Power & Market
Atilla Sulker has posted a new interview with Lew Rockwell at LewRockwell.com. My favoire part:
LR: I don’t think that imperialism is at all, necessarily connected to nationalism. The good nationalism has nothing to do with imperialism. It should oppose imperialism, because it brings war and destruction to your own people, as well as other people. But I think Bush and McCain, both of course, extremely evil and promoters of world government, are not nationalists at all. Maybe they want to see their own families and their own connections at the height of the global government running everything. But they don’t like Trump, because of what they thought he might turn into, in terms of America first, and no more wars. So that unfortunately hasn’t happened, although he (Trump) hasn’t started any big wars. But he has done terrible things like fund the war in Yemen, by giving or selling weapons, and selling weapons to Saudis. And of course his constant drumbeat of aggression against Iran is horrendous, and he’s strangling those people.
American sanctions are worse than sanctions that the Bushes put on against Iraq before they invaded. In that famous exchange with the Secretary of State (Madeleine Albright), she was asked that apparently 500,000 children and people had died because of sanctions, and she said “we think it’s worth it.” I just heard this recently from Pompeo, but this has been going on for a long time. The reason you have sanctions, according to these people, is to hurt the citizens of the other country, so they will rise up and overthrow their government. I’m not aware of any instances where that has ever happened. In fact, it just makes people more loyal to their own government.
As an international private currency, Libra will be in competition with publicly issued currencies. It could have large and fruitful repercussions on the global monetary policy, especially with reference to those countries where central banks are still heavily subject to political influence and tend to pursue inflationary monetary policies.
The introduction of the Libra project to the public has generated a lot of fuss over the consequences this cryptocurrency may have for the stability of the global financial system.
At first, we need to clear the ground from the most common mistaken facts about Libra running over the news. As detailed in this white paper, Libra will be a fully backed cryptocurrency, it will be issued solely upon demand, and its value will be given by a basket of reserves whose composition will be diversified, privileging safe assets and stable international currencies (as thoroughly described in the technical part of the white paper dedicated to the functioning of the reserve mechanism).
Thus, despite the rumors, we know as a fact that Libra will not:
- run its own monetary policy, since it will not be in control of its money supply;
- create commercial-banks money, since it will not leverage on its costumers’ deposits to create new units of Libra operating under a fractional-reserve scheme like regular commercial banks do;
- be pegged to any existing currency, since it will not take a specific commitment to fluctuate in a stringent range vis-a-vis any currency or basket of currencies.
Lastly, the fear that a sudden bank-run may cause the collapse of the Libra is either irrational or it confirms early critics have not yet understood the basic functioning of the project. In fact, the fully backed-ness of Libra would make it much safer than commercial-banks deposits we daily accept as means of payment, because Libra would be always redeemable—at least—into legal-tender currency; this redeemability would not be just theoretical (as it occurs with commercial-banks money and fractional-reserve banking) but also practical, because a unit of Libra could be created if, and only if, a unit of monetary base (i.e., legal-tender currency) or a claim on it (i.e., a unit of commercial-banks deposits) were conferred in exchange for that very unit of Libra.
In other words, while commercial-banks money (that is, deposits) can be created out of thin air—simply granting a loan—Libra would be instead created if, and only if, backed by a formerly existing unit of money—either of the central bank or of commercial ones (recall: money of commercial banks are deposits, which entitle the owner to claim a unit of monetary base, i.e., legal-tender currency).
For all these reasons — sticking to what we really know about Libra so far — Libra will have a value which will be stable in time with respect to the main reserve-currencies of the world. The relatively stable value of Libra, together with its worldwide accessibility, is what we believe may have positive and interesting repercussions. Libra may become a safe, accessible, cheaply storable reserve of value for those people living in countries that experience unbearable high levels of inflation to this day.
Moreover, the analogies between Libra and the first steps of the Hayekian proposal of “Denationalization of Money” (1976) are strikingly patent, insofar as Libra:
- is a privately issued medium of exchange;
- is subject to a 1:1 reserve system, in which money-creation out of thin air is not allowed;
- remains fully redeemable in terms of existing legal-tender currencies.
