The United States Is a Nuclear Dictatorship

The United States Is a Nuclear Dictatorship

11/15/2017Ryan McMaken

Thanks in part to Trump's bombastic and unpredictable style — but more likely due to his lack of friends in Washington — members of Congress have suddenly realized that maybe, just maybe, it's a bad thing that the President of the United States can unilaterally blow up the world. 

And when I say "President of the United States" I don't mean that as a metonym for the US government as in the phrase "Washington today is considering a pact with Mexico." 

No, a single specific individual really does have the ability to make that decision and give that order — unimpeded in any way. 

This fact — which should daily be regarded by all Americans as an excellent illustration of what a farce "constitutional government" is — is now a topic of debate in Washington. It is now being suggested that some of those alleged "checks and balances" we're always being told about might be applied to the most destructive and apocalyptic power enjoyed by a US government agent. 

CNN reports

Congressional lawmakers raised concerns about President Donald Trump's ability to use nuclear weapons during a hearing Capitol Hill Tuesday amid bipartisan anxiety over launch process procedures and indications that the administration has considered the option of a first strike on North Korea.

Members of the Senate foreign affairs committee called into question a decades-old presidential authority to deploy nuclear weapons in what was the first congressional hearing on nuclear authorization in decades.

You read that right. This is the first time Congress has considered the question of a president's nuclear-warmaking prerogatives in decades. Congress, on the other hand, has been quite busy during that time holding hearings about steroid use in sports, and violence on television.

As it stands right now, the president can start a nuclear war all by himself. We're talking about first strike capability here, and not about merely a response to military action by another state.

The LATimes tells us how easy it is: 

All he has to do is call in the military officer who carries the “football,” the bulky briefcase containing the nuclear codes, and work through a brief procedure to transmit launch orders to U.S. Strategic Command...There are really no checks and balances,” said Bruce G. Blair, a former nuclear launch control officer who is now a researcher at Princeton University. “The presidency has become a nuclear monarchy.”

"Nuclear dictatorship" probably better captures the reality of the situation.

Thus, all the president has to do is decide — perhaps based on whatever unreliable information the CIA is feeding him — that now is the time to unleash a nuclear holocaust on, say, North Korea. Once the bombers are flying, or once the missiles are launched, of course, we'll then have to hope that none of them are interpreted as threats to major nuclear powers like China and Russia, both of which are right next door. 

Indeed, it's this unpredictability of how a nuclear strike might get out of hand has long been a limiting factor on the use of the weapons. During the Vietnam War, for example, using nuclear weapons were discussed as a possible alternative to the failed bombing strategy at the time. The problem strategists encountered was the sheer volume of unpredictable consequences that could result from usage. 

The downsides of starting a nuclear conflict are immense, both in terms of global diplomacy, and in terms of actual risk to the American population. 

But even with this reality staring us in the face, Washington is so obsessed with maintaining an aggressive military stance, that it's unwilling to seriously consider any limitation on the President. 

This why we should expect no real changes out of these Congressional hearings. Not surprisingly, Congress has already taken any meaningful change off the table: 

Ultimately, the panel warned against legislative changes to rein in the President's authority to exercise nuclear authority.

"I think hard cases make bad law, and I think if we were to change the decision-making process in some way because of a distrust of this President, I think that would be an unfortunate precedent," said Brian Mckeon, who previously served as Principal Deputy Under Secretary of Defense for Policy during the Obama administration.
This pretty much sums up how Washington's foreign policy works. Limiting the power of the President in any way, we're told "would be an unfortunate precedent." After all, this Trump guy may be a jerk, but all the other Presidents are totally wonderful human beings. We wouldn't want to limit their power to blow up the planet.
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The War on Profit Margins

09/12/2022Robert Aro

It could be a coincidence, but probably not, that Joseph Stiglitz commented on corporate profit margins then the following week Federal Reserve Vice Chair Lael Brainard wrote about Bringing Inflation Down, where she too mentioned the problem with high profit margins.

In her own words, she found that:

Reductions in markups could also make an important contribution to reduced pricing pressures.

This is true. But a lot of things could reduce a firm’s cost structure such as outsourcing or mass layoffs. As for final prices, a company could also make inferior products and the market might pay less for this as well. Countless things can be done to change prices. Her comment doesn’t carry much weight.

It goes against common sense, that a for profit enterprise should simply reduce prices because a central planner asks them too. And it leads to questions such as “how” much should a company make, and does this universally apply to all companies or just the largest ones? Measurability is also a concern:

Using the available macroeconomic data, it is challenging to measure directly how much firms mark up their prices relative to their costs. That said, there is evidence at the sectoral level that margins remain high in areas such as motor vehicles and retail.

