Panem et circenses: Stimuli, Commodities and the Austrian endgame

Yesterday I had thought nothing of the news that Bernanke was on capitol hill pushing for yet another stimulus package from congress. After all, isn't that the same bill of goods he has been trying to sell the US tax payers all along? Why would this be news worthy? I asked myself this question and came to an interesting conclusion 24 hours later. The news IS the product being sold, not the information that the news was reporting on.

This morning, an excited co-worker informed me that the stimulus package I mentioned yesterday was on the morning edition of the MSM talking head parade. It seems this is one of those things that gets a lot of attention. After all, when your banking overlord speaks, you listen.


When you take into consideration the bottoming out of commodities recently it is easy to see why the price of consumer goods such as bread, cereal, milk and gasoline are dropping. According to a Globe and Mail interview by John Heinzl (no subscription? no problem!), Donald Coxe the chairman and chief strategist of Harris Investment Management in Chicago, tells it like this:

the Fed’s ultimate goal was to trigger a rally in financial stocks, which would, in theory, help banks hammered by the credit crisis raise fresh capital and repair their balance sheets. To accomplish this, the decision to support Fannie and Freddie was deliberately announced on a Sunday, which had the effect of maximizing the reaction from thinly traded financial stocks on overseas markets.

Because many hedge funds were using massive leverage to short financials and go long on commodities, when North American markets opened and banks initially rallied, the funds were forced to cover their short positions.

At the same time, the U.S. dollar was rallying because the risk of holding Fannie and Freddie paper had diminished. The rising dollar, in turn, made commodities less attractive, giving funds that were already scrambling to cover their financial shorts another reason to dump oil, grains and other commodities.

The losses were swift and dramatic. On the Friday before the July 11 announcement, crude oil closed at $145.18 a barrel. Over the following five days, it plunged 11 per cent. “Leverage was being unwound dramatically,” Mr. Coxe said on a conference call last week. “We had a true panic.”

As oil and other commodities were tumbling, fears about the slowing global economy were mounting, giving resources another push downhill. This was also in keeping with the Fed’s wishes, because lower commodity prices would help quell fears about inflation.

Every message on teevee that tells me to "get out and vote" or "rock the vote" just sounds like sheep bleating. In my head I hear what the state preferati are actually saying in their attack ads:

Bread at rock bottom prices, made even easier to purchase with a second stimulus check in your mailbox. Make sure to "vote for state economic tyranny" this year, your partisanship and lack of insight are necessary to continue this charade of democracy.

I am the appointed representative of the state, and I approve this message


End Game:

There is no means of avoiding the final collapse of a boom expansion brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved. - Von Mises

According to the article The Austrian End Game at Taipan Publishing; What Von Mises pointed out is that, if the government throws a drunken free-for-all, at some point the free-for-all must stop. You can’t run the printing presses forever, just as no one can drink an infinite number of vodka tonics. Morning has to come.


The US empire is in decline. It may have lasted as long as the Roman empire if not for the telescoping nature of evolution. The highlights of historical imperial expansion have been contracting in frequency, we are seeing a de-emphasis of counter-intuitive systems.

Empires fall, and as time marches on, they fall faster and faster. Hopefully reaching a crescendo which will result in the banishment of the state from the minds of men.

'That government is best which governs not at all;’ and when men are prepared for it, that will be the kind of government which they will have.

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