Fauci and the Fed: America's Technocratic Frauds

Fauci and the Fed: America's Technocratic Frauds

05/18/2021Tho Bishop

This past March, Dr. Anthony Fauci sparred with Dr. Rand Paul over any public health benefit that came from wearing a mask if one had developed immunity to the virus. In dealing with both a democratically elected senator and a medical doctor, Dr. Fauci was dismissive and condescending. He demonstrated the degree to which he held himself higher than the Senate.

Dr. Fauci was also wrong.

A medical expert in Dr. Fauci’s position losing a debate on the science to an ophthalmologist—even one of Dr. Paul’s great reputation—would itself be enough to declare them a fraud.

But Dr. Fauci is much worse than a fraud; he is a technocrat. He doesn’t see himself as simply someone to explain “the science” of the virus but appointed himself a covid czar. He leveraged the corporate press’s personality cult and used it to manipulate the public to behave the way he wanted them to behave.

He prioritized control over presenting the science.

He also has no shame in doing this. He has repeatedly boasted about it to his devoted followers in the media.

For example, this morning, Fauci explained on ABC that his wearing masks indoors was about optics—not science.

I didn’t want to look like I was giving mixed signals but being a fully vaccinated person, the chances of my getting infected in an indoor setting is extremely low.

This is not the first time Fauci has given himself the authority to act beyond "the science." Last December, Fauci started changing his claims about the necessary rates of vaccination to achieve a state of postcovid normality. The original aim of 70 percent was moved as high as 90 percent. As Fauci explained to the New York Times:

When polls said only about half of all Americans would take a vaccine, I was saying herd immunity would take 70 to 75 percent…. Then, when newer surveys said 60 percent or more would take it, I thought, "I can nudge this up a bit," so I went to 80, 85. We need to have some humility here…. We really don’t know what the real number is. I think the real range is somewhere between 70 to 90 percent. But, I'm not going to say 90 percent.

America has subjected itself to a lost year of economically devastating, mentally abusive policies—all based on the authoritarian impulses of a learned ignoramus.

This has also become the norm for Washington’s imperial federal government.

While Fauci’s thirst for the camera has made him an easy target for ridicule, most of the true power of the federal government rests in the hands of similar unelected “experts.” For all the arguments that can be made against democracy, it is in these unelected institutions of power that we have seen the most aggressive expansions of state power in pursuit of the most radical policies.

Take the institution most challenged now by the success of Fauci-ism: the Federal Reserve.

Though he doesn’t make enough television appearances to earn his own progressive prayer candle, Jay Powell has received his own fawning praise from the slice of the corporate press that follows the Fed. Senate Democrats have even begun to push for Biden to keep Powell on board when his term comes up next year.

Outside the Beltway, however, Americans are feeling the impact of inflation. Google searches for “inflation” hit record highs in March, long before the 4.2 percent reported increase in the Consumer Price Index (CPI). Perhaps an American consumer seeing their paycheck buy less and less would be comforted by the fact that inflation is precisely what the Fed has been explicitly calling for.

Of course, the consequences of the Federal Reserve’s unprecedented monetary policy go beyond simply the devaluation of money. The Fed’s low interest rate policy has massively increased risk in the financial system by depriving investors—both large and small—of safe, conservative investment options. Doing so has been great for large corporations, which have seen stock prices soar since 2008, both richly rewarding CEOs and subsidizing attempts to purchase smaller potential competitors. Those Americans who just wanted to simply save money, avoid debt, and avoid the volatility of the stock market have been less lucky.

At least they can look forward to funding the bailouts when the collapse of a stock market bubble ends up designating Facebook a systemically important company.

Even better, the Federal Reserve continues to give itself greater and greater authority to expand its mission far beyond monetary policy, with policy aims such as “greening the financial system.”

These bold and aggressive power grabs come in spite of the fact that the Fed’s own actions have repeatedly demonstrated that it has no idea what it is doing. Examples include not only the inability to identify the financial crisis in 2008 but its failure to reverse quantitative easing (QE)—as it repeatedly claimed it could do—and its repeated inability to forecast economic growth. The Fed has gone from one crisis to another, expanding its power, creating new tools for itself, and without any clear or coherent vision or economic theory.

Just like Fauci and the other parts of America’s technocratic class.

As the Trump era showed, the problem of these unelected policy czars is not solved simply by a presidential election. They are embedded deep within the structure of the federal government. To reign them in, we either need systemic change or pressure from the states.

Ultimately, what forced the Centers for Disease Control and Prevention (CDC) to break itself from the propaganda of Dr. Fauci were the counterexamples offered by Florida and other open states, which were grounded in science rather than a personality cult. While it is easier for a state to nullify public health guidelines than it is to separate a state from America’s central bank, we have seen states like Wyoming and Texas take legislative action to promote alternatives to the Fed.

Hopefully, the example of Dr. Fauci will help kill some of the faith in “policy experts” that government schools spend so much time instilling in the public.

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The Federal Reserve Policies Promote Crony Socialism

21 min agoJames Anthony

Criminals seriously harm people here and there, but to systematically harm people everywhere takes governments.

Organized Predation

The Fed disincentivizes working. It enables banks to create money, lend out the money, and transfer losses to taxpayers. As a result, over time the same nominal amount of pay buys less and less. People work less.

The Fed disincentivizes saving. Its new money reduces the interest earned by people who would save. People save less.

The Fed incentivizes borrowing. People find loans even harder to resist since interest is artificially low, and since payments and principal both are easier to repay after inflation. (On net, this is a bad deal. Loans still extract interest. Also, as elaborated below, the people who gain, on net, from money creation and the resulting lending are governments and cronies. Everyone else loses.)

