained unrealized, and not even gaining the traction that some third party start ups have gotten. But they remain just as interesting, I think.

A gentleman by the name of Paul Koch is heading this one up, and he admits the details have yet to be worked out, particularily where it comes down to funding the new state.

“I honestly don’t have a clue,” he said. “However, in talking to people about this, we’re thinking about using some new techniques, new approaches … and having a very small, centralized state government and relying on cities and counties to deliver most of the services.”

I like that answer!  Small government… what a concept, what a new approach.  He didn’t say anything about providing welfare, health insurance, or free mortgages either!  You gotta love it.  It would be interesting to go to some of the meetings, just to watch folks get involved in their government and try to think through what it would take to make it different.  Beats “Operation Chaos” and the Obamessiah all to heck, don’t you think?  (and don’t bring up McCain, or I’ll know you’ve never read this blog)