Power & Market
How a Libertarian Church in the Nation of Georgia Helped Undermine Military Conscription There
Georgia is a country at the intersection of Eastern Europe and Western Asia. It was occupied by the Soviet Union in 1921 and remained part of it until 1991. Military service was mandatory in the USSR because the Soviet leadership didn't respect individuals’ lives and used them as mere pawns.
This practice remained intact in contemporary Georgia until a libertarian party called Girchi established a "Christian, Evangelical, Protestant Church of Georgia—Biblical Freedom" in 2017 to free people from being government slaves, as priests were legally allowed to avoid conscription.
Since its creation the church managed to free individuals in nearly 50,000 cases from this form of modern slavery, but recently the government introduced a new law making it illegal to avoid conscription this way. Therefore, Girchi is now battling against the government to completely cancel the military draft and make the service fully voluntary by offering willing soldiers a decent salary, contrary to how it is nowadays when the government pays them less than $25 per month.
For all these years, the immoral practice of forcibly taking 18 to 27-year-old boys and exploiting their labor has been justified with patriotic slogans and the unwillingness of the government to stop treating people like a free resource for the duration of 12 months. However, patriotism is not just a word; it's an act of showing your respect in material form to the people who voluntarily want to defend your country, because patriotism or any other virtue can only be moral if it's done voluntarily and not under the threat of force.
There's been research done on the topic of whether the size of an army is an important factor when it comes to winning the battle, but it turns out it's not the size of the army but other factors such as motivation, weaponry, and tactics that play the main role.
Therefore, concentrating only on soldier quantity without guaranteeing that the army is staffed with people who voluntarily chose this profession and are equipped with decent weaponry, only points out that the government places no value on individual lives, as unmotivated and inadequately armed soldiers are doomed to an undeserved death.
There have been cases when conscription was justified with false argumentation that it's a duty of every patriot to serve in the army. But this reasoning overlooks a simple fact that defense is a public service that's financed from the state budget, therefore it is in fact taxpayers who keep army well-fed and armed.
This, it is no more of a patriotic act to serve in the army than to be employed or run a business so then the government can take taxes in order to actually keep the army financed and functioning. Especially nowadays when modern armies are exclusively dependent of high-tech equipment and weaponry, it is foolish to hope merely on troop numbers rather than directing the funds towards a fully professional and well-armed voluntary army.
No army is as effective as the one that is staffed with people who have willingly accepted their occupation as a soldier and it is in fact counterproductive to keep unmotivated people in the army, as it’s a waste of financial resources required for the training as well as dear lives when it comes to the actual battle.
In some cases, Girchi's church was criticized from a religious perspective that it's a sinful act to help people avoid the conscription, however the Bible itself states the following in 1 Samuel 8:10:
Samuel told all the words of the lord to the people who were asking him for a king. He said: This is what the king who will reign over you will claim as his rights: He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots. Some he will assign to be commanders of thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots. He will take your daughters to be perfumers and cooks and bakers.
He will take the best of your fields and vineyards and olive groves and give them to his attendants. He will take a tenth of your grain and of your vintage and give it to his officials and attendants. Your male and female servants and the best of your cattle and donkeys he will take for his own use. He will take a tenth of your flocks, and you yourselves will become his slaves. When that day comes, you will cry out for relief from the king you have chosen, but the lord will not answer you in that day.
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Denying Western Provocations Risks Prolonging War in Ukraine
The war in Ukraine has become a bloody grind — and there's no end in sight.
As some Western allies express doubt that Ukraine can completely expel Russian forces, Britain, France and Germany have entertained the idea of a defense pact with Ukraine. Their hope is that the prospect of closer ties to NATO will encourage Ukraine to negotiate a peace deal with Russia. While searching for a path to negotiations is a worthwhile endeavor, recent history suggests that the proposal of a post-war defense pact could push Putin even further away from potential peace talks.