Contrast this to a truly unhampered free market, where no company would own a government granted monopoly or have support from a central bank. If one firm was making “too much profit,” then a new firm would eventually enter the marketplace and offer lower prices. Unfortunately, we live in a world very much removed from this.

She could only arrive at these conclusions by looking at data that showed average profit margins didn’t agree with her idea of what was fair or correct. Hence she says things like:

…overall retail margins—the difference between the price retailers charge for a good and the price retailers paid for that good—have risen significantly more than the average hourly wage that retailers pay workers to stock shelves and serve customers over the past year, suggesting that there may also be scope for reductions in retail margins.

It all seems very strange and unnecessary, leading back to the fact that the increase in the money supply and forced shutdown was caused by the central bank and government. Now, because prices have gotten out of line with the planners’ expectations, it behooves corporations to fix this by reducing margins to a more acceptable level.

Notice how they lack any “merit of a theory.” If bringing down inflation was so easy, then in countries across the world, from Venezuela to Zimbabwe, corporations could simply take less profit margins and help lower inflation. Of course it doesn’t work that way, and it isn’t as easy or even a viable solution. Yet these are the solutions being offered from some of America’s most highly decorated, and paid, economists.

Brainard ends by reminding us that it’s not over yet:

We are in this for as long as it takes to get inflation down. So far, we have expeditiously raised the policy rate to the peak of the previous cycle, and the policy rate will need to rise further. As of this month, the maximum monthly reduction in the balance sheet will be nearly double the level of the previous cycle. 

If anything she said is true, it’s that we are in this for the long haul. For better or for worse, but probably for worse, so long as everyone in charge continues to invent ad hoc economic theories while ignoring the root cause of “inflation.”

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America's Continual Return to Europe

09/09/2022Connor Mortell

Sometime after the turn of the century, a change began to take place. You cannot mark it precisely. It became fashionable to plant Old World seeds. They grew in soft warm places, often in the gardens of the leisure rich, and flourished in academic soil generally. There appeared in the East an intellectual cult of disaffection, with a sneer in its mind for what it named 100 per cent Americanism and a pose of contempt for the wealth that supported it. Everything American was vulgar. Happy the expatriate who could live abroad with his dollars and forget where they came from.

Garet Garrett wrote this passage over eighty years ago describing a chapter in America’s history that he called “America’s Return to Europe.” Looking back on that moment, 1940 is multiple generations away and the whole world has changed and, in many ways, become completely unrecognizable. However, through all that, one thing has remained the same: Americans still find it oddly fashionable to plant these old-world seeds and see themselves as somewhat better by not affiliating with 100 percent Americanism. Americans still seem to glorify the very culture from which they once so proudly fled. We saw that in full swing on Thursday September 8th, when Queen Elizabeth died.

That night, the NFL season kicked off - nothing could be said to be more 100 percent Americanism than the reigning Super Bowl Champion playing this year’s likely challenger. But how did this moment of pure Americanism begin? In memory of Queen Elizabeth.

While I believe that human beings should be sad when another human being dies, the truth of the matter is that is simply not what is happening here. This is just another example of “America’s Return to Europe,” and this is just one of hundreds of examples. Major American talk shows were overtaken by this, social media was overtaken by this, everything was taken over by this. The entirety of American culture overwhelmingly returned to Europe during this moment. However, Garet Garrett goes on to explain that this Return to Europe has more impact than just cultural displays:

It was not only Europe’s culture that was preferred; her solutions also began to be admired. What followed was a new kind of exchange. Europe went on taking economic ideas from us while we, for the first time, were taking political and social ideas from her.

While the politics we are taking from Europe today are not identical to what they were then, the concept still holds true that we are pulling our politics from Europe. In every political debate we find ourselves compared to Europe in terms of gun control, socialized medicine, and universities, and recently in America’s COVID-19 response. This of course is the logical conclusion of not being able to move on from the cultural influences of Europe because - as Breitbart says - politics is downstream of culture. From here, Garrett addresses beyond politics what the true cost of all this is:

What we lost at that time cannot be computed. Not the cost of our war exertions. Not the illusions that went into our slogans. Our own center - that is what we lost. That sense of separate destiny on which we had been building departed from us, and we have never since recovered it.

Unfortunately, in the 82 years since this line was written, we have yet to recover it. In fact, only a week before the Queen’s passing, President Joe Biden delivered a speech in which the very issue with which he was struggling was “The Soul of America.” Not only was this the topic, but also it was completely unanswered. He took the time to attack a large portion of the voting public as evil fascists in a supposed attempt to unify them because the soul of America was so inaccessible that he saw that as the appropriate way to address it. When we so glorify the leaders of other nations, we lose our own center.

Through all this, Garet Garrett left us with a simple question that is all that must be answered to address the problems left to us by the Return to Europe:

When shall we learn again that Europe is Europe, America is America, and these are two worlds? When shall we believe again that our destiny is unique, parallel to nothing?

