Power & Market
Growing US Debt Menaces Liberty and Prosperity
Congress’ top priority this fall will be passing legislation funding the government and avoiding a “shutdown.” As of this writing, it appears unlikely that the Republican-controlled House will be able to make a deal with President Biden and the Senate Democrats on a long-term spending bill. Instead, they will likely pass a short-term funding bill to give themselves more time to reach agreement on a longer-term bill.
Any bipartisan agreement is unlikely to reduce government spending or begin to pay down, or stop the growth of, the over $32 trillion national debt, which the Congressional Budget Office projects will grow by at least $115 trillion over the next thirty years. Instead, Congress and the administration will continue to pretend they are addressing the spending problem by “reducing in the projected rate of spending growth,” and other gimmicks.
The sad fact is both parties, along with a majority of the American people, are addicted to welfare-warfare spending. What little resistance there is to big government within the Republican party is likely to be further weakened by the rise of a new form of “conservatism” that advocates the use of government power—including deficit spending and increasing the federal debt — to advance conservative political and social goals.
The failure to take seriously the threat to the American economy caused by reckless federal spending is illustrated by the reactions to the credit rating agency Fitch’s downgrade of the US government’s credit rating. Instead of treating it as a wake-up call, government officials like current Treasury Secretary (and former Federal Reserve Chair) Janet Yellen dismissed the downgrade as “arbitrary and based on outdated data.”
One reason Yellen and others may be so blasé about the federal debt is that they believe the Federal Reserve will bail the government out by holding interest rate low enough to keep the federal government’s interest payments to manageable levels This is why, even though the Fed has been raising interest rates, the rates remain well below what they would likely be in a free market. However, the Fed knows it cannot go back to keeping rates at or below zero without causing price inflation.
Therefore the Fed will likely continue to raise rates for the next several months. The Fed will likely pause its rate increase next year in the hope of boosting economic activity to help President Biden’s reelection campaign. Former President Trump gave Powell an additional incentive to keep rates low next year by promising not to re-appoint him if he returns to the oval office.
Despite the Fed’s repeated interest rate increases, Americans are paying an average of $709 more per month for basic living expenses than they were two years ago. This is why credit card debt is over one trillion dollars. Adding more in private and public debt will increase pressure on the Fed to “do the impossible” - keep interest rates relatively low without creating price inflation. Eventually, the Fed-created debt-based economy will collapse as the dollar loses its reserve currency status. This will increase political divisions and may even lead to political violence.
Those of us who know the truth must make preparations to ensure the safety of ourselves and our loved ones and do all we can to spread the ideas of liberty. Creating a critical mass of people to reject the false promises of the welfare-warfare state is the only way to regain liberty without first suffering political and economic upheaval.
Government Medicine Is Creating More Physician Burnout
According to the American Medical Association, “Physician burnout is a long-term stress reaction which can include the following:
“Physician burnout is an epidemic in the U.S. health care system, with nearly 63% of physicians reporting signs of burnout such as emotional exhaustion and depersonalization at least once a week.”
“While many factors contribute to burnout, the burnout epidemic is often associated with system inefficiencies, administrative burdens and increased regulation and technology requirements.” One expert sums up the primary cause of physician burnout: “It’s been said that people don’t leave their jobs. They leave their bosses. But for physicians, physicians don’t leave their careers. They are leaving their inbox.”
At my own institution, the most common sources of dissatisfaction expressed by physicians are the electronic medical record (EMR), dealing with insurance companies, and other administrative duties that take physicians away from their patients. I will deal with each of these causes and demonstrate why the system – including the burnout created – is working as intended.
Contrary to popular belief, the EMR was not intended to make records easier to read, or to improve patient care. The EMR was created so that Centers for Medicare and Medicaid Services (CMS) could systematically and objectively deny payment for services. “If it wasn’t documented, it didn’t happen” has become the foundation for EMR. Physicians have been educated through mandatory indoctrination on how to document services to justify billing. Templates have been created to instantiate the mandatory documentation with a few clicks of the mouse. The result is pages of text that nobody ever reads. However, computers can scan the notes for the documentation and failure to detect the documentation provides CMS with an objective basis for denial of payment. Each service has multiple codes with higher code levels resulting in greater payment. There are requirements to achieve each level of code. What the administrators do not acknowledge, however, is that the value of the time necessary to properly document each level of code (to the physician) far exceeds the increase in payment. The physician time has zero value to the administrator, so the administrators constantly harangue the physicians to spend more time on each record in order to generate higher payment. Some administrators do not understand this phenomenon; some do understand it but do not care. No administrator ever suggests that the solution is for the physician to spend less time on each record in order to see more patients or spend more time interacting with each patient. Physicians are regularly graded by Press-Gainey surveys of patient satisfaction. There will NEVER exist a Press-Gainey survey for physician satisfaction with CMS.
