Hunter Lewis: Powell is Closer to Schumer than Trump

Hunter Lewis: Powell is Closer to Schumer than Trump

11/02/2017Ryan McMaken

Hunter Lewis's op-ed at Foxnews today explains how Trump's new nominee for the Fed Chairmanship, Jerome Powell, is anything but a departure fron business as usual. Lewis begins by comparing Powell's appointment to that of Ben Bernanke:

By nominating Jerome Powell as chairman of the Federal Reserve, President Trump is elevating a nominal Republican but also an Obama administration appointee to the chairmanship of our nation’s central bank. Many consider the chairmanship to be the second-most powerful position in the U.S. government.

This is not the first time something similar has happened. In 2006 President George W. Bush appointed Ben Bernanke, also a nominal Republican at the time, who on leaving the Federal Reserve registered as a Democrat.

No wonder that Democratic Sens. Chuck Schumer of New York and John Kerry of Massachusetts publicly rejoiced when Bernanke was appointed. They correctly surmised that he was closer to them philosophically than to President Bush.

Democrats should be equally pleased about the Powell nomination. This puts someone in charge of the Federal Reserve who is more aligned philosophically with Schumer than with President Trump.

Lewis then goes into some history of the Fed's enthusiasm for "non-traditional" monetary policy which is designed primarily to help Wall Street and Washington, DC. The crash itself, had been triggered in part by Fed policy: 

The trigger for the Crash was the chairman’s stubborn refusal to reconsider the imposition of “mark to market” accounting on U.S. banks. This form of accounting reflects the current market value of assets and liabilities. Steve Forbes accurately identified “mark to market” regulations as “mark to make believe.” They were guaranteed to make the entire banking system insolvent.

When Bernanke finally relented and announced the termination of “mark to market” the stock market bottomed only a few days later and thereafter soared as more easy money was poured in. These policies, cheered on by the Democrats, represented true trickle-down economics. They helped those already rich, not the poor or the middle class.

During the Crash, Bernanke devised a novel monetary policy that was remarkably unsupported either by economic evidence or theory. Federal Reserve economists acknowledged that they could not model it. The stated purpose was to protect Main Street, although it was obvious that Wall Street and not Main Street was being bailed out. What was not so obvious was that the real intention was to rescue a tottering federal government debt system.

Hunter concludes by noting that Powell is merely a continuation of the current monetary status quo: 

On the Federal Reserve, Powell has been a “good soldier.” He never voted against the wishes of either Bernanke or Yellen. He vigorously opposed legislation proposed by Rep. Ron Paul, R-Texas, and his son, Sen. Rand Paul, R-Ky., to audit the Federal Reserve.

The Paul legislation would have penetrated some of the secrecy of the Federal Reserve, which finances itself “off-budget” with newly created money, notwithstanding the Constitution’s requirement that government spending be approved by Congress.

Powell can be relied on to oppose any reform of the Federal Reserve or any reconsideration of the Bernanke system, despite the dismal record of the U.S. economy since the Crash. Powell was reportedly favored by current Treasury Secretary Steve Mnuchin, who earlier worked for Goldman Sachs and liberal financier and donor George Soros.

Read the full article at Foxnews. 

Powell Has Long Hated Fed Reform

For further evidence of Powell's position on Fed reform, we need look no further than his official comments on "Audit the Fed" legislation:

Audit the Fed also risks inserting the Congress directly into monetary policy decisionmaking, reversing decades of deliberate effort by the Congress to insulate the Fed from political pressure in carrying out its day-to-day duties. Indeed, some advocates of the bill have expressed support for complete elimination of the Federal Reserve. Long experience, in the United States and in other advanced economies, has demonstrated that monetary policy is most successful when decisions are rendered independent of influence by elected officials. As recent U.S. history has shown, elected officials have often pushed for easier policies that serve short-term political interests, at the expense of higher inflation and damage to the long-term health and stability of the economy.

Powell goes on to repeat the usual orthodoxy pushed by central bankers which pushes the myth of Fed independence, and the idea that the Fed is a non-political organization. In short, Powell believes the Fed does only excellent work, and no reform is warranted at all. 

Powell is nothing more than the usual sort of central banker. 

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Which States Are Best for Sound Money?

2 hours agoJp Cortez

Wyoming, Texas, and South Dakota are the three most pro-sound money states in America, according to the 2021 Sound Money Index. Meanwhile, Vermont is ranked absolutely last.

Released last month for 2021, the Sound Money Index uses 12 criteria to determine which states maintain the most pro- and anti-sound money policies in the nation.

The index evaluates each state’s sales and income tax policies involving precious metals, whether a state recognizes the monetary role of gold and silver under the U.S. Constitution, whether a state holds pension, reserves, or bonds in gold or silver, whether a state has imposed precious metal dealer/investor harassment laws, and other criteria.

The report was released by the Sound Money Defense League and the Money Metals Exchange. 

Alaska, New Hampshire, Utah, and Washington round out the fourth to seventh place range on the index.

During 2021, Arkansas and Ohio each ended their sales taxes on purchases of precious metals in their states, joining the 40 other states that have already ended this unfair practice. Arkansas and Ohio rose from 49th and 45th place to 33rd and 20th place, respectively.

The Buckeye State made a comeback in the past two years when Ohio pension trustees decided to allocate five percent of retirement funds to physical gold -- and then the legislature reversed its prior decision to tax the sale of sound money. Ohio had fallen near the bottom of the index, but has now worked its way back into the top 20.

In fact, Ohio now stands as the only state in the U.S. currently known to allocate a percentage of state-held pension funds to physical gold. 

According to the index, the very worst environments for sound money can be found in Vermont, New Jersey, Maine, and Kentucky. However, New Jersey, Maine, and Kentucky are expected to consider bills that would improve their rankings in their upcoming 2022 legislative sessions.

Inflation is becoming the top economic problem facing America. As politicians and central bankers continue to create trillions in unbacked currency, sound money has never been more important. Citizens in states that foster pro-sound money environments can better protect their savings.