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Stiglitz’ Analysis

09/07/2022Robert Aro

Ivy League professor and Nobel Prize winner, Joseph Stiglitz recently spoke to CNBC providing 3 reasons why the Fed’s rate hikes will make (price) inflation worse. It begins with his analysis, in which no further details were provided, just his conclusion. According to the interview:

The first is that the overwhelming source of inflation, by Stiglitz’s analysis, is supply-side disruptions leading to higher prices in oil and food, even causing a shortage of baby formula.

We understand the existence of “supply-side” disruptions. However, we mustn’t pretend that a baby formula shortage, no matter how devastating that may be, is a leading cause of universal price increases in all goods, services, and assets. There is still a noticeable failure at diagnosing the cause of our current inflation problem.

To say that supply side disruptions just happened across the globe, or that it is due to government lockdowns occurring some time ago still doesn’t seem quite right. Contrast this to an alternative idea, that the nearly $7 trillion increase in the M2 money supply since 2020, corresponding with the Fed’s $5 trillion increase in its balance sheet, should shoulder the blame.

Supply-side disruptions can be acknowledged, but an academic like Stiglitz needs to address what effect the increase in the money supply had in causing these disruptions. Afterall, the whole point of injecting trillions of dollars in monetary and fiscal stimulus was to increase the demand for goods and services. Unfortunately, production is not instantaneous in the real-world; it should be reasonable to understand how increasing the money supply increases the demand for goods, and since production always lags, supply issues arise.

Of course, forcing an economic shutdown plus trillions of dollars in stimulus ensured certain doom from the start.

The Columbia University professor continued:

The second reason, Stiglitz said, was evidenced by the fact that margins for major corporations have been rising along with their input costs.

Without seeing his analysis, it sounds more like a talking point appealing to the masses. However, it implies that “major corporations,” are in the wrong for increasing profit margins. In his own words:

They’ve not only been passing on the cost but passing it on even more.

Even if his data supported this, it invokes an idea that increasing profit margins at this time is somehow bad, and that in the past margins were more acceptable, speaking to some notion of an ideal profit margin not occurring at this time.

It can be dangerous, as it invites the opportunity for academics or planners to suggest ways to fix this alleged problem, potentially through more intervention or higher taxation under the pretense of leveling the playing field for the poor, weak and disadvantaged.

Tying his analysis back to the Fed, he believes that raising rates “may lead to even more inflation.”

His third point suggests raising rates hurts the housing market. Given the housing asset bubble created by the Fed, and sky-high debt across all levels of personal, corporate and government, this is nothing new. Even Jerome Powell has long since warned us that raising rates will lead to “some pain.”

Stiglitz raises more questions than he answers. But it’s helpful to see how arguments supporting socialism always fail to arguments supporting capitalism. What would have been more interesting is if he spoke to the profit margins universities have been receiving, and how much the government's student debt forgiveness program and $1.7 trillion student loan account receivable constitutes a cost involuntarily passed on to the public.

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Reflections on Last Friday’s Jobs Report: The News Still is Bad

Stocks reacted positively to the jobs report released Friday morning before selling off sharply that afternoon on geopolitical fears. The report, which showed non-farm payrolls increased by 315,000 for the month of August, was largely in line with the expectations of market watchers, with major surveys held in the run-up to the release of the report yielding predictions of roughly 300,000.

Of itself, the rally was somewhat unexpected since the report seemed to back the hawkish stance reiterated by Federal Reserve Chair Jerome Powell at Jackson Hole last week. At the meeting he restated the Fed’s commitment to further tightening. The implied probability of Fed futures data has shifted accordingly, with oddsmakers having raised the possibility of a further .75 point hike to 75 percent.

With various indicators suggesting inflation might be peaking or slowing, many over the summer had come to hope such data would convince the Fed to signal a readiness to ease up on tightening credit conditions. After all, the economy was slowing. For example, while the figures reported on Friday were in line with estimates, they were still well short of July’s half a million. At the same time, unemployment increased from 3.5 to 3.7 percent. 

And, frankly, there are reasons to look askance at these numbers. For one thing, they are likely to be revised, with like reports over the past two decades seeing an eventual average adjustment of plus or minus 55,000. If the report was “just right,” not too hot to stoke inflation, not too cold to stall the economy, such a regular adjustment would be problematic. In addition, there are large discrepancies between federally withheld taxes and purported hiring, and between the Labor Department’s household survey and the Census Bureau’s employer survey used in headline unemployment numbers – both of which suggest the labor market is actually much weaker than the headline numbers make out.

For example, the Census Bureau’s unemployment figure does not include those who after becoming unemployed eventually give up looking for work and drop out of the labor market.

