Power & Market

U.S. Treasury Bailouts Aren’t What They Used to Be

05/15/2023Bill Bergman

United States citizens are watching a deteriorating tango between banks and the federal government. Bank depositors have been losing confidence in the value of their bank deposits, while credible market signals flag higher concerns about the credit quality of the United States Treasury.

In recent months, credit default swap spreads for Treasury debt have risen significantly. They are based on financial instruments that yield information about the implied probability of default. For the U.S. Treasury, that implied probability remains low, but it has been climbing to recent-record-high levels.

In the latest collection of market information reported at “WorldGovernmentBonds.com,” the United States ranked 16th among 25 countries in terms of the implied probability of default on their sovereign debt. In May 2020, after the market (and credit rating agencies) had begun to digest the implications of the COVID pandemic for economic and government finances, the United States ranked fourth on that list.

Appraisals of the probability, value, and wider implications of future bank bailouts have to consider the decline in confidence in US Treasury credit quality, both in absolute as well as relative terms, in the last few years.

Granted, the recent concerns have been driven in part by a rancorous but possibly temporary debt “ceiling” negotiation process. But these intensified tensions owe no small debt to the real deterioration in the federal government’s financial condition in recent decades.

Can we rely on still-high credit ratings for the US for comfort? Perhaps the wise sages in the credit rating agencies do a good job of “looking through” short-term political considerations in their appraisals of longer-term credit quality. But a careful look at historical experience suggests market signals lead credit ratings, not vice versa. And in the last three years, the distribution of rankings of countries based on the CDS market data did a much better job of anticipating the rankings for current country credit ratings than the three-year-old ratings rankings did in anticipating current rankings on CDS data.

For uninsured bank depositors in a bailout, getting par value may be better than not getting a bailout. But getting paid back “par” value in dollars that aren’t worth what they used to be generates real economic losses – for depositors as well as all of us.

Ukraine War Offers Glimpse at Modern Conscription

04/24/2023Connor O'Keeffe

January 27th of this year marked fifty years since the draft was officially suspended in the United States. And while young American men are still forced to register with the Selective Service, we have been fortunate to go without a draft for half a century, despite Washington's hyper-aggressive foreign policy.

That amount of time can make things feel distant. And even though the program is all set to fire right back up with a word from the president, there's a sense that the draft is an issue from a different era.

But the war in Ukraine offers a window into what conscription looks like in today's day and age. Both sides have resorted to forcing a part of the population to put their lives on the line to serve the interests of the regimes in Kyiv and Moscow. And the lack of condemnation, or even interest, from our fellow Americans should concern all advocates of self-ownership.

After the fall of the Soviet Union, both Ukraine and Russia continued to require male citizens to serve time in the military, though the term was gradually reduced from two years to one.

In 2013, Ukrainian President Viktor Yanukovych abolished conscription. Less than a year later, the new Western-backed Ukrainian government reinstated the draft and forced men to fight the people of eastern Ukraine who didn't want to live under the new government in Kyiv.

After serving their time as active duty soldiers, Ukrainian conscripts remained in a reserve status, eligible to be recalled until the age of 55.

Within hours of the first Russian airstrikes that signaled the beginning of the February 2022 invasion, Ukrainian President Volodymyr Zelensky declared martial law, called up men in the reserves, conscripted new soldiers, and prohibited men between the ages of 18 and 60 from leaving the country.

Zelensky also authorized the "release" of convicts with combat experience to bolster Kyiv's forces. At the same time, conscription appears to have been implemented as a new form of punishment. Men caught breaking curfew and getting into street fights have received conscription notices after being detained by police.

Russian conscription followed a similar trajectory to Ukraine's after the fall of the USSR. The mandatory term of military service for Russian men was rolled back to one year in 2008. And as recently as 2019, Russian President Vladimir Putin voiced support for abolishing conscription.

But, genuine or not, those sentiments disappeared as the region descended into war. Shortly after the February invasion, Russia held its spring draft and conscripted 134,500 people. 120,000 were conscripted last Fall. The Russian government has claimed conscripted soldiers are only being sent to replace volunteer soldiers in their posts, with the volunteer soldiers then sent to the front in Ukraine, but some have disputed this.