Producers and customers both succumb. Producers borrow more, make riskier investments, pay more interest, get smaller returns on their investments, and suffer more losses. Customers borrow more, pay more interest, have less to spend on what they want, and get fewer products.

The Fed incentivizes government spending. The Fed buys national-government Treasury bonds, and government people spend this money. Also, the Fed enables banks to create money. This reduces interest rates, making government debts less costly to pay the interest on. Creating money also reduces the real value of the debts’ interest and principal, making government debts progressively get defaulted away. Since interest becomes a smaller consequence and debt becomes a smaller consequence, government people borrow more, charging the debts to future taxpayers, and spend more now.

Producers pay more taxes, so products cost more. Customers pay more taxes, so they have less to spend; and with the products also costlier, they get even-fewer products.

Governments and cronies take more of the value that people create. Everyone else still spends substantial time working—using up substantial portions of their liberty—but takes home less of the value they create.

Organized Corruption

Control of money has always provided opportunities to not add value that customers would choose to buy and to instead take advantage of others. The lure of not adding value and instead just taking other people’s money has always attracted criminals.

The original sin with money has been the fraud of accepting deposits and promising to return them on demand, and then not holding the full deposits in trust and instead turning around and lending out a fraction of the deposits to others.

No banker has perfect foreknowledge, so just as everyone else gets surprised by sudden turns of events, bankers have gotten surprised too. But since government people have let bankers hold in reserve only fractions of the deposits that people have entrusted them with, this sin has produced bank failures. And bank failures have visited the consequences of this action not on the government people themselves nor just on the bankers themselves but also on most all of the bankers’ customers.

The compounding sin with money, once some banks have failed, has been the true greed of the remaining bankers and lenders as a group.

When some banks have failed, the money which has been on their books but not on reserve in their vaults has been destroyed. As a result the remaining amount of money still in use has been less. Customers have had mostly the same needs they had before, but less money to spend.

To keep producing, producers have reduced their product prices, and ultimately reduced their employees’ wages.

Borrowers with existing loans have been saddled with contracts that have required them to make the same nominal payments and to pay off the same nominal balances, even though these nominal amounts have suddenly become far-more costly. For existing borrowers, this has been a sudden loss.

For the remaining bankers and lenders who have still been in business, this has equally been a sudden windfall. They hadn’t originally lent out such large real amounts, and they hadn’t originally contracted to be repaid such large real amounts, and yet they suddenly had gotten the opportunity fall in their laps to collect far more real value than they originally contracted to receive. Bankers and lenders as a group haven’t relieved these debts by renegotiating contracts that would restore the contracts’ original real terms.

Their cronies, the national-government people—who granted them the problematic permission to hold only fractional reserves, the permission that enabled the money supply to suddenly get smaller, making the loan contracts’ real terms suddenly more costly—haven’t rolled back the fractional-reserve privilege that had long ago been unconstitutionally granted to bankers.

The national-government people also haven’t relieved borrowers of the pressure of these unforeseeable sudden losses.

Instead, they have tripled down on their original sin and their compounding sin by also inventing and perpetuating the Fed.

The Fed is a cartel owned by bankers.

When it seems like the Fed does everything it can do to shake down the national government to protect banks, that’s because the Fed does do everything it can do to shake down the national government to protect banks. Because the Fed is a cartel of the banks.

Which means that the present financial system is crony-socialist central planning of money production that has been substituted for what by law are supposed to be our free and voluntary actions to produce and consume all products. Including money.

Free Customers to Choose Moneys, and Free Producers to Produce Moneys

The organized predation and organized corruption that are the Fed are immoral. They are criminally illegal (since they deprive persons of property without due criminal-justice or civil-tort process). And they are not only undesirable but also unnecessary.

A money can be produced, cleared between providers, saved, and lent out without creating it out of thin air and fraudulently making it unavailable on demand.

Gold money can be used without creating it out of thin air, and it will hold its value.

Equity-based money can be used. It would be legal ownership of fractions of businesses, including all their assets. Equity-based money could not be created out of thin air. Over the long run it would not just hold its value but increase in value, as the businesses’ productive assets are used by the businesses’ employees to add more value.

As usual with governments, what’s mandatory is to get the governments out of the way. To get the governments’ monopolistic operations out of the way. Here, to get the national government’s criminal corruption of the law out of the way. This is simple.

TL;DR. Want to end inflation permanently? Want to reclaim financial power as customers? Here’s how.

Two actions are required:

  1. Formally outlaw fractional-reserve banking.
  2. Formally repeal legal-tender laws and the Fed monopoly on money production.

Both actions together are the minimum action required to satisfy the rules in the Constitution. And as centuries of Constitution defiance on money have clearly shown, both requirements need to be made explicit.

And that is all that’s required. Fixed that for you.

Wherever we the people free ourselves from government predations, as customers we drive producers to work out the best solutions themselves. Including the best moneys, clearinghouses, and lending.

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Oops, We Did it Again

Or rather, in the case of Somalia, we never stopped – and we just keep doing it!

As the Biden administration orders U.S. troops to back to Somalia in significant numbers, several things are worth noting in opposition to yet another military response to a faraway crisis of small stakes and absolutely no consequence to Americans.

First, U.S. military and intelligence operatives have been operating in Somalia continually for the past 20 years. Along with their allies in Ethiopia and Kenya, a playbook all too familiar to observers of the concurrent Afghanistan debacle was followed. Arming the warlords, asking no questions and paying no mind, led predictably to the Somalia of today. The warlords took the money, arms, and US-bestowed patina of legitimacy and set to fighting with one another and oppressing the population. Meanwhile, successive human rights abusing central governments, including the present one, enjoyed U.S. backing.

