Police Have No Duty to Protect You, Federal Court Affirms Yet Again
Police Have No Duty to Protect You, Federal Court Affirms Yet Again
Following last February's shooting at Marjory Stoneman Douglas High School in Parkland, Florida, some students claimed local government officials were at fault for failing to provide protection to students. The students filed suit, naming six defendants, including the Broward school district and the Broward Sheriff’s Office , as well as school deputy Scot Peterson and campus monitor Andrew Medina.
On Monday, though, a federal judge ruled that the government agencies " had no constitutional duty to protect students who were not in custody."
This latest decision adds to a growing body of case law establishing that government agencies — including police agencies — have no duty to provide protection to citizens in general:
“Neither the Constitution, nor state law, impose a general duty upon police officers or other governmental officials to protect individual persons from harm — even when they know the harm will occur,” said Darren L. Hutchinson, a professor and associate dean at the University of Florida School of Law. “Police can watch someone attack you, refuse to intervene and not violate the Constitution.”
The Supreme Court has repeatedly held that the government has only a duty to protect persons who are “in custody,” he pointed out.
Moreover, even though the state of Florida has compulsory schooling laws, the students themselves are not "in custody":
“Courts have rejected the argument that students are in custody of school officials while they are on campus,” Mr. Hutchinson said. “Custody is narrowly confined to situations where a person loses his or her freedom to move freely and seek assistance on their own — such as prisons, jails, or mental institutions.”
Hutchinson is right.
The US Supreme Court has made it clear that law enforcement agencies are not required to provide protection to the citizens who are forced to pay the police for their "services."
In the cases DeShaney vs. Winnebago and Town of Castle Rock vs. Gonzales, the supreme court has ruled that police agencies are not obligated to provide protection of citizens. In other words, police are well within their rights to pick and choose when to intervene to protect the lives and property of others — even when a threat is apparent.
In both of these court cases, clear and repeated threats were made against the safety of children — but government agencies chose to take no action.
A consideration of these facts does not necessarily lead us to the conclusion that law enforcement agencies are somehow on the hook for every violent act committed by private citizens.
This reality does belie the often-made claim, however, that police agencies deserve the tax money and obedience of local citizens because the agencies "keep us safe."
Nevertheless, we are told there is an agreement here — a "social contract" — between government agencies and the taxpayers and citizens.
And, by the very nature of being a contract, we are meant to believe this is a two-way street. The taxpayers are required to submit to a government monopoly on force, and to pay these agencies taxes.
In return, these government agents will provide services. In the case of police agencies, these services are summed up by the phrase "to protect and serve" — a motto that has in recent decades been adopted by numerous police agencies.
But what happens when those police agencies don't protect and serve? That is, what happens when one party in this alleged social contract doesn't keep up its end of the bargain.
The answer is: very little.
The taxpayers will still have to pay their taxes and submit to police agencies as lawful authority. If the agencies or individual agents are forced to pay as a result of lawsuits, it's the taxpayers who will pay for that too.
Oh sure, the senior leadership positions may change, but the enormous agency budgets will remain, the government agents themselves will continue to collect generous salaries and pensions, and no government will surrender its monopoly on the use of force.
Read More :
- Police Botched the Uvalde Standoff. Now Gun Controllers Want to Give Police More Power.
- Colorado Cop Sentenced to 5 Years for Breaking Old Lady's Arm and Laughing about It.
- Police Officers Threaten to Quit If the Public Keeps Demanding Accountability
- Police: We're the Experts — Don't You Dare Criticize Us
- Lack of Police Accountability Shows the "Social Contract" Isn't Working
- The Problem with "Just Do What the Cops Say and You Won't Get Hurt"
Agents of the Nanny State
The front door opens in a rush of air, followed by the muffled patter of shoe-less feet racing across the threshold and up the stairs. A mother seated at the kitchen table calls out, “Are you all done outside?” A chorus of yeses returns from the second floor. The mother smiles and returns to her work.
Moments later, her attention is disrupted by a purposeful rap on the door. She rises from her chair, wondering who that could be. As she walks the hall, a longer, more aggressive rap sounds. The mother, concerned now, opens the door to the squared-off shoulders and serious face of a neighbor. He extends his arm and opens his hand to an almost indiscernible reflection, “I just wanted to let you know I found this piece of glass in the street.”
Meet the nanny-dogooder. In this instance, he is someone who cannot believe a mother allows her children to run through yards, along sidewalks, and across streets without shoes. He regularly peers through a window and frets, “Does she not recognize the danger? Does she not care about her kids?”
Luckily, he thinks, at least he cares. In fact, he knows that without his interventions, children would get hurt, or worse. But he also knows he must be ever vigilant and always on guard – for the kids. Sleep, as C.S. Lewis noted, does not come easily to those like him.
