Power & Market

Governor of Bank of Canada Doesn't Know Canada's Own History

04/16/2018Tho Bishop

Unfortunately I will not be able it make the highly anticipated debate between Bob Murphy and George Selgin on fractional reserve banking tonight, it should be a great event between two great scholars (and former Mises Institute alums). Though I'm obviously on Team Bob tonight, I did want to point out a great tweet from Dr. Selgin over the weekend that help shows the very superficial grasp of history many central bankers have.

In a thread sparked by recent comments from Mark Carney of the Bank of England about central bank digital currency, a participant pointed to an article from Stephen S. Poloz — the head of the Bank of Canada. While explaining his skepticism of cryptocurrency, Poloz remarks that providing cash "is an absolutely vital public good, which has always been provided by the central bank." 

The problem as Selgin notes, is that central banks didn't provide cash for Cananda until the BoC was founded in 1935. Prior to that, Canada had a system of free banking and private currency — a monetary regime that proved to be far more stable than the United States under the Fed.

While this could perhaps be dismissed as simple absent mindedness on part of Poloz — his own "57 states" moment — the problem is that his entire point about the inherent "public value" of government-backed currency is directly undermined by Canada's own history. It is precisely because the record has shown that money is best left up to the market — coupled with the past decade of unprecedented monetary policy — that recent projects such as cryptocurrencies (along with private gold/silver/etc.-backed money) are so fascinating. On this point, I'll continue to shamelessly borrow from Selgin's work by pointing to his blog articles (Part 1Part 2, and Part 3) that critique a paper about what Canada's history of private bank notes might mean for cryptocurrency.

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Gun Crackdowns Have Already Led to Too Many Federal Abuses

03/08/2018James Bovard

President Trump declared last week that the law enforcement should “take the guns first, go through due process second.” But the history of federal firearms enforcement shows that due process is often a mirage when federal bureaucrats drop their hammer. Before enacting sweeping new gun prohibitions, we should remember the collateral damage and constitutional absurdities from previous federal crackdowns.

Gun control advocates have called for prohibiting possession of AR-15 rifles — a ban that could create five million new felons overnight, since most owners would not meekly surrender their firearms at the nearest federal office. Others advocate outlawing all semi-automatic firearms — an edict first floated by the Clinton administration that would create tens of millions of new offenders.

But before vesting vast new power in federal enforcers, the record of the Alcohol, Tobacco and Firearms (ATF) agency must be considered. A 1982 Senate Subcommittee on the Constitution report on ATF concluded, "Enforcement tactics made possible by current firearms laws are constitutionally, legally, and practically reprehensible.” Outrageous abuses have continued to the present day. An analysis conducted for the University of Chicago found that ATF heavily targeted racial minorities in its entrapment operations. And across the nation, ATF has been caught using mentally handicapped individuals in sting operations.

Sweeping new firearms prohibitions would enable the feds to selectively target unpopular offenders. The biggest debacle resulting from prior such targeting occurred 25 years ago last week outside of Waco, Texas. The federal Alcohol Tobacco and Firearms (ATF) agency saw the Branch Davidians — a fringe Protestant group that quickly became maligned as a cult — as the perfect patsies for a high-profile raid that would make G-men look like heroes.

Read more at The Hill
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George Washington’s advice for Trump-Era DC

01/30/2018Gary Galles

January 20 marks the first anniversary of Donald Trump’s swearing in as the 44th person to succeed George Washington as President. Looking back, we can see that not only were the principles of civility that animatedWashington as America’s “indispensable man,” in historian Forrest MacDonald’s words, missing from the electoral process, neither our President nor his often harsh critics (particularly those who have given rise to what is now called Trump derangement syndrome), has since reflected the demeanor that helped make Washington “first in war, first in peace, and first in the hearts of his countrymen.”

We see this in the tooth-and-nail verbal melee the beltway is today, where even basic civility is routinely violated between members of opposing factions. Given the importance of comity to every form of social cooperation (supposedly advanced by the gargantuan Washington apparatus), perhaps a somewhat different approach may help. The hordes of finger-pointers and rhetorical bomb-throwers there could all benefit from reading GeorgeWashington’s Rules of Civility and Decent Behavior in Company and Conversation. Written before Washington was 16, it summarized important facets of necessary for him to behave “according to the custom of the better bred.”

Consider some of George Washington’s advice to himself and its relevance today for our current President, his admirers, and his attackers.

  • Every action...ought to be with some sign of respect to those that are present.
  • Speak not when you should hold your peace.
  • Show not yourself glad at the misfortune of another.
  • Always submit your judgment to others with modesty.
  • Undertake not to teach your equal in the art [he] professes; it savors of arrogance.
  • In reproving, show no sign of choler but do it with all sweetness and mildness.
  • Take all admonitions thankfully.
  • Mock not nor jest at anything of importance.
  • Wherein you reprove another be unblameable yourself.
  • Neither curse nor revile.
  • Let your conversation be without malice or envy...And in all causes of passion admit reason to govern.
  • Utter not base and frivolous things amongst...very difficult questions or subjects.
  • Speak not injurious words, neither in jest nor earnest.
  • Detract not from others.
  • Be not obstinate in your own opinion.
  • Reprehend not the imperfections of others.
  • Think before you speak.
  • Undertake not what you cannot perform.
  • In disputes, be not so desirous to overcome as not to give liberty to each one to deliver his opinion and submit to the judgment of the major part.
  • Contradict not at every turn what others say.
  • Be not tedious in discourse, make not many digressions, nor repeat often the same manner of discourse.
  • Speak not evil of the absent, for it is unjust.

George Washington’s commitment to decorum has been thoroughly trampled in America’s ongoing political uncivil war whose post-inauguration phase is now celebrating (or, more frequently, denigrating) its first anniversary. Americans could benefit greatly from deflating the incivility that besets us, in his honor. However, even more important to our well-being would be once again looking to the principles Washington articulated for governing.

  • The cause of America [is] liberty.
  • Express your utmost horror and detestation of the Man who wishes, under any specious pretenses, to overturn the liberties of our Country.
  • Liberty will find itself...where the Government...[will] maintain all in the secure and tranquil enjoyment of the rights of person and property.
  • Under [government’s] protection; everyone will reap the fruit of his labors; everyone will enjoy his own acquisitions without molestation and without danger.
  • [Government] has no more right to put their hands into my pockets, without my consent, than I have to put my hands into yours.
  • Government is not reason. It is...a dangerous servant and a terrible master. Never for a moment should it be left to irresponsible action.

George Washington’s character was important to our founding, but even more so, his actions were essential to our revolution’s success and the creation of America as “this land of equal liberty.” Both helped provide America with what he celebrated as “the fairest prospect of happiness and prosperity that ever was presented to man.” His core principles would provide a far more useful model for the city named for him than what we are witnessing today.

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Government in Action: Crypto Edition

01/16/2018Troy Vincent
  1. Be a central government
  2. Complain of volatility/risk in cryptocurrencies
  3. Talk about banning cryptocurrencies
  4. Cause panic and market fear/uncertainty
  5. Complain of volatility/risk in cryptocurrencies
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