Wednesday, April 13, 2016

Mish Shedlock*'s Solution - First Steps:
Eliminate The Fed, Eliminate Fractional Reserve Lending, Eliminate Public Unions, Undertake Massive Campaign Finance Reform
Shedlock comments on suggestions by Dilbert founder Scott Adams on lowering the cost of living .. essentially by having robots do a lot of the work in the economy .. Shedlock explains how many solutions simply can not be done due to the restrictions imposed by public unions - he references the virtually zero cost educational system of the Khan Academy - "The problem is accreditation. Schools and the unions do not welcome low-cost education alternatives and fight them tooth and nail." .. Shedlock extends his thinking to the Federal Reserve which is hell-bent on creating inflation - "By insisting on inflation in a price-deflationary world, we have lost countless jobs to Asia and also to robots .. It’s quite difficult to envision a low-cost life when today’s activists clamoring for $15 an hour will insist on $25 an hour for flipping burgers in 2020 .. Local governments love rising prices, especially rising real estate prices because of all the taxes they collect on property. These taxes support wasteful pet projects, throwing money at the politically well connected who get these local officials elected .. What isn’t immediately siphoned off as blatant graft to friends and families goes to local government pensions .. In general, most of academia, as well as most of mainstream media promotes Keynesian insanity that we need inflation .. Of course, professors have a vested interest in promoting inflation, their pensions depend on it. And those pension assumptions are a mere 7.5% to 8.5% per annum in a 1% inflation world .. The only way to pay those pensions is to tax the hell out of the middle class or inflate another bubble in the stock market (both of which have been done)." .. Shedlock welcomes the idea of a lower cost of living, but he highlights 4 areas which serve a realistic starting point: Eliminate the Fed, Eliminate Fractional Reserve Lending, Eliminate Public Unions, Undertake Massive Campaign Finance Reform.
LINK HERE to the commentary

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