As the above figure illustrates, the Great Financial Crisis and pandemic-era have led to serious declines in overall labor force participation rates. Millions of workers never returned following the shuttering of the economy in response to COVID, amplifying what was already predestined to be a period of demographically induced labor market tightness. As the legions of America’s baby boomers retired, economists had predicted much of the current labor market predicament decades ago.

A shortage of workers, continuing supply chain disruptions, and epic monetary mismanagement having coincided, it is little wonder retail sales and housing are slowing; critical commodities, such as copper and oil, are trading down; and consumer confidence is just up from its lowest level in 70 years of measurement.

With signs pointing increasingly negative, talk of a “soft landing” is going the way of “transitory” inflation. Seemingly determined not to back down, to regain price stability, a “growth recession” is now the target. Far from backing off rate-hikes for fear of impending recession, as it did in 1974, Fed officials now openly admit that tightening may continue into 2023, with rates being held at that level for some time after.

With the chances of a decrease in the size of September’s rate hike, from .75 bps to .50 bps, getting smaller, and stocks still expensive by historical standards, as measured by the price to earnings ratio, a sell-off on the jobs report Friday would have seemed more in line with the broader macroeconomic conditions.

But whereas job numbers can be massaged or spun, the response of markets to word that gas supplies to Germany from Russia were going to be suspended for an indefinite period just hours after the G7 announced their price capping strategy, was a reminder that some news is just unambiguously bad.

As the war in Ukraine grinds on and the global economy weakens, we can expect more such news.

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Current State and Federal Schemes to Bribe Voters are Totally out of Hand

09/06/2022Liam Cosgrove

Men are not infallible; they err very often. It is not true that the masses are always right and know the means for attaining the ends aimed at. “Belief in the common man” is no better founded than was belief in the supernatural gifts of kings, priests, and noblemen. Democracy guarantees a system of government in accordance with the wishes and plans of the majority. But it cannot prevent majorities from falling victim to erroneous ideas and from adopting inappropriate policies which not only fail to realize the ends aimed at but result in disaster. Majorities too may err and destroy our civilization.

-Ludwig von Mises, Human Action (1949)

 

Forbes recently published a list of 17 states that are implementing direct-to-consumer stimulus in order to provide ‘inflation relief’ to struggling residents. These include CA Governor Gavin Newson’s ‘gas rebates’ of $1050 for families earning less than $150k annually and even larger proposals like in Pennsylvania, where Governor Tom Wolf has proposed $2,000 stimulus checks for households earning less than $80,000 (estimated to reach a total of 250k households). Because that’s not enough, Wolf is also proposing small business grants of up to $50,000 in which firms owned by women and minorities, as well as rural companies, would get priority.Hey… at least ‘rural’ is now a protected class too!

It’s no surprise that nearly all of these proposals were signed or proposed just ahead of midterms, a strategy that is becoming alarmingly bipartisan. As an early adopter, NY Senator Chuck Schumer has mastered this technique. You may recall in early 2021, the stakes were high ahead of the Georgia run-off elections as this race would determine whether the Democrats would secure a majority in the senate. Polls slightly favored Republican candidate Perdue leading up to the start of the new year. Then, late in the evening on Dec 27 2020, Schumer announced his plan to raise the scheduled $600 stimulus checks to $2,000, emphasizing that “No Democrats will object. Will Senate Republicans?”. To the exact day, you can see how the polling results shifted, knocking Perdue’s +10 basis point lead down to -170 (note this is pre-Jan 6):

In response to Biden’s $10-20k student loan forgiveness executive order (also strangely enacted right before midterms), Schumer and MA Senator Elizabeth Warren released a joint statement which read “the work - our work - will continue as we pursue every available path to address the student debt crisis.” In other words, we’ll be forgiving more debt ahead of the 2024 presidential elections.

New York state has taken things considerably further. Last year, the state passed a measure allowing for stimulus checks of up to $15,600 to be given to undocumented workers. The $2.1 billion in funds quickly depleted, yet to this day, the Excluded Worker Fund receives hundreds of calls per month inquiring about further stimulus. The self-described “nonpartisan” think tank Economic Policy Institute praised the initiative and recommended all other states follow suit.

NY based immigration advocacy groups are now calling for another $3 billion in stimulus for the undocumented and $800 million to provide them with monthly unemployment checks of $1,200. While Governor Kathy Hochul has not weighed in, this year’s state budget includes subsidized medical care for undocumented seniors and mothers with newborns, estimated to cost $220 million. Ordinarily such measures would not qualify as constituent bribery, however, New York City passed a law earlier this year granting noncitizens suffrage.

In June, this law was shot down by the New York State Supreme Court. Still, the law is an omen for things to come, and during a time when senators and district attorneys consider the federal Supreme Court to be 'illegitimate’, it will be interesting to see how long this ruling holds up.

