Power & Market
Five days before the last Federal Open Market Committee (FOMC) meeting, Tho Bishop wrote about how the Fed and other agencies are preparing for a crisis without telling everyone they are preparing for a crisis. In his article, he showed how the Fed and the Office of the Comptroller of the Currency were working on a policy that would require banks to access the Fed’s discount window once a year, which would diminish the stigma associated with crawling up to the window as a last-ditch effort to save your failing bank.
This is clearly crisis prep. They see the dominos falling: commercial real estate valuations, credit card delinquencies, regional bank failures last year, the expiration of the Bank Term Funding Program (which was emergency lending without calling it “emergency lending”), high-profile corporate layoff announcements, etc. They are getting ready for their next power grab once the crisis is in full swing.
The minutes from the January FOMC meeting were released today, and they reveal, in Fedspeak, of course, worries about the economy and the banking system.
In the discussion of financial stability, participants observed that risks to the banking system had receded notably since last spring, though they noted vulnerabilities at some banks that they assessed warranted monitoring. These participants noted potential risks for some banks associated with increased funding costs, significant reliance on uninsured deposits, unrealized losses on assets resulting from the rise in longer-term interest rates, or high CRE exposures.
My translation: “The underlying problems in the banking sector that resulted in the bank failures last year have only been papered over, and not meaningfully resolved. Deposits, commercial real estate loans, and all those assets with unrealized losses you’ve marked as ‘held-to-maturity’ are not safe.”
While participants noted that they were not seeing any signs of liquidity pressures at banks, several participants noted that, as a matter of prudent contingency planning, banks should continue to improve their readiness to use the Federal Reserve's discount window, and that the Federal Reserve should continue to improve the operational efficiency of the window.
My translation: “We are definitely seeing signs of liquidity pressures at banks, so they should get ready to line up at the discount window for a loan of last resort.”
Given that the stresses that emerged at some banks early last year have subsided, members agreed to remove from the statement the reference to the resilience of the U.S. banking system as well as to tighter financial and credit conditions and their effects on the economic outlook.
My translation: “Yeah, we were definitely lying earlier when we said ‘risks to the banking system had receded notably’ and how we aren’t ‘seeing any signs of liquidity pressures at banks.’ We’re just gonna delete the ‘banking system is sound and resilient’ line.”
Oh but ain't that America for you and me.
Ain't that America something to see baby
Ain't that America home of the free
Little pinks houses for you and me.
John Cougar Mellencamp
Released in 1983 after double-digit price inflation from 1979-1981
Shrinkflation has President Joe Biden annoyed. He called it a “rip off” on social media ahead of the Super Bowl. “Some companies are trying to pull a fast one by shrinking the products little by little and hoping you won’t notice,” said Biden, who evidently just now noticed, and is calling for companies to stop it.
While the President is focused on snacks and such, the New York Times reports that homebuilders like Lennar are building 400 square foot structures and calling them homes. The Times piece by Conor Dougherty entitled “The Great Compression” explains “Over the past decade, as the cost of housing exploded, home builders have methodically nipped their dwellings to keep prices in reach of buyers. The downsizing accelerated last year, when the interest rate on a 30-year fixed rate mortgage reached a two-decade high, just shy of 8 percent.”
“Their existence is telling,” Ali Wolf, chief economist of Zonda told Mr. Dougherty. “All the uncertainty over the past few years has just reinforced the desire for homeownership, but land and material prices have gone up too much. So something has to give, and what builders are doing now is testing the market and asking what is going to work.”
With 400 square feet, no garage, and driveways just wide enough for one vehicle or two motorcycles — builders can offer prices under $300,000 in markets like San Antonio and Redmond, Oregon. The days of the $100,000 to $300,000 starter home are long gone in many markets. “This is the front end of what we are going to see,” said Ken Perlman, a managing principal at John Burns Research and Consulting.
Levittown, N.Y. Cape Cod homes, considered the model post-World War II suburb, were about 750 square feet. However, Americans want more space for their stuff and the median home size has increased to about 2,200 square feet, up from around 1,500 in the 1960s.
As for snacks, “This corporate greed is one of the reasons that Americans are frustrated by expensive grocery bills,” Senator Bob Casey D-Pa., said in a December statement.
The good Senator should study the work of Ludwig von Mises who explained,
No complaint is more widespread than that against “dearness of living.” There has been no generation that has not grumbled about the “expensive times” that it lives in. But the fact that “everything” is becoming dearer simply means that the objective exchange value of money is falling.
While prices rise, the value of the dollar shrinks, the number of chips in a bag and the size of houses shrink.
“The advocates of public control cannot do without inflation, Mises wrote. “They need it in order to finance their policy of reckless spending and of lavishly subsidizing and bribing the voters.”
[Pre-order the 4th Expanded Edition of Early Speculative Bubbles & Increases In The Supply of Money today.]
