Power & Market
After a hiatus of about 10 years, the Mises Institute is resuming publication of the Journal of Libertarian Studies, with volume 23 scheduled to appear before the end of the year. This peer-reviewed, interdisciplinary journal, with David Gordon as editor, will complement the economics-focused Quarterly Journal of Austrian Economics.
The influential JLS dates back to 1977, with Murray Rothbard as the founding editor and many of the brightest scholars in libertarianism serving on the editorial board. The first volume contained articles by Murray Rothbard, Ludwig von Mises, Walter Block, Ralph Raico, Don Lavoie, Randy Barnett, Williamson Evers, and many others. Back issues of the journal are available here.
A Blockchain Study Finds 0.00% Blockchain Success Rate . The study reported also reported 0 vendor call backs when asked for evidence of implementation.
Though Blockchain has been touted as the answer to everything, a study of 43 solutions advanced in the international development sector has found exactly no evidence of success.
Three practitioners including erstwhile blockchain enthusiast John Burg, a Fellow at the US Agency for International Development (USAID), looked at instances of the distributed crypto ledger being used in a wide range of situations by NGOs, contractors and agencies. But they drew a complete blank.
"We found a proliferation of press releases, white papers, and persuasively written articles," Burg et al wrote on Thursday. "However, we found no documentation or evidence of the results blockchain was purported to have achieved in these claims. We also did not find lessons learned or practical insights, as are available for other technologies in development."
During a recent trip to Mexico City, Jeff Deist was able to join Sergio Sarmiento of TV Azteca's adn40 for a great discussion on the meaning of liberty and the power of markets.
The interview is available here.
The Mises Institute been excited to increase our reach in the Spanish speaking world in recent years thanks to trips like this, as well our growing library of Spanish-language translations available at Mises.org/es.
According to the Federal Reserve's Underlying Inflation Gauge, the 12-month inflation growth in January 2019 was at 2.9 percent. That's a 12-month low, and reflects the anemic economic growth the Federal Reserve has recently identified as a reason to slow down or stop the earlier-stated plans to raise the target interest rate and sell-off the Fed's 4-trillion-dollar portfolio.
The Fed began publicly reporting on new measure in December of 2017, and takes into account a broader measure of inflation than the more-often used CPI measure.
Not shockingly, the UIG has shown a higher rate of inflation than the CPI, most of the time in recent years. Moreover, this gap between UIG and CPI has been generally higher in recent years.
In January, the UIG was 2.9 percent, the CPI growth rate was 1.6 percent. The gap was 1.4 percent, which was the largest gap in 39 months.
In other words, price inflation in both the UIG measure and the CPI have slowed. But it's slowed more in the CPI than in the UIG measure. Not surprisingly, the FED concludes that inflation is not problem at all, while a broader look at the economy shows considerably more price inflation.
The use of consumer prices only in the CPI has long been a problem, in that the cost of living and planning for the future does not involve only the basket of goods used in the CPI calculations. A wide variety of assets affect the American economy as well.
As explained by the New York Fed's summary of the UIG measure:
We use data from the following two broad categories: (1) consumer, producer, and import prices for goods and services and (2) nonprice variables such as labor market measures, money aggregates, producer surveys, and financial variables (short- and long-term government interest rates, corporate and high-yield bonds, consumer credit volumes and real estate loans, stocks, and commodity prices).
But don't expect the Fed to abandon its fondness for the CPI and the arbitrary "2-percent inflation" goal any time soon.
Jeff Deist joined CrossTalk yesterday to discuss the influence of neoconservatives like John Bolton on Trump's foreign policy. Things get heated with another guest when Jeff questions the dubious "War on Terror," the enormous US military budget, and whether Trump's actions regarding endless Middle East wars matches his rhetoric.
Jeff Deist recently published an editorial in the Washington Times challenging various proposals—popular among DC think tanks—to create monetary policy "rules" or targets based on statistical data related to inflation or GDP.