Today, over a year into the invasion, Ukraine is relying more on conscripts as their losses mount. Until recently, officials could only deliver draft notices to someone's home address. Some found they could avoid the summons by staying away from their official addresses.

New rules allow officials to track down new conscripts wherever they may be. Men are being stopped in the street and questioned about their draft status. With few eligibility exceptions available and a brutal front line, the stricter rules have many Ukrainian men fearing for their safety. The conscripts have so far received worse equipment and inferior training than the volunteer forces before being sent into battle.

Russia has also had an issue tracking down new conscripts. The Kremlin's approach has been to transition to a digital platform. All eligible men are required to register through an online government portal. Draft notices are sent out electronically and are considered “delivered” immediately, meaning the man is instantly on the clock for reporting to his local recruitment office.

In the enduring words of William Norman Grigg, "conscription indisputably rests on the assumption that each individual is the State's property, to be sacrificed when those controlling the State deem it necessary for their protection."

The draft may lie dormant in the U.S., but that assumption remains. The war in Ukraine serves as a reminder that conscription is not extinct. It remains a clear and present threat to liberty. 

Upcoming Talk with Alex Pollock in Pittsburgh

08/19/2022Ryan McMaken

"Rethinking the Role of the Fed"

Coming August 24 at 11:45 AM EDT, presented by the Federalist Society:


  • Alex Pollock, Senior Fellow, the Mises Institute
  • Winthrop Watson, President/CEO, Federal Home Loan Bank Pittsburgh
Rivers Club
301 Grant St Suite 411
Pittsburgh, PA 15219

Using Vaccine Mandates to Create Second-Class Healthcare Patients

03/04/2022Lipton Matthews

Some healthcare providers are refusing to treat unvaccinated Covid-19 patients. But is there really an argument for doing so? The claim is that unvaccinated patients are imposing an undue burden on the health system. However, the legitimacy of this claim fails to justify withholding treatment for unvaccinated patients. If the argument is that the negligence of unvaccinated people is straining the health system, then a similar logic must be applied to other scenarios, and failing to do so delegitimates the case for discriminating against the unvaccinated.

Obesity can aggravate other co-morbidities and research reveals that in the United States the obesity epidemic is responsible for $170 billion in surplus costs per year. Despite public education programs outlining the consequences of obesity many remain wedded to unhealthy diets and cultivate eating habits that are enabled by relatives, as TLC frequently documents on the series my 600-IB life. 

Quite alarming is that this show has produced several minor celebrities who invite the sympathy of viewers. Usually, the unwillingness of characters to conform to higher health standards is attributed to mental health. So, on what basis can we entertain discrimination against the unvaccinated when people are quite hospitable to overweight patients who despite an awareness of their condition do little to avert compounding existing health challenges?

Further Covid vaccines are unable to prevent transmission and if they could proponents would have a stronger argument for mandating mandatory vaccination. Yes, vaccines reduce the severity of the disease, but individuals are responsible for their own health and since punishing people for failing to take health seriously is not a practice of the health system there is no precedent for maligning the unvaccinated.

Moreover, if doctors denying treatment to the unvaccinated were serious about maximizing resources for patients, they would refuse to nurse people suffering from smoking-related illnesses. In America, such ailments incur costs totaling $300 billion per year including over $225 billion for direct medical care for adults and $5.6 billion in lost productivity as a result of second-hand smoking.

The adverse effects of smoking are well known and governments have spent millions to dissuade people from perpetuating the habit, whereas evidence on the efficacy of Covid vaccines is highly controversial so considering this fact it actually makes greater sense to punish smokers than to deprive the unvaccinated of treatment. One could even argue that due to conflicting information the skepticism of the unvaccinated is justified, though smokers are wilfully negligent since the evidence that smoking harms health is clear.