At least, until they didn’t.

Between overthrown governments, civil wars, drone attacks, direct U.S. bombardments, invasions, and the birth of Islamic extremism in the country as a product of US actions, Somalia has been unquestionably among the worst places on earth to be from George W. Bush onward – rivaled only by perhaps Afghanistan or the dystopian nightmare of North Korea.

Further, while successive administrations have been responsible for more or fewer civilian deaths and war crimes in the country since 2001, no doubt in accordance with the levels their national security councils had advised the current situation merited, the policies have been nothing but a disaster for the people living there and are yet another blight on the record of an American establishment that has produced nothing but failures and civilian casualties for twenty years.

Another thing to point out: prior to any of that, the U.S. backed the sadistic dictator of Somalia, Siad Barre. In a familiar Cold War move, principles were sacrificed to geostrategy, and the U.S. backed his brutal regime to the end. In another familiar move, it then backed various factions in the civil war it helped provoke and that has basically carried on to this day.

Lastly, just as in Afghanistan, the only thing that prevents the fall of the corrupt and hated government is U.S. backing. Reading between the lines, the situation for America’s proxies must be bleak if actual American blood is being shoved back on the line again. Mind, this is after twenty years of involvement couldn’t conclude the situation to the hawks’ liking.

As stated in opening, the stakes in Somalia are unimaginably small: whether a corrupt, abusive, and non-service providing central government can defeat a collection of homegrown Islamic fighters, which rose up as a response to the misrule of the U.S.’s chosen favorites, and who eventually pledged allegiance to al-Qaeda in order to open up funding networks through Saudi Arabia.

But never mind the facts – as one of the New York Times’ resident hawks, Charlie Savage, approvingly observed in response to the Biden administration’s announcement: the decision represented a resumption of the “open-ended” American commitment.

How much has this cost? How much will it cost in the future?

No one knows – and certainly, when it comes to the corporate media, no one even cares to ask.

One thing is certain though: between the decades of war and the famines it helped induce, the cost can’t simply be weighed in dollars. Because for Washington it’s just a matter of turning on the printing press – at least for now.

Anyone interested in reading about the details of the extent of U.S. involvement in Somalia since Ronald Reagan can find it in Scott Horton’s Enough Already: Time to End the War on Terror.

Everyone else should complain loudly as midterms are right around the corner.

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The Real Dual Mandate

05/25/2022Robert Aro

Members of the Federal Reserve often discuss their dual mandate of promoting both maximum employment and price stability. The St. Louis Fed even provides a picture to illustrate the alleged balancing act to get the economy functioning properly:

According to the seesaw infographic above and the economic myth known as the Phillips Curve, there is a perpetual trade-off between (price) inflation and unemployment.

However, in the article: Phillips Curve: Read the Fine Print, I share the Fed’s data, referred to as a “cloud of points,” to show no correlation between inflation and unemployment existed in the last 50 years. The origin of the arbitrary 2% inflation target, as well as various problems with inflation data have also been explored. Notably, countless decades of Austrian economists have maintained that the Fed’s doctrine has a detrimental impact on society.

The necessity of maintaining the dual mandate simply doesn’t add up. If the Fed cannot control inflation, as it claims, and if inflation is not actually tied to employment, then either the Fed is pursuing a known falsehood or it doesn’t understand the false premise it has been assigned.

If this dual mandate is not feasible, then what, if any, is the Fed’s “real” dual mandate?

Keeping interest rates low and asset prices high sounds more achievable. They’d never officially say it, understandably so, but in this arena the Fed has excelled far better than anywhere else. Consider that since the early ‘80’s interest rates have only trended down due to the Fed’s policies. See Federal Funds Effective Rate below:

Low rates come with benefits such as cheap and easily acquired debt, facilitating the growing national debt. Easy money kept rates low, boosting asset prices like stocks, bonds and real estate.

Unlike the success the central bank found in rate suppression and asset bubble creation, the Fed failed miserably at maintaining price stability of the U.S. dollar. By definition, there is nothing stable about a currency devaluing year over year with the potential of falling into oblivion. See Purchasing Power of the Consumer Dollar in U.S. City Average below (Indexed 1913 = 100):

While inflation and unemployment matter to society, we should question just how much they mean to the Fed. A new narrative can always be spun to justify whichever inflation rate or employment number the Fed desires. Whether some inflation is good or transitory, or whether employment and inflation targets should be changed to allow the Fed to better meet its objectives, there will always be a reason to justify the Fed’s actions. Inherent in the dual mandate is a grave falsehood which few economists are willing to pinpoint in order to warn the public. Yet, a crushing interest rate on an unmanageable debt, plus a prolonged downturn in the stock market are two things the Fed, nor the people, will tolerate for long.

On last week’s Human Action Podcast, I mentioned that I would be hard pressed to believe the Fed was able to tighten into October of this year. It’s difficult to imagine a near-future where the Fed’s fund rate is over 2%, and where rates on home mortgages and US debt are at levels a few multiples higher. Then consider how poorly the stock market has performed from just the anticipation of the Fed’s tightening. To think the stock market would change its downward spiral after $350 billion is removed from the balance sheet in just a few months from now sounds more naive than optimistic.

History and a look at the world today indicates that “high” inflation eventually leading to a currency crisis is the norm, not the exception. That some years are perceived to be more ruinous to dollar purchasing power than others misses the long term trend, or inevitable conclusion of a debt based monetary system. No matter how painful inflation becomes, and regardless of what job data reads, it’s even more difficult to see a future where the Fed does nothing. In due time, they will rescue the stock market through inflating the money supply, lowering rates and letting all asset bubbles continue once again; no matter the consequence. 

