Power & Market

Calvin Coolidge on the Declaration of Independence

07/03/2019Gary Galles

On July 4th, Americans celebrate our Declaration of Independence. But we often give little thought to the uniqueness and importance of our country’s founding.

To revisit those issues, we might turn to Calvin Coolidge — the only president born on the 4th of July. He honored the Declaration’s commitment to life and the liberty to pursue one’s happiness, provided others’ equally inalienable rights are not violated, more than any of his successors. He also produced remarkable results without sacrificing our freedoms — substantially cutting tax rates, tax rolls and federal debt, while real economic growth averaged 7%, with 0.4% inflation and 3.3% unemployment, during his presidency.

In particular, Silent Cal’s speech commemorating Independence Day’s 150th anniversary merits reconsideration. Consider this condensed version:

We meet to celebrate the birthday of America … a service so great, which a few inspired men here rendered to humanity … the preeminent support of free government throughout the world.

The Declaration of Independence and the Constitution of the United States … those two great charters of freedom and justice remain firm and unshaken.

A new spirit had arisen on this side of the Atlantic more advanced and more developed in its regard for the rights of the individual.

The American Revolution represented the informed and mature convictions of … independent, liberty-loving, God-fearing people who knew their rights, and possessed the courage to dare to maintain them.

The Declaration of Independence was the result of the seasoned and deliberate thought of the dominant portion of the people of the Colonies … in no sense a radical movement but … resistance to illegal usurpations … to maintain their constitutional rights which from time immemorial had been guaranteed to them under the law of the land.

The Declaration of Independence … had a much broader and deeper significance than a mere secession of territory and the establishment of a new nation … because it was proposed to establish a nation on new principles.

Three very definite propositions were set out in its preamble regarding the nature of mankind and therefore of government. These were the doctrine that all men are created equal, that they are endowed with certain inalienable rights, and that therefore the source of the just powers of government must be derived from the consent of the governed.

That our Declaration of Independence containing these immortal truths was the political action of a duly authorized and constituted representative public body in its sovereign capacity, supported by the force of general opinion … makes it the most important civil document in the world … a new nation was born which was to be founded upon those principles … an incomparable event in the history of government.

All men are created equal … they are endowed with inalienable rights … governments derive their just powers from the consent of the governed. … No advance, no progress can be made beyond these propositions.

America … has remained true to the principles which were declared 150 years ago. …The rights of the individual are held sacred and protected by constitutional guaranties, which even the Government itself is bound not to violate.

The fathers made their declaration and adopted their Constitution … to establish a free government, which must not be permitted to degenerate into the unrestrained authority of a mere majority or the unbridled weight of a mere influential few. … These are our guaranties of liberty.

Very little of just criticism can attach to the theories and principles of our institutions. There is far more danger of harm than there is hope of good in any radical changes.

The Declaration of Independence … is the product of the spiritual insight of the people. We live in an age of science and of abounding accumulation of material things…Our Declaration created them. The things of the spirit come first … to maintain the great heritage which has been bequeathed to us. … We must follow the spiritual and moral leadership which they showed.

Calvin Coolidge articulated America’s founding principles, where they came from and the dangers of moving away from them. As we celebrate another Independence Day, that understanding deserves rediscovering, because it is a far cry from the spirit animating many in America today.

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Christine Lagarde's Move from IMF to ECB is Bad for Europe

07/02/2019Tho Bishop

Earlier today, the internet was aflutter with rumors that we were on the verge of an international crisis following schedule changes involving Russian President Vladamir Putin and Vice President Mike Pence. While it appears there two events were unrelated, a different sort of tragedy struck the international stage hours later when it was announced that Christine Lagarde had been named the new head of the European Central Bank.

Joining the ECB after a lengthy stint as head of the IMF, Lagarde certainly has the resume to be the next "great" central banker. Unfortunately, she has a record of folly which we've come to expect from such a title.

In the words of our friend Mike Shedlock, "It's rare to find someone who is consistently wrong on everything. Christine Lagarde...comes close"

A conventional policymaker that fears deflation most of all, Lagarde has been a high profile defender of the negative interest rate policies we've seen doing damage in Europe and Japan. Her selection is being widely seen as an endorsement for continuing the policies of the outgoing Mario Draghi at a time when the ECB desperately needed a hawk to help defuse their trillion-Euro time bomb.

As Daniel Lacalle put it:

Read more: The ECB Continues to Incentivize Reckless Behavior by Daniel Lacalle

Earlier this year, Alasdair Macleod outlined the damage being done by the policies Lagarde is expected to continue. 

Pumping yet more credit into the Eurozone is as effective as giving adrenalin to a dead horse. Lack of credit is not the problem. Put simply, there is a global momentum of economic contraction evolving, which any business and lending banker would be foolish to ignore. There is a developing crisis, the consequence of earlier monetary inflation in the credit cycle. Economic actors may not understand the origins of the crisis, but we can be certain they are becoming acutely aware of its looming presence. And as the crisis rapidly develops, those that require additional loans will already be insolvent. 

