Rothbard on Slavery Reparations

Rothbard on Slavery Reparations

07/12/2019Jeff Deist

In 1969 the hottest new libertarian publication was The Libertarian Forum, edited by Murray Rothbard in New York and Karl Hess in Washington. Hess, famously as associate of Barry Goldwater before becoming a deeply disillusioned anarchist, was a man of many talents—welding, motorcycle racing, and no-holds-barred philosophy among them. His street fighter style, combined with Rothbard's acerbic writing and penetrating political eye, made the Forum an outlet for strategy and tactics more than anything. And it had a surprisingly long run, until 1984, in physical print no less.

There is nothing like it today, either in style or content.

As just one example, consider the short essay Rothbard penned for the June 15, 1969, issue. "Confiscation and the Homestead Principle" elaborates on Rothbard's earlier writing in Power and Market concerning homesteading of land. In the latter, he criticized the Georgist notion of "societal" ownership or control of real property in favor of a "first-user, first-owner" principle. In the former, he considered how we might determine proper title to stolen property, i.e. land where current possession is not based on legitimate homesteading or title transfer.

The homesteading principle means that the way that unowned property gets into private ownership is by the principle that this property justly belongs to the person who finds, occupies, and transforms it by his labor. This is clear in the case of the pioneer and virgin land. But what of the case of stolen property? 

This is especially tricky when the thief is the state and the victim is not readily identifiable:

Let us now apply our libertarian theory of property to the case of property in the hands of, or derived from, the State apparatus. The libertarian sees the State as a giant gang of organized criminals, who live off the theft called “taxation” and use the proceeds to kill, enslave, and generally push people around. Therefore, any property in the hands of the State is in the hands of thieves, and should be liberated as quickly as possible. Any person or group who liberates such property, who confiscates or appropriates it from the State, is performing a virtuous act and a signal service to the cause of liberty. In the case of the State, furthermore, the victim is not readily identifiable...All taxpayers, all draftees, all victims of the State have been mulcted. How to go about returning all this property to the taxpayers? What proportions should be used in this terrific tangle of robbery and injustice that we have all suffered at the hands of the State? 

The answers are thorny. State-owned entities, like universities, are readily identified and seized. But seized by whom, and given to whom? When decades or centuries have passed, how do we determine rightful owners of land? And what about corporations that derive 50% or 75% of their income from taxes, such as defense contractors? Should they be nationalized, liquidated, and the proceeds distributed to taxpayers?1 

But the most interesting feature of the essay, deals with the idea of land reparations for descendants of American slaves.

This brings us to Karl’s point about slaves. One of the tragic aspects of the emancipation of the serfs in Russia in 1861 was that while the serfs gained their personal freedom, the land – their means of production and of life, their land was retained under the ownership of their feudal masters. The land should have gone to the serfs themselves, for under the homestead principle they had tilled the land and deserved its title. Furthermore, the serfs were entitled to a host of reparations from their masters for the centuries of oppression and exploitation. The fact that the land remained in the hands of the lords paved the way inexorably for the Bolshevik Revolution, since the revolution that had freed the serfs remained unfinished.

The same is true of the abolition of slavery in the United States. The slaves gained their freedom, it is true, but the land, the plantations that they had tilled and therefore deserved to own under the homestead principle, remained in the hands of their former masters. Furthermore, no reparations were granted the slaves for their oppression out of the hides of their masters. Hence the abolition of slavery remained unfinished, and the seeds of a new revolt have remained to intensify to the present day. Hence, the great importance of the shift in Negro demands from greater welfare handouts to “reparations,” reparations for the years of slavery and exploitation and for the failure to grant the Negroes their land, the failure to heed the Radical abolitionist’s call for “40 acres and a mule” to the former slaves. In many cases, moreover, the old plantations and the heirs and descendants of the former slaves can be identified, and the reparations can become highly specific indeed. 

Rothbard wrote this a century after the Civil War, and another 50 years have gone by since. Can old plantation land be seized today, given all the subsequent owners and land development? (e.g. parceling into housing owned by innocent good faith buyers). Can we identify slave descendants accurately? And if so, wouldn't such a descendant living in another part of the US likely prefer cash to a land title in a southern state? Some slaves may have hundreds of living descendants, will cash amounts be reduced pro rata? 

One thing is certain: if paid, reparations will be financed via deficits and general taxes, not specific payments from person X to person Y. "The government," an amorphous blob, will pay—which means all of us, including black Americans, will foot the bill via taxes and inflation.

  • 1. For more on the distinction between stolen and unowned land, see Stephan Kinsella's blog on Rothbard's evolution regarding the subject. As Kinsella explains, Rothbard appears to have changed his thinking between 1969 (when "Confiscation and the Homestead Principle" was published); 1974, in an article titled "Justice and Property Rights," and in Chapter 9 of 1982's The Ethics of Liberty. Kinsella suggests Rothbard does not assert that any cloud over a land title's provenance means the land is open to seizure or homesteading. Subsequent or current owners may be completely innocent in any case, and their rights cannot simply be dismissed.
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How the West Was Won: Counterinsurgency, PSYOPS and the Military Origins of the Internet, Part I: Look a Gift Horse in the Mouth

As the digital revolution was underway in the mid-nineties, research departments at the CIA and NSA were developing programs to predict the usefulness of the world wide web as a tool for capturing what they dubbed “birds of a feather” formations. That's when flocks of sparrows make sudden movements together in rhythmical patterns.

They were particularly interested in how these principles would influence the way that people would eventually move together on the burgeoning internet: Would groups and communities move together in the same way as ‘birds of a feather, so that they could be tracked in an organised way? And if their movements could be indexed and recorded, could they be identified later by their digital fingerprints?

To answer these questions, the CIA and NSA established a series of initiatives called Massive Digital Data Systems (MDDS) to directly fund tech entrepreneurs through an inter-university disbursement program. Naming their first unclassified briefing for computer scientists ‘birds of a feather,’ which took place in San Jose in the spring of 1995.

Amongst the first grants provided by the MDDS program to capture the ‘birds of a feather’ theory towards building a massive digital library and indexing system - using the internet as its backbone - were dispersed to two Stanford University PHD’s, Sergey Brin and Larry Page, who were making significant headways in the development of web-page ranking technology that would track user movements online.

Those disbursements, together with $4.5 million in grants from a multi-agency consortium including NASA and DARPA, became the seed funding that was used to establish Google

Eventually MDDS was integrated into DARPA’s global eavesdropping and data-mining activities that would attempt total information awareness over US citizens. Few understand the extent to which Silicon Valley is the alter-ego of Pentagon-land, even fewer realise the impact this has had on the social sphere. But the story does not begin with Google, nor the military origins of the internet, it goes back much further in time, to the dawn of counterinsurgency and PSYOPs during the second world war.