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Why a Minimum Wage Is Not a Win for Labor Advocates

After scrapping the plan three years ago, Ontario Premier, Doug Ford, has decided to raise the minimum wage to $15/hour. Naturally, this move has sparked a fair amount of discussion around what the minimum wage level ought to be. Instead of taking a moment to realize the flaws in the minimum wage system, people are doubling down, calling for it to be even higher. 6ixbuzz, a Toronto news website, recently discussed how different regions in Ontario have separate costs of living, which should surprise no one. In this article, they cite a breakdown by The Ontario Living Wage Network on the “living wage” needed for people to live all over Ontario. Unsurprisingly, Toronto has the highest at $22.08/hour. This study effectively lays out the flaws in a minimum wage policy while miraculously coming to the wrong conclusions.

The first issue is the assumption that a “living wage” exists and that a government can set this wage. Many others have covered this concept before, so I’ll be brief. The “living wage” idea stems from the concept of the “price level,” which measures the average prices in the economy. There are plenty of attempts to calculate the price level using market baskets and similar metrics; however, they all fall victim to The Knowledge Problem. The “living wage” aims to cover the cost of living in the province at a given price level. Since each individual has their own unique wants and needs, it is impossible to set a wage at such a rate to satisfy every person in the economy. Further, the study cited above demonstrates the critical flaw in having the province legislate the “living wage,” as every municipality has a different cost of living, mainly to do with housing.

The next problem comes from the enemy of all humans, time. When we look at the study from The Ontario Living Wage Network, we see a snapshot of the economies today. What about tomorrow? What about next year? Inflation is currently 4.3% in Canada, and thanks to economist Richard Cantillion, we know that it impacts every part of the economy differently. What is the longevity of this wage with the rising costs of living, and if expenses suddenly fall, are we to expect the state to set the wage rate lower? I’m sure the Ford Government would win big political points for that. Realistically, we cannot expect the mechanisms of bureaucracy to keep up with the economy; even the staunchest of minimum wage supporters have to agree with that.

Further still, what happens when the “living wage” takes effect? The surge in demand for all the necessities calculated into the “living wage” will drive up prices or create massive shortages if prices don’t act fast enough. When those prices go up, the whole basis of the “living wage” is flipped on its head as we lower more people into poverty than before the policy came into effect. These price changes compound with the rise in the cost of doing business as labour becomes more expensive. This, and the other problems listed above don’t paint a flattering picture for the minimum “living wage” argument.

On the other hand, with free-floating prices for wages—and everything else—in each municipality, individuals have more ability to relocate to areas that better fit their wage rate. Moreover, when the market sets the price of labour, workers actually gain more power because if the workers cannot afford to live near their jobs due to low wages, the companies will run out of workers. Geographical arbitrage is the single most effective tool to increase wages. 

Reducing taxes and the legislative red tape can also help get more businesses started, lowering costs with the competition.

Lastly, removing the price floor on wages removes the legal excuse to keep wages low. As counter-intuitive as it may seem, having a minimum wage disincentivizes wage growth by allowing companies to use it as a precedent for paying the same price for all entry-level positions. To look at this from the other side, if all businesses in Ontario came together and declared that they would all pay a specific wage for an entry-level position, labour advocates would cry foul, calling it price-fixing cartel behaviour. If monopolistic price setting is wrong when corporations do it, why on earth do labour advocates believe that it’s any different when the state sets the wage? You can put a cow in a tracksuit, but it’s still a cow; you wouldn’t expect it to beat Andre de Grasse in the 200m sprint.

The Ontario Liberals and the New Democratic Party (NDP) are correct; Ford’s move to raise the minimum wage is nothing but a play to win votes. However, they go wrong when they believe the minimum wage must equal their mythical “living wage.” How about we let competition and sound economics create wage rates tailored to each region and sector. The advocacy for intervention can only backfire, as demonstrated above. Fighting against the living wage is political suicide, so don’t expect a change of heart in any political leaders. As I’ve said before, you can’t expect politicians to sacrifice their votes in favour of a real solution.

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Money Printing and Inflation in Australia

The Reserve Bank of Australia (RBA) “doesn’t fight inflation, it manufactures and maintains it.” This is a quote from the 2011 book The Evil Princes of Martin Place which I used in my first public piece on the RBA and inflation. That was in July 2013 for the LNP’s policy magazine at the time called Dialogue and published by, then editor but now senator, Amanda Stoker. Interestingly, this piece was originally written for the IPA but was rejected by, then editor but now senator, James Paterson. (And by the way, the LNP didn’t change a word.) I have since written and spoken about inflation dozens of times, both in Australia and the USA including for Townhall, Good Sauce and LibertyWorks. Inflation was a problem then, but it is far worse now a decade later.

The ‘Aussie’ mainstream media…be it Murdoch, Fairfax or ABC or be it ‘print’, online or TV…rarely gets inflation right or even tries to. And the RBA’s central role in this is largely unknown or untouchable (unlike that of The Fed in the USA). That sadly also goes for the ‘right wing’ media ‘down under’, including Sky News Australia. To be fair to them, they tend to focus on the ‘culture wars’ and other non-economic ‘wars’ such as on borders, climate, Covid-19, etc. However, such ‘cold wars’, like ‘hot’ ones, are heavily funded and influenced by economics. As for Australia’s two leading think tanks on the ‘right’ of IPA and CIS, both to their credit were tackling the topic in recent years, albeit from nearly ‘polar opposite’ viewpoints, but not so much in 2021 when it is most needed.

The Indicators of Inflation (Part 1)

There is no shortage of indicators of inflation which get cited on a regular basis in the mainstream and financial media. One of the best online places to find such economic indicators is Trading Economics, where all sorts of graphs, over all sorts of time periods, from across the world, can be found and displayed in a plethora of different ways. Indirect indicators of ‘Aussie’ inflation and expectations include: government bonds; government debt; gold reserves; stock markets; and GDP (noting the latter is an essentially a price x quantity metric). More direct indicators include: interest rate; exchange rates; labour costs; PPI; and CPI. Yes, CPI is an indicator; not a measure of, nor itself, inflation as such.