The above is a true tale, similar to what I (and you?) have experienced. There was the neighbor exercised to despair because our children were playing in the rain. Fortunately for us, he related his concerns before injury occurred. Or the woman who staggered in shock after spying our teenage son riding a longboard down a slight incline. To her defense, she did call the sheriff in an attempt to have our son cease his dangerous display.
Then there was the man in plain clothes who flashed a paper claim to auxiliary status as an agent of the state. He was beside himself after encountering my wife holding our seventh child in a Walmart. Seems our choice of clothing for our son did not meet the man's requirement for sufficiently layering – especially given the outside temperature was in the mid-60s. Though alleging to be a peace officer, he was anything but. I imagine he barely slept that night knowing we were not impressed by his vigorous appeal.
Covid revealed a number of personalities, with Lewis's “omnipotent moral busybodies” being a regular and obvious one. These were the folks who claimed they masked for everyone else. Despite any proof that masking worked, they both paraded their masks and, either explicitly or implicitly, yelled, “Put a mask on.”
OK, so they are bores. Why not ignore them and move on? Simple, nanny-dogooders know the state is there for them – to hear their cries and address their concerns with force. And the state knows it needs the busybodies to champion its continual quest for power – to provide a semblance of legitimacy by having a Red Guard of sorts march the streets while shouting state slogans and ratting out those who dare to disobey.
Without the support of the nanny-dogooders, the state couldn't have implemented it's covid policies. Just as without the backing of those moral busybodies, the state couldn't have positioned itself as the final authority in family matters. Agents of the state are ready to react to concerns a parent permits her child to run barefoot in an area where a shard of glass was found. And nanny-dogooders are anxiously pacing their kitchens debating whether to make the call.
It's a symbiotic relationship that benefits both – and harms everyone else.
Life is a string of vagaries. As we are warned, “Accidents can happen.” And they will, but we have to accept them as a part of life or else we will never be free. A zero-accident life is as likely as zero-covid one. Yet, the state wants us to believe it can protect us from that which cannot be stopped. And, in the name of the latest zero-policy initiative, it's willing to enact all manners of imposition and force.
Sure, if someone wants to live a life of self-imposed lockdowns in a quest for a personal, zero-covid, or zero-accidents, existence, have a go. It won't work. But dragging us all into your dystopia will not make it work either – just check the graphs.
Let kids run without shoes, play in the rain, longboard faster than a walking pace, and breath the air – inside and outside – unmasked and unvaxxed. Keep your fears in your house and to yourself.
Live as you want to live and let us do the same. Don't use the state against others or you may soon find the empowered state turning its searchlight on you.
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Still Waiting for the Dip
Seven months ago I published the article: Will You Buy the Dip? I concluded:
Whether it’s this year, the next, or some time beyond, there will be an event, such as the return of COVID, WW3, the next Lehman Brothers, anything really, to blame for the next stock market crash. Eventually, the Fed will find a reason to officially re-enter the market.
Telling readers (free of charge):
They will not say it’s for the purpose of saving the stock market. They’ll use words like liquidity crisis, or cite the necessity of a smooth and functioning market. When this happens, the Fed will justify expanding its balance sheet once again. This article does not constitute investment advice, but this is the kind of dip the author is preparing to buy, backed by the full faith and credit of the United States Government and its central bank.
That was on March 25, 2022. The article corresponded with the high of the Toronto Stock Exchange and only a few months after the high of the Dow Jones, which occurred around the start of the year. The world will perpetually change, but my outlook has not; I’m still waiting to Buy the Dip.
With the 10-year minus 3-month yield curve turning negative just last week, Ryan McMaken recently published an article about this. It seems likely that a recession is on the horizon, even though we may have already been in a formal recession for some time.
On mainstream outlets, talk of the Fed Pivot is finally getting more airtime; it’s funny to see mainstream economists starting to think along the same lines. Of course, the Pivot should not be a cause for celebration or jubilation where the world will become a better place. Everything will not be awesome again; quite the contrary.
Just last week, CNBC ran the headline:
Fed will pivot soon after ‘tremendous’ progress on inflation, says Wharton’s Jeremy Siegel
The pivot will happen. It may start slowly with a pause on rate hikes as well as a pause on balance sheet reduction. Or the pause could be skipped entirely and the Fed will go for an immediate rate reduction and balance sheet expansion. Regardless of how long it takes and the method the Fed uses, eventually, after some financial crisis, the Fed will start buying assets again. If prices are still elevated, then the Fedspeak will follow the reaction, being a narrative such as fighting a recession with inflation, or picking between the lesser of two evils, recession or higher prices.
The easy money path means money will become cheap again, and interest rates should start to go down, as long as the Fed buys enough bonds. Recall that in 2020 the Fed apparently saved the world by creating $5 trillion. The next time they step in, we can expect to see a lot more money creation. Maybe $8 trillion, maybe $10 trillion? All we can do is speculate, but speculate is what we must do!