The Dawn of PSYOPs

According to historian Joy Rhodes, a renowned physicist told U.S. defense secretary Robert McNamara in 1961:

“While World War I might have been considered the chemists’ war, and World War II was considered the physicists’ war, World War III . . . might well have to be considered the social scientists’ war.”

The intersection of social science and military intelligence is recognised by the US Army to have begun during WW1 when pre-war journalist Captain Blankenhorn established the Psychological Subsection in the War Department to coordinate combat propaganda.

These grey-area operations, as they become known, plateaued during world war II, when military strategists, building on wartime research in crowd psychology, drafted social scientists into the war effort through the Office of Scientific Research and Development (OSRD). The office would aggregate information about the German people and develop propaganda and psychological operations (PSYOPS) to lower their morale. This culminated in 1942, with the US federal government becoming the leading employer of psychologists in the US.

OSRD was an early administration of the Manhattan Project and responsible for important wartime developments in technology, including radar. The agency was Directed by engineer and inventor, Vannevar Bush - a key player in the history of computing, known for his work on The Memex, an early hypothetical computer device, that would store and index a user’s books, records and other information, and which would go on to inspire most major advancements in the development of personal computers over the next 70 years.

As the second world war ended and a new threat emerged from post war ravaged Europe, scholars and soldiers once again reunited to defeat an invisible and aggressively expansionist adversary.

Across the Soviet satellites in Europe and in the nations threatened by communism in Asia, Africa, and Latin America, cold war special operations, as they become known, were a nebulous category of military activity that included psychological and political warfare, guerrilla operations and counterinsurgency. To mobilise these ‘special warfare tactics’ the army established the Office of the Chief of Psychological Warfare (OCPW) in 1951, whose mission was to recruit, organise, equip, train, and provide doctrinal support to Psywarriors.

The office was directed by General Robert McClure, a founding father of psychological warfare and friend of the Shah of Iran, who was instrumental in the overthrow of Mohammad Mosaddegh in the 1953 Iranian coup d’état.

Integral to the projects of McClure’s OCPW, was a quasi-academic institution with a long history of military service called the Human Relations Area Files (HRAF). Founded by anthropologist turned FBI whistle-blower George Murdock, HRAF was set up to collect and standardise data on primitive cultures around the world. During WW2 its researchers worked hand in glove with naval intelligence to develop propaganda materials that would help the US liberate pacific nations from Japanese control. By 1954, the department had grown into an inter-university consortium of 16 academic institutions, funded by the army, CIA, and private philanthropies.

In 1954 the OCPW negotiated a contract with the HRAF to author a series of special warfare handbooks, disguised as scholarship, that sought to understand the intellectual and emotional character of strategically important people, particularly their thoughts, motivations and actions, with entire chapters compiled on the attitudes and subversive personality traits of foreign nationals, while other chapters focussed on the means of transmitting propaganda in each target nation, whether news, radio or word of mouth. This was, of course, decades before the internet.


In 1956, the Special Operations Research Office (SORO) emerged from these programs. Charged with managing the US Army’s psychological and unconventional warfare tactics during the cold war and taking the work of HRAF to the next level, SORO set about the monumental task of defining the political and social causes of Communist revolution, the laws governing social change and the theories of communication and persuasion that could be used to transform public perception.

SORO formed a central component of the Pentagons militarisation of social research, and particularly the ideas and doctrine that would usher in a gradual shift towards an American-led world order. Its research team was located on the campus of American University in Washington, D.C, and comprised the era’s pre-eminent intellectuals and academics. SORO’s ensemble team, from the fields of psychology, sociology and anthropology, would immerse themselves in social system theory, analysing the society and culture of numerous target countries, particularly in Latin America, while confronting the universal laws governing social behaviour and the mechanisms of communication and persuasion in each jurisdiction. If the US Army could understand the psychological factors that sparked revolution, they could, in theory, predict and intercept revolutions before they got off the ground.

SORO was part of a rapidly expanding nexus of federally Funded Research Centres (FCRC’s), that reoriented academia towards national security interests. Working at the intersection of science and the state, SORON’s, as they were known, advocated for an expert-directed democracy, regardless of the totalitarian consequences of social engineers and technocrats acquiring control over the thoughts, actions, and values of ordinary people.

In those early days of the cold war, academics and scientists working at the intersection of military and academia firmly believed that intellectuals should guide geopolitics. This was accepted as the most stable form of governance to take the free world into the next century. It explains how we have arrived under the rubric of the ‘settled science’ today. Or at least, policies masquerading as science. From the biosecurity state to the fundamentalism of climate science, much of what was achieved in those golden years of militarised social research shapes the twenty first century.

By 1962, sixty-six federally funded military research institutions were in operation. Between 1951 to 1967, the number tripled, while funding skyrocketed from $122 million to $1.6 billion.

But as opposition to the Vietnam War intensified in the 1960s, a growing number of intellectuals, policymakers and academics became increasingly concerned that the national security state was morphing into the statist, globalist force it had been fighting during the cold war and began publicly criticising Pentagon-funded social scientists as technocratic social engineers.

This inspired a wave of discontent for the militarisation of social research to grip America, culminating in 1969 with American University’s administrators banishing SORO from their campus and severing ties with their military partners. The move was endemic of the changing attitude towards these grey area special operations and resulted in the 1960’s and 1970’s with the excommunication of military research centres from university campuses across the US. A move that forced the military to look elsewhere - towards the private sector for their alternative warfare capabilities. Following a long tradition of public-private military cooperation, from the Rand Corporation to the Smithsonian Group, these quasi-private institutions were being spun-out of the military at a rate of knots since the 1940’s.

Project Camelot

One of the programs conceived by SORO was ‘Methods for Predicting and Influencing Social Change and Internal War Potential. Codenamed Project Camelot, the landmark program sought to understand the causes of social revolution and identify actions, within the realm of behavioural science, that could be taken to suppress insurrection. The goal, according to defence analyst, Joy Rhodes, was 'to build a radar system for left wing revolutionaries.' A sort of ‘computerised early warning system that could predict and prevent political movements before they ever got off the ground.’

‘This computer system’ writes Joy Rhodes, ‘could check up to date intelligence against a list of preconditions, and revolutions could be stopped before the instigators even knew they were headed down the path of revolution.’

The research collected by Project Camelot would produce predictive models of the revolutionary process and profile what social scientists deemed ‘revolutionary tendencies and traits.’ It was anticipated that such knowledge would not only help military leaders anticipate the trajectory of social change, but it would also enable them to design effective interventions that could, in theory, channel or suppress change in ways that were favourable to U.S. foreign policy interests.

