Power & Market
Yesterday in Colorado, voters rejected numerous proposed taxes and government regulations. One of the biggest was Proposition 112, which was an anti-fracking measure that would have outlawed fracking in much of the state. That failed, with 57 percent voting no.
Meanwhile, a proposed tax to fund government schools — for the children! — failed with 55 percent voting no. Two separate new taxes to fund new transportation projects failed with neither mustering more than 40 percent approval. There was a pro-hemp-industry measure, which passed with 60 percent approval, which is designed to allow more expansion for hemp businesses. 66 percent also voted against new proposed limits on campaign funds. Nor did voters look kindly on an effort to reduce the minimum age for serving in the state legislature to 21 (it's currently 25).The "youth vote" strikes out yet again.
So looking at these pro-business, anti-tax, anti-youth vote results, one might think, "golly, those Republicans must have done pretty well in Colorado!"
Last night's election was an absolute bloodbath for the GOP in Colorado.
The same voters who voted to defeat all statewide tax increases also voted to elect Democrats to every single statewide office, including Governor, AG, and Treasurer. The Dems maintained control of the House, and they managed to flip a few seats to get control of the Senate.
With the governor, it wasn't especially close. Jared Polis won with 52 percent, but his opponent, Walker Stapleton, couldn't even muster more than 45 percent. He performed more poorly than all other statewide GOP candidates, all of whom got 47 percent.
With Polis at the top of the ticket, and with Stapleton as such an embarrassingly weak candidate, this hurt the rest of the GOP candidates.
But how could an electorate so opposed to taxes vote for so many Democrats? The answer is that Democrats ran as fiscally responsible moderates, while Republicans largely ran as conservative culture warriors.
This could be seen in the campaign ads of the two gubernatorial candidates. Stapleton, who should ask for his money back from his campaign advisors, ran with the tag line "A conservative who gets things done!" Stapleton should have asked his advisors when was the last time anyone won the governor's mansion playing up his conservatism. The answer is maybe one time: 2002, when incumbent Bill Owens crushed hard-left candidate Rollie Heath.
When Owens ran the first time, though, his campaign had a laser-like focus on three things: increase infrastructure spending, lower taxes, increase school accountability. The end. He avoided talking about anything else. And he won with a less-than-one-percent margin in the 1998 race.
Using that sort of simple approach, Owens remains the only Republican to win the governorship since John Love back in the 1960s. And Love was no "conservative." He signed one of the nation's most expansive pro-abortion statutes at the time.
Since then, when Democrats run as moderates — as was the case with Roy Romer (1987-1999) and John Hickenlooper (2011-2019) — they win.
And Polis ran as a moderate. I know this because I live in a core city (i.e., not the suburbs), which means the marketing consultants assume I'm likely to vote Democrat. So, I was fed Polis ads before pretty much every YouTube video I've seen in the past two months. I can even quote from memory Polis's tag line: "Jared Polis: saving you money!"
And who's going to vote against that? Had I been less cynical, given the content of the ads, I probably would have concluded, "this Polis guy sure sounds reasonable!" What Polis certainly did not do was say "Jared Polis: a liberal who fights for reform!" or something like that. It would have been disastrous.
In fact, the anti-Polis ads said Polis was "too radical for Colorado." The problem is, few non-Republicans believed it. This is especially the case since Polis's Congressional career was, as far as Washington politicians go, not especially terrible.
Moreover, Polis was helped by how awful a candidate Walker Stapleton was. If you assumed that someone named "Walker Stapleton" was from the manicured lawns of a manse in Connecticut, you would be right. Stapleton is a cousin of George W. Bush, and while he is the grandson of a five-term mayor of Denver, Stapleton is not from Colorado. He moved to Colorado just six years before he decided to run for statewide political office and begin his march toward his rightful place — in his mind — at the top of Colorado's political establishment. Worse yet, his mayor grandfather is largely notable for being a high-ranking Klansman. And while you might say "gee, a man shouldn't be punished for who his grandfather was," it was just one more thing that made Stapleton's biography so un-compelling.
Polis, by the way, is fabulously wealthy, and while he was born rich, he has managed to cultivate an image (accurately or not) of being someone who turned a small fortune into a large fortune in mundane industries like the greeting card and florist industries. In Colorado, no one begrudges people with self-made riches. But wealthy carpetbaggers from east-coast political families don't fare quite so well.
