The Fed Does 60 Minutes

The Fed Does 60 Minutes

05/21/2020Robert Aro

One of the most powerful men in the world, Chairman of the Federal Reserve Jerome Powell, appeared on 60 Minutes over the weekend. The interview did not mention Austrian economics, a return to the gold standard, or a new laissez-faire stance by the Fed. But there are some thought-provoking sound bites.

When asked if the Fed had simply flooded the system with money, Powell responded, “Yes. We did.” When asked where the money came from, he replied:

We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury bills or bonds for other government-guaranteed securities. And that actually increases the money supply.

Although true (and completely ludicrous) it’s nothing new, as central bankers seem to have no problem supporting inflationism. However, his follow-up sentence was patently false:

We also print actual currency and we distribute that through the Federal Reserve banks.

It is in fact the US Treasury that prints every Federal Reserve note and gives it to the Fed, which then distributes to banks. Why does the world even need the Federal Reserve? And why doesn’t the US Treasury cut out the middleman and print its own currency? The interview continued with the usual fawning over central bankers. Scott Pelley couldn’t help mention how:

Some of the best economic analysts in the world report to you.

One can only wonder how many Austrian economists work at the Fed and what types of analysis could be provided when analyzing trillions of dollars of “stimulus” required to fight a “liquidity crisis.”

Assurances to the market and hopes for future debtors to the Fed were also included:

I will say that we're not out of ammunition by a long shot. No, there's really no limit to what we can do with these lending programs.

Is this not the most alluring trait of money created out of thin air and backed by nothing? Having no limit on the amount which can be generated? Most of the Fed facilities haven’t even opened up yet, and Congress is already cooking up another trillion-dollar spending bill. We can only guess how much money will be “printed” by the time the crisis is over. If the Fed’s balance sheet doubled by this time next year, would anyone really be surprised?

Oddly enough, the chairman mentioned something that was entirely honest:

We don't have oversight over Congress. Quite the reverse, actually. We're a creature of Congress. And they have oversight over us.

Congress created the Fed. Contrary to what we’ve been told, the it cannot save the world by creating more money. It hasn’t worked before, and it won’t work now. In terms of oversight, if Congress wants more transparency, it can simply demand it, repealing any privacy that the Fed has. America survives not because of the Fed, but despite it. Just as an act of Congress created it, an act of Congress can end the Fed.

When commenting, please post a concise, civil, and informative comment. Full comment policy here

Will Special Interests Allow America’s "Longest War" to Finally End?

05/04/2021Ron Paul

Even if “won,” endless wars like our 20 year assault on Afghanistan would not benefit our actual national interest in the slightest. So why do these wars continue endlessly? Because they are so profitable to powerful and well-connected special interests. In fact, the worst news possible for the Beltway military contractor/think tank complex would be that the United States actually won a war. That would signal the end of the welfare-for-the-rich gravy train.

In contrast to the end of declared wars, like World War II when the entire country rejoiced at the return home of soldiers where they belonged, an end to any of Washington’s global military deployments would result in wailing and gnashing of the teeth among the military-industrial complex which gets rich from other people’s misery and sacrifice.

Would a single American feel less safe if we brought home our thousands of troops currently bombing and shooting at Africans?

As Orwell famously said, “the war is not meant to be won, it is meant to be continuous.” Nowhere is this more true than among those whose living depends on the US military machine constantly bombing people overseas.

How many Americans, if asked, could answer the question, “why have we been bombing Afghanistan for an entire generation?” The Taliban never attacked the United States and Osama bin Laden, who temporarily called Afghanistan his home, is long dead and gone. The longest war in US history has dragged on because … it has just dragged on.

So why did we stay? As neocons like Max Boot tell it, we are still bombing and killing Afghans so that Afghan girls can go to school. It’s a pretty flimsy and cynical explanation. My guess is that if asked, most Afghan girls would prefer to not have their country bombed.

Indeed, war has made the Beltway bomb factories and think tanks rich. As Brown University’s Cost of War Project has detailed, the US has wasted $2.26 trillion on a generation of war on Afghanistan. Much of this money has been spent, according to the US government’s own Special Inspector General for Afghanistan Reconstruction, on useless “nation-building” exercises that have built nothing at all. Gold-plated roads to nowhere. Aircraft that cannot perform their intended functions but that have enriched contractors and lobbyists.

President Biden has announced that the US military would be out of Afghanistan by the 20th anniversary of the attacks of 9/11. But as always, the devil is in the details. It appears that US special forces, CIA paramilitaries, and the private contractors who have taken an increasing role in fighting Washington’s wars, will remain in-country. Bombing Afghans so that Max Boot and his neocons can pat themselves on the back.

But the fact is this: Afghanistan was a disaster for the United States. Only the corrupt benefitted from this 20 year highway robbery. Will we learn a lesson from wasting trillions and killing hundreds of thousands? It is not likely. But there will be an accounting. The piper will be paid. Printing mountains of money to pay the corrupt war profiteers will soon leave the working and middle classes in dire straits. It is up to non-interventionists like us to explain to them exactly who has robbed them of their future.

Reprinted with permission.

When commenting, please post a concise, civil, and informative comment. Full comment policy here

Cops Beat Up an Old Lady and Then Laughed about It. Where Were the "Good Cops"?