One hopes Mr. Powell sticks to his guns and his earlier commitment to tightening in the face of bad economic news. He certainly will face pressure, and not only from President Trump and Congress. Nearly the entire think-tank chorus sounds alike when it comes to monetary policy: The Brookings Institution, the American Enterprise Institute, the Heritage Foundation, the Mercatus Center, and the Cato Institute all offer up some version of rules-based policy.
Rules are meant to be broken. Rules-based proposals are relatively complex and not particularly suited to winning over Congress. It’s one thing to legislate a broad dual mandate for the Fed and hope for the best. It’s another to reach bipartisan agreement on the Taylor Rule and mandate its execution by law. Rules-based proposals are likely to become internalized Fed policies at most, not laws.
But as we’ve seen, policy rules tend to go out the window in times of economic crisis. Fed chairs do not serve in a vacuum; politics and current events often lay waste to the Fed’s vaunted independence. Only Paul Volcker and William McChesney Martin seemed to have resisted the bidding of unhappy presidents.
Monetary rules don’t truly get at the heart of things. Technical analysis and mathematical formulas only obscure the complexity and human fallibility of the real world. Mr. Powell and company are tasked with determining the “best” monetary policy for 320 million Americans with widely diverse interests.
The answer to our coming economic woes lies in recognizing that no monetary policy tinkering can replace the fundamental corrections that must take place: bankruptcy, liquidation and restructuring of firms to clear out bad debt; higher interest rates to encourage capital formation and discourage more malinvestment; an end to direct bailouts by Congress and roundabout bailouts by the Fed; and a serious program of spending and debt reduction in Washington that spares neither entitlements nor defense.
As the article makes clear, statistical or mathematical analysis of economic data cannot save Fed officials from their insurmountable task: determining the supply and price of money in a vast economy. As Ludwig von Mises explained more than a century ago in The Theory of Money and Credit, money is a marketplace phenomenon; as such it cannot be engineered through any amount of technical monetary or fiscal policies:
All proposals that aim to do away with the consequences of perverse economic and financial policy, merely by reforming the monetary and banking system, are fundamentally misconceived. Money is nothing but a medium of exchange and it completely fulfills its function when the exchange of goods and services is carried on more easily with its help than would be possible by means of barter. Attempts to carry out economic reforms from the monetary side can never amount to anything but an artificial stimulation of economic activity by an expansion of the circulation, and this, as must constantly be emphasized, must necessarily lead to crisis and depression. Recurring economic crises are nothing but the consequence of attempts, despite all the teachings of experience and all the warnings of the economists, to stimulate economic activity by means of additional credit.
We can't "reform" the Federal Reserve Bank any more than we can reform the FDA or IRS or TSA. Politics and the economic calculation problem cannot be overcome by tinkering.
The Accad and Koka Report, hosted by two MDs, focuses on free-market approaches to medicine and health.
Drs. Michel Accad and Anish Koka recently hosted Mises Institute president Jeff Deist for a no-holds barred look at how Congress, the medical establishment, and lobbyists work together to make healthcare anything but free. Watch the interview here.
The late Sen. John McCain is being lauded far and wide for his long career of public service. Rep. John Lewis, the famous civil rights activist, hailed McCain as a “warrior for peace.” In reality, McCain embodied a mix of moralism and militarism that worked out badly for America and the world.
When he was awarded the Liberty Medal last October at the National Constitution Center in Philadelphia, McCain declared, "We live in a land made of ideals... We are the custodians of those ideals at home, and their champion abroad. We have done great good in the world.” He warned that it would be “unpatriotic” to “abandon the ideals we have advanced around the globe.” But idealism has fared better in political speeches than in the lives of American soldiers or purported foreign beneficiaries...
McCain’s career illustrates the peril of exalting uplifting rhetoric over the lessons of history. There are plenty of nasty dictators in the world but U.S. military campaigns have dismally failed to spread democracy this century. America can no longer afford an idealism that consists of little more than combining bombing and wishful thinking.