The Great Social Media Purge of 2018

The Great Social Media Purge of 2018

10/16/2018Alan Mosley

Back in the ancient news cycle of August 6, 2018, Alex Jones, host of The Alex Jones Show and curator of, was deplatformed in a coordinated effort by multiple social media and content streaming services. The list of companies, whose simultaneity was surely a coincidence, is quite impressive: Facebook, Apple, YouTube, Spotify, Vimeo, Pinterest, MailChimp, and LinkedIn. The debate on free speech versus hate speech raged on for the customary week or two as the news cycle dictated, with many libertarians and conservatives willing to leave Jones to the proverbial wolves. Perhaps Alex Jones wasn’t an attractive enough martyr for the cause. But to those who stood on principle against these social media giants, this was a sign of things to come. Editors for the Free Thought Project spoke out against such censorship on the grounds that it may only be Alex Jones today, but FTP would be next.

How right they were.

At, Matt Agorist wrote, “What makes this recent purge from Facebook and Twitter so egregious is that the pages like the Free Thought Project, the Anti-Media, Press for Truth, and dozens of others, did not fit the hate speech narrative these same companies used to wipe out Alex Jones. Instead, these pages were dedicated to spreading peace, bridging the divide, bringing humanity together and holding government accountable.”

It’s true that Jones has made more than his share of controversial statements, including claiming that the Sandy Hook Elementary School shooting in 2012 was a hoax, but this kind of controversy does not follow sites such as the Free Thought Project; Facebook even admitted they were not targeted for promoting violence or spreading “fake news.”

So what were the determining factors that led to this round of deplatformings? According to a statement co-authored by Facebook’s Head of Cybersecurity Nathaniel Gleicher, the 559 pages and 251 accounts purged had, “consistently broken our rules against spam and coordinated inauthentic behavior.” The statement continues, “This inauthentic behavior consists of sensational political content, regardless of its political slant, to build an audience and drive traffic to their websites…posting in dozens of Facebook Groups, often hundreds of times in a short period, to drum up traffic for their websites.”

As Caitlin Johnstone wrote at, Nathaniel Gleicher is also the former White House National Security Council Director of Cybersecurity Policy.

What a small world!

Is there any truth to Facebook’s claims about “inauthentic activity”? It’s easy to become instantly enraged by the censorship, considering that it appears to be punishing alternative media groups for “driving traffic to their websites.”

This hardly seems like an egregious sin. And if consistently applied, would this standard not also include major news outlets such as CNN, MSNBC, and Fox News?

Additionally, the deplatformings seem conspicuously coordinated, as a number of affected organizations found their accounts suspended all at once, one the same day, on multiple social media sites.

There is some logic to Gleicher’s explanation, but Facebook’s application of its rules has been wildly inconsistent. People rushed to share tales of the purge, showing account holder screenshots with multiple banned pages and profiles. Unfortunately, it’s the operation of so many pages and accounts by the same individuals that possibly got them caught in this little sting operation. When users were identified as sharing their clickbait in “dozens of groups, hundreds of times over a short period,” they were attempting to game the system by boosting likes and shares in an attempt to drive themselves higher in news feeds. An issue with consistency notwithstanding, this sort of activity is considered spam and inauthentic behavior by Facebook. They are hardly the first to adhere to such a policy. bans users who are found to operate multiple accounts in order to up-vote the submissions by their primary account.

To be clear, I am not criticizing indie media for doing everything they can to spread their message. Those of us in the liberty community will remember Congressman Ron Paul and his foreign policy warnings against “blowback,” — the CIA-coined term for the unintended retaliation for U.S. foreign interventions. But blowback is not limited to the world of foreign policy; it’s also a social phenomenon. When Facebook made drastic changes to its algorithm crippling the reach of alternative media and independent content creators, it prompted these same creators to find ways to circumvent the algorithms. This kind of “throttling” is nothing new. The Gold Standard with Alan Mosley once enjoyed a reach of over 70,000 for its updates and episodes, even without any budget for Facebook Ads. These numbers were common as recently as May, but even with the purchase of Facebook Ads, results have been catastrophically lower since June. Now The Gold Standard is fortunate to receive a quarter of the reach, even though it sports all-time highs in likes and follows.

So what will the community-at-large do in response to this latest social media purge?

Sure, there were some that rushed to defend Alex Jones, but many more decided to put their momentary e-safety far above the principle of defending free speech. But those of us who believe in the free market should put our money where our mouths are. There is more than just circumstantial evidence to suggest that many of the major media outlets are coordinated, both with each other and Big Brother, to silence dissenting voices. When you read an article, listen to a podcast, or watch a video, make sure to like/share/subscribe to the original feed in order to keep them in the public view despite the reproach of the elite. Better yet, follow these content creators to their new destinations, and prepare to unplug from outlets that don’t respect your freedom to choose what information to consume.

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Did the Fed Really Ask for Fiscal Support?

09/29/2020Robert Aro

In testimony before the US House of Representatives on Tuesday, Chair Powell noted economic challenges under covid, as well as supposed triumphs such as an increase in household spending “likely owing in part to federal stimulus payments and expanded unemployment benefits.”