05/04/2021Ryan McMaken

Last month, I mentioned the case of Karen Garner, a seventy-three-year-old, eighty-pound woman with dementia who was beaten by police for “resisting” arrest in June 2020. At the time, Garner was allegedly guilty of almost stealing thirteen dollars' worth of merchandise at Walmart after apparently forgetting to pay. When confronted by store workers, Garner attempted to pay but was thrown out of the store by Walmart staff.

Garner, who was apparently confused at the time of arrest, was soon confronted by Loveland, Colorado, police officer Austin Hopp while Garner slowly walked home. Within seconds—with the help of fellow officer Daria Jalali—Hopp threw the elderly, disabled woman to the ground, breaking her arm, and dislocated her shoulder.

The officers then threw Garner in a jail cell, denying her any medical treatment, for six hours.

But the story doesn’t end there.

Lest anyone think these officers made a well-meaning error in judgment or were unaware of Garner’s injuries, we can turn to video recorded at the Loveland Police Department facility following Garner’s arrest.

Shortly after Garner’s arrest, while Garner sat ten feet away in agony in her jail cell, officers Hopp, Jalali, and police staffer Tyler Blackett proceeded to review the body cam video from Garner’s arrest.

During this period of fun and revelry—captured on the station’s video cameras, and surely occurring “on the clock”—Hopp joked about dislocating Garner’s arm and declared, “I love it!” when he heard “the pop” that was apparently audible when Hopp wrenched Garner’s arm from its socket.

Hopp, Jalali, and Blackett proceeded to enjoy several minutes of hilarity as Hopp delighted in his torture of Garner and as Jalali and Blackett giggled and looked on.

Hopp and Jalali then when on to “fist bump” to congratulate themselves for Garner’s arrest.

Clearly, Hopp, Jalali, and Blackett were quite comfortable with amusing themselves with the suffering of others, and did not appear at all concerned that they might be disciplined for refusing medical attention to a woman in their custody who was clearly known to at least one of the officers to be injured. The dislocated shoulder, of course, was in addition to Garner’s bloodied face, which had earlier been observed and commented upon by police personnel in the body cam video itself.

And it seems the officers had little reason to suspect there might be any repercussions for their sadistic and unprofessional behavior. Although these officers’ little video party took place right in the middle of the police station, and right under the nose of supervisor Philip Metzler—who can be seen walking by Hopp and Jalali as they discussed the arrest—the Loveland Police department completely ignored the incident. The video suggests no other officers questioned this behavior or regarded it as untoward in any way. Certainly, Jalali and Hopp were not going to report on each other. We now know they were in a sexual relationship at the time of Garner's arrest

It was only eight months later, when Garner’s attorney sued the Loveland Police Department, that the department was forced to acknowledge the video, the arrest, and its officers’ behavior. But even now, the department is hard at work sweeping the matter under the rug. The three officers most closely involved with the incident—Hopp, Jalali, and Blackett—were all allowed to resign rather than be fired. This presumably will allow these officers to retain their pension benefits and pursue work as police officers in other departments.

The chief himself has offered no sign that he will accept any responsibility for what is apparently considered acceptable behavior in his department.

Bizarrely, in the midst of all this, the arresting officers still have their defenders. For example, last week, when some Loveland residents turned out to protest, some heavily armed locals turned out to shout at protestors who were allegedly guilty of insufficiently “backing the blue.”

Of course, the taxpayers already "back the blue" every day. The police budget is well funded to the tune of approximately $25 million per year in the small, virtually crime-free suburban town of Loveland. The idea that taxpayers—taxpayers like Karen Garner—ought to be harangued for a lack of police support should boggle the mind. For generations, Loveland police officers have been well paid to police a peaceful town where rarely does any officer deal with anything resembling a gangland slaying. Countless Loveland officers retire with generous benefits. Loveland citizens have financially backed the blue to the hilt for decades.

Two Important Reforms

The Loveland case also illustrates the need for other reforms we've discussed here at mises.org in the past. The first needed reform is abolishing police unions—and all public sector unions, for that matter. It is likely that a central reason the police department has avoided any real disciplinary action against Hopp et al. is because it is known the police union would provide legal services to the police officers and would fight tooth and nail to keep these officers in their positions. Police unions are one of the primary institutions most responsible for keeping abusive police officers on the payroll.

Second, legal immunity for police must be ended. Fortunately, in Colorado, this is already the case, and police can be found personally liable for up to $25,000 for abusive behavior. However, this new legislation did not take effect until after Garner's arrest. 

When commenting, please post a concise, civil, and informative comment. Full comment policy here

The Fed Finally Gets Some Tough Questions. And Fails to Answer Them.

05/04/2021Robert Aro

On Wednesday, Federal Reserve Chair Jerome Powell showed how simple questions do not always get simple answers. When speaking to the media after the latest Federal Open Market Committee (FOMC) meeting, some difficult questions were asked. So much so, Powell had to repeat one question to himself, asking:

When will the economy be able to stand on its own feet?

He immediately followed with:

I'm not sure what the exact nature of that question is.

FOX News correspondent Edward Lawrence elaborated, asking when the Fed would lower the number of treasuries it buys, and when the economy would function “without having that support from the monetary side.” 

Powell found ways to avoid answering the idea of a nation which stands without central bank supports, but he did refer to various “tests” the Fed will do in order to make decisions like shrinking the balance sheet, explaining:

we've articulated our test for that, as you know, and that is just we'll continue asset purchases at this pace until we see substantial further progress.

He went on to say that prior to making any decisions, such as buying fewer treasuries, they will give the public a lot of notice beforehand.