The 3 to 10 year graphs of all these indicators show some very strange goings on the past two years. Of course, that does correlate with the appearance of, and (public) responses to, Covid-19. However, that also correlates with the appearance of, and (private) responses to, inflation. As is well known in statistics, correlation is a ‘necessary but not sufficient’ condition for trying to get at cause and effect (noting that the latter two can be multiple in nature as well as in one or both directions). CPI, for better or worse, is most associated with inflation. As can be seen in the left graph below of CPI as an annual percentage change, “[t]he annual inflation rate in Australia fell to 3.0% in Q3 2021 from a 12-1/2-year high of 3.8% in Q2”. Context always matters. As can be seen in the right graph below of CPI as a cumulative index, consumer price ‘inflation’ has been largely accumulating like compound interest since the mid-1970s but with a bit of a break of sorts around the 1990s (during a ‘golden’ era of policy).

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The Economics of Inflation (Part 1)

Inflation is usually portrayed in the media, think tanks and even academia as simply, and only, a rise in prices. The focus is usually on consumer prices, but sometimes other prices are mentioned such as those of production, labour, borrowing, investment and trade. But for hundreds, if not thousands, of years inflation meant, and was only known as, inflation of the money supply. This clearly points to the cause behind the effect of a general and sustained rise in prices. Money is the cause; prices are the effect. The modern, or post WWII, portrayal of inflation is essentially saying that: “the rise in prices is caused by the rise in prices.” That is unhelpful at best; circular at worst.

But don’t just take my word for it. Let me quote three of the most influential economists of the 20th, or any, century. The first two are on the ‘right’ (Austrian and Chicago); the third on the ‘left’. They said:

  • “What people today call inflation is not inflation, i.e., the increase in the quantity of money and money substitutes, but the general rise in commodity prices and wage rates which is the inevitable consequence of inflation.” – Ludwig von Mises
  • “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” – Milton Friedman
  • “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.” – John Maynard Keynes

The Measures of Inflation (Part 2)

An inflation indicator is something that correlates as an effect. An inflation measure is something that correlates as a cause. The RBA, somewhat ironically, measures the cause, ie money supply, which they somewhat vaguely (and perhaps intentionally) call “monetary aggregates” or “financial aggregates”. These include the following three that can also be found on the Trading Economics website:

  • M0 is “holdings of notes and coins by the private sector plus deposits of banks with the Reserve Bank and other Reserve Bank liabilities to the private non-bank sector”.
  • M1 is M0 plus “transaction deposits with authorised deposit-taking institutions (ADIs)”.
  • M3 is M1 plus “all other deposits at ADIs (including negotiable certificates of deposits) from the private non-ADI sector”.

As can be seen in the left graph below of M0 in annual billions of Aussie dollars, RBA money supply (which is more or less just printing money) has skyrocketed in the past two years almost four fold. Context still matters. As can be seen in the right graph below of M3 in annual billions of Aussie dollars, RBA plus Big Banks money supply (which is known as the legal fraud of Fractional Reserve Banking) has been a largely ignored and growing problem since the mid-2000s (post ‘golden’ era of policy).

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The public policy justification for reckless money printing used to be Quantitative Easing (QE) in order to temporarily “stimulate the real economy of normal businesses and consumers, in the wake of the Global Financial Crisis (GFC)”. Nowadays it is Modern Monetary Theory (MMT) in order to neverendingly “stimulate the political economy of Woke corporations and activists, in the wake of” The Great Reset of not just culture, covid and climate but also even of nations, democracy and liberty themselves. "The revolution [may] not be televised", but it will need to be monetised.

Economics provides crucial, and obvious, insights into the real economy. It also provides no less crucial, but not so obvious, insights into the political economy. This is called Public Choice economics. It reminds us that politicians and bureaucrats are neither selfless nor omnipotent. It also points out that policy has a marketplace where concentrated special interests seek relatively large benefits for themselves at the relatively small costs to the dispersed masses. Unlike those in a free market: the overall benefits are smaller than the overall costs; and largely not created in a win-win way but transferred to the beneficiaries from the non-beneficiaries in a win-lose way. These benefits can be material and/or psychic. The beneficiaries are usually some combo of bootleggers and baptists, the former seeking the material (such as power and/or easy money) and the latter seeking the psychic (such as change and/or virtue signaling). All of this goes for the RBA’s unelected executives and permanent technocrats when it comes to inflation of the money supply.

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We Need More Statues to Jefferson, Not Less

10 hours agoEric Brakey

In 1833, Uriah P. Levy commissioned two statues of Thomas Jefferson.

As the first Jewish commodore in the United States Navy, Levy overcame anti-Semitism within the ranks. Levy credited his ability to serve as a religious minority to “one of the greatest men in history … [who] serves as an inspiration to millions of Americans [and] did much to mould our Republic in a form in which a man's religion does not make him ineligible for political or governmental life.”

Eight years after Jefferson’s death, Levy purchased and restored the former president’s home at Monticello and commissioned the celebrated French artist Pierre-Jean David d’Angers, to create these two statues in his likeness. With a pen in his hand and the Declaration of Independence at his side, a bronze version stands today as the only privately commissioned statue in the Capitol Rotunda. Its twin in painted plaster was donated to New York City where it stood in the city hall for almost two centuries until this November when it was boxed up and carted away.

“It should be destroyed,” says former Assemblyman Charles Barron of Jefferson’s likeness in New York City. “A statue should be for those who we honor for their exemplary service and duty to all of this country, not just the white race.”

He has a point, but misses the target.

Our public statues should remember those who made contributions of universal value. That is why Levy commissioned statues to the Father of the Declaration of Independence. Not only did Jefferson author our country’s mission statement—“Life, Liberty, and the Pursuit of Happiness”—he devoted his life to advancing that mission through every institution of American life, including religious freedom, universal education, and the abolition of slavery.

Born into a wealthy slave-owning family, Jefferson was a slave owner. This much his critics have right. Focusing on this fact in isolation, however, is “ahistorical” and “ripped out of context,” says Kevin Gutzman, Professor of History at Western Connecticut State University and author of Thomas Jefferson: Revolutionary, in a recent conversation I had with him.