Polis's riches, though, allowed him to spend massively on political ads, which is why even people like me saw hundreds of those ads telling us what a reasonable, fiscally responsible fellow he is. Stapleton, meanwhile, spent time talking about his conservatism and "sanctuary cities" and other things few Coloradans have ever cared about. (I suppose there's some comfort for the GOP in the fact that even with all his spending, Polis still only got 52 percent.)
But, if you seek victory as a Colorado candidate, offer the voters tax cuts, offer the voters shiny new roads (paid for without tax increases). But whining about immigrants never did much to win anyone statewide office around here. This isn't Trump country. It's not the Bible Belt (and never has been). But as the voter-initiative results showed, most Coloradans aren't fans of taxes or commie rhetoric about business owners. One would think that's a fairly easy winning formula to figure out.
It's unknown if the state GOP will ever get its act together again and run some decent candidates, but one might note that the voters of Maryland just re-elected a Republican governor. If a Republican can win in Maryland of all places, what does that tell us about the Colorado GOP?
Sadly, but not unexpectedly, the mass shooting at the Tree of Life Synagogue in Pittsburgh is being used to justify new infringements on liberty. Of course, opponents of gun rights are claiming this shooting proves America needs more gun control. Even some who normally oppose gun control say the government needs to do more to keep guns out of the hands of the “mentally ill.” Those making this argument ignore the lack of evidence that background checks, new restrictions on the rights of those alleged to have a mental illness, or any other form of gun control would have prevented the shooter from obtaining a firearm.
Others are using the shooter’s history of posting anti-Semitic comments on social media to call for increased efforts by both government and social media websites to suppress “hate speech.” The shooter posted anti-Semitic statements on the social media site Gab. Gab, unlike Twitter and Facebook, does not block or ban users for offensive comments. After the shooting Gab was suspended by its internet service provider, and PayPal has closed the site’s account. This is an effort to make social media websites responsible for the content and even the actions of their users, turning the sites’ operators into thought police.
Some social media sites, particularly Facebook and Twitter, are eager to silence not just bigots but those using their platforms to advocate for liberty. Facebook has recently banned a number of libertarian pages— including Cop Block, a site opposing police misconduct. Twitter has also banned a number of conservatives and libertarians, as well as critics of American foreign policy. Some libertarians say we should not get upset as these are private companies exercising private property rights. However, these companies are working with government and government-funded entities such as the Atlantic Council, a group funded by NATO and the military-industrial complex, to determine who should and should not be banned.
The effort to silence “hate speech” is not just about outlawing racist, sexist, or anti-Semitic speech. The real goal is to discredit, and even criminalize, criticism of the welfare-warfare state by redefining such criticism as “hate.” It is not just progressives who wish to use laws outlawing “hate speech” to silence political opponents. Some neoconservatives want to criminalize criticism of Israel for the nonsensical reason that any criticism of Israel is “anti-Semitic.” Other right-wing authoritarians wish to expand hate crime laws to include crimes committed against police officers.
Ironically neoconservatives and other right-wing authoritarians are among the biggest purveyors of real “hate speech.” What could possibly be more hateful than speech advocating perpetual war? Cultural Marxists are also guilty of hate speech with their calls for both government and private violence against political opponents, and for the use of government force to redistribute property. Just about the only individuals advocating a political philosophy not based on hate are those libertarians who consistently advance the non-aggression principle.
Preserving the right to free speech is vital to preserving liberty. All who value freedom should fight efforts to outlaw “hate speech.” “Hate speech” laws may initially be used to target bigoted and other truly hateful speech, but eventually they will be used to silence all critics of the welfare-warfare state and the authoritarian philosophies that justify omnipotent government. To paraphrase Ludwig von Misses, libertarians must fight hate speech—including the hate speech emanating from Washington, D.C.— with the “ideas of the mind.”
When advocates of gun confiscation complain about "guns" and say "no one needs a gun for x" all they are really saying — whether they understand it or not — is "I want only cops and soldiers to have guns."
While gun control advocates often claim to be suspicious of police power, logic dictates that the gun-confiscation position is simply the position that only government employees should have guns. Similarly, more mild gun-regulation positions are designed to increase the coercive power of government over the taxpaying citizenry, and to lessen access to private sources of self-defense — thus increasing private-sector dependence on government police for "protection." The gun-regulation position is premised on the idea that only the police can really be trusted with gun ownership.