The signal sent by the ECB to lending-bankers is likely to be misinterpreted when credit contraction is the looming threat: if TLRTO-III is the smoke, there must be a fire, possibly out of control. Better surely to call in existing loans to businesses rather than waiting to be repaid from profits unlikely to materialise. An encouragement to lend early in the credit cycle is more effective and less likely to be misunderstood than a similar encouragement later in the credit cycle. This is why a renewed TLTRO policy will almost certainly fail. 

The inability of bureaucrats, with their heads buried in spreadsheets, to appreciate the role of human psychology is not the ECB’s only failing. Its executives do not even understand what interest rates represent, thinking it is simply the price of money. This is why it believes in keeping interest rates suppressed as a means of increasing credit. Earlier in the credit cycle, rate suppression does generate some credit expansion, mainly in financial rather than non-financial activities, because lower interest rates lead to higher prices for financial assets. That is basically a spreadsheet, almost non-human function. Large industrial corporations are opportunist, borrowing to fund buy-backs and to take over weaker rivals. Smaller and medium-sized business borrowers are usually offered credit only later in the cycle, when it is a mistake to accept it.

Consequently, in a zombie economy, such as that of the Eurozone, the only borrowers are wealth-destroying, socialising, debt-entrapped governments, taking full advantage of the Basel accords, which rates them for lending banks’ purposes as riskless borrowers.

While Lagarde's appointment could be bad news for Europe's future, it will be certainly be welcomed by some.

As Fabrizio Ferrari noted last month, the big winner of a Dovish ECB appointment is the Italian government. Perhaps that's why the Italian mafia has gone back to using the lira.

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Could an Austrian Win the Battle to Replace Theresa May?

05/31/2019Tho Bishop

Following the incredible success of Brexit in 2016, British politics has become a tragedy. Theresa May has been rightfully ridiculed for her remarkable incompetence in striking a Brexit deal, but her greatest sin was her ideological commitment to preserving and growing the very sort of government interventionism that has long hindered the UK.

As George Pickering noted earlier this year:

It would…be tempting for Brexiteers to place the blame entirely on policies inflicted by the EU bureaucracy, but the truth is that harmful post-Brexit policies are equally likely to be imposed by the UK’s own government. This is particularly true for the issue of ‘regulatory harmonization’. Although UK policymakers had initially been considering significant deregulation as a possibility in the case of a no-deal Brexit, this option was taken off the table due to Theresa May’s commitment to transpose the bulk of EU regulations into British law. This would mean that, even in the event of a no-deal Brexit, UK consumers would miss out on the economic boost and quality of life improvements that could otherwise have resulted from abandoning burdensome and unnecessary EU regulations. Again however, the key point is that the true culprit is the policy of regulation itself, not Brexit, and Brexiteers should be no less quick to point this out simply because the source of the harmful policy is the UK government, rather than the EU.

While a Prime Minister with the will to follow through on Brexit would itself be an important blow against political centralism, the UK needs a bold change in ideology to truly take full advantage of the opportunity breaking away from the EU offers its people. Luckily it seems that the Conservative Party will have the option to do just that.

Former Brexit Under-Secretary Steve Baker, a favorite of our friends at Mises UK, has publicly announced he’s considering jumping in to the race to replace May. Baker’s appointment at the time was particularly noteworthy as he was perhaps the strongest EU-skeptic in parliament. His support of Leave, for example, was not simply grounded in the name of British national sovereignty, but correctly identified the EU itself as a dangerous project that should be destroyed entirely.

I think Ukip and the Better Off Out campaign lack ambition. I think the European Union needs to be wholly torn down….It was meant to defeat economic nationalism, it is therefore a failure in its own terms. If we wish to devolve power to the lowest possible level, make it accountable and move on into a free society, then it’s clearly incompatible. What I want is free trade and peace among all the nations of Europe as well as the world and in my view the European Union is an obstacle to that.

While he lacks the same degree of name recognition that is enjoyed by others like former-London Mayor Boris Johnson, Baker has created a strong following of his own among Brexiteers due to his principled stand on Brexit. He has also argued that his distance from May’s past failed deals – which were backed by not just Johnson, but other potential rivals such as Domick Raab – gives him greater credibility.

While Baker’s principled stance on Brexit is itself deserving of praise, what truly makes Baker fascinating is his familiarity with Austrian economics. As I noted when he was originally named Under-Secretary, as a Member of Parliament Baker often referenced economists such as Ludwig von Mises, Jesús Huerta de Soto and F.A. Hayek in the House of Commons. A co-founder of the Cobden Centre (named after the great Richard Cobden), he has long been a vocal opponent of the “monetary socialism” of central banks and the IMF.