Another issue is that denying treatment to the unvaccinated raises ethical concerns. Based on the Hippocratic Oath doctors are morally obliged to treat patients irrespective of their political beliefs and decisions. So, using vaccination status to judge a patient is unethical and counter to the goals of the medical profession. Politically, this approach is also fraught with problems. In relating to citizens, the expectation is that the government will act impartially, hence if public hospitals deprioritize the unvaccinated this suggests that the government is taking a political stance thus making the policy discriminatory and unjust.

Secondly, public health is funded by taxpayers and not all agree with mandatory vaccination, therefore privileging the vaccinated would be an insult to taxpayers. Furthermore, deprioritizing the unvaccinated is blatantly classist. Affluent people can always resort to superior treatment at private hospitals owned by their colleagues. And clearly, private providers would be less likely to discriminate since they are motivated by money, however even if they do prioritise vaccinated patients, there is a possibility that they will make concessions for rich friends.

Ed Yong in a piece for The Atlantic illustrates the inherent classism in deprioritizing the unvaccinated: “Using recent survey data from the U.S. Census Bureau, the health policy researcher Julia Raifman and the economist Aaron Sojourner have shown that unvaccinated Americans are disproportionately poor – and within the lowest income brackets, people who want or would consider a vaccine outnumber those who would never get one…That they still haven’t gotten the shots might seem inexplicable to people who can just pop into their local CVS. But people who live in poor neighborhoods might not have a local pharmacy, or public transport that would take them to one, or internet access that would allow them to book an appointment. People who earn hourly wages might not have time for a vaccination appointment, or paid sick leave for weathering any side effects.”

Shunning the unvaccinated is even contrary to the notion of positive rights often lauded by intellectual elites as John Coggon points out in The Conversation: “Just by refusing vaccines, a person cannot be deemed to have also refused consent to receive treatments for COVID. People who are unvaccinated have not waived their positive right to healthcare…A policy to deprioritise unvaccinated patients for care, or to charge them for such care, would not be about denying a privilege or preference. It would be punitively discriminatory, denying a fundamental and universal positive right.”

Like hospitals, employers have been punishing the unvaccinated, but their case is dubious. Quite often it is said that employers have greater latitude to discriminate than the state, however this is untrue, because the decisions of a corporation are constrained by contractual agreements. Other than at-will agreements employers can’t arbitrarily institute policies and expect employees to comply, especially when such policies are not pursued to increase productivity.

Mandatory vaccination in the private sector is laughable because they are many opportunities for companies to use their discretion. When space is an issue then employees can work from home and if it’s a situation where people are unable to conduct work at home mandatory vaccination is still a baseless idea. The Covid-19 vaccines are not at the level where they serve as a deterrent to contracting and transmitting the disease as yet, so corporations can’t claim to mandate vaccination on the basis of preserving public health.

Additionally, sick employees usually stay home to contain the spread of infectious diseases, so Covid patients irrespective of vaccination status are unlikely to congregate with co-workers. And it’s highly improbable that employers are going to demand that infected people who seem healthy and are vaccinated show up to work. There is a possibility that vaccination can reduce productivity losses by expediting recovery to ensure a quick return to work. However, the impact of Covid-19 on productivity is still under review and anecdotal evidence suggests that much of the decline in productivity can be attributed to lockdowns and the ravaging impact it had on contact intensive industries.

Finally, obesity negatively affects productivity and health, yet employers are hesitant to mandate dietary requirements for workers. We are not suggesting that they do so, but even when the Pandemic migrates, they will still have to grapple with the problem of obesity and its potential to amplify underlying conditions. Though popular, it’s clear that stigmatizing the unvaccinated is just inane.

Understanding the Action Axiom

The action axiom can be stated as follows (Cf. Rothbard [1962, 1970] 2004, pp. 1–2, 7–8, 19–20; Rothbard, 2011, pp. 113, 290; Mises, [1949] 1998, pp. 14–16): “Human beings engage in purposive behavior—i.e., they choose which scarce means are to be more fruitfully (or economically, or rationally) employed in order to satisfy their most preferred ends. This behavior—stemming from human free will—is what we call action. As long as means are scarce and wants are not fully satisfied, human beings will keep on intentionally (or purposefully) acting.”