And what a terrible position that is.
Richard Black could tell us more about this. Were he still alive today. After Black killed a home intruder in self-defense, he called the police. Sometime later, the police showed up and shot Black dead in his own home.
The dead victims of the school shooting in Parkland could tell us more also. When sheriff's deputy Scot Peterson — who was specifically supposed to provide security at the school — was faced with an armed intruder, he ran away and hid.
And now we hear about the case of Amber Guyger. Guyger is the police officer who confused another man's apartment for her own. She trespassed on the man's property, saw his "silhouette" and then open fired. Her victim, Botham Shem Jean, died.
A Double Standard
In cases like these, police could not be counted on to use firearms appropriately — or they failed to use them to defend the innocent.
Moreover, this latest case serves to illustrate, yet again, the enormous double standard that is employed when police behave in ways that any private citizen would be roundly and viciously denounced for. Were a private citizen to do what Guyger did, his actions would be provided as more evidence that private ownership of guns ought to be curtailed.
Guyger has claimed in her defense that she "gave verbal commands" to her victim before she shot him.
That this should even be considered any sort of "defense" requires a special kind of deference to government. But this is how police officers and their defenders think. If a normal person is woken or surprised in the middle of the night by an intruder with a badge, the victim is supposed to know — by magic, apparently — that the intruder is a police officer and then do what you're told. Never mind that the person might just be claiming to be a police officer.
For police of course, private citizens are always supposed to respond calmly and obediently when screamed at by multiple police officers. Often, the victims receive conflicting orders from police.
Similar rules do not apply to police. Police — we are told — "must make split-second decisions under extreme pressure. "In other words, if the police make a poor decision under pressure, they're heroes who did what had to be done. If a private-sector taxpayer like Richard Black makes the "wrong" decision? He deserved to die.
The law reinforces this view as well. It is extremely rare for a police officer to be prosecuted for gunning down unarmed victims. In the Black case, the police chief has already blamed the 73-year old war veteran for his own killing. The chief's reasoning? Black, who was hearing impaired, should have responded faster to verbal police commands. Case closed.
Even when a trigger-happy police officer is brought up on charges, the law is written in such a way as to make it extremely hard to thread that needle. Members of the jury are easily browbeaten into coming down on the police officer's side. We saw this in the case of Daniel Shaver, an unarmed man who was crawling and begging for his life when gunned down by police. Police officer Philip Brailsford was so fearful of this weeping, trembling man on the ground that Brailsford just couldn't keep himself from opening fire. The jury's verdict? Not guilty.
What If a Private Citizen Did the Same Thing?
But imagine if a private citizen did what Guyger did. If a private citizen trespassed into someone's house, screamed at the residents, and then opened fire — regardless of the details in the case — we all know what would happen.1 We'd all be told we need to have "a national conversation" about how there are "too many guns" in private hands. If the whole thing were shown to be an accident, pundits would endlessly be quoting statistics designed to make it look as if guns in private hands lead to countless accidental shootings. But since it was a police officer who did the shooting, we'll hear about none of this. Why? Because gun control does nothing to control the use of firearms by police. Although we're repeatedly told that guns in private hands lead to spades of accidents, mistaken shootings, and overly-aggressive gun owners, none of this applies when that gun is in government hands. Then it's all just unavoidable. It's never a problem with the guns themselves.
And the double standard doesn't stop with the media. Were the roles of Jean and Guyger reversed, the response by criminal-justice officials would be totally different. A person who trespassed into someone else's home and started shooting — even if totally accidental — would be arrested immediately. A plethora of charges would be aggressively applied to the defendant, ranging from illegally discharging a firearm to criminal trespass to second-degree murder.
In Guyger's case, she isn't even arrested at the scene, and so far she only faces manslaughter charges. The Texas Rangers have handled her with kid gloves, allowing her to turn herself in at her convenience. All her statements to the police have been treated as indisputable facts — and not as the claims of a person who breaks into people's homes and starts shooting. Attorneys who have read the arrest warrant are saying that, given the way it is written, law enforcement clearly thinks it's all just an accident and "the Texas Rangers were careful not to implicate Officer Guyger." It's the usual "professional courtesy" of the Thin Blue Line. There is one set of laws for government agents. And another set of laws for the taxpayers who pay all the bills.