Therefore, Libra — if not impeded by governmental legislative power — would provide consumers with a medium of exchange whose inflation would be the weighted average of the safest legal-tender currencies of the globe, thus naturally displaying a potential standard deviation of its value — that is, deflation or (more likely) inflation — closer to them than to that of more volatile currencies. After a while, highly inflated legal-tender currencies (especially in those countries with relevant governmental interference and political influence over central bank’s activity) would be gradually less demanded in exchange for goods and services and, were governments not to forbid payments denominated in terms of Libra-units (that is, were they to allow Libra to exist as a full-fledged means of payment), then Libra could (analogously to what is postulated by the Grisham’s Law, but —somehow — in reverse) drive governmental money out of the payment-mechanism and prompt agents to hold to Libra for payment-purposes.
Thus, citizens would be induced to hoard governmental money only in order to pay taxes — since government would not, most likely, forego their privilege of imposing which unit of account taxes are to be paid in, that is, which unit of account is decreed to be legal-tender currency — and would be given the opportunity to access a slightly more competitive money-market.
For example, were Libra allowed to circulate alongside the publicly issued currencies in countries such as Turkey or Argentina, which at present experience high level of inflation, citizens of these countries will soon start to be interested in storing their wealth in Libra-coins, which is what has in part already happened with Bitcoin or major international currencies — like the dollar. The advantage Libra could have over Bitcoin is that it promises to deliver far better in price stability, while the advantage it could have over the dollar is that it has the potential to flow freely over the internet, overcoming the capital control barriers and all sort of government limitations.
Surely, critics point out that the currencies of said countries will not be accepted as a collateral for the issuing of Libra, hence these people will not be the early adopters of the currency. Nevertheless, Libra may eventually get to these countries from the international trade, via inflows of capital or (more likely) goods and services purchasing; and, since money transfers in Libra would be far cheaper and easier to handle, Libra could then start to be adopted as an alternative currency by more and more people inside the country. In such a scenario, people will express their preference for Libra instead of their local currency, and that will represent an incentive to the local central banks not to act inflationary so to restore the confidence in their own currency, displaying the fruits competition could bear also in a traditional public dominated market — as that of currencies currently is.
Few people who write for the news media — most of whom have only ever studied journalism or "mass communications" — know much about markets or entrepreneurship. Thus, it's not difficult to understand by people who are not entrepreneurs or capitalists get labeled at such in newspapers and on TV news shows.
When George Steinbrenner died, for example, he was hailed in the media as a great entrepreneur and capitalist. In reality, Steinbrenner was a con artist and a tax mooch. His "entrepreneurship" consisted mostly of fleecing working-class taxpayers to pay for his luxury stadiums.
And now, with the death of Lee Iacocca, we see a similar phenomenon. Within the many tribute articles about Iococca, he is commonly called the "savior" of the auto industry, or as Car and Driver describes him "the face of American capitalism."
In truth, it was the American taxpayer who "saved" Chrysler, not Iacooca. And thanks to Iacocca, the taxpayer did so against his will since Iacocca was an expert at leveraging the coercive power of government to make others pay for his corporate schemes.
Back in 1985, when Iacocca was being hailed as a capitalist extraordinaire, James Bovard, in typical Bovardian fashion, threw cold water on the nation's celebration of faux capitalism:
Iacocca is so popular largely because of his reputation for taking Chrysler from the brink of bankruptcy to the heights of profitability. But Chrysler is raking in the billions now not because it is making better cars, but because Iacocca and others persuaded Uncle Sam to prohibit Americans from buying more better-made Japanese autos.
Iacocca brags that the 1979 government bailout of Chrysler was a huge success, and even says federal loan guarantees are “as American as apple pie.” But since 1978, Chrysler has laid off more than a quarter of its workers and shut down 21 factories. A bailout intended to save jobs still resulted in tens of thousands of Chrysler workers losing their paychecks.
Iacocca even tried to cheat the government on the bailout deal. To cover the government’s risk in guaranteeing a $1.2 billion loan to a bankrupt corporation, Chrysler gave the Treasury Department warrants to buy 14 million shares of Chrysler stock at $14 a share. At the time of the bailout, Chrysler was trading at $7 a share; a few years later, thanks largely to the bailout and import quotas, Chrysler stock was up to $27 a share. When the Treasury announced it would cash in the warrants and collect a few hundred million dollars for taxpayers, Iacocca raised hell and tried to welch on the bargain. Iacocca whined, “That kind of profit is almost indecent….” Even though Chrysler has made billion thanks to government protection, Iacocca still tried to avoid paying Uncle Sam a single penny.