Why is this an axiom? Because you cannot disprove it without either conceding its truth or incurring a self-contradiction (Cf. Rothbard 2011, pp. 6, 10; Rothbard [1982] 2002, p. 32 and 32n6). In fact, anyone trying to disprove the action axiom would indeed engage in purposive behavior—i.e., he would be employing scarce means (his time, his intellectual labor, etc.) in order to achieve a preferred end (trying to disprove the action axiom instead of, say, watching TV or reading Rothbard). Therefore, the action axiom denier would either contradict himself—claiming the untruth of a statement he is instead performatively proving to be true—or be forced to concede the truth of the axiom itself—because otherwise he could not maintain to be acting in the sense we defined above.

The Action Axiom and “Microeconomics”

Generally, microeconomics textbooks frame the main tenets of consumer (and, analogously, producer) theory as follows: “Consumers are supposed to be rational—i.e., they employ scarce means to attain desired ends. Moreover, consumers’ preferences are assumed to feature (at least) the following properties: completeness, transitivity, and non-satiation.” 

As I will briefly explain, it is very easy to derive these properties from the action axiom itself. There are many other properties of human behavior that we could derive from this axiom—such as, e.g., time preferences, the law of diminishing marginal utility, and the law of optimum returns—but those will not be examined here.

First, consider “completeness”—i.e., human beings’ capability of always ranking alternative ends. Since action requires having preferred ends, it also entails that human beings will act if and only if they indeed have ends they want to achieve—i.e., they are willing to act in order to substitute a state of the world with a more desired one. In other words, were human beings not always capable of deciding between at least two possible ends and ranking them (e.g., B is preferred to A, or vice versa), they simply could not act (Cf. Rothbard 2011, pp. 305–07). But, as we saw above, action is an axiomatic truth of human nature—we cannot conceive of nonacting human beings. Therefore, action itself implies complete preferences—i.e., human beings need to be always capable of ranking the various potential states of the world (A, B, C, etc.) they can attain while engaging in action.

Second, consider “transitivity”—i.e., if I prefer A over B and B over C, then I must also prefer A over C. Again, it is straightforward that absent transitivity human beings would not be capable of conclusively ranking preferences—hence, they would not have precisely definable desired ends to struggle for. Consider, for instance, the simplest possible case: Fabrizio is faced with the possibility of employing some means (say, one hour of his labor) in order to attain one among three alternative ends—A, B, and C. However, suppose also that he prefers A to B, B to C, and then C to A; the question now arises: How could he act? In fact, it is obvious that he would face a paradox—not being able to decide which end is to be pursued and which ones are to be foregone. Again, this proves that transitivity is directly—and easily—derived from the action axiom: men with nontransitive preferences would not be able to act—but this would contradict their nature as human beings!

Third, consider nonsatiation. Here, suffice it to say that “a man perfectly content with the state of his affairs [i.e., satiated] would have…neither wishes nor desires; he would be perfectly happy. He would not act; he would simply live free from care” (Mises [1949] 1998, p. 13). Again, denying nonsatiation of preferences would be tantamount to denying the acting nature of human beings. Thus, we proved again (via reductio ad absurdum) that nonsatiation is consistently derived from a true axiom—and must thus be itself true.

There are two other properties that conventional microeconomics textbooks ascribe to economic agents’ preferences—namely, continuity and convexity (i.e., consumers are assumed to love goods’ variety). Suffice it to say that while convexity can be postulated (but need not be, since it is not directly derived from the action axiom), the assumption of continuity is simply wrong—because human action does always involve choices among discrete, noncontinuous units (pounds of bread, gallons of milk, haircuts per year, etc.) (Cf. Rothbard [1962, 1970] 2004, pp. 130n27, 305–07).

The Action Axiom and Ethics

If the fundamental feature of human nature is that human beings act, then what does this (a priori) truth imply for other branches of human sciences? Take, for instance, the task of building a rational (i.e., a priori true) ethics of human liberty.