Guyger's chain of mistakes in this case belies the pro-gun-control argument that police ought to have a monopoly or near-monopoly on firearms because private citizens can't be trusted with weapons. These ordinary people are too likely to be mentally unstable, too trigger-happy, or too lacking in training to be allowed to own firearms.
But who is to defend us from the mentally unstable or poorly-trained police officers? Or perhaps from the ones who are too distracted or unintelligent to figure out which apartment is theirs?
It is precisely this sort of thing that led to the infamous Indiana law which explicitly states that it is not a crime to defend ones self from an abusive police officer — even using deadly force if necessary. That law was a response to an Indiana Supreme Court decision which stated that “there is no right to reasonably resist unlawful entry by police officers.”
Amber Guyger will benefit form this sort of judicial thinking if her case ever goes to trial. The deck in stacked in favor of the government and its law enforcement arm. It's not a coincidence that government judges too often side with government police. They all work for the same organization — and they all live off the sweat of the taxpayers who have very little say in the matter. Moreover, courts have ruled that police have no obligation to protect the citizenry. Thus, "officer safety" is priority number one.
[RELATED: "Lack of Police Accountability Shows the "Social Contract" Isn't Working" by Ryan McMaken]
At this point, the details of Guyger's motivations and actions remain vague. But let's assume it was just an innocent mistake. There's not much comfort there since we've already seen the double-standard — even in cases of accidents — employed for police shootings and shootings by private citizens. The definition of "innocent mistake" varies widely between police officers and everyone else.
But could anything have been done to change the outcome in Jean's apartment? Even once we know the details, it will be impossible to say — and there's no way to assume that Jean would have successfully defended himself with a firearm in this case. But what if Guyger had missed at first? Botham Jean would have been perfectly rational to retreat, grab a gun, and then return fire. Then Jean might at least had a chance. After all, what reason had he to believe she was a police officer beyond her uniform? It's not as if imposters can't buy those. And even if Jean had believed she was a police officer, he still would have been within his rights — morally speaking — to shoot her dead.
Few who know the realities of real-life violence would see this is a "good" alternative — but it's hard to see how this is any worse than a reality in which police can shoot innocent bystanders without any fear of self-defense on the part of the citizenry. For gun-control advocates, however, this is all too messy. For them, it would all be much more neat and tidy to make sure that private citizens like Jean have no access to the tools of self-defense. "Why you just want the Wild West!" is the typical refrain. The implication is that in a "civilized" society, these sorts of "shoot-outs" should never happen. Apparently, being shot dead while defenseless by a government-employed home intruder is the preferred "civilized" alternative — and only when we all learn to embrace this sort of untrammeled police power will we all be "safe."
- 1. Guyger's defenders are already trying to claim she is innocent of any misdeed because Jean's door was unlocked. However, whether or not the door was locked is irrelevant to the question of whether or not Guyger was trespassing.
The 2016 campaign set a new standard for interruptions and other crimes against civility by candidates. The primaries were full of such rudeness, particularly the Republican free-for-alls. The presidential debates provided additional examples. Even the vice-presidential debate was described by one pundit as an “interruptionfest.”
One side would call such interruptions beyond-the-pale rudeness proving unfitness for office, while the other would cheer them as necessary to make good points. And things are not improving, judging from the hyper-hypocrisy illustration of Democrats who lauded John McCain for not being blindly partisan screaming their intense partisanship at the opening of Brett Kavanaugh’s Supreme Court hearing. So how should we view such political interruptions and other examples of rudeness, now that Americans are facing another election that will be in large part a response to the 2016 outcome?
The structure of logical arguments offers a clue. They run from premises to conclusions—A implies B implies C…implies Z. Correctly structured, if the premises are true, the conclusion must be true. However, if a premise or step in an argument is false, factually or logically, even if every succeeding step is valid, the conclusion need not be correct.
Consequently, when someone observes an important false premise or errant step in an argument, logic and a desire for better real-world results both suggest immediately focusing on where and how such premises depart from truth. After all, if people can come to some resolution with respect to the contested step, we can move on in our discussion, and potentially even compromise or agree, in the end. Without that step, further discussion may yield a great deal of stomach acid, but little fruit.