That would be laudable if it weren’t free market interventionism:

We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.

His reference to “tools” refers to his self-declared “forceful actions” since March, which “helped unlock more than $1 trillion of funding” by:

implementing a policy of near-zero rates, increasing asset holdings, and standing up 13 emergency lending facilities. We took these measures to support broader financial conditions and more directly support the flow of credit to households, businesses of all sizes, and state and local governments…

We can look past what he told Congress to see that since mid-March, the M2 money supply and the balance sheet have both increased by about $3 trillion to $18.58 trillion and $7.06 trillion, respectively. Powell also provided updates on various lending programs, noting around $2 billion for loans to the Main Street Lending Program, nearly $13 billion for the Secondary Market Corporate Credit Facility (corporate bond/ bond-ETF) buying program, and $250 million for the municipal bond purchase program. To clarify, all this money didn’t exist in February, it is literally “new money” credited to various bank accounts across the country.

He touched on the lesser-known Term Asset-Backed Securities Loan Facility (TALF), mentioning how nearly $100 billion can still be lent, but just under $3 billion has been utilized to date. Of course, these funds are not for Main Street since the three-year loans are reserved for:

certain triple A-rated ABS [asset-backed securities] backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration (SBA), and certain other assets.

So just who exactly has been receiving the nearly $3 billion in TALF support? Powell didn’t say. However, when we review the monthly reports to Congress under TALF’s September 8, 2020 transaction-specific disclosures, we see that the aptly named Mackay Shields TALF 2.0 Opportunities Master Fund LP received $571 million from thirty-two loans, with an interest rate from 0.76 to 1.30 percent. Per the company’s website, Mackay Shields is a firm of 210 employees managing $134 billion in assets. The collateral pledged to the loans was commercial mortgages, student loans, and several small business loans under SBA 504, which is a “loan program that offers small businesses another avenue for business financing” according to the Small Business Administration’s website.

Looking deeper into the data other names, large asset managers and some overseas firms are mentioned; only one question remains:

What about BlackRock? We know they helped the Fed launch its corporate bond buying program; surely by now we can expect Wall Street to receive more than Main Street.

Also included in the report, they received seven loans totaling $113 million, with the same favorable interest rate of the Mackay Shields loans for commercial mortgages and, naturally, small business loans.

Now imagine BlackRock, having $7.32 trillion in assets under management and getting small business loans from a central bank! Meanwhile the man responsible appears before elected US officials and isn’t met with so much as any scorn, ridicule, or calls to resign. Yet who dares ask of the long-term effects of stimulating a semi–shut down economy with a money machine? As usual, some on Main Street get breadcrumbs while the richest companies in America get entire loaves of bread!

Regardless of what the Fed does or Powell says, does any of it matter to Congress? If it did, one would think they would have ended the Fed, especially by now. As if to prove the point, Powell delivers the coup de grace at the very end, saying that, despite their efforts,

Many borrowers will benefit from these programs, as will the overall economy, but for others, a loan that could be difficult to repay might not be the answer. In these cases, direct fiscal support may be needed.

We know we’re in trouble when central bankers are asking for fiscal stimulus. Where does the Fed think Congress will get the money if not from the Fed? Not many, if any, elected officials understand the origins of money. But what’s Powell’s excuse?

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The Fed Has Decided the Phillips Curve Is Wrong after All

09/28/2020Robert Aro

Chairman Powell at the August 27 Jackson Hole symposium emphasized what he sees as the malleability of economic theory, noting that the apparent tradeoff between inflation and unemployment, known as the Phillips curve, hasn’t been working as once hypothesized. He alluded to an era when the curve allegedly worked better than it does now:

In earlier decades when the Phillips curve was steeper, inflation tended to rise noticeably in response to a strengthening labor market.

Strange, because for many decades Austrian economists raised concern about the theory, asserting that correlation does not equal causation. While Powell doesn’t acknowledge the efforts made by Austrians, he somewhat agrees. The framework used generations ago may no longer be relevant.

During the September 16 Federal Open Market Committee (FOMC) meeting, he noted the “new framework” and the move away from the unemployment/inflation tradeoff:

The good news is we think we can have quite low unemployment without raising troubling inflation.

This may sound new but Powell said almost the exact same words to Congress in July of last year:

I think we really have learned though that the economy can sustain much lower unemployment than we thought without troubling levels of inflation.

Vice Chair Clarida, in an August 31 statement, takes the idea one step further by appearing to rationalize the “flat curve” as reason to push for the importance of inflation expectations:

This is especially true in the world that prevails today, with flat Phillips curves in which the primary determinant of actual inflation is expected inflation.

Twentieth-century mainstream economists—until recently—have generally asserted that unemployment is a primary determinant of actual price inflation. But now that Fed economists have concluded the Phillips curve has flattened this can no longer be said. In our new era, “expected inflation” is the “primary determinant.” It's a vague term, but as Clarida explains, it can be “inferred from surveys, financial market data, and econometric models.” This approach hinges on the Fed influencing the market to instigate higher inflation which manifests itself into higher prices; a theory impossible to prove.