Starting from the action axiom, we can, for instance, build a rational and cogent argument for human beings’ natural and absolute self-ownership—i.e., any human being shall be the sole owner of his body, his labor, and his mind (namely, his choices, his values, his free will, etc.). In fact, let’s assume the simplest possible case: there are two persons—A and B. Now, there are three possible arrangements (Cf. Rothbard 2011, pp. 353–54).

First, we can assume that A is the owner of B (or vice versa). However, if A is the owner of B, then B is A’s slave—and slaves, by definition, are not free to act as they will. But if B is no longer capable of free-willed action, then he would no longer be a human being as we defined this concept (i.e., acting man) above. But this would imply a paradox—B being a human being in our hypothesis but no longer being one in our conclusion. Hence, this first arrangement is to be discarded as self-contradictory.

Second, we can assume that A owns a share of himself and a share of B (and vice versa). However, this would entail that A cannot act without B’s approval (and vice versa). But, for B to approve A’s action, B is required to purposefully cast a vote approving such an action (and vice versa). But then we reach again a paradox: A cannot act without B’s consent, but B’s consent is itself an action requiring A’s approval, but A’s approval is itself an action requiring B’s consent, et cetera—an infinite regress. But if both A and B’s action is stalled, then neither A nor B can act—and, if they cannot act, they are at odds with their nature as human beings (i.e., acting men). Hence, again, this second arrangement is to be discarded as paradoxical.

Lastly, we are left with the third option, the only consistent—i.e., noncontradictory—solution to our problem of human beings’ ownership: both A and B are to be self-owners. No other arrangement is compatible with human nature—i.e., action as deliberate choices employing scarce means in order to achieve preferred ends.


Economics has conspicuously departed from its Mengerian-Misesian-Rothbardian framework as a purely deductive science. By doing so, mainstream economists have forgotten the epistemological groundwork of economics, abandoning proper praxeological analysis, neglecting the apodictical (a priori) truths of praxeology, and imitating empirical (a posteriori) sciences. In the end, this departure from the Mengerian-Misesian-Rothbardian framework has proved detrimental for (at least) two reasons.

First, it prompted mainstream economists to justify their assumptions as “operational” (or “heuristic”) hypotheses—like empirical scientists do—instead of acknowledging the a priori truth of praxeological tenets. Second, it undermined sound and rational analysis even in other branches of human sciences—such as ethics—thus leaving intellectual room for moral relativism, postmodernism, and collectivistic ideologies.

Understanding the Fed's Balance Sheet

12/15/2020Robert Aro

The Fed’s balance sheet could easily be replaced with the phrase abracadabra; truly, there is little else in the world which works as magically as it does. Often cited, seldom understood, few seem to realize that as the balance sheet expands, so too does the power of this central bank at the expense of the entire nation.

As of mid-December 2020 the Fed’s balance sheet stood at $7.2 trillion. These trillions of dollars are considered to be an “asset” owned by the Federal Reserve; hence the accounting term “balance sheet” is both normally and appropriately used. Assets are a fundamental part of any balance sheet, as defined by the Financial Accounting Standards Board (FASB):

Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.

The Fed must first purchase something tangible such as US Treasurys or mortgage-backed securities (MBS) in order for them to become assets. The other part of the definition requires an asset to provide “future economic benefit” to the Fed.

Despite the news of this year’s various covid spending programs, the brunt of the balance sheet continues to be composed of the $4.6 trillion of Treasurys and the $2.0 trillion of MBS held; in other words, debt.

The future benefit to the Fed is that these principal amounts remain owed to it and will continue to generate interest income so long as the principal is outstanding. When we talk of the Fed’s balance sheet, we are talking about one of the largest accounts receivable balances in the world!

To further conceptualize this, the Fed created around $7 trillion and gave it to someone, or some entities, to “do something” with. The trillions, for all intents and purposes, have digitally left the Fed and have been received elsewhere. The idea here is that at some later date, the Fed will get back its $7 trillion, but until that time the Fed will continue to benefit from receiving interest payments from the borrower(s).

