Power & Market

CNBC’s Version of the Fed's 2% Inflation Target

02/20/2023Robert Aro

On Saturday, Dr. Mark Thornton published a 3-minute recording for Minor Issues podcast on The Fed’s 2% Inflation Target. It had the usual honesty, integrity and simplicity readers of the Mises Institute are accustomed, with the introduction reading:

Mark Thornton explains the target as another smokescreen that was originally intended to stabilize monetary policy, currencies, and exchange rates, but has become a justification for inflation and central bank manipulation.

As if in response, two days later CNBC published The curious history of the Federal Reserve’s 2% inflation targeting, explained. Stark is the contrast:

The 2% inflation target is key to the Federal Reserve’s vision for stable prices in the U.S. economy, according to the Federal Reserve Bank of St. Louis.

Someone is not telling the truth.

Either central banks use the 2% target to deceive the public into their various anti-capitalistic interventions, for public detriment; or, they use 2% as a planning tool to achieve an ill-defined notion of “stable prices” for the public good.

Past and current successes at meeting the 2% target appear to have no bearing on its continued use. However, it is the origin story which reveals over 30 years of deception.

But, “the 2% inflation target, it’s relatively arbitrary,” Josh Bivens, director of research at the Economic Policy Institute, told CNBC.

CNBC correctly sources the arbitrary 2% target to New Zealand, who adopted it in 1989. They found PhD holder Arthur Grimes, of Victoria University, who happily takes credit for one of the worst, if not the worst, economic policies ever.

As his story goes:

In the late 1980s, New Zealand was facing incredibly high inflation when freshly minted Ph.D. economist Grimes started his work at the central bank, which at the time was not independent from the government.

“We were saying, ‘OK, if we have independence, what should we target? Interest rates or the money supply?’” Grimes said.

“And I just one day, I said, ‘Well, actually, what are we trying to achieve? We’re trying to achieve price stability. Why don’t we just have an inflation target?’”

Our fate was sealed.

With no regard to anything that at least could substantially be defended, it was the whimsical fancy of a “freshly minted” PhD holder who came up with the idea. We’ll never know where we’d be today if they fought high (price) inflation by simply stopping the manipulation of interest rates and the money supply, as they could have done.

Unfortunately, the idea of 2% spread in popularity across the world, where as recent as 2017:

… some economists wrote a letter to the Federal Open Market Committee, making the case for a higher target.

They even cite a professor from John Hopkins who wrote:

There’s no evidence that 3% or 4% inflation does substantial damage relative to 2% inflation.

Rather than mainstream economists, media, or policy makers asking serious questions about the 2% strategy, we get continued support of the conspicuously false narrative. With reported Consumer Price Index figures much higher than anyone wishes to see, any memories of wanting a high inflation target becomes laughable.

To add insult to injury, CNBC concludes that now, in “post-pandemic normal,” central banks are coming under scrutiny for inflation targeting. Despite the fact that in 2020, I wrote about that exact topic in The Origins of the 2 Percent Inflation Target, or that Austrians have been writing about inflation for over a century before me. Yet we should never be surprised. A society who uses dishonest money is, by definition, a fraudulent society. This deception gets interwoven into the very fabric of all our institutions and then permeates across all levels of our interactions with each other. We must never celebrate capital destruction or economic absurdities. This is an origin story that should only be lamented.

Crypto Custody… At the Fed?

01/23/2023Robert Aro

The idea that billionaires would gather behind closed doors and discuss the fate of the world is no longer conspiracy. The more you read, the more you’ll see. The plans are laid out in plain sight.

Take a look at this chart from the World Economic Forum (WEF) itself. Notice anything strange (hint: top right)?

Central Bank Digital Currency (CBDC) was undoubtedly on the agenda at this years’ meeting in Davos. Here is where one must maintain a keen eye. When they discuss risks surrounding cryptocurrency, like custody, they provide neutral points and maintain an air of uncertainty. Per the chart above, they’re not stating a conclusion, but merely showing how risk is reduced the higher up one goes on the scale.