Stranger things have happened, but we are all forced to place our bets. We are all stock market speculators now.

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Bribing Seniors to Volunteer

Donating time and/or resources is a virtuous activity. Parishioners volunteer for church. Parents help with their kids’ school functions. Citizens clean up parks.

Some state and/or local governments have monetized this by offering volunteering seniors a break on their property taxes. While total elimination of this odious tax is the ultimate goal, any reduction of it in the interim will do. 

There are a few problems with such carve-outs though.

One thing that enables us to volunteer is our prosperity. Despite declarations by some politicos, things are shaky right now. In addition to the eyewatering price of gas, tanking stock markets, and other residual effects of government lockdowns, we’re experiencing continued labor shortages.

These discounts exacerbate that problem.

In a recent interview, one councilwoman here in San Antonio asserted that their plan is aimed at those “already” volunteering. “They may as well get credit,” she said. The official policy proposal implies otherwise

Citing “isolation and loneliness” studies, it points to the benefits of getting seniors out of the house, how it can stem cognitive decline, among other negative effects associated with aging. 

As a consequence, they’re lured away from the private sector, where seniors like my father feel they “still have more to give.” 

Regardless of property tax credits’ respective sizes, seniors could still possibly lose their home, just like the rest of us, if they’re unable to pay the balance. Thousands are already more than two years late ponying up to the taxman. 

It’s distinctly possible that municipalities that seek to be an “’employer of choice’” fail to see this link. It points to an underlying concern: the disconnectedness that exists between governments and citizens.

When the vast majority of staff and elected representatives favor a more active government, it’s no surprise to see official documents tout that tax “revenues performed well,” even though they weren’t earned. Respect for individuals and independent wealth-creators takes a backseat. 

They can dictate “the maximum number of participants and … reduction (they) can receive,” protecting their own “so as to not adversely impact … operations.”

The media add to this chorus by characterizing exemption savings to taxpayers as what the “city loses.”

Property tax systems essentially amount to little more than social engineering tools. If programs like these “work well,” governments reserve the power to determine “other populations that may be vulnerable.” 

As public appraisers themselves point out, property taxes are also an instrument for cronyism, given the inequitable favoritism shown to commercial property.

The only time politicians extend such favor to homeowners is when their respective states compel them to. Ironically, sometimes it’s the state itself that permits levying this tax in the first place. 

Cracking that nut is another task altogether.

For the time being, to paraphrase Chris Rock, just because a municipality can do it, doesn’t mean it should. Alas, we keep getting the Will Smith smackdown. Political openings do however, occasionally present themselves. 

Politicians like to say that their “vote is based on the needs of (their) constituents.” Too often that’s used to justify taking from some to give to others. Paid sick leave laws come to mind. 

When they extend this “belie(f) in representative government” to pleas they’re hearing for “property tax relief,” voters should pounce. 

These flexible principles, and any newfound religion (from “meaningless” savings of a 5% exemption, to wanting to “(go) big”), should be exploited to abolish this antiquated tax scheme for good.

People are more generous when they’re more prosperous. Government bribes need not apply.

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How the Old Right Vindicates Murray Rothbard

05/24/2022Aaron Cummings

As geopolitical tension reaches a historic peak in recent memory, it reveals some of the earliest lore from 20th century libertarian thinkers and the conservatism that flourished at the time.

Ludwig Von Mises was establishing his ideas during the distressing times of WWII. Rothbard was also analyzing the Great Depression with economic concerns rather than political ones.

The Wall Street Journal generally has been supportive of libertarians in the past, but their Old Right allies have been recently critiqued for holding the same views. Among many others, J. Edgar Hoover is cited as a pivotal figure for the Cold War, while Rothbard highlights his populist approach to politics. This was among the most effective examples of the era and those who were receptive to the writings of Russell Kirk or the campaign of Huey Long had a space to call their own.

Warren G Harding and Calvin Coolidge represent the Old Right, which is free from the clutches of the postwar era and best identified by Robert Taft. Many of his quotes resemble a GOP platform that are rarely promoted publicly:

“Our armament program should be based on defending the United States and not defending democracy throughout the world.”

The momentum of the Old Right is often juxtaposed against the foreign policy decisions of WWII. Not only was it a humanitarian endeavor, many 20th century thinkers saw the nonintervention stance as a figment of the past that didn’t adapt to international threats. The Old Right emphasizes that the anti war sentiment is a timeless one and not excused based on emerging ideologies. The libertarians continue that legacy to this day by focusing on national topics over intervention.

Many of these views are not represented in modern campaigns. However, Ron Paul championed them on the national stage with his presidential run. The nonintervention consensus was a key distinction between Donald Trump and the 17 Republicans he ran against. The historic significance around ending the War in Afghanistan harkens back to Taft’s America First platform.

The FDR era was deemed as a watershed moment that, “won the enmity of conservatives.” Like the aftermath of WWII, the right would continue to respond based on the most influential aspects of The New Deal. Its revolutionary impact on the nation left conservatives trying to outcompete it with economic substitutes and cultural trends. The most visible example of Roosevelt’s impact was the continuation of Wilsonian foreign policy. Despite his reputation, Eisenhower was much more in tune with Taft’s hesitation on world affairs and that became a rarity after the FDR presidency.

