Power & Market
In Washington the global US military empire is a bipartisan affair. With a trillion dollar yearly military budget, there are plenty of opportunities for both the position and the opposition parties to thrust snouts deeply into the trough.
While Ron Paul was in Congress and GW Bush was president, we did a good deal to craft a bipartisan antiwar coalition in opposition to the Iraq war and other Bush-ite neocon misadventures. Then Obama was elected and pursued the same policies of global military empire - but with a better smile - and our coalition disintegrated. Suddenly the Democrats (with a couple of exceptions) were uninterested in the antiwar issue.
Such is the case now, when Obama's great "success" - the US-led coup in Ukraine - is back in the headlines. Now Obama's second fiddle is "in charge" of things and those under him who pull the levers are determined to solidify their "great achievement" of peeling Ukraine away from its neighbor and dropping that basket-case into the lap of Brussels and Washington. So for the past five weeks they have been ginning up the idea that Russia is about to invade Ukraine - even when Ukraine's own defense secretary is practically laughing at Washington's breathless assertions.
Said Ukrainian Defense Secretary Alexey Danilov:
As of today, we don’t see any grounds for statements about a full-scale offensive on our territory. It’s even physically impossible... Maybe, [seeing Russian troops] is an oddity to our foreign partners who finally saw that there are Russian forces and they move a certain way.
It must be comical for Russia to sit back and watch the US Keystone Kops at the helm of foreign policy blunder and bluster, with Biden's press secretary insisting that a Russian invasion of Ukraine is "imminent" even as the Ukrainians - who are in a position to know and also in a position to benefit if it was true - pour cold water on the Biden war-fear-porn.
But when it comes to Fed-generated counterfeit money, Congress is always ready to sprinkle plenty around to their favorite causes - usually war and corporatism.
That is why House Democrats are desperately trying to ram through a massive "free weapons" bill for Ukraine before the current lapdog media-driven "RUSSIA INVASION" propaganda dies down.
Just as Big Pharma is rushing to put a new omicron variant vaccine on the market before their Covid gravy train dies out, Washington's Democratic warmongers (with plenty of Republican fellow travelers) are rushing to send half a billion dollars in weapons to Ukraine before the casual MSM consumer learns (they're always last to know) that the whole "Russia is about to invade Ukraine" cook-up is another lie.
US military aid overseas is corporate welfare for US Beltway weapons manufacturers who in turn kick back millions to fund pro-war politicians and more millions to fund pro-war "think tanks" who warn us that there are Reds under every bed and that we need to spend moar moar moar!
As The Intercept reports, Pelosi is worried that the "RUSSIA IS INVADING" panic will wear off too soon, so she is "looking to skip marking up the bill and move it straight to the House floor, setting up the possibility of a vote as soon as early next week."
Angry to be left out of the fleecing of America for foreign interests frenzy, Republicans are racing to offer more of our money to protect the borders of corrupt Ukraine (while foreign invaders are given the red carpet treatment on our borders):
Republicans have offered their own measures. Earlier this month in the House, Rep. Michael McCaul, R-Texas, the lead Republican on the House Foreign Affairs Committee, introduced the Guaranteeing Ukrainian Autonomy by Reinforcing its Defense Act, a companion bill to a measure sponsored by Senate Foreign Relations Committee Chair Jim Risch, R-Idaho. The bill would give Ukraine $450 million from the State Department’s FMF account and impose sanctions related to the Nord Stream 2 project immediately, without waiting for an escalation as in the Democrats’ bill.
Only $450 million? Come on Republicans! Surely you can do better to flush our money down the foreign policy toilet! Slackers!
As the great Pat Buchanan once said, "Our two parties have become nothing but two wings of the same bird of prey."
Indeed, Mr. Buchanan. Indeed!
How many times has a famous billionaire, or politician, praised the virtues of raising taxes? Warren Buffet claims to have a lower tax rate than his secretary. CNN shares the anecdote dating back from 2013. In 2022, more ultra wealthy are asking governments of the world to unilaterally raise tax rates. Reuters broke news from the most recent Davos, Switzerland summit:
A group of more than 100 billionaires and millionaires has issued a plea to political and business leaders convening virtually for the World Economic Forum: make us pay more tax.
Seems strange. If 100 billionaires and millionaires actually believed that paying more taxes was a good idea, why don’t they lead by example and donate billions of dollars to their respective governments?
For an immediate impact, they could have written checks to their government’s treasury department to pay the debt directly. They call themselves the Patriotic Millionaires, and the sheer absurdity of their schemes should not be lost on anyone.
It seems the Patriots proved successful in some taxation areas, taking credit as they convinced:
…more than 130 countries to agree a deal to ensure big companies pay a global minimum tax rate of 15%...
More ideas out of Davos:
…a progressive wealth tax starting at 2% for those with more than $5 million and rising to 5% for billionaires could raise $2.52 trillion, enough globally to lift 2.3 billion people out of poverty and guarantee healthcare and social protection for individuals living in lower income countries.
It’s not the idea of lifting people out of poverty with which we take offence. Rather, their proposed poverty alleviation method is the problem. Specifically because it won’t work and will only lead to more poverty and capital destruction. The administrative tax, level of corruption, and dollars that will go missing are miniscule to the fact that we cannot shower dollars across the planet and expect poverty to disappear; there is a supply issue here that is completely overlooked.