I used to be an environmentalist.
I once wrote that “scientists are right about climate change.” I long opposed logging clear-cuts and excessive drilling. I even voted for the Green Party candidate (gasp!) for president. But this long-time supporter of environmentalism has completely abandoned its modern instantiation. Here are five reasons why.
1. Failed climate change predictions.
Science is about accurate prediction. If Newton’s theory had failed to predict how apples fall, then it would be useless.
Few scientists have been as bad at this (basic) job as climate scientists. In one of the most comical episodes I’ve ever seen, climate scientists erected signs in Glacier National Park predicting its glaciers would be gone in 2020—only to be forced to leave the signs after the predictions proved false. For a year, tourists to the park were met with a monument to the legacy of climate science: They stood looking simultaneously at glaciers … and the sign that promised, on the good authority of climate science, that the glaciers were not there.
Increasingly, climate scientists have appeared to me not as serious intellectuals but as the crazy old coot on the corner with a sign proclaiming: “The End is Near!” At some point, it is best to just avert your eyes and walk on by.
2. Where did the wild spaces go?
Thoreau said of nature: “We need the tonic of wildness.” Thoreau was right about me at least. One of my primary motives for being an environmentalist was that I believed natural wild spaces were good for the soul.
I still believe that. But many modern environmentalists don’t. They have abandoned this idea and substituted in its place a cult-like obsession with a set of things that clearly won’t preserve wild spaces at all.
And that brings us to wind farms. I hate wind farms. They kill birds and destroy forest habitats. The blades are made of materials that fill waste dumps and can’t be recycled. They require lithium batteries that have to be mined with methods that create the very kinds of problems the “clean energy” movement is supposed to solve.
But for all that, my primary reason for hating wind farms is the same as my motive for opposing all those oil derricks years ago: They destroy the wild spaces of my sanity. They dilute Thoreau’s tonic.
The real problem is the scope of their effect. An oil derrick isn’t attractive—but it is a fairly contained ugliness. Wind farms, on the other hand, ruin everyone’s view for miles and miles and miles around. The higher you go in the Pennsylvania mountains, the more you ought to feel freedom. But the higher you go, the more likely you are to have your vast wild vistas displaced by wind turbines. Even if a specific turbine design is attractive, it still interrupts our ever-diminishing wild spaces. So unless you happen to be a rich Massachusetts politician with the power to stop wind farms from messing up your own pristine ocean view, the tonic you get from nature will be appreciably less curative.
Wind farms make oil derricks feel like pure mountain streams. Can we start drilling again soon?
3. Bullying over debate.
One of the clear signs that a movement is rotten is when it resorts to silencing its opponents rather than debating them. The modern “green” movement contains the worst set of bullies I’ve ever seen; indeed, they serve as primary fodder for my forthcoming book called Liberal Bullies. Rather than meet fact with fact, the movement increasingly calls people they disagree with climate deniers and engages in intentional censorship to silence the voice of opponents. Not only is this repugnant to those of us who value free speech, but it is also a clue that the movement doesn’t have a lot of substantive arguments. You don’t need to silence people when you can win an argument with facts.
4. Politics over facts.
Speaking of facts: The relationship between science and politics only works when the causal arrow between them goes from scientific facts to politics. The modern green movement has that backwards. I remember seeing a science presentation at a San Francisco aquarium where the speaker confidently asserted that Glacier National Park had less than 10 glaciers left. I thought that was odd because we had just visited the park and the park officials had told us there were over 40 glaciers. But trying to discuss this with a presumed expert was a parable of the modern movement: no amount of fact would change his conviction, because the facts didn’t fit his political beliefs.
5. Lack of a cost/benefit analysis.
Even at the height of my pro-environmentalist sentiment, I wasn’t opposed to all oil drilling. I know we need energy; I use it every day. I just wanted moderation that purposefully preserved a significant amount of wild nature. Well, across the board, the green movement increasingly just bludgeons us with simple-minded ideas that ignore the obvious costs of their policies. They push for recycling without considering the environmental costs of (say) moving recycled goods (even The Atlantic recently admitted that recycling wasn’t accomplishing all that much). They push for climate change initiatives while dismissing the costs for everyday families. They don’t often consider that, compared to other methods, wind farms produce a small amount of energy relative to the destruction they cause.
All movements have problems, including my own. All movements have bullies, including my own. I realize there is a danger in hand-picking a few extreme examples here. There are plenty of good environmentalists. I know some of them. I don’t want to paint the entire movement with one brush.
And yet, from my little corner of the world, something seems amiss. The green movement has increasingly ignored common people’s real experiences in favor of an ever-narrowing and cult-like political agenda. If it ever regains a focus on the reality most of us inhabit, I’ll re-consider.
But I’m not holding my breath.