It was intended that the information gathered by Project Camelot would funnel into a large ‘computerised database’ for forecasting, social engineering, and counterinsurgency, that could be tapped at any time by the military and intelligence community.

But the project was beleaguered by controversy when academics in South America discovered its military funding and imperialism motives.

The ensuing backlash resulted in Project Camelot being, ostensibly, shut down, though the core of its project survived.

Multiple military research projects picked up on Project Camelot’s ‘early warning radar system for left wing revolutionaries,’ while its computerised database for ‘forecasting, social engineering, and counterinsurgency’ went onto inspire a nascent technology that would be developed in the years to come, that would eventually become known to the world as the internet.

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Alabama Passes Sound Money Law, Expands Sales Tax Exemption Involving Gold and Silver

04/16/2022Jp Cortez

With Governor Kay Ivey’s signature on sound money legislation today, Alabama has become the second state this year to expand its sales tax exemption involving gold and silver.

Alabama Senate Bill 13, championed by Sen. Tim Melson and Rep. Jamie Kiel, passed with unanimous support out of the Alabama Senate and then passed unanimously through the Alabama House before making it to the governor’s desk.

In 2019, Alabama originally removed sales taxes from most gold, silver, platinum, and palladium coins and bars. This year, SB 13 clarified that the exemption covers all common forms of bullion, removed burdensome reporting requirements, and extended the sales tax exemption until 2028.

Backed by the Sound Money Defense League, Money Metals Exchange, and in-state supporters, SB 13 now fully ensures that Yellowhammer State citizens cannot be penalized with taxation when acquiring the monetary metals for investment, to protect their savings from the ravages of inflation, or any other reason.

Stefan Gleason, president of Money Metals Exchange, explained the importance of extending the existing sales tax exemption on precious metals: “Many states surrounding Alabama (Georgia and Florida) have cultivated pro–sound money environments, eliminating sales taxes on gold and silver. Alabama savers and investors are thankful that the legislature expanded and extended the state’s exemption.”

Alabama follows Virginia, which had only days earlier expanded and extended its own sales tax exemption involving the monetary metals earlier this month.

Including Alabama, forty-one US states now fully or partially exempt gold and silver from the sales taxes. That leaves nine states and the District of Columbia as the primary jurisdictions that still harshly penalize citizens seeking to protect their savings against the serial devaluation of the Federal Reserve Note.

Jp Cortez, policy director for the Sound Money Defense League, noted that SB 13 is part of a growing national trend. “Tennessee and Mississippi, both states that border Alabama, have been considering the elimination of sales taxes on gold and silver. So are Alaska, Hawaii, and New Jersey.”

States are removing sales taxes from monetary metals for the following reasons:

  • Taxing precious metals is unfair to certain savers and investors. Gold and silver are held as forms of savings and investment. States do not tax the purchase of stocks, bonds, ETFs (exchange-traded funds), currencies, and other financial instruments, so it makes no sense to tax monetary metals.
  • Levying sales taxes on precious metals is illogical because gold and silver are inherently held for resale. Sales taxes are typically levied on final consumer goods. But precious metals are inherently held for resale, not “consumption.”
  • Taxing gold and silver harms in-state businesses. It’s a competitive marketplace, so buyers in states with precious-metals sales taxes often take their business to neighboring states that have eliminated or reduced sales tax on precious metals. Coin conventions also tend to avoid the sales tax states.
  • Taxing precious metals is harmful to citizens attempting to protect their assets. Purchasers of precious metals aren’t fat-cat investors. Most who buy precious metals do so in small increments as a way of saving money. Precious metals investors are purchasing precious metals as a way to preserve their wealth against the damages of inflation. Inflation harms the poorest among us—including pensioners, those on fixed incomes, wage earners, savers, and more.

The Sound Money Defense League is a nonpartisan, national public policy group working to restore sound money at the state and federal level and publisher of the Sound Money Index.

Money Metals Exchange is a national precious metals investment company and news service with more than 500,000 readers and 350,000 customers. It also operates Money Metals Depository for the vaulting of gold and silver and Money Metals Capital Group, a collateral lending institution.

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Are US-Iran Relations Permanently Strained?

04/16/2022José Niño

As the United States saunters blindly down the dark hall of multipolarity, new questions about its capacity to handle the new realities of international affairs are surfacing.

Most attention is being directed towards Russia, as it’s conducting a controversial military campaign against Ukraine. On top of that, is the perennial question of China. The US is ostensibly making a pivot towards Asia in its efforts to contain the East Asian giant’s rise.

Generally overlooked nowadays is how the US will deal with Iran — one of the Deep State’s long-time bêtes noires. Part of the Biden administration’s foreign policy agenda is to re-enter the Joint Comprehensive Plan of Action (JCPOA), colloquially known as “the Iran nuclear deal.” Over the past few months, the two parties have attempted to resurrect the nuclear deal. The US’s current energy crunch — a largely self-inflicted predicament — has prompted the Biden administration to desperately revive this deal to allow for Iranian oil to continue flowing to the states.

Whether the deal will be finalized is still up in the air. Signed in 2015, the Iran nuclear deal was a hallmark of Barack Obama’s second term in office. Under this agreement, Iran, the US, and the European Union signed the agreement where Iran ostensibly agreed to iron out several issues with its nuclear program in exchange for sanctions relief from the US and EU.

However, the succeeding Trump administration scrapped the deal on the grounds that it was not fully permanent, did not address Iran’s development of a ballistic missile program, and did not tackle Iran’s expanding influence in the Middle East, namely its increased foothold in Syria, Iraq, Lebanon, and Yemen.

From there, the Trump administration pursued a maximum pressure strategy to bring the Middle Eastern nation to its knees through tightened sanctions and punitive actions such as the assassination of Major General Qasem Soleimani. While tensions did not escalate any further, US-Iran relations likely took a irreparable beating.

Although the Biden administration is still making efforts to rejoin the JCPOA, re-entry into this agreement has been a chore for both parties. US officials have previously accused Iran of not being serious about taking steps to return to compliance with the JCPOA.

On the Iranians' end, they have every reason to be skeptical of dealing with the US due to the long history of animosity between the two countries. More importantly, the US’s growing instability at home is infecting its foreign policy decision making. When a country sees one American president sign an agreement that is scrapped by a succeeding administration, they would be hesitant about re-entering an agreement that was previously scrapped.

Despite the obstacles they’ve faced in recent decades, the Iranians have proven to be resilient in the face of US pressure. In correspondence with Arta Moeini, an international relations scholar specializing in Iranian geopolitical affairs, Moeini called attention to how “years of 'maximum pressure' campaign by Iran hawks in the Trump administration have emboldened Tehran, reassuring it 1) that it can withstand almost any duress, and 2) that it has leverage because of it." Getting back into this deal will not be a walk in the park to say the least.