The following day Governor Lael Brainard similarly bent reality by referencing the “flat curve” to justify low interest rates:

With a flat Phillips curve and low inflation, the Committee would have to sustain the federal funds rate below the neutral rate for much longer in order to push inflation back to target sustainably.

At least she’s honest when affirming low rates are “conducive to increasing risk appetite, reach-for-yield behavior, and incentives for leverage” ultimately leading to more economic instability.

Finally, September 23 delivered the final nail in the coffin when Vice Chair for Supervision Randal K. Quarles stated:

This recent experience in the United States, which has also played out elsewhere, has led to a growing consensus in the economics profession that the relationship between unemployment and inflation—commonly known as the Phillips curve—has flattened.

It’s not that the Phillips curve, invented over sixty years ago, once worked and now inexplicably doesn’t. It never worked at all. A theory must work at all times to be considered credible, not just when it’s convenient. What’s worrisome is that the Fed’s mandate centers around inflation and unemployment. But with no tradeoff between the two, the Fed’s balancing act must be called into question.

[RELATED: "The Phillips Curve Myth" by Frank Shostak]

As for the Fed, we will never get a concise version of their stance. However, it appears they have come to terms with there being little, if any, tradeoff between inflation and unemployment. They won’t admit to implementing an obsolete theory. Therefore, it must be the curve that has changed.

This creates a new error. Rather than taking the opportunity to reflect on what went wrong, they, in effect, doubled down on their mistake. Using the unresponsiveness of the curve as an opportunity to be free of long-standing economic constraints, the Fed “freed” itself. Inflation expectations, low rates, and money supply expansion can continue indefinitely to help bolster job growth, all while seeing minimal effects of price inflation; only now, the flat curve can be incorporated into a new narrative, some unnamed theory, the equivalent of disabling a car’s onboard computer system to drive over a cliff at an even faster velocity.

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The US Economy Would Have Been Stronger Had the US Never Had Slavery

09/27/2020George Reisman

Ancient Rome, Greece, Babylon, Egypt, India, China, and Africa too, all had slavery. None of them created the Industrial Revolution. Great Britain and the United States did create the Industrial Revolution, on a foundation of economic freedom and respect for individual rights.

The great blemish of slavery played no greater positive role in the history of the US than it had played previously in the world, which is to say virtually none. Ignoring its overwhelming negatives, its utmost positive contribution here may have been a temporarily larger supply of raw cotton. But even that is probably not true. Free labor could have picked cotton. True, it would have had to be paid more than a wage equal to the price of a slave's minimum necessities, but it undoubtedly would have been less expensive per pound of cotton picked.

Free labor would have done away with the cost of a system of overseers and the cost of acquiring slaves. It could easily have been accompanied by a system of piecework and thus eager competition among workers in picking more cotton and thereby earning more money. Free workers would also have been motivated to find brand new ways to increase production, because they would have financially greatly benefited from doing so. Thus, improvements in raw cotton production might have come generations sooner. People who believe that slavery is an efficient system of production are people who are ready to impose 100 percent marginal rates of taxation in the belief that doing so is economically harmless.

The alleged economic benefit of slavery is a core belief of the Left both in current politics and in the interpretation of economic history. It sees no connection between freedom and production and no difference between work for positive gain and work to avoid pain.

Fundamentally, the Left does not recognize the distinction between human beings and draft animals, in that it believes the value of human beings derives from their muscles rather than their motivated minds. So far is slavery from having been a source of gain in the United States that the actual truth is that had it never existed and had no African ever been involuntarily brought to the US, the effect would have been enormously positive economically, socially, and culturally. Incentives to produce and save would have been greatly increased. No portion of accumulated savings would have been constituted by the market value of human beings but only by that of physical assets, implying the accumulation of more physical assets. There would have been no need for a civil war to free the slaves, a war that killed six hundred thousand Americans. And today there would be no racial animosities traceable to slavery.

The US would be more the country that its fundamental principles have designed it to be: a country in which the material self-interests of men function harmoniously, to the benefit of all, because they deal with one another by means of voluntary trade, not physical force.

Slavery is as much an economic benefit as holding up gas stations. Not only does the gas station owner lose what the robber gains, but both his motivation to produce and his means of producing are reduced. A world of robbery, which is what slavery is, is a world of great poverty.

This is why the standard of living of even the kings and emperors of the preindustrial world was far below that of the average worker in any capitalist country today.

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What You Need to Know about Amy Coney Barrett's Jurisprudence

09/27/2020Robert Wenzel

Below is a look from a libertarian perspective at the statements and rulings of the likely Trump nominee for the Supreme Court, Amy Coney Barrett.

President Trump is expected to officially announce his choice for the Supreme Court on Saturday afternoon.

The good from a libertarian perspective:

  • Barrett wrote in 2017 that Chief Justice John Roberts pushed the Affordable Care Act beyond its plausible meaning in order to save it.

