Paulson Hates Mises to Pieces

Forget the edgy bears, on Monday the raging bulls had the floor on Wall Street. Never you mind that the Dow(n) rose a record 960 points; we are choking to death on debt that we will never repay. Every single day that the Powers fail to acknowledge the simple fact that America is drowning in red ink brings us closer to a much worse calamity than the far less painful correction which should have been in store for us. We can never repay the vast sum of money we owe because repayment will be impossible given the pace at which we're borrowing and the rate at which we're hemorrhaging cash we don't even have. Honestly, the way we're feasting from the credit trough makes sharks feeding on bloody chum look like Holy Communion. It is at once neither feasible, responsible, sustainable nor honorable. The bailout is a shameful farce and is nothing but bread and circuses for a dilemma that requires seriousness and immediate sacrifice -- not poker, slots, junkets and Dom, and certainly not business as usual.

I don't know why I expected more from G7+ last weekend. To be sure, I hoped for better than: “The Federal Reserve led an unprecedented push by central banks to flood the financial system with dollars, backing up government efforts to restore confidence and helping to drive down money-market rates."

Really, people... inventing money to throw at this mess makes Reagan-era trickle-down Voodoo economics look avant-garde... even smart. No one knows how much we owe now. Nobody has the guts to but it down in black and white. I'm a prick that way, and not even I have the stomach for it.

Captain, she's gonna blow!

We might profit by gleaning some wisdom from Austrian School Economist Ludwig von Mises' The Theory of Money and Credit:

"What is needed for a sound expansion of production is additional capital goods, not money or fiduciary media. The credit boom is built on the sands of banknotes and deposits. It must collapse."

"Credit expansion is the governments’ foremost tool in their struggle against the market economy. In their hands it is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous."

"If the credit expansion is not stopped in time, the boom turns into the crack-up boom; the flight into real values begins, and the whole monetary system founders."

"The essence of a credit-expansion boom is not overinvestment, but investment in wrong lines, i.e., malinvestment."

"The final outcome of the credit expansion is general impoverishment."

WHEN WILL MORE DEBT NOT BE THE ANSWER?