Putting oneself in an international actor’s shoes allows for one to understand why countries like Iran might not be so giddy about striking future agreements with the US. Why should Iran deal with a US government that has a long track record of reneging on its treaties, sanctioning countries at will, promoting covert operations that destabilize countries, and destroying countries wholesale in the name of democracy and human rights? For all the talk DC foreign policy apparatchiks make about rogue states, the US’s behavior on the world stage ironically embodies such behavior. It’s the classic case of the pot calling the kettle black. 

While diplomacy is preferable to DC’s usual strategy of saber-rattling, stiff sanctions, covert destabilization, and diplomatic isolation, perhaps it’s time to consider a bolder alternative. That would consist of a full-blown withdrawal from the Middle East altogether and stop interfering in Iran’s internal affairs.

From supporting the coup that deposed Mohammad Mossadegh in 1953 to pursuing draconian sanctions against the current Islamic Republic, the US has a long history of interfering in Iranian politics. The latter sanctions have only harmed Iranians, while doing nothing to topple the Mullah’s regime.

Moreover, the negative effects of the sanctions have incentivized Iran to form a strategic partnership with the emerging Eurasian axis that China and Russia are spearheading. Iran has deepened its relation with China by signing a 25-year $400 billion trade deal last year, and is in process of strengthening defense ties with Russia. Similarly, Iran’s 2021 accession into the Shanghai Cooperation Organization has reinforced its relationship with this Eurasian bloc.

The types of blowback that American foreign policy is generating will not just come in the form of terrorist attacks but also manifest themselves in the creation of parallel military partnerships. Such alignments will only make Iran even stronger thanks to the injection of money and military hardware from these rising powers.

If the US couldn’t take down the Iranian regime when it wasn’t part of any meaningful alliance structure, what makes American regime change architects think that they can topple an Iran that is beginning to enjoy stronger backing from the likes of China and Russia?

The US is now in a geopolitical environment where it’s no longer the only major actor on the world stage to boss other countries around. The unipolar moment is over and the dinosaurs in DC haven’t updated their foreign policy software. Failure to adjust to the new realities on the world stage, could result in the US stumbling into a disastrous conflict.

With the US mired in so many domestic problems as it is, getting ensnared in a misguided military adventure abroad is the last thing it needs.

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Why Are Sri Lankans Protesting?

The small and beautiful island of Sri Lanka is often eclipsed by discussions surrounding its richer, strategically more important, and dimensionally bigger northern neighbor, India. Recently, the island has been battling an unprecedented economic crisis of an alarming magnitude. While it is true that this crisis could have catapulted the island into international limelight, the current Russia-Ukraine hostilities have foreshadowed the plight of Sri Lankans facing relentless power cuts, fuel shortages, and endless hunger.

In this article, I attempt to succinctly break down the Sri Lankan Economic Crisis for western audiences that may need political and historical context to fully understand the gravity of what is transpiring on this small island.

Historical Background

Sri Lanka was a British colony that gained independence in 1948, albeit as a British Dominion, a status it was not able to shed until 1972, when it became a republic and changed its name from Ceylon to Sri Lanka. Despite electing the world’s first female Prime Minister, Sirimavo Bandaranaike, in 1960, Sri Lanka failed to expand its progressive politics to all realms of governance, disenfranchising the ethnic Tamil minority immediately after its independence in 1948.

Some 700,000 Tamils of Indian origin in Sri Lanka had been rendered stateless after the passing of a citizenship law in 1956 by the Ceylon Parliament. This was followed by mass “deportation” of Sri Lankan Tamils to India and ethnically harsh acts erasing the Tamil language and identity from other offices and governmental institutions.

The infamous, inhumane, and sanguineous Sri Lankan Civil War was a product of armed Tamil resistance that witnessed terrorist acts by LTTE, a separatist group, and the commission of war crimes by the Sri Lankan army. The war claimed about 100,000 lives and displaced close to a million. Anyway, in pursuit of unattainable historical thoroughness, I digress.

Current Politics and Crisis

Sri Lanka has been governed by the Rajapaksa brothers since 2019 in their current spell of governance. This temporal specification is relevant here since it is worth noting that Mahinda Rajapaksa, the current Prime Minister of Sri Lanka, served as the president of the country from 2005 to 2015, when he lost the presidency to Maithripala Sirisena, who was replaced in 2019 by Gotabaya Rajapaksa, Mahinda’s brother, as President. As glaringly nepotist as this development of events sounds, Sri Lankans had learned to live with their government until the current economic crisis.

Many experts attribute the immediate origins of the current economic crisis to the hit weathered by the tourism industry in the country, which has traditionally produced the third largest chunk of foreign exchange income by sector. Following an extremist attack during Easter in April 2019 which claimed about 270 lives, the country witnessed a sharp decline in tourist traffic, a chain of misfortunes worsened drastically by the COVID-19 pandemic, which devastated the economy, forcing it into a recession.

The crippling of the tourism industry was consequently followed by international credit rating agencies downgrading Sri Lanka’s ratings, making it impossible for the country to borrow money from international sources through bonds and other channels. This set into motion the steep downfall of Sri Lankan foreign reserves, which stands out as perhaps the sorest manifestation of the current crisis.

To understand how dwindling foreign reserves affect domestic economic conditions, and above all, the legitimacy of the current economic regime, one could regard the current discrepancy between the reserves and the debt obligations that Sri Lanka currently has. While the country has $2 billion in foreign reserves, it owes $7 billion this year, with $1 billion in bonds maturing in July. As the government inches closer toward a sovereign bond default, the prices of Sri Lankan sovereign bonds descend further, with the current risk premium associated with the bond being a whopping 28.36 percentage points.

Involvement of Foreign Actors

Chinese diplomacy traps and preying strategies have also added to the country’s woes. For the last two decades, Sri Lanka has received about $12 billion from China in infrastructure investments and been forced to give up as collateral to its ambitious creditor the strategic Hambantota port, which is intended by China as a major stop on the New Silk Road, officially known as the Belt and Road Initiative. Despite its stake in the country, China has refused Sri Lanka’s requests for credit to mitigate the ongoing crisis. On the other hand, India, a major regional rival of China, has forwarded $2.4 billion since January 2022 to its embattled southern neighbor.

Backlash and Protests

Sri Lanka Podujana Peramuna (SLPP), the party led by the Rajapaksa brothers, with Gotabaya Rajapaksa at the helm as the current president of the country, has lost over 40 Members of Parliament over this crisis. The entire cabinet has resigned except for the President and the Prime Minister, who are now relying on emergency powers to curb protests all over the country which are drawing Sri Lankans of all ages, classes, ethnicities, religions, and genders. The opposition leaders have demanded resignations from the Rajapaksa brothers as people stand in lines for hours for fuel, milk, and grains.