As is always the case with any decent politician, Baker remains a longshot in the race to replace May. Still, the fact that his name has emerged in the conversation is a strong sign for his political future. We shall see what emerges in the coming weeks, but if there is one thing we should learn from recent Tory history – one should never rule out an underdog.

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Congress Fiddles While Trump Lurches Toward War on Iran

05/28/2019Ron Paul

Congress, and particularly the Democrat-controlled House of Representatives, seems determined to see the end of the Trump Administration before the 2020 vote. Although House Speaker Pelosi claims she is not seeking impeachment, she’s accusing the president of “covering up” something. However, she won’t say what until she can do more investigating.

But Trump’s opponents on both sides of the Congressional aisle don’t seem so enthusiastic about challenging the president when he actually does abuse his Constitutional authority to pursue a more aggressive policy overseas.

Late last week, for example, President Trump declared a national security “emergency” brought about by unspecified “Iranian malign activity” – a “loophole” allowing him to bypass Congressional review of some $8 billion in US weapons to be sold to Saudi Arabia.

Congress had been reluctant to approve yet more arms sales to Saudi Arabia after the President vetoed a bi-partisan House and Senate-approved bill requiring the US to end its military support for the Saudi war of aggression against Yemen.

What might this new Iran “emergency” be? As with the lead-up to the Iraq war, the Administration claims important secret intelligence — but of course we have to just trust them. From what we have heard from the Administration, it looks pretty flimsy. Rear Admiral Michael Gilday, the director of the Joint Staff, has outright claimed that the so-called “sabotage” of four container ships at port in the UAE is the doing of the Iranian Revolutionary Guards. But even Abu Dhabi didn’t claim Iranian involvement in the mysterious incident.

Could it have been a false flag?

Admiral Gilday also claims, without providing proof, that the recent firing of a small rocket in the general vicinity of the US Embassy in Iraq is the work of the Iranians. “We believe with a high degree of confidence that this [recent attacks] stems back to the leadership in Iran at the highest levels,” he said.

What would Iran gain by shooting off an insignificant rocket, exposing itself to US massive retaliation with no gain whatsoever? They don’t say.

 The Trump Administration has been lacking any coherent foreign policy strategy for some time. It often seems the President is fighting more with his own appointees than with his opponents on Capitol Hill. As soon as he announces that ISIS is defeated and US troops must come home, his employees like National Security Advisor John Bolton “clarify” Trump’s statements to mean that troops are staying. Trump goes to Hanoi to cut a deal with North Korea’s Kim Jong-Un and Bolton shows up with a poison pill that blows up the deal.

Bolton announced plans for 120,000 US troops to the Middle East to help push the war on Iran he’s been hocking for 20 or so years. Then we heard it was 10,000. Then 1,500, of which 600 are already there.

Whether Trump is on board or not, his Administration is clearly dragging the US into conflict with Iran. While some Members remind the president that he does not have Constitutional authority to attack Iran without approval, that argument has not been very effective in deterring presidents thus far.

If Congress really wanted to rein in an out-of-control president, they have plenty of opportunity in his bogus “national emergency” declaration and his saber rattling toward Iran. But if asserting Constitutional authority means Congress acts to pull-back US militarism overseas, suddenly there is a great bipartisan silence. They’d rather impeach Trump over his rude Tweets than over his stomping on the Constitution.

Reprinted with permission.

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Canada's Export Guarantee Program: More Risk for the Taxpayer

05/11/2019Eddie Fizor

The CBC (Canadian Broadcasting Corporation) broadcasts select NHL games on Hockey Night in Canada. These are "free” to watch on TV or stream online. "Free" is placed in quotations because the CBC’s advertises that their content services can be streamed for “free” by the public. It is worth noting that the CBC's annual share of revenue for 2018 was roughly 1.2 billion. Hockey fans may attempt to recuperate their tax dollars by watching as much hockey as possible.

The aforementioned gives context, but it is not the CBC which is the main focus of this article, but a commercial advertisement which is played during CBC’s Hockey Night in Canada.

The advertisement is for Export Development Canada (which is also funded by tax dollars).

A quote from the EDC website:

Our Export Guarantee Program can help your bank provide you with additional access to financing. We share the risk with your bank by providing a guarantee on the money you borrow, encouraging them to increase your access to working capital.


The Future is Uncertain

When an entrepreneur identifies a market in which they believe a profitable enterprise can be undertaken, the entrepreneur will invest their available funds. If the entrepreneur possesses insufficient funds, then a bank may choose to act as lender and direct additional funds toward what they may also believe to be a profitable endeavour.

[RELATED: "Mises Explains The Aggravating Role of Export Credit Agencies" by

In this instance, it is both the entrepreneur and the bank who will bear the risk. If the risk is too high, then the bank may choose not to loan funds to the entrepreneur.

What happens when Export Development Canada steps in to "de-risk" the project? EDC is funded by taxpayers. This means that projects will be undertaken with someone else’s money (the tax payer). Neither the entrepreneur nor the bank will fully bear the risk involved. What if the venture turns sour? EDC explains, "we share the risk with your bank by providing a guarantee on the money you borrow."