Alexei Navalny – seen as a pro-democracy, transparency, anti-corruption Russian nationalist gadfly – died while on a walk in his Siberian prison. He was serving a long sentence, one the Biden administration raged about: the Russian judiciary had convicted him of several crimes including fraud, embezzlement, “inciting extremist activities” and “rehabilitating Nazi ideology.”
I’m sure Donald Trump can sense the irony.
Navalny’s recent incarceration in Siberia comes of the heels of a less reported imprisonment and death of an actual pro-democracy, transparency, anti-corruption US, UK, and Ukrainian gadfly – who died of untreated pneumonia in a Ukrainian prison. Gonzalo Lira, a 55-year-old American citizen, married father of two, was a journalist and commentator. He had been charged by Kiev, without a date or plan for a trial, with “justifying Russian aggression against Ukraine.” Lira was said to have violated Ukrainian criminal code, a code Lincoln, Wilson and FDR would have enthusiastically enforced.
Lira and Navalny criticized and annoyed certain governments. One did so as a politician, backed by several countries that, as a matter of policy, constantly call for regime change in Russia; the other criticized the Ukrainian government, for its US-pressed bombing the breakaway Donbass region, its refusal to abide by the Minsk Accords, its Nazi influences within the Army and government, and its efforts to join NATO. Lira also reported what he saw during the past few years of war – Kiev bleeding billions of Western dollars and hundreds of thousands of lives, and displacing nearly half of its population, because, as a matter of policy circa 2024, Kiev and its US master, will not negotiate with Putin.
The United States government was involved in the fates of both of these men. Navalny received continual support, funding and media advocacy from the West, in hopes of regime change in Russia; as for Lira, he was a US citizen by birth (born in California) and as an American, was due legal and welfare advocacy from the US Embassy in Kiev. Instead of support, he was ridiculed on the front pages of mainstream media in the US for his eyewitness reporting from inside Ukraine, and received no financial or any other kind of support as he served as one of the few objective American voices watching and reporting on this expensive and destructive proxy campaign. The US embassy in Kiev is large and quite well staffed. Yet, the embassy said little, and did even less for Gonzalo Lira.
DC’s upside-down morality is on constant display, but with these accidental examples of two middle-aged men, both working to expose government wrongdoing, only one was spending millions of dollars with connections to many European and NATO leaders, and their intelligence agencies, as this video illustrates. Only one was celebrated in the West, to include his wife’s invitation and presence at the most recent “Davos of Defense” three day military conference, along with the US Vice President and key EU leadership. Only one was a “democratic hero.”
Some memorable lines, as reported by Reuters, on behalf of Navalny, are instructive:
Navalny’s mother, Lyudmila Navalnaya, wrote, “I don’t want to hear any condolences. We saw him in prison on the (Feb) 12, in a meeting. He was alive, healthy and happy.” Clearly and predictably, she does not accept what is being reported. That Navalny seemed happy is important to note. From Lira’s distraught father, we have this: “I cannot accept the way my son has died. He was tortured, extorted, incommunicado for 8 months and 11 days and the US Embassy did nothing to help my son.”
Speaking to Reuters, Russian newspaper editor and 2021 Nobel Peace Prize winner Dmitry Muratov called the death “murder” and said that he believed prison conditions had led to Navalny’s demise. In 2022, Muratov sold his Nobel Prize and gave the proceeds to UNICEF for their distribution in support of Ukrainian refugees. He stated that he would have rather the prize been given to Navalny. Similarly, friends and family of Gonzalo Lira also believe his death was murder. Lira was not only married to a Ukrainian, a father to Ukrainian citizens, he had repeatedly reported about the horrific conditions for and harm done to Ukrainians inside Ukraine, and in the meat grinder of battle. But somehow, there were no Nobels to auction, and no newspapers in the West were interested.
U.S. Secretary of State Blinken, the man in charge of all US Embassies, extended his condolences to Navalny’s family. He said, “[Novalny’s] death in a Russian prison and the fixation and fear of one man only underscores the weakness and rot at the heart of the system that Putin has built. Russia is responsible for this.” Curiously, I can find nothing where Blinken addresses Lira’s repeated arrests, mistreatment, and eventual death at the hands of the Ukrainian government, and how hard he, as Secretary of State, tried to prevent it.
French President Macron noted “In today’s Russia, free spirits are put in the Gulag and sentenced to death.” I doubt Macron has even heard of Gonzalo Lira, but perhaps he did know of him. Gonzalo was a free spirit, a bold and brave spirit, and he was put into a Ukrainian gulag without a syllable of French outrage, poetic or otherwise.
German Chancellor Olaf Scholz said, “I met Navalny here in Berlin when he was trying to recover in Germany from the poisoning attack and also talked to him about the great courage it takes to return to his country. And he has probably now paid for this courage with his life.” Scholz, who sacrificed his entire nation’s economy far into the future with his criminally silent assent of the US destruction of the Nordstream pipelines, among other things, should, for the sake of Germany, be making his commentary on courage from inside a German prison cell.