Masked-profile-picture MA Senator Ed Markey and NYC District Attorney Eliza Orlins call the Supreme Court 'illegitimate’.

All of this brings up this question: Should the recipients of outright bribes be permitted to participate in elections? Is the conflict of interest not too great? I’ve written in the past about implementing a ballot test to curb some of the less desirable symptoms of pure Democracy. But perhaps the solution is as simple as: if you receive direct payments from the government (federal, state, or local), then you cannot vote. Another solution is a poll tax, which, in addition to being a voluntary tax, ensures one’s vote is not influenced by the prospect of financial gain.

I realize these suggestions are literal “assaults on Democracy”, but I fear the path we’re on eventually leads to hyperinflation, capital controls, and a deterioration of personal autonomy over one’s property. I see no reason why the bribing-of-the-constituency trend reverses without decreasing the size of the US voting base, which is instead rapidly increasing as, in addition to adding noncitizens, Democratic congressmen are advocating to reduce the voting age to 16. Lastly, I don’t expect anyone in office to take up a position of reducing voter rolls as it’s too easy to be branded an “enemy of Democracy”.

I truthfully believe the US is beyond saving, although someone like Ron DeSantis could help to delay the inevitable for a while. That doesn’t mean the rest of the world is destined to our fate. Small government, anti-authoritarian, freedom-oriented, Libertarian ideals are more likely to take hold in countries where government has failed its people time and time again - countries in Africa, South America, and parts of Asia.

It’s a long shot, but if you’re a person with means who would like to attempt to fix big government, reach out through my Substack and let’s see if we can get a group and some capital together. Then use it to either back pro-freedom candidates in a developing nation or educate the local population in these concepts (a foreign Mises Institute). Just a thought I’ve had for some time but never acted on. It certainly feels like the authoritarians are winning these days, why not try to counter them?

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3 Months of QT Down

09/06/2022Robert Aro

Three months have passed since quantitative easing officially began. Per the official plan the Fed was to reduce US Treasuries by a maximum of $30 billion and Mortgage-Backed Securities by $17.5 billion per month. So far they’ve been reducing their assets by around half of the total limit of $47.5 billion a month. This was noted for the month of June (1 month of QT) and then July. Continuing from the August 3 data release until August 31, the changes are as follows.

  • On August 3 the US Treasury (UST) balance was $5,719,119,000,000. The balance on August 31 now stands at $5,694,997,000,000 for a reduction of roughly $24 billion.
  • On August 3 the Mortgage-Backed Security (MBS) balance was $2,717,552,000,000. The balance on August 31 now stands at $2,709,288,000,000 for reduction of roughly $8 billion.

One can see the peak and slow decline of the treasury holding balance when looking at the one-year chart below:

In the case of MBS, the balance hasn’t moved as much… Unlike the UST chart above, mortgage debt held by the Fed looks to have flat-lined.

If the Fed really did save the housing market in the 2007-09 crash, why haven’t they exited from mortgage debt purchases?

When looking at the entire life of the MBS balance, started in January 2009, we see a few peaks and troughs of asset purchases, but the trajectory has always been, and will continue to be, upwards and onwards:

Pay close attention to the decline in MBS that bottomed during the March 2020 COVID crash. Notice how it also corresponds with the (gray bar) COVID recession. By now it should be clear that it’s only a matter of time until the next crisis and official recession is announced, even if policy makers and statisticians are doing their best to avoid this at the present time.

Watching the Fed shrink its balance sheet and waiting for the next stock market crash can be like watching paint dry. You know it’s happening. Sometimes you’ll swear you see traces of it. But it is slow and can be a tedious process. However, September and the months ahead should be more exciting.

Beginning this month, the Fed promised to increase the rate of QT. They have now doubled the maximum cap on its reduction, so UST can decline from $30 to $60 billion, and MBS can decline from $17.5 to $35 billion.

Of course, considering the Fed has only achieved around $25 billion a month in asset reduction, it's nearly impossible to think they’d suddenly move to $95 billion a month. Therefore, it remains in the realm of possibility, but seems highly certain this will not happen anytime soon, especially since the bi-partisan Fed may not want to sway the midterm elections by bringing on a stock market crash quite yet. Still, they should try to do a little bit more, since the optics will look worse if they don’t.

And like paint drying, once the coat is laid it's only a matter of time until the job is done. The same can be said with this next bust cycle; it’s only a matter of time, but it’s coming.

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Biden Declares "MAGA Republicans" Enemies of the State

09/02/2022Tho Bishop
Listen to the Audio Mises Wire version of this article.

Last night Joe Biden was propped up behind the presidential seal in front of historic Independence Hall and gave the most provocative and divisive speech in modern American history. With the site of the signing of the Declaration of Independence cloaked in an ominous blood red, Biden sputtered his way through an attack on “insurrectionists” he labeled as threatening American democracy, political norms, and the rule of law.