Gutzman notes that “slavery once was a universal institution,” crediting leading founders for deciding, “at a given point in the history of the world, this needs to go—we need to get rid of it.” They did not have the power to overturn the system all at once, but “having been born into a world in which [slavery] was a very important part of life, they left a world in which it was doomed and going to end.”

Among this generation, Jefferson stands out in his lifelong pursuit of abolition.

Elected at twenty-six to the Virginia House of Burgesses, one of Jefferson’s first acts was an effort to gradually abolish slavery in Virginia. With little standing to advance the radical cause, he recruited a senior lawmaker to cosponsor a proposal to emancipate every enslaved person born after a date certain upon adulthood. The legislature turned against them, calling his elder cosponsor an enemy of the country. In his autobiography, Jefferson reflected that Virginia was not ready to abolish slavery. Still, he persisted.

Through his law practice, Jefferson represented enslaved persons suing for their freedom. Before the court, he argued, “under the law of nature, all men are born free, and every one comes into the world with a right to his own person, which includes the liberty of moving and using it at his own will.” In the years that followed, these antislavery arguments echo throughout his revolutionary writings, including the Declaration of Independence.

Nikole Hannah-Jones of the 1619 Project may claim the Declaration of Independence “a lie” drafted by “white men” who implied a black exemption in the words “all men are created equal,” but four of the five members of the drafting committee went on to lead abolition efforts in their own states. John Adams and Roger Sherman wrote the laws outlawing slavery in Massachusetts and Connecticut. Ben Franklin was the president of an abolition society that petitioned Congress to abolish slavery during its very first session.

In addition to his own efforts in Virginia, Jefferson’s first drafts of the declaration decried slavery as a “cruel war against human nature, violating its most sacred rights of life and liberty.” Congress—reacting to opposition from South Carolina, Georgia, and northern states profiting from the triangular slave trade—struck these words from the final document. Still, Jefferson poetically amended John Locke’s liberal credo, “life, liberty, and property,” to remove any claim “property” might imply the right to own people.

As he rose in national politics, Jefferson authored the first draft of the Northwest Ordinance, which outlawed slavery throughout the Midwest. Additionally, his Ordinance of 1784 sought to outlaw slavery in new western states admitted to the Union. The provision failed by a single vote. "The voice of a single individual … would have prevented this abominable crime from spreading itself over the new country,” he wrote years later. “Thus we see the fate of millions unborn hanging on the tongue of one man, and Heaven was silent in that awful moment!"

Once in the White House, Jefferson called on Congress to ban slave importation at the earliest constitutional date, signing the policy into law in 1806 Even Paul Finkelman, a legal historian and one of Jefferson’s most ardent living critics, concedes in his book, Slavery and the Founders, this law saved hundreds of thousands of Africans from enslavement.

“Jefferson took more substantial steps against slavery than anyone else in his generation,” says Barbara Oberg of Princeton University. Like many liberal ideals of the American Revolution, however, he could not complete the project in a single lifetime.

In his later years, however, writing to a young supporter in the Virginia abolitionist movement, he told of his long-held hope that young people—raised in a republican society—would be more sensitive to the wrongs of slavery than the prerevolutionary generation who had once scolded him as a young man in the House of Burgesses. “The hour of emancipation is advancing in the march of time. It will come.” Jefferson would not live to see the day, but future generations would adopt his cause and make it so.

Commodore Levy commissioned these statues for a man who set high ideals for a nation. Whatever personal failings Jefferson may have held in life, those statues have stood two centuries for the advancement of individual human liberty. If those ideals remain our guideposts as a country, then those statues of Jefferson must continue to stand.

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Vaccine Mandates Result from the Abuse of True Science

12/07/2021Birsen Filip

There is an alarming degree of uniformity between the governments of many western countries when it comes to instituting tyrannical measures like mandatory medical injections at workplaces and vaccine passports. In doing so, they have departed from liberal values and principles, by no longer recognizing or respecting private spheres, personal goals, or individual freedom and rights. They have also ignored the fact that living in a liberal democratic society means the state is limited to a reasonable level of activity or interference that is neither detrimental nor destructive to various types of freedoms, including negative, positive, individual, subjective, and objective freedom.

At this point, it is clear that vaccine passports and mandates have nothing to do with safeguarding public health or mitigating the COVID-19 pandemic. Rather, they are purely coercive measures designed to punish disobedience by taking away one’s ability to provide for his family, shape his future, engage in activities that bring him happiness, and live his life in ways that allow him to flourish and advance his well-being. That is to say, they are effectively capable of destroying people’s dreams, goals, self-respect, self-esteem, self-development, aspirations, etc. They are also damaging for public health and the common good, as a society cannot provide a safe, secure and healthy environment for its citizens without an adequate number of people to provide key social services, including police forces, health care workers, fire fighters, sanitation workers, and teachers.

Recent data from Israel, the UK, and other nations with high vaccination rates suggest that the COVID-19 injections are of very limited effectiveness in terms of preventing the spread of the virus, and it is unclear how long any personal protection that they might provide actually lasts. In the case of Israel, the poor performance of the COVID-19 injections has resulted in a third injection being pushed on people that were previously thought to be fully vaccinated (i.e., two shots). Consequently, the Israeli Health Ministry recently reported that, in less than one year, “nearly 90% of people over the age of 60 had their third shot, compared with around 70% of people ages 40-49 and fewer than 50% of people ages 20-29.” Israel managed to achieve such high inoculation rates for third doses despite the fact that Moderna and Pfizer-BioNTech are still in the process of conducting or setting up clinical trials to test the effects of COVID-19 booster shots on people.

The COVID-19 injections did not follow the proper evaluation and approval processes for creating an effective vaccine, which typically takes between 10 to 15 years. Nonetheless, anyone that has dared to question the unknown future risks of these new vaccines, criticize vaccine passports and mandates, or point out inconvenient details like the fact that fully vaccinated people can still get infected and transmit the virus to others, has been publicly shamed and labelled as “unscientific,” “anti-vaxxer,” “selfish,” and “conspiracy theorists.” No one has been spared from the attacks of vaccine zealots, including professors, politicians, scientists, lawyers, nurses and doctors. Essentially, divergent views, ideas, approaches and perspectives, which are crucial for the progress and evolution of science, have been ridiculed or strongly rejected in the mainstream narrative. In fact, this has been true of virtually anyone that supports informed choice over obedience, and freedom over submission.