Iacocca wants the entire economy restricted, squeezed, and bled in order to benefit Chrysler. Iacocca tried to block the GM-Toyota joint effort to produce small cars in California, saying the partnership would be terrible for the auto industry. But at the same time Iacocca was doing his “Chicken Little” routine, Chrysler was already colluding with Mitsubishi, selling tens of thousands of their cars in the U.S.
Iacocca is America’s leading Jap-basher. Iacocca sweats that the Japanese “want to rape the market” and that “We’re a colony again, this time of Japan.” When Iacocca gave a speech on Dec. 7 on Japanese imports, he reminded his audience that it was a “day of infamy,” invoking Pearl Harbor and trying to stir up hatred for a valuable ally. Congressman Robert Matsui, D-Calif., derided recent Iacocca remarks as “racist.”
But it is understandable that Iacocca would seize every chance to slur Japan. Japanese car makers are still putting his company to shame.
Thanks to Iacocca, real American entrepreneurs — i.e., not welfare queens like the execs at Chrysler — had to pay much more for automobiles and auto parts, while paying taxes to bailout a huge corporation. Many also had to settle for lower-quality American cars.
But few seemed to care because then — as now — many Americans can't think through the implications of trade barriers and government bailouts. They don't notice the widespread unseen costs of protectionist trade barriers paid by consumers and entrepreneurs throughout the economy. All that really matters, in the minds of politicians and gullible taxpayers, is that Iacooca "saved Chrysler" and stuck it to those Japanese who think we're "lazy."
Of course, all that was before the 2008 financial crisis when it became the norm to bailout banks and auto companies, and when George W. Bush declared "I’ve abandoned free market principles to save the free market system."
Iacocca could have easily uttered those words himself. He was well versed in destroying competition, limiting choice, and sticking it to the taxpayer in the name of American big business.
There's no doubt Iacocca was a savvy businessman and a great lobbyist. But don't confuse what he was doing with entrepreneurship or capitalism.
The Free Society. By Laurence M. Vance. Vance Publications, 2018. Xii + 468 pages.
Laurence Vance is best known for his work as a specialist on the King James translation of the Bible, but he is also an outstanding writer on libertarian issues. In The Free Society, he has collected a large number of his articles for the period 2005-2017, almost all of which first appeared first in LewRockwell.com or the Future of Freedom Foundation. The articles are well worth reading, as they display the author’s sharp mind and consistent outlook.
Vance, who is a conservative Christian, maintains that the Bible supports a libertarian viewpoint. That opinion puts him at odds with those religious believers who wish to use government to enforce personal morals, but Vance is undaunted: “So why do I think that religion---in this case the Christian religion—is compatible with libertarianism? Let me give you two verses of Scripture, one from the Old Testament and one from the New, since Christians accept the authority of both: Proverbs 3:30--- ‘Strive not with a man without cause, if hath done thee no harm.’ 1 Peter 4:15----But let none of you suffer as a murderer, or as a thief, or as an evildoer, or as a busybody in other men’s matters.’ These verses, my friends, embody the essence of libertarianism. Don’t kill anyone, don’t take what’s not yours, don’t do anything wrong, don’t stick your nose into someone else’s business, and don’t bother anyone if he hasn’t bothered you.” (p.20)
Libertarianism, Vance, explains, should be taken in a strict way. The welfare state should be rejected, for example, not mainly because it is economically inefficient but because to take from some to give to others violates people’s rights. “Of course, I oppose welfare payments! It is immoral to take from those who work and give it to those who don’t---even when the government does it. All charity should be private and voluntary.” (p.39)
One final illustration of Vance’s uncompromising adherence libertarian principle: “Since no parent in the United States is forced to send his child to a government school, it is a myth that we need ‘school choice’(meaning vouchers) so that children can get out of an unsafe, failing government school.” (p.85)
Vance is a consistently illuminating writer, and I highly recommend his work.