Conversely, there are those who owe the Fed that $7 trillion, plus interest. The principal owed plus interest (when rates are positive) means the debtor will always owe more money than initially borrowed; which is how, after all these years, the US debt outpaces the money supply.

A handful of people, which the general public is not part of, received a massive amount of money at rates close to or maybe even at zero. While good for these few, there is a slight problem with borrowing trillions from a central bank specifically: What do you do with a trillion dollars and a great rate?

If the intent is to make a return on money, it can be lent at a higher cost than what it was borrowed for, or assets can be purchased to make a profit before paying it back. Thinking along these lines, we can see why trillions of dollars have not gone into Main Street households for goods such as toothpaste and toilet paper but rather into stocks, bonds, and real estate.

Especially for nations whose central banks own equites, like Switzerland, it’s easy for some to defend this process, looking favorably upon central banks making money. However, profit made by a central bank comes at the expense of society as a whole—through currency debasement, distortions throughout the market, and the boom-and-bust cycle, to name a few. We can be sure the “gains” of a central bank come at a very real, yet still grossly misunderstood, cost to society.

The asset acquisition process of a central bank has various names, sometimes called stimulus, liquidity injections, QE, etc. These terms sound very official, yet can be reduced to a simple idea, the act of money creation for the purpose of purchasing or lending. Contrary to the narrative, there is nothing new or inventive about this intervention. This idea of “expanding the balance sheet” can be summed up as nothing more than theft. Those who understand economic history will know it by a different name: inflation.

US Employment Stalls as Trillion-Dollar Deficits Mount

07/16/2020Ryan McMaken

Listen to the Audio Mises Wire version of this article.

New tax revenue data released by the Treasury Department on Monday shows that tax revenue further worsened in June (compared year over year) from May's already cratering total.

On the plus side, neither May nor June has returned to April's historic plunge in revenue.

As shown in June's Monthly Treasury Statement, June's total tax receipts were $240.8 billion. That was down 27.8 percent year over year, a decline from May's year-over-year drop of 25 percent. This was nonetheless less of a plunge than April's multidecade low in revenue growth, which hit –54.8 percent. 

Source: US Treasury.

In spite of declining revenue, federal spending continues at a record-breaking pace. Federal outlays surged in June to $1.1 trillion, a remarkable sum for a single month of spending. In recent years, federal spending for an entire year has been between $4 trillion and $4.5 trillion. 

With declining tax revenues and soaring spending, the deficit reached new highs in June as well. June's budget deficit hit $864 billion, a new high. It is now likely that the annual budget deficit will easily top $3 trillion, which will be well above any previous deficits. 

The annual deficit reached "only" $1.4 trillion in the wake of the 2008 financial crisis. This moderated over the next eight years, but after years of runaway spending during the Trump administration, the annual deficit again reached $1 trillion in 2019. This was a remarkable feat for a nonrecessionary period, and I warned at the time that this did not bode well for any coming period of economic turbulence. That period has now arrived, and not surprisingly, there appears to be no end in sight to the mounting deficits. 

Unemployment Numbers Climb Again

Hopes that the economy might soon roar back and bring some relief from skyrocketing deficits remain unfounded for now. 

Today's new data on initial unemployment claims brought more bad news, as more than 1 million workers filed for unemployment benefits for the seventeenth week in a row. For the week ending July 11, initial unemployment claims totaled 1.3 million, a slight decrease from the 1.31 million workers who filed for new benefits the week prior. That's in seasonally adjusted numbers. In unadjusted numbers, new claims actually increased from the previous week, rising from 1.4 million the week of July 4 to 1.5 million last week. 

Since March, 51 million American workers have filed for unemployment. As of the week of July 4, 17.3 million continue to file for claims.

Moreover, June's tax revenue suggests that worker income has plunged with employment. 

Will earnings and jobs and tax revenue come roaring back in July? This is certainly not a given. After all, many states and jurisdictions are now reimplementing business closures, shutdowns, and other measures which will surely eat away at both jobs and tax revenue. As with the first round of business closures, retail sales and food services are likely to be most immediately impacted.