Totalitarian governments of the pandemic, unelected health experts and biased news reporters have been incessantly glorifying the vaccine mandates, often with religious undertones. In the United States, this has led to the emergence of a “false prophet” in the form of Dr. Anthony Fauci, whose dictates are widely treated with a deference that resembles a “divine pattern” by devoted adherents in a number of countries. Unfortunately, the faithful followers of this “false prophet” fail to understand that “prophecies are entirely beyond the scope of scientific method.”1 They also might not realize that science is concerned with objective facts and true images of the real world, while simultaneously opposing fear, hate, subjective opinions, coercion, faith and revelation. In fact, adherents of true scientific approaches renounce faith, revelation, and divine patterns on the basis that science explores the unknown “to establish what is,” rather than to “dictate what ought to be and what ends people should aim at.”2 They are of the opinion that “no science can tell anyone what one wants, what one should uphold, what one should grind into the dust.”3 Accordingly, any true scientist would regard vaccine mandates as wholly unscientific.

The development of science throughout history has frequently featured significant disagreements between scientists on a wide range of issues, including concepts, priorities, principles, methodologies, procedures, points of view, explanations, theories, assumptions, approaches, and goals. Such disagreements and doubts have often led to the refutation and abandonment of theories, assumptions, principles, methods, and goals in favor of new ones that emerged. Ultimately, this process has resulted in the expansion of knowledge and realization of progress. That means, in science, progress and “advances consist in finding out” where people had been wrong.4

True scientists are fully aware of what they do not know, and are prone to exercising caution until they acquire more knowledge. They do not hide information and empirical evidence in order to defend certain ideas, or specific products. On the contrary, they would be more than happy “to prove” that their “anticipations were false” and overthrow them.5 It is not the “possession of knowledge, of irrefutable truth, that makes the man of science, but his persistent and recklessly critical quest for truth.”6 True scientists would avoid “rash and premature prejudices” and developments.7 Meanwhile, the treatment of the COVID-19 injections by Dr. Fauci and his followers could be described as idolization, which halts the road to scientific progress. In fact, this sort of idolization is an abuse of science, in that it is the “wrong view of science” that “betrays itself in the craving to be right.”8 Many current western political leaders support the tyranny of abused science, which has played a crucial role in justifying their recently acquired totalitarian powers.

It would appear that the tyrannical leaders of the pandemic and their anointed “false prophets” regard the masses with disdain, believing that they do not possess intelligence or the ability to think critically. Much like “the eugenicists” that came before them, the current crop of unfit tyrannical rulers and “false prophets” have managed to “delude themselves in assuming that they themselves will be called to decide what qualities are to be conserved in the human stock. They are too dull to take into account the possibility that other people might make the choice according to their own value judgments.”9 They have not only concluded that people do not know what is best for themselves, their actions are destroying the progress made over the course of the entire history of Occidental civilization by eliminating various guarantees and protections of freedom, including the constitutions or charters of rights of individual countries, international laws and agreements like the Nuremberg Code, the Declaration of Helsinki, and the Universal Declaration of Human Rights, and the labor protections established and defended by trade unions.

People should be weary of the “false prophets” and totalitarian governments of the pandemic, as the “return to the closed society which they advocate is the return to the cage, and to the beasts.”10 Instead of unquestioningly accepting the fictitious oracles of these “false prophets,” individuals should find ways to once again become the makers of their own fates, if they are to breathe and think freely. Prior to the normalization of the present environment of fear, hate, discrimination and division, it would have been unimaginable that the leader of any western country would attempt to suspend so many types of freedom and mandate medical procedures for the entire population, essentially transforming the country into a laboratory. Doing so would have run the risk of landing them in a prison or an insane asylum. The mere existence of this type authority proves that “the forces which generated” Fascism and Nazism are not “dead.”11 Moreover, everybody around the world needs to be cognizant of the fact that if such a ruling party ever managed to gain the full backing of the police and military forces, then “the glorification of violence,” or the violent oppression and liquidation of dissenters, which characterized “the policy of Russian Sovietism, of Italian Fascism and of German Nazism” will become inescapable.12 Accordingly, it might be fitting that any politician who advocates for the destructive, uncivilized, and inhuman policies associated with totalitarian regimes might be called a Bolshevist, Nazi or “fascist psychopath.”

  • 1. Karl Popper, The Open Society and Its Enemies. (1945: repr. London: Routledge, 2002).
  • 2. Ludwig von Mises, Socialism: An Economic and Sociological Analysis, trans. J. Kahane (New Haven, CT: Yale University Press, 1962), p. 539.
  • 3. Joseph Schumpeter, ‘Gustav von Schmoller and the Problems of Today.’ (1926; repr. Journal of Contextual Economics 138: 261 – 304. Berlin: Duncker & Humblot), p. 263.
  • 4. F.A. Hayek, The Constitution of Liberty, ed. Ronald Hamowy, vol. 17 of The Complete Works of F.A. Hayek (1960; repr. Chicago: University of Chicago Press, 2011).
  • 5. Karl Popper. The Logic of Scientific Discovery. (1935; repr. London: Routledge, 1992), p.278-279.
  • 6. Popper, The Logic of Scientific Discovery, p.281.
  • 7. Popper, The Logic of Scientific Discovery, p.278-279.
  • 8. Popper, The Logic of Scientific Discovery, p.281.
     
  • 9. Mises, Socialism, p. 582.
  • 10. Popper, The Open Society and Its Enemies.
  • 11. Mises, Socialism, p. 578.
  • 12. Mises, Socialism, p. 480, 572.
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Subjecting the Global Warming Hysteria to Rationality and Logic

12/07/2021Patrick Barron

So much of our time, energy, and resources have been sacrificed to the Global Warming Hysteria without subjecting the issue itself to rationality and logic. I intend to provide a logical step-by-step approach that may be used for evaluating just about any controversial issue, whether it be personal or worldwide such as global warming.