Nostalgia has been a key asset to postwar conservatism, defined by its sympathies to Wilsonian foreign policy and Cold War framework. The fiscal priorities that were expected from both parties were shattered by The New Deal. Despite the Great Depression remaining in the collective psyche, it was popular to fund any projects that benefited financiers and supported anti-communism. This trend continued beyond the destruction of the Soviet Union and while this helped libertarians in terms of rhetoric, it was a short-term trade off that didn’t accommodate their anti-war stance. Rothbard outlined that a shift in one aspect of policy would not address all political concerns. Instead, there lies a systematic task ahead of conservatives and libertarians alike. He prescribes a new outlook on future platforms by confronting the policies of the past and writes:

We shall break the clock of the New Deal. We shall break the clock of Woodrow Wilson's New Freedom and perpetual war. We shall repeal the 20th century.

Donald Trump was a breakaway from that trend and his legacy is part of an inter-generational history of populism. Contrasting with the climate of 1920s conservatism, the concerns of the prewar right have deeper roots outside their respective eras. As these populist strains spread through Europe, it is clear that the Old Right has revitalized energy that thrives beyond economic reform. It was not a platform exclusive to the early 20th century, since many policymakers are moving away from neoconservatism and embracing the populist approach.

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End the Incorporation Doctrine

05/24/2022Ryan McMaken

Since the Civil War, perhaps no development in American law or politics has done more to expand the de jure power of the federal government than the Incorporation Doctrine. This legal doctrine took a Bill of Rights designed to limit federal power over the states and did exactly the opposite: it greatly expanded the role of the federal government in potentially regulating every aspect of daily life within the states themselves. 

So what is the Incorporation Doctrine?

Stephan Kinsella defines it:

The meaning of the Fourteenth Amendment, “ratified” in 1868, has been debated for about 140 years now–and increasingly so in the last 90 or so years as the “Due Process” clause of that Amendment was used as a source of federal power over the states, via the “incorporation doctrine,” under which many of the rights implicit in the first 8 amendments of the Bill of Rights have been “incorporated” into the Due Process clause and thereby “applied” to the states.

Then concludes: 

I come to my main point. If it is true that, at best, the Fourteenth Amendment does not clearly grant to the feds a host of new powers–and even if there are arguments for it (as Thomas himself leans toward), it is clear that there is no such clear grant–then it does not grant them. Just as we interpret serious agreements strictly, and against the drafter; just as we require formalities and writings for serious matters (such as living wills, sales of real estate, and so on), so a wide grant of power to the central state, in the context of a decentralist Constitution where the states historically jealously guarded their sovereignty, must be clear and expressly written to take effect. In other words, the central state should not be allowed–as a matter of constitutional or libertarian norms–to legitimately shift the balance of power away from the states, and toward itself, by vague and ambiguous wording that it itself drafted.

There is no historical or legal basis for the Doctrine in the actual texts of the Constitution, but as a matter of limiting state power, the Doctrine must also be opposed on practical grounds. After all, it is the Incorporation Doctrine which has provided legal scholars and politicians a pretext under which to claim that the federal government should be the last word in virtually every legal conflict in America, from school prayer, to local taxes, to gun ownership. One even often encounters self-identified laissez-faire libertarians who completely accept that the federal courts should intervene in local city council meetings to decide the propriety of local eminent domain laws. Lew Rockwell has explained just how wrong this approach is: 

 [I]t would be no victory for your liberty if, for example, the Chinese government assumed jurisdiction over your downtown streets in order to liberate them from zoning ordinances. Zoning violates property rights, but imperialism violates the right of a people to govern themselves. The Chinese government lacks both jurisdiction and moral standing to intervene. What goes for the Chinese government goes for any distant government that presumes control over government closer to home.

How is the libertarian to choose when there is a conflict between the demands of liberty and strictures against empire? The answer is not always easy, but experience and the whole intellectual history of liberalism suggest that decentralized government is most compatible with long-run concerns for liberty. This is why all the founders were attached to the idea of federalism: that the states within the union were the primary governing units, and the Bill of Rights was to protect both individuals and the states from impositions by the central government—even when liberty is invoked as a justification. 

Just so that we are clear on this last point: the purpose of the Bill of Rights was to state very clearly and plainly what the Federal Government may not do. That's why they were attached to the Constitution. The states, under the influence of skeptics of the Constitution's limits on the central power, insisted that the restrictions on the government be spelled out. The Bill of Rights did not provide a mandate for what the Federal Government may do. You can argue all you want about the 14th amendment and due process. But a reading that says it magically transforms the whole Bill of Rights to mean the exact opposite of its original intent is pure fantasy.

At the heart of all this is the fact that a federal government that has the power and authority to decide what is "constitutional" in every corner of the empire also has the power to force state and local governments to submit to federal laws. 

In other words, the Incorporation Doctrine largely abolished the United States as a confederation of independent states, and moves it far down the road toward becoming a unitary consolidated government. The more practical and wise classical liberals of the eighteenth and nineteenth centuries understood this and opposed the consolidation of American law under a national government. Mike Maharrey explains why

I think centralizing power is always a net loss for liberty. So did the founding generation. This is why the framers of the Constitution emphatically rejected a proposal to give the federal government veto power over state laws. It’s also why the first Congress rejected applying some provisions of the Bill of Rights to the states.

When I say this, it tends to confuse people, because, in today’s political system, the federal government vetoes state laws all the time through federal courts. And virtually every time somebody perceives that a state government has violated their rights, they run straight to federal courts to stop the offending state action.

Despite my protests, the application of the federal Bill of Rights to the states has become a key feature of the American political system.

As I said, I believe this will ultimately prove to be a net loss for liberty. When you turn to federal courts to protect your liberty from state actions, you’re playing a game of Russian roulette with five bullets loaded into your six-shooter. Despite a few minor victories here and there, federal courts almost always come out with opinions that expand government power, not protect individual liberty. And these expansions of government power become the law of the land across the entire United States. In a decentralized system, bad state court decisions only impact the people in that one state.