In the end, someone must bear the risk. So, who will it be?

If the entrepreneur utilizes his own funds, then he has a vested interest. This also would apply to a bank acting as lender. The claim that “risk doesn’t stop you,” identifies the  EDC not as “ risk experts,” but as “experts” in promoting risky ventures, underwritten with tax dollars.

Here's the advertisement which is aired during Hockey Night in Canada:

Risk Doesn’t Stop You When You’re With EDC

None of the entrepreneurs in this commercial appear to be concerned with risk. This should be a reason for concern on the part of the viewer. Such ads are misleading and promote a false of reality. The bearing of risk is unavoidable in any entrepreneurial endeavor. Future is uncertain. Resources are scarce.

Man shrugs his shoulders, "30,000 brake pads NO DEPOSIT. I said, why put the brakes on now?"

Indeed, why not? Why demand a deposit for surety? If the deal goes sour, someone else is left paying for your losses. It is easy to make risky decisions when the error of your way does not return upon your own head.

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Can Modern Man Re-Create Notre Dame?

04/16/2019Ryan McMaken

The Notre Dame cathedral in Paris isn't the first historically significant church to go up in smoke. The Basilica of Saint Paul's Outside-the-Walls — after standing for more than 1,400 years — was almost totally destroyed by fire in 1823. It housed the tomb of the Apostle Paul, and was a major basilica, second only to St Peter's as a pilgrimage site. Thanks to a construction worker, the church was accidently set on fire. 

Its destruction was a great disaster at the time, and an international appeal went out for assistance in its reconstruction. The world responded and the church was rebuilt to the original design. Today, it is a beautiful church, and it remains the site of the Apostle's tomb. It also still contains many works of art preserved from the Middle Ages and other elements from the original church.

Today, few pilgrims to Saint Paul's are much perturbed by the fact it is not entirely the original fourth-century structure. Most ancient churches are really a mixture of (relatively) new and much older elements. Old Saint Peter's Basilica, built by Emperor Constantine, stood for 1,200 years before being shamefully neglected and knocked down by the popes. It was replaced by the new basilica now known as (new) St Peter's. Although I personally wish the old basilica had been rebuilt — and the new basilica never constructed — few people nowadays complain about the new St Peter's value as a work of art. It has itself now become "ancient." When it comes to important churches, renovations and changes take place. It's not the end of the world. 

But maybe the destruction of Notre Dame is different. Those who built the new Saint Peter's figured they were perfectly capable of building something even better than what came before. They had Michelangelo.

But what about today? Perhaps many observers of Notre Dame's destruction suspect modern artists and architects aren't up to the task of recreating or surpassing the artisans of the thirteenth century. That would be a grim realization, indeed. 

What strikes me as especially significant about Notre Dame is that its reconstruction will have to take place in a world colored by a worldview that is far, far removed from the one that produced the original. Notre Dame was built in the High Middle Ages — an era when Europe invented the University. It was the time of Aquinas, and of Francis of Assisi. It was a time of immense interest in new technologies and new types of learning. Much of which made Notre Dame possible. It was also, of course, a time of widespread Christianity.

Europe today, however, has largely rejected Christianity and mocks it regularly in Europe's artwork, politics, and scholarship. Thus, the worldview that created Notre Dame is anathema to the modern European mind. Europeans may value the physical building that is known as Notre Dame, but Europeans have been happily burning down Notre Dame in spirit for centuries. 

Given the widespread disdain for the medievals who built it, why do we hear so much about what a wonderful thing Notre Dame is today?

The answer lies in the fact that modern Europeans have redefined the building as a safe, watered-down version of what it was meant to be. 

We're told Notre Dame is just a symbol of France, and of Europe. We're told it's a work of art, and that it's a great place for people watching. It gives us "a sense of community." And perhaps most importantly, it's a world famous tourist attraction.

Some who have pledged to rebuild the structure have been explicit in this. One wealthy donor announced today: "Notre Dame is an extraordinary landmark and an immeasurable symbol of Paris. It represents love and unity, bringing people together from all over the world no matter who they are and where they come from."

Nevertheless, for all the attempts to redefine Notre Dame today as something of non-religious importance, the fact remains the building was constructed as a church. It was made as a place to say Mass, to pray to what Christians regard as the eternal God, and to confect the Eucharist. That is, the building was created primarily to provide a holy place for the priests to participate in the process of making Christ physically present in flesh and blood on the altar. The artwork, structure, and design were all made to focus the senses and attention of visitors on this reality.

Yes, Notre Dame was also built to showcase and advertise the wealth and power of those who built it.  But this wealth and power could have been equally well advertised through the construction of palaces, and military outposts, and other civil buildings.