Yet here we are, the ultra wealthy are asking for more involuntary intervention by way of public address, when they have the means to make their desired changes overnight.
You can write a check payable to the Bureau of the Fiscal Service, and, in the memo section, notate that it's a gift to reduce the debt held by the public. Mail your check to:
Attn Dept G
Bureau of the Fiscal Service
P. O. Box 2188
Parkersburg, WV 26106-2188
Just think about how many people, whether rich or poor, talk about the need for taxes to somehow make society better. If tax is a public good that people value, then one would think writing checks to the treasury would be a popular task.
The data is available. Last year in 2021 a total of $1,268,950.35 was voluntarily sent to the U.S. Treasury. It could be that on the richest nation on Earth, home to countless billionaires, millionaires, and a large middle class compared to the rest of the world, not many people want to voluntarily pay taxes.
Or, like a mass vaccination program, it’s only a good idea if everyone is forced to comply?
[Mr. Grant studied under Mises at NYU in the early 1960s and became a friend of Rothbard’s some years thereafter.]
If you were to ask me, many years after I last spoke with Murray Rothbard, what was the first thing that comes to mind when I think about Murray now—I'm skipping for the moment the extraordinary brainpower, the powerful books and essays, and the infectious personality—then it would be his cackle. It was not the timbre of the cackle, nor its loudness, nor its length; indeed, it was not a particularly unusual cackle at all. What made Murray's cackle noteworthy to me was its frequency. Predicting precisely when Murray would cackle was not necessarily easy; what was easy, though, was predicting that it would surely emerge from him very often.
When I think about Murray's cackle, I am reminded of the title of a long essay he wrote about one of our mutual heroes, the journalist H.L. Mencken. The headline for Murray's piece called Mencken a "joyous libertarian." Anyone who spent time with Murray and had frequent exposure to his cackle realized pretty quickly that the mantle "joyous libertarian" had switched easily from Mencken to Murray. (When I attended the Mises seminar in the early Sixties, by contrast, I found Mises anything but joyous. He appeared extremely dour. Of course, this may have something to do with the fact that I was still a teenager, while Mises was over 80; such an age difference can be quite intimidating!)
But back to Murray. How did I first meet him? I became interested in the conservative movement after, as a high school student, I heard a speech by an unknown Senator named Barry Goldwater (l can even now hear Murray shouting "fascist!" at the mere mention of Goldwater's name) at Hunter College in May of 1960; he was introduced by Bill Buckley, by the way. I was piqued enough by Goldwater's passionate speech to buy Conscience of a Conservative.
This was also the time when I was thinking about college. Just about when I first encountered Goldwater, and I was trying to figure out what to major in, an uncle of mine suggested economics; as a journalist, my instinct was to major in English, but my uncle told me that economics might be more practical for me.
That decision, and my natural curiosity about economics matters, gradually led me to the names of Mises, Hazlitt and Hayek.
My childhood friend Larry Moss and I started to attend the Mises seminar at New York University. At some point around that time, someone mentioned the name Murray Rothbard to me. I don't think I had ever heard of him. I remember well that he was described to me as—I am not joking!—"an anarchist dwarf." And so, of course, I thought that this guy Rothbard must be some kind of wacko, and I hardly gave him another thought. (Once I got to know Murray, of course, I discounted the noun—but not the word preceding it.)
As I delved more and more into Austrian economics, I began to wonder about this fellow Rothbard. At some point someone (l cannot recall who) suggested a meeting with him. And so Larry and I trudged to 215 West 88th Street (sometimes the memory is good; even now, decades later, I still recall the phone number at his apartment: SC-4-1606) for what turned out to be the first of many memorable evenings.
Often those evenings stretched to 3 a.m.; in those days (the early Sixties), New Yorkers did not worry about taking the "A" train back to Queens at such forbidden hours. Larry and I met many memorable people at Murray's and (his wife) Joey's apartment, including Edith Efron and Leonard Liggio.
But, of course, it was the anarchist dwarf himself who was the engine, the soul and the heart of those evenings. He seemed to love being a host and observing the give-and-take of his guests. Nor was he ever shy; if he ever lacked an opinion about anything, I certainly can't recall such a moment!
One of the most (of many) notable things about Murray was his reaction when you asked him a question or raised a topic for discussion. His attitude always seemed open and, charmingly, quizzical—I say ''charmingly" because Murray was of course quite fixed in his opinions, and yet he didn't always seem so.
This was quite unlike Mises, from whom Larry and I learned the word ''apodictic"; Mises not only loved (and used) that word, but he lived that word himself. But not Murray. Let me make up an example, because I can only recall the general phenomenon, rather than a particular instance: I say to Murray something that 99% of Americans would accept, such as "Well, of course, we had to get into World War II." Murray cocks his head, looks puzzled (NOT angry, not upset, not a hint that he might even slightly disagree) and says, good-naturedly, ''Really? Why do you say, that?" It was exactly as if I had said something completely uncontroversial and of little importance that was rarely discussed in one's living room, such as, "Well, of course, Washington is the capital of the United States," or if l said my eyes are brown or Frank Sinatra had recorded "All The Way."
In other words, one could say things in the presence of Murray with which (in retrospect) he furiously (and apodictically!) disagreed, and yet often his reaction would be the kind of mild response your grandmother might give you if you asked her what kind of flowers she liked.