A major reason behind fuel shortages and the subsequent lack of basic items such as paper and milk is the inability of the country to import fuel, which it does not produce domestically. Not only does Sri Lanka lack the required foreign reserves, but the country has also devalued its currency in a bid to make its exports attractive and make a case before the IMF for a loan. After a 15 percent devaluation in the Sri Lankan Rupee, the state-run Ceylon Petroleum Corporation faces bankruptcy and owes US$3.3 billion to foreign entities.


As a country that is running a trade deficit, facing backbreaking inflation, battling an unprecedented economic crisis, and governed by a regime that lacks the faith of the people, Sri Lanka is witnessing a crucial time in its history. With 22 million people and no major resources or commodities featuring in its top exports, it is no wonder Sri Lankans are hungry, anxious, furious, and out on the streets marching toward Gotabaya’s home. That the primary export of the country is tea and the primary import refined petroleum indicates the gravity of this inflation-trade deficit-debt triangle.

The International Monetary Fund and India are two immediate actors who can help alleviate the pain of this economic crisis, but if the problem is truly as structural as the ongoing protests reveal, it is doubtful how much help loans will provide without proper domestic channels. Sri Lanka needs foreign reserves, fuel, oil, paper, and food, but above all, Sri Lanka needs a change to secure a future.

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Why Voters Should Nix San Antonio's Proposed Bond Issue

Next month San Antonians will go to the polls to vote on $1.2 billion in bond proposals. It’s a whopper of a debt-binge that includes funding for unfinished projects authorized by prior bond elections, some of questionable legality, and others representing wasteful jurisdictional overlap.

Also on the ballot will be two constitutional amendments, both aimed at reducing property taxes. The issues are related.

Here in the Alamo City, part of the tax we pay on the investment we put into our homes goes toward paying off that debt. The city’s ability to continue tapping that source is subject to a couple of cross-currents.

One is soaring property appraisals. This allows the municipality to pull in more revenue without raising rates. Unfortunately, they opt to spend this windfall rather than cut rates, or at least raise exemptions.

The state of Texas has been picking up the slack on the latter.

In addition to the ones on the ballot in a few weeks, a couple more exemption-raising constitutional amendments were approved in November. Any reduction in this damaging tax is progress, and it puts citizens on more equitable footing with businesses that get favorable tax treatment.

But only some taxpayers benefit.

To state the obvious, this is unfair, and it increases the burden on the remaining, shrinking tax base, some of whom may eventually say “to heck with this” and move outside city limits. My dad did exactly that when I was a kid.

Our mayor on the other hand, believes this exodus is happening due to a lack of “affordable housing,” and prospective homebuyers “losing … bidding wars … to outside investors.” 

The fact is, those investors are looking for safer assets as a result of poor monetary policy in Washington D.C. 

The City Council practically salivates at the opportunity to take advantage of this, and other federal largesse, to spend on their pet projects. However, they can’t bring themselves to modestly raise exemptions on property taxes without the state compelling them to

During the last effort to raise exemptions a year ago, one councilman said the savings to homeowners of the proposed hike would be “meaningless.” I agree. That’s why the entire scheme should be eliminated. 

The reaction of most politicians, regardless of jurisdiction or political party, is typically “but how will we fill the revenue hole in the budget?” Whether that’s due to lack of respect for citizens, envy or ignorance is anyone’s guess. 

I tend to give them the benefit of the doubt that they just don’t know any better.

For one, taxpayers will not simply stuff the reclaimed $400+ million in tax seizures under the mattress. They’ll inevitably go shopping, thereby pumping up sales tax revenue. Or even better, some might use it to launch a business venture, hiring more sales tax-paying employees. 

Maybe in addition to appealing to residents to “buy local,” our elected representatives should also urge them to “invest local.” Economic prosperity is supply-driven, not demand-driven. 

They could also show more respect to enterprising individuals and businesses by eliminating city programs that are better- and/or already handled by these folks. As it is, they appear to have more faith in their ability to spend taxpayer money than they do in that of the taxpayers’ themselves.

For example, rather than expanding control and increasing subsidization of “food access” programs, how about removing obstacles to its development, and selling plots of city-owned land to urban farmers? 

Members of council who have owned a business should know all of this. If not, they’re more prone to cronyism.

If all this is a bridge too far for their ego, they could just add another percentage or two to the city’s sales tax rate. If they agree with the aforementioned councilman’s sentiment, one would assume they’d feel the same about consumers paying a few more dollars for another T.V.

If citizens are serious about stopping municipal versions of federal omnibus spending bills, it is critical to also demand the elimination of this coercive tax. It would bump up the GDP portion of our state-high debt/GDP, which itself calls into question how much more we can take on with a handicapped ability to pay for it.

Shifting to the most efficient form of taxation would force the city to depend on the health of the economy for its spending, rather than on devalued dollars. It would have more incentive to clear excessively burdensome hurdles to commercial activity.

Otherwise, they can count on us wasting valuable time protesting appraisals, putting on workshops to teach others how to do the same, numbing ourselves to it all by outsourcing the escrow process to our mortgage lenders, etc. 

Next month, citizens can put a stop to the city borrowing like a teenager who stole his parents’ credit card. We should also put them in a timeout until they stop plundering our bank accounts

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The Left is Anti-War? Think Again

04/15/2022Peyton Gouzien

The Left is often assumed to be a major force against war and intervention to the point that many on the Right and Libertarians try to appeal to the left based on the agreement on the issue. This assumption ignores how the left’s opposition to war has mostly been when politically beneficial.

While leftists can point to a few left-wing idealogues who started Anti-War movements or protests and periods when there was a significant left-wing presence in the movements, leftists in actual positions of power have been at the forefront of warmongering U.S. foreign policy, particularly in the 20th century. 

Looking as far back as President William McKinley, the first Progressive Republican was a faux anti-imperialist who used revolutions in Latin America and southeast Asia as a pretext to expand American territories and resources which led to the Spanish-American War. This war is where the more left-wing Journalists and the State formed their relationship to provide ample justification in the eyes of the public which has since been titled “Yellow Journalism”

At the turn of the century, the left Liberal intellectuals, particularly in Britain, were a small minority that was drowned out within the left by those who supported British involvement in the First World War. In America, most pacifists and anti-war activists, despite being portrayed as communists, came from religious movements and far exceeded left-wingers in terms of those who did not support the war, as “their churches supplied many conscientious objectors…”.

President Woodrow Wilson drew more conservative and religious support in his re-election for keeping the country out of the war. This was certainly the case as his re-election campaign slogan ironically became “He Kept Us Out of War”. The quote becomes ironic when Wilson, a progressive politician, quickly joined war efforts after re-election in April 1917 when he called on Congress to declare war on Germany. 