The fact that so many resources and so much artistic fervor were put into the construction of a church, however, reminds us that European civilization — many within it, at any rate — took their religion seriously, even if their devotion was hampered by vices such as the usual human desires for prestige and bragging rights.

But those who will rebuild the church are likely to regard New Notre Dame as something far different from a monument to an ancient deity. In reading the words above about the rituals Notre Dame was designed for, most modern day Europeans and Americans will scoff at the very idea that anyone believed in all that superstitious "god stuff." Words like "Eucharist" and "Mass" are quaint relics from absurd notions passed down by semi-barbarian medievals. (Ironically, moderns will mock medieval Europeans for their alleged ugly backwardness, even while praising their beautiful churches in the next breath.)

The contempt for the idea of Notre Dame as a place good for anything loftier than civic pride and tourism has been recently illustrated in the fact the mass media and the global pundits assign virtually no value at all to other French churches. For example, most media outlets have largely ignored the fact that French churches are increasingly targeted by vandals. According to the International Business Times:

A total of 875 of France's 42,258 churches were vandalized in 2018, with a small fire set to the Saint-Sulpice church in Paris in March, according to French police.

In the same week that the fire broke out at the Saint-Sulpice church, another 11 churches were vandalized. According to the Ministry of the Interior, a total of 1,063 anti-Christian acts were recorded in 2018 alone.

We only hear about Notre Dame because it's famous. Its status as a church is of little importance.

And this, ultimately, is what sets the reconstruction of Notre Dame apart from the reconstruction of St. Paul's or St. Peters. It will be rebuilt and placed in a culture that regards it primarily as a museum or a community center. Notre Dame has been domesticated. It's been made ideologically safe.

The way Notre Dame is treated today is not unlike what many political theorists do when they regard religion as superstitious nonsense, but nonetheless tolerate it for its supposed societal benefits. Religion, they cynically claim, can have its advantages. It keeps the rubes in line by imposing on them a moral code. It distracts the mob from their troubles. It's all fine so long as it doesn't challenge the status quo.

And who can be surprised that a French church is popularly regarded in such a way? Only 51 percent of the French population claim to be Catholic at all. Among those, only five percent attend Mass regularly. In other words, virtually no one in France is much interested in Notre Dame beyond it's mundane perks.

None of this is to say I oppose the reconstruction of the church. It's a good thing if the Church is rebuilt. It is good to have a beautiful church in the center of Paris. It's good that many people value the church on some level, even if they mock what it was intended to be.

But as I'm lectured by pundits and columnists about the need to value Notre Dame as a symbol, I can't help but think of the Catholic novelist Flannery O'Connor who took exception to the idea that the Eucharist was a mere symbol, and not the flesh and blood of the Christian God:

Well, toward morning the conversation turned on the Eucharist, which I, being the Catholic, was obviously supposed to defend. Mrs. Broadwater said when she was a child and received the Host, she thought of it as the Holy Ghost, He being the ‘most portable’ person of the Trinity; now she thought of it as a symbol and implied that it was a pretty good one. I then said, in a very shaky voice, ‘Well, if it’s a symbol, to hell with it.’ That was all the defense I was capable of but I realize now that this is all I will ever be able to say about it, outside of a story, except that it is the center of existence for me; all the rest of life is expendable.”

This sort of radical devotion on the part of O'Connor will strike most modern Westerners as unpleasantly radical. Perhaps even extreme. Or worse yet: intransigent. We're not supposed to have convictions like this anymore, or take religious propositions seriously. That's all for a past "dogmatic" age we're now supposed to condemn. And it is condemned, by exactly the sorts of people now singing the praises of Notre Dame. They tell us the most important thing about Notre Dame is that it's a symbol. Flannery O'Connor might have disagreed. 

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College Admissions Scandal: More Meddling by the Feds

03/13/2019Peter G. Klein

As with the federal investigation into college basketball recruiting, the college admissions scandal announced yesterday seems to fall into FBI jurisdiction only because of the overly broad mail and wire fraud statutes and federal racketeering laws — which make every tort or contract violation into a federal crime. Put differently, if rich parents bribed Yale or Stanford to take their kids, this is between those schools and their employees who took bribes, the kids and parents who lied on their applications, and possibly the other kids who attended (or were denied admission) around that time. Why is the US taxpayer funding this investigation?

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Carabini's Liberty, Dicta and Force

03/04/2019Gary Galles

About a decade ago, I first met Louis Carabini when he sponsored a Mises Circle event in Newport Beach, California. At that event, I picked up a copy of his small book, Inclined to Liberty. Not long afterward, I had read it, been impressed with its insight and Mr. Carabini’s ability to turn a phrase, and had even done a bit of a teaser article to encourage others to read it.

Now, a decade later, I have read another short book of his that is similarly insightful, with well-worked ideas and language. It is Liberty, Dicta, and Force , although its subtitle may bring out its theme best: Why Liberty Brings Out The Best in People and how Government Brings Out the Worst. The themes of both books, in fact, are well-represented by two sentences on p. 22:

Those inclined to liberty accept their lives as their own responsibility, take responsibility for their actions, and view those claiming to be their masters as charlatans. Being responsible for your life includes being wary of the state, just as you would be wary of any other form of intrusion.