The insurance companies have merely taken the lead provided by CMS although the insurance companies have a different twist. The insurance companies require pre-authorization for expensive services. They deny authorization for reasons known only to the insurance company. The stated reason is always that the service is not medically necessary. It does not matter what the physician thinks about the necessity of the service. An appeal process is available, but the process is made as lengthy and as unpleasant as possible. The goal is obviously to make the process so unpleasant that physicians will not pursue an appeal. The insurance company convinced me a long time ago, so I just document that the insurance company denied the service that I recommended. Many other physicians have the misconception that the barrier is lack of education or understanding, so that they can convince the insurance company of the rightness of the request. Their effort may even work on occasion, but the time and effort required will never be worth the result. If the existing treadmill does not reduce requests for services sufficiently, the insurance treadmill will just spin faster. Many physicians do not understand that the only way to win this game is to refuse to play it. There will NEVER exist a Press-Gainey survey for physician satisfaction with insurance companies.
Administrators claim to be very concerned about physician burnout. Their solution to physician burnout is to increase the administrative burden even further with questionnaires about burnout and mandatory education about burnout. The administrators will never acknowledge that the questionnaires and mandatory training are part of the cause of physician burnout rather than a solution. There will NEVER exist a Press-Gainey survey of physician satisfaction with the number of mandatory training sessions required.
What are the consequences of physician burnout? Physicians retire earlier or commit suicide. However, a decrease in the number of physicians solves more problems than it creates. The U.S. health care system pretends to eliminate the scarcity of medical services. It is not possible to actually eliminate this scarcity, so we have to pretend. Medical services appear to be “free” to the patient, but they are still scarce, so they are not actually free. One method of solving this imbalance between actuality and appearance is called rent dissipation. Rather than paying for services with money, patients pay for services with inconvenience, time waiting in lines, or time and effort travelling to services no longer available locally. Another method of solving the imbalance between actuality and appearance of medical services is to decrease the number of physicians who order such services. Fewer physicians translate into fewer services which translate into lower payments by CMS and insurance companies. Another benefit of earlier retirement of physicians (or suicide) is there are more positions available for the excess number of physicians trained each year by medical schools. As older physicians disappear, demand for post graduate residents increase, so the current imbalance between number of medical graduates and residency training positions can be reduced. Physician burnout is a problem for physicians, but it is a solution for CMS and other third-party payers of medical care. Given that CMS makes the rules, do not expect physician burnout to go away very soon. To paraphrase Lenin, physicians sold CMS the rope by which they are being hanged.
Greedflation on Stilts—or the Fed on Steroids?
A Los Angeles Lakers jersey worn by basketball legend Wilt Chamberlain is expected to sell for more than $4 million in a forthcoming Sotheby’s auction. Chamberlain wore the jersey in the fifth game of the 1972 NBA championship series between the Lakers and the New York Knicks, which was won by the Lakers. The previous record for Chamberlain memorabilia was set just a few months ago when another jersey worn by Wilt as a Philadelphia Warriors’ rookie sold for a mere $1.79 million. So what goes on here? Is the seller of the former jersey “greedier” than the seller of the latter jersey? Is this an instance of a new kind of inflation fueled purely by greed? Are sellers really able to arbitrarily raise prices in a single market or for the entire economy whenever their greed intensifies?
This “new inflation” called “greedflation” is an absurd explanation for the ongoing rise in prices that constitutes inflation. It rests on the assumption not simply that sellers are greedy—which we may grant—but that they inexplicably become progressively greedier over time. More importantly, it also leaves out of account the scarcity of the goods offered by sellers in relation to the preferences and money incomes of the buyers, that is, it ignores supply and demand. If Wilt’s Lakers’ jersey does sell for $4 million, it indicates that one and only one buyer was happily willing to pay this price because the value to him of this jersey exceeded the value of the $4 million or any other good or collection of goods he could purchase with the money. At any price lower than $4 million, there would have been more than one buyer and a “shortage” of the good, and the price would have been bid up to equalize demand to the single unit of supply. On the other hand, had the most eager bidder for the jersey had a maximum buying price of only $1 million, the seller—no matter how greedy—would not have been able to sell it for one penny more.
The point is that, like Wilt’s jersey, all goods are in fixed and limited supply at any moment in time and thus the same principle that determines an auction price, the law of supply and demand, applies to all the goods in the economy. In the case of consumer’s goods, the price of automobiles, oranges, tablet computers or any thing at all will be bid up to, but not higher than, the price at which the entire supply in existence is purchased by the most eager consumers, with the only units left unsold on retailers’ shelves or on dealers’ lots being those that the seller voluntarily withholds because he anticipates more eager buyers will show up bidding higher prices at tomorrow’s “auction.”