Tonight Mises Senior Fellow Bob Murphy is debating George Selgin of Cato's Center for Monetary and Financial Alternatives on the topic of fractional reserve banking. The host is Gene Epstein's Soho Forum, an excellent monthly debate series based in New York City.
Greater London and New York City have similar population sizes at around 8.6 million. And now, for the first time, homicides in London are on a par with those in New York City.
- In January, the Met investigated eight murders whereas the NYPD looked into 18 killings
- By February, the NYPD's figures had dropped to 11, while London's rose to 15
- In March, 22 murders were investigated in London while 21 inquiries were launched in New York
These numbers, notably, exclude London homicides defined as resulting from "terrorism" — although the US does not exclude "terrorism" from its homicide counts.
Officials in London, in turn have blamed "knife crime" and even blame social media:
Britain's most senior police officer recently said social media was partially to blame for the soaring rate of knife crime in the UK.
Met Commissioner Cressida Dick said websites and mobile phone applications such as YouTube, Snapchat and Instagram were partially to blame for the bloodshed.
The current orthodoxy around homicides, of course, dictates that this should never happen. The current assumption underlying gun control laws is that gun control brings lower homicide rates.
And yet, By Western European standards, guns are easy to come by in New York City — although New York is quite restrictive by US standards.
If homicide rates continue to grow substantially, London could end up subject to the sort of crime problem not seen in the UK in more than a century. We we've discussed in the past, the UK has been a region with low crime going back more than a century. The nation's low homicide rates pre-date the introduction of gun control laws in the 1920s.
Nevertheless, officials have now been conditioned to think of all crime in terms of being caused by a lack of weapons prohibition. Hence, we hear about "knife crime" and what an epidemic it is. We even occasionally hear about calls for banning kitchen knives in the UK.
Growing crime in London also has the potential to significantly affect nationwide statistics since a sizable 13 percent of the UK population lives in Greater London.
Homicides statistics in the US have already been similarly affected since increases in crime in only a handful of cities have been driving increases in homicide rates in recent years.
As with the US, it is likely that most of the UK outside certain areas of certain cities remains remarkably safe, in spite of recent upward trends in London.
The Institute of Austrian Asset Management has awarded Lew Rockwell with the prestigious 2018 Roland Baader Award, for his contributions to Austrian economics.
From a translation of the IfAAM press release:
The Institute for Austrian Asset Management (IfAAM) announces that the journalist Llewellyn Harrison (Lew) Rockwell Jr. receives the "ROLAND BAADER Award 2018". The ceremony will take place on 2 June 2018 at the 9th Hamburg Mark Banco Anlegertagung in the Historisches Museum Hamburg.
Without the journalistic and entrepreneurial commitment of Lew Rockwell, the Austrian School of Economics or the Austrian School of Economics would be just a footnote in the history of ideas today. His contribution to the popularization of this tradition of thinking and to the preservation and further development of their approaches can hardly be overestimated. In a hostile academic and journalistic environment marked by statists and fellow travelers in the United States and Europe, Rockwell proved courageous in uncomfortable positions. He personally acted alongside Ludwig von Mises and Murray N. Rothbard, his most important student in the US, who entrusted Rockwell with their intellectual heritage.
In the name of Ludwig von Mises, with the consent and co-operation of his wife, Rockwell founded the Ludwig von Mises Institute in 1982, which he developed into the world's leading center of the Austrian School. The institute was founded in deliberate contrast to "think tanks", which cut back on principles for the purpose of influencing politics, and universities that are increasingly dominated by careerists and thinkers. The Mises Institute utilized he Internet to address a wide audience, especially young readers. A large part of the scientific writings of the Austrian School are made freely available in a comprehensive digital library worldwide. Without the work of the Mises Institute , the rediscovery of the Austrian School would hardly have happened. All over the world, interested people can find the ideas and approaches of this almost forgotten tradition via the internet.
In 1999, Rockwell launched LewRockwell.com, one of the oldest and most successful weblogs for the Austrian School, and became a model for many publicists. He proved that a journalist can reach a mass audience, even without the mainstream media, thanks to the internet.
In his work, which does not shy away from simple language, popular themes, and sharp words on the zeitgeist, he made for the US, what succeeded Roland Baader in German-speaking countries. This makes Lew Rockwell an obvious and deserving winner of the Roland Baader Award.