I believe that, as with Inclined to Liberty, the best way to stimulate more — and more careful — reading of Liberty, Dicta and Force would be to highlight some of Mr. Carabini’s most on-the-money and inspirational words. With that in mind, consider some of my favorites.

  • Hobbes and Madison imply…that governments are needed to curtail man’s worst behavior; however, in actual practice, governments instead encourage man’s worst behavior…government provides a political safe harbor for the most abhorrent acts committed on its behalf.
  • Each political group [has] as its essential common theme the use of dicta and force to gain obedience…Dicta and force are the heart and soul of governments.
  • Those in government see solutions to problems they are certain will work. Yet …when their solutions are adopted and enforced the problems either get worse or create other problems worse than the ones for which the solution was designed.
  • The worthiness of any given solution in …the marketplace…is determined by potential beneficiaries. In contrast, a top-down political process is a one-size-fits-all solution in which worthiness is predetermined by the designer.
  • Allowing freedom to whatever extent government decrees requires the subjugation of some to the will of another…those who so prefer a master require everyone else…to be subject to the same master.
  • In the political world, those who demand respect are enforcers to be dreaded, not leaders to be followed.
  • We are awash in double-standard political jargon that manipulates our minds into transforming uncivil private behavior into civil public behavior…The same act that would land a private person in jail is praised when done by a so-called public one.
  • Why do people today have a deeply held conviction that slavery is inhumane and demeans the very essence of life, yet will condone and even enthusiastically endorse enslavement when the state is the master?
  • [Our] natural inclination toward cooperation and away from force tends to bring out the best behavior in people. In direct contrast, government authorities insist that dicta, obedience, and punishment are necessary to bring out the best behavior in people who, if left to their own volition, would become savages in a lawless society.
  • In the upside-down political world… cheaters gain entitlement to that which they did not work to produce, while those who would ostracize them as cheaters are disentitled to that which they have worked to produce.
  • Myriad government welfare programs have been devised…with a common thread of predation as the means to improve human welfare. Yet, despite the negative consequences of such programs, politicians remain convinced that predation — taking from some to give to others — if done their way, can…actually improve social welfare.
  • Politicians use the word “fairness” to shroud the act of theft in an aura of righteousness.
  • One would have to be most gullible to fall prey to the devious political tactic of criminalizing wealth, victimizing poorness, and moralizing theft.
  • If [people] were truly convinced about the validity of their beliefs, they would welcome scrutiny as an opportunity to showcase them and demonstrate the invalidity of the opposing view.
  • It is counterproductive to use dicta and punishment to command good behavior and conformity to another’s prescribed standards.
  • Government force is incapable of accomplishing that which volition accomplishes naturally…The tragedy that sensible people are able to avoid when left alone is the very tragedy governments perpetuate.
  • The tragedy of communal access to human resources is exemplified in a political democracy, where free riders have equal say about the distribution of resources as do those who produce them.
  • The state only exists at the expense of the working, cooperative members of society, while disrupting…their natural proclivity to orderliness.
  • Liberty is a concept of non-subordination that those who embrace politics find most difficult to accept because without subordination political governments would not exist.
  • The belief that there is a plan that if implemented will bring about a better society begs for someone with exceptional insight who knows the plan and can make it a reality. With that mindset, people open their door to every sort of political pundit claiming to be that messiah, ready and willing to implement his or her miraculous plan if given the chance.
  • Real people…do not become more brilliant, energetic, efficient, moral, creative, or superhuman by way of the state…the very opposite is engendered in people at the hands of the state.
  • Using force to make people behave better will only make them behave worse!
  • Outside the political world, people have myriad differences of opinions and preferences they can express without repressing the expression and preferences of others. The market seeks out every kind of expressed preference as an open invitation to provide satisfaction…In contrast, the political world is a battlefield where you had better shoot down the other guy’s preferences before he shoots down yours.
  • If political democracy were as wonderful as many claim, the threat of physical force would not be needed to gain allegiance. Only this threat gives politicians an audience because without it, people would, for the most part, mind their own business.

In Liberty, Dicta and Force, Louis Carabini makes a forceful case that “There are no stronger or more peaceful means for bonding humans of different cultures than the synergism of open markets, where interactive trading is neither forced nor prohibited.” Consequently, it provides one of the central reasons for why “Liberty is not something to be doled out by, or subject to, a superior authority.” Americans would profit by learning, or re-learning, that increasingly counter-cultural conclusion.