Self-custody was once the safest way to store your crypto. Looking at this chart, if a central bank offered custody of “your” CBDC, it would offer an even higher measure of security.

They’ll try to convince you by claiming they spent a lot of money, time, and expertise exploring the issue of digital money for the “public’s interest.” Nonetheless, no different than a scientific research paper, we must ask, who funded the project?

Over the past year, an interdisciplinary research team funded by the Bill & Melinda Gates Foundation…

If Bill Gates can influence the future of CBDCs the same way he has the scientific, medical, and drug market, then we’re in for something spectacular in the future.

And this future could be just around the corner. According to one of the experts at the World Economic Forum:

Over the next four years, we should expect to see many central banks decide whether they will use blockchain and distributed ledger technologies to improve their processes and economic welfare.

Four years from now seems a lifetime away, especially when most people in the wealthiest nations on earth are living paycheck to paycheck, struggling with an ever-increasing cost of living, and very little about the future looks promising. Yet, one day, CBDCs will be implemented.

It’s all part of the plan. Literally, the WEF has the Centre for the Fourth Industrial Revolution, where, amongst other things they’ve:

…built a global community of central banks, international organizations and leading blockchain experts to identify and leverage innovations in distributed ledger technologies (DLT) that could help usher in a new age for the global banking system.

The plan is progressing quite nicely too! They have no problem saying:

We are now helping central banks build, pilot and scale innovative policy frameworks for guiding the implementation of DLT, with a focus on central bank digital currencies (CBDCs). 

The difficulty is that as of yet, these ideas are still intangible to the public. There is currently no functioning Fedcoin. If we are cashless, it is only by choice. Individuals cannot hold a deposit at the Federal Reserve.

But just because the world looks like this today, doesn’t mean it will look like this tomorrow. Everything the WEF publishes, these meetings in Davos, and whatever the response to the next crisis will be are all designed to move the masses away from liberty, freedom, privacy, security, and autonomy, to be handled by another. They market whatever it is they’re doing as a public service. The reality is anything but. Society has seen this before, many times and in many forms.

Unfortunately, by the time CBDC hits the front page, by the time society has become officially cashless, and by the time you're forced to accept a salary, or pay debts in Fedcoin, held in custody at your local Federal Reserve branch, it will be too late. It’s like waiting for a tornado to touchdown on your front porch; you know it’s coming. It’s just a question of how bad it will be, whether you’ve prepared for it, or whether you’ve left town completely.

Counterfeit Inclusivity

11/22/2022Robert Aro

In a recent speech, one of the lesser-known Fed Governors, Philip N. Jefferson, discussed the importance of having a home:

Beyond location, a home provides both basic needs, such as shelter, and invaluable benefits, such as a sense of personal safety and dignity. It is a refuge in which our minds and bodies can recuperate and regenerate so we are prepared to participate in all aspects of life, including the next day's work. The costs of living in disadvantaged areas or of dealing with financial hardship can be seen in all areas of life. Higher stress, the frequent necessity of working more than one job, the absence of benefits, and the time and money spent commuting—all these exact a financial and psychological toll.

On some level, he must understand that most Americans are under tremendous financial hardship, given the increase to both the cost of living and interest rates.

He asked the question:

What can the Fed learn from research on opportunity and inclusive growth?

Then tried to elaborate further what this meant:

The better we understand the channels that affect the health and function of the overall economy, the better we can calibrate our policy decisions to deliver on our dual mandate.


In pursuing its dual mandate, the Federal Reserve is essentially trying to foster and maintain the conditions in which the economy and all its participants can thrive.

And again:

Pursuing our dual mandate is the best way for the Federal Reserve to promote widely shared prosperity.