In contrast, Murray could excoriate like few others. One of his favorite nouns was surely "fascist" and he used it very liberally indeed. Forget about Hitler; Murray lambasted as ''fascist" people from Barry Goldwater to a dear friend of mine—a libertarian who is active in Cato, mind you!—who had had the temerity to disagree with Murray on some minor doctrinal point.
Typically the evenings at Murray's and Joey's apartment were long (l don't recall his ever asking me and Larry to leave, and the conversations were lively). The talk was almost always fascinating, with much back-and-forth debating and a great deal of humor and, of course, many cackles.
Joey, Murray's wife, was a charming hostess. She seemed so sweet that I found it difficult to believe it when a mutual acquaintance told me after Joey died in the late 90s that she was in fact much tougher and meaner than Murray. I don't recall that side of her.
My chief recollection of the apartment itself was the seemingly never-ending array of bookcases—row upon row upon row of bookcases that seemed 40 feet high and topped off mere inches from the ceiling.
In addition to those enjoyable evenings with Murray and Joey, I have of course spent countless hours immersed in his books and articles. The first one I read was probably Man, Economy, and State; I have read it 2 1/2 times altogether.
While often provocative, Murray's opinions were indeed apodictic. This is most obvious, of course, in his theoretical tomes. In some cases, such as The Ethics of Liberty, I find him frequently unpersuasive. Even in such cases, however, he rarely fails to provoke; consider, for example, his distinction between copyright and patent (with which Mises disagreed) and his thoughts on what he called "Kid Lib." And of course he could be delightfully un–politically correct, such as when speaking of certain feminists.
Clearly, a lot of research went into his non-theoretical works, such as America's Great Depression and his delightful two-volume history of economic thought. Someone wrote somewhere that Murray seemed to have read EVERYTHING ever published about EVERYTHING; as one picks through his extensive footnotes, one can believe it.
Generally speaking, I find Murray's rebuttal of Keynesian and other fallacies much more thorough and convincing than Mises's. Firstly, Mises rarely addressed Keynes's arguments directly (in class at NYU, he pronounced the adjective Kuh-NAY-zee-un). Secondly, Mises's references to Keynes and others with whom he disagreed were all too often mere castigations. (By the way, I named my public relations firm after Mises; the firm is called "LVM Group," and our clients—3M, Channel 13, the Empire State Building, and others—have no idea what the name stands for.)
As a former journalist myself, I do not agree with many of the kind words others have said about Murray's writing. While there is no denying that he was an extraordinarily passionate and knowledgeable writer, I thought his writing too often pedestrian, cliché-ridden and uninspired. Someone once compared Murray's writing to our hero Mencken's, but Mencken was a WRITER; Murray was a writer, and not a great one. By contrast, while many have lambasted Mises for what they considered his dry writing, I have always found it well thought out, lucid, un-cliché-ish [I grant you that's not a word] and [I confess] often dry. But Murray did exhibit at least one good trait lacking in Mises; Murray's writing is lively.
Both in person and in his writings, Murray was one of the most exciting and inspiring people I ever met in my life. I'm glad I had the chance to know him.
Anyone interested in what the future of the Covid pandemic looks like, should look no further than Austria. The country that was the foundational home of Ludwig von Mises, is now the home of the next chapter in the Covid hysteria. On December 12, 2021 the Austrian government finally lifted the fourth lockdown, since the Covid pandemic began, but only for vaccinated people. While the lockdown for vaccinated people was lifted, the Austrian government kept in place the lockdown for unvaccinated people. However, the Austrian government went a step further in requiring all Austrian citizens to be fully vaccinated starting February 1, 2022. Austrian residents who refuse to get vaccinated will first be fined 600 euros for noncompliance and face fines of up to 3,600 euros every three months after formal proceedings are implemented. What is the most telling sign of uttermost confusion in the leadership of Austria, is that Karoline Edtstadler, the minister for constitutional affairs, stated that "We do not want to punish people who are not vaccinated. We want to win them over and convince them to get vaccinated." While the vaccine mandate in the U.S.A. for large private employers through OSHA was declared unconstitutional, the supreme court left the door wide open for states and local governments in imposing a vaccine mandate. New York City mayor DeBlasio was one of the first public figures to take the playbook from Austria and issued an order requiring all private sector employees to be vaccinated as well. What is more frightening, there exists a blueprint on how to impose a vaccine mandate upon a larger population.
Readers of the Mises Wire are already familiar with the enormous social and economic cost associated with lockdown measures. What is particularly sad is the fact that the country that gave name to one of the most powerful concepts defending freedom and liberty is the first country to begin moving away from the ideals of a free society. Mises, who ferociously attacked socialism and ultimately communism, understood clearly the fallacies in his opponents’ thinking. In “The Historical Setting of the Austrian School,” Mises writes about Menger leaving a note that read “There is no better means to disclose the absurdity of a mode of reasoning than to let it pursue its full course to the end.” Menger and his two earliest followers, Wieser and Böhm-Bawerk writing about the Historical School and Marxism “were fully convinced that the logically indefensible dogmas of these factions would eventually be rejected by all reasonable men precisely on account of their absurdity …” All three hoped that ordinary people will eventually realize the logical fallacies in many political dogmas. Equally, one needs to hope that people will realize the absurdity of a mandate especially once it reaches its absurd ends.