This is particularly important when the pivotal step involves the exact reverse of the truth, which can not only invalidate the conclusion, but actually confirm the opposite conclusion. That is, while statement A, if true, may imply Z, when A is false, it may exclude Z as a possibility.
For example, protectionism can save some jobs, and the income derived from them, from superior competitors. However, protectionism does not create jobs and wealth for the economy, as protectionists assert, or any of the consequences that would follow. “Saving” certain jobs eliminates others, including those in export industries, those facing higher input costs and those whose jobs would have been created from the greater wealth unrestricted trade would produce. That shifting of resources from where people’s circumstances and preferences would lead them voluntarily to where government favoritism dictates also destroys societal wealth.
We must also consider what happens if we wait politely until the end of a disputed chain of reasoning. Think back on your personal experiences. How well did you remember precisely what was said at step B, where disagreement began, multiple steps (possibly also in question) and many minutes later? How well did your recollections match those of your opponent(s)? What was said and why we disagree is easily lost, generating still more uncivil bickering. And such problems are only worsened when, as today, one side often insists that certain words or phrases should not be taken at face value, but as “dog whistles” for hidden and nefarious meanings.
The upshot is that even though interruptions feel rude (because no one likes being sidetracked before reaching their intended conclusions), they may be more justifiable in political debate than in other circumstances. When the direction of the country is at stake, the benefits of more effectively revealing core policy disagreements exceed those in day-to-day conversations. Consequently, we may want to allow more leeway for rudeness when disputing over government policy. We do not want rudeness to become the issue deciding political choices, rather than logic and evidence.
Of course, citizens still must judge whether and when interruptions are sufficiently justified. There are many instances that are not. For example, when one person just talks over another until they quit speaking, interruptions are unjustified. The same is true for interruptions whose purpose is to derail a line of thought, inject misrepresentations that will move us further from the truth or make ad hominem attacks. Electorally punishing such assaults on the possibility of advancing Americans’ well-being, by undermining the potential for increased clarity, remains appropriate.
There will be always be vast differences of political opinion expressed in elections. And citizens will fight over the relevant facts. That process can certainly produce rudeness. But it would be far better to fight over such matters, even rudely, than to let real issues be hijacked into battles over whose rudeness most disqualifies them and their positions from consideration.
Assad was supposed to be gone already. President Obama thought it would be just another “regime change” operation and perhaps Assad would end up like Saddam Hussein or Yanukovych. Or maybe even Gaddafi. But he was supposed to be gone. The US spent billions to get rid of him and even provided weapons and training to the kinds of radicals that attacked the United States on 9/11.
But with the help of his allies, Assad has nearly defeated this foreign-sponsored insurgency.
The US fought him every step of the way. Each time the Syrian military approached another occupied city or province, Washington and its obedient allies issued the usual warnings that Assad was not liberating territory but was actually seeking to kill more of his own people.
Remember Aleppo, where the US claimed Assad was planning mass slaughter once he regained control? As usual the neocons and the media were completely wrong. Even the UN has admitted that with Aleppo back in the hands of the Syrian government hundreds of thousands of Syrians have actually moved back. We are supposed to believe they willingly returned so that Assad could kill them?
The truth is Aleppo is being rebuilt. Christians celebrated Easter there this spring for the first time in years. There has been no slaughter once al-Qaeda and ISIS’ hold was broken. Believe me, if there was a slaughter we would have heard about it in the media!
So now, with the Syrian military and its allies prepare to liberate the final Syrian province of Idlib, Secretary of State Mike Pompeo again warns the Syrian government against re-taking its own territory. He Tweeted on Friday that: “The three million Syrians, who have already been forced out of their homes and are now in Idlib, will suffer from this aggression. Not good. The world is watching.”
President Trump’s National Security Advisor, John Bolton, has also warned the Syrian government that the US will attack if it uses gas in Idlib. Of course, that warning serves as an open invitation to rebels currently holding Idlib to set off another false flag and enjoy US air support.
Bolton and Pompeo are painting Idlib as a peaceful province resisting the violence of an Assad who they claim just enjoys killing his own people. But who controls Idlib province? President Trump’s own Special Envoy for the Global Coalition to Counter ISIS, Brett McGurk, said in Washington just last year that, “Idlib province is the largest al-Qaeda safe-haven since 9/11, tied to directly to Ayman al Zawahiri, this is a huge problem.”