Although many in the West don’t want to admit it, it was Ukraine’s growing relationship with the West — threatening to pull the country further from Russia’s sphere of influence — that kindled the conflict in the first place. In other words, Putin’s invasion of Ukraine was not completely “unprovoked” as the media often suggests.
Eastern Europe has been increasingly tumultuous ever since the Bucharest summit in 2008 when NATO declared that Ukraine and Georgia “will become members” of the alliance. Russia’s Deputy Foreign Minister Alexander Grushko asserted that this was a “huge strategic mistake,” and President Putin called it “a direct threat” to Russian security.
Months after this declaration, a war broke out between Russia and Georgia. In 2014, the U.S. aided a coup that resulted in the ousting of Ukraine’s pro-Russian president Viktor Yanukovych, arousing Russia’s invasion and annexation of Crimea.
After the U.S. and Ukraine co-hosted military exercises with over a dozen nations in 2021, the Kremlin reiterated that NATO expansion into Ukraine is a hard red line. Despite this, weeks later the U.S. and Ukraine signed the U.S.-Ukraine Charter on Strategic Partnership, which doubled down on the 2008 Bucharest Declaration and even explicitly said Crimea is a territory of Ukraine despite being under Russian control.
In January of 2022, an agitated Russia, having amassed troops on Ukraine’s border, demanded a number of written guarantees from the U.S., including that Ukraine would never become a member of NATO. The U.S. refused. Russia invaded Ukraine less than a month later.
The West’s refusal to heed any warnings that courting Ukraine could create serious conflict played a major role in triggering this war. To be clear, this doesn't excuse Putin’s illegal invasion and the devastation that has ensued. But the media’s portrayal of the West’s supposed innocence perpetuates a false narrative.
Foreign policy expert John Mearsheimer, a professor at the University of Chicago, has written about the events leading to the war at length and argues that the West is “principally responsible for the crisis” in Ukraine. Even back in 1998, George Kennan, best known for formulating the U.S. “containment” policy during the Cold War, warned that NATO expansion was the “beginning of a new cold war” and “a tragic mistake” that would provoke adversarial reactions from Russia.
William J. Burns, the current CIA director and once U.S. ambassador to Russia, wrote to Secretary of State Condoleezza Rice in 2008 that "Ukrainian entry into NATO is the brightest of all red lines for the Russian elite (not just Russian President Vladimir Putin). In more than two-and-a-half years of conversations with key Russian players… I have yet to find anyone who views Ukraine in NATO as anything other than a direct challenge to Russian interests."
Admitting the West’s role in the lead-up to this war is necessary as Western governments seek to foster negotiations. Any approach to negotiations that fails to understand the causes of the war is likely to encourage extended Russian aggression.
This war was not solely instigated by a fanatic. Rather Russia viewed Ukraine’s gradual incorporation into the West and the prospect of further NATO expansion as a direct threat to its security.
So, while an agreement for a post-war defense pact between NATO allies and Ukraine might encourage Ukraine to negotiate, it would likely discourage Russia from engaging in conversation. Without an honest analysis of the causes of this war, the West risks pushing Putin further from negotiations and prolonging this brutal conflict.
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I’d Buy That for a Dollar!
What a weekend! On Sunday morning Treasury Secretary Janet Yellen told CBS there would be no bailouts. Later that day the Fed declared Quantitative Easing to infinity and beyond.
What’s going on?
Quite simply: the Fed is willing to overpay for debt (again). They call it the Bank Term Funding Program (BTFP), and as far as one can tell, its dollar value is limitless. The term sheet reads:
Program: To provide liquidity to U.S. depository institutions, each Federal Reserve Bank would make advances to eligible borrowers, taking as collateral certain types of securities.
And who is eligible?
Any U.S. federally insured depository institution (including a bank, savings association, or credit union) or U.S. branch or agency of a foreign bank…
Basically everyone (i.e., not you or main street, just financial institutions) can take part in this legal counterfeiting operation.