There was also a question related to the Fed’s influence in the housing market:

the housing market is strong, prices are up. And yet, the Fed is buying $40 billion per month in mortgage related assets. Why is that, and are those purchases playing a role at all in pushing up prices?

Despite amassing nearly $2.2 trillion of mortgage-backed securities (MBS), Powell defended the central bank on the grounds that:

I mean, we started buying MBS because the mortgage-backed security market was really experiencing severe dysfunction, and we've sort of articulated, you know, what our exit path is from that. It's not meant to provide direct assistance to the housing market.

To be clear, the “severe dysfunction” occurred over a decade ago, when the Fed entered the MBS market. As for the public knowing the exit path or not providing assistance to the housing market, both ideas are highly debatable, to say the least. But even more puzzling is when Powell says that during the current COVID crisis:

We bought MBS, too. Again, not intention to send help to the housing market, which was really not a problem this time at all.

Strange, the Fed would commit to buying $40 billion a month of MBS when, according to the Chair, there were no problems in the market. He concludes that purchases will go to zero over time, but the “time is not yet.”

The final question asked was in regards to market intervention:

if you get out of the markets, there aren't enough buyers for all of the Treasury debt? And so, rates would have to go way up. Bottom line question is what do we get for $120 billion a month that we couldn't get for less?

Powell never explained what exactly “we get for $120 billion” a month, but assured us the Fed was looking to reach its goals, and this was part of its plan. However, he did comment on purchases, saying:

But if we bought less, you know, no. I mean, I think the effect is proportional to the amount we buy… And we articulated the, you know, the test for withdrawing that accommodation. And we think, you know. So, we're waiting to see those tests to be fulfilled, both for asset purchases and for lift off of rates. And, you know, when the tests are fulfilled, we'll go ahead as, you know, we've done this before.

Between various tests to determine policy, vague responses, and a general avoidance of answering questions directly, not much was offered other than providing perpetual liquidity injections under accommodative monetary conditions. It was refreshing to see the mainstream media ask more questions about the plan ahead; we can only hope the mainstream economic community will do the same.

When commenting, please post a concise, civil, and informative comment. Full comment policy here

What Makes Western Civilization Different?

05/03/2021Lipton Matthews

Believing that Western civilization is not unique is a fashionable sentiment. Today many argue that the West has no distinctive traits. However, critics suggest that individualism, freedom and human rights are innately Western constructs. Yet there is more to the West than its history of freedom. Western civilization is easily rejuvenated by creative elements. Throughout history, other cultures have relied on new knowledge to justify old beliefs, but Westerners have consistently allowed foreign ideas to unleash their revolutionary potential.

During the medieval ages, for example, the Latin West was mesmerized by the teachings of Islamic scholars. Such knowledge was appropriated to create novel intellectual inquiries. Historian Peter O’brien offers a glimpse of this spectacular development: “The knowledge transmitted to Latin Christendom via Islamic civilization touched and upset virtually every discipline. Thomas Aquinas, for instance, devoted the lion's share of his scholarly attention to wrestling with theological and epistemological quandaries stemming from Arab philosophy…Lettered Europeans scrambled to absorb this torrent of new knowledge pouring in from their rivals. Those who could, journeyed to loci of Islamic erudition. "Since at present the instruction of the Arabs...is made available to all in Toledo," explained Daniel of Morley, "I hastened there to attend the lectures of the most learned philosophers in the world." Both Adelard of Bath and Ramón Llull travelled to the Levant to learn Arabic, study Arab texts and carry the newly acquired knowledge back to Europe.”

Earlier in his text, O’brien recounted evidence that may suggest that Western civilization is not unusual in this regard: “Cultivated Muslims embraced ancient learning. Not only did they preserve and venerate the works of Greek masters such as Plato, Aristotle and Euclid that were lost to the Latins, Islamic and Jewish sages the likes of Musa al-Khwârizmî, al-Farabi, al-Ghazzali, Abu Ma'shar (Albumasar), Ibn Sina (Avicenna), Ibn Rushd (Averroës), and Maimonides augmented and improved the inherited storehouse of knowledge.”

But what O’Brien failed to say is that the Islamic Golden Age was inspired by a few dissident Muslims who were influenced by Hindu, Greek, and Persian learning. Furthermore, Christian intellectuals who were trained by the scholars at Jundi Shapur played a crucial role in translating ancient texts. It was only in the West that intellectual revolutions became a permanent fixture. Notwithstanding the brilliance of some Muslim scholars in the Islamic faith, reason is intertwined with revelation. Up until the nineteenth-century the principle of natural causality was denied by Muslim intellectuals. Whereas though Christians believed that natural laws were instituted by God – there was the expectation that one would explore the natural world without resorting to religion.

The destruction of the Abbasid Caliphate by the Mongols negatively affected the course of science in the Islamic world, but nonetheless there was already a revival of traditional schools that were hostile to scientific inquiry prior to the invasion. Islam lacked a culture able to sustain the passionate debates that would lead to continuous revolutions. Ali. A Allawi in the Crisis of Islamic Civilization lucidly explains the tension between Islam and non-theological reasoning: “The Arabic word “individual”- al -fard - does not have the commonly understood implication of a purposeful being, imbued with the power of rational choice…The power of choice and will granted to the individual is more to do with the fact of acquiring these from God, at the point of a specific action or decision – the so-called iktisab – rather than the powers themselves which are not innate to natural freedoms or rights…Therefore to claim the right and responsibility of autonomous action without reference to the source of these in God is an affront, and is discourteous to the terms of the relationship between human beings and God…None of the free thinking schools in classical Islam – such as the Mu’tazila – could ever entertain the idea of breaking the God-Man relationship and the validity of revelation, in spite of their espousal of a rationalist philosophy.”