He cited two incidents for this 180 in the policy. First was the sinking of the Lusitania in the English channel, which left the harbor despite warnings of attack from both the British government and German governments if it was to enter what was currently a war zone. The second was the Zimmerman Telegram which proposed an alliance between Mexico and Germany to attack the United States if the U.S. were to enter the war. 

Now both examples invoke some clear antagonism from Wilson and the U.S towards Germany. The first required the Lusitania to enter a war zone with a civilian ship, despite warnings from both sides that they would not be protected. Second, Germany does not propose a first strike on the U.S. but admits it intends to keep the U.S. out of the war and only proposes a “worst-case scenario” in which it tries to gain Mexico as an ally. Neither would be sufficient to claim America’s declaration of war was a defensive one. 

We see much of the same with the Second World War, largely caused by the terms of the Treaty of Versailles created by Wilson. President Franklin Delano Roosevelt, a progressive as well, also feigned a sense of neutrality at the start of the war. From supporting aggressive embargo policies and navy deployments in the pacific to combat Japan without “direct measures” to the “Lend-Lease” program which supplied the Allies before the official U.S. involvement, FDR acted despite the Neutrality Acts of the 1930s to provoke the Axis into attacking the U.S. by making the U.S. neutrality virtually untrue without an official declaration of war. 

The opposition to FDR’s warmongering was also not from the left, but from the right with the America First Committee’s campaign to keep the U.S. out of the war. Additionally, Congressional support for Neutrality was greatest among Republicans.

Finally, looking at when the left’s “anti-war” convictions were greatest in the Vietnam War we can see that the timing of their protests seemed to coincide with the presidency of Nixon. While protests against the war in Vietnam existed before 1970, it was not until Nixon announced an invasion into Cambodia, a new offensive in the region, that the “New Left”’s protests became widespread. During Johnson’s presidency, the movement was substantially smaller. 

Again, we see that the real substantial opposition to the war came from the right, not the left, as Nixon himself in the 68 Election put a public face of condemnation for further involvement in Vietnam. Of course, as we know Nixon betrayed such trust and continued the war, despite the assurance to the Anti-War right that he was surrounded by the “right people”. Though this would ultimately be his administration that ended the war and had begun removing troops as early as 1969.

This is not to say that Nixon was anti-war, far from it, but it was not the left who were the ones ending Vietnam, but the right, as it had been in the previous wars of the 20th century. As Rothbard characterized during the 1992 election between George Bush Sr. and Bill Clinton that the right had a better history of keeping us out of conflicts than the left, even if marginal. His words remain true, even as Bush Jr. would enter us into two wars at the beginning of the 21st century. This is because his successor, Barack Obama, would go on to only escalate the conflicts and try to drag us into more even as he tapped into the “anti-war left”. 

The mask of “Anti War” leftism has completely fallen as the Ukraine/Russia conflict goes on. Democrats have consistently more likely to support aggressive foreign policy around the conflict than Republicans. This is especially true on the topic of No-Fly Zones, as more Democrats support them than Republicans. Though this does not mean the Republicans are completely against escalating this conflict as a Florida Republican in Congress said she supported a no-fly zone despite not knowing what it means. The numbers are still relatively high for Republicans, we can see that the bulk of opposition again is on the right, proving Rothbard’s point in 1992 right again. 

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The Immaculate Correlation

04/14/2022Robert Aro

Physicist John Stewart Bell said:

The scientific attitude is that correlations cry out for explanation.

Using the Federal Reserve's data, see the Consumer Price Index (blue line) left axis and M1 Money Supply (red line) right axis for the 14 month period of January 2021 to February 2022:

Regression statistics reveal a correlation coefficient of 0.989 and an R-Square of 0.979. This begs explanation.

For the last 14 months, the CPI and the M1 Money Supply moved in near perfect positive harmony, despite one being a price index and the other measured by the trillions. While near perfect correlation between two variables is noteworthy, it does not prove one variable caused the other. Even if the correlation coefficient was 1.0 rather than 0.99, it would still be insufficient to prove causation.

Frank Shostak writes on the limitations of quantitative economics. Recently, in his article Quantitative Methods Are Incomplete When Used for Economic Analysis he wrote:

Various quantitative methods are a way of describing but not explaining events.

Finding a correlation of 0.99 is immaculate. However, it only indicates what happened. It cannot explain why. A theory is needed on how this is possible and whether it is indicative of a causal relationship.

By showing the 0.99 correlation between CPI and M1 is not accidental, that A precedes B, and no other variable can explain this relationship, it’s possible to sufficiently prove causality.

To claim this near perfect correlation to be mere coincidence ignores the known relationship between money supply and prices. Austrians note currency debasement occurs when governments or central banks engage in pro-inflation policies, inevitably leading to currency collapse. CPI and M1 have limitations but attempt to quantify ideas including the loss of purchasing power of money. A highly positive correlation between the two is not surprising. It’s actually expected.

The existence of a temporal relationship can be proven through thought experiments utilizing the history of fiat currencies. We also need to consider what would happen if the M1 did not increase by $2.5 trillion in the last 14 months, being held constant. Could the CPI have risen to these new highs?

Lastly, the possibility there exists a third factor which is the cause of the CP1/M1 correlation must be ruled out. Yet no alternative factor or credible theory has been identified. To say COVID or a Putin Price Hike caused unilateral price increases is one thing, but explaining how the money supply miraculously followed suit for the last 14 months is another. This unidentified factor would have to explain the increases and co-movements between CPI and M1.

What started with blaming COVID, turned into transitory inflation, bottlenecks, supply shortages, entrenched inflation, blame COVID again, now blame Putin. Blame everything except the Federal Reserve who not only took part in expanding the money supply by many trillions of dollars in the last two years but allowed it.

The limitations in data are clear. The CPI attempts to measure the immeasurable. It cannot adequately measure the prices of all goods and services nor purchasing power; CPI exemplifies statistical bias at best.

M1 money supply, prone to changes, is just one of several money supply measures. As recently as May 2020, the Fed changed the definition of M1. The action “increases the M1 monetary aggregate significantly,” thus, the money supply is not consistent. With various definitions of money supply, the concept of what constitutes money continues to be contentious. (Articles on the True Money Supply (TMS) developed by Rothbard and Salerno can be found here and here).

It’s tempting to use past data to extrapolate the future. For example, a model could show that for every trillion dollars increase in the money supply, 8 points are expected to be added to the Consumer Price Index. This is a principle of Econometrics, holding the position that the past relationship continues indefinitely, contrary to human action. It’s interesting estimating such things, but it fails to recognize the difference between human behavior and mere objects, and could be dangerous if used as a government planning tool.