But underneath those industries are a wide variety of support industries, from janitorial to bookkeeping to commercial real estate, all of which will affect both blue-collar and white-collar hiring. 

Tax Hikes on the Horizon?

As earnings and retail sales plunge, the greatest danger to economic recovery lies in the decline of state and local taxes. The threat does not lie with the tax declines themselves, but with the expected policy reaction. As school districts, city governments, and state legislatures face immense shortfalls in revenue, many are now increasingly talking about large tax increases to fill the budget hole. This will be crippling for businesses seeking to come back from the current round of business closures and the collapse in consumer demand for many services and products. Tax increases will cripple the ability of entrepreneurs to shift resources to more in-demand industries and start up new businesses where old ones fail. 

Facing uncertainty about both tax increases and the threat of ongoing mandated business closures, many business will wait as long as possible to commit to new staff hires. 

Unelected Technocrats Have Seized Control of the Global Economy

07/13/2020Robert Aro

There are way more people on Main Street than members of Congress or the Fed, yet for inexplicable reasons these few have control, power, and decision-making ability over the lives of the many. Congress can legally tax and spend. The Fed can legally create US dollars and buy real assets at virtually no cost. These powers allow this very small group of individuals to affect the lives of hundreds of millions of Americans, if not the entire planet, by engaging in activity that if done by anyone else would be called counterfeiting.

For example, the Wall Street Journal noted that Secretary Mnuchin is hopeful that between July 20 and the end of the month a new economic stimulus package will be unveiled:

Mr. Mnuchin said the administration supports a second round of so-called economic impact payments to households, an extension of enhanced unemployment benefits for furloughed workers, and a “much, much more targeted” version of the Paycheck Protection Program of forgivable loans for small businesses.

Mnuchin, a man who may still be unrecognizable to most who don’t follow the political theater, is estimated to have a net worth of around $400 million. His role as head of the Treasury and Trump’s top economic advisor seems to require that he “plan” for those on Main Street.

As for the next iteration of the Paycheck Protection Program, how much more “targeted” will it be? Well, that is up to those deciding our future without our consent. But like all of government’s best-laid plans, the program will only get larger in scope. Mnuchin mentioned just last month:

Before we rush back and spend more money, whether that’s a trillion dollars or whether that’s more, we want to make sure we’re careful in knowing how much more we need to spend.

It's incredible that we live in a world where an unelected official has the power to decide where trillions of dollars are spent, with credit supplied by well-revered central banks and using economic calculations known only to the privileged few. While it’s easy to point to US central planners and their lack of proficiency in economics, this predicament is not restricted to the United States.

According to Forbes, the European Central Bank (ECB) is headed by the second most powerful woman in the world. Similar to Mnuchin, Christine Lagarde was not elected by the people, but she is charged with monetary policy over the entire continent. CNBC recently shared an interview in which Lagarde proclaimed:

“I want to explore every avenue available in order to combat climate change….This is something that I hold very strongly.”

Lagarde added that the bank “has to look at all the business lines and the operations in which we are engaged in order to tackle climate change, because at the end of the day, money talks.”

This same ECB is currently embarking on a €1.35 trillion asset program on top of its €20 billion per month bond-buying program!

If it's any consolation, Mnuchin is not using his central bank to tackle climate change. Distressingly, if he wanted to, and the Treasury or Fed made a mandate, nothing could stop them.

When the rich and powerful seek to plan for those in a much lower socioeconomic standing than their own, as far as monetary policy is concerned, whether their intentions are to genuinely help those in need or purely to control the masses is actually irrelevant. We know the outcome. It starts with a crisis, involves government intervention, and ends with the Fed owning real assets. To no one’s surprise, the people meant to benefit most from intervention find that they benefit the least.

For those who recall, the Great Recession was the harbinger of Fed ownership of our mortgages. Now they own our bonds. In Europe central bankers are charged with fighting climate change. We’ve predicted this several times already and it bears repeating: one day, with this progression, they will officially own our very stock exchange. Some call it policy; we’ll call it what it is…theft!