The risk isn’t worth the reward.

Essentially, the Incorporation Doctrine renders the Tenth Amendment null and void. We can have a functioning Tenth Amendment or we can have an Incorporation Doctrine. But not both. 

It's also why here at mises.org, we are explicitly decentralist and opposed to applying the Bill of Rights to the state governments. It's a good thing when the state constitutions have their own bills of rights, naturally. Most states do have them, and most of them are quite good. But it is both dangerous and illiberal to insist that the federal government meddle in state and local governments to change state laws and dictate to states what is "constitutional." That was never the intent of the American constitutional system, and the very idea of incorporation destroys the original intent of the Bill of Rights, which was to limit federal law. 

Rather, the idea of the American confederation was to provide protections for liberty through competition among states, and through balancing state power against federal power. The Incorporation Doctrine, however, has greatly tipped the legal scales in favor of federal power and makes the United States far more of a consolidated state than was ever intended. If we're serious about expanding laissez-faire and true self-determination in the United States, the Incorporation Doctrine must be abolished. 

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Biden: A Proxy War with Russia Is Not Enough. We Must Also Seek War with China

If you need any more evidence that U.S. foreign policy is completely out of control, look no further than Commander-in-Chief Biden’s latest pronouncements regarding Taiwan – which is not a country.

That’s right. Not according to the United Nations or the United States government.

In fact, it is acknowledged by both that Taiwan is part of China.

Still, since its decision in the 1940s to begin seriously intervening on the side of the corrupt but nominally republican government of Chiang Kai-Shekin his decade-long struggle for power against Mao and his communist peasant guerillas, it has been U.S. policy to prevent the conclusion of the war by communist Beijing reunifying Taiwan with the mainland.

From Eisenhower to Clinton, any saber-rattling by Beijing was met with the same response: a U.S. carrier sailing through the narrow waterway separating the island(s) from the mainland.

After it recognized Beijing’s legitimacy in the 1970s, the U.S. ripped up its prior defense guarantee to the island, replacing it with security assurances akin to those received by Ukraine via the Budapest Memorandum. Officially, the U.S. position was “strategic ambiguity.” That is, it would not say one way or the other whether or not it would intervene militarily in the event of a mainland attempt to retake the island.

The tactic, maintained through six administrations and four decades, has now been thrown out the window.

After hinting this past year that he favored military intervention, Biden has now declared openly that the U.S. would militarily intervene in the event of an attack by Beijing

This amounts to a de facto preemptive declaration of war on China whenever Taipei decides.

While one is tempted to say the Senate ought to be consulted and their assent given, so mad for war is Washington these days the administration would no doubt get it.


The strategy of moving to contain China, a slow creep these past years, is now being escalated dramatically.

Other economic news announced by the White House the same day as Biden’s unilateral decree gives one to understand the Biden administration will not be risking Congress’ interference in U.S. grand strategy – which apparently amounts to needlessly escalating the single most dangerous point of transitional friction between great powers in the world.

Seeing the need to economically as well as military contain China, the Obama administration worked hard to negotiate the TPP: the largest free trade zone in the world for the next century, with the rules written largely by Washington, it could be used to constrain Beijing’s growing economic might.

When then-President Donald Trump tore up the TPP, China hawks were incredulous: after all, how could someone who wanted to get tough with China do something so obviously counterproductive?

As Thomas Freidman at the New York Times fumed at the time: why go it alone when you could gang up on Beijing?

But no matter.

With the announcement of the new Indo-Pacific Economic Framework the China hawks and geo-economic strategists have gotten the beginnings of what they wanted. With the war in Ukraine as a backdrop, they will no doubt feel confident they can get the rest.

Most troubling in all of this is whether or not it is even Joe Biden, Jake Sullivan & Co. making these decisions at all. Remember, Obama admitted to being led by the hand, while Trump was beaten into line by Russiagate and a thousand lies and leaks from the departments of State, Defense, and the National Security apparatus. How much of this was Biden being sat down and told what was happening?

Afterall, as the Wall Street Journal broke this fall: Joe Biden was informed upon taking office that the U.S. military had inserted special operators into Taiwan as Trump was leaving office.

It may very well be, as Stephen Walt wrote in his book The Hell of Good Intentions: American Foreign Policy and the Decline of U.S. Primacy, “when it comes to foreign policy, the President is less decider than presider.”

But whether it is Biden or the deep state, the future looks deeply troubling.

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What to Do with War Criminals, Foreign and Domestic

By now everyone has heard or seen it, the thirty-second video clip having been destined to go viral the moment it happened.

In an understandably rare public speaking event at the George W. Bush Institute at Southern Methodist University, the 43 president made a Freudian slip of almost unimaginable proportions: he admitted to being a war criminal.

The moment came at the end of an extended condemnation of Vladimir Putin, his regime, and his war in Ukraine. It was in his condemnation of the last of these that the younger Bush familiarly stumbled, saying out loud what critics of the Second Iraq War have said all along: criticizing the systemized stealing of elections and repression of critics, Bush indicated his belief that it was this system which had led to “the decision of one man to launch a wholly unjustified and brutal invasion of Iraq.”

Dead silence.

“I mean, of Ukraine,” Bush corrected himself.

He gave a laugh and so did the audience.

Bush continued: “Iraq too…Anyway.”