If not increasing greediness, then what has caused the rapid inflation of consumer prices that we have experienced in the U.S. up until recently? The answer once again lies in the law of supply and demand. In the aftermath of the COVID lockdowns, consumers generally were in a position to happily bid higher prices for most consumer goods because their money incomes had been inflated and the extra dollars now had a lower value relative to goods. And this had occurred because the Fed as the monopoly issuer of bank reserves and currency had greatly expanded the amount of money in consumers’ pockets and bank deposits to obscure the effects of the lockdowns and stay-at-home mandates. From February 2020 through April 2022 the Fed pumped a mind-boggling 6.5 trillion new dollars into the economy, increasing the money supply by a whopping 42 percent. Like an increase in the supply of all other goods and services, this explosive increase of the supply of money caused the “price” of money in terms of its purchasing power over goods to plummet or, in other words, for consumer prices to shoot upward. In the absence of the Fed’s reckless inflation of consumers’ money incomes, even the greediest sellers would have been unable to increase their prices.
Ginning Up a Fake China Threat
Critics of the increasingly bipartisan consensus of conflict with China face a difficult task. For the (fake) China threat is not a single concrete thing that can be pointed to or otherwise signified. Rather, as a manufactured thought climate produced by a series of interlocking incentive structures, like Kafka’s Castle it looms inscrutable but no less ominous.
Upon close inspection, however, the inner workings of the (fake) China threat reveal nothing new about the anatomy of the state.
First, it serves as a legitimating device, a new reason for the continually climbing defense budgets, new toys for generals and admirals, overseas bases, the meddling by comfortably ensconced state department officials in the affairs of other states, and the existence of an intrusive national security apparatus. Stoking the fear, representatives of the state spin conflicts they seek as looming threats to everyday Americans in order to justify their continued position of power over them, with a well-funded network of think tanks and the corporate press helping prescribe the acceptable limits of public discourse in order to marginalize dissent.
Second, the (fake) China threat serves as a convenient scapegoat for the end results of the bad policies Washington itself pursued. America deindustrialized? China’s fault. Millions of Americans hooked on drugs? China’s fault. The Saudis and Iranians don’t want the Americans around anymore? China’s fault.
Et cetera.
There is one element of truth to the (fake) China threat, however. That is, the existence of an independent China (or Russia) is a threat to Washington’s accustomed privilege of being able to do more or less whatever it wants wherever it wants.
But the existence of an independent China is already a fact.
Refusal on the part of Washington to accept it will cause more than theoretical problems.
GMU Economics Department Takes a Stand against the DEI Agenda in Academia
Nineteen current and emeritus members of the George Mason University economics department have taken a heroic stand against the attempt by Leftist faculty members and administrators to undermine American academia’s long-standing commitment to academic freedom and intellectual merit. Their Statement of Commitment to Academic Freedom and to Intellectual Merit forthrightly rejects the diversity, equity, and inclusion agenda of the Left and unabashedly upholds academic freedom, “the right of students and faculty to express any idea in speech or writing, without fear of university punishment, and secure in the knowledge that the university will protect dissenters from threats and violence on campus.” The statement also expresses unqualified support for the ideal of intellectual merit – "the right and duty of academic departments to hire and promote the most brilliant, creative, and productive faculty in their fields, and admit the most intellectually promising students, without pressures from the administration.” In polar opposition to the Left-Progressive ideal of diversity based on race, ethnicity, gender, religion, disability, etc., the statement’s signatories boldly insist that “viewpoint diversity must be celebrated.”
The statement would be more effective if it had been endorsed by the most prominent classical liberals on the GMU economics faculty, Peter Boettke and Tyler Cowen. I was surprised and dismayed that they failed to sign the statement. The statement would also have carried more weight had it named the specific ideology of those who are ruthlessly trying to suppress the ideals of academic freedom and intellectual merit in American higher education. That ideology is Left Progressivism, which now pervades most of America’s cultural, educational, and political institutions. Finally I found it ironic that a statement celebrating “viewpoint diversity” was posted on two blogs, Café Hayek and Marginal Revolution, neither of which include Mises.org on its “Blogroll” and “Blogs We Like,” respectively. Of all contemporary libertarian and classical liberal institutions, the Mises Institute has been and is the most vigorous, bold, and uncompromising in opposing the Progressive war on Western Civilization.
These minor misgivings aside, Dan Klein, who took the lead in drafting the declaration, and his fellow GMU economists who endorsed it are to be congratulated for standing fast against the Progressive onslaught and courageously affirming the core academic values.