The purpose is not to use a model to predict inflation, rather, it’s to utilize data to describe and provide a visual aid of one of the most important, yet grossly neglected causal relationships in economics. Inflation is not necessary. It can and should be stopped because no amount of inflation can be considered beneficial to the public. As Mises said: Inflation is a policy. It’s a policy paid by the masses, allowing them to better serve the most powerful members of society.

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America’s Top Post-WW2 Export Has Rapidly Been Losing Value

04/14/2022Allan Stevo

In the last World War, the United States of America beat the fascists, drew a line between freedom and the communists, and then spent the next 70 years turning into what it claimed to abhor. 

There were notable milestones on that road. There was 1971 when government had swelled so large that it had to publicly announce that it could not pay for itself absent a monetary game of Three-card Monte. On August 15 of that year, gold was decoupled from the dollar. Then in 2001, the US went full police state, a framework that it had long been marching toward in small and big ways. In 2020, it shut down all churches, schools, and most businesses, seizing total control over life in the period known as corona communism. 

Like the Reichstag Fire of February 27, 1933, a minor, non-event — a seasonal illness — was turned into an excuse to seize power more completely. Each year, about 1% of Americans died from all causes. That was the normal baseline rate. In 2020, there was not a bubonic plague level event of one-third of the population dying. There was not a decimation-under-seize level event of one-tenth of the population dying. About 1% died that year, just like many other years. Americans had long marched toward communism, and by some mystery, that seasonal illness became the pivotal event that society widely consented to as the moment a defining transition into corona communism would take place. 

Through this all, from the time of its fight against the unfree nations all the way to its shift into an unfree nation, America consistently pushed its chief export in the post-World War Two era. Some may debate that America’s chief export is material. Others may debate that America’s chief export is debt. Both of these claims misunderstand the significance of the American economy in the world. 

Its most significant export in the post-WW2 era was the regulatory framework that America pushed into virtually every corner of the globe — its abolition of financial freedom. 

Washington, D.C., Langley, and New York City alike collaborated in a powerful system of “modernizing” banking and financial record keeping globally, to the extent that merely desiring to have privacy in one’s financial affairs was enough to cause one to be declared a criminal and an enemy of the state. 

This took place through rules on taxation, through money transfers, through accounting standards, through anti-financial privacy laws, through innocent sounding “know your customer” policies, through righteous sounding sanctions, and many other methods as financial privacy was effectively renamed “money laundering.” It was presumed that if one were to seek financial privacy that one was a terrorist seeking to harm innocent civilians, a narcotics trafficker seeking to ravage homes and communities, or a human trafficker seeking to drive that which is good and pure from the face of the earth. 

While this system captured many troublemakers, an untold number of innocents were harmed in this attack on financial freedom, a detail that was seldom mentioned by the opponents of financial freedom. Eventually, the biggest troublemaker of them all was hardest to ignore. In time, it became known that the US government, to a virtually incomparable level, engaged in acts of terror on civilians, engaged in trafficking of narcotics, and engaged in trafficking of humans. Just as that government spoke freedom loudly while instituting tyranny, it also became all manner of evil it claimed to oppose.

Eventually, this war on financial freedom became so total that some non-American banks would not even open an account for an American citizen because of the compliance headaches it caused. Once the calling card of freedom in the world, the American passport even turned into a business liability. Far from being seen as a warning sign that such anti-financial freedom regulation had gone too far, this was an indication that some places were too free if there was competition among passports. The regulatory regime increased in both velocity and mass. 

On February 24, 2022, a minor border skirmish between virtually indistinguishable neighbors — one of dozens taking place around the globe at the time — turned into an opportunity for the United States to seize upon a new level of financial control. Never before, not even against Nazi Germany, had such a level of economic sanctions been rolled out against a country. Russia, declared an aggressor nation by the United States in a conflict with the Ukraine, suffered crippling economic sanctions. 

The United States had gone about the world using the financial regulatory framework to de-bank individuals and removing them from the global economy. This brutal de-banking of people had come to be seen as a normal and legitimate role for the US Government to play. This was a new extreme, though. The entire country of Russia was in many ways de-banked, isolated from the world economy, and massive economic ramifications occurred. The currency, the Ruble, plunged in value. It was widely argued by American media experts that the Russia economy and Russian people would crumble in days, perhaps even resulting in a coup d’etat. 

In a desperate effort to prop up its currency, the Russian government responded by requiring payment in its own currency for its exported commodities. Russians, after all, had no access to international banking, so the US Dollar had suddenly become largely worthless to this 2% of the world’s population who occupied about one-tenth of the world’s land mass. The Russian government did an additional, uncommon thing for a post-1971 country. It tied its currency to gold, a move that was considered by leading economists to be a barbarous relic. 

Crippling sanctions continued, proxy war with other nations on Ukrainian soil raged, Russia was soon to be defeated, and its leader deposed by the Russian people, American media experts announced. 

By April 7 of that year, the Russian currency found itself trading even higher than it had on February 24. For the first time ever, the post-World War Two economic order — and its promises of economic destruction for all who disobeyed — had failed. 

No matter how much bluster you have, no matter how much talk, no matter how tough your words are, those things just can not beat gold. Those things can not beat the no nonsense real life call to action appeal of gold. Everywhere in the American sphere of influence, talk of the evilness of those who would stand against American financial regulatory hegemony filled the airwaves. The numbers did not lie, though. Talk lost. 

Gold had taken its proper seat again as money. Paper had taken its proper seat again as gold certificates. A glimmer of freedom sparkled through the world in those darkest days of 2022, the evil empire and its crippling sanctions, sanctions felt even by its own people, that evil empire had finally been shown to have a limit to its evil at home and in the world, and that evil empire had an expiration date on its evil. 

If its most powerful export — the eradication of financial privacy and the elimination of financial freedom — could be combatted with something as powerfully simple and disarming as the truth contained in a room full of gold, then it was clear that there were other simple, disarming truths that could return the world to its proper order as a place of free men.

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Russia's Invasion of Ukraine Is Creating a Financial World War

04/08/2022Tho Bishop

Over a month after Russia invaded Ukraine, the military conflict has remained a regional conflict. While Russia has been able to fortify its claim in eastern Ukraine and has made advances in the south, recent counteroffenses by the Ukrainians have pushed Vladimir Putin’s military away from Kyiv. Meanwhile, allegations of war crimes committed by Russian forces during the conflict have given Ukrainian president Volodymyr Zelenskyy new ammo in his campaign to increase pressure from the international community against the Russian Federation.