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Confidence in British Politics is Collapsing, That May Not Be a Bad Thing

02/26/2019Claudio Grass

One of the most commonly cited arguments initially against Brexit, and now against a no-deal scenario, is the towering threat of businesses leaving the UK. A great many campaigners and leading figures of the Remain camp have warned voters time and time again of the dangers to British industry and ultimately to their jobs. They will often point to early evidence of such a shift, to companies moving either their headquarters or part of their operations to Germany, the Netherlands or other EU member states. They also like to highlight the concerns of various business leaders that have taken the Remain position, while some have supported the idea of a “People’s Vote”, a second referendum that they hope will reverse the original decision.

The dire warnings and the near-apocalyptic visions of post-Brexit destruction have managed to gather wide media coverage, with panic-stricken headlines like the BBC’s “Brexit threat to sandwiches” and the Independent’s “Butter, yogurt and cheese could become occasional luxuries after Brexit”. However, what is hardly ever mentioned is the failure of most of these projections to materialize, at least so far. What is also frequently omitted in the discussions over the fears of businesses leaving the UK, are the departures that already took place while the UK was still in the EU.

Much Ado About Nothing?

Early in the Brexit campaign, Remainers published extensive research and projections regarding the potential job losses and company relocations should the Leave camp prevail. After it did, the numbers kept coming, with predictions of a mass exodus of jobs and business. The finance sector soon emerged as the one most likely to suffer the heaviest losses, with terrifying analyses like that by Oliver Wyman, warning that a hard Brexit could result in a loss of 75,000 jobs and £10bn of tax revenue. And yet, by last September, only 630 UK-based finance jobs had actually moved, according to a Reuters survey, a mere fraction of the estimates. More recent projections have been slashed, reflecting a much milder impact and highlighting the degree of exaggeration in previous predictions.

Overall, the concerned voices and the doom-and-gloom narratives coming out of the business world have also been largely proven hyperbolic and inaccurate, at least up to this point. Moreover, strong counterarguments have gained traction, as a few well-respected and successful businessmen and women have publicly adopted a much calmer and more confident outlook for the post-Brexit reality in the UK. Sir James Dyson, billionaire inventor, has described his expectations for trade as “enormously optimistic”, while Sir Jim Ratcliffe, the wealthiest man in the UK, also expressed similar views: “The Brits are perfectly capable of managing the Brits and don’t need Brussels telling them how to manage things”.

The Split in the Business World

At the same time, it has become apparent that the interests of small businesses and large corporations are not at all aligned when it comes to Brexit. Among the most vocal and fervent Remainers and supporters of the idea of a second referendum, one finds a large share of executives and representatives from the corporate arena, together with industry lobbyists. On the other hand, small and family business owners are much more likely to support to be optimistic over Brexit. According to the Daily Telegraph’s Business Tracker, small firms have a positive outlook, despite mounting concerns over Brexit, as positive sentiment vastly overshadowed negative sentiment in 2018.


All in all, small business owners have been inclined to be more Eurosceptic than their much larger and multinational counterparts. That sentiment reinforces the idea that Small and Medium Enterprise (SME) owners are much more in touch with the realities on the ground than senior figures in FTSE companies or Tech entrepreneurs, whose views were statistically massively out of sync with the public.

Official figures from YouGov, also indicate that the smaller the company, the less likely they are to support retaining EU membership. Such findings are even more significant when one considers that SMEs account for 60% of all private sector employment in the UK and 47% of private sector turnover.

Sins of Omission

During the many debates on the future of the business world, a lot of attention and airtime is given to the fears that businesses will leave as a result of Brexit. However, the ones that have already left during the country’s membership, are seldom mentioned. Although various claims and reports on this issue are riddled with inaccuracies and have wildly exaggerated the number of these relocation cases, there is still a factual basis and numerous solid examples of instances when EU funding or other incentives encouraged companies to move operations out of the UK.

In 2012, Ford relocated the production of Ford Transit vans to a factory in Turkey, a move that was facilitated by an £80m loan approved by the European Investment Bank and cost the UK more than 500 jobs. In 2011, Twinning’s Tea tried and came very close to securing a €12m grant for a factory in Poland, while planning to cut 400 jobs in the UK. The grant was denied at the last minute, after accusations of breached EU rules and the subsequent media attention. In 2018, EU leadership in Brussels approved a bid by Slovakia to provide €125m in funding for a new Jaguar Land Rover plant, a move that has raised considerable objections and concerns over lost jobs in the UK.

Lost Faith in Government

As the government’s approval rating has taken a nosedive since the negotiations began, the public’s doubts over the leadership’s ability to handle the exit process and to deliver on what they voted for have spiked. After Theresa May’s performance during the talks with the EU and her failure to secure the assurances she promised, confidence in her government has plummeted. Official statements and commitments have largely lost their credibility, to the point that despite repeated assurances against a no-deal exit, the public still believes this is the most likely scenario. Moreover, a survey by the Enterprise Investment Scheme Association (EISA) showed that 59% of UK investors do not think the government is doing a good job in negotiating a deal that would protect the interests of the UK’s financial services sector.