Similarly, the Chinese are excessively praised for their successes during the Song Dynasty. Using Chinese history as a case study, multiculturalists often posit that the West is not peculiar. Although as David Landes informs readers, the Chinese did in fact build a great civilization, but under the spell of hubris they shunned foreign technologies thinking that outsiders could not enrich a superior culture: “Along with Chinese indifference to technology went imperviousness to European science. The Jesuits and other Christian clerics brought in not only clocks but (sometimes obsolete) knowledge and ideas. Some of this was of interest to the court: in particular, astronomy and techniques of celestial observation were extremely valuable to a ruler who claimed a monopoly of the calendar and used his mastery of time to impose on the society as a whole…Little of this got beyond Peking, however, and the pride some took in the new learning was soon countered by a nativist reaction that reached back to long forgotten work of earlier periods. One leader of this return to the sources, Wen Ting (1635–1721), examined the texts of mathematicians who had worked under the Song dynasty (10th–13th centuries) and proclaimed that the Jesuits had not brought much in the way of innovation.”

Unlike countless societies Western civilization is willing to admit when its culture requires regeneration from outside forces, and this is a major reason for its dynamism. Had the West not been a self-critical society there is no doubt that it would have stagnated like other areas of the world. Another interesting point about the West is the centrality of the idea of progress. Because Western culture is self-reflective it can objectively judge the true state of society. As such, innovation often trumps traditionalism. The Renaissance, for example, repudiated much of medieval scholasticism.

Yet one cannot discuss the concept of progress in Western civilization without examining its link to the Christian notion of linear time. Contrary to the Greeks, Chinese, and other civilizations, Christianity asserts that time will not revert to older cycles. Based on this reasoning, society can only go forward. Obviously, developments can either be progressive or regressive, but one must always strive to attain progressive ends by not returning to the ignorance and superstition of the past. In short, despite the rantings of multiculturalists Western civilization is indeed special.

When commenting, please post a concise, civil, and informative comment. Full comment policy here

Vaccine Passports Are Just a Way for the Regime to Expand Its Power

05/03/2021Ryan McMaken

Earlier this month, the conservative magazine known as The Spectator published an article with the absurd title “The Libertarian Case for Vaccine Passports.” The online version now bears the title “Vaccine Passports Are a Ticket to Freedom,” but the physical print version is perhaps more descriptive of what the author is trying to do.

The author, a former Conservative politician named Matthew Parris, apparently believes that the forever lockdowns are an inescapable feature of reality, and that the only way around them is for the regime to enact a vaccine passport scheme. For Parris, covid lockdowns are just a force of nature, like gravity. Now, if only we could find a way to get around these nature-imposed lockdowns!

By now the flaw in Parris’s logic should be clear. There is nothing natural or inescapable about lockdowns. They are an invention of the state. They are so unnatural, in fact, that they require the use of the state’s police powers to enforce them. They require policemen, handcuffs, courts, prisons, and fines to ensure they are followed. Those who ignore this supposed “force of nature”—and these scofflaws are many—must be punished.

All of this escapes Parris’s notice, however.

For example, his article begins this way:

In principle I’m in favour of vaccination passports, and don’t understand how—again in principle—anyone could be against the theory….

In other words, Parris’s position—in his mind, at least—is so correct and so commonsensical that he can’t even comprehend how someone would disagree with him.

This, of course, is always a highly suspect way to begin an article. Any intellectually serious political commentator, if he tries a bit, can at least imagine why others might disagree with him. After decades in government, however, Parris is so enamored of the idea that the regime ought to control your every move that any another option is apparently beyond the pale of rational thinking.

Parris goes on:

To me it seems not just sensible and fair but obvious that access to jobs or spaces where there is an enhanced risk of viral transmission might be restricted to people who could demonstrate a high degree of immunity.

There is absolutely nothing libertarian about delaying the lifting of lockdown for everybody, just because it wouldn’t be safe for somebody.

Again, note the core assumption: the regime must tell you where you are allowed to go and what you are allowed to do. It is those dastardly libertarians who are the ones "delaying the lifting of lockdowns." For Parris, politicians have been working hard to find a way that society can be set free. These noble policymakers discovered vaccine passports. At long last, people can be allowed to leave their homes. But those libertarians now stand in the way!

Unlike those libertarians, Parris assures us he is in favor of people leaving their homes and visiting each other in public gathering places. It’s just that his hands were tied before. There were no options available to him other than keeping you locked up. Now, dear taxpayer, won’t you let Parris and his friends set you free? They want you to be free. It’s just that there’s nothing they can do until you embrace vaccine passports!

If you’re noticing that Parris sounds a bit like an abusive husband, you wouldn’t be far off. Just as an abuser tells his wife, “See what you made me do!” after he punches her in the face for burning the toast, we see a similar attitude from the vaccine passport crowd: “You see what you’re making me do? I want to let you out of your house, but you refuse to submit to our oh-so-libertarian passport system!”

Yet Parris is not alone in this sort of thinking. Many others continue to advocate for vaccine passports as some sort of profreedom scheme. Passports are being framed as an “easing of restrictions.”