For well over a hundred years the Austrians have documented the economic problems a currency monopoly creates. Even beyond the mechanics of money creation lies moral, ethical, and legal considerations. The summary to Bastiat’s The Law, provides a succinct account:

The question that Bastiat deals with: how to tell when a law is unjust or when the law maker has become a source of law breaking? When the law becomes a means of plunder it has lost its character of genuine law. When the law enforcer is permitted to do with others’ lives and property what would be illegal if the citizens did them, the law becomes perverted.

Bastiat, as one of the proto-Austrians, or predecessors to the school, shared countless ideas which have always remained relevant. Hayek built upon this idea, explaining one of the problems with central planning:

The economic planning which was to be the socialist means to economic justice would be impossible unless the state was able to direct people and their possessions to whatever task the exigencies of the moment seemed to require. This, of course, is the very opposite of the Rule of Law.

What the Fed has successfully done over the last century is normalize one of the biggest crimes of the century: Counterfeiting.

Not a day goes by where the Fed is not mentioned on all business channels. Whether it’s CNBC, Bloomberg, on TV, or in print, a significant amount of effort goes into talking about the Fed, what they will do next, and how they may help or hinder the economy. Mainstream economists seem to revere the Fed, with the institution being widely incorporated into their dogmatic beliefs.

But let’s never forget: The Fed is a counterfeiter.

Should one individual try to pass even $100 of fake note as legal tender, they may face grave punishment. And depending on how large the scheme, the individual could face consequences stiffer than murder charges. Yet, when the Fed prints billions to trillions of dollars, not one in a thousand economists think anything of it. If anything, they’ll applaud the inflationary policy.

Like democracy through the barrel of a gun, or dropping a bomb for freedom, the words and actions of a central planner are usually diametrically opposed to each other. If the Fed was serious about helping the poorest members of society, wanted to ensure more “inclusivity,” and really wanted Americans to know the joy of home ownership and the pursuit of the American dream, then the best thing it could do is to stop everything it is doing today. If they really cared, they’d surrender to the rule of law, and not the law of the central planning authority.

Congress Begs the Fed

11/03/2022Robert Aro

Ron Paul(R) wants to End the Fed. Elizabeth Warren(D) begs the Fed, along with Bernie Sanders(I) and nine other Congress persons who signed a Halloween dated letter to Fed Chair Jerome Powell(R), scrutinizing his intent to keep hiking rates.

Incidentally, a few days ago Sherrod Brown(D) also wrote to Powell pleading for market intervention. It seems those who normally benefit from the Fed are starting to feel the weight of the inevitable economic crisis ahead. Congressional requests to the Central Bank remind us this is not the America of the Founding Fathers.

We are writing to express concern and request additional information about the implications of the Federal Reserve’s (Fed’s) most recent economic projections, its intention to continue raising interest rates at an alarming pace, and your disturbing warning to American families that they should expect “pain” over the coming months as the Fed takes “forceful and rapid steps” to “get supply and demand back into alignment…by slowing the economy.”

Yesterday, the Fed did what most expected of them and raised rates by 75-bps.

The concerns from Congress are many, but what stands out are some of the quotes used in the letter, taken from a Washington Post article:

…a growing group of economists from the left and the right arguing that the Fed is braking the economy too hard.

Understanding the problem with the above is liberating to the mind. The problem begins with the use of the left and the right since they’re both ill-defined yet popular words.

Personally, “the left” invokes ideas of wokeism, progressives, socialist, the mainstream media, social messaging. But I’d also classify neo-cons and war hawks as the left, because they too feed off the government and embrace coercion . I’ve never been quite sure what “the right” is or how far right it gets. It’s confusing when socialists swear Hitler was far-right, considering he was a socialist dictator who forcibly implemented what is called “socialism.”

Arriving at a succinct definition, or any clear delineation between the left and the right is not easy. Even worse, what side of the aisle does one belong to if they just want to be left alone?