  • Barrett dissented when the appeals court upheld a decision restricting the Second Amendment rights of a felon convicted of mail fraud. She said nonviolent offenders should not lose their constitutional right to firearms possession.

  • In a dissent, Barrett defended the Trump administration's rule denying immigrants permanent residence if they become regular users of public assistance.

  • Barrett helped to block the US Equal Employment Opportunity Commission's effort to stop an employer from transferring Chicago-area employees based on their race or ethnicity. The agency had accused AutoZone of making the transfers to reflect area demographics.

  • Barrett ruled that the Age Discrimination in Employment Act does not apply when policies impact plaintiffs unintentionally. The ruling went against a 58-year-old job applicant who lost out to someone half his age when the company sought to hire a person with less than seven years' experience.

  • In the case Rainsberger v. Benner, Barrett authored an opinion in which she denied qualified immunity—a protection for government officials from being sued for judgment calls they make on the job—for a police officer who was alleged to have submitted a document "riddled with lies and undercut by the omission of exculpatory evidence" that led to a man being put in jail for two months.

  • "In a 2019 opinion…she concluded that Drug Enforcement Administration agents violated the Fourth Amendment when they searched a suspect's apartment based on the consent of a woman who answered the door but did not live there."

  • "In 2018, Barrett concluded that an anonymous tip did not provide reasonable suspicion for police to stop a car in which they found a man with a felony record who illegally possessed a gun. 'The anonymous tip did not justify an immediate stop because the caller's report was not sufficiently reliable,' she wrote for a unanimous three-judge panel. 'The caller used a borrowed phone, which would make it difficult to find him, and his sighting of guns did not describe a likely emergency or crime—he reported gun possession, which is lawful.'"

  • "Barrett has written several opinions overturning excessive federal sentences. In a 2019 case, she said that a methamphetamine dealer should not have received extra time because of prior convictions under a state truancy law. That same year, she concluded that a judge should not have imposed a four-level enhancement for possessing a gun in connection with a drug offense without citing any evidence of that connection."

The bad from a libertarian perspective:
  • "In a 2019 decision, two members of a three-judge panel said that Indiana courts and a federal district court had erred by rejecting a defendant's claim that prosecutors improperly withheld exculpatory evidence when they tried him for attempted murder. According to the Supreme Court's 1963 decision in Brady v. Maryland, the failure to disclose such information is a violation of due process….

    "The defendant in the 7th Circuit case, Mack Sims, did not discover until after he was convicted that the victim, whose testimony was crucial in identifying Sims as the perpetrator, had undergone hypnosis prior to the trial, which may have tainted his recollection of the crime. Between the attack and the trial, 7th Circuit Judge William Bauer noted in an opinion joined by Judge David Hamilton, the victim's account changed, as did his confidence that Sims was the man who had shot him….In these circumstances, they concluded, the use of hypnosis was an important piece of information that could have affected the outcome of the trial.

    "In her dissent, Barrett said the majority had failed to give the Indiana Court of Appeals proper deference. 'Even though I think that the undisclosed evidence of [the victim's] hypnosis constitutes a Brady violation, it was neither contrary to, nor an unreasonable application of, clearly established federal law for the Indiana Court of Appeals to conclude otherwise,' she wrote. "If I were deciding the question de novo, I would agree with the majority that the suppressed evidence of hypnosis undermined confidence in the verdict. But because I can't say that the Indiana Court of Appeals' decision was "so lacking in justification that there was an error well understood and comprehended in existing law beyond any possibility for fairminded disagreement," I would affirm the district court's denial of Sims's habeas corpus petition.'"

  • She was part of a three-judge panel that rejected the state GOP’s request for a preliminary injunction against enforcement of the lockdown order issued by Gov. J.B. Pritzker. The appeals court also rejected the state GOP claim that Pritzker was selectively enforcing the political gatherings ban by allowing and even endorsing massive Black Lives Matter street protests while refusing to allow other political groups to assemble.

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The Fed Plans to "Overshoot" the Target for Max Employment

09/22/2020Robert Aro

Fed Chair Jerome Powell laid out our targets for our future at the September 16 Federal Open Market Committee meeting. “Accommodative stance” on monetary policy, up to 0.25 percent interest rates until maximum employment, plus a moderate overshoot of the 2 percent inflation target all must be met. Clearly, there is no plan to ever stop monetary stimulus.

He didn’t explicitly say this, nor would he. But, per his guidance and Q&A, conclusions can be made. Maximum employment for example:

We are assigned maximum employment. Now what does that mean? As I mentioned earlier, it doesn't mean a particular headline unemployment number. What it means is maximum employment.

Unemployment rate? Not much substance offered there:

I can't be precise about a particular number, but let me just say there was a lot to like about 3.5 percent unemployment. It's not a magic number. No one would say that number is the touchstone or that is, you know, maximum employment.

Touchstone? Curious what number that would be. Upon further questioning, he clarified that maximum employment is “not something which could be reduced to a number.” Apparently, the Fed will determine when that goal is reached. However, support does not end once employment is met.