German Foreign Minister Annalena Baerbock, tweeted “Like no one else, Alexei Navalny was a symbol for a free and democratic Russia. That is precisely the reason he had to die.” As a suspected CIA and/or MI-6 asset, Navalny’s death, as his life, continues to serve a Western agenda. One wonders if Annalena, noted for her accidental and sometimes embarrassing blurts of truth, did it again with this one.
Zelensky, speaking in the same Munich security conference this week, stated, “It is obvious: he was killed by Putin, as thousands of others were tortured and martyred by this one ‘creature’. Putin does not care who dies as long as he keeps his position. And that is why he should not keep anything. Putin should lose everything and answer for what he has done.” Given what we know about church banning, free speech, Nazi influences, suspension of both opposition political parties and elections in Ukraine under the US-backed Zelensky, he proves himself, once again, to be a tiresome narcissist, projecting malignantly.
EU Council President, Charles Michel, along with many heads of state in EU countries, rushed to hold Putin responsible for the death of Navalny. “Alexei Navalny fought for the values of freedom and democracy. For his ideals, he made the ultimate sacrifice. The EU holds the Russian regime solely responsible for this tragic death.” The dramatic language is almost Versailles in its absolutism.
EU President Ursula Von Der Leyen, tweeted the real import of this death. “A grim reminder of what Putin and his regime are all about. Let’s unite in our fight to safeguard the freedom and safety of those who dare to stand up against autocracy.” How about let’s all pray for a degree self awareness to dawn upon the EU ruling commission and the US imperial capitol – fighting against autocracy is indeed what we all should be doing, starting at home, resisting over-centralization and global mandates, and autocrats everywhere, wherever they are.
NATO Secretary-General Jens Stoltenberg made a wise observation, “We need to establish all the facts, and Russia needs to answer all the serious questions about the circumstances of his death.” While the US shamefully did nothing to protect the rights or the life of its own countryman Gonzalo Lira, and Western media joked and celebrated his death, Stoltenberg’s recommendation should have been made, and followed, as soon as we discovered that Lira had died in a prison in Kharkiv.
Those most feared by governments are most at risk. The US is rich with examples – Julian Assange, Edward Snowden, Jeffery Epstein, Seth Rich, John F. Kennedy and his brother Robert, or the hundreds of people who showed up for the January 6 reading of the electoral count only to be tracked down and arrested to rot awaiting trials in DC prisons, and thousands of others, most not even household names. The list is long, and we all know someone on that list. Those who effectively challenge state narratives and objectives always put themselves in danger.
Post-Republic, non-democratic governments always need to persecute and murder their political enemies. Instead of accepting or tolerating such governments, we should work to expose, overwhelm and obliterate them, starting and ending with the one we know best — our own.
As Gordon explains, I define socialism (chapter 2) as coming in degrees along two axes: (i) the degree of collective ownership and control of the means of production and (ii) the degree of egalitarian distribution of resources. The book then analyzes common arguments for and against socialism, and I ultimately advocate moving much further in the socialist direction than where we are in the United States, though I favor neither complete democratic control of the economy nor a completely equal distribution of resources. I argue that moving in the socialist direction would not violate rights (chapter 4) and that it would better promote human well-being than the more-capitalist alternative (chapters 6–12).
Gordon first takes issue with my treatment (in chapter 5) of an argument that many socialists make against capitalism: that by exploiting the workers, capitalism violates rights. I reconstruct and analyze versions of the argument, but in the end, I do not endorse it. Nonetheless, Gordon believes that I give the argument more credence than it deserves, and he says that I rely on a theory of the value of labor that economists generally reject. While I could defend my analysis, I’ll leave that point aside, since Gordon and I agree that this particular argument against capitalism does not clearly work.
Some of Gordon’s objections seem to rely on a misinterpretation of my view, though he began the review with a correct summary. For example, he says that it is a “glaring omission” that I do not respond to the argument of Ludwig von Mises, according to which “a socialist economy—by which he meant an economy run by central planners—would collapse into chaos” because “in the absence of numerical market prices, resources cannot be allocated rationally.”
Gordon is correct that I ignore this argument, but it is for the simple reason that I am not advocating for a centrally planned economy without numerical market prices. Such an economy would be the extreme version of the first axis of my definition of socialism; I never said—indeed I explicitly denied—that I advocate this extreme version.
Similarly, when I argue that socialism need not violate political rights and I point to the Scandinavian countries to illustrate this (chapter 2 shows that the Scandinavian countries are much further in the socialist direction on the two axes), Gordon responds: “Sehon misses a fundamental point. The [Scandinavian] countries he mentions aren’t centrally planned economies.” Indeed, they are not. Why is that relevant, given that I do not argue for a centrally planned economy?