Again, this article does not constitute investment advice. But I’ll continue waiting for the Fed to formally re-enter the market. When they do, I intend to buy everything I can get my hands on. The future with the Fed is fixed, and the bet is that this next round of multi-trillion stimulus will push all prices up, as it always has and will continue to do.
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China's Economic Success Is Due More to Quantity of Production than Innovation
China’s investment in scientific research and technology intimidates U.S. officials who fear that the former’s emergence as an innovation powerhouse could eclipse America’s dominance as the leader in cutting edge innovations. According to the US National Science Board in a politically charged report, America is trailing China in critical components such as financing research and development, building novel technologies, and patents for innovative systems.
The findings indicate that China accounted for 29 percent of the global expansion in research and development between 2000 and 2019, relative to America’s 23 percent. Read in geopolitical terms the report paints an unflattering image of innovation in America; however, a broader dissection of the data reveals that China is still struggling to close the gap with the US. China is a major player in patent filings, yet Chinese patents have attained only one-third the quality of non-Chinese patents.
In a publication exploring China’s capacity for innovation, the Atlantic Council notes that China scores poorly on primary indicators of innovation performance. Compared to America, China files a paltry 9.7 percent of patents abroad, in stark contrast to the former’s 45.3 percent.
Patents in America also have a higher likelihood of approval with America’s grant ratio being 59.4 percent, significantly higher than the 39 percent of patents approved in China. Though the most relevant point is China’s lower rate of commercialization. Research institutions in China are responsible for 7.8 percent of China’s granted patents, but deliver an industrialization rate of 18.3 percent and a licensing rate of two percent.
American institutions however are better at commercializing research observing that in 2018, American universities were responsible for four percent of granted patents, but licensed 40-50 percent for commercial use. Some research suggests the proliferation of patents in China does not reflect scientific innovation, because only 11-19 of granted patents are inventive.
Further, notwithstanding the hype about Chinese researchers few are considered innovators in their fields when compared to American professionals. Evidently, China’s strengths reflect quantity rather than quality.
Moreover, China depends heavily on foreign expertise to cultivate local sectors. For example, China has produced a few big names in the pharmaceutical sector, though America continues its lead. Chinese manufacturers have yet to release breakthrough innovations that rival American supremacy and predominantly invest in generic drugs. Based on research figures, China remains a laggard, with only 9 esteemed life science and medical research centers, well below the 52 in America.
Global analyses show that China has few innovative companies that can compete on an international level. Additionally, a large portion of small businesses fixate on creating generic products at the lower end of the value chain, instead of innovating. China’s success rate for converting technologies into industrial applications is 15 percent, but in advanced economies it is 30 percent.
Another understudied problem facing China is the misallocation of research funds that succeed in undercutting innovation policies. In a new paper Koenig and co-workers argue that excessively funding research and development expenditure is unnecessary for fostering innovation and reducing distortions in the economy would be a better strategy for boosting innovation. Limiting these distortions would enable China to transition from the paradoxical status of a high tech, low productivity country to an innovative country with high productivity
According to Alexander B Hammer and Shahid Yasuf in a 2020 document published by the U.S. International Trade Commission, spending on research in China is incommensurate with significant gains in productivity. The researchers’ comment on China’s inability to escape the low productivity trap:
On the one hand, its firms have fielded major advances in areas such as image recognition using machine learning, digital payment technologies and mobile financing, 5G telecommunications, and quantum communications. On the other hand, despite official goals and unprecedented amounts of R&D spending, China has yet to realize what its government assumed to be concomitant productivity gains…The level of China’s TFP has been unchanged since 1981 at about 40 percent of the U.S. level.
Indeed, China appears to be a serious competitor to America’s dominance in innovation. However, despite improvements, China is yet to achieve parity with the U.S. and is primarily playing the role of a developing country aspiring to surpass America.
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What Did the Democrat Say to the Republican?
If cringeworthy were a letter, read what Ohio Senator Sherrod Brown (D) wrote to Federal Reserve Chair Jerome Powell (R). In my opinion, everything contained in the letter comes from a place of selfishness, entitlement, and employs little use of reason. The demagogue thrives on appeals to emotions and the use of ill defined or hollow economic verbiage, regardless of political party.
Written on the letterhead of the United States Senate Committee on Banking, Housing, and Urban Affairs, he begins by reminding Powell of the Fed’s dual mandate:
As you know, the Federal Reserve is charged with the dual mandate of promoting maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy.
Titled dual mandate, yet at some point became tri-part, where the Fed is additionally tasked with “moderating” interest rates. Senator Brown follows:
It is your job to combat inflation, but at the same time, you must not lose sight of your responsibility to ensure that we have full employment.
On one hand, Jerome Powell is supposed to create (money and price) inflation. On the other, he must aim to control prices once they exceed a metric in which he deems unacceptable while also ensuring that “maximum employment,” a bizarre negative right, is reached.