The optics of the event were likely the idea of a proud Biden staffer, fresh off receiving a $10,000 subsidy to their student loan debt, leaning into the “Dark Brandon” aesthetic that has become popular among regime loyalists on Twitter. To Americans outside of this Very Online echo chamber, the imagery drew connotations of sinister authoritarian regimes ranging as Nazi Germany, the Empire of Star Wars, or the fascist regime of V for Vendetta.

The substance of the speech supported these comparisons. It was the display of a weak regime projecting strength at a time of mass unpopularity and rising polling numbers of political opponents in pivotal midterm elections.

None of this is a surprise.

As I noted after the chaotic 2020 election, the federal government faced a threat it has not seen in over a hundred years. Concerns over the integrity of the 2020 election struck at the core of the institution’s democratic legitimacy. The result was a Biden inauguration fortified with thousands of national guard members that the Democrat Party didn’t trust with ammunition.

The path the Biden administration took could have gone one of two ways. The regime could have fallen back on the power of moderation, restoring the isolated Washington uniparty by staffing the executive branch with prominent Republicans who always preferred the Clintons and Bidens over Trump—even if the smart ones refused to say so explicitly—while pursuing a standard policy agenda of foreign intervention, reckless spending, and fortifying the supremacy of the federal government over state control. These policies would have continued American decline but could have served to lull Americans to pre-Trump apathy by reminding them that federal elections have no real consequences for Washington.

Instead, the Biden regime doubled down on the excesses of the Obama era, attacking hot-button issues such as gun rights, tying state funding to public school promotion of child mutilation and sterilization, and leveraging their control over large corporations to censor political opponents and mandate covid vaccinations of employees. Along the way, they secured funding to increase, arm, and expand the scope of federal agencies—an Imperial Guard for Washington elites to remind red states who is truly in charge.

From the golf courses of Mar-a-Lago, the specter of Donald Trump continues to animate Capitol Hill. C-SPAN hearings over January 6 have been coordinated for prime-time viewing, while his supporters have been subjected to federal prosecution, solitary confinement, and financial ruin.
These concerns may be justified. Outside of Washington, “MAGA Republicans” have found success, particularly in the high-profile senate and governor races.

In Arizona, Blake Masters and Kari Lake conquered John McCain’s former state running on a platform against the 2020 election and the anarcho-tyranny of Biden-era policies while being viciously attacked by both the corporate press and establishment Republicans. In Ohio, Peter Theil–backed J.D. Vance leaned into opposition to American financing of the Ukrainian government while overcoming two more traditional Republican candidates. In Florida, Governor Ron DeSantis has secured the position as the only Republican with the popularity that rivals Trump by translating Trump-style rhetoric into aggressive state policy, with a particular focus on attacking the public health tyranny of the soon-to-debate Dr. Fauci.

A common theme of this new class of Republicans has been their explicit calls to stand against the “regime,” railing against Washington’s “administrative state,” and their interest in the intellectual works of “dissident right-wing thinkers.” They have been supported by a vocal group of MAGA House members, such as Marjorie Taylor Green, Matt Gaetz, Thomas Massie, and Lauren Boebert, who have seized on the overzealousness of the Biden administration to normalize calls to defund the FBI and other cherished Washington institutions.

The primary success of a potential new class of MAGA Senators has created new pressures for Mitch McConnell. Long established as the kingpin of beltway Republican politics, his criticism of the “quality” of candidates has earned him strong public rebukes from Florida Senator Rick Scott—a political figure with both the ambition and financial resources to threaten McConnell.

All of this is creating a unique moment in American history.

The overreach of the Biden administration has led to the dropping of the executive mask. No longer is there any pretense of governing all Americans—the notion of liberal persuasion is dead. Brute force and the abolishment of governing norms—such as the facade of a politically independent Supreme Court, state control of elections, or the role of the filibuster in the Senate—are now accepted by mainstream Democrats as necessary to usher in a modern version of reconstruction on the parts of America that still fly Trump flags.

Meanwhile, the most vocal anti-Trump Republicans have faced brutal defeats electorally but still have a home in the comfortable confines of Washington. While Liz Cheney’s blowout primary defeat means she will be giving up the pretense of representing Wyoming, she has been welcomed to the friendly confines of AEI. The View or CBS News are willing to welcome various former Trump administration figures so long as they engage in the public ritual of condemning their previous boss. The impact of these decisions, however, is declining interest in traditional conservative think tanks, respect for corporate media, and the legacy of formerly prominent Republican legislators and dynasties.

The regime’s most powerful tool—a federal uniparty that fights on Sunday News Shows but works together and socializes in the real world—is fraying fast.