Greater-Idaho Counties, Stand Your Ground
In the midterm election, Greater Idaho ballot referendums passed in 2 Oregon counties. Voters have passed ballot referendums in 11 of the 16 Oregon counties that would join Idaho under the current Phase 1 plan.
In May, Greater Idaho ballot referendums narrowly failed in 2 other counties. Greater Idaho would have expanded to the Pacific coast under the previous Phase 1 plan.
Once voters pass the ballot referendums, Oregon and Idaho state legislatures and the USA congress would have to pass bills to change these states’ border.
But another approach would be faster and stronger.
Oregon suburban and rural county legislators should just ratify a county-region constitution. Under a county-region constitution, suburban and rural counties’ residents would delegate state powers to a United Counties of Oregon government.
In a single ratification step in each county, county legislators would hyperlocally carve out a state-level government that’s chosen by majorities of its counties’ residents.
Secede from Progressive state government
In 2020, majorities of voters chose Trump over Biden in 26 of the 36 Oregon counties.
For Oregon’s constitutionalist counties, standing their ground but leaving Progressives behind would be simple. Just as the national Constitution created a United States of America, an exactly-analogous state constitution would create a United Counties of Oregon (UCOR).
Just as state legislatures ratified the USA constitution, county legislatures would ratify the UCOR constitution. The USA constitution became effective when ratified by a 2/3 majority of the states, which was 9 of the 13 states. The UCOR constitution would become effective when ratified by a 2/3 majority of the counties, which would be 24 of the 36 counties.
This would be surgically precise to a highly-useful degree. Metro areas have Progressive urban cores but typically span multiple counties, and different counties’ residents have different political preferences. This is true in Oregon:
- In 2020 in metro Portland, the Multnomah, Washington, and Clackamas County majorities chose Biden, while the Yamhill and Columbia county majorities chose Trump.
- In metro Eugene, the Lane County majority chose Biden. In this case, the Lane County residents who live outside of Eugene’s urban core could choose to leave Eugene's urban core behind to form a separate county.
- In metro Salem, the Marion County majority chose Biden, while the Polk County majority chose Trump.
Secession of freedom-supporting counties from the legacy Oregon state government to form a UCOR government would create for metro residents the freedom to stay in the same metro area but relocate to a freer county. In the new location, residents could still commute to their same jobs, and they would still be near to their local family members and friends. But they would delegate their state-level powers to a much-more-limited state government.
The former-monopoly legacy state government would suddenly have to compete with the adjacent UCOR for residents. Even now, when state residents have to vote with their feet by moving far away, Progressive state governments have been losing such competitions. Given freer choices within Oregon’s own metro areas, the Progressive legacy state government’s losses would accelerate.
At some point the mounting losses of residents and revenues would drive even many Progressives to offer at least some more freedoms. The race to freedom would be on.
Divide and limit all governments
A UCOR constitution modeled on the Constitution and having strong local support would provide a republican form of government:
- The UCOR government would have limited enumerated powers. Power should not be enumerated over schools. Parents as customers would drive needed, rapid improvement. Power should not be enumerated over professions. Customers should be free to buy services as freely as they buy goods. Customers would secure the lifesaving freedom to use existing drugs off-label. Enough customers would learn from professional reviewers, and all service producers would compete for these customers, so all services would improve.
- The UCOR government would have genuinely separated powers—legislative, executive, and judicial—and no delegation of legislative powers. Together, these rules make it illegal to operate rulemaking administrative departments and agencies and to operate administrative courts.
- The UCOR government would provide for enforcement of its rules on the government by having as sanctions various offsetting powers, which in the UCOR would be used. Strong local voter support, demanding accountability, would lead UCOR government people to use their constitutional offsetting powers against anyone in any government jurisdiction who violates a rule. Cumulatively, this would limit all government jurisdictions.
Legislators would just pass simple bills, executives would just sign bills and enforce the resulting laws, and judges would just opine on cases under the resulting laws. With legislators, executives, and judges each doing their own jobs, there would be no openings for staffers, advisors, or bureaucrats. All tradeoffs would get made by legislators and would be fully defined by the laws’ rules and sanctions. Legislators would get some tradeoffs wrong, so then they would just repeal those laws.
In republican-government release 1, the USA’s initially quite-limited government transformed the world. Under the world’s-lowest total taxes in all government jurisdictions, which through 1913 totaled just 4% to 8% of GNP, the USA’s world’s-freest people led the world to previously-unknown prosperity.
Republican-government release 2—constitutionally-limited state government, fanning out like wildfire to enforce constitutional limits throughout our governments—can be rolled out in any county region, at any time.
Constitutionalist Oregon voters keep showing their legislators that freedom matters a lot to them—that freedom decides their votes. Oregon county legislators would do well to listen and lead this simple, giant step up straightaway.