Also, in the context of rights and socialism, Gordon says I ignore Friedrich von Hayek’s argument in The Road to Serfdom “that centrally planned economies suppress important political rights.” Again, I fail to see the relevance of an argument against a view that I do not hold. Even in Hayek’s “Present State of Debate,” an article that Gordon cites, Hayek makes no argument that is directly relevant to the sort of socialism I am defending. (This is not to say that nothing Hayek says is relevant or poses a challenge; I discuss Hayek at some length in chapters 9–11 of the book.)
I’m honestly not sure what to make of criticisms that assume that I argue for a view that Gordon’s own summary clearly indicates that I do not endorse. With respect to the first axis, it is as if Gordon thinks that there are only two alternatives: either a completely planned economy or a completely free market. However, this would clearly be wrong: both in principle and in practice, we see that there are varying degrees to which we can exert democratic control over the economy.
Perhaps Gordon’s thought is this instead: if a completely state-run and state-controlled economy would be disastrous, then any move away from state control is desirable—the further from central planning, the better. However, this does not follow. It is clearly possible that there is a sweet spot with markets and prices, but with significant democratic control, particularly in certain areas. That’s what I argue, especially in chapter 9, where I cover arguments inspired by Hayek and Milton Friedman for free markets, and then in chapters 10–12, where I consider areas where we can expect the market to fail as a mechanism for increasing human well-being.
There is one point that Gordon makes on which I will concede some ground. In chapter 4, I respond to an argument by Matthew Harwood in which (on one reconstruction of the argument) Harwood simply assumes that socialism is an awful system. Harwood then infers that socialists will violate political rights, with the idea being that proponents of an awful system will need to suppress opposing speech in order to stay in power.
I point out that this is essentially question begging: if one starts with the premise that socialism is an awful system, we don’t need the rest of the argument in order to know that we should not adopt socialism. Gordon agrees with this much. However, he says that this “doesn’t make the argument useless,” for “if you do have grounds to think that socialism is an awful system,” then Harwood’s argument would allow you to infer that it would also be likely to violate rights.
Fair enough; if we had grounds on which to claim that socialism is an awful system, then its awfulness would likely compound itself into the further awfulness of repressing speech. While that is a concession, it is not much of one. If I were willing to grant, as a premise, that socialism is an awful system, then I obviously would not have written a book defending it.
Of course, most readers of Power & Market probably do have the antecedent conviction that socialism is awful. I invite you to read my book to see whether I can convince you otherwise!
Big corporations and global leaders adhere to and assume the growing interventionism and the advance of socialism because, for politicians, it is an excellent way of perpetuating their power and control over citizens, while multinationals tolerate it because they have enough financial muscle and size to absorb the pernicious effects of the massive rise in public debt and monetary imbalances, public spending, taxes, barriers to trade, and progress.
They all know that the burden of interventionism falls entirely on small businesses and families, destroying the middle class in the process. The wealthy can escape the negative impact of monetary debasement and confiscatory taxes. People with salaries and small entrepreneurs cannot.
Who suffers the constant erosion of real disposable income from those gigantic and wrongly called government “stimulus plans” that never stimulate anything but bureaucracy, leaving a massive trail of debt and impoverishment caused by increased inflation and ever-increasing taxes? The middle classes and small businesses.
Why do global leaders accept a rising trend in destructive policies that they know will fail? There is a perverse incentive. Business leaders who should value the success of productive investment and free markets are afraid that the interventionist cancelling crowd will attack them and, therefore, prefer to look elsewhere or even finance the advance of anti-freedom ideas in the hope that the mob will let them work and invest in peace. Others believe they may keep their market share and avoid the threat of competition if they stay close to political powers. It doesn’t work. They do not leave them alone, and leaders lose more than they gain when they fall for cronyism. Whitewashing Marxist collectivism does not stop it. It is no surprise to see how this neocommunism disguised as social justice attacks with even greater cruelty those companies and leaders who embrace their false messages. Just like wokeism often cancels and destroys its most staunch defenders, Neomarxism does the same with corporations and business owners because its objective is full control.
The West is in danger, and Javier Milei explained this in detail at Davos, crushing the consensus narrative. “It should never be forgotten that socialism is always and everywhere an impoverishing phenomenon that has failed in all countries where it’s been tried out. It’s been a failure economically, socially, and culturally, and it has also murdered over 100 million human beings, he said. However, the most important point of his speech for me is to remind people what socialism is. “I know, to many, it may sound ridiculous to suggest that the West has turned to socialism, but it’s only ridiculous if you limit yourself to the traditional economic definition of socialism, which says that it’s an economic system where the state owns the means of production. This definition, in my view, should be updated considering current circumstances.
