Wednesday, June 3, 2009

Some More Random Thoughts

1. Part of the criticisms of Chrysler and GM is that they have "too many dealers" and bankruptcy allows them to shed those dealers without additional compensation (when GM dropped the Oldsmobile brand they paid the dealers over $1 billion). I simply do not understand this argument. Since the dealers are independent businesses, if they are not profitable then they will themselves go out of business. Why should the manufacturer care if there are 5,000 dealers or 1,000 dealers if the same amount of cars are sold?

2. I love basketball but am not a basketball fan. The game - especially the NBA - is unwatchable mainly because I hate all the tattoos. As a result, I pull for the team with the fewest tattoos. This year I was pulling for the Lakers to beat the Nuggets - who are unwatchable - and for the Magic to beat LaBron James' Cavaliers - who are equally unwatchable. If the results had been otherwise, I would not have watched the finals.

3. Of all the topics that I write about, the three that generate the most controversy are on global warming, the "fair" tax, and the Fed. With global warming and the fair tax, I tread on some people's gospel. Understand dear reader that I come to each issue only with the bias imposed by market economics. I do my research and reach a conclusion. When critics challenge me I gladly send them the sources that have shaped my opinion. The third area is the Fed where there appears to be vast believers in some conspiracy shaped by Griffin's "The Creature from Jeykll Island". I have serious doubts about anyone who believes in conspiracies and wonders whether they have thought through the consequences of their beliefs. Don't get me wrong. I am not defending the Fed - I am one of its harshest critics. Like Milton Friedman, I believe that the Fed should adopt the monetary rule. That is, it should set the rate of growth in the money supply equal to the long run rate of real economic growth. That way, monetary policy no longer becomes the main source of destabilization within the economy. The Greenspan Fed was responsible for the current economic crisis and the Bernanke Fed has done us all a disservice by not only prolonging the crisis but by sowing the seeds for more future economic destabilization. However, I do not believe that the Fed is a tool of manipulation by a few powerful figures for their own benefit. If that were true, then they would have put out a contract on Bernanke who has probably helped destroy much of their new worth.

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