Once the problem with the left/right is exposed, a person is free to think along the lines of more pronounced ideas, such as individualism vs. collectivism, voluntary vs. involuntary, or capitalism vs. socialism/interventionism. One can start thinking like a praxeologist, concerning themselves with human action, to arrive at interesting conclusions like the most rational way to organize society is through a free and unhampered market.

Or one can understand that the belief in a benevolent central bank who holds a currency monopoly is an economic absurdity, no different than Keynes’ animal spirits or velocity of money. Of course, great societal harm is done through the Federal Reserve since the Fed distorts the price and profit mechanism, interferes with the structure of production, and causes the boom-and-bust cycle.

Economists may affiliate with a political party or hold personal ideas which generally classify as being left or right. However, as the most honest way to organize the means of production on a planet with scarce resources, where everything is bound by real-world factors such as the passage of time and stages of production, there is little room for an economic analysis considered left or right.

When Senator Warren and Co. cite quotes from the Washington Post like:

Moreover, as central banks around the world simultaneously pursue aggressive interest rate hikes “in a precarious economic experiment that has never been tried before,

…it shows how little those in Congress know about economics and the history of central banking. The Fed has been doing this for a long time, and until this latest iteration of America’s central bank is ended, the Fed will continue to be the primary cause of our recessions and depressions.

China's Economic Success Is Due More to Quantity of Production than Innovation

10/31/2022Lipton Matthews

China’s investment in scientific research and technology intimidates U.S. officials who fear that the former’s emergence as an innovation powerhouse could eclipse America’s dominance as the leader in cutting edge innovations. According to the US National Science Board in a politically charged report, America is trailing China in critical components such as financing research and development, building novel technologies, and patents for innovative systems.

The findings indicate that China accounted for 29 percent of the global expansion in research and development between 2000 and 2019, relative to America’s 23 percent. Read in geopolitical terms the report paints an unflattering image of innovation in America; however, a broader dissection of the data reveals that China is still struggling to close the gap with the US. China is a major player in patent filings, yet Chinese patents have attained only one-third the quality of non-Chinese patents.

In a publication exploring China’s capacity for innovation, the Atlantic Council notes that China scores poorly on primary indicators of innovation performance. Compared to America, China files a paltry 9.7 percent of patents abroad, in stark contrast to the former’s 45.3 percent. 

Patents in America also have a higher likelihood of approval with America’s grant ratio being 59.4 percent, significantly higher than the 39 percent of patents approved in China. Though the most relevant point is China’s lower rate of commercialization. Research institutions in China are responsible for 7.8 percent of China’s granted patents, but deliver an industrialization rate of 18.3 percent and a licensing rate of two percent.

American institutions however are better at commercializing research observing that in 2018, American universities were responsible for four percent of granted patents, but licensed 40-50 percent for commercial use. Some research suggests the proliferation of patents in China does not reflect scientific innovation, because only 11-19 of granted patents are inventive.

Further, notwithstanding the hype about Chinese researchers few are considered innovators in their fields when compared to American professionals. Evidently, China’s strengths reflect quantity rather than quality.

Moreover, China depends heavily on foreign expertise to cultivate local sectors. For example, China has produced a few big names in the pharmaceutical sector, though America continues its lead. Chinese manufacturers have yet to release breakthrough innovations that rival American supremacy and predominantly invest in generic drugs. Based on research figures, China remains a laggard, with only 9 esteemed life science and medical research centers, well below the 52 in America.

Global analyses show that China has few innovative companies that can compete on an international level. Additionally, a large portion of small businesses fixate on creating generic products at the lower end of the value chain, instead of innovating. China’s success rate for converting technologies into industrial applications is 15 percent, but in advanced economies it is 30 percent.