Gold Is Money: Everything Else Is Credit
Throughout the better part of 2022 there has been one question that has consistently, and predictably, popped up in conversations with my friends, clients and readers. Those who know me and are familiar with my ideas are well aware of my position on precious metals and the multiple roles they serve, so I can’t blame them for them for being curious whether I still “stick to my guns” in this era of irrationality in the markets and the economy.
Especially for those not versed in monetary history, which is regrettably the vast majority of the population, it is natural to wonder: “If gold is such a great hedge against inflation, why hasn’t it skyrocketed now that inflation is finally here?”
Well, there are a couple of reasons for that, some more obvious than others. The interest rate hikes that the Fed spearheaded and repeatedly escalated are the most straightforward explanation. At least that’s the answer most mainstream economists and analysts will give you. And it makes sense: If gold pays you no interest for holding it, then why not switch to something that does? This is the mindset of most investors and that weakens demand, which in turn drags the price down. That’s how the theory goes anyway.
If, however, we’re willing to examine the question a little more closely, we might begin by scrutinizing its premises. The question takes for granted that gold has underperformed this year. But has it really? If you’re saving, getting your paycheck and paying your bills in a currency other than the dollar, you’re likely to have a very different view on this issue. In euros, gold is up around 6.6 percent. In yen, it’s up 17.9 percent In Egyptian pounds is up over 45 percent. What this clearly shows us, is that perspective matters.
And for those that can see the bigger picture, that perspective is even clearer: Thinking about the gold price in terms of any fiat currency, not just the USD, is not really helpful. It’s not gold’s value that fluctuates, what fluctuates is the perceived and totally imaginary value of all these useless pieces of paper. After all, as all long-term, responsible precious metals investors know very well, there’s only one important trend and it’s an obvious one.
As I mentioned many times, I do not believe that short-term price considerations should play a pivotal role in the decision-making process of investors who hold gold for the right reasons and who understand why they do. What is important, however, is to look beyond the mainstream headlines and to be able to separate the signal from the noise. In our case, for example, one can find a million analyses and forecasts on gold’s outlook, all highlighting superficial dynamics and featuring simplistic arguments. Monetary policy projections are chief among them, and the narrative goes “Since we expect central bankers to do so and so, gold is projected to react in this way.”
Well, instead of trying to divine the intentions of central bankers, to guess what they’ll do and how it might affect the gold market, wouldn’t it make more sense to look at what those central bankers have actually done, rather than what they say? Cause what they did in 2022 speaks volumes: Globally, central banks accumulated gold reserves at a pace unseen since 1967, back when the dollar was still backed by the precious metal.
Consider this for a moment and then recall all their official statements and projections about the economy and how a recession is avoidable, about inflation and how it’s definitely, absolutely under control and about their faith in their own currencies. Feel free to draw your own conclusions about what’s coming.
Looking forward to the next year, it is clear that there are many reasons to be concerned. The conflict in Ukraine shows no signs of abating and all the preexisting problems it seriously aggravated can also be expected to linger, if not get worse. Inflation is set to continue to plague the real economy, no matter how hard government statisticians try to cook the numbers: Even if CPI goes down, real households will continue to feel the pain. There’s an abundance of supportive forces working in favor of gold and the dynamics are so striking that even the big banks couldn’t help but notice. In early December, Saxo Bank put out an “outrageous” price forecast of $3,000/ounce, in its most “extreme” scenario of a worldwide “war economy.”
While price gains will certainly be more than welcome for physical gold investors, the metal’s real value is likely to become apparent too in the months and years to come. As States get increasingly desperate and fail to find a way out of the fiscal, monetary and sociopolitical hole they dug for themselves, they are bound to get more aggressive, as they’ve always been known to do. Threats to financial sovereignty, government power grabs, increased monitoring and control over private assets and savings, are all likely to become more dire. And under these conditions, physical gold really shines, especially when it’s securely and compliantly held outside one’s own jurisdiction, as well as, outside the traditional banking system.
Go vote (But Only if You Want To)
It’s an even year in November, so we know what that means.
Tuesday’s election is rolling around and aside from the plague of attack ads on your television screen, oodles of political spam mail and yard signs, it’s time for everyone to start telling you how important it is to “get out and go vote.”
I remember these people in college. They’d spend all day on the concourse passing out t-shirts and obnoxiously screeching out of a megaphone at innocent pedestrians trying to avoid being late for class.
“Your voice matters,” they’d say. “This is your chance to change the world.”
Yet the same people didn’t necessarily approve of me using my voice when they realized it wasn’t being used to advocate for a socialist utopia.
It’s not just college students either.
Our Big Tech overlords Facebook and Twitter have both launched campaigns to encourage users in the United States to register to vote.
