First and foremost I just want to offer a disclaimer regarding Stefan himself. I have a great deal of respect for Stefan in the way he collates and presents information, even if I don't agree with his conclusions. It's fairly obvious that he has an appreciation of empirical evidence, so if he ever watches this video I hope he's able to appreciate the information I'm going to put forward and try to reconcile it with  his own conclusions—even if he disagrees with me in the end. I also consider myself sympathetic to 'free banking' (that is, the abolition of the central bank), especially the work of George Selgin, but still find fault with Stefan's analysis.

One of the first problems I have with Stefan's analysis is his description of the “Greenspan Put”, which he claims stops the economy from slowing down and restructuring as capital is re-allocated into different kinds of economic activity. This is false, monetary policy only has control over nominal variables. The allocation of capital and investment in an economy is primarily a real—not nominal—factor and therefore largely non-monetary. The point of the so-called “Greenspan Put” was to stabilise the growth of aggregate nominal income (aggregate demand) in  an economy, which is a solely nominal variable. How capital reallocates itself, and the growth rate of rGDP, wasn't significantly restricted under Greenspan's chairmanship.

Moving on to the crux of Stefan's claims, however, it's quite clear that there is a confusion of causality in his thinking. Stefan seems to be positing the idea that there was a severe housing bubble, which crashed and led to a severe financial crisis which then in turn led to a severe recession. This isn't, true. Looking at starts per million U.S. citizens (http://www.data360.org/temp/dsg1397_850_450.jpg) we can see that there is a quite clear moderation in the previously cyclical nature of housing starts, and—if anything—a moderation. Indeed, just looking at house starts in pure numbers, it's actually somewhat commensurate with the population growth (https://thefaintofheart.files.wordpress.com/2012/10/house-boom_1.png?w=436&h=294). So, first of all, it's not obvious that there was any significant mal-investment to begin with. The idea that the Federal Reserve kept interest rates 'too low for too long' with an expansionary monetary policy—which seems to be the consensus—isn't very solid, as the data seems to show wild divergences about how house prices in different states reacted during the same period (https://thefaintofheart.files.wordpress.com/2012/10/house-boom_8.png) which suggests a primarily structural or supply-side issue with the housing market, such as zoning laws.

Stefan, however, doesn't seem to think that interest rates were kept excessively low in the 2002-2004 period, and actually acknowledges that the 'bubble' began in the late 1990s, which doesn't alter during the period of a low federal funds rate. (https://thefaintofheart.files.wordpress.com/2011/02/conundrum_4.jpg?w=750). However, even acknowledging this doesn't make it clear that the Federal Reserve is directly responsible in the creation of a bubble, as the steady decline in long-term interest rates—which engendered the bubble—was clearly caused by non-monetary factors, as post-1990, the federal funds rate was decoupled from long-term interest rates (http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=Yce) for a number of potential reasons.

Despite all of this, however, the housing bubble really is irrelevant. Unemployment didn't alter when the house prices peaked in 2006 and began a steady decline throughout 2007 (http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=VLt) suggesting a sort of non-effect on the U.S. economy, unemployment only really kicked off in mid-2008 (http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=Yci) when nominal income sharply declined as a result of tight money (https://thefaintofheart.files.wordpress.com/2011/02/conundrum_7.jpg?w=750). The Financial Crisis (marked by the failure of Lehman Brothers) began a few months after the decline of nominal income

Stefan is correct in the assertion that the Federal Reserve is primarily responsible for the Great Depression—it isn't a case of 'animal spirits' or the stock market crash of 1929, as seems to be the consensus among non-economists (http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=Ycs). However, unlike Stefan's assertion, Milton Friedman showed that monetary policy was too tight during the late 1920s to early 1930s, not inflationary or expansionary as seems to be the underlying theme of Stefan's hypothesis.

Also, there is a more underlying problem with how Stefan views monetary policy in the first instance. Stefan seems to take a Wicksellian view of monetary policy in that he focuses intensely on interest rates (this was later taken to something of an extreme by Keynes). Interest rates are, largely a poor way of viewing monetary policy; Milton Friedman (who Stefan referenced earlier) noticed this and recognised how rates are usually depressed during times of deflation and very high during times of inflation or hyper-inflation. The central bank has an imperfect control of monetary policy primarily via the liquidity effect—which is short-term—whereas interest rates are also influenced by things like inflation expectations and the Fisher effect. And remarks by Ben Bernanke in 2003, no less, points to inflation and nominal income as being the best determinants for the stance of monetary policy (http://federalreserve.gov/boarddocs/speeches/2003/20031024/default.htm).