Another understudied problem facing China is the misallocation of research funds that succeed in undercutting innovation policies. In a new paper Koenig and co-workers argue that excessively funding research and development expenditure is unnecessary for fostering innovation and reducing distortions in the economy would be a better strategy for boosting innovation. Limiting these distortions would enable China to transition from the paradoxical status of a high tech, low productivity country to an innovative country with high productivity

According to Alexander B Hammer and Shahid Yasuf in a 2020 document published by the U.S. International Trade Commission, spending on research in China is incommensurate with significant gains in productivity. The researchers’ comment on China’s inability to escape the low productivity trap:

On the one hand, its firms have fielded major advances in areas such as image recognition using machine learning, digital payment technologies and mobile financing, 5G telecommunications, and quantum communications. On the other hand, despite official goals and unprecedented amounts of R&D spending, China has yet to realize what its government assumed to be concomitant productivity gains…The level of China’s TFP has been unchanged since 1981 at about 40 percent of the U.S. level.

Indeed, China appears to be a serious competitor to America’s dominance in innovation. However, despite improvements, China is yet to achieve parity with the U.S. and is primarily playing the role of a developing country aspiring to surpass America.

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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California’s Unemployment Fund is Insolvent, Far Surpassing Other States

08/22/2022Liam Cosgrove

I recently dug into our government’s convoluted unemployment insurance system. As is typically true with most government policy, any stone one decides to unturn is ripe with waste, fraud, and mismanagement.

In 1935, FDR (of course) created the first federal unemployment insurance program via the Social Security Act. The program created a national lending pool for states with insolvent unemployment relief accounts. It began by ‘incentivizing’ states to join the program and of course is now a required federal tax on all employers. 

Called the FUTA tax, it’s levied on business owners directly for each employee they have. The IRS makes clear on its website, “Only the employer pays FUTA tax; it is not deducted from the employee's wages.” Leaving aside the naive assumption that employees and customers will not share the burden of this tax, I can’t help but laugh at the rationale here: Private employers are, by definition, the greatest force combating unemployment. So, let’s punish them with a tax - reducing their ability to hire - and use it to incentivize not working!

During COVID, with unprecedented levels of layoffs amid government lockdowns and commensurate increases in unemployment stimulus, many state unemployment relief funds became deeply indebted to the national fund. Though none come close to California’s negative $19 billion balance

In a world where trillion-dollar spending packages are commonplace and each week another billion is sent to Ukraine, it’s hard to grasp what is actually a big number. To put it into perspective, the second most indebted state is New York at negative $9 billion. Look at how CA compares to its peers:

Yet another example of how your federal taxes are being used to bail out California.

According to the Congressional Research Service, if these debts are not repaid “states may face interest charges and the states’ employers may face increased net FUTA rates until the loans are repaid.” In other words, California business owners (who are already fleeing the state en mass) will soon face even higher taxes. The reality is, however, that CA will never be able to pay back this debt. It will likely come down to higher taxes for ALL business owners and some help from the Federal Reserve.

California has seen a substantially slower jobs recovery than most of the country (see LA below).

Maybe… just maybe… massive welfare programs that encourage people not to work and excessive taxes and regulatory headaches for business owners do not actually solve the problem.

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Chicken, Beef, & Bugs

08/15/2022Robert Aro

You know the economy is in trouble when a CNBC headline reads:

This was a good week for inflation numbers, but whether it can last is the big question

…citing the Consumer Price Index (CPI) increase by 8.5% and the Producer Price Index (PPI) increase of 9.8% from a year ago as a mild victory. However, the celebration came with a reminder that:

Fed officials will be watching closely to see larger trends in how inflation is impacting Main Street.

Yet, understanding how Main Street is impacted is an impossible task. Measuring the average price increase, for the average person, in the average city, has severe limitations. Then there are even more immeasurable elements like human suffering, capital destruction, and opportunity cost that also comes from centrally planning an economy.

Using the Fed’s own data, we can attempt to visualize how bad things are by looking at one of the few things many people still have in common, their love of eating chicken and beef.