While some in the hypocritical corporate media were quick to express their own disapprobation and condemnation, this in the name of at a war they had screamed for and called traitors everyone who didn’t support it, the rest quietly observed Bush’s humble willingness, after 20 years, to admit that he had been responsible for the unnecessary and criminal deaths of thousands of American soldiers and hundreds of thousands—if not millions—of Iraqis. Together with his disastrous and unnecessary invasion and occupation of Afghanistan—we now know from Donald Rumsfeld’s own papers that the Taliban regime had offered to surrender Osama and itself within weeks of the initial US special operations beginning—the body count Bush Jr. is responsible for is likely some millions, to say nothing of the tens of millions of refugees.


And that is exactly how it looks.

In a country where the politicians are at least nominally carrying out the will of the people, they get to casually mention they destroyed the Middle East under false pretenses to a response of chuckles and collective ethos of “we don’t really care.”

Because it doesn’t matter to them, the political elites. And frankly, to any objective observer it didn’t and doesn’t seem to matter to the great majority of Americans. The American public would have let the war in Afghanistan go on forever, never mentioning the war in their pre-election priorities, and the corporate media collectively going months without even mentioning it. As for Iraq War Two, all the American public really objected to were the American casualties, though this could be attributable to the fact that the corporate media had obediently conjoined the two under the black and white rubric of the War on Terror—which was always an obvious lie, since Sadaam hated and killed every Islamist and Jihadi he could get his hands on.

This isn’t world leadership, not worthy leadership: it is criminal, and Bush has finally made a public acknowledgement of it. However late, however inadequate, it should do.

The path now is clear: charge and hand him over the International Criminal Court at the Hague. That is where war criminals belong - and if we're being completely honest George W. Bush isn't the only living US president of recent memory who should go. 

Whatever else it might do—from encouraging Russians to throw Putin in the docket, to keeping Xi patient over Taiwan—it would at least begin the process of trying to account for the great stain upon the nation George W. Bush and the Congresses that abetted him perpetrated during their time in office.

Of course, many of those who voted for the war are still in Congress—or like perma-hawk Hillary Clinton went on to be Secretary of State and the Democratic nominee for president.

And while Bush gave the order and so should take the blame, no one believes for a second that it wasn’t the decision of his advisors, especially his vice president, Dick Cheney. The fact that those same advisors suffered no great personal loss for their deceptions and miscalculations, but sit comfortably in think tanks, or appear on nightly television news broadcasts to tell us how to fix the current crop of messes their policies created in the first place, is a continuing reminder of the failure of the American people to fulfill what democracy says is its most basic function: public accountability.

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Our Economy Needs a Good Dose of Customer-Driven Deflation

05/21/2022James Anthony

Inflation is created by governments, so the solution to inflation is political. Governments and cronies falsely claim that inflation is good or even necessary, when it’s neither. It’s just best for elites. Deflation, on the other hand, comes naturally when customers are in control, and this customer-driven deflation brings sustainable investment and increased productivity. This is best for everyone.

Government-Created Inflation

Price “stability” (stagnation) or price inflation is caused by inflation of the quantity of government money by government people and cronies.

When money is created by government people, they borrow by creating Treasury bonds. The value that the Treasury people borrow this way is taken and spent right away by politicians to favor cronies. In return, cronies contribute to politicians’ campaigns and get their favored politicians elected.

The interest on the Treasury bonds is paid by taxpayers. The principal of the Treasury bonds keeps getting rolled over into new Treasury bonds and never gets paid back. The value of this principal, along with the value of all other holdings that are denominated in dollars, eventually gets driven to near zero by inflating endlessly. The resulting inflation losses are borne by everyone who uses dollars.

When money is created by government-crony banks, they simultaneously create loan money and loan liabilities, and they loan the money to producers and customers. The fact that loans are easily available sends a false signal to producers that customers have saved money and will spend it later if producers build better processes and products, so producers make investments.

As producers and other borrowers pay back the principal on their loans, the crony banks need to eliminate their liability for this money they created, so as this created money gets repaid, the crony banks destroy it. When producers’ investments come to fruition and the resulting better products are offered for sale, the savings that customers would use to buy these products aren’t there. Such savings never were there. Because of this, some portion of producers’ investments turns out to have been malinvestment. Malinvestment compounds until some producers no longer generate the required interest payments and no longer get propped up by further government-granted privileges or bailouts.

Through money creation these producers’ plants were created, and through money destruction these producers are destroyed. Through this destruction, malinvestment generates crises. In crises as of late, cronies create even-more inflation, which is crisis inflation.

Government-Created Deflation

In crises in earlier times—which also were initiated by inflation of the quantity of money by government people and cronies—crisis deflation of prices has resulted from further actions by government people and cronies.

In exercising their government-granted money-creation privileges, crony banks have circulated money without holding enough reserves to cover all deposits they promise to produce on demand and to cover all bad loans. This system design is not only unconstitutional but also unstable.

Borrowers are subject to competition, and they make mistakes, and they suffer disasters. Borrowers haven’t been able to insure against every problem. Some loans have failed.

In times of such failures, depositors have understandably not trusted that crony banks have had enough reserves to stay open. Some depositors have tried to withdraw their money, creating runs on these banks. Some banks have gone bankrupt. When they have, all the assets they have listed on paper but haven’t backed by reserves have been suddenly destroyed.

This destruction of paper wealth has deflated the total quantity of money. For products to sell, producers have then needed to reduce their prices. This has deflated product prices. When product prices have been deflated, either labor prices (wages) have had to be deflated or jobs have been destroyed. With fewer dollars being used to buy and sell the same products at the same rates, each dollar has become worth more.