So what’s being traded for newly created Federal Reserve notes?
Eligible collateral includes any collateral eligible for purchase by the Federal Reserve Banks in open market operations … provided that such collateral was owned by the borrower as of March 12, 2023.
Meaning: Practically any bank can exchange US Treasuries (or even Mortgage-backed securities should they have held any on their books) with the Federal Reserve.
This program will be offered for one year at no charge to banks, and of course with no recourse!
As explained:
Recourse: Advances made under the Program are made with recourse beyond the pledged collateral to the eligible borrower.
Now here’s the rub:
Collateral Valuation: The collateral valuation will be par value. Margin will be 100% of par value.
Therefore, if Wells Fargo or Bank of America own US debt that is trading at 50 cents on the dollar, they can trade it with the Fed who will pay $1. In theory, it’s only an unrealized and temporary loss because once the US debt comes due, it will be paid in full. So the Fed won’t suffer a loss, nor will the bank.
The Fed will purposely pay an amount above market value on debt held by banks. The banks would receive this newly created money and get rid of their unrealized losses. Afterwards, the banks will have to “do something” with this new money, such as buy more debt. We can only guess but whatever the banks do with the money, it will most certainly be highly lucrative for them, push asset prices up, and further erode whatever is left of the middle class. It will also offer a new way for banks to make even riskier bets that will land them in more trouble in the future.
It is theft, moral hazard, anti-capitalistic and even antagonistic to those forced to pay taxes and work for a living. But still more questions remain, specifically: How large is this program; are we talking a few billions or trillions of dollars?
On one extreme, this program serves as a confidence booster more than anything; it’s public messaging. Very few banks will accept the generous offer. It will provide public assurance that the Fed will insure deposits, it will keep banks from panic selling bonds at a loss, and quell any ideas of bank run.
If so, then the Fed has bought a little more time until the next panic sets in.
On the other extreme, come Monday, every bank in America will be lining up to receive free money from America’s central bank. The Fed would eventually expand its balance sheet by trillions of dollars more, and they’ll tell us that it would have been worse if it wasn’t for the Fed.
…as for the Fed’s commitment to reducing the balance sheet… we’ll know the answer to this soon enough! Few things are certain at the moment, but it sure is a good day to be a banker.
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Washington Miffed as China makes Peace
For those who have followed the background noise of US activities in the Middle East over the past year, since it was last seriously in the news following the disastrous execution by the Biden administration of the long overdue withdrawal from Afghanistan, they will recall a vague haze of reported drone strikes, arms sales, and Israeli assassinations; more recently, they will recall resistance to attempts to end the U.S. military roles in Syria and Yemen, the death of the Iran nuclear deal, and the blocking of earthquake relief.
China, by contrast, with no military presence in the Middle East at all, just quietly concluded talks between the Iranian and Saudi leadership that resulted in the normalizing of their diplomatic relations.
Quite the contrast.
And despite complaints by the hawks and Israel-firsters in the Democratic and Republican parties, this deal is good for multiple reasons. First, it will help end the wars in Yemen and Syria where Iran and Saudi Arabia have been among the chief backers of opposite sides of the two proxy conflicts. Together, they’ve gone on over twenty years and killed well over a million people.
Two: it signals that China, who buys most of the oil from the Gulf monarchies these days, is going to start more actively investing political capital in the region. The only party that can be trusted by all sides concerned, as Beijing is ideally situated to mediate invariably arising disputes. There are real costs involved, and it would be good to see someone other than the American taxpayer start footing these bills.
Naturally, Washington acts like anything that happens anywhere without its imprimatur constitutes a threat to national security – much like Ted Cruz recently embarrassed himself by claiming the same about the mere temporary docking of two small Iranian warships in Brazil.
Worth noting as an aside, their permission to dock came despite months of reported pressure by Washington to deny them port and after Lula had already been to Washington to meet with Biden.