Andrew Foy’s article published in the Mises Wire entitled “The Pretense of Medical Knowledge” applies Hayek’s economic knowledge problem to the practice of medicine. The author shows that the idea of decentralization of medical decision making, letting people decide whether to get vaccinated, is diametrically opposed to the prevailing trend to centralize medical decisions, a vaccine mandate. Foy writes that Hayek and Mises strongly believed that “the best answers could only be arrived at through the spontaneous and uncoordinated actions of millions of individuals interacting freely with the marketplace.” This means that every citizen has to gauge for themselves what and how they mitigate the risks of covid. Foy continues that Mises and Hayek did not deny the fact that mistakes will not be made, but “these mistakes would be corrected more quickly in market conditions than under conditions where government made the rules and had a vested interest in ensuring a certain outcome.” A vaccine mandate is at best an attempt for a one size fits all prescription that will solve everything.
In another powerful article by Birsen Filip, she identifies “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.” She continues by writing:
“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, ...”
She concludes: “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, …”
How would government be able to pull a vaccine mandate off? The Mises Institute reprinted an article by Ron Paul who for years has been the torchbearer of Austrian economic principles amongst politicians in Washington on a subject that most people have little or no knowledge, the Unique Patient Identifier. The Senate and House versions of the Labor, Education, and Health and Human Services Appropriation bill would remove a prohibition on funding for a unique patient identifier which would allow government to efficiently monitor Americans’ immunization status. If approved government officials, employers, schools and other entities would be able to monitor what vaccinations and medical treatments have or have not received.
More recently, the Mises Institute published another article by Ron Paul about the Immunization Infrastructure Modernization Act (HR 550). The intent of the act is to facilitate information sharing between state and federal governments as well as public and private health care providers on medical information. Together with the unique patient identifier this bill would empower federal bureaucrats to create databases monitoring health data including vaccine records. Ron Paul concludes this “would be the final step toward creating a system of government surveillance, and control, over our personal health care choices.” But how can government ensure compliance?
Read more: Employer Vaccine Mandates by Ryan McMaken
Ryan McMaken in a recent article lays out the plan for a vaccine compliance in a recent article entitled using the welfare state to get compliance on vaccine mandate. A president and his cabinet willing to enforce a vaccine mandate, can use the unique patient identifier and the immunization infrastructure modernization act plus using the welfare state to get force compliance. The supreme court upheld the vaccine mandate for healthcare workers through a provision that any healthcare facility that received money from Medicare and Medicaid will need to follow. It is an easy step to tie government welfare payments to proof of vaccination status. The power of the centralized state controlling every aspect of life becomes increasingly real.
The US Senate will soon vote on Federal Reserve Chairman Jerome Powell’s nomination to a second term. One of the senators opposing Powell is Elizabeth Warren. I don’t often agree with Senator Warren, but I do agree with her assessment that Powell is “dangerous.” However, Warren actually doesn’t understand what makes Powell, or any Fed chairman, intrinsically dangerous to liberty and prosperity.
Warren thinks Powell is dangerous because she thinks he will not be supportive enough of imposing her desired new regulations on banks and other financial institutions. Senator Warren, like most progressives, clings to a fantastical notion that regulations benefit workers, consumers, and small businesses. The truth is most regulations benefit large corporations by imposing costs that big businesses can easily absorb, but that their smaller competitors cannot.
Powell is a threat to the American people. Under his tenure, the Fed has kept interest rates at or near zero. The Fed’s balance sheet has grown to over eight trillion dollars. This has caused prices to climb at a rate America has not seen in several decades.
At his nomination hearing before the Senate Banking Committee, Powell reiterated the Fed’s intention to fight inflation by reducing its monthly 120-billion-dollar purchase of Treasury and mortgage-backed securities. Powell also stated that the Fed is planning to increase interest rates this year. However, even if the Fed follows through on this, interest rates will remain at historically low levels.
Powell, like Elizabeth Warren and other progressives, dangerously believes that the Fed should go “woke.” However, Powell is still not “woke” enough for progressives who lobbied President Joe Biden to replace Powell with Fed board member Lael Brainard, the biggest supporter of Elizabeth Warren–style regulations on the Fed board. Brainard is more committed than Powell to using monetary and regulatory policies to advance the “woke” agenda. President Biden did end up nominating Brainard to become vice chairman at the Fed.
A Powell-Brainard Fed would likely use “social and climate justice” as a justification for expanding the Fed’s easy money policies. President Biden has recently nominated Sarah Bloom Raskin to the Fed board, who also has advocated for the Fed to use its power to fight climate change.
A central bank committed to the social justice and climate change agendas will inevitably increase the Fed’s “inflation tax.” Contrary to the claims of some progressives, lower-income Americans are primary victims of this hidden and regressive tax.
Powell prefers to push his rather zealous and extremist philosophies behind the scenes. Thus, not surprisingly, he is a leading opponent of Audit the Fed. Powell claims that bringing transparency to the Fed’s conduct of monetary policy would somehow jeopardize the Fed’s independence. Powell’s claim is truly fake news. There is nothing in the Audit the Fed bill giving Congress or the executive branch any new power over monetary policy.
Any group of individuals given the power to manipulate the money supply, and manipulate the interest rates that are the price of money, poses a threat to our liberty and prosperity. The solution is not to replace Powell with a “better” Fed chairman, or to force the Fed to follow a “rule” that still allows it to erode the dollar’s value. The only way to protect the people from dangerous individuals like Jerome Powell, Lael Brainard, and the rest of the Fed board is to audit and then end the Fed.