Step One: Is the earth really warming?

The Global Warming Hysteria posits that the earth is warming and that our economies need to be altered to stop it. But there are a lot of assumptions built into that single claim. First of all, is the earth warming? I've been told that it is. Maybe it is so, but there's much more to this assumption. What is the starting point and what is the ending point? How were these points chosen? Was there a steady rise from start to finish? Probably not. So, what caused the ups and downs? According to NASA the earth's temperature has risen point eight of one degree Celsius (.8C) since 1880. Why since 1880? Why not since 1780 or 1280? Or, why not just a decade? Furthermore, why is point eight of one degree Celsius considered to be too much? What is an acceptable amount? One half degree? Zero change? How was this standard chosen? How accurate is it? How can we know the temperature of the entire earth over one hundred and forty years ago with any confidence? Actually, the earth has cooled and warmed several times in the past three hundred and fifty years. The last cooling period began in 1850. Now, isn't that interesting, since NASA's report of a slow warming period began thirty years later in 1880!

Step 2: Would global cooling be preferable to global warming?

We can we assume that the earth's temperature is never static. It's always warming or cooling. Would it be better if the earth were cooling? This seems to be implied in the Global Warming Hysteria; i.e., if we fear the warming periods, we should celebrate the cooling periods. I doubt it. The last ice age ended just shy of twelve thousand years ago, a blip in time for planet earth. Ice covered most of North America to a depth of between one and two miles, hardly conducive to human existence.

Step 3: Might not global warming be a net benefit?

Even if the earth is warming, might not warming be beneficial on net? More favorable climate for food production. Longer ice-free passages for global trade. Fewer resources expended for heating in the shorter winters. Better health due to more favorable climate for enjoying the advantages of the great outdoors. It's really hard to come up with any advantages to global cooling.

Step 4: Is man a major contributor to global warming?

Assuming that malign global warming does exist, is man a major contributor? If not, end of inquiry. If so, how so? The earth has warmed and cooled over the previous several hundred years. Man could not have been a major contributor to these events, so there must have been some other phenomenon causing them. Perhaps that phenomenon, even if we can't identify it, is the major contributor to global warming now. The key point is that we must identify the man-made significant cause of global warming--if it's really happening, of course--before we can ask the next question.

Step 5: Would the mitigation action produce a net benefit?

Assuming that we have gotten this far--i.e., the earth is warming; warming is bad, and man is the cause-- what actions should be taken that will not cause even greater harm than simply letting man continue doing what he's doing? Trashing economies around the world by restricting the benefits of fossil fuels would inflict horrendous hardship on billions of people. Might it not be wiser to adapt to global warming than to revert to a more primitive economy that cannot support existing human life on earth at its current level of comfort and with the promise of even more comfort for billions more in the future? By what criteria do we assume that stopping or slowing global wealth creation is a net good?

Conclusion: The hidden assumptions to the Global Warming Hysteria need to be challenged

The Global Warming Hysteria has been subjected to very little serious, logical, and rational inquiry. The hidden assumptions to the movement need to be challenged. It is incumbent on those who wish to inflict great harm on worldwide economies to justify their proposed actions. World leaders need not act until they have done so.

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Goodbye, Transitory Inflation, and Hello, Omicron!

12/03/2021Robert Aro

All great narratives must come to an end. No one can predict whether the transitory inflation narrative will ever return. But for now, the Federal Reserve and Treasury have officially retired its banner slogan.

Yesterday the New York Times reported Treasury secretary Janet Yellen saying:

I am ready to retire the word transitory … I can agree that that hasn’t been an apt description of what we are dealing with.

This sounds like a light admission of a mistake done by the central planning authority, who, for several months, told us this inflation was believed to be transient in nature. Errors like these illustrate the problem with planning since there is no negative outcome or cost the planner incurs for making such errors.

Yellen’s response was a follow-up to Federal Reserve chair Jerome Powell, who earlier in the week testified before Congress, quoted by CNBC:

[I]t’s probably a good time to retire that word (transitory) and try to explain more clearly what we mean.

Thus, Powell and Yellen have both explicitly laid the transitory inflation to rest. But as any storyteller knows, the close of one narrative allows for the opening of another. According to Yellen, the spread of new variants has “changed that calculus.” She went on to say:

Now the new variant, the Omicron variant—the pandemic could be with us for quite some time and hopefully not completely stifling economic activity, but affecting our behavior in ways that contribute to inflation.

Paying no attention to the Fed’s $8.7 trillion balance sheet or the $21 trillion M2 money supply, the focus is centered on a still little-understood virus.

And the more we read the better (or worse) it gets. The New York Times goes on to explain Yellen’s position and how Omicron could spell trouble in the future:

It could further snarl supply chains and fuel inflation, she noted, but if it dampened economic growth it could blunt price increases. She warned, however, that it could cause “significant problems.”

Strangely enough, Congress never asked Powell about the new variants. But New York Fed president, John Williams, spoke about them, noting they could

slow economic activity and exacerbate inflationary pressures.

With the end of the transitory inflation narrative and the start of the new variants narrative, it’s been quite the week for our economic planners. An exhaustive list of what can be learned from this becomes too onerous to compile. But what becomes clear is that there will always be something which threatens the stability of the economy. There will always be a new problem which attacks the vulnerable, the weak, and the poor. There will always be that external force which can destabilize America, its working class, and its working poor. If it’s not clear by now, that exogenous economic problem is called the Federal Reserve. And the crisis will never resolve so long as they continue to cause economic booms with one hand and economic busts with the other.

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Transitory, They Say

Last month, the Labor Department reported that the CPI rose at its fastest rate since 1990: 0.9% for the month of October and has risen 6.2% since last year, beating Wall Street consensus estimates of 0.6% and 5.9% for those metrics, respectively. Perhaps most tellingly, the monthly acceleration in prices still clocks in at 0.6% monthly when the volatile food and energy categories are excluded, indicating inflation is here to stay. Astute observers might notice that the 0.9% monthly change in CPI represents faster inflation than earlier this year. These figures obliterate any notion that our inflation is “transitory” or trivial. In response, the president declared inflation his “top priority.” Judging by the administration’s economic agenda, this only spells more trouble for the American people.