I've also seen a few videos by Stefan where he talks about the level of household debt in the economy, relative to GDP. This is actually a fairly mainstream idea which has been propagated across the political spectrum from the likes of Paul Krugman to Ben Bernanke; it dates back to Irving Fisher's theory of debt deflation, which claims that over-indebtedness in the economy leads to fluctuations in the business cycle. It's an intuitive idea—it essentially states that over-indebtedness can lead to a contraction of inter-bank activities and a slowing down of money velocity, which leads to real higher debt burdens and higher cases of insolvency, essentially fuelling a bubble resulting in a restriction of credit. This is, however, incorrect provided aggregate demand is maintained.

This has been demonstrated throughout history—notable in 1987 when the single-biggest drop in stock prices occurred, even bigger than the crash of 1929. Even the crash of 1929, as I mentioned earlier, occurred after certain factors like industrial production were indicating economic weakness. Not only this, however, but the crash of 1929 didn't even cause a financial crisis. . . the 40pc declination in the amount of banks in the economy was due to small banks and mergers, meaning there couldn't have been much disintermediation (http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.4.45). In fact, the largest and most efficacious banking crises occurred in 1933, wherein 11pc of all deposits were effected, the first proper year of recovery; until that was choked off by poor fiscal policy.  (http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=YcK) The same study also goes on to note how, by the end of 2008, the availability of bank credit to GDP was at an all-time high, and we can also see that represented here on this graph (http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=YcA).

 
In the end, the housing bubble and the financial crisis were not causes in themselves of the Recession. The housing bubble is largely irrelevant to the discussion, and confusing, as house prices declined with the global drop in nominal income around 2008. The financial crisis too, is more of an indication of underlying economic weakness, as the failure of Lehman Brothers in Sept. 2008 occurred a few months after nominal income went into free-fall.

(CNN)Song lyrics that glorify violence are hardly uncommon. But a prosecutor in California says one rapper's violent lyrics go beyond creative license to conspiracy.

San Diego-based rapper Tiny Doo has already spent eight months in prison, and faces 25 years to life in prison if convicted under a little-known California statute that makes it illegal to benefit from gang activities.

The statute in question is California Penal Code 182.5. The code makes it a felony for anyone to participate in a criminal street gang, have knowledge that a street gang has engaged in criminal activity, or benefit from that activity.

It's that last part -- benefiting from criminal activity -- that prosecutors are going after the rapper for.

Tiny Doo, whose real name is Brandon Duncan, faces nine counts of criminal street gang conspiracy because prosecutors allege he and 14 other alleged gang members increased their stature and respect following a rash of shootings in the city in 2013.

Prosecutors point to Tiny Doo's album, "No Safety," and to lyrics like "Ain't no safety on this pistol I'm holding" as examples of a "direct correlation to what the gang has been doing."

No one suggests the rapper ever actually pulled a trigger.

In fact, Duncan may rap about violence but he's got no criminal record.

Duncan told CNN's Don Lemon he's just "painting a picture of urban street life" with his lyrics.

"The studio is my canvas. I'm just painting a picture," he said. "I'm not telling anybody to go out and kill somebody."

He denied any involvement with any gang but said the prosecution has him concerned about future creative expression.

"I would love to continue to rap," he said. "But these people have you scared to do anything around here."

Prosecutors say lyrics aren't the only evidence they have. At Duncan's preliminary hearing, they presented social media posts that they say prove Duncan is still a gang member.

CNN Legal Analyst Mark Geragos says the district attorney may be trying to send a message "that you shouldn't glorify or glamorize gang activity."

"The problem is you're going to run straight head-on into the First Amendment," he said. "If they don't have anything other than the album, this case I don't think would ever stand up."

Over the last 24 hours, ISIS has been defeated in every front in Iraq in unprecedented way. From Mosul to the north to Anbar to the west and Diyala to the east, Iraqi government forces, Shiite militias, Sunni tribes and Kurdish forces were all victorious in battle.

Since the start of the U.S.-led air campaign, ISIS has lost its momentum in Iraq and lost some of the cities and towns that it captured in June 2014. It still controls the provincial capitals Mosul and Tikrit as well as the city of Fallujah west of Baghdad, and many other small towns throughout.