Their method to lower prices is explained:
The Federal Reserve’s tools work to lower inflation by reducing demand for economic activities sensitive to interest rates.
What exactly these sensitive economic activities are, or how they are measured, is not detailed. There is also a noticeable tactic of acknowledging problems, then looking past rational solutions in favor of something less sophisticated, per below:
Upper-income households are better able to protect their wealth during economic downturns … lower income families have fewer resources to mitigate unemployment and less wealth to accumulate assets and realize gains during an economic recovery. Due to this disparity, inflation and recessionary job losses increase the gap between upper- and lower-income households…
It is true that wealthier individuals are better insulated from currency debasement. They have more assets. Artificial booms created by the Fed benefit those with a higher net worth since, traditionally, they have cheaper and easier access to the new monetary inflation. The ability to access credit for the purpose of business loans or placing leveraged stock market bets is much easier for those in the “upper-income” bracket than for “lower-income” households. Yet the Senator doesn’t seem to fathom the idea that it is the Fed’s monetary creation causing widespread price increases, recessions, and economic booms.
At last, it’s declared:
We must stay focused on addressing the root causes of inflation without putting workers’ livelihoods at risk.
As explained:
…the United States and the world are still feeling the effects of a supply and demand imbalance from the pandemic. Russia’s illegal invasion of Ukraine has driven energy costs up, affecting food, transportation, and other sectors. Big corporations in concentrated industries have exploited this inflationary environment, increasing consumer costs and earning higher profit margins than before.
He mentions the Inflation Reduction Act, which in his own words “initiates fiscal action to strengthen the economy,” by way of various market interventions including new tax credits. Then he concludes by reminding Powell to continue following the dual mandate.
Reading a letter like this illustrates how far from reason, dignity, and honesty society has strayed. In this case, we find a senator seemingly not embracing any capitalism writing a letter to the head of an organization whose sole existence is anti-capitalistic. When everything goes predictably wrong, expect more socialist policies. They will never arrive at the answers society needs. Only a free and unhampered market can offer the best and most fair solutions to our economic woes.
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Risking Nuclear War for Ukraine? Why?
The Bureau of Democracy, Human Rights and Labor (a branch within the US State Department) releases annual ‘Human Rights Reports’ on 194 different countries around the globe. Their 2021 report for Ukraine was released in April of this year. Despite its relevance to whether US intervention in the RU-UA war is merited, the report received zero media coverage.
The report highlights “serious abuses” in the Donbas region citing multiple sources: “International organizations and NGOs, including Amnesty International, Human Rights Watch, and the HRMMU, issued periodic reports documenting abuses committed in the Donbas region on both sides of the line of contact.”
Notable examples of ‘significant human rights issues’ listed by the bureau include “extrajudicial killings by the government or its agents,” “violence against journalists,” “serious acts of government corruption,” and “violence motivated by anti-Semitism.”
Corroborating the State Department’s classifications is the Heritage Foundation, a pro-interventionist conservative think tank founded in 1973. For nearly three decades, the foundation has maintained its Index of Economic Freedom which defines economic freedom as the “fundamental right of every human to control his or her own labor and property”. For the 2021 index, not only does Ukraine rank 35 spaces below Russia at #127 on the leaderboard, it’s in another category. Russia’s economy is deemed to be “moderately free”, a category shared by first world nations like Italy, France, and Spain, while Ukraine’s economy falls within the “mostly unfree” bracket.
I encourage readers to read the full list at the end of page 1 of the report and compare it to the State Department’s report on Russia. The assessments are nearly identical. It’s worth asking, if our own State Department classifies these two nations as equally abysmal defenders of basic human rights, why on Earth should we care about who governs their disputed territories?
The only material differences between the two reports are related to Russia’s unfair elections, an issue the department does not attribute to Ukraine despite the Obama Administration’s interventions into their elections in 2014. That said, there is no question that Russian elections are less-than-legitimate. Despite Putin’s popular support (which has been cited in numerous western outlets), he certainly shapes the system to his advantage - whether it’s extending his legal term limit, imprisoning opponents, or outlawing online speech that demonstrates “disrespect” towards “state authorities”.
However, even granting that Ukrainian elections are likely freer and fairer than those in Russia, if our goal is to defend democracy, why have we refused for almost a decade to recognize the secession of Crimea?
Months after the widely disputed Crimean referendum to join Russia which passed in early 2014, Gallup, one of the oldest and most respected polling institutions in the US, in partnership with the Broadcasting Board of Governors, a US federal agency whose stated mission is to “promote freedom and democracy and to enhance understanding by broadcasting accurate, objective, and balanced news and information”, polled Crimean residents on whether the referendum reflected their views. Not only did 82.8% of the population confirm that it was, but 68.4% of ethnic Ukrainians did as well.