Regarding that inflation target, Powell informs us:

Even after -- if we do lift off, we will keep policy accommodative until we actually have a moderate overshoot of inflation for some time.

Interesting to note the consensus in the Fed’s statement of economic projects: inflation won’t reach 2 percent until 2023; even then the highest projection made is 2.4 percent, hardly an overshoot. However, Powell remained steadfast:

In terms of inflation, you know, this is a Committee that is both confident and committed and determined to reach our goals. And the idea that we would look for the quickest way out is just not who we are….Okay, so just understand that, you know, we're strongly committed to achieving our goals and the overshoot.

How much more could be done to keep policy “accommodative?” Aren’t they out of ammunition? The Chair gives a definitive NO.

I certainly would not say that we're out of ammo, not at all. So first of all, we do have lots of tools. We've got the lending tools. We've got the balance sheet, and we've got forward guidance…

Translation: new Fed/Treasury bailouts, more bond buying, eventually equity purchases, and, of course, more statements extolling the virtues of maximum employment and inflation. But, it could also mean negative interest rates in the future.

Again, he will never outright say this, but accommodative monetary policy inevitability takes over nations. We are already seeing this across the globe. Why should the Fed be any different? These policies and goal settings carried out by central banks go by many names: interventionism, socialism, anticapitalism. They create asset bubbles and boom/bust cycles, but the Fed tells us their work is necessary to “provide relief” and “support recovery” as long as needed.

They have explicitly stated that interest rates will stay low for the next several years and this “accommodative stance” will continue at least until maximum employment is met with a consistent overshoot of inflation. Looking back on the last ten years, if price inflation was only around 1 percent, we could hardly imagine a decade of inflation being around two to five, seemingly the ballpark for which they are striving. As for maximum employment, it’s a target that cannot be measured nor particularly articulated. It appears nothing more than a carrot on a stick, intended to continue on a path which has a nearly unattainable end goal. But which is worse, the Fed somehow meeting their goals or continually falling short?

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The War on Assange Is a War on Truth

09/22/2020Ron Paul

It is dangerous to reveal the truth about the illegal and immoral things our government does with our money and in our name, and the war on journalists who dare reveal such truths is very much a bipartisan affair. Just ask Wikileaks founder Julian Assange, who was relentlessly pursued first by the Obama administration and now by the Trump administration for the “crime” of reporting on the crimes perpetrated by the United States government.

Assange is now literally fighting for his life as he tries to avoid being extradited to the United States, where he faces 175 years in prison for violating the “Espionage Act.” While it makes no sense to be prosecuted as a traitor to a country of which you are not a citizen, the idea that journalists who do their job and expose criminality in high places are treated like traitors is deeply dangerous in a free society.

To get around the First Amendment’s guarantee of freedom of the press, Assange’s tormentors simply claim that he is not a journalist. Then CIA director Mike Pompeo declared that Wikileaks was a “hostile intelligence service” aided by Russia. Ironically, that’s pretty much what the Democrats say about Assange.

Earlier this month, a US federal appeals court judge ruled that the NSA’s bulk collection of Americans’ telephone records was illegal. That bulk collection program, born out of the anti-American PATRIOT Act, was first revealed to us by whistleblower Edward Snowden just over seven years ago.

That is why whistleblowers and those who publish their information are so important. Were it not for Snowden and Assange, we would never know about this government criminality. And if we never know about government malfeasance, it can never be found to be criminal in the first place. That is convenient for governments, but it is also a recipe for tyranny.

While we might expect the US media to aggressively come to the aid of a fellow journalist being persecuted by the government for doing his job, the opposite is happening. As journalist Glen Greenwald wrote last week, the US mainstream media is completely ignoring the Assange extradition trial.

Why would they do such a thing? Partisan politics. Journalists—with a few important exceptions like Greenwald himself—are no longer interested in digging and reporting the truth. These days they believe they have a “higher calling.”

As Greenwald puts it, “If you start from the premise that Trump is a fascist dictator who has brought Nazi tyranny to the US, then it isn’t that irrational to believe that anyone who helped empower Trump (which is how they see Assange) deserves to be imprisoned, hence the lack of concern about it.”

That may seem like a good idea to these journalists in the short term, but for journalism itself to become an extension of government power rather than a check on that power would be deeply harmful.

We cannot have a self-governing society as was intended for our Republic if the government, with the complicity of the mainstream media, decides that there are things we are not allowed to know about it. President Trump should end the US government’s war on Assange…and on all whistleblowers and their publishers.

Reprinted with permission.

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What Consumers Say Is Not as Important as What They Do in the Marketplace

09/21/2020Raushan Gross

It is preposterous to assume what customers say is more important than where they place their feet and the price they pay for products or services. The customer's mind is still elusive and challenging for entrepreneurs. If understanding the mind of the customer were easy, everyone would do it!