Uncovered Audio of Eugen von Böhm-Bawerk from 1905

05/18/2020Tho Bishop

The Österreichische Mediathek, an Austrian archive for sound recordings and videos on cultural and contemporary history, has published a very short clip titled "Vienna Economics" featuring the voice of Eugen von Böhm-Bawerk. The 26-second clip, dated 1905, is in German, but it allows listeners the rare treat of listening to one of the greatest economists of the twentieth century.

A translation of the page offers this description of the clip:

Unfortunately, the great economist, Professor Eugen von Böhm-Bawerk (1851 to 1914), does not speak about his subject in this sound recording, which was recorded in the Vienna Phonogram Archive on December 20, 1905, but rather mentally talks about the then quite new recording machine, the phonograph. - Böhm-Bawerk, who was also twice Minister of Finance (in the Gautsch and Koerber cabinets), along with Carl Menger, Eugen von Philippovich and Friedrich von Wieser, is one of the main representatives of the Viennese School of Economics, which extends well beyond Austria and beyond.

Transcript: I don't know what future ages would like to learn from us. I would know what I would like to learn from future ages. Unfortunately, the phonogram post, to which I could entrust my curious questions, does not provide a response.

As Guido Hülsmann notes in the magnificent Mises: The Last Knight of Liberalism, 1905 was the year Böhm-Bawerk was the year he obtained a full chair as a professor at the University of Vienna, a victory of profound importance for the history of the Austrian school.

[Carl] Menger was successful not only in developing the continental  tradition  of  economic  science,  but  also  in  establishing  a network of like-minded young thinkers within the confines of Austria-Hungary. He only failed to get Böhm-Bawerk a chair at the University of Vienna. His favorite disciple applied twice,in  1887  and  1889,  but  each  time  the  Ministry  of  Education chose  a  different  candidate.  They  argued  that  Böhm-Bawerk represented the same abstract and purely theoretical school as the  other  chairholder  (Menger)  and  that  it  was  necessary  to also  have  a  representative  of  the  new  historical  school  fromGermany. Even this did not prove to be a decisive obstacle. In the fall of 1889, Böhm-Bawerk went to Vienna to join the Ministry  of  Finance  and  became  an  adjunct  professor  at  the  University  of  Vienna;  in  1905  he  obtained  a  full  chair.  Hence,  in distinct  contrast  to  all  other  modern  (marginalist)  schools  of economic thought, the Austrian School quickly reached a position of power, protected by intellectual tradition and political patronage.  Under  the  leadership  of  the  next  generation,  it would obtain a position of unparalleled influence.

Böhm-Bawerk would end up being publishing important works advancing the Austrian theory of capital and interest, as well one of the most potent takedowns of Karl Marx ever written. His students at the University of Vienna included Ludwig von Mises and Joseph Schumpeter.

In a 2002 Quarterly Journal of Austrian Economics article, George Reisman, a student of Mises himself, noted that it's "entirely conceivable to me that Mises might have described Böhm Bawerk as the most important Austrian economist."

For readers who are excited to find this neat historical gem, consider checking out the Ludwig von Mises (Audio) Archives available here on the site.

Uh-Oh, The FDIC Exhorts Us Not to Hit the (Bank) Panic Button

Our rulers want us to ignore the tried and true adage that cash is king in a crisis. The FDIC has just released a video exhorting people to keep their money in the banks. The spokesperson is the FDIC Chairman herself, Jelena McWilliams, who earnestly assures us: "Your money's safe at the banks. The last thing you want to be doing is pulling your money out of the banks thinking it's going to be safer some place else. . . . You certainly don't want to be hoarding your money in a mattress. It didn't pan out well for so many people. [Huh, why, when, where?]" Indeed, Ms. McWilliams seems desperate to stave off a potential bank panic when she declares, "No depositor has lost a penny of their insured deposits since 1933 when the FDIC was created."

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