The following year, GfK, a German-based data and analytics behemoth, conducted a follow-up poll asking Crimean residents “Do you endorse Russia’s annexation of Crimea?” to which 82% responded “yes, definitely” with only 2% answering with a definitive “no”. One cannot claim to be defending democracy while aiding and abetting the Ukrainian government’s ongoing incursions into Crimea. David Sacks sums it up best:’
Ok, so if not protecting democracy or improving the quality of life, what are we doing? Can we simply not tolerate an infringement on sovereign borders?
If that were the case, why then does the US not only allow but actively support the United Arab Emirates and Saudi-backed invasion of Yemen that began in 2018 and continues today? Regardless of the origins behind this war, it was not sanctioned by the Yemeni government and thus an infringement on their sovereignty. It’s the Middle East so it doesn’t matter?
The real reason we are involved in Ukraine is not to help their civilians. It is not to preserve democracy. It is not to preserve national sovereignty. It is what US officials like Defense Secretary Lloyd Austin and Congressman Dan Crenshaw have both admitted. The true purpose is to ‘weaken Russia’. A goal in direct contradiction to “Standing with Ukraine”. This goal uses their home as our playground. It uses civilian lives as our propaganda. It does nothing for the ordinary Ukrainian whose life would experience no material difference if Russia were to govern Crimea (as it has done for nearly a decade with the approval of its inhabitants) or the Donbas (which has been mired in civil war for years with atrocities on “both sides”).
Oh yeah… and this goal also runs the risk of annihilating humanity.
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Some Economic Lessons Learned from Britain's "Inglorious Coup"
British school children learn about the Glorious Revolution of 1688 which installed without bloodshed a new bill-of-rights respecting monarchy (William and Mary) on the throne in the place of the autocratic short-reigning King James. The Protestant elites feared his dismantling of restrictions on Catholics and his geo-political rapprochement with France under Louis XIV. They opted for Dutch King William.
Now there is a new lesson: the inglorious coup against PM Liz Truss in office just 7 weeks.
What was the aim of this coup led by plotting centrist parliamentarians within the Conservative Party1? It was to abort her free-market capitalist agenda – the first time a Conservative Government led by a PM from the right-wing of the Party had embarked on this since the 1980s under Margaret Thatcher. Geopolitics was not a factor; outwardly at least there is no dissent in Parliament about Britain’s prominent role in supporting Ukraine and joining in the US-led proxy war against Russia.
The pretext of the coup-organizers was to stem a market crisis ostensibly triggered by the government’s early budget decisions.
Many fellow conservative MPs (members of parliament) were anxious that the crisis would be the catalyst to the opposition Labour party gaining a landslide victory at the next General Election (due at latest by end 2024); wild swings in the opinion polls fanned the alarm. A leading concern was that the jump in interest rates would unsettle swathes of traditional conservative voters with large mortgages outstanding on homes bought at notoriously high prices fanned by monetary inflation.
The inglorious coup, unlike the glorious revolution, brings no new freedoms. Rather a rapid return journey looms into the status quo where Big Government, Big Finance, and crony capitalism thrive. The brooms of de-regulation and market-determined interest rates to which the Truss Government had opened the door are now firmly back in the cupboard.
The new PM, Rishi Sunak was selected under rules for a conservative party vote stitched up overnight by the coup plotters, and duly rubber-stamped by the so-called “1922 committee”. The requirement for any eligible candidate to have 100 MP sponsors to go forward into an election process meant Sunak would be the only name on a ballot. Hence no election necessary, whether amongst parliamentarians or rank and file conservative party members.
Within a few days of Liz Truss’s resignation announcement came the anointment as PM of ex-Finance Minister Sunak who had presided over the Big Government and highly inflationary economic program of the Boris Johnson administration through the pandemic years. As such he had perfectly toed the line to the beliefs and preferences of the status quo whether at Davos, the global central bankers’ club, or “the City”.
The success of this coup is sad for anyone who believed that Britain had a real prospect of shaking off the fetters of a high tax Big Government and reaping the benefits of freedom and prosperity from a new competitive capitalism under sound money.
Deriving and learning the lessons about how the coup succeeded will not help undo the sombre outcome for the UK. The process, however, should be of huge consequence for the US and indeed the rest of the world. Hopes for a renaissance of capitalism and freedom should gain new substance from those lessons as its advocates in the political arena are better prepared in consequence when their opportunity comes.
The biggest lesson will surely be one going all the way back to Adam Smith, repeated by J.S. Mill and Milton Friedman.
The essential foundation of competitive capitalism and freedom is sound money. The ill-fated ex PM Truss came into office with no coherent let alone compelling program for monetary reform – how to overturn the actual bad money regime, the so-called “2 per cent inflation standard”.