Then-Secretary of State Colin Powell is given credit for popularizing the “Pottery Barn” rule of foreign policy. Though he denies using that exact phrase, in arguing against what became the disastrous 2003 US attack on Iraq Powell made the point that, as in Pottery Barn, “if you break it, you own it.”
Bush and his neocons—ironically with the help of Colin Powell himself—did indeed break Iraq and the American people as a result “owned” Iraq for the subsequent 22 years (and counting). It was an idiotic war and, as the late former NSA chief Gen. Bill Odom predicted, turned out to be “the greatest strategic disaster in American history.”
Attacking and destroying Iraq—and executing its leader—not only had no value in any conceivable manner to the United States, it had negative value. In taking responsibility for Iraq’s future, the US government obligated the American people to pick up the tab for a million ransacked Pottery Barns.
There was no way out. Only constant maneuvering and manipulation to desperately demonstrate the impossible – that the move had any value or even made any sense.
So it is with Ukraine. In 2014 the Obama/Biden Administration managed to finish what Bush’s neocons started a decade before. With the US-backed overthrow of the Ukrainian government that year, the US came to “own” what no one in their right mind would ever seek: an economic basket case of a country with a political/business class whose corruption is the stuff of legend.
Rather than admit what a colossal blunder the whole thing had been, the US foreign policy establishment doubled down.
“Oh, this might be a neat tool to overthrow our own election: let’s pretend Trump is Putin’s agent!”
In fact Trump was impeached because a certain Col. Alexander Vindman—himself of Ukrainian origin and doing the bidding of a Ukrainian government installed by Washington—solemnly testified to Adam Schiff and his Democrat colleagues in charge of the House that Trump was clearly Putin’s puppet because his lack of enthusiasm for continuing to “own” Ukraine went against “the Inter-Agency Consensus.”
We “own” Ukraine and there is no way back—at least if the US foreign policy establishment has its way.
That is why our hapless State Department today continues to peddle the fiction that Russia is about to invade—and thus “own”—Ukraine. US foreign policy is one of projection: accuse your rivals of doing what you yourself are doing. No sane country would want to “own” Ukraine. Except the Beltway Think Tank class, thoroughly infused with military-industrial complex money.
That is why the US government, though its Embassy in Kiev, is bragging about the arrival of $200 million in lethal aid, all pointed directly at Russia.
That is why the US State Department is maintaining the fiction that Russia is about to launch a ground war to occupy Ukraine by dramatically announcing an “evacuation” of all “non-essential personnel” from its Embassy in Kiev.
It’s just too bad that we don’t share the opinion of who are really “non-essential” State Department personnel in Kiev: the last person out could be asked to turn off the lights.
By overthrowing an elected government in Kiev in 2014, the US government disenfranchised millions of voters in eastern Ukraine who voted for the overthrown president. Those voters unsurprisingly came to view the US-installed regime as illegitimate and sought self-rule under the concept of self-determination. As ethnic Russians, many of these successfully sought Russian passports.
Russia has been clear for a long time about Ukraine: it will not allow an armed invasion of eastern Ukraine that would result in the deaths of thousands of Russian citizens. Were the shoe on the other foot, the US—and any country—could be expected to react the same way.
The US is nearly the last country on earth that still holds to the WWII-era concept of war for territorial gain. Russia wants to “own” Ukraine like most people want to “own” a 2003 Saturn. That is why despite neocon/neo-liberal hype, magnified by the lock-step US media, Russia is not about to invade Ukraine.
This fantasy is being pushed by those who desperately need to continue to gin up enthusiasm for a thoroughly idiotic and counterproductive imperial enterprise.
Biden while vice president sowed the regime change winds in Ukraine. Now his inept Administration will reap the whirlwind of that continuing train wreck and eventual dissolution of the country. No matter what Antony Blinken peddles to the contrary.
Even the comedian Zelensky knows this is a really bad joke.
Originally published at the Ron Paul Institute.
Fedcoin is inevitable. Yet many issues surround it while the Federal Reserve continues engaging the public and experts on this matter. The Board of Governors recently issued a report: Money and Payments: The U.S. Dollar in the Age of Digital Information detailing various ideas without definite conclusions.
It starts with the Executive Summary:
This paper is the first step in a public discussion between the Federal Reserve and stakeholders about central bank digital currencies (CBDCs). For the purpose of this paper, a CBDC is defined as a digital liability of a central bank that is widely available to the general public.
They don’t use the word Fedcoin; perhaps CBDC sounds more official. But they’re discussing a Federal Reserve cryptocurrency, created by the Fed functioning exactly like the dollar bills in your wallet.
One hurdle is the transmission process required to get the new coins into circulation. CBDC’s could simply be exchanged for existing dollars, or can used to expand the money supply through new loan arrangements directly to the public.
The potential expansion of the money supply, and the Fed gaining new powers by stepping into the commercial banking/government transferor/collection agency role, is most concerning if not completely terrifying. In the Fed’s own words:
A widely available CBDC would serve as a close—or, in the case of an interest-bearing CBDC, near-perfect—substitute for commercial bank money.
Consider the implications of an interest bearing CBDC. The Fed could grant Fedcoin loans at favorable rates to the entire country or only to those deemed most in need of funds. Consider if someone were to default on a CBDC loan. Would the Fed not be obligated to seize that person’s assets? This is hardly a conspiracy theory as default risk would be an eventuality of issuing Fedcoin loans if repayment of principal and interest is required.