According the Bureau of Labor and Statistics, who compiles data used by the Fed, the average cost of chicken breasts is up almost 32% from a year ago:

The average price of ground beef hasn’t increased as much, only 12% from a year ago, per below:

Of course these titles sound unintentionally humorous and highly arbitrary. In the case of ground beef, the Fed says this applies to: “Fresh regular 100% ground beef excluding round, chuck, and sirloin. Includes organic and non-organic. Excludes pre-formed patties.” Should one be so inclined to actually read the calculation method and average price data, it will quickly be obvious how inexact a science inflation calculations really are.

They categorize meats, poultry, fish and eggs together to arrive at a change in the CPI by only 11% from a year ago:

For those who abstain from eating meat entirely the average price of beans is up 17% from a year ago:

While not everyone is looking to buy a used car, pay tuition, owns a pet, or takes public transportation, everyone must eat food; and, by all measures, grocery bills, like the price of gas, remain elevated. The future shows little promise of sustained and long-term price decreases occurring anytime soon… or ever, since the Fed is pro-inflation.

Perhaps another sign of the times was from an article the World Economic Forum published earlier this year entitled:

5 reasons why eating insects could reduce climate change

Whether one eats chicken, beef, or chooses to eat bugs, we must remain cognizant of the fact that it never had to be this way. We should get angry when the mainstream media chooses to portray a CPI of 8.5% as good news, or worse, claim that:

Wednesday’s inflation numbers could take some heat off the Fed.

Remember no amount of positive CPI or PPI is necessary to support a functioning society. All these calculations attempt to do is capture how much the cost of living has changed from the month, or year prior, with the hope that it always goes up by a certain amount. For the planner, they’re okay with making life more expensive for you with each passing year, because they need to increase the money supply in order to pay for things not generally valued by the public, like wars, corporate bailouts and tax collector salaries. In their perfect world, they’d hope this to be gradual, so the public would never become aware of the perpetual loss of purchasing power.

The thing about a central plan is that it never goes as planned. If there is a silver lining, it’s the hope that this lesson in inflation will become a generational learning curve, much like price inflation, permanently entrenched.

Can a Libertarian Pragmatically Support Pax Americana? The Case of Freedom in Central and Eastern Europe.

07/30/2022Karol Mazur

The war in Ukraine has brought back the debate on international security among European countries, especially in the countries of the former Soviet bloc in Central and Eastern Europe. Most of these countries, such as Poland, the Czech Republic, Slovakia, Lithuania, Latvia and Estonia, broke free from the communist regime with the end of the Cold War and the collapse of the Soviet Union at the end of the 1980s. These countries began to build democratic structures with a relatively free market economy.

The shift from central planning economy to capitalist enrichment mechanisms and privatization has become a reality. In some countries that transformation unfortunately was done not in peace but in accordance with Jefferson's famous sentence that „the tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.”

A few years ago, before the war was started, Polish organization „Stowarzyszenie Libertariańskie” (Libertarian Association) wrote an optimistic statement about Ukraine:

We are witnessing a repeat from Lithuania, but on a larger scale. In the elections, Volodymyr Zelensky was elected president, whose political staff openly admits to libertarian ideas. (..) it is worth keeping your fingers crossed for the initiative and potential implementation of several libertarian postulates in the beautiful Ukrainian lands. 

After February 24, 2022, the discussion on security flared up again, also on the websites of European libertarians and supporters of the Austrian school of economics. In an interview with Dr. Michał Stępień from the Department of International and European Law at the University of Wrocław, published on the website of the Polish Mises Institute we read that:

The scale of armed aggression by Russia with the participation of Belarus against Ukraine since February 24, 2022 and the related scale of crimes against humanity, which is being committed by the Russian army, has meant that the previously used arguments of Russia, assuming that it is a defense of the Russian minority living in Ukraine and Georgia, is completely inconsistent with the actual situation witnessed by the international community. In the event of the occupation of Crimea, the Russian armed forces pretended not to be the armed forces of Russia. What the armed forces were, today is absolutely beyond dispute, so this trick is legally insignificant. In the case of the military operations undertaken on February 24, 2022, the armed forces conducting the military operations against Ukraine have been officially announced by the Russian authorities.