As a practical matter it is only possible to pursue supply side tax reform which transitorily widens the budget deficit if indeed there is a monetary regime in place which enjoys confidence about its money being good. Tax cuts delivered up front can be matched then by credible programs of public spending reduction. If the economic reformers leave the bad money regime in place, then any serious widening of the budget deficit becomes a catalyst to an intensification of inflationary fears. These can short-circuit in currency and bond market collapse.
President Reagan and PM Thatcher understood those interdependencies in the early 80s. They accompanied supply side tax cuts with their endorsement of the “monetarist experiment”. Reagan gave political support to the Volcker Fed’s blunder-buss rate rises through 1981-2 to end high inflation: Thatcher supported tough monetarist medicine, ostensibly taking advice from internationally renowned professors.
Of course, the applied forms of practical monetarism had flaws. Both leaders came under intense political pressure later to abandon monetarism, which they did. The wider free market crusades in Britain and the US bore the consequences of that failure to persevere with monetary reform in the direction of good money.
By contrast ex-PM Truss led the charge for a new low tax competitive capitalism whilst leaving the old regime under inflation-maker Bank of England Chief Bailey in full command. His institution announced only a tame 50bp rise of its policy rate to 2.25% on the eve of a bold unveiling of Truss’s tax-cutting plan, despite year-on-year CPI inflation already moving in double digits. No wonder the markets (the pound and gilts) reacted in scare.
Glaringly PM Truss had totally failed to make any popular appeal about creating a new hard money and slaying the scourge of high inflation.
Is there not a way to sell the benefits of a good money to the public, whether in the US or Europe, in a way which would be a powerful vote winner?
After all we have the example in Germany where the Social Democrats and Liberals won the 1969 elections on the promise of a strong currency and breaking with the inflationary dollar. They allied themselves with the monetarist pioneers within the Bundesbank, The hard DM became the most popular German institution.
Is it out of the question, especially in present high inflation circumstances, for a mainstream British or US or German political party to find the same route to victory?
Obviously the big and most important sell is that a hard currency wins advantages of prosperity and freedom and soothes the widespread deep anxiety at this time of widespread serious loss of wealth in real terms.
Symbolism can be important here.
Perhaps in time a Truss government if it had survived would have embraced the idea of launching a 100-pound note (at present the maximum denomination is 50 pounds, much lower than the maximum 100 in dollars, 200 in euros, and 1000 in Swiss francs) with the head of the new King on it. The new notes could have born a promise saying we (the Bank of England) will be faithful to our duty to maintain the soundness of this money.
All this would have indicated a radical change from the Elizabethan pound; notes as first issued with the Queen’s image on one side in 1960 had lost (through the course of several exchanges) almost 96% of their purchasing power by the time of that monarch’s death.
Now pie in the sky.
The simple lesson repeated ad nausea in the media from all this is the need to reduce fiscal deficits. The argument is that in today’s world of permanently higher interest rates governments can no longer run large deficits and expect the tolerance of financial markets to do so.
That is a lesson to suit the monetary and economic status quo. The central banks are back to the age-old ploy of blaming the finance ministers for bad outcomes. No fault of the monetary regime!
The free-market competitive capitalist agenda will never win popular support based on good housekeeping as its main plank, though that will doubtless be incentivized by good money.
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One More Time
Everyone expects the Federal Reserve to increase rates next week. The CME Group assigns a probability of 97% that the Fed’s target rate will rise from 3.0-3.25% to 3.75-4.0%. With the Fed hiking for quite some time, and inflation maintaining a 40 year high, at least two things should now be apparent: Raising rates to fight (price) inflation does not work and the Fed will continue raising rates to fight inflation.
Just last week, CNBC wrote:
Philadelphia Federal Reserve President Patrick Harker on Thursday said higher interest rates have done little to keep inflation in check, so more increases will be needed.
Showing not even the slightest reservation with their policy, the Fed President was quotes as saying:
We are going to keep raising rates for a while... Given our frankly disappointing lack of progress on curtailing inflation, I expect we will be well above 4% by the end of the year.
Incredible really, because so far, rate hiking has done next to nothing to “fight inflation.” Instead of examining their theory, the Fed decided to do more of the same in hopes it will somehow work… eventually.
According to our planners, prices have increased due to COVID, Putin, and anything else except the Fed’s $5 trillion monetary inflation. Their solution to lowering prices is to raise interest rates. While this has not worked so far; if rates reach above 4% by the end of the year, the prediction is that it will.
It’s comical but this is basically the narrative we’re told. There’s even more to the story:
The expectation is that the Federal Open Market Committee, of which Harker is a nonvoting member this year, will then take rates a bit higher in 2023 before settling in a range around 4.5%-4.75%.
And so, he claims:
At that point, I think we should hold at a restrictive rate for a while to let monetary policy do its work.
To recap: The Fed will stop raising rates sometime next year when rates are close to 5%. At this time, something will happen, and prices will go back down again. Or if they don’t want to call it deflation, the hope is that the CPI and other inflation calculators show a mere 2% inflation for the foreseeable future.