Today, states don’t need to directly control the means of production to control every aspect of the lives of individuals. With tools such as printing money, debt, subsidies, controlling the interest rate, price controls, and regulations to correct so-called market failures, they can control the lives and fates of millions of individuals. This is how we come to the point where, by using different names or guises, a good deal of the generally accepted ideologies in most Western countries are collectivist variants, whether they proclaim to be openly communist, fascist, socialist, social democrats, national socialists, Christian democrats, neo-Keynesians, progressives, populists, nationalists, or globalists. Ultimately, there are no major differences. They all say that the state should steer all aspects of the lives of individuals. They all defend a model contrary to the one that led humanity to the most spectacular progress in its history.” This is critical because the average citizen has been led to believe that massive money printing, piles of new regulations and laws, rising public debt, and constant interest rate interventions are capitalist or neoliberal policies, when they are tools of statism to accelerate the rising size of government in the economy. Socialism does not seek progress; it seeks control. Large companies that fall into the trap of buying socialism suffer the same attack and further deteriorate their ability to create value and wealth.
Milei destroyed all the current myths in one speech at Davos, and millions watched in awe because it was obvious that he was telling the truth. And that, coming from Argentina, he knows what he is talking about. When one speaks with Argentine citizens, they often remind us all that they “come from the future.”.
The example of Argentina is obvious. Between 2007 and December 2023, the world looked to the other side in the face of a massive increase in poverty and inflation. They even had the audacity to justify that inflation was due to exogenous factors, not massive money printing, and that poverty was miscalculated, exculpating socialist governments from any responsibility.
The left’s shocking silence in the face of the humanitarian and ecological disasters created by the Socialism of the XXI Century governments in Venezuela, Nicaragua, Argentina, and other countries shows that they could not care less about the welfare of citizens or the protection of the environment but used seemingly harmless causes to take power and destroy the economy. Why? Because the goal of any socialist leader is to create poor hostage clients who depend on a state in which those leaders become obscenely rich as the country goes down. Do not be mistaken; statism does not seek the redistribution of wealth from the rich to the poor, but the accumulation of the wealth of the nation in the hands of a few politicians.
Thankfully, Davos Milei was an undeniable success, and this shows that not all is lost. According to the World Economic Forum page, ten times more people watched his speech than all other leaders combined. Socialist leaders like Spain’s Sanchez bombed with less than 5,000 views. No, businesses do not depend on the state. There is no welfare state without powerful and productive enterprises, and there are no public services if private wealth is not created. There is no public sector without a thriving private sector. Progress does not depend on a crony, extractive, and confiscatory state but on a strong civil society of free individuals with independent institutions that act as a counterweight to political power. Legal certainty and investor attractiveness, or respect for international law, do not happen due to the generosity of political leaders, but thanks to free markets and independent institutions that limit political power. The world does not progress due to big governments, but despite the obstacles they put in place,
Milei crushed it by telling the truth. Those who remained silent for years about Argentina’s economic ruin now fear him.
Socialism is an impoverishing system that has failed and should not be defended out of fear of retaliation.
Milei reminded companies that they are the heroes of poverty reduction and progress and that the left only uses environmental and gender excuses to impose totalitarianism.
Milei reminded everyone at Davos that Argentina’s ruin is not a coincidence or a fatality, but the result of years of implementing the same interventionist policies that many at Davos have defended or tolerated.
Vladimir Putin isn’t a hero, but his interview with Tucker Carlson brings out some basic truths that we would do well to consider. In contrast to brain dead Biden and his gang of neocon controllers, Putin isn’t dominated by an ideological vision that requires world hegemony. He is a nationalist who aims to advance the interest of Russia. This enables him to have a realistic perception of world politics. In what follows, I’ll discuss some of the vital points we can learn from him.
Some people don’t want us to learn these lessons. As usual, the great Dr. Ron Paul is on top of this. Right after the interview, the mainstream media attacked it. They don’t want you to know that there is another side to their propaganda. Dr. Paul says:
“There has been much written and said about Tucker Carlson’s interview with Russian President Vladimir Putin last week. As of this writing the video on Twitter alone has been viewed nearly 200 million times, making it likely the most-viewed news event in history. Many millions of viewers who may not have had access to the other side of the story were informed that the Russia/Ukraine military conflict did not begin in 2022, as the mainstream media continuously reports, but in fact began eight years earlier with a US-backed coup in Ukraine. The US media does not report this because they don’t want Americans to begin questioning our interventionist foreign policy. They don’t want Americans to see that our government meddling in the affairs of other countries – whether by “color revolution,” sanctions, or bombs – has real and deadly consequences to those on the receiving end of our foreign policy.
To me, however, perhaps the most interesting aspect of the Tucker Carlson interview with Putin was the US mainstream media reaction. As Putin himself said during the interview, “in the world of propaganda, it’s very difficult to defeat the United States.” Even a casual look at the US mainstream media’s reporting before and after the interview would show how correct he is about that. In the days and weeks before the interview, the US media was filled with stories about how horrible it was that Tucker Carlson was interviewing the Russian president. There was the danger, they all said, that Putin might spread “disinformation.”