The platforms present messages on certain user's home screens, but not everyone gets them.
Low voter turnout
Why do these people feel the need to encourage others to vote anyway?
The typical excuse is that voter turnout is so low.
According to Statistica, voter turnout is higher than its all-time low in 2014, skyrocketing in 2018 potentially due to the contentious presidential election just two years prior. Despite being higher than any midterm election after the Watergate scandal, only 49% of eligible Americans voted.
A broken system
But if so many people don’t care enough to vote, why should they? I mean, can you blame them?
It doesn’t take a genius to see how our system is broken beyond repair. Politicians make promises every other year, and hardly any get answered. Nevertheless, they consistently manage to increase taxes, pass more invasive regulations and drive inflation through the roof.
And they might spend billions on unnecessary wars and drone strike a few innocent children overseas while they’re at it.
Both candidates always stink.
Politics has its way of weeding the good guys out and welcoming the truly sinister with open arms. And the good guys that manage to stay are either rendered powerless or become no longer good.
Maybe some people just want some peace and quiet. They want to turn off the news and disassociate with all the angry talking heads online. Maybe the system is utterly collapsing, but they want to maintain some semblance of sanity and live a good life in spite of it.
Is more people voting necessarily good?
Perhaps you’re different. Perhaps you want to take advantage of your opportunity to vote. Well, why would you ever want more people voting?
Unless you knew those people were likely to vote for who you want them to (and perhaps that’s who this “your voice, your vote” marketing is intended to target) how would that help you or the “greater good” of society in any way?
The more people that vote in the same election, the less your vote counts. If 100 people are registered to vote in an election and you add 900 more, the weight of your vote just went from 1% to .1%.
In real elections, we’re dealing with much larger numbers of course. The weight of your individual vote is small enough as it is. What’s your incentive for making it even smaller?
Are most people knowledgeable enough about politics?
I find the idea that the more people that exercise their vote the better the outcomes will be to be ridiculous.
This assumes that the masses are 1) knowledgeable about the way politics works and 2) have a good idea about the way politics ought to work.
Us humans have a tendency to specialize. We have a division of labor and that’s a good thing.
In “Human Society,” Ludwig von Mises wrote that “work performed under the division of labor is more productive than isolated work and that man’s reason is capable of recognizing this truth.”
We have a limited focus, so therefore we develop expertise in specific skillsets and subjects and we exchange the fruits of our expertise for the fruits of the expertise of others.
Is politics the exception? Absolutely not! Understanding the intricate details of political theory, law, political mechanics, public relations and political marketing is simply not something 99% of people have time to do.
A middle school civics class doesn’t make you an expert.
Do most people even care?
And even if we did all know how exactly how the political system works, would we all have a good idea about how it should work? Would we all be voting for the “right” intentions? Would be voting for the sake of the “common good”? I doubt it.
Most people, if they do vote, will probably vote for the option they believe will present the most immediate reward to them. They’re worried about raising their kids, making a living and taking care of their loved ones.
They’re not sitting around thinking about ideology or political theory, trying to determine which policies will be best for everybody or which political system is the most morally correct.
They’ll vote for whatever they think will sustain their lifestyle or improve it, even if that means taking away from others, future generations included.
To the ideologues
Perhaps this is to the disdain of the believer in Democracy. But perhaps it also speaks to how ineffective Democracy is.
You’ll be pleased to know that I’m not suggesting any alternative political system. I just don’t believe in politics, and if I’m going to use it, it will be only in self-defense. I'll use politics from the bottom-up to protect myself from politics and to keep it from encroaching on my family as much as possible.
I’ll never use it to intentionally take from someone else or who hasn’t intentionally taken from me and I’ll never use it to impose some ideological system on millions of people.
If I do go vote, that’s what I’ll vote for.
If someone else believes they can effectively defend themselves to a certain degree by casting a vote, they’re welcome to do so too. I might even encourage them to do so, but I’m not going to go out of my way to present that message.
But to the people who want to take something from me, impose restrictions on my family or shove your ideas down my throat, I absolutely do not encourage you to vote. In fact, I wish you wouldn’t.
Gold Is the Solution for Financial Crises, Not their Cause
The Great Depression, Great Inflation I, the Financial Crisis, and the unfolding Great Inflation II have all been caused and perpetuated by hyperactive Progressive government. In the past crises, holding gold would have conserved savings and provided added returns.
The Great Depression came about when the Progressives’ newly-spawned Fed, having first greatly increased the quantity of money throughout World War I, again increased the quantity of money throughout the 1920s, by 62 percent (for details on figures, see table below). There was considerable innovation-driven growth already, but this new money created out of thin air created an unsustainable boom.