In general, the falling nominal wages have ended up sufficient to cover the falling product prices. But for borrowers who have had existing loans, their falling nominal wages haven’t ended up sufficient to cover their unchanged nominal loan payments and principal.

For borrowers, this midstream change in the real values of their loan payments and principal has been a substantial hardship that they didn’t create. For cronies, this change has been a substantial windfall that they, empowered by the government people, did create.

The government people, though, despite having been the root cause of this crisis deflation, haven’t required their cronies to discount the nominal loan payments and principal to make the real values match the real values that both parties had contracted to exchange.

Every borrower who hasn’t been relieved by bankers acting on their own and who hasn’t been relieved by government people restoring the original real terms has been squeezed hard. Some, and oftentimes many, have failed. These failures have left more banks with unanticipated losses, leading depositors to make unanticipated withdrawals, leaving more banks destroyed, multiplying losses much-more widely.

Crisis deflation has enabled government people to greatly ratchet up government. The 2.5-year panic of October 1839 through March 1842 ended the initially small-government Democrats’ plan to systematically greatly-limit government using three presidents over 24 years, destroying that plan after just 12 years. The 1.4‑year recession of January 1893 through June 1894 eliminated the last small-government major party by transforming the Democrats into a big-government party.

Customer-Driven Deflation

Deflation of prices can instead be achieved by keeping the quantity of money constant and leaving individual producers free to increase their productivity. Productivity increases come naturally when savers, investors, producers, and customers act freely.

Savers store up past value-added to be spent later. Saving makes investments sustainable, because when better products are produced by this investment and these loans are paid back, this earned-and-saved money will be available to spend on these products. Saving also increases the sustainable investment and learning and innovation that increase productivity, so the same quantity of money buys more and better products.

Changing over from the current inflationary regime will be simple. All that’s needed is to stop granting crony banks the unconstitutional privilege to use fractional reserves, and to transform crony fractional-reserve banks into value-adding full-reserve banks, with a few simple actions:

  • Repeal banks’ privilege to hold fractional reserves.
  • Create and transfer to banks the quantity of money needed to back all current deposits with full reserves.
  • Transfer ownership of all bank assets to mutual funds. (Transferring ownership from the current owners is appropriate because the current owners are cronies who are accepting the banks’ crony privileges.)
  • Distribute the same fraction of shares in these mutual funds to every citizen. (Some people have had much value taken from them. Other people have been stopped from adding much or any value in the first place. This dispensation provides a simple, reasonable path forward.)

Repeal won’t require government people to administer new scope by promulgating new programs. After these one-time transfers of money and ownership, government people will be required to do nothing.

The Fed was government-spawned to address government-caused panics. But once banks are required to hold in reserve all the money they’re required to pay out on demand, these panics will be fully prevented with no added controls and no accompanying variation, error, and risk.

Savers, investors, producers, and customers will no longer have to readjust their choices in response to the Fed’s every move, in addition to readjusting their choices in response to all the other, smaller changes around them. Savers’, investors’, producers’, and customers’ choices will be more accurate and optimal.

Customers, Freely-Competing Producers, and Voters Unite!

So why haven’t we gotten the government people to make these simple changes before? When the government people make these changes, all the built-up malinvestment won’t be sustainable and must fail.

For the entrenched government people and cronies, such a transition has been a genuine fight to the death of their longstanding way of life. Their unearned advantages over us would end. The cronies’ malinvestments would fail and the failed businesses would be destroyed. To block such change, these elites have constantly pushed out their narratives using every channel they control: academia, most media, and supermajorities of politicians.

But now we know what’s wrong and we know what to do about it. This time when the built-up malinvestment fails, people will again do what people usually do in uncertain times: they will start saving more. This time, though, their savings won’t be undercut by government and crony money-creation that unsustainably lowers interest rates, so this time people will keep saving more. Producers will sustainably create new jobs. Workers will choose those jobs.

What will determine the duration of this initial transition will be the durations of these overlapping initial changes to saving more, creating new jobs, and moving to new jobs. These initial new jobs can be created and filled surprisingly quickly, once enough producers start working to use this transition to their best advantage.

All recoveries’ delays and rates are determined by producers’ choices. In this recovery, producers won’t be awash in inflated money, but producers will be keenly aware of the dawning of a free, new regime. Once government actions are changed for the better, this brings good results that are politically popular, and this popularity helps hold these changes in place.

Opportunities will be everywhere; first-mover advantages will beckon. Like producers did after World War II, producers will move fast. Ongoing development of still-better jobs will proceed at a furious pace.

Price stagnation or price inflation is evidence that governments and cronies are grabbing advantages over us. Crisis deflation in years past was evidence that governments and cronies were taking advantage of us. Customer-driven deflation has been, and will be, evidence that the playing field is level and that customers are in control.

Customer-driven deflation is the economic way that we live better. The best time to get started at living better is always right now.

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Axel Leijonhufvud RIP, 1933–2022

05/20/2022Judy Thommesen

It is with a sad heart that we note the passing of Axel Leijonhufvud on May 2. He wasn't an Austrian (but rather, as a good Swede, a Wicksellian), nor did he like pigeonholes, but he leaves a large legacy that is relevant to the Austrian school. He, much like Roger Garrison, knew more about what Keynes said than most any other scholar, past or present. His dissertation, On Keynesian Economics and the Economics of Keynes, argued that Keynes's General Theory didn't actually deal with sticky wages and prices, but instead with intertemporal coordination failures. He was more interested in out-of-equilibrium processes than in mathematical models of equilibrium, and this led to his advising some of the former republics of the Soviet Union (notably, Kazakhstan) on how to transition to a market economy. He was a gentleman, and a true friend to those who knew him. He will be missed.

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