The insights of the Austrian school of economics tell us that people act purposefully toward future betterment. That is, customers and entrepreneurs both act to attain better future situations than their current situations compared to if they had not acted at all. Customers operate on a value scale, an important insight developed by Carl Menger, elucidating that value is in customers' minds. In this regard, Menger urged entrepreneurs to "reduce the complex phenomena of human economic activity to the simplest elements."1

I echo the sentiments of Menger, but some do not. For example, a recent article titled "2 Simple Steps for Testing If Your First Customers Like Your Product" recommends surveys and the search for "moments of truth" and "tipping points." The only simple way of ascertaining customers' product sentiment is through the market itself.

The market process provides excellent insights into customers' unspoken motives and whether they like your products and services. The best way to figure out if your customer likes your products is to turn to market phenomena. That is, the market price, as reflected by customers' subjective valuation and competitors' offerings. Different opinions about the value of a product or service are drawn out through this process. The real test, the market signals, shows how much and to what extent customers are willing to sacrifice to attain your product or service offering.

The customer wants the product with high use value, intended for whatever purposes to help them reach their end. The value of any product is in the customer's eye, the same way that beauty is in the beholder's eye! We never truly know to what extent a customer chooses your product over a competitor's. That is to say, the only reliable data on customer sentiments is that customers have purchased your products—the more, the merrier. Ludwig von Mises in Human Action expressed that "It is ultimately always the subjective value judgments of individuals that determine the formation of prices.”2

Market prices and exchanges alert the entrepreneur whether the product is more or less valuable to the customer than the forgone opportunity to withhold their cash holdings. Money measures prices, and prices measure value. Buying and selling or market abstention determine prices. As such, prices are what customers are willing to pay for a product based on their subjective valuation, keeping in mind their future benefit from that product.

In his salient book Economics for Real People, Gene Callahan agreed that "only real market prices convey information on the freely chosen values of acting man."3

Therefore, it is sensible to observe market price signals as a means of analyzing customer sentiments. Customer dissatisfaction and loyalty occur when product or service incongruities exist. Market incongruities also exist between the entrepreneurs' perceptions of changing market realities. The entrepreneur's function is to address any market incongruities in which the customer, because of market changes, is better off than they were before. The market is in constant movement, which means customer preferences are in perpetual motion.

Retention of customers is a less complicated phenomenon which an entrepreneur might observe. Only individuals act in concert with one another in a spontaneous way to reach their goals in any given market. As the author of the cited article proposes, the concept of customer retention is somewhat misguided, because retention relates to competitors' actions and their substitutable products. The question should be, how many substitutable products exist in my ecosystem? Are other entrepreneurs doing something that I am not doing?

First, the customer is the holder of the perception of value. Secondly, the customer making future choices is the cornerstone of the basic axiom of action. While taste preferences change over time, so do the market actions of your customers and your competitors. The first axiom of praxeology is that people act; they act to pursue a better situation based on the choices they are presented with. Mises reminds us of this in his work Human Action. What the customer says and the action the customer takes are two different things, because it is the customer's action that provides market signals to the entrepreneur. As long as you satisfy the customer's needs and wants, profits will ensue, and losses decrease.

You strive to get rewarded for the risks involved with bringing new products to the market. Your competitors are seeking the same market reward.

Some do not understand that competition works as a signal of incongruities, leading to profits or losses. Indeed, competition exists so long as customers have market choices and can exercise them. The reality is that customers vote with their dollars and feet. They may voice their liking of your products, but at the same time be enthralled with a competitor's quality, service, and prices. Competition, therefore, acts as the entrepreneur's light post, guiding them toward market opportunities that may go unrealized or deterring them from those that are unfit.

Competition, in the Austrian view, is aimed at who can serve the customer best. Providing the best quality and product to the customer is the leading role of entrepreneurial competition. Competition is not and should not be insidious—rather, it should be productive and dynamic. If entrepreneur A wants to enter a market with capital to prove he or she can do things better than entrepreneur B, that should be his or her choice. Entrepreneur B will come to realize they missed many market opportunities only because that knowledge appears as a result of the competitiveness of entrepreneur A. For example, customers may choose the products of entrepreneur A one day and B the next.

It is not what customers say, but what they do. Entrepreneurial insight about the market and the changes that will occur should be the guiding light for entrepreneurs. Entrepreneurs have to ascertain how people will respond to changes. Customer purchases, retention, a likeness of products or services, and loyalty are results of entrepreneurial market observation, and not causes.

  • 1. Carl Menger, Principles of Economics, trans. James Dingwall and Bert F. Hoselitz (Auburn, AL: Ludwig von Mises Institute, 2007)
  • 2. Ludwig von Mises, Human Action: A Treatise on Economics, scholar’s ed. (Auburn, AL: Ludwig von Mises Institute, 1998).
  • 3. Gene Callahan, Economics for Real People: An Introduction to the Austrian School, 2d ed. (Auburn, AL: Ludwig von Mises Institute, 2004).
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Will Kirkpatrick Sale's Collapse of 2020 Come True?

09/17/2020Doug French

America is about growth and getting big, supersized, or bigly, as the president would say. There’s no debate, growth is good, in fact essential; bigger is better.