That Putin might say something to put his country in a better light was, they were saying, reason enough to not interview him. With that logic, why have journalism at all? Everyone interviewed by journalists – certainly every world leader – will attempt to paint a rosy picture. The job of a journalist in a free society should be to do the reporting and let the people decide. But somehow that has been lost. These days the mainstream media tells you what to think and you better not dispute it or you will be cancelled!
What the US mainstream media was really worried about was that the “other side of the story” might start to ring true with the public. So they attacked the messenger.
The CNN reporting on Tucker’s interview pretty much sums up the reaction across the board of the US mainstream media. Their headline read, “Tucker Carlson is in Russia to interview Putin. He’s already doing the bidding of the Kremlin.”
By merely doing what used to be called “journalism” – interviewing and reporting on people and events, whether good or bad – one is “doing the bidding” of the subject of the interview or report?
No wonder fellow journalist Julian Assange has been locked away in a gulag for so many years. He dared to assume that in a free society, being a journalist means reporting the good, the bad, and the ugly even if it puts those in power in a bad light.
Protecting democracy and the Constitution from Donald Trump and the “MAGA extremists” is a major theme of President Biden’s reelection campaign. As is often the case in American politics, President Biden is just as, if not more, guilty of posing an “existential threat” to the Constitution as those he smears as “extremists.” For example, President Biden and members of his administration have waged a campaign to undermine the First Amendment by “encouraging” companies to suppress the expression of “unapproved” views online.
The latest example of the administration trying to get a private internet company to censor Americans may be the most outrageous of all. House Judiciary Committee Chairman Jim Jordan recently released a series of emails between Biden administration officials and Amazon, the world’s largest online retailer. The government officials wanted Amazon to remove from its online catalog books containing “misinformation” regarding the safety and effectiveness of covid vaccines, meaning anything questioning the government’s pro-vaccine propaganda.
While Amazon did try to push back some against the administration, it did remove at least one “anti-vaccine” book from its online catalog. Amazon also manipulated its search results to make sure books expressing skepticism of vaccines were buried under books touting the pro-vaccine line. The company probably hoped that by “burying” these “dissident” books Amazon could make the administration happy without actually removing all books that question the covid vaccines. The company also promised the administration that it would expand use of a Centers for Disease Control (CDC) warning for books promoting “anti-vaccine” narratives.
Some libertarians say that Amazon should not be criticized for its decisions. These libertarians point out that, as a private company, Amazon has the right to decide what books to sell and also has the right to decide to make it difficult to find books expressing viewpoints the company finds dangerous or distasteful. This is true but ignores one important fact: Amazon’s decision to suppress books critical of covid vaccines was not done to attract consumers who would not shop at a site that sells “anti-vaccine propaganda” or “conspiracy theories.” Instead, Amazon acted at the behest of government officials who were seeking to prohibit Americans from accessing alternative views.
Amazon may have been eager to cooperate with the government to avoid being subjected to antitrust litigation. At the very time the administration was demanding Amazon suppress covid dissidents, President Biden was preparing to appoint Lina Khan, an advocate for antitrust litigation against Amazon, to lead the Federal Trade Commission.
It is clear that the US government has been a major spreader of covid disinformation, while those challenging the government’s pro-mask, pro-vax, and pro-lockdown propaganda have been the truth-tellers. Covid is an example of why protecting the First Amendment is vital to protecting not just liberty, but also our prosperity and health.
Congress should prioritize its investigation into the Biden administration’s efforts to silence Americans because of their views. Congress should then impeach all high-level federal officials, including President Biden, who took action to violate Americans’ First Amendment rights.
Market expectations of rapid disinflation and a soft landing remain, but January has given a few new risks to the optimistic estimates of disinflation with no impact on the economy.
The first risk comes from the commodity complex and freight costs. Market participants have all but ignored the spread of geopolitical risk and assumed the extraordinary and counterintuitive decline in commodity prices in 2023 as something permanent. However, January has shocked analysts with a dramatic increase in freight costs and a significant bounce in oil prices. Furthermore, the December inflation figures in the eurozone proved that the base effect was an uncomfortably large driver of the consumer price index annual decline in November. In fact, all the components published by Eurostat in the December advance came significantly above the European Central Bank target.
We have been discussing too much about rate cuts and too little about net liquidity, sometimes forgetting that rising net liquidity has driven markets higher in the fourth quarter, and the first quarter will likely be more challenging considering the estimated volatility in the reverse repo figures. Additionally, massive deficit spending by the U.S. government may keep inflationary pressures above the level that broad and base money reductions would suggest.
The third risk comes from the inflationary impact of government protectionism. As trade barriers continue to build, the monetary disinflation process may be decelerating due to governments implementing trade wars, barriers to commerce, and tariffs. Unfortunately, governments in the euro area and the United States are tightening protectionist measures disguised sometimes as “environmental policies,” making competition more challenging and prices of food and shelter more expensive, by slashing access to land and farming as well as limiting building projects. Interventionism and trade wars make goods and services more expensive for citizens by placing a floor on prices even when monetary aggregates decline.