Support for Ukraine and words of encouragement come from libertarians for obvious reasons. However, the fundamental question that arises is whether, in such a situation, the libertarian can compromise using ideological pragmatism. Can we accept the fact, for the needs of the moment, that the domination of the United States within Pax Americana as a hegemon and gendarme of the world was and is necessary in this part of Europe to maintain civil liberties, free market, and to expand these aspects within the self-determination of newly liberated countries?

The European freedom perspective is closely correlated with the analysis of the imperial activity and policy of the United States, to which the former Soviet bloc states owe their freedom. So, does a European libertarian, e.g., a Polish libertarian, can and has to adopt the view that the involvement of the United States can serve to extend freedom? Paradoxically, this thesis is not as obvious as it might seem. After all, as a political movement, libertarianism believing in small government, is opposed to imperialism, unfounded aggression, and the destructive role of violence in human relations. Maybe some societes can take advantage of US hegemony, according to geopolitical rules, to expand their sphere of freedom, democracy and free market? The conflict in Ukraine, despite the obvious reasons on the side of the attacked Ukraine, seems to divide many libertarians. Libertarians, as we read in the principles of Libertarian Party:

...believe that war is justified only in defense. We are opposed to a draft. If a war is just and necessary, Americans of all backgrounds will volunteer to fight it. We believe that a draft enforced by law is no different from slavery.

Much has been written about international relations from a libertarian perspective (including classics of thought like Murray N. Rothbard and H.-H. Hoppe). But the European perspective of the libertarian movement seems to be a little different. This is probably because many European libertarians know historical aspects and realize that without the involvement of the United States, especially in their culminating moment, i.e., the presidency of Ronald Reagan, the countries of Central and Eastern Europe might still be in captivity and Russian dependence, like in Belarus or Chechnya for other example. 

Fear of the Russian Federation seems to be a natural determinant of the European libertarians' view of the collective involvement of Western forces in helping Ukraine. By the way of example; Polish libertarians expressed their indignation at the words of the famous psychologist Jordan B. Peterson speaking on the war in Ukraine. Peterson declared that he saw the conflict (war) as a clash of values. As we said libertarians' support for Ukraine seems obvious.

Various supporters of freedom seem to recognize this problem and support Ukraine by sending money and basic necessities. But is it enough? Does the role of commitment end there? Many freedom activists says that the case of Hong Kong should be a warning to the free world. The prospect of a libertarian Ukrainian state that breaks out of the gloomy Kremlin despot seems very tempting and possible. For example, Rainer Zitelmann sees opportunities for Ukraine, which may become an economically liberal state in which political currents of freedom thought can and develop.


This short and provocative reflection maybe open the great debate. The problem outlined here requires a broader attention to this issue throughout the Austro-libertarian community. If we have two or more agressive imperialist Leviathans, should we choose the lesser evil among them? What strategies of freedom should be adopted in the face of that kind of crisis? Are there any alternatives to imperial military alliances? What criteria for collective self-defense of states should be adopted from a libertarian perspective? The answers still remain open and we should not avoid them.

Congressional Term Limits: How Short Should They Be?

07/28/2022Ryan McMaken

Here's an interesting bit of new legislation coming from Congressional Democrats. Georgia Democrat Rep. Hank Johnson has introduced the "Supreme Court TERM Act." This legislation would

  • Establish terms of 18 years in regular active service for Supreme Court justices, after which justices who retain the office will assume senior status;
  • Establish regular appointments of Supreme Court justices in the first and third years following a presidential election as the sole means of Supreme Court appointments;
  • Require current justices to assume senior status in order of length of service on the Court as regularly appointed justices receive their commissions;
  • Preserve life tenure by ensuring that senior justices retired from regular active service continue to hold the office of Supreme Court justice, including official duties and compensation; and
  • Require the Supreme Court justice who most recently assumed senior status to fill in on the Court if the number of justices in regular active service falls below nine.