But, as epidemiologist Martin Kulldorff and Stanford physician Jay Bhattacharya pointed out this month in the Wall Street Journal, there is nothing in the passport scheme that is geared toward lessening regime control of our daily lives. On the contrary, it is all about extending and increasing regime power. Kulldorff and Bhattacharya write:

The idea is simple: Once you’ve received your shots, you get a document or phone app, which you flash to gain entry to previously locked-down venues—restaurants, theaters, sports arenas, offices, schools.

It sounds like a way of easing coercive lockdown restrictions, but it’s the opposite. To see why, consider dining. Restaurants in most parts of the U.S. have already reopened, at limited capacity in some places. A vaccine passport would prohibit entry by potential customers who haven’t received their shots….

Planes and trains, which have continued to operate throughout the pandemic, would suddenly be off-limits to the unvaccinated….

The vaccine passport should therefore be understood not as an easing of restrictions but as a coercive scheme to encourage vaccination….

Naturally, the regime claims this is all “required” by “science,” but

[t]he idea that everybody needs to be vaccinated is as scientifically baseless as the idea that nobody does. Covid vaccines are essential for older, high-risk people and their caretakers and advisable for many others. But those who’ve been infected are already immune. The young are at low risk, and children—for whom no vaccine has been approved anyway—are at far less risk of death than from the flu. If authorities mandate vaccination of those who don’t need it, the public will start questioning vaccines in general.

“Science” mandates nothing as a matter of public policy. Rather, it is policymakers—backed by the violent power of the state—who impose mandates. These are policy choices, not forces of nature. Moreover, as Kulldorff and Bhattacharya note, these aren’t even prudent policy choices, and are based on questionable conclusions wrought from scientific data. The authors continue:

Most of those endorsing the idea belong to the laptop class—privileged professionals who worked safely and comfortably at home during the epidemic. Millions of Americans did essential jobs at their usual workplaces and became immune the hard way. Now they would be forced to risk adverse reactions from a vaccine they don’t need. Passports would entice young, low-risk professionals, in the West and the developing world, to get the vaccine before older, higher-risk but less affluent members of society. Many unnecessary deaths would result.

But we know how the regime will justify mandatory vaccine policies to themselves should some be injured by adverse reactions. "We had no choice!" the politicians will insist. "Science forced our hand!" This is a convenient way for politicians to weasel out of responsibility for forcing much of the population—much of it a low-risk population—into submitting to certain state-mandated medical procedures. But lest we take too cynical a view, it's entirely possible these people are true believers. Like Parris, the policymakers forcing these policies on citizens and taxpayers might not be able to comprehend any other course of action. This level of moral certitude is a certain privilege of the ruling class, and it certainly has nothing to do with "science."

Image source:
Getty
When commenting, please post a concise, civil, and informative comment. Full comment policy here

The American Right is the New Target of Washington's "War on Terror"

04/28/2021Tho Bishop

The security walls around the US Capitol may be removed, but the federal response to the January 6 protests has only just begun. The Democrats in Washington are determined to treat the incident as on par with the events of September 11, which may explain a troubling report about the potential use of the famed No Fly List.

Yesterday Nick Fuentes, a right-wing social media pundit who attended the January 6 protests in the capital, alleged that he has been placed on the federal no-fly list, preventing him from traveling to Florida for a political rally. While Mr. Fuentes shared on social media audio of an airline employee suggesting that his flying restriction did come from the Transportation Security Administration (TSA), later that night Tucker Carlson informed his audience that his staff could neither confirm nor deny the report. While critics pointed to previous social media posts which documented his being removed from a plane for failing to comply with mask policies, Fuentes has noted that he had no problem flying to Washington in January.

It is unclear whether federal authorities will be in any rush to clarify the situation, but there is no reason not to assume that federal authorities would attempt to use this war on terror tool against political opponents. From its inception, what originally began as sixteen names federal authorities had connected to potential future terrorist attacks quickly grew to over 1 million. As is the case with other surveillance tools handed over to the deep state, there is very little oversight or due process involved in how federal authorities handle potential “terrorist threats.”

Since January there has been a concerted effort by Democrat leaders, former deep state officials, and America’s most despicable neoconservatives to push the Biden administration to utilize the power of the federal government against the supporters of Donald Trump. While the incidents at the Capitol on January 6 are used to justify these calls, the weaponization of federal power against political opponents goes back almost as long as the federal government itself. In more recent years, President Biden’s previous service in the White House saw a Democrat administration that used both the IRS and Department of Homeland Security to target conservatives.

Another reason to expect escalation from the Biden administration against vocal figures like Fuentes is the unique critique of the current regime from the right. The majority of Republican voters do not simply oppose President Biden due to politics, but flatly reject his democratic legitimacy.

As Murray Rothbard explained, it is precisely this sort of attack that the state fears most:

The increasing use of scientific jargon has permitted the State's intellectuals to weave obscurantist apologia for State rule that would have only met with derision by the populace of a simpler age. A robber who justified his theft by saying that he really helped his victims, by his spending giving a boost to retail trade, would find few converts; but when this theory is clothed in Keynesian equations and impressive references to the "multiplier effect," it unfortunately carries more conviction. And so the assault on common sense proceeds, each age performing the task in its own ways.

Thus, ideological support being vital to the State, it must unceasingly try to impress the public with its "legitimacy," to distinguish its activities from those of mere brigands….