How or why any of this would be the case has never been explained by the most highly paid and decorated economists of our time. Nor has it been explained why raising rates to fight inflation will work in 2023 when it hasn’t worked in 2022. We must assume that on some level, everyone, including members of the Fed, know that inflation cannot be controlled like a water faucet. Surely, those in the Fed’s inner circle know their quantitative models are inherently flawed. For everyone outside the Fed, we must continue to take stock that whatever the Fed is doing, it’s economics in name only. Never forget what they’ve done to our money, our economy, and our future.
Barring any stock market catastrophe, rates will rise next week. If that doesn’t solve our inflation problem, expect rates to rise again. Of course, they cannot raise indefinitely because amongst other things, the world is drowning in debt. The rate cut will come eventually, irrespective of any inflation reading.
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Tom and I Talk Secession on The Tom Woods Show
I was on The Tom Woods Show on Friday, and the two of us talked about secession at all levels of government, plus some details about my new book, Breaking Away.
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Gold Is the Solution for Financial Crises, Not their Cause
The Great Depression, Great Inflation I, the Financial Crisis, and the unfolding Great Inflation II have all been caused and perpetuated by hyperactive Progressive government. In the past crises, holding gold would have conserved savings and provided added returns.
The Great Depression came about when the Progressives’ newly-spawned Fed, having first greatly increased the quantity of money throughout World War I, again increased the quantity of money throughout the 1920s, by 62 percent (for details on figures, see table below). There was considerable innovation-driven growth already, but this new money created out of thin air created an unsustainable boom.
Progressive regulation of utilities, which at the time were high-tech and high-growth, sparked a stock market crash. Projects failed, businesses failed, and banks failed, ruining borrowers. Both parties‘ politicians then blocked product prices and wages from being decreased in sync, which had been done throughout the remarkably-similar 1839-1843 crisis deflation and had allowed workers to keep working and investors to keep earning returns. Investors saw that the Progressive, newly-hyperactive government could eliminate their returns or confiscate their returns, so investors rationally held back on new projects. Tragically for individuals, the Progressive government controlled the price of gold and started treating it as illegal for unlicensed individuals to hold gold.
Great Inflation I came about when the Fed increased the quantity of money in the 1960s and 1970s by 176 percent. Starting in the 1970s, both parties’ politicians significantly blocked corresponding increases in prices and wages. Investors again saw that the Progressive government could eliminate their returns, so investors rationally flocked to savings-conserving assets, including gold from 1975 on, once conservatives in government again started honoring it as legal for unlicensed individuals to hold gold. Sadly, Progressives in government meanwhile started treating the inflation-driven increases in the dollar prices of gold not as holdings of constitutional money or as conserved savings but instead as taxable capital gains.
The Financial Crisis came about when the Fed increased the quantity of money from 1995 to 2007 by 128 percent. The Progressive government also leaned on its financial cronies to lend mortgages to crony voters who were at serious risk of defaulting, and then bailed out almost all of its financial cronies. The initial increase in consumer prices was echoed and outpaced by the increase in the price of gold.
Great Inflation II has been started by unprecedented increases in the quantity of money by 303 percent, of which the portion that has come only recently, in the time of covid, has been 120 percent. Stock prices first were inflated and now have begun to decrease. Consumer prices have started to increase. (Consumer prices change quickly for quickly-processed products but as a whole don’t become stable for 8 to 16 years or more; so if the average is 12 years and the fastest changes come in the middle, then after the money-quantity changes, the most-substantial consumer-price changes would turn up in 6 years.) The price of gold has so far only decreased.
These crises’ superficial differences mask these crises’ deeper commonality. Each crisis is caused by a boom during which the quantity of government money is greatly increased, followed by a bust during which governments further disrupt workers, customers, and investors from healing themselves. Throughout the boom and the bust, governments treat taxpayers and money-holders as a commons resource—like land owned in common by everyone, which gets overgrazed and depleted. Various groups in government each grab as many resources as they can until the taxpayers and money-holders are depleted in resources and need significant time to rebuild. Although the Fed enables these depletions and has a fiduciary duty to not be the enabler, the root cause is always the politicians’ choices to borrow on the backs of taxpayers and to spend and regulate to favor business cronies and activist cronies.
The table below summarizes these crises’ booms in the quantity of money, the resulting busts in the prices of consumer products and stocks, and the resulting changes in the price of gold.
Table. Four Crises Summarized.
Booms in money quantity,
resulting busts in urban-consumer and stock prices,
and resulting changes in gold price.
1 The money quantity TMS2, often referred to as TMS, for the USA.
2 Murray Rothbard’s calculation.
3 Author’s calculation by Griggs and Murphy method.
4 Consumer-price index for urban consumers in the USA, as listed on InflationData.com.
5 Widely-used index of 500 leading large-cap USA equities, covering approximately 80 percent of available market capitalization, as listed on macrotrends.net.