It's a both a court-packing bill and a term limits bill. It's unclear that the bill would pass constitutional muster under federal judges' current interpretations of Article III of the US Constitution. But, that probably doesn't matter since such legislation is unlikely to get through the Senate, given that Sen. Manchin of West Virginia has already said he would not support any court-packing legislation. 

The idea of Congress erecting term limits for the Supreme Court while doing nothing to create term limits for Congress is an impressive display of chutzpah for current members of Congress. After all, term limits for Congress have long been very popular, with the idea often commanding around 75 percent support from those polled. That's even more than the support for limiting the tenures of SCOTUS justices, which is apparently around two-thirds in support

Legislation limiting Congressional terms is also of unclear constitutionality, at least as far as current interpretations offered by federal judges go. But there's no reason why Congress couldn't put the wheels in motion for enacting Congressional term limits. The reason this hasn't happened, of course, is obvious. Those in Congressional leadership positions—the ones who determine what gets voted on—would be the most impacted were such measures adopted. 

But how much would term limits affect the average member of Congress? 62 members of the Congress over the years have served more than 40 years in Congress overall. 10 members of the Senate have served more than 40 years in the Senate alone. 32 members of the House of Representatives have served 40 years in the House alone. 

It's a fairly safe bet that most members of the public would support term limits set at well below 40 years. But how much lower? Not all members are in there for these long multi-decade periods. What is the average tenure for a member of Congress? 

Well, according to a July 2022 report by the Congressional Research Service

The average length of service for Representatives at the beginning of the 117th Congress was 8.9 years (4.5 House terms); for Senators, 11.0 years (1.8 Senate terms). 

So, setting the term limit for members of the House at, say, 12 years of the House of Representatives and 18 years for the Senate, would not impact the "average member." But it would definitely eliminate those members of congress who serve decades in Congress. People like Mitch McConnell or Chuck Schumer or Nancy Pelosi would be long gone. Even if these 3 people had served 12 full years in the House and then moved to serve 18 years in the Senate, they still would have used up their full terms years ago. 

Do Members Stay in Congress Longer in the 21st Century? 

Of course, we haven't approached the question of whether or not term limits are a good thing. It's not at all obvious that term limits would make Congress more laissez-faire, less corrupt, or less warmongerish. It could be that term limits would just bring in a larger number of people who are pretty much like the current sorts of people who inhabit Congress. Moreover, maybe in the good ol' days people actually served longer in Congress than they do now. Maybe longer Congressional tenures would actually improve things? 

Well, it turns out that the average length of tenure of members of Congress has gone up considerably over the past 150 years. As noted above, the average tenure for the current crop is 8.9 years in the House and 11 years in the Senate, but those averages were much lower in the nineteenth century. As we can see, the average for Senators never exceeded 6 years until the late nineteenth century. It never exceeded 4 years in the House until around 1900. The overall trend has been steadily upward since then

Source: Congressional Research Service.

In other words, for the first 100 years of the Republic, the average length of so-called "service" in the Senate was one term, while it was less than two terms in the House. 

[Read More: "Repealing the 17th Amendment Won't Fix the Senate" by Ryan McMaken.]

Those could be due to many different factors. It could be due to the structure of political parties which was much different in the nineteenth century. Senators, of course, were generally chosen by state legislatures, and many senators came and went based on deals struck with state politicians. In any case, we do know that greatly reducing the average tenure of members of Congress would simply return average tenure lengths to what was common in the past. 

That's unlikely to "fix" Washington, DC. But holding Senators to a single term or a House member to 2 terms would not necessarily be a radical departure from the Congresses of the past either.