Apart from knowing that somewhere at the State Department someone is being paid a six-figure salary to harass Brazilian officials for literal months about a pair of small Iranian vessels taking port in their ostensibly independent and sovereign country, everywhere everyone seems to be taking every opportunity to try to send Washington the message that they have no interest in yet another round of so-called “great power” competition.
A minor, potential downside to the deal being done between Riyadh and Tehran is that it may complicate efforts to normalize Saudi-Israeli relations. But here it should be noted that any potential deal to get that done already looks terrible from the point of view of the average American: Riyadh’s demands include formal American security guarantees, more weapons, and a nuclear program.
Realistically, given the power of the Israel lobby, Washington’s failed policy of wasting American lives and treasure in pursuit of Israeli policy priorities in the Middle East hardly looks likely to be seriously disturbed by China’s mediation of Riyadh and Tehran’s most recent spat.
If it is going to be disturbed by anything, it will be by the new Israeli government. But that is another story.
In short, China facilitating these talks between Iran and Saudi Arabia was a good thing to see. It will help bring peace and save lives.
Or, as State Department shill Jonathan Panikoff, writing for the Atlantic Council put it:
“It should be a warning to U.S. policymakers: Leave the Middle East and abandon ties with frustrating, even barbarous, but long-standing allies, and you’ll simply be leaving a vacuum for China to fill.”
Fill with what? Peace? To replace four decades of Washington’s war?
The horror.
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Jamaica's Uncertain Political and Economic Future
Lisa Hanna has indicated her desire to exit the political landscape, but this could turn out to be a major tragedy for Jamaicans. Although her tenure as Culture Minister in the previous PNP (People’s National Party) administration was controversial, Hanna has redeemed herself with a slew of captivating proposals published in Jamaican dailies.
Unlike her peers who pander to tribal constituents, Lisa Hanna is one of the few politicians trumpeting issues that people find relevant. In her articles, Hanna discusses complex issues in a simple manner to empower the average person. Recently, Hanna pointed out that complying with the know your customer (KYC) policy of banks can be quite taxing for clients who endure the hassle of providing proof of address, financial statements, references, and other documents. Such measures are consistent with anti-money laundering regulations, though they hurt the poor according to a 2012 World Bank report.
Despite the popularity of AML regulations, they fail to put a significant dent in money laundering and erect barriers for working-class people to participate in the financial market. Many self-employed people desire a business account; however, they are unregistered, indeed they can choose to register, but being unregistered should not prevent them from opening an account. Hanna and average Jamaicans find it disconcerting that ordinary people must comply with onerous regulations, yet financial companies can ignore red flags without penalties. Moreover, these policies are not always enforced because a colleague opened a bank account with relative ease due to banking connections.
The truth is that AML requirements are crafted by developed countries and imposed on Caribbean countries even if they are inapplicable in a regional context. But luckily, citizens in developed countries are not enslaved to such regulations, because some American institutions don't require financial statements or character references to open accounts. So, there is no reason to think that Jamaica can't adopt flexible options. We should find it hilarious that politicians in both parties like to protest neo-colonialism, but only a few like Lisa Hanna are willing to confront real oppression. On another note, Lisa Hanna is embracing free market economics rather than battling for protectionism.
Speaking in parliament Hanna informed the public that the national import substitution policy has only enriched a few by creating monopolies. Hanna instead recommends improving productivity and human capital to boost agricultural production. Hanna's arguments are corroborated by a 2017 paper in the Review of Economic Perspectives that observes a link between trade openness and economic growth. The savings derived from imports are immeasurable so only fools will purchase inferior products and expensive products because they were manufactured in Jamaica.