Republican Congressional offices are being flooded with calls and emails attacking once noncontroversial issues such as foreign aid, the FBI, and the security of elections. While the wiliest of Washington creatures know how to pretend to sympathize with these concerns, the more mediocre ones flounder—with numerous Republican incumbents now forced to move their office from Capitol Hill to K Street.

The real question will be what comes after 2022. While the sulfur and brimstone tones spewing from Joe Biden may spark news cycles, economic distress continues to dominate the concerns of voting Americans. At the same time, Hispanic Americans, many of which are alarmed about the cultural radicalism of the modern Democratic Party, are undermining the assumptions of the “demographics are destiny” framework that has dictated so much of the Left’s political strategy in the recent decades.

Attempts to smear new-Republican Hispanics as the new “white nationalists” is surprisingly having little impact.

While Joe Biden mocks “brave, right-wing Americans” that cling to the notion that their AR-15 can protect them from the F-15s he controls, the mentally declining commander-in-chief should pay more attention to his government’s failures in Afghanistan. The Afghan military surrendered billions of dollars in high-tech military supplies to Taliban forces not because they were out-armed but because the incompetent and kleptomaniac “liberal” regime America installed lacked the true support of the people and was not a cause many saw dying for.

Likewise, the collapse of military enlistment in the American military reflects the sincere and growing disillusionment with Washington itself. While state propaganda may be trying to make the military appeal to America’s growing transgender population, they don’t seem up to the task of replacing young, white working-class men the modern class of generals dismisses as privileged.

As Murray Rothbard noted in Anatomy of the State, the state needs more than guns and bureaucrats to thrive. It needs the implicit consent of the people.

Thanks to Joe Biden, and his friends in both political parties, instead tens of millions of Americans are growing increasingly comfortable considering themselves enemies of the state.

Image source:
White House, YouTube
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The Fed’s Tough Year

08/30/2022Ryan McMaken

Alex Pollock explains that something is wrong with the Fed, big time. And it really shows in 2022. Pollock writes::

The powerful and prestigious Federal Reserve is having a tough year in 2022 in at least three ways:

  • It has failed with inflation forecasting and performance;
  • It has giant mark-to-market losses in its own investments and looming operating losses;
  • It is under political pressure to do things it should not be doing and that should not be done at all.

Forecasting Inflation

As everybody knows, the Fed’s overoptimistic inflation forecasts for the runaway inflation year of 2021 were deeply embarrassing. Then the Fed did it again for 2022, with another wide miss. In December 2021, it projected 2022 Personal Consumption Expenditures inflation at 2.6%, while the reality through June was 6.8%, with Consumer Price Index inflation much higher than that. It would be hard to give the Fed anything other than a failing grade in its supposed area of expertise.

The Fed’s interest rate forecast for 2022 was three federal funds target rate increases of 0.25%, so that its target rate would reach 0.9% by the end of 2022. It forecast the rate at 2% by the end of 2024. Instead, by July 2022, it already reached 2.5%.

In short, the Federal Reserve cannot reliably forecast economic outcomes, or what the results of its own actions will be, or even what its own actions will be. Of course, neither can anybody else.

It is essential to understand that we cannot expect any special economic or financial insight from the Federal Reserve. This is not because of any lack of intelligence or diligence, or not having enough computers or PhDs on the payroll, but of the fundamental and inevitable uncertainty of the economic and financial future. Like everybody else, the Fed has to make decisions in spite of this, so it will unavoidably make mistakes.

Read the full article. 

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Social Diversity to Tackle Inflation

08/30/2022Robert Aro

This is an actual news headline from the Associated Press, published over the weekend:

Fed tackles inflation with its most diverse leadership ever

It’s true that when forming a board of directors, an organization can greatly benefit from a variety of competencies. But when “they” in the media or Federal Reserve discuss diversity, they aren’t referring to a diversity of opinions nor schools of economic thought such as Austrians and Neoclassical.

By “diversity,” they mean skin deep, literally skin color, or in the most private of matters, the sexual partner someone chooses. As the article explains:

There are more female, Black and openly gay officials contributing to the central bank’s interest-rate decisions than at any time in its 109-year history.

William English, a former member of the Fed who now teaches at Yale said:

There’s evidence that diverse groups make better decisions.

Agreed. Having a diverse background in economics would help the decision-making process; but again, this is not the diversity they seek. History shows becoming a high-ranking member of the Fed requires a total commitment to accepting economic fallacies and false narratives.

Judy Shelton is a woman, but asked too many questions about concepts such as a stable currency, currency manipulation, and even mentioned the gold standard. Her thoughts were clearly “too diverse” both within the Fed and for members of Congress who greatly benefit from easy money policies. Based off of how poorly Judy was received, it’s likely these new hires, no matter how diverse or who their bedfellows may be, will never ask questions about the nature of the Fed or the existence of deposit insurance, nor strive to advance economic thought or educate the public in any meaningful way. It’s apparent that thinking outside of the proverbial box is not tolerated.