The gravest crimes in the State's lexicon are almost invariably not invasions of private person or property, but dangers to its own contentment, for example, treason, desertion of a soldier to the enemy, failure to register for the draft, subversion and subversive conspiracy, assassination of rulers and such economic crimes against the State as counterfeiting its money or evasion of its income tax. Or compare the degree of zeal devoted to pursuing the man who assaults a policeman, with the attention that the State pays to the assault of an ordinary citizen. Yet, curiously, the State's openly assigned priority to its own defense against the public strikes few people as inconsistent with its presumed raison d'être.

This perspective explains the disproportionate treatment that mostly peaceful protesters at the Capitol in January have received in contrast to those arrested during riots in American cities throughout the past year. The state will always treat those who seriously threaten its perceived legitimacy with greater zeal than those guilty of simply destroying the livelihoods of its citizens.

This also highlights the self-defeating nature of the modern American conservative movement.

For decades now, the same political party that often gives lip service to “federalism” has often been the party directly responsible for the growth of federal power. As noted earlier, it took exactly one administration before the Department of Homeland Security, created by the Bush administration, began to target the very voters who elected him to office. It was just two election cycles before the PATRIOT Act was used to target a Republican presidential campaign.

The biggest question that now lies in American politics is whether conservatives are capable of learning from these examples. If the American right is capable of fully absorbing the reality that the greatest threat to their lives, liberty, and prosperity lies domestically—and not abroad—perhaps there is potential for a political rollback of the American empire.

If not, American conservatives will come to understand how little constitutional rights truly mean in the face of a hostile state.

Image source:
WIKIMEDIA COMMONS
When commenting, please post a concise, civil, and informative comment. Full comment policy here

"Transitory Inflation" Is the New Buzz Phrase at the Fed

04/27/2021Robert Aro

With April’s Federal Open Market Committee (FOMC) and Wednesday’s press conference to follow, we can anticipate some of the key words we will hear from the Fed. The first, gaining in popularity, is “transitory inflation,” or the idea some price increases are only temporary in nature…

Last month the word came up after the March FOMC meeting. On Friday CNBC wrote about the impermanence of inflation, anticipating:

the Fed is expected to defend its policy of letting inflation run hot, while assuring markets it sees the pick-up in prices as only temporary.

If inflation calculations show increases in the foreseeable future (or if more people become aware of their loss in purchasing power and increases to cost of living), talk of the temporariness of inflation may continue. The only way temporary “across the board” price increases make sense is if they are followed by a period of “transitory deflation,” reversing prices. If prices spike up, then quickly spike down, price increases were, in fact, temporary in nature; however, given the Fed’s aversion to deflation and proclivity for the printing press, it’s safe to say price decreases are not to what they are referring.

Without price reductions, the word “permanent” would better suffice. Instead, what the Fed could mean is that we’ll learn to live with (permanent) price increases, possibly aided by the highly nebulous: “wages will adjust” idea.

Consider the scenario of widespread price increases for just one year. For each subsequent year, even if prices don’t increase much, there still exists a compounding effect of the initial price inflation, which would be anything but temporary. To illustrate, if the price of lumber increases by 300% in year one, then only increases at a rate of 1% a year the following five years, lumber is still 300% higher than it was at the start of the first year, even if we call the inflation transient.

CNBC continues:

Powell is also expected to once more explain that the Fed will let inflation rise above its 2% target for a period of time before it raises rates so that the economy can have more time to heal.

Long has existed an idea about how the Fed controls inflation. In this instance, their power lets inflation rise above its 2% target so the economy can somehow strengthen. However, it leads to another word to watch for: this idea of “tightening” monetary policy.

As the Wall Street Journal said on Sunday:

The process of ending the Fed’s giant bond-buying program, and subsequently raising interest rates, will take years unless inflation unexpectedly surges.

Undoubtedly, talk of the Fed’s unwinding balance sheet should continue to be a discussion point as it nears ever closer to $8 trillion, persistent all-time highs. Putting together the idea of inflation and tightening, we are taken to a world difficult to imagine.

It is only after prices increase at a pace which has not been seen in decades, the Fed will look to raise interest rates and reduce buying of government debt. Unless the Fed’s reduction in government debt buying is taken up by private investors, we can expect further increases to interest rates. As for the $28 trillion government debt, all-time high in the stock market, and the heating up of the real-estate market, perhaps, like inflation, those too will be transient in nature… unless wages really do adjust?

When commenting, please post a concise, civil, and informative comment. Full comment policy here

Your Check Is In the Mail: How "Stimulus" Checks Are Spent

04/27/2021Robert Aro

More than $379 billion has been sent out across the country in the form of stimulus checks over the last two months. CNBC reported on Thursday:

A sixth batch of $1,400 stimulus checks has gone out, bringing the total number of payments sent to date to about 161 million.

One report, by the Peter G. Peterson Foundation noted that if we combine the last three stimulus bills:

The federal government has provided over $850 billion of direct payments to taxpayers.

It raises an interesting question: What did everyone do with their stimulus money?

NBC attempted to answer this question. Yet, in doing so illustrated the problem with the question and policy itself, finding:

the majority of that money continues to be spent on groceries, rent and other monthly bills…

Vague. So here are more details:

nonessential spending (13 percent), paying down debt (32 percent) and investing (11 percent) since January, the number one reason for stimulus spending among all income brackets is monthly bills (45 percent).

It’s curious to see what spending is considered essential and which is not. Still, the bigger issue is the idea spending can be adequately tracked in order to illustrate where the stimulus checks have gone.