Alternatively, forgivable Fedcoin loans could be granted; much like the Paycheck Protection Program, where, as of January 9, 2022, $680 billion in loans were forgiven across America.
In what could become the ultimate error in monetary policy, next time a financial crisis hits, Fedcoins could be deployed to stimulate demand, meaning citizens could receive an instantaneous stimulus check deposited into their bank account, courtesy of their neighborhood central bank.
A faint hope of averting disaster remains. Earlier this month, legislation was introduced by Congressman Tom Emmer (MN-R), who anticipated the trajectory of Fedcoin. He issued a bill prohibiting CBDC from being issued directly to individuals, saying:
It is important to note that the Fed does not, and should not, have the authority to offer retail bank accounts.
He also had concerns over the Fed having the ability to:
…collect personally identifiable information on users, and track their transactions indefinitely…
History provides many examples showing what the Fed can do as the lender of last resort. The continual boom and bust cycle, a dollar that can only decline in purchasing power, a country never more divided economically while facing a booming stock market are just some of the implications of central banking. A significant amount of economic destruction will be avoided if the Fed is not afforded the opportunity to become the lender of first resort.
For one of the most powerful institutions on the planet, Fedcoin is an idea that Marx himself could only dream of when he asked for:
Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
Concerned citizens may want to alert their state representatives to the potential dangers a CBDC poses, including privacy concerns while having the Fed compete against commercial banks. Additionally, you can fill out the Fed’s feedback form on the matter here. Even if they don’t take your feedback seriously, at least your comments will be made available for public viewing!
Big Tech. Big Pharma. Big food. Big banks. Big oil. We’ve got questions about all of them. Big Tech is surveilling us and stealing our privacy. Big Pharma is exploiting us and poisoning us. Big food is compromising our health and fitness. Big banks are destabilizing boom-and-bust machines. Big oil is destroying the planet.
Do we need them? In the past, they were necessary to tackle problems of scale—the accumulation and control of sufficient capital to undertake massive industrial-era projects like building railroads, oil fields, pipelines, energy grids, fleets of oceangoing ships or airplanes, and supplying every household in America with 1.88 vehicles.
These achievements—and many, many more—have delivered tremendous benefits and improvements in productivity and in the quality of life. They’ve opened up the globe to trade and eliminated most poverty. They were part of what Professor Deirdre McCloskey calls the Great Enrichment, the flowering of opportunity and economic growth since the nineteenth century that is unparalleled in human history.
But capital accumulation is not needed in the same way in the digital age as in the industrial age. To a large degree, scale can be downloaded from the internet and capital can be controlled by renting it by the minute. Amazon Web Services (AWS) is the epitome of capital rental. Companies don’t need their own server farms and specialized software to run their digital operations—they rent from AWS. Their storefronts, fulfillment, and customer service run on AWS.
According to Wikipedia, as of 2021, AWS comprises over two hundred products and services including computing, storage, networking, database, analytics, application services, deployment, management, machine learning, mobile, developer tools, RobOps, and tools for the Internet of Things.
As an even more specific example of distributed control over capital, consider AWS Ground Station. Do you need satellite capability to collect data? Check the website:
AWS Ground Station is a fully managed service that lets you control satellite communications, process data, and scale your operations without having to worry about building or managing your own ground station infrastructure.
…. you can use Amazon S3 to store the downloaded data, Amazon Kinesis Data Streams for managing data ingestion from satellites, and Amazon SageMaker for building custom machine learning applications that apply to your data sets. You can save up to 80% on the cost of your ground station operations by paying only for the actual antenna time used, and relying on the global footprint of ground stations to download data when and where you need it. There are no long-term commitments, and you gain the ability to rapidly scale your satellite communications on-demand when your business needs it.
This is the new age: capital on demand. Who needs big corporations?
This realization frees some brain capacity to think about some of the bad things that come with big corporations. There are plenty.
We want our corporations to create value, and to improve people’s lives through innovation and service. Parts of them do. But those parts are surrounded by, and sometimes suffocated by, bureaucracy. Bureaucracy was developed by corporations not for purposes of innovation, but for the opposite. It’s an engine of control, to limit the autonomy and creativity of people who work in the corporation and to impose rules, guidelines, methods, and processes. Compliance is a big word for corporate bureaucracies.
Loss of Speed
Big corporations are structured. They have hierarchies and layers, divisions, functional departments, regions, and subsidiaries. Structure is the enemy of speed. When any individual or team has to seek approval, ask for funding, submit for compliance, and check for authority before acting, time is used and wasted. Speed of action and speed of responsiveness to marketplace and competitive changes are imperative in the digital era. Losing speed is losing productivity. It’s a loss imposed on the firm and the economy.
Big corporations attract regulation, and in many cases initiate it. It’s called crony capitalism. By agreeing with government how to regulate their industry, corporations achieve three things: (1) a known environment in which to operate (the opposite of systems innovation); (2) employment for an expanding bureaucracy (big banks, for example, have huge compliance bureaucracies); and, consequently, (3) competitive insulation, since smaller entities can’t afford to divert resources into their own compliance bureaucracies.
Regulation, of course, is a huge drain on productivity and a huge barrier to innovation. It’s one of the major ways government undermines the economy, and big corporations are complicit.