Progressive regulation of utilities, which at the time were high-tech and high-growth, sparked a stock market crash. Projects failed, businesses failed, and banks failed, ruining borrowers. Both parties‘ politicians then blocked product prices and wages from being decreased in sync, which had been done throughout the remarkably-similar 1839-1843 crisis deflation and had allowed workers to keep working and investors to keep earning returns. Investors saw that the Progressive, newly-hyperactive government could eliminate their returns or confiscate their returns, so investors rationally held back on new projects. Tragically for individuals, the Progressive government controlled the price of gold and started treating it as illegal for unlicensed individuals to hold gold.
Great Inflation I came about when the Fed increased the quantity of money in the 1960s and 1970s by 176 percent. Starting in the 1970s, both parties’ politicians significantly blocked corresponding increases in prices and wages. Investors again saw that the Progressive government could eliminate their returns, so investors rationally flocked to savings-conserving assets, including gold from 1975 on, once conservatives in government again started honoring it as legal for unlicensed individuals to hold gold. Sadly, Progressives in government meanwhile started treating the inflation-driven increases in the dollar prices of gold not as holdings of constitutional money or as conserved savings but instead as taxable capital gains.
The Financial Crisis came about when the Fed increased the quantity of money from 1995 to 2007 by 128 percent. The Progressive government also leaned on its financial cronies to lend mortgages to crony voters who were at serious risk of defaulting, and then bailed out almost all of its financial cronies. The initial increase in consumer prices was echoed and outpaced by the increase in the price of gold.
Great Inflation II has been started by unprecedented increases in the quantity of money by 303 percent, of which the portion that has come only recently, in the time of covid, has been 120 percent. Stock prices first were inflated and now have begun to decrease. Consumer prices have started to increase. (Consumer prices change quickly for quickly-processed products but as a whole don’t become stable for 8 to 16 years or more; so if the average is 12 years and the fastest changes come in the middle, then after the money-quantity changes, the most-substantial consumer-price changes would turn up in 6 years.) The price of gold has so far only decreased.
These crises’ superficial differences mask these crises’ deeper commonality. Each crisis is caused by a boom during which the quantity of government money is greatly increased, followed by a bust during which governments further disrupt workers, customers, and investors from healing themselves. Throughout the boom and the bust, governments treat taxpayers and money-holders as a commons resource—like land owned in common by everyone, which gets overgrazed and depleted. Various groups in government each grab as many resources as they can until the taxpayers and money-holders are depleted in resources and need significant time to rebuild. Although the Fed enables these depletions and has a fiduciary duty to not be the enabler, the root cause is always the politicians’ choices to borrow on the backs of taxpayers and to spend and regulate to favor business cronies and activist cronies.
The table below summarizes these crises’ booms in the quantity of money, the resulting busts in the prices of consumer products and stocks, and the resulting changes in the price of gold.
Table. Four Crises Summarized.
Booms in money quantity,
resulting busts in urban-consumer and stock prices,
and resulting changes in gold price.
1 The money quantity TMS2, often referred to as TMS, for the USA.
2 Murray Rothbard’s calculation.
3 Author’s calculation by Griggs and Murphy method.
4 Consumer-price index for urban consumers in the USA, as listed on InflationData.com.
5 Widely-used index of 500 leading large-cap USA equities, covering approximately 80 percent of available market capitalization, as listed on macrotrends.net.
6 Gold bullion price in USA dollars, as listed on macrotrends.net, deselecting “inflation-adjusted.”
7 Holding of gold by unlicensed individuals was treated as illegal from 5/33 through 12/74.
The boom money-quantity increases of the Great Depression, Great Inflation I, and the Financial Crisis were fractions of the boom money-quantity increase in Great Inflation II so far: only 0.20x, 0.58x, and 0.42x as much.
The consumer-price decreases of the Great Depression would be drowned out by today’s modern-monetary-theory Fed. The consumer-price increases of the Great Inflation I and the Financial Crisis were sizable fractions of the money-price increases: 1.11x and 0.23x. The consumer-price increase of Great Inflation II so far has been a much-smaller fraction of the money-price increase: only 0.08x.
The gold-price increases of the Great Depression, Great Inflation I, and the Financial Crisis were multiples of the money-quantity increases: 1.1x. 4.8x, and 1.2x. The gold-price increase of the Great Inflation II so far has been a negative fraction of the money-quantity increase: -0.1x. All in all, gold’s downside potential is small and gold’s upside potential is very large.
USA governments have a long history of largely respecting the glaringly-obvious right to own property. Political pressures have prevented gold from ever having been confiscated outright. The same political pressures remain in play now. In fact, the holding and voluntary pricing of gold may well be as protected now as they have been at any time under majority-Progressive rule.