Build Jamaica, Buy Jamaica is a nonsensical slogan and it's great that Hanna prefers economic reasoning to ignorant nationalism. Leader of the Opposition Mark Golding and Prime Minister Andrew Holness can continue to boast that they are committed to the poor, however, Hanna appreciates that entrepreneurs and innovators will propel the country into the future rather than poor people. Instead of loving the poor, she prefers to equip them with the tools to compete on a global scale. Undoubtedly, Lisa Hanna is the free-market champion Jamaica needs to be a powerhouse and she must reconsider retiring.
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Money Inflation Is Baked In. Savers Need to Preserve Assets
This time is different. Crises aren’t just typical cycles. In Great Inflation II, savers can at least preserve savings and likely earn substantial returns by owning gold.
Government spending as a percentage of GDP has risen to a new minimum level—34 percent.
Government Spending
Total National, State, and Local in USA, percent of GDP
Spending was ratcheted up by congresses and presidents from both parties.
The spending is substantially paid for by creating and borrowing money. Interest is paid later, and the principal’s real value is inflated away. This money inflation is a slow-motion default on this borrowing, and is a stealth tax that’s taken from everyone who holds dollars.
Crises
Money inflation regularly produces cycles of government money error (GME, pronounced “gimme”) and occasionally produces crises.
The Great Depression was forced by 7.8 percent average annual True Money Supply increases for 8 years. Great Inflation I, by 9.9 percent increases for 18 years. The Financial Crisis, by 11.0 percent increases for 12 years. Great Inflation II, as of April 2022, had already been forced by 22.2 percent increases for 14 years.
Four Crises Summarized
Anthony, James. “Gold Is the Solution for Financial Crises, Not their Cause.”
Mises Institute Power & Market Blog, 21 Oct. 2022, licensed under CC BY-NC-ND 4.0.
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7 | Treated as illegal from 5/33 through 12/74 |
All government-money-error cycles bring wasteful malinvestment and then necessary corrections. Crises bring even-more malinvestment and correction and also long-lived shifts in saving and shopping.
Across the Great Depression, including the resulting World War II, private investment plummeted. During Great Inflation I, after a “deadtime” delay of several years, most savers sought out harder assets like real estate and gold.
Crisis deadtimes are made of many component deadtimes. Producers must decide to raise prices, knowing this will make customers look elsewhere. Customers must decide to buy assets, consumer products, producer consumables, labor, and producer durables (which can last decades). Savers must learn about crises, and must make decisions that are emotionally taxing.
Crises aren’t the usual fast government-money-error cycles, crises are irregular, slow, longer-lived increases in government spending, powered by crisis-level money inflation. In crisis booms and busts, the indicators that are of first importance aren’t the often-studied fast signatures of recessions, but instead are rarely-considered slower indicators of behavior changes—in government spending, and in individual saving, producing, and shopping.
Debt as a percentage of GDP has risen to a new minimum level—343 percent.
Debt
Total Public and Private in USA, percent of GDP
Employment has fallen to a new post-2000 maximum level—62.3 percent.
Excess deaths since the start of covid have reached 1.30 million—0.4 percent. Little has been done to limit these deprivations by government either during covid or in future operations.
So then in the current Great Inflation II crisis, government spending is high and is staying there. Money inflation has been unprecedented for the USA in peacetime, and a juggernaut of money inflation is now baked in. Debt is high and is increasing. Employment is low and is decreasing. Lives are already lost and these losses are increasing.
When hard-to-reverse trends are for the worse and are worsening, how can savers preserve or even increase their savings?
Asset Preservation
Stocks have in the long run delivered the largest total returns of any large asset class. This has been true even across crises, eventually.
Figure: Anthony, James. rConstitution Papers. Neuwoehner Press, 2020, p. 10.21.
Data: Siegel, Jeremy J. Stocks for the Long Run. 5th ed., McGraw-Hill Education, 2014, p. 6.