Diversity at the Fed is merely superficial, hence why they look at physical instead of mental attributes. We’ve seen more than enough to know the only thing that matters is that they keep the system grinding for as long as possible. This can only be done by hiring Yes-Men (or women, or other).

On Sunday, under their article post, I asked the Associated Press on Twitter:

No response was given, but they’d have very little to say. Intellectual thought and polite discourse haven’t been seen in the public arena for quite some time. This is not to say that racial and sexual discrimination do not exist, or aren’t important issues; but not everything in life is about race and sexual orientation. In the case of the Fed, they created $5 trillion in the last two years to buy mostly debt, artificially suppressed interest rates, destroyed price discovery, debased the US dollar, and set in motion the next big crisis.

So I kindly ask again, what does sexual orientation and race have to do with any of this?

Here’s the thing: Once you’ve read just a little bit of Austrian economics, it allows you to start thinking about sound economic reasoning. You’d quickly be able to do things like define inflation and may even take an interest into economic history pre-Keynes. Eventually you’ll start reading about long forgotten ideas, such as the socialist calculation debate or the pretense of knowledge.

Ultimately, those in the liberty crowd, especially those who understand how a central bank impoverishes societies, causes recessions, and are the primary reason behind inflation problems, will conclude that all this talk on diversity at the Fed is nothing more than a distraction tactic. Clearly, the best way to keep the masses ignorant of economics is to not teach economics. One of the best ways to distract the crowd is through division among lines of race, gender, and sexual preference, while adding a social (conditioning) message in everything.

The silver lining will be a hard one. Some time in the not-to-distant future, when everything the Fed is doing today ends up failing, when the US debt and money supply are at even more unfathomable levels, when the stock market crashes and the next round of Quantitative Easing begins, just remember: This was not caused through lack of physical or sexual diversity, but the willful ignorance of basic economic concepts centered around human action and the societal benefit of a having a free and unhampered market.

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Three Lessons From Jackson Hole

08/27/2022Robert Aro

One of the most anticipated events on the Central Banking calendar commenced this week: Jackson Hole, where “policymakers, academics and economists from around the world” gathered to discuss plans for the future. Powell gave his much-anticipated speech on Friday, quickly getting to the tough talk:

The Federal Open Market Committee's (FOMC) overarching focus right now is to bring inflation back down to our 2 percent goal. 

Sticking to script, he promised to maintain restrictive monetary policies while warning of another “unusually large increase” to interest rates next month.

The Oh No moment occurred when he cited lessons learned from over half- a century ago:

Our monetary policy deliberations and decisions build on what we have learned about inflation dynamics both from the high and volatile inflation of the 1970s and 1980s…

Of course, we know this to be false and that they learned little to nothing since 1970. If they had, the pursuit of currency debasement as monetary policy would have ceased several generations ago.

The critical knowledge Powell claims to have learned:

The first lesson is that central banks can and should take responsibility for delivering low and stable inflation… Today, we regard these questions as settled. Our responsibility to deliver price stability is unconditional.

True, the Fed should take responsibility for easy money policies, monetary inflation, interest rate suppression, the boom/bust cycle and relentless dollar depreciation. Congress could also abolish the Fed entirely, or at least stop their ability to intervene in the market, leaving the Fed with no more than an oversight role over the banking system. Unfortunately, while entirely possible, the odds of this happening at this time are still slim to none. This does not mean it will always be this way, alternative options exist, even if unlikely at the present moment.

He continued:

The second lesson is that the public's expectations about future inflation can play an important role in setting the path of inflation over time.

We can give him this. Keeping the masses calm and complacent will always be a goal of central planners. The last thing the bankers want is a public panic potentially leading to a bank run, or the widespread realization that high (price) inflation is here to stay.

Powell acknowledges that their window of opportunity closes ever so slightly with each passing day:

The longer the current bout of high inflation continues, the greater the chance that expectations of higher inflation will become entrenched.

It would require a combination of the passage of time, media persuasion, Fedspeak, and some rejigging of statistical data in order to change public perception again.

Lastly, and certainly the most detrimental, he proclaims:

That brings me to the third lesson, which is that we must keep at it until the job is done.

If the only viable solution is to ask that the Fed does nothing, clearly not on the agenda, then we accept that the interventions and new schemes will only increase with time. He cites more comparisons to the Volcker era; but as written before, it’s not 1970 nor the 1980’s. They can only compare to this period for so long and it’s well overused as is.

For all the hoopla surrounding this Jackson Hole Symposium, the three lessons learned by Powell are nothing we haven’t heard before. If there is anything to learn from Jackson Hole, it’s that the best time to end the Fed was a little over 100 years ago; the second-best time is now. 

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