Could someone please remind Pompeo and Bolton that al-Qaeda are the bad guys?
After six years of a foreign-backed regime-change operation in Syria, where hundreds of thousands have been killed and the country nearly fell into the hands of ISIS and al-Qaeda, the Syrian government is on the verge of victory. Assad is hardly a saint, but does anyone really think al-Qaeda and ISIS are preferable? After all, how many Syrians fled the country when Assad was in charge versus when the US-backed “rebels” started taking over?
Americans should be outraged that Pompeo and Bolton are defending al-Qaeda in Idlib. It’s time for the neocons to admit they lost. It is time to give Syria back to the Syrians. It is time to pull the US troops from Syria. It is time to just leave Syria alone!
This week President Trump signed the 2019 National Defense Authorization Act, increasing America’s war budget to a whopping $717 billion. For comparison, this is roughly equal to the next 11 highest military budgets combined.
In fact, the $107 billion increase from last year alone is roughly equal to the total military spending of Russia and Germany together.
Congress isn’t done spending taxpayer money yet though. Next up is a spending bill that will fund the Departments of Labor, Health and Human Services, Education, and Defense, because the Pentagon apparently can’t get by with a humble $717 billion. This will be the third “minibus” to pass Congress in 2018, the result of which has been the US running its highest deficits in years.
Of course reckless Federal spending isn’t anything new. What is particularly noteworthy about Congress’s recently behavior is that it has now become extremely efficient at passing these spending bills.
Congressional budgets are broken up into 12 different bills. When this next package clears the Senate – as expected – it will have passed 9 of the 12. As Axios notes, the Senate “has already passed the majority of spending bills by early August for the first time since 2000.” Should Congress continue on this pace and complete all 12 budgets by October, it will be the first time this has occurred since 1996.
None of this is surprising. As Ryan McMaken noted prior to the 2016 election, no one spends money more liberally than a Republican-controlled Federal government. Ideas like fiscal responsibility (and political decentralization) makes for great rhetoric in a political minority, but are extremely inconvenient when in a position of political power.
What makes this all the worse is that the GOP’s fiscal irresponsibility will inevitably result in blow back for some of its better policy victories, such as last year’s tax cuts.
Already progressive outlets are trying to peg last year’s reforms as the reason for historically high deficits, even though tax cuts have (unfortunately) increased government revenue. As such, when the Democrats next find themselves in political power, we can count on a push for tax increases to address America’s fiscal ills – likely while advocating for a new list of new government programs.
This cycle will continue to play out until the power to spend is taken away from Washington. The question is whether it will be due to a debt and monetary crisis, or pro-active restraints placed on it from the states.
Caitlin Long, a 22-year Wall Street veteran and a leader in the cryptocurrency sphere, recently took to Forbes to write about the pros and cons of the Intercontinental Exchange (parent of the New York Stock Exchange) announcement that it is building "a new ecosystem for cryptocurrencies." As she explains, while this is a major leap forward in the "normalization" of crypto, she has some concerns about what a growing role for Wall Street in the industry:
Bakkt is yet more evidence that incumbent institutions are increasingly taking the “join ‘em” approach to cryptocurrencies, as explored in Part 1 of my 3-part series about the building rivalry between cryptocurrencies and Wall Street. Bakkt could bring many positives to cryptocurrencies:
it will likely attract more institutional investors to cryptocurrencies,
it may solve the custody problem that has so far kept large institutions from investing in the cryptocurrency asset class due to the absence of a qualified custodian, which the SEC requires for investment advisors that manage $150 million or more,
it may help regulators become more comfortable with the sector to see ICE involved, and
most importantly—it will probably attract corporate issuers to raise capital using the Bakkt ecosystem. Cryptocurrencies offer issuers the prospect of covenant-free and preference-free capital at low cost. Investors have proven their willingness—rational, in my view—to trade standard investor protections in return for the low friction costs involved with cryptocurrencies—there are no underwriters, trustees, transfer agents, exchanges, custodians, clearinghouses or central securities depositories involved in cryptocurrency issuance, and—very importantly—cryptocurrency trades settle instantly and with no counterparty risk. Moreover, issuers incur only a small percentage of the costs of being a public company, such as investor relations costs, proxy solicitation costs and the significant compliance costs related to public-company financial reporting and auditing. Additionally, cryptocurrency issuers can repurchase coins or execute a tender/exchange offer much more efficiently than for traditional securities.