Total Real Returns
USA Stocks, Government Bonds, Treasury Bills, Gold, and Dollar
Stocks are ownership shares of productive capacity. This capacity is worth less in downturns, when the capacity utilization is less. But even then, whatever value will eventually spill over into nonproducing assets like real estate and gold must first have originated as value added by productive businesses. In the long run, nonproducing assets can’t outperform stocks.
Stocks naturally protect against inflation. Stock prices reflect all future net profits. When product prices inflate, future net profits inflate too.
Savers learn that the total returns from stocks quickly fall substantially if savers don’t stay invested in stocks. The S&P 500’s 2002–2021 annual total return would have been cut from 9.52 percent to just 5.33 percent if a saver had missed out on just the 10 best trading days in these 20 years.
But while it can be rewarding to stay invested in stocks across sub-crisis government-money-error cycles, it would be punishing to stay invested in stocks during crisis drops in stock prices. In the Great Depression, Great Inflation I, and the Financial Crisis, savers were pummeled by substantial drops in the S&P 500, respectively, of 82 percent, 64 percent, and 53 percent.
Currently, earnings forecasts can’t be trusted. Current forecasts figure in both stagnation-or-recession in 2023 and a strong recovery in 2024, but both can’t happen. If a recession is strong enough to limit price inflation, then current earnings forecasts are too high. If there isn’t a strong recession, then price inflation will be high, so there won’t be a strong recovery, so here too, current earnings forecasts are too high.
Bonds inherently lack stocks’ considerable upside potential. Also, interest rates ultimately should increase, so then the nominal value of bonds will decrease. Also, money inflation and product-price inflation will continue, so the real value of bonds will decrease.
Dollars are guaranteed to lose value. Currently the Fed openly tries to force dollars to lose value at an average annual rate of 2 percent. Already, Wall Street Journal reporter Jon Sindreu suggests that the Fed should force dollars to lose value at an average annual rate of between 4 percent and 6 percent.
And yet, even these figures wouldn’t capture how quickly the Fed forces dollars to lose value. Modern price-inflation calculations are used to claim that dollars are losing value at annual rates of 6 percent to 9 percent. But in reality, more-accurate 1980 calculation methods indicate that dollars are losing value at annual rates of 14 percent to 17 percent.
Gold has a proven track record as money. Now, computerization allows gold to efficiently be kept in vaults and have its ownership transferred without moving the gold, which eliminates a past drawback of gold as money. No other store of value can match gold’s proven track record and infrastructure.
In the usual sub-crisis government-money-error cycles, gold has a relatively constant value.
In crises, gold also gains value. In the Great Depression, Great Inflation I, and the Financial Crisis, gold gained, respectively, 69 percent, 849 percent, and 156 percent.
Gold Price
per Ounce
Back when the Great Depression started, the government had claimed that dollars were worth a fixed amount of gold. But the government had inflated the quantity of dollars, so dollars were worth less.
To avoid honoring the government’s claim and as a result losing more and more gold, President Franklin Roosevelt issued an executive order that claimed that owning gold was illegal. State governments, congresses, and justices didn’t respond by using their offsetting powers to secure people’s right to own gold. This deprivation of the right to own gold continued until 1975, by which time Great Inflation I was well underway.
Now, the national government hasn’t been claiming that dollars are worth a fixed amount of gold. So the national government no longer has an incentive to deprive people of their right to own gold.
Naturally, demand for gold has already increased. Central bankers have had to increase interest rates. Higher interest rates are costing central bankers higher interest payments. Also, higher interest rates are causing central bankers’ holdings in the moneys they create to lose value. Both kinds of losses have been forcing central bankers to buy and hold a better store of value—gold.
So then in the current Great Inflation II crisis, stocks are at unsupportable prices. Bonds and dollars are sure to lose value too. But gold is proven in crises.
Unprecedented money inflation is already baked into Great Inflation II. Savers need to preserve and increase their savings by owning gold.
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What Do We Mean by Corruption?
Back in December, a county treasurer buddy of mine informed me of a “dead period” when campaign donors cannot give to state legislators since they’re about to go into session. It’d therefore be more likely that they could give to candidates for local office.