Liberating Mosul is crucial – it’s Iraq’s second-largest city, and the largest city controlled by ISIS, located in Nineveh province. Ever since the fall of the city in June, ISIS became the leading global terror organization. It surpassed al-Qaeda central by inspiring tens of thousands to join its ranks and many more to commit acts of terrorism on their own. The Jewish Museum of Belgium shooting in May 2014, the Sydney hostage crisis in December 2014, the attacks in France, and the plot to blow up the U.S. Congress earlier this month – all were inspired by ISIS.

But on Wednesday, ISIS was pummeled, and Kurdish Peshmerga forces retook an area near the Mosul dam, liberating seven villages.

Another Kurdish official said that the Kurdish Peshmerga are now 10 miles only away from Mosul, stating that 30 ISIS fighters were killed by air bombing in northern Mosul and 10 ISIS artillery canons were destroyed.

While ISIS was on the defense in Mosul, it was on the offense in al-Anbar province to the west of Baghdad. Al-Anbar is Iraq’s largest province geographically, making up one-third of Iraqi territory. On Wednesday, ISIS attacked the provincial capital al-Ramadi, 70 miles west of Baghdad, using seven car bombs.

“ISIS has left more than 200 bodies of its fighters in the field,” said Masrour Barzani, chancellor of the Kurdistan Region Security Council and the son of the region’s president in a press conference on Wednesday. He added that his forces and the international coalition air force have destroyed 14 car bombs prepared and launched by ISIS during the battle.

Al-Ramadi has been divided between the Iraqi government and ISIS since January 2014. ISIS has attacked the government controlled parts numerous times throughout the last year. Wednesday’s attack was the strongest. However, the Iraqi army, police, Special Forces and the Sunni tribes were able to repel the attack.

“The terrorist was killed before he reached his target,” said Saadon Shehan, a blogger from al-Ramadi, referring to one of the car bomb attacks. A video of one the car bomb attacks was posted online. The Iraqi army launched an attack to the north of the city, destroying eight ISIS boats that were used to transport fighters and equipment between Mosul and al-Anbar. A day earlier, ISIS has also launched three attacks in Anbar, killing and injuring dozens of Iraqi soldiers and police officers.

In Diyala province northeast of Baghdad, ISIS had already lost most of the province except for a few pockets. One of these is the town of al-Miqdadiya. ISIS established three defensive lines to prevent the Iraqi government from any further advance. The Shiite militia infiltrated ISIS and discovered the exact locations of these lines. A heavy artillery shelling followed and the lines were destroyed. ISIS fighters ran away to nearby farms.

The ISIS defeats of Wednesday are significant. They could lead the way to liberation of Mosul. “ISIS has lost today 20 percent to 25 percent of its controlled territories in Nineveh province…and the liberation forces of Mosul will have 5,000 fighters in five days who are ready for special operations,” said Hisham al-Hashimi, an ISIS specialist. Already many experts are optimistic about what this could mean for the global war on ISIS.

DOHA, Jan 21 — A leading Islamic organisation has called on the United Nations to make “contempt of religions” illegal and urged the West to protect Muslim communities following the attack on French magazine Charlie Hebdo.

The Qatar-based International Union of Muslim Scholars, headed by influential preacher Yusuf al-Qaradawi, appealed to Muslims to continue peaceful protests against images of the Prophet Muhammad but “not to resort to any violence”.

The latest cartoon of the prophet in Charlie Hebdo has angered many Muslims and triggered protests in Asia, Africa and the Middle East.

In a statement released yesterday, the union said there should be protection for “prophets” and urged Islamic countries to submit a draft law to the UN calling for defamation of religions to be outlawed.

The union said the UN should then issue a “law criminalising contempt of religions and the prophets and all the holy sites”.

It also called for the West “to protect Muslim communities from attacks, whether they are citizens or residents or visitors”.

The union has condemned the publication of a cartoon of the Prophet Muhammad holding a “Je suis Charlie” sign under the headline “All is forgiven” in the first Charlie Hebdo edition since Islamist gunmen killed 12 people in an attack on its offices.

It said that the new drawing would give “credibility” to the idea that “the West is against Islam” and warned the image would incite further hatred.

Qaradawi, 88, is seen as a spiritual guide of Egypt’s banned Muslim Brotherhood, the movement of ousted former president Mohamed Mursi.