The creation, maintenance, and profitability of big corporations often have more to do with financial engineering than serving customers and innovating. Financial engineering includes all activities that appear to strengthen financial reporting on paper without improving customer value. Stock buybacks are a perfect example. There is no customer purpose in stock buybacks. The activity is purely for changing pro forma “per share” ratios. The same is often true for mergers and acquisitions—most acquisitions do not improve customer value because they are not executed with customers in mind.
Generally, the financial-engineering mentality of today’s big corporation is not customer favorable.
Once corporations get big, they have something to defend: their size (investors insist they must grow), their revenues (the top line, as it is called, must slope upward), their market share (they must not “lose” share), and their influence (more lobbyists). Their focus is diverted from innovation and improved customer service to maintenance and “sustainability.” Defensiveness does not generate growth.
Big corporations are not anticapitalist. But they often get capitalism a bad name. Robert Bradley Jr. created the term contracapitalist when describing the corporate behavior of Enron (for whom he once worked). This company abandoned and subverted capitalist practices, often with the support of institutions like the Ex-Im Bank, and mostly stayed within the law. Freewheeling accounting practices, contorted debt structures, hyped projections, and hubristic imprudence all contributed to Bradley’s realization that his former employer practiced contracapitalism.
Do we need big corporations in the interconnected digital era of distributed control over capital? Not really. We should certainly never use big corporations as good examples of capitalism and free markets; they are far too often contracapitalist.
In 2016, I published a book titled Lines of Liberty, which featured great quotations about liberty from those who had been active and important in promoting it. To this day, one of my favorite quotes in that book is from John Stuart Mill’s On Liberty: “The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it.”
For that reason, when Leonard Read opened his “Several Facets of Freedom,” Chapter 8 in his 1982 The Path of Duty—his last book—with that quote, it drew my attention instantly. And I found Read’s own opening lines an effective teaser to read more:
The quotation from Mill’s famed essay, On Liberty, published in 1859, captures the essence of freedom. But there are many facets or aspects of the subject that merit elaboration.
Since Leonard Read was always broadening our understanding of liberty, its antecedents, its implications, and its power to benefit all of society, directly and indirectly, it is worth giving his reflections some reflection of our own. So I have put together a top 20 list of my favorite passages from the chapter, dealing with liberty’s connections to knowledge, excellence, influence, merit, competition, justice and optimism.
- The recognition on the part of Socrates that…he knew he knew nothing--the first step toward wisdom--is, from the standpoint of human freedom and prosperity the most important recognition there is.
- Each of us has an infinitesimal bit of knowledge--limited expertise…When the market is free--no restrictions against production and exchange--the tiny bits of know-how possessed by millions of discrete individuals flow naturally and easily, contributing to the prosperity of each. This knowledge is in the market process itself, not in you or me or anyone else--the claims of the know-it-alls to the contrary notwithstanding.
- It is in freedom that one’s knowledge is put to best human use.
- It is not mere quantity of knowledge that counts, for even the most knowledgeable… has a mere glimpse of all that is to be known…excellence includes growth.
- When…the keynote…is excellence, freedom reigns!
- There is no action we take--good or bad--that fails to exert an influence on someone. Thus, the question: How influence others better to understand and explain the free society? The answer: Let anyone who would move mankind toward freedom first move himself!
- Never try to reform another; do not try to forcibly draw others toward your view. Instead, strive for that perfection of understanding and exposition which will cause them to do the reaching.
- He who wishes to exert a useful influence must…concentrate his energies on the creation of what is good. He must not demolish, but build.
- Through the better personal practice of freedom may we attract others to share its blessings.
- Merit, if it be genuine, cannot be concealed…those who are seeking light, the ones who really count—will find true merit. It cannot be hidden for long.
- History reveals that contemporaries see more the man than his merit…respect their merit.
- Many among us insist that man is born for cooperation, not competition—as if these were antagonistic to one another. Such people…they fail to realize that cooperation is only a dream in the absence of competition.
- Genuine competition implies rules, such as the rule of free entry. Free entry in any field of endeavor--the production of goods or the supplying of services or whatever--assures competition, each participant trying to excel.
- Free competition among suppliers results in cooperation with customers…When there is real competition among the bakers of bread, we customers decide whose bread we eat, that is, with whom we will cooperate.
- The goal of competition in the free market is to serve customers better, according to consumer choice. The alternative is coercion…And such a coercive society affords no incentive for self-improvement.
- When there is competition, there are always those out front, setting the pace, leading the way. The effect of this leadership? Others…are inspired to grow. Competition--trying to excel--is the origin of growth; it is the magnet that draws forth each man’s best in the practice of freedom!
- Government, the political arm or agent of society, can have no higher aim than justice for one and all alike.
- The Goddess of Justice is blindfolded; her concern is not with who you are but, rather, with how fairly and honestly one deals with one’s fellowmen.
- Justice conforms to such ideals as The Golden Rule [and] No special privilege for anyone; No violation of the right to the fruits of one’s own labor or the right to act creatively as one chooses.
- A person may vigorously denounce the bad while failing to see the good. This…fails to advance the good…faith that the right will prevail…advances the good.
Few people in history spent more of their lives thinking about and acting to advance liberty than Leonard Read, as befits the founder and long-time leader of the Granddaddy of libertarian think tanks. He saw liberty as vitally important to both our individual growth and our social advance, so he considered everything he could think of that had a bearing on, or relationship to, it. Those thoughts are worth thinking after Read, so that we too might grow in insight and wisdom into liberty and advance society with that growth.