Most of our economic Brahmins in Washington have misdiagnosed the causes of the current inflation crisis. Watching the chattering classes or browsing through center-left websites, one deduces that there is great consensus among the intelligentsia on who is to blame: you. You buy too much, expect it too quickly, are too dependent on complicated supply chains, and have not adequately respected COVID safety measures, thus ensuring that the virus continues to disrupt the economy. Just lower your expectations, as the Washington Post editorial page opines.

Missed in this analysis is that the worst of COVID has been over for quite some time in the United States, and almost all states have eased or eliminated their COVID-related lockdowns and the shuttering of factories and stores. To the extent that the current inflation may be attributable to a virus with a 1% death rate (reported—many people had the virus and never reported it), it is attributable to the unintended consequences of government overreaction—businesses that no longer exist, knowledge no longer employed, human capital lost, higher compliance and transactional costs, etc. Meanwhile, blaming the American consumer is what Frederick Douglass would call “an old dodge.” In the 1970s, Presidents Nixon, Ford, and Carter all contended that inflation was to varying degrees due to overconsumption, or excessive demand. Plans like Ford’s “Whip Inflation Now” (WIN, ironically) encouraged Americans to reduce their consumption of goods and services to beat inflation, ignoring the fact that obtaining goods or services at high prices is often better than not obtaining them at all in the name of low prices. Ronald Reagan lambasted this line of thinking in his 1980 debate with Jimmy Carter when he asked, “Why is it inflationary to let the people keep more of their money and spend it the way they’d like and it isn’t inflationary to let him take that money and spend it the way he wants?” Our current policymakers could use a similar chastening. Then, as now, overconsumption did not drive inflation, government spending did.

Although unspeakable for many mainstream economic thinkers and policymakers, the proximal cause of our accelerating inflation is obvious: massive government spending. Since the pandemic’s onset, the American people saw multiple rounds of direct stimulus payments, increased unemployment benefits, unprecedented bailouts of businesses small and large across the country as well as states and municipalities, and now another $1.2 trillion in infrastructure spending when President Biden signs the Bipartisan Infrastructure Framework, or “BIF”. Such has been the deluge that many funds from the last stimulus bill are still unspent. The last two years have seen over $5 trillion in new government spending. Whatever the effect of COVID lockdowns and misallocation of human and physical capital from sweeping orders is doing to exacerbate inflation, the current level of government spending is the elephant in the room. Yet the administration proposes a new elephant breeding program, in the form of expanded government spending, as the solution. The president urges Congress pass the “Build Back Better” social spending package of $1.75 trillion (on paper—the real cost is likely to far exceed that figure), which will help “fight inflation.” 

Such magical thinking will not stand up to the next few months’ inflation data, and the American people must demand an end to this madness. Government created this inflationary crisis. It could end it by reversing the Federal Reserve’s easy money policies, removing barriers to free trade, and shutting off the spigot of reckless spending. I’m not holding my breath for that outcome, but the American public is waking up to the threat of inflation and its causes. Libertarians and economic conservatives should call out the cause of this crisis loudly and often. 

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Are Digital Marketspaces The Last Free Market Frontier?

11/30/2021Raushan Gross

In his book, The Theory of Moral Sentiments, Adam Smith said of producers: "They are led by an invisible hand to make nearly the same distribution of the necessaries of life which would have been made had the earth been divided into equal portions among all inhabitants; and thus, without intending it, without knowing it, advance the interest of society, and afford means to the multiplication of the species." As an institution of entrepreneurship, the digital marketspace is the modern version of Smith’s invisible hand: a complex phenomenon that has not been designed by any one single person but has emerged as a result of the usefulness that it provides to individuals pursuing their goals by serving other marketspace participants through value-providing exchanges.

These value-providing economic participants are people that are not highly capitalized, not holders of special permits, and have not paid large sums in startup fees. Many are retirees, stay-at-home parents, or young adults who want to start small. All of them have much to gain from the advent of the digital marketspace. They are everyday entrepreneurs who are prospering in unprecedented ways via the marketspace.

Today, more than ever before, everyday entrepreneurs are using eCommerce and social platforms because they have lower barriers to entry, comparatively lower startup costs, minimum fees, and in many cases, no costly permits. We know it to be universally true that fees, permits, licenses, and undue barriers automatically write a portion of the population out of the economic picture.

The digital hand is the proximate cause of millions of people entering the emerging digitalpreneurs class - those who sell products and services via e-platforms on digital devices.

The dead hand, in contrast, is an emerging anti-market hand. The dead hand imposes a heavy counterweight effect by its interventionist, antimarket, anti-innovative policies that adversely affect the rising class of digitalpreneurs in the long run. The dead hand tends toward intervention; increasing regulatory requirements, requiring large amounts of startup capital, imposing licensing requirements, and other fees of entry that hamper the positive effect of digitalpreneurship for everyday people. Unlike the digital hand, the dead hand does not create wealth or create value; it seizes resources, eliminates wealth creation, and it does so by disallowing individual, privately-held resources to be employed in higher uses in the marketspace. The dead hand disrupts the fundamental entrepreneurial institutions of private ownership and freedom of exchange.

The dead hand intends to intervene in a growing and prosperous economic process with policies and regulations that have good intentions but adverse effects on this rising class of people. Just think, the resale market is expected to reach 30 billion by 2030, according to Allison Prang of the Wall Street Journal. Imagine a free space in the market where people who do not have millions of dollars in seed money or capital equipment on hand or a storefront with overhead costs can enter a market space and serve others and themselves. They may be collectors who later decide to resell their collection or they may be individual creators of products of their art, or music, or crafted furniture, etc. The dead hand does not peer beyond the tangible, measurable, and visible effects of an individual's ability to engage and prosper in marketspace. It does not recognize the opulence of the nonvisible effects, of peaceful, energetic, and voluntary exchanges that are bettering life circumstances for many individuals in the pursuit of their purpose.