I doubt it will be very long before major corporate issuers join Telegram and Eastman Kodak in raising capital via these markets. This is the good type of financialization—attracting new investors to the networks, each of whom (in proof-of-work blockchains) makes the networks more secure by bringing new computer resources to the networks, directly or indirectly on their behalf—and that, in turn, makes the networks more decentralized, resilient and immune to attack.
Kudos to ICE for being first!
But ICE’s news also has downsides. As explored in Part 2 of the 3-part series just two days ago, Wall Street's only shot at controlling cryptocurrencies is to financialize them via leverage—by creating more financial claims to the coins than there are underlying coins and thereby influencing the underlying coin prices via derivatives markets. It’s pretty much impossible at this point for anyone to gain control of the Bitcoin network (and likely the other big cryptocurrency networks too), so Wall Street's only major avenue for controlling them is to financialize them via leverage.
The financial system has perfected the art of leverage-based financialization, unfortunately, and ICE’s announcement about plans to launch a regulated, physical bitcoin futures contract and warehouse (subject to CFTC approval) in November means leverage-based financialization is likely coming to bitcoin in a big way.
This is exactly what I’d warned of in Part 2:
“As cryptocurrency markets develop further, here’s what I’ll be on the lookout for: financial institutions beginning to create claims against cryptocurrencies that are not fully backed by the underlying coins (which could take the form of margin loans, coin lending / rehypothecation, coin-settled futures contracts, or ETFs that don’t 100% track the underlying coins at any given moment). None of these are happening in the market yet, though.
“So far, regulators have only allowed bitcoin derivatives in cash-settled form among major derivatives counterparties. While cash-settled derivatives can affect the price of the underlying asset, the magnitude of the impact is lower than the impact if derivatives were settled in an underlying that is “hard to borrow” or “special” (using securities lending parlance). Bitcoin is especially “hard to borrow” so a requirement to deliver the underlying bitcoins into derivatives contracts would amplify bitcoin’s price fluctuations.
“Eventually it’s likely regulators will approve bitcoin-settled derivatives among major derivatives counterparties. At that point, banks will be looking to borrow the underlying bitcoin—and that’s when the custodial arrangements made by institutional investors will start to matter. Will custodians make their custodied coins available for borrowing in “coin lending markets” as they do with securities lending today? Or will they deem the cybersecurity risks of lending coins (which entails revealing private keys) too high relative to the extra return available for coin lending? And will institutional investors even allow coin lending by their custodians? Regardless, when bitcoin-settled derivatives appear on the scene, it’s very likely that cryptocurrencies will be “hard to borrow” for quite some time because HODLers (long-term holders) own most coins and rarely use custodians.” (emphasis added)
Why does this matter? Bitcoin has algorithmically-enforced scarcity, and that’s a big part of what gives it value. If Wall Street begins to create claims to bitcoin out of thin air, unbacked by actual bitcoin, then Wall Street will succeed in offsetting that scarcity to some degree.
Read the rest of the article here.
For more on this topic, listen to Cailtin Long's talk at our recent Future of Money conference in San Francisco.
Americans are being told that China's currency manipulations are causing harm to its trading partners, America being the main victim. Nothing could be further from the truth. China's currency manipulations certainly cause harm, but to China itself!
No country can cause harm to another by adopting any economic intervention. All economic interventions cause harm only to the country that adopts them. This applies to subsidies of home industries, quotas restricting import volumes, tariffs imposed on imports, and currency manipulations.
A nation typically manipulates its currency by giving more of its own currency in exchange for the currency of other countries. Thus foreign importers can buy more goods per unit of currency exchanged. In other words, if the free market exchange rate between the dollar and the yuan is six yuan per dollar, an importer would be able to buy goods costing six yuan by tendering one dollar. If the Bank of China arbitrarily decides to boost imports, it can give eight or ten yuan for each dollar presented. Chinese goods drop in price on the American market.
Protectionists such as President Trump view this as harm, but where exactly is the harm? A Chinese good that previously cost a dollar now may be purchased for sixty or eighty cents. Our American standard of living goes up at China's expense! The extra money in Americans' pockets may be used to consume or invest more. This is a very strange definition of harm.