One man who believes the end of all this bigness is nigh is Kirkpatrick Sale, a prolific author, most notably of Human Scale and Human Scale Revisited, and a notable proponent of secession. Simply put, Sale believes the world is destroying itself. In a piece for Sale wrote, “the government we have in this country is too incompetent, inept, corrupt, wasteful, and inefficient, too centralized, undemocratic, unjust, and invasive, and too unresponsive to the needs of individual citizens and small communities, and all because it is too big.”

For readers wanting a warm-up before launching into the meaty Human Scale, Sale’s latest book is The Collapse of 2020, which started with a $1,000 bet Sale made in 1995 with Wired magazine editor Kevin Kelly that civilization would collapse by, well, 2020. At the time, that year sounded a long way off and Sale, who in those days had little more than a thousand bucks to his name, figured $1,000 would be inflated away to virtually nothing by 2020.

Not quite, of course, and civilization hasn’t completely collapsed, but Sale believes we are close and now puts the doomsday year at 2030. He has produced a pithy little book (44 pages) to give us a status report. The author tells us the earth has experienced five previous extinctions: a meteor strike which changed the climate and four others caused by greenhouse gases. The sixth is underway.

“Industrial civilization,” Sale writes, “in other words, is an inherently self-destructive system with limits beyond which it cannot survive, and utterly consumes itself like the self-burning tree of Gambia discovered by Mungo Park.”

Political collapse is underway in 43 percent of all nations on earth, without including “a dozen smaller nations that are locked into autocracy and poverty.” There are plenty of examples in the political collapse category for Mr. Sale to cite: Brexit, the Trump election “(and the subsequent attempt to overturn it),” and protracted protests in Poland and Hong Kong. Sale mentions the work of two political scientists who claim that “the state system seems to be failing all over the world” and believe work must be done to study “how to grow, maintain, and fund states so as to avert their collapse.” Anarchists would cheer “let them fail!”

Political collapse stems, Sale believes, from the world’s population, which, like everything else, has grown too big. There will be wars and competition, because “there will be no diminution in overpopulation--it has grown steadily and irredeemably by 83 million people a year since 1975.” Sale describes the United Nations as a waste of time and money; “in short,” he writes, “[the U.N.] is an example of the collapse of politics at the global level.”

Also collapsing on a global scale are capitalism, which Sale says “has everywhere turned into a disputative autocracy or a failed anarchy,” and the Catholic Church, which “has proven itself incapable of self-reform or doctrinal coherence.”

These examples of political collapse have led to increasing rates of addiction, suicide, and mental illness around the globe, while rates of marriage and religious affiliation have declined.

Individual contempt and distrust of government are increasing, with terms like “deep state” and “the swamp” being common pejoratives.

The author sees the economy as “the Sophoclean and Shakespearean heroes who go into disasters unable to change.” The problem in a word is debt—government, corporate, and individual combine to unsustainable levels. The weight of all that debt will collapse the dollar. Sale quotes a Swiss banker as saying that “The long-term trend of the dollar is clear: it will go into oblivion faster than anyone can imagine.” China and Russia are of the same opinion and have added to their gold holdings at an increasing pace while unloading the dollar.

In the end, Sale believes the collapse will be due to “Heedless technological advances pushing heedless exponential growth beyond human capacity to control…, just as I predicted.”

Although he wrote before the covid-19 outbreak, Sale predicted that new deadly infections would spread to all continents. Perhaps this is the canary in the coal mine.

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Judy Shelton Won't Toe the Fed's Party Line. So She Can't Get the Votes for Confirmation.

09/17/2020Robert Aro

On Tuesday Reuters reported comments made by Republican senator John Thune:

Judy Shelton, U.S. President Donald Trump’s controversial pick to serve on the Federal Reserve’s interest-rate-setting panel, does not currently have the votes to win confirmation in the U.S. Senate.

Hope still remains as Senator Thune’s role as majority whip requires him to track votes made by Republicans; the official vote has not yet happened. In the senator’s words:

She’s a priority for the White House. It’s the Federal Reserve. It’s important. So, obviously, we want to get it done. But we’re not going to bring it up until we have the votes to confirm her.

The story is troubling because Republican’s have a 53–47 senate majority, but still not enough votes to approve the nomination. This raises questions for the Grand Old Party; mainly, what is the hesitation?

The Wall Street Journal echoed the “controversial selection” narrative:

Ms. Shelton has been a longtime proponent of a return to the gold standard, which would limit the Fed’s ability to influence inflation and employment, and concedes that her views are outside the mainstream of economics.

Of course, limiting the Fed’s ability to influence the free market, including inflation and employment is the purpose of the gold standard. The controversy centers around members of Congress and the Fed who may not want to concede the power to influence the market. It’s dangerous to those at upper levels of government and the Fed, as their control rests in the ability to manipulate interest rates and create US dollars in order to buy assets and run perpetual budget deficits.

A month ago a group known as “Fed Alumni,” comprised of various former Federal Reserve employees, as well as several presidents, published an open letter to the Senate with thirty-eight signatures asking them to reject the nomination. The number now stands at seventy-seven signatures.