If the donors have business before the legislature (or a local body) though, how proper is it that they give at all? That question popped to mind after perusing local campaign finance reports.
Whether it’s securing the right to defend yourself with guns, or shielding individuals from discrimination based on race, sexual orientation, etc. we’re dealing in terms of personal freedoms.
What if, on the other hand, we’re talking about an engineering company, or its PAC (political action committee) that is donating? How about a construction or real estate business?
As questionable as it is to be on the giving end, it’s completely noxious to be on the accepting end. It sends the wrong message, especially when the elected representative does not reject the funds.
For one, it arguably says you’re for sale as a policymaker.
Donors might claim it gets them access, and that if they don’t, someone else will step in line ahead of them. That’s still concerning, but point taken.
This is where the officeholder should make clear that access, not to mention their vote, is not up for auction. Otherwise, they embody the adage that “the second oldest profession (politics) bears a close resemblance to the oldest (prostitution).”
This dynamic also narrows the window of opportunity for smaller competitors who can’t afford a line item in their budget for lobbying. Plus, they’re likely too busy trying to stay in business, now having to work that much harder to overcome this additional government-created barrier.
And it’s not difficult to uncover these connections, though they exist on a sliding scale of transparency.
Some donors make no mention of the companies that they own that will benefit. Others do. Some go to the trouble to set up a PAC to carry out the favor-buying, but name it the same as the benefiting company.
Still others are so brazen in their contributions, that they misspell their names by one letter, or add a suffix like “Jr.” so as to circumvent donation limits altogether.
And so shameless are some politicians that they push to raise those limits.
I have the utmost respect for business owners and entrepreneurs. The risks they take, and the rewards that the rest of society derive from it, are things I try to shine a light on in class when discussing the supply side.
That admiration erodes however, when they try to buy a fast-pass to the head of the line. Worse is when elected representatives grant it to them. It’s another way in which they rob from taxpayers by depriving them of a fair bidding process.
Adding insult to injury is when a politician proposes a law to solve this problem. Either they’re naïve enough to think that this will be the law to do it, or it’s a blatant attempt to distract voters. Cue donations from lawyers who benefit from the opportunity to decipher all this.
If we’re really concerned about “mechanism(s) to incentivize good work,” how about clicking the “refund” button on these ethically-questionable high-dollar donations?
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Powell Ignites the Experts
Everyone is blaming Jerome Powell for something these days, like the stock market selloff that followed the Fed Chair’s testimony to Congress this week. But do these critiques suffer from a lack of depth? On Wednesday, Fortune published an article showing how mainstream academics view the Fed. Various quotes foreshadow what the general public is up against, starting with the headline:
‘It really shouldn’t be this way’: Top economist Mohamed El-Erian blames the Fed for bad messaging and stock volatility
According to Fortune, this “top economist,” was quoted saying:
Yet once again remarks by Federal Reserve Chair Jerome Powell fueled considerable volatility in markets that could risk both economic well-being and financial stability.
El-Erian continues:
Rather than overwhelmingly pricing in an increase of 25 basis points as previously signaled by the Fed, the markets moved the odds in favor of 50 points, which would reverse the downward shift in hikes the central bank prematurely made just a month ago.
More experts are cited. According to the head of Citadel, Ken Griffin:
The variance of the message over the last couple of weeks has been incredibly counterproductive.
The article’s author also gives a fool's hope to coming out of this crisis without a recession, thanks to remarks made by the Fed:
Historic data also points to how recessions have rarely been avoided after interest rates touched levels as high as they are currently. It’s possible that the Fed defies that, according to Philip Jefferson, a member of the Fed’s Board of Governors.
Per the Governor, “the current situation is different” because now we have:
… supply chain disruptions, a drop in the number of people working or seeking jobs, the Fed’s increased credibility to fight inflation, and its concerted efforts to reign in on high inflation rates.