The dead hand may be getting stronger. Recently a proliferation of restraints and regulations have been imposed on marketplace sellers on social and eCommerce platforms. The dead hand seeks to assert itself against the last free-market frontier. The dead hand may be a well-meaning hand, but its force has unintended effects. In perspective, eCommerce had approximately 2.1 billion digital buyers in 2020. The rise of the dead hand will destroy this last frontier where everyday people can flourish via the economic process.

We have to ask whether eCommerce and social platforms will remain free and unhampered in the long run. In the long run, will everyday entrepreneurs (i.e., stay-at-home parents, work-from-home contractors, retirees, young adults) employ digital means to participate in the economic process? In other words, will the dead hand discourage people from using their resources to produce a product or offer superior service, thereby making either a profit or loss in marketspaces? If they profit, will they be able to save and reinvest their profit back into the business or will the dead hand take it away? Or will the dead hand make saving impossible by charging higher fees and taxes and associated permits?

We face a potential conflict. There is a rising class of digitalpreneurs and a rising dead hand that seeks to impose restrictions on them. What would hold any entrepreneur back from the utilization of this free entry? Only the dead hand that restricts market entry.

Is the digital hand the last frontier for the average person to do good business in marketspaces? The problem with the dead hand is that it imposes barriers that eliminate the incentive for many to consider selling on eBay, Esty, Poshmark, etc. A requirement for permits and upfront fees to start entrepreneurial activities will impose disincentives to conduct business in marketspaces. Why?

The dead hand and its adverse effects on future digitalpreneurs are emerging. As it emerges, we must consider the short-run and long-run consequences of disincentivizing people from voluntarily exchanging their private resources using eCommerce platforms. If the dead hand takes hold of the emerging entrepreneurial class, what kind of market remains for people to earn, save, and reinvest their savings to enter the economic process? What are the long-run consequences of alternative market decisions for entrepreneurs and their freedom to prosper using their knowledge and personal property?

In the short run, will marketspace barriers remain low over time for absorption of newcomer entry, or will the barriers to entry to eCommerce rise and increase the costs of doing good business outside the bounds of the average person's capital investment? We may not find answers to these immediate effects the dead hand will have on digitalpreneurs, but in the long run, its effects will become apparent if the incentive to use the digital hand ensures increasing significant gains rather than losses.

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How Lincoln Dealt with "Draft Dodgers" and Other Dissenters

11/30/2021Ryan McMaken

Mises.org reader Brad Cole writes:

A great-great-grandfather Montgomery Cole, got imprisoned during the Civil War because of speaking out against the draft policies. His arrest, along with others, resulted from President Lincoln's invoking his Proclamation 94 in September of 1862. 

As for a bit of background, Montgomery Cole was 39 years old when arrested. He was married with six children (my great-grandfather came along two years after the Civil War) and nearly 100 acres of fields and livestock to work. He had registered correctly for the draft and was legally excused by furnishing a substitute. Scanned copies of his draft documents are below.

President Lincoln's Proclamation enabled Montgomery Cole's arrest by suspending the writ of habeas corpus during the War—no charges necessary for an arrest. In short, Grandfather Cole and other Democrats in the rural part of the northeastern Pennsylvania (Columbia County) area believed that the prolonged War, particularly the draft, caused disproportionate hardships on northern Columbia County, Pennsylvania's people, and their families. The men were undoubtedly not Confederate sympathizers. However, he and the others arrested got accused by Republicans of discouraging volunteer enlistments and criticizing the draft policies.

Many of today's citizens don't know—or care—that in 1864 Lincoln was not necessarily the favored candidate for all. In Columbia County, that was certainly the case. Democrat rival, General George McClellan, carried every district in the County except for the Town of Bloomsburg, Catawissa, and Berwick. The farming communities voted overwhelmingly for McClellan. The vote tally in the County was 3,367 for McClellan and 1,914 for Lincoln. 

The horrible injustice of military arrest without charges and imprisonment of Cole and his fellow Democrats got named the "Fishing Creek Confederacy"—catchy name but a misnomer. To boil down a complicated story to its essence, it was the wrongful treatment of men who were otherwise upstanding community members.

Montgomery Cole's release and the Oath of Allegiance he signed are also in my possession (attached with draft documents). It is moving to hold the papers in my hand and imagine what being arrested and imprisoned without charges was like for him and the other Columbia County men. Shortly after the War's end, Cole was elected a County Commissioner and served from 1866 to 1869. He died of Tuberculosis, known then as consumption, at the young age of 51 in 1877.

As an aside, I turned 18 two years before the draft during the Vietnam War got abolished. Thankfully, I did not have to face getting drafted to head off to an unpopular war by then.

_____

Sep. 24, 1862 proclamation by President Abraham Lincoln:

A Proclamation

Whereas, it has become necessary to call into service not only volunteers but also portions of the militia of the States by draft in order to suppress the insurrection existing in the United States, and disloyal persons are not adequately restrained by the ordinary processes of law from hindering this measure and from giving aid and comfort in various ways to the insurrection;

Now, therefore, be it ordered, first, that during the existing insurrection and as a necessary measure for suppressing the same, all Rebels and Insurgents, their aiders and abettors within the United States, and all persons discouraging volunteer enlistments, resisting militia drafts, or guilty of any disloyal practice, affording aid and comfort to Rebels against the authority of United States, shall be subject to martial law and liable to trial and punishment by Courts Martial or Military Commission:

Second. That the Writ of Habeas Corpus is suspended in respect to all persons arrested, or who are now, or hereafter during the rebellion shall be, imprisoned in any fort, camp, arsenal, military prison, or other place of confinement by any military authority of by the sentence of any Court Martial or Military Commission.

In witness whereof, I have hereunto set my hand, and caused the seal of the United States to be affixed.

Done at the City of Washington this twenty fourth day of September, in the year of our Lord one thousand eight hundred and sixty-two, and of the Independence of the United States the 87th.

Abraham Lincoln

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