The impact of resources on national development has puzzled economists and political scientists for decades. Economic literature has noted that resource-rich countries conventionally fail to transform natural advantages into material prosperity. In the field of economics, this development is known as the resource curse. It has been asserted that resource abundance degrades the quality of institutions by emboldening elites to devote resources to capturing rents. Others argue that by reducing the state’s dependence on taxes, resource windfalls erode political accountability.
The erosion of accountability is likely because windfalls minimize the need for tax revenues thereby diminishing the impetus to be accountable to citizens and implement reforms. Reliance on resources can also preclude economic diversification by crowding out manufacturing and the service sector. Another burden of the resource curse is that incentives are engendered for politicians to distribute privileges to major players in the economy at the expense of the broader economy.
A related problem is that resource windfalls cultivate a breeding ground for autocracies by bolstering the power of political elites. Several observers have concluded that oil wealth increases the durability of autocracies and impedes the transition to democracy. Furthermore, when autocrats exert control over economic resources, they also inherit the ability to use these resources to purchase support and consolidate their rule.
Michael L Ross in a detailed 2015 review of the resource curse published in the Annual Review of Political Science shows that during 1960-2008, there was an inverse association between democratic transitions and the level of a country’s oil income. Moreover, countries that transitioned early and retained democratic institutions like the Dominican Republic, Turkey, Portugal, and Spain had marginal or no oil. Though some countries with modest oil and gas managed to transition, no country with more reliance on oil and gas income than Mexico became democratic.
However, the best case studies of the resource curse have been provided by data-sets examining African countries. South Africa is featured prominently in the literature. In the 2013 article, “The forgotten Resource Curse: South Africa’s poor experience with mineral extraction,” Ainsley D Elbra opines that South Africa’s experience not only aligns with the resource curse literature but is amplified since the country is plagued by entrenched poverty and inequalities linked to a rentier state.
Indeed, the scenario identified in South Africa is typical for African countries. In Sub-Saharan Africa resource abundance is related to rampant corruption, low economic growth, and inefficient bureaucracies, according to research. Due to avenues for pilfering, politicians have a reduced incentive to inhibit corruption by enhancing the efficiency of government.
But there is no reason to believe that resources will forestall economic growth. Addisu Lashitew and Erik Werker in a 2020 paper using the examples of Canada and the Republic of Congo illustrate that equally endowed countries can pursue divergent paths. Despite similar levels of resource endowment, the contribution of resources to GDP is substantially larger in Congo (42.3 percent), in comparison to Canada (2.3 percent). The adverse effects of resources are more pervasive in the Congo considering that its economy is dependent on resources, whereas Canada’s economy is diverse, notwithstanding resource abundance. The authors contend that the channels through which resources hinder institutional change are likely to be weaker in diverse economies. When economies are diverse there is less scope for players in resource sectors to lobby for initiatives that block institutional innovations thus diminishing opportunities for rent-seeking.
The contrasting fortunes of Canada and Congo suggest that institutions are crucial in explaining income disparities across countries. Although the evidence indicates that resources induce perverse incentives - high quality institutions can tame the resource curse. One study finds that in Africa when countries are besotted by corruption, and limited institutional capacity, resources appear to be a curse, instead of a blessing. Yet as institutions upgrade, resources transition from a curse into a blessing. Essentially, increased accountability and constraints on the political class depress conditions for the emergence of a rentier state.
For example, Naazneen H Barma in a comparative study of countries affected by the resource-curse recounts how Timor-Leste adopted new practices to combat the resource curse: “Partly due to the extensive international state-building effort there, the Timorese government decided upon petroleum sector institutions and policies explicitly intended to mitigate the resource curse…The centrepiece of Timor-Leste's institutional architecture in the petroleum sector is its Petroleum Fund, to which all petroleum revenues are directed, without exception. The Petroleum Fund Law establishes the concept of Estimated Sustainable Income (ESI), a principle intended to ensure intergenerational saving of the country's windfall income stream.”
Additionally, relating the issue to an American context Justin Callais declares that unlike Texas, Louisiana is languishing from a regional resource curse as a result of differences in institutional quality. Texas has a high EFNA score, ranks ninth on the net entrepreneurial productivity index, and demands licenses for just 34 of 102 lower-income occupations. Callais similarly avers that Louisiana’s economy is inferior because “Texas provides its citizens with alternative opportunities, while Louisiana’s environment is such that it necessarily must be dependent on oil.”
He further attributes Louisiana’s subpar economic performance to the legacy of the civil law: “Civil law tends to concentrate power to a centralized government. In France, this was chosen as a tradeoff in favor of dictatorship as a means of lowering disorder… What this means for Louisiana, and other transplant areas more generally, is that centralized control lead to ineffective governance and corruption. Through corruption, more authoritarian regimes were able to take advantage of their resource abundance. This abundance was good for those in power, yet lowered opportunities for the economy as a whole to invest and produce in alternative industries.”
Based on the data explored, we conclude that resource abundance can either result in stagnation or prosperity. However, the pertinent fact is that the potential for resources to foster growth is contingent on the right interplay of institutions and policies. Lacking an appropriate institutional framework resource-abundance will lead to dismal economic outcomes