The real harm occurs in China. The Bank of China sets off price inflation in its own country. It may try to mitigate this inflation by raising the interest rate on its own debt in order to withdraw the extra yuan from circulation. This is known as "sterilization". It then appears as if China has achieved greater exports with no price inflation. However, China's debt rises. Eventually holders of Chinese debt will desire to draw down their yuan-denominated debt. Demand for yuan for spending purposes will increase. At that point China will be faced with a dilemma. Either it can raise the interest rate high enough to entice enough marginal holders of debt to roll over their holdings or it can print yuan. The former causes a recession and the latter causes price inflation.
There is no such thing as a free lunch or an economic intervention that causes harm to others and not one's own country.
Calls for civility in politics are nothing new, and the incident involving White House spokesman Sarah Sanders at a restaurant has yielded plenty of smoke but little heat from both phony sides of this non-debate/non-issue.
I suppose we should be happy when property rights become part of the conversation. It's healthy when our Left progressive friends develop a situational private property ethic. Of course property owners have the unfettered right to remove people or refuse service. And of course we should all be civil with those who don't share our views. The day to day interactions that make any society at least tolerable, if not healthy, comport with customs and mutual-self interest, not positive laws.
But liberty requires property, and civility requires civil society. When politics and the state serve as the chief organizing principles in society, property rights and social cohesion necessarily suffer. Incivility is a feature, not a bug, of a highly political society. It is also a feature of an America where far too many things are decided by the federal government or its super-legislative Supreme Court.
What kind of healthy society devolves into cheering and jeering over judicial decisions, decisions swung by just a few judges voting one way or another? Should 320 million people have to worry so much about 5 or 7 Supreme Court justices?
It's hard to argue for civility in winner-takes-all political scenarios. In fact it's a recipe for hyperpartisanship, "othering," and tribalism. It's senseless to lament a loss of civility and then argue for overcoming our differences by voting harder and suing each other more.
Ludwig von Mises witnessed the collapse of the Habsburg civilization, the rise of Nazism in Austria and Germany, and two horrific European wars-- a series of events far beyond mere incivility. His answer to actual barbarity was real liberalism, distilled in its purest form to one word: property. "If history could teach us anything, it would be that private property is inextricably linked with civilization," Mises tells us in the aptly-titled Omnipotent Government.
But property is not part of the liberal program today; on the contrary, private ownership is under serious attack not only among rising "democratic socialists" like Alexandria Cortez and Bernie Sanders but also by protectionist and mercantilist forces in the Trump administration.
In fact only libertarians believe in full ownership--i.e. full control-- of private property. This is hardly an edgy argument at this point; Murray Rothbard made it 50 years ago. But nobody in politics or media actually believes this or argues for it. In the context of real estate, full property rights would require no property taxes, no zoning, no permits or building codes, complete freedom to alienate or sell at will, and most of all full control over who enters and who is required to leave. This kind of private property is not available to cake bakers or quaint southern restaurateurs.
America slowly but surely lost her sense of robust private ownership, the soul of a free society. It happened through the tax and regulatory state, by overturning the Lochner case and jettisoning economic substantive due process, through absurd readings of the Commerce Clause, through the creation of wildly extra-constitutional administrative agencies, and through the creation of an inferior form of property called "public accommodations."
By giving up property we gave up liberalism and civil society. By insisting on political control over vast areas of human affairs we gave up civility for force.
Remember, politics is zero sum. The restaurant owners view Sarah Sanders as a threat, as someone who is going to cause them harm if her (Trump's) administration prevails. That the owners acted absurdly is not the issue, nor is the incoherent argument that Trump somehow is beyond the pale relative to past presidents. The scene at the Red Hen restaurant was the result of the owners' not-unjustified perception that the US political system vanquishes people. To avoid being vanquished they must vanquish Trump, at least in their eyes.
Ideally, when asked to leave by the proprietors of the restaurant Ms. Sanders simply should have shrugged her shoulders and left quietly. Which is apparently what she did, although reportedly she was followed and harassed at a restaurant down the street. What's unfortunate is not merely the twitter incivility that followed, or the nasty news articles clamoring about a brewing civil war, but rather our blindness in understanding where "democracy," politics, and disrespect for private property lead.