But there’s an interesting thing about money: once received or added to one’s existing supply of savings (or credit), how can one allocate where the newly received money goes afterwards? Does it matter if the person has savings or not? Consider two scenarios:

Someone with $5,000 in their checking account receives a $1,400 stimulus check. They immediately purchase a hunting rifle for $1,400 then invest $1,400 in the stock market. After receipt of the check and the two purchases, they now have $3,600 in their account. Was the stimulus check used for savings, as it was saved in the checking account first? Did it go to the firearm as it was the first purchase made after receipt of funds? Or was it used to invest in the stock market?

And what if someone is in a debt position? Consider the same scenario above, except they had $5,000 balance owing on their line of credit, and stocks and the rifle are bought in the reverse order. Do we say the stimulus check went to pay down the line of credit (debt), the stocks (investing), or the rifle (nonessential or essential spending)?

There are various combinations which involved the timing of payments and whether the check contributed to existing savings or reduction of debt; but it illustrates the difficulty in allocating the whereabouts of the stimulus checks.

In addition to being unable to allocate the funds, we cannot prove the checks were a “good idea,” for the country. Any such criteria would be arbitrarily based on the value judgments of the decider. Nor can we say nearly $1 trillion in stimulus payment to households was “the correct” amount, as it could have easily been $500 million or $2 trillion. Since stimulus checks are devoid of economic calculation, any stimulus amount is equally as valid as any other. 

One might prefer if exactly zero dollars of stimulus money was given. That would have saved another $1 trillion off the national debt and reduced future interest expenses. It would also mean less unpredictable price distortion in the market as the 161 million recipients would not have to decide whether they should spend or save this newly created money.

But what does it matter anyway? Per NBC:

There may be hope on the horizon for the millions who continue to struggle financially: Almost two dozen senators have urged the Biden administration to include recurring relief payments…

Unfortunately, when it comes to economic policy matters, it seems economics continues to take a back seat to policy matters.

When commenting, please post a concise, civil, and informative comment. Full comment policy here

A Rights- and Logic-Based Approach to Pandemics

04/23/2021Patrick Barron

We all are too familiar with the approach to pandemics taken by governments at all levels in the US. In the name of "public safety" governments assumed "emergency powers" to restrict the citizens' right to peaceful assembly (a violation of the First Amendment to the Constitution) and to deprive citizens of property without due process of law (a violation of the Fifth Amendment to the Constitution). The Fourteenth Amendment applies these protections to the states, too. I will not repeat all the justifications that emanated from government that supposedly negated these constitutional protections. Instead I will concentrate on whether they are defensible logically, using government's own criteria as the judge. The individual will be the subject of our inquiry, not the group.

Claim No. 1: Peaceful Assembly Threatens Your Health and the Health of Others

Let's assume that government is right. If individuals assemble, they threaten one another's health in some way. But why should government make the decision about what constitutes a threat to health? What is its criteria? What is the threshold? Some individual in government makes this decision, but why should his level of acceptable risk be the group standard? Can't each individual decide how much risk he willingly assumes? Furthermore, if a person decides to assemble with like-minded individuals, what risk is that to those who do not wish to assemble? You've willingly quarantined yourself, as governments recommended. Your risk is not affected by those who do not wish to quarantine themselves. They assume more risk; yours remains the same. Even if the pandemic spreads more rapidly, it does so only among those who took the risk in the first place, not you. Again, you have not been subjected to any additional risk. This is the reasoning behind the actions of many hypocritical politicians who ignored their own orders to their constituents. They merely decided that they were willing to take additional risk, and no one suggested that they were threatening others who remained in quarantine. So, logically, the government-imposed quarantine, a.k.a. restricting the citizens' right to peaceful assembly, makes no sense.

Claim No. 2: "Nonessential" Businesses Threaten Your Health and the Health of Others

The same logic can be applied to governments' decisions to lock down "nonessential" businesses. (All businesses are essential, so that qualification is nonsense.) Government used the same rationale; i.e., that mingling with one's fellow citizens in places of business threatened the individual himself and others. But these "minglers" assumed the risk and threatened no one who did not "mingle."

The big question becomes this: Why do those who quarantine themselves insist upon forcing quarantines on others? Certainly, businesses that choose to close may do so voluntarily. Why should they be concerned over those who do not choose to close? (Actually, I am not aware of any business that voluntarily closed due to risk intolerance. But maybe such a business does exist.) Businesses can adapt their premises to allay the fears of potential customers. This seems to be happening voluntarily for those "essential businesses" that were permitted to remain open. Why should government dictate business practices to those who remain open? This is a decision for individual businesses alone. If such businesses adopt too stringent entry requirements, patronage will flow to more friendly competitors. If such businesses adopt too lenient entry requirements, the same thing will happen. There is no objective guideline for determining entry practices. In fact, the same kind of businesses may be more or less stringent, attracting more or less risk-averse clientele.

Let Perfect Freedom Prevail

Each individual has the right to "perfect freedom" in deciding for himself how much risk he is willing to assume from any of thousands of daily risks. We practice perfect freedom every day without even thinking about it as we go about our daily lives. Each individual may choose his own risk tolerance, because his decision cannot affect those who wish to take less or even more risk. Risk-averse individuals protect themselves. Likewise, each individual business decides what is best for itself and its customers, ranging from closing down to taking no additional risk-mitigating measures at all. If customers decide that the business is not taking appropriate measures, they can stay home and/or patronize other businesses with risk-mitigating measures more attuned to their liking. In other words, there is no logical reason that our constitutionally guaranteed rights of peaceful assembly and to protection of our property need be violated in order to protect "society." Society is composed of millions upon millions of individuals, all with different risk profiles. Let perfect freedom prevail.