Stocks are ownership of the world’s productive assets, which makes them the source of the values of all other assets. Over sufficiently-long time periods, even periods that include crises, stocks are unmatched as investments. Gold is a store of existing value. Over sufficiently-short time periods of crisis, gold protects existing value from being rapidly destroyed by government assaults on productive actions. Gold is for crises.
From now until the Fed makes a lasting slowdown of its enabling of government spending, or puts an end to its enabling, gold looks like an obvious buy, and worth holding as Great Inflation II unfolds.
Like the 2018 midterms, the 2022 midterms have too-few competitive races to change the swing votes substantially and shift the congressional houses from Progressive big spenders to constitutionalist government-limiters. The most-rapid change in government response to this crisis would be to elect a more-constitutionalist executive. Expect to re-evaluate gold holdings depending on how administrations change in 2024, 2028, and 2032.
Gary North was My Mentor: A Tribute
Every self-respecting writer should have a mentor, a character to refer to, a beacon in the night to turn to in times of difficulty or uncertainty. That full stop represents a safe haven from the storm of commas and other uncertain interludes he must battle every day. The basis thanks to which that same writer is able to bear the weight of the situation that torments him/her. That figure, although in most cases is someone with whom you do not have many contacts, embodies a totem, a support structure on which you develop your skills and ameliorate yourself.
Writers are strange, you might think, and you would have every reason to say it aloud: people who indulge in a river of reflections and mental flights, who write about the lives of others, who give a body to the immateriality of opinions or emotions, yet they need immaterial support. Someone to dedicate their works to, someone to thank for their successes. Very often we thank family and relatives, the legacy of materiality that makes us so empathetic; but in reality, we know that our totem is always there, watching over our words, our ideas and our career.
When this totem passes away, the writer loses a piece of himself. In this world we shouldn't be less, we should be more. Each additional brain would represent a better solution to the problems that arise every day. When death steals life from the physical world, a sense of general pain subsides like thick winter fog after a massive thunderstorm. But the writer makes emotion his weapon: it is the ink in which he dips his pen. And when he is the protagonist of an adverse event, his emotions are elevated to the nth degree; when he learns of a mourning that ink falls on him and like an indelible stain remains there as long as he has breath. And if that mourning concerns a totem, a mentor, a guide, then that stain extends to the depths of his soul.
Torn, torn to shreds. He hands over his suffering to a last poem, an epitaph dedicated to a person who was able to take an immature professional by the hand and accompany him along a path of progressive maturation. The keyboard is blurry and the keys are heavy to press, and it is a struggle to put ideas together because there is only one that silences all the others: "My mentor, my teacher is dead".
At the age of 80, Gary North passed away.
When I started my blog ten years ago, I was looking for an identity. At first it was just a desk where scattered papers fluttered around every day. In that mess of ideas, I found my inspiration in a man who made simplicity and immediacy his strengths. With a single text he was able to communicate in a clear and crystalline way concepts that until then the common imagination had drawn as unattainable by an audience "not properly trained". I immediately fell in love with his writing, striking myself as the legendary mallet of the Scandinavian gods. The magnetism with which he captured the attention was unique, no other writer has been able to create works like his: he spoke to you in an elementary language, yet what you were learning were a much more elaborate analysis than the appearance conveyed. At that moment I knew I had to take his hand if I wanted to find my place.
That's how it was. My way of writing has changed, dragged by the vigorous passion that I felt flow every time I put myself in front of the screen to compose one of my essay. And like a blacksmith's bellows, which blows with greater intensity when the works are of the finest workmanship, my inspiration blew with anxious enthusiasm to churn out new articles and, above all, worthy of being considered as good as North's ones. Each time a mistake, each time a too complicated paragraph, they provided me with the propellant to improve myself and reach a level of optimum comparable to his marvelous works. Composing and communicating to achieve that perfection has been the litany that has accompanied my blog for years.
A mixture of nostalgia and pride assails me when I think back to the exchange of emails we began to have when, taking courage, I had to inform him that I would translate in Italian his Christian Economics into One Lesson. To exorcise the moment in which I would receive an answer, I repeated to myself that he had more important things to do, but when the inbox signaled his answer an explosion of pride and emotion permeated me as I read his answer. It was like the embrace of a father who, enthusiastic about his son, looks at him with eyes full of pride without saying a word. Surprised by my dedication to his writings, he was amazed that someone on the other side of the world had taken his writing as a model and shared it with his fellow citizens. From that moment on, he would write to me every now and then to report him articles worthy of note and that he would like to see them published. But most of all, he was happy that his book would be available in Italian.
And this is how I will remember him: that flash of happiness that made a little writer proud of his teacher, and that "unknown" boy who enthusiastically communicated that he had allowed a wider audience to know your works.
Goodbye dear Gary, until we meet again.