Source: Bloomberg, Opinium

At the same time, the EU is sticking to its extremely hard stance on the matter, firmly refusing any meaningful concessions and sharply focused on making an example out of the UK, rather than achieving a sustainable and mutually beneficial deal. Recent comments by European Council President Donald Tusk exemplified this vindictive position, as he gleefully mentioned a “special place in hell” for “those who promoted Brexit”.

No matter how this ends, the damage already done to the British public and the country’s social cohesion is considerable. Deep divisions, fuelled and aggravated by both the media and by political figures, will not heal easily. Civilized conversation and free debate on the topics that really matter have long given way to personal attacks and name-calling. Such a devolution and corrosion of civil dialogue is bound to have a lasting and widespread impact on British society and on the country’s political future.

However, despite all the noise, one thing is clear: the United Kingdom will eventually regain its national sovereignty, one way or another. Delays are likely, and so are potential political maneuvers to void the public’s will, which are destined to fail. Today, the main focus might lie in a Hegelian dialectic, in divisive tactics and in massive fearmongering campaigns, nevertheless, the country is on track to free itself from the centralized authority of Brussels. The only real question is how this regained freedom will be channeled. Will the government use it to enforce an even more centralized system than today on a national level, or will it empower the individual and take a turn towards more personal responsibility and self-determination?

Either way, it is bound to be a bumpy and eventful road ahead for the UK and for the EU as well, as the scars of Brexit are still fresh. Dissatisfaction with Brussels is far from a confined phenomenon and dissenting voices continue to get louder all over the continent. From an investor’s perspective, preparing for the very likely political and economic turbulence that awaits is essential. With European markets under pressure, a near-impotent Central Bank and a currency that will struggle when the next downturn commences, physical precious metals and their lack of counterparty risk provide a much-needed hedge and a way to protect one’s wealth.

Although it’s impossible to predict the ultimate outcome of this historic turning point, Britain appears to be on the right track, especially if the British people will remember and hopefully be guided by Lord Acton’s words: “Liberty is not a means to a higher political end. It is itself the highest political end.”

Originally published at ClaudioGrass.ch
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Central Banks Get Scared: Forget About Promises to Reduce Balance Sheets

02/22/2019Ryan McMaken

After two years of a lot of aggressive-sounding talk about reducing the Fed's balance sheet and raising the target interest rate, the Fed in recent weeks has reversed  itself, and declared that now's a time to take things more slowly.

At the January FOMC meeting, officials:

 widely favored ending the runoff of the central bank’s balance sheet this year while expressing uncertainty over whether they would raise interest rates again in 2019, minutes of their January meeting showed.

“Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year,” according to the record of the Federal Open Market Committee’s Jan. 29-30 gathering released Wednesday.

This just represents more of the "we'll return to normal someday!" routine we've been getting from the Fed for about a decade. Over that time, we've repeatedly heard that once the economy is strong again, the Fed will reduce its balance sheet back to normal levels, and will raise the Fed Funds rate back to what had historically been more normal rates. Yet, after years of near-zero rates, and a Fed balance sheet of more than $4 trillion, it looks like the Fed lacks the resolve to do anything about it. Yet, if the economy isn't strong enough right now, with record-low  unemployment, and surging job growth, when will it be strong enough?


The lack of Fed action has long been an indication of how weak the US economy has long been, in spite of headline numbers that suggested strength. In reality, incomes and wealth growth only reached former peak levels in the past three years, with most of the period of 2009-2016 being in negative territory when compared to 2000 or 2007.

But after what looks like three years of real growth, the Fed is still worried that even the mildest hawkishness on monetary policy will undue the moderate gains of the past decade.

For a sense of how far the Fed has come from more "normal" times, we can see how total assets remain near all-time highs, as the Fed attempts to manufacture demand in the economy:

And then there is the Fed Funds rate, which, in spite of 18 months of increases, remains well below where it was prior to the most recent two recessions:


Worldwide, we're seeing some similar hesitation from other central banks.

Yesterday, "Bank of Japan Governor Haruhiko Kuroda said the central bank would “of course” consider easing monetary policy further if the economy lost momentum toward achieving its 2 percent inflation target, the Asahi newspaper reported on Friday."

Meanwhile, the European Central Bank shows no signs of budging from its extremely accommodative monetary policy. Overall, it looks like European growth is flatlining.

Overall, if we look at major central banks worldwide, we see that only in the US and Canada have central banks done anything that might be considered "tightening." And even in the US and Canada, rates remains quite low. And in no cases do we see any significant moves toward reducing central bank assets.


This is apparently the best the central banks can do in a time of "expansion."

A summary of the most recently set rates:

  • USA: 2.5%
  • Canada: 1.75%
  • UK: 0.75%
  • Australia: 1.5%
  • China: 4.35%
  • ECB: -0.4%
  • Japan: -0.1%

Note: All graphs by Ryan McMaken. Here are the specific key rates discussed here, with links:

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