Food, commodities, and real estate inflation are all monetary effects. More units of newly created currency are going to relatively scarce assets. At the same time, deficit spending and the rising weight of government in the economy reduce the positive effects of monetary contraction and certainly decelerate the disinflation process. However, all those negative effects combined also contribute to the risk of a hard landing, especially when the U.S. and Europe are already in a private sector recession.
We need to be careful with excessive optimism about inflation and even more aware of the perils of expecting disinflation with no economic harm. Many market participants are suddenly surprised that January has started with a negative trend, but this is explained by the excessive expectations of aggressive and immediate rate cuts.
President Joe Biden made an appearance in a White House advertisement during this year’s Super Bowl. He put one of the biggest problems facing the country—inflation—front and center for the largest broadcast audience since the 1969 Moon landing. Yet, he deflected responsibility for it entirely. A leader with integrity could be expected to level with the general public about the consequences of prior decisions made, but that’s not the style of U.S. leadership, unfortunately. Shifting blame to someone else is the name of the game and the politicians continue to play America.
In the ad, the President called attention to a phenomenon known as “shrinkflation.” It refers to manufacturers changing their products while trying to maintain relatively stable prices on the shelves rather than just raising prices, which would be too obvious to consumers. Some approaches include cutting down the amount of food contained in the same package, producing the product with cheaper ingredients, or cutting corners in other ways that consumers may not immediately notice—all while keeping prices the same or only slightly higher. Another term, “skimpflation,” refers to the method of keeping the volume or weight of a product the same, but changing the proportions of different ingredients contained within, such as using a starchy filler over protein in a canned soup.
As he squinted into the camera, Biden spoke casually to the audience, saying:
It’s Super Bowl Sunday – if you’re anything like me, you like to be surrounded by a snack or two while watching the big game. You know, when buying snacks for the game, you might’ve noticed one thing, sports drinks bottles are smaller, bag of chips has fewer chips, but they’re still charging us just as much. As an ice cream lover, what makes me the most angry is that ice cream cartons have actually shrunk in size, but not in price. I’ve had enough of what they call “shrinkflation.” It’s a rip-off. Some companies are trying to pull a fast one by shrinking their products little by little and hoping you won’t notice. Give me a break. The American public is tired of getting played for suckers. I’m calling on companies to put a stop to this. Let’s make sure businesses do the right thing now.
Biden made the classic politician’s play in calling out shrinkflation. Of course, it’s the immoral greed of the snack companies that is to blame for you paying more for less! It’s not right that big businesses are pulling the wool over your eyes as you shop for tasty treats! On game day no less!
Senator Elizabeth Warren made the same cry of outrage a couple of weeks ago on X when she said:
Fewer Doritos in your bag.
Fewer Oreos in your box.
Less toilet paper on your roll.
You aren’t imagining it—big corporations really are making you pay the same amount (sometimes more) for less. It’s called “shrinkflation,” and we’ve got to crack down on it.
Warren reiterates the adolescent notion that consumers have a right to the myriad of products on the shelves and nobody can “make them” pay more for less. No one is forcing consumers to buy Doritos. But it's the government that does force you to act against your will. It forces people to pay taxes on special interests and foreign interventions on top of juicing the money supply to service its out-of-control spending.
In a twisted hint to the prudent viewer, the President even wore a small pin in the ad with the American and Ukranian flags joined together—a nod to the many rounds of spending packages that the government has approved for the war in Eastern Europe. That is why Americans are losing the purchasing power of their money. That is the real root of so-called ‘shrinkflation.’
If the producers of snacks and household items that everyday Americans buy simply raised prices on stocked goods, it would likely hurt the current administration’s image. By going the “shrinkflation” route, companies are actually masking the damage that has been done to the U.S. economy by Washington. The impact of gas prices on public sentiment toward the U.S. president is a well-known dynamic.
Businesses would prefer to keep prices the same for a given quantity and quality of their products so that consumers continue to buy from them so that they can continue to make a profit and stay in business. If they can’t make it work, they go out of business, the product disappears from shelves, and the jobs go away.
In a free market, prices should fall as businesses and entrepreneurs sharpen efficiencies and provide better products. When the state spends money through debt, the central bank increasingly resorts to counterfeiting by creating new money to pay for it. A recent Congressional Budget Office projection estimates that U.S. debt will reach $54 trillion in the next decade. Under such conditions, everyone—including businesses—must adapt to the falling value in the currency and it will become increasingly difficult to do so.
Ironically, the president correctly stated that “the American public is tired of getting played for suckers.” But the real immoral greed is that of the political class and Biden was there to run interference for it on Superbowl Sunday.