Image source:
Getty
When commenting, please post a concise, civil, and informative comment. Full comment policy here

The Paycheck Protection Program: Abuse and Misuse

There are few examples to showcase the absurdity of the current political climate during the covid pandemic such as the Paycheck Protection Program (PPP). Put in place by the Trump administration and now continued under the Biden administration, the PPP has become the poster child for government programs rampant with fraud and mismanagement. Indeed, in a recent report, the Office of the Inspector General (OIG) repeatedly warned about the lack of program oversight and controls. However, government officials continued on with the program despite the OIG’s warnings.

What is the PPP?

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The intent of the CARES Act was to provide short-term relief for small businesses, individuals, and nonprofit organizations that were negatively affected by the shutting down of the economy to slow the spread of the coronavirus. The CARES Act appropriated first $349 billion for the Small Business Administration (SBA) Paycheck Protection Program in April 2020. Later in April, Congress appropriated an additional $321 billion for a total of $670 billion. Affected businesses can apply for a forgivable loan to cover operating costs and lost revenue. From 2000 to 2019, the SBA made about 1.2 million loans totaling $333 billion. Under the CARES Act, the SBA processed 5.2 million loans in six months, which was far more than all of SBA’s combined lending from 1990 to 2019. 

Six months into the program, on October 16, 2020, the OIG released the first in a series of reports. In Top Management and Performance Challenges Facing the Small Business Administration in Fiscal Year 2021, the OIG provides a good sense of the chaos with section title “SBA’s Economic Relief Programs Are Susceptible to Significant Fraud Risk and Vulnerabilities.” Anyone who has critically examined the government response to the covid pandemic should not be surprised by the fact that the PPP is a recipe for disaster. 

In October, the inspector general already sounded the alarm bell:

SBA moved quickly to establish the new nationwide program but eased controls required in its lending program to do so, increasing the risk of rampant fraud. Our preliminary investigative oversight revealed strong indicators of widespread potential abuse and fraud in the PPP.

In its preliminary report, the OIG found systemic issues with the PPP. OIG found indications of deficiencies with internal controls related to the eligibility of borrowers. 

  • Tens of thousands of approved and disbursed loans were made to borrowers for amounts that exceeded the maximum allowed based on the number of employees and compensation rates as defined in the CARES Act.
  • Tens of thousands of loans that matched a Do Not Pay data source record indicating potential loan ineligibility.
  • Hundreds of businesses that exceeded the greater of 500 employees or the SBA size standard for number of employees in the industry obtained PPP loans that may have been erroneously approved.
  • We found thousands of businesses obtained PPP loans with Tax Identification Numbers (TINs) that were not registered until after that date indicating the business was created after the fact.

Even more troublesome is the fact that OIG found that the data the SBA publicly reported as well as the loan-level PPP data was inaccurate and incomplete, concluding:

Without accurate and complete data, SBA cannot reliably and accurately inform SBA management and Congress about program effectiveness and measures needed to inform program decisions.

What is even more concerning is the fact that despite these early warning signs the SBA continued with the program without many changes to curb the widespread abuse of the program.

On January 11, 2021, the OIG published Management Alert Paycheck Protection Program Loan Recipients on the Department of Treasury’s Do Not Pay List:

Our review of Treasury’s analysis showed approximately $3.6 billion in PPP loans to potentially ineligible recipients.

In January 14, 2021, the OIG published another report entitled Inspection of SBA's Implementation of the Paycheck Protection Program, which can be summarized in the following quote:

SBA’s efforts to hurry capital to businesses were at the expense of controls that could have reduced the likelihood of ineligible or fraudulent business obtaining a PPP loan. As a result, there is limited assurance that loans went to only eligible recipients….We also found SBA’s PPP publicly reported and loan-level data was inaccurate and incomplete.

On March 15, 2021, just one week before the Senate passed the extension, the OIG published a flash report entitled Duplicate Loans Made under the Paycheck Protection Program:

We determined SBA did not always have sufficient controls in place to detect and prevent duplicate PPP loans. As a result, lenders made more than one PPP loan disbursement to 4,260 borrowers with the same tax identification number and borrowers with the same business name and address. These disbursements totaled about $692 million for PPP loans approved from April 3 through August 9, 2020.

Did Congress stop the program or demand more oversight? No. Congress extended the PPP. One can only conclude with the words of Hoppe again. “Government has the ability to be the savior twice over: the rescuer of a rescuer in distress.” It “rescued” us from the covid pandemic by severely limiting the economy, and then “rescued” us again from the economic free fall by compensating for the losses incurred by simply creating state paper money from nothing at zero expense. Government is the rescuer twice over, but government has the ability to socialize costs to the public while making itself look like the “blessed savior.” Rescue packages, however well intentioned, are not, and never are, free of charge.

The only thing missing from the covid Ponzi scheme is for government to take the rampant misuse and abuse in the PPP to grab as much power as possible by creating more rules and regulations for businesses in the name of covid. Readers of Robert Higgs’s book Against Leviathan: Government Power and a Free Society. know that government bureaucrats have a tendency to take advantage of “emergencies,” like the covid-19 pandemic, to consolidate and grab even more power. Let’s hope that this will not become true or happen.

When commenting, please post a concise, civil, and informative comment. Full comment policy here
Shield icon power-market-v2