One of the problems is that taking economic advice from a mainstream economist, a billionaire hedge fund manager, and a Fed board of governor is akin to writing a research paper about an experimental drug funded by a drug company; one should be wary of bias. These three individuals all have a strong vested interest in keeping the current central banking system running for as long as possible.
The comments made by El-Erian are highly superficial, and ignore the inherent problem, the Fed's very existence, and its ability to move markets with just one policy decision or even just a simple comment. At best, mainstream economists will talk about the Fed hiking rates too slowly, or too little too late, but they’ll never talk about the Fed being the culprit behind the depreciating currency, destruction of price signals, or how it benefits the rich over the poor.
As for Ken Griffin whose net worth fluctuates on a daily basis in and around $32 billion, it's safe to say his primary concern when it comes to central bankers is their ability to help his portfolio. His life has undoubtedly been enhanced due to the Fed’s easy money policies.
Meanwhile Governor Jefferson is likely compromised since he is literally on the Fed’s payroll, and the Fed doesn’t care much for intellectual diversity. His supply chain argument ignores disruptions due to the increase in the supply of money and credit. Plus, it’s now several years since lockdowns. Blaming the labor market also could use more depth, but they’ve hardly gone into this. Lastly, his notion that the Fed has more credibility now and is also more concerned with fighting inflation is a terrible slight since it diminishes the credibility of his predecessors.
Mainstream media falls under the same State apparatus who cares little for a voting age population who understands economics, central banking, currency debasement, nor how the Fed causes the problems it claims to solve. Ultimately, Powell testified to Congress, then a few wealthy and powerful people levied superficial shots. Nothing meaningful was shared to the public since no one at the top wants to do what needs to be done: Stop the Fed once and for all.
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GMU Economics Department Takes a Stand against the DEI Agenda in Academia
Nineteen current and emeritus members of the George Mason University economics department have taken a heroic stand against the attempt by Leftist faculty members and administrators to undermine American academia’s long-standing commitment to academic freedom and intellectual merit. Their Statement of Commitment to Academic Freedom and to Intellectual Merit forthrightly rejects the diversity, equity, and inclusion agenda of the Left and unabashedly upholds academic freedom, “the right of students and faculty to express any idea in speech or writing, without fear of university punishment, and secure in the knowledge that the university will protect dissenters from threats and violence on campus.” The statement also expresses unqualified support for the ideal of intellectual merit – "the right and duty of academic departments to hire and promote the most brilliant, creative, and productive faculty in their fields, and admit the most intellectually promising students, without pressures from the administration.” In polar opposition to the Left-Progressive ideal of diversity based on race, ethnicity, gender, religion, disability, etc., the statement’s signatories boldly insist that “viewpoint diversity must be celebrated.”
The statement would be more effective if it had been endorsed by the most prominent classical liberals on the GMU economics faculty, Peter Boettke and Tyler Cowen. I was surprised and dismayed that they failed to sign the statement. The statement would also have carried more weight had it named the specific ideology of those who are ruthlessly trying to suppress the ideals of academic freedom and intellectual merit in American higher education. That ideology is Left Progressivism, which now pervades most of America’s cultural, educational, and political institutions. Finally I found it ironic that a statement celebrating “viewpoint diversity” was posted on two blogs, Café Hayek and Marginal Revolution, neither of which include Mises.org on its “Blogroll” and “Blogs We Like,” respectively. Of all contemporary libertarian and classical liberal institutions, the Mises Institute has been and is the most vigorous, bold, and uncompromising in opposing the Progressive war on Western Civilization.
These minor misgivings aside, Dan Klein, who took the lead in drafting the declaration, and his fellow GMU economists who endorsed it are to be congratulated for standing fast against the Progressive onslaught and courageously affirming the core academic values.
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"Secession Is Inevitable" on the Judge Napolitano Podcast
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