6 Gold bullion price in USA dollars, as listed on macrotrends.net, deselecting “inflation-adjusted.”
7 Holding of gold by unlicensed individuals was treated as illegal from 5/33 through 12/74.
The boom money-quantity increases of the Great Depression, Great Inflation I, and the Financial Crisis were fractions of the boom money-quantity increase in Great Inflation II so far: only 0.20x, 0.58x, and 0.42x as much.
The consumer-price decreases of the Great Depression would be drowned out by today’s modern-monetary-theory Fed. The consumer-price increases of the Great Inflation I and the Financial Crisis were sizable fractions of the money-price increases: 1.11x and 0.23x. The consumer-price increase of Great Inflation II so far has been a much-smaller fraction of the money-price increase: only 0.08x.
The gold-price increases of the Great Depression, Great Inflation I, and the Financial Crisis were multiples of the money-quantity increases: 1.1x. 4.8x, and 1.2x. The gold-price increase of the Great Inflation II so far has been a negative fraction of the money-quantity increase: -0.1x. All in all, gold’s downside potential is small and gold’s upside potential is very large.
USA governments have a long history of largely respecting the glaringly-obvious right to own property. Political pressures have prevented gold from ever having been confiscated outright. The same political pressures remain in play now. In fact, the holding and voluntary pricing of gold may well be as protected now as they have been at any time under majority-Progressive rule.
Stocks are ownership of the world’s productive assets, which makes them the source of the values of all other assets. Over sufficiently-long time periods, even periods that include crises, stocks are unmatched as investments. Gold is a store of existing value. Over sufficiently-short time periods of crisis, gold protects existing value from being rapidly destroyed by government assaults on productive actions. Gold is for crises.
From now until the Fed makes a lasting slowdown of its enabling of government spending, or puts an end to its enabling, gold looks like an obvious buy, and worth holding as Great Inflation II unfolds.
Like the 2018 midterms, the 2022 midterms have too-few competitive races to change the swing votes substantially and shift the congressional houses from Progressive big spenders to constitutionalist government-limiters. The most-rapid change in government response to this crisis would be to elect a more-constitutionalist executive. Expect to re-evaluate gold holdings depending on how administrations change in 2024, 2028, and 2032.
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Financial Innovation or Intrusion?
Central Bank Digital Currencies (CBDCs) are coming. History shows that technology has never been stopped, nor restrained, for a significant length of time.
Governor Christopher J. Waller commented on some of the risks and benefits that CBDCs can offer. He weighed ideas such as security concerns and how foreign and domestic CBDCs would impact the vital role the American dollar has on the world economy. It appears the Fed is trying to convey their careful consideration of its efficacy and usefulness. Per the Governor, in January of this year:
The Federal Reserve Board published a discussion paper on CBDCs to foster a broad and transparent public dialogue, including the potential benefits and risks of a U.S. CBDC. To date, no decisions have been made by the Board on whether to move forward with a CBDC.
He goes on to proclaim:
But my views are well known. As I have said before, I am highly skeptical of whether there is a compelling need for the Fed to create a digital currency.
Whether for show, pretending the Fed is still on the fence regarding CBDCs, or if he truly is skeptical is unclear. But governments and central planners have no limits when it comes to interfering with the economy and lives of others. When confronted with a technology that will only enhance the powers of the planner, we can be confident the planner will jump at the opportunity.
In his speech, he failed to mention other innovations that CBDCs could offer, such as the ability to track payments, block transactions at will, and set expiry dates on money itself.
If it sounds far fetched, read an excerpt from a paper published by the Bank of Canada last December:
An inconvenient aspect of physical cash is that it can be lost, and there is no way to recover it. We consider a potential feature to solve this problem for offline digital cash: an expiry date to automate personal loss recovery. With this feature enabled, digital cash could not be spent after its expiry date.
Naturally, they try justifying this by claiming:
Consumers whose digital cash expired would automatically receive the funds back into their online account without having to file a claim.
Notice the spin, that, unlike cash which can be lost, if you were to somehow lose your (presumably digital) wallet, then after a set amount of time the money expires and the individual receives the funds again.
Such situations could be useful; yet, there are two sides to every technology.
Consider the “weakening of consumer demand,” according to the Fed. It’s possible they will set expiry dates on CBDCs, forcing people to spend money by a set date in order to “stimulate the economy.” They wouldn’t admit this yet. But once the technology is in place, nightmare financial scenarios such as this could become reality, masquerading as short-term measures or necessary policy decisions.
Either way, once the wheels of progress, or devolution, are in motion, they won’t be stopped. Central banks of the world will continue publishing papers on the pros and cons of CBDCs, and then one day, we’ll wake up to find we’re living in a cashless society.
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