The situation on the ground has fueled a narrative popular in America and Europe that Putin vastly underestimated the difficulty of conflict with Ukraine and that the Russian regime is suffering from the “authoritarian trap” of government bureaucrats prioritizing placating their president over accurately reporting the state of Russia’s military affairs. While any degree to which Russian military failures push the countries to a ceasefire is a cause of celebration, overestimating Russian weakness could serve to undermine peace negotiations. Hopefully, the United States and the North Atlantic Treaty Organization’s analysis of this conflict is better than it has been in other situations in recent history.

Putin’s aspirations, however, go well beyond territorial conquest in former Soviet nations. At its core, the aim of the Russian regime is to challenge the post–Cold War order of a unipolar America-dominated global order.

On that front, Russia’s actions—and the West’s response—have now sparked a global conflict.

Since the 1970s, the dollar has been as vital a tool for American global supremacy as any military weapon. America’s war on terror not only transformed the Middle East into the main theater of US foreign policy but fueled Washington’s desire to militarize the American financial sector. What began as debanking al-Qaeda conspirators evolved into the primary tool used against rogue nations such as Iran and North Korea. In recent years, Western nations have also wielded these tools against domestic political dissidents.

In response to Putin’s aggression against Ukraine, America and the West have responded with some of the most extreme sanctions yet deployed. While these measures have forced severe financial pain on Russian oligarchs, who had become used to a certain quality of life outside of their homeland, Russia’s own counteroffensive is revealing the limits to Washington’s favorite weapons.

Global demand for Russian energy, food, and other vital resources has allowed Putin’s regime to provide support to the ruble by demanding purchases be made in Russia’s currency—Putin’s investments in various European “green” causes were well made. The result has been the value of the ruble returning to its postwar standing and stabilizing a financial sector bearing the brunt of Western sanctions.

What should concern the Washington regime the most, however, has been the geopolitical response to the West’s actions. The Russian government has created a list of “friendly” and “unfriendly” countries, leveraging access to its commodities in exchange for neutrality over the Ukrainian conflict. The Kremlin’s response has been supported by the West’s own increasingly aggressive positions towards countries willing to prioritize the interests of Ukraine over that of their own people. The result has been an increasing number of significant, non-European countries refusing to submit to the demands of the Biden regime.

Countries like Mexico, Brazil, and India—all led by nationalist political leaders—have refused to sanction Russia, providing economic support to Putin beyond his handshake agreement with the Chinese Communist Party. In fact, opposition to Washington’s demand for these nations to sacrifice their economic ties with Russia in order to morally condemn Russia has succeeded in bridging geopolitical rivals. Pakistani prime minister Imran Khan praised President Narendra Modi for the India’s “independent” foreign policy.

As a Pakistani news site reported:

"They (India) are saying they will import Russian oil because it is better for their people despite the sanctions [on Russia]."

[Kahn] said he had the "same problem".

As Ryan McMaken noted recently on the Wire, Washington’s military adventurism over the past two decades has greatly eroded America’s claims to a moral high ground. The same is true of Washington’s increasingly aggressive abuse of the privilege of having the global reserve currency. A prominent central banker warned that the US’s continual weaponization of the dollar demonstrates a need for the global community to find something new.

This call came not from the Bank of Russia or the Bank of China, but the Bank of England—one of Washington’s closest allies. In the past month, we’ve seen a historical alternative, gold, enjoy renewed attention as a strategic asset.

The new phase of the West’s financial war is succeeding in bringing together a new coalition of global powers—many with long-standing historical disagreements—who are unified in their opposition to submitting to the edicts of Washington. Additionally, the economic impact of global economic disruption—currently being felt in gas and fertilizer prices and to be felt in the future with food shortages—is now causing social unrest. Politically, the nation of Hungary overwhelmingly reelected nationalist Viktor Orbán against the demands of the European Union and the Biden administration, while polling shows France’s Emmanuel Macron now trailing EU-skeptic Marine Le Pen.

Over a month into the conflict, it remains to be seen whether or not Vladimir Putin will achieve his military goals in Ukraine.

Increasingly, however, it appears he may have achieved his larger aim of overthrowing the unipolar world. Yet another failure of Washington’s technocratic class.

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A Trillion Here, A Trillion There

04/08/2022Robert Aro

In this world, few things can be measured in the trillions. The US national debt, which first hit $1 trillion under President Reagan, is one. During his tenure, the national debt increased from roughly $700 billion to $2 trillion; a percentage increase that, if happened today under President Biden, would be nothing short of calamitous. 

The era of the trillion-dollar balance sheet is still relatively new, with 2008 being the first time the Fed’s balance sheet crossed the trillion-dollar threshold. Apple, in 2022, with assistance from the Federal Reserve’s $5 trillion increase in asset purchases since the start of the pandemic, became the first company valued at $3 trillion. Meanwhile, at $1.76 trillion, the largest asset held by the United States Government is the student loan account receivable.

Yesterday Forbes reported that:

Biden announced an extension of the student loan pause. For over two years, payments on most federal student loans have been suspended, along with interest accrual and collections efforts against borrowers in default on their federal loans. 

Without a doubt, the $1.76 trillion “asset” (plus interest) will never be collected by the US Government. To even call this an asset is disingenuous since “government grant” or “student stimulus” is more befitting.

Contrary to popular opinion, debt does matter. Like the student loan debt, the current national debt of over $30 trillion will also never be repaid; not that anyone in power seems to mind. The only real questions to ask are: “How many trillions will the next government spending bill require?” “When will the next stimulus check arrive?” and eventually… “How many trillions are needed for the next Federal Reserve bailout?”

Society has never moved beyond inflationism as a monetary policy. Perhaps that’s why every new generation of economic wizards conjure up inventive names to describe their Magical Monetary Techniques, hinging upon the pretense of increasing the supply of money and credit, passing it around rather hurriedly in times of societal distress with claims of making our lives easier.

We’ve seen the Paycheck Protection Program nearing the trillion-dollar mark. As part of a $5 trillion pandemic relief fund, it included several government stimulus checks totalling around a trillion dollars. Considering all we’ve been through in the past few years, society may have very well become numb to the significance of a trillion dollars.

A trillion here and a trillion there. No one knows when the next big crash will happen. But a crash after a boom is always inevitable, unless we’ve entered a new epoch where market downturns and stock market crashes never happen again. The timing of the catastrophe is unknowable. But the response by our central planners is reasonably assured. There will be trillions in government spending, trillions added to the balance sheet, and with enough new trillions added to the financial system, the stock, housing, and bond markets should be poised to gain that much more trillions in value.

Sadly, everyone is a trillionaire in Zimbabwe. We can only hope it will never come to this, but there’s nothing to show us it won’t. Yet it lies within the realm of possibility that our children, or our children’s children will all be trillionaires. And should this day ever come to pass, they’ll all remark how: “a trillion dollars ain’t what it used to be.”

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