by Keyu Jin
I view the prospects of the Chinese economy in the coming years with guarded optimism – guarded because distortions are rampant in the economy – from the vast misallocation of resources to the highly distortionary macroeconomic structure that propels a vicious cycle – but optimistic, for exactly the same reason. The existence of important and pervasive distortions means that there is still room for growth. The larger the misallocation, the greater the potential for efficiency gains.
China is different from other countries, because it is a highly distorted economy. Central-planning in the past has left many dislocations in place, still waiting to be removed one by one through bouts of individual reforms. Thus, unlike many emerging economies today, and unlike the East Asian Tigers of the past, China has a far more powerful development tool: reforms. Reforms which reallocate existing resources to its most productive use, will stimulate productivity growth that is inherently much more sustainable than capital accumulation.by
An estimated 1.7 million Cambodians — 21 percent of the country’s population — were killed or died of starvation during the 1975-79 communist terror regime of the Khmer Rouge. In terms of percentage of the population, no country has ever suffered so much at the hands of its own leaders, who were crazed by a utopian ideology that turned life in Cambodia into a nightmare.by
We live at a time when politicians and bureaucrats only know one public policy: more and bigger government. Yet, there was a time when even those who served in government defended limited and smaller government. One of the greatest of these died one hundred years ago on August 27, 1914, the Austrian economist Eugen von Böhm-Bawerk.
Böhm-Bawerk is most famous as one of the leading critics of Marxism and socialism in the years before the First World War. He is equally famous as one of the developers of “marginal utility” theory as the basis of showing the logic and workings of the competitive market price system.
But he also served three times as the finance minister of the old Austro-Hungarian Empire, during which he staunchly fought for lower government spending and taxing, balanced budgets, and a sound monetary system based on the gold standard.
by Sydney Williams
The right to protest may not be specifically found in the Constitution or the Bill of Rights; though the rights to freely assemble, petition and speak are integral to the Bill of Rights. However, peaceful protests are embedded in our culture and history and manifested by those like Henry David Thoreau and Martin Luther King. Both men, while demonstrating for causes in which they strongly believed, were vigorous in their emphasis on, respectively, civil disobedience and peaceful marches.by
by Louis James
We’re going to take a break this week from our usual fare of industry insight for metals and mining investors, pulling back for a look at the big picture. The biggest picture, in fact: the current human condition, within the context of all of history—and even prehistory.
This is the subject of our friend and fellow contrarian investor Bill Bonner’s new book, Hormegeddon.
The cryptic title, I must admit, is my second greatest disagreement with what I think is clearly one of the best and most important books written in many years.by
For more than a decade, now, Federal Reserve policy has been guided by the fear of one economic bogyman: the presumed danger of “price deflation.” The fear is unfounded and the inflationary “solution” only leads to disaster.
During Alan Greenspan’s and Ben Bernanke’s watches at the helm of America’s central bank and now under Janet Yellen, the claim has been that the U. S. needs enough price inflation to ward off the danger of falling prices.by
by John Charalambakis
In the last commentary our thesis was that the economic landscape does not suffer from secular stagnation but rather from a complex and confused disequilibrium that diminishes expectations. Rather than focusing on the causes of this disequilibrium policymakers shift tactics among symptoms, always centering them on money and interest rates (such as forward guidance). The purpose of this commentary is to argue that while the recent economic developments (at least for the US) are positive, we seem to be celebrating a victory without counting the costs. Hence, while ready to take advantage of an upward trend in the equities market (as we have previously explained), while underweighting bonds (which may go sideways), we would consider the possibility that another commodities cycle may start in 2015. The latter could possibly serve a dual purpose, namely: profiting from the overall market upswing, and hedging a portfolio with real hard assets.by
by Tom Palmer
Robert Samuelson is usually a judicious writer. But his column “Global prosperity is no panacea: the post-euphoric world” in the Washington Post, August 17, was a disappointment.by
Fans of J.R.R. Tolkien’s trilogy The Lord of the Rings (LOTR) have long been aware of a possible plot hole. The central narrative concerns the hero, Frodo Baggins, who must destroy a powerful ring by walking through forbidding terrain and defeating or eluding monstrous foes and throwing the ring into a live volcano. The journey takes many months and costs Frodo and his companions dearly.by