Upon reading the letter, the problem with mainstream economics is revealed:

She has advocated for a return to the gold standard; she has questioned the need for federal deposit insurance; she has even questioned the need for a central bank at all.

The dogma is followed by hubris:

The Fed has serious work ahead of it. While we applaud the Board having a diversity of viewpoints represented at its table, Ms. Shelton’s views are so extreme and ill-considered as to be an unnecessary distraction from the tasks at hand.

If there is a controversy, it should be about the “serious work” the Fed has ahead of it. With the new goal of aiming to “achieve inflation moderately above 2 percent for some time,” it appears very few are asking the purpose behind this. Especially since the Fed is moving away from the belief in there being a tradeoff between inflation and unemployment, there seems little reason to push for higher price inflation any longer.

Contrast this sentiment with those in science, math, or physics, where questions and the ability to refute or prove theories allows these fields to advance. Yet economics is devoid of this advancement; as we can see, when someone offers ideas such as a return to the gold standard, the result is contempt. But it’s one thing to petition congress claiming lack of qualifications, yet quite another to offer coherent arguments, articulating where exactly the problem lies. So far, we’re still looking for a critique which goes beyond being discredited for brainstorming economic solutions.

This somewhat explains why economics is divided into “orthodoxy” and “heterodoxy,” which normally refer to religious doctrine—heterodoxy for beliefs falling outside the mainstream. Perhaps it’s time for the Fed to stop treating economics like a religion and start searching for the truth, where someone like Judy Shelton is praised instead of punished for questioning economic tradition.

Much uncertainty remains as we wait for 51 democratically elected senators to give their blessing, allowing Ms. Shelton to ascend to the hallowed halls of the Eccles Building, where she can join the ranks of those select few who have the almost godlike ability to decree paper (or its electronic equivalent) legal tender. Maybe long-standing beliefs like money creation leading to prosperity should be widely questioned: If it holds up to scrutiny then great; if not, then why should we adhere to it?

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The Fed's Inflation Obsession

09/17/2020Robert Aro

If one needs convincing the Fed and mainstream economists are divorced from reality, read detailed economic explanations from those so called “experts.” A few sentences in reveals no economic theory employed, as exemplified by Fed head, Jerome Powell, addressing the world on the Fed’s new inflation objectives as part of the updated monetary policy strategy at the August 27 Jackson Hole symposium.

The persistent undershoot of inflation from our 2 percent longer-run objective is a cause for concern.

This notion of a “2% inflation” target may seem as though it has been in effect forever, but it was only officially made a goal by the Fed in 2012. Unofficially, it began in countries around the world in the late 80’s to early 90’s. Contrary to what we’ve been conditioned to believe, economic policy was not always this way. An article on the origins of the inflation target was shared this week, where it was noted by the New York Times how the 2% goal was literally “plucked out of the air” with no empirical evidence ever presented to support the target.

After suggesting inflation below 2% would be cause for concern, Powell follows up with:

Many find it counterintuitive that the Fed would want to push up inflation. After all, low and stable inflation is essential for a well-functioning economy. And we are certainly mindful that higher prices for essential items, such as food, gasoline, and shelter, add to the burdens faced by many families, especially those struggling with lost jobs and incomes.

Here's the tricky part; for the last decade, we’ve been told by the Fed, the media, and popular economists consumer price inflation has been low. While technically true that it has been low according to their measurement, the problem lies in the measurement itself. It’s not a matter of getting the “correct” inflation number; it’s that no such number exists. These calculations rely on so called experts to arbitrarily choose a basket of goods and assign a relative weight of importance to each item. Yes, it amounts to data, but no, it’s not credible since it cannot factor in the countless reasons which cause price fluctuations, nor can it calculate the sheer number of inputs required to arrive at a figure that can be adequately applied to an entire nation. Anecdotally for the average American, who is not a central banker, the cost of goods and services has increased at a rate much greater than 2% per annum for a very long time.

Unfortunately, even though Powell acknowledges the burden inflation places on families, he dismisses the gravity by saying:

Inflation that is persistently too low can pose serious risks to the economy. Inflation that runs below its desired level can lead to an unwelcome fall in longer-term inflation expectations, which, in turn, can pull actual inflation even lower, resulting in an adverse cycle of ever-lower inflation and inflation expectations.

Fortunately, the train of thought is revealed: if low “inflation expectations” materialize into pulling “actual inflation” lower, higher inflation expectations should push actual inflation higher. In this regard, we see the Fed rely on unproven theories more than anything else. Consider, if inflation expectations influenced actual inflation, why does the Fed continually struggle with “the persistent undershoot” of inflation? Despite never providing empirical evidence to support inflation expectations, it remains paramount to the Fed, especially since:

Expected inflation feeds directly into the general level of interest rates….

By taking a little time reading a speech from a central banker, it becomes apparent something just doesn’t add up. For an organization which claimed “monetary policy is data dependent,” they have failed to justify the 2% inflation target or proven that inflation expectations actually work. One would be hard pressed to see any data to support their assertions, which is probably why it’s best they maintain an air of mystique around them ignoring Austrian economics entirely.

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