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The True Believer

How is it that seemingly intelligent people, of apparent sound mind and rational thought, can stray so far off the beam? How come there are certain professions that reward their practitioners for their failures? The central banking and monetary policy vocation rings the bell on both accounts. Today we offer a brief case study in this regard

Minneapolis Fed president Neel Kashkari attacking a block of wood with great zeal. [PT] Photo credit: Linda Davidson / The Washington Post

Minneapolis Federal Reserve President Neel Kashkari is a man with strong convictions. He is what the late Eric Hoffer would have classified as “the true believer.” According to Hoffer:

“It is the true believer’s ability to ‘shut his eyes and stop his ears’ to facts that do not deserve to be either seen or heard which is the source of his unequaled fortitude and constancy. He cannot be frightened by danger nor disheartened by obstacle nor baffled by contradictions because he denies their existence.”

For starters, Kashkari believes the Federal Reserve, an unelected board of bureaucrats, can crunch economic data into pie graphs and bar charts and draw conclusions as to what they should fix the price of credit at. Moreover, he believes that by fixing credit at the “correct” price, the Fed can somehow “optimize” the economy.

This idea is patently false. Remember, the economy is comprised of billions of people with ever changing interactions. Activities and exchanges are always adapting.

What may be the correct price of credit at one time is precisely the wrong price of credit at another. Only a free market for credit, where rates are agreed to by willing borrowers and lenders, and unobstructed by government decree, can self-correct in real time to properly meet changing supply and demand.

…click on the above link to read the rest of the article…

Ludwig Von Miss on Collectivist Fallacies and Interventionist Follies

September 25, 2017

LUDWIG VON MISES ON COLLECTIVIST FALLACIES AND INTERVENTIONIST FOLLIES

For more than a century the world has been caught in the grip of social engineers and political paternalists determined to either radically remake society from top to bottom in collectivist directions, or to use various government regulatory and redistributive policies to try to modify existing society into desired “social justice” forms and shapes. Both are based on false conceptions of man and society.

One of the leading voices challenging the social engineers and the interventionist-welfare statists in the twentieth century was the Austrian economist, Ludwig von Mises. In such important works as Socialism (1922), Liberalism: The Classical Tradition (1927), Critique of Interventionism(1929), Planning for Freedom (1952), and in his monumental treatise, Human Action (1949; 1966), Mises demonstrated the economic unworkability and negative unintended consequences resulting from attempts to impose systems of socialist central planning on society, as well as the social quagmire brought about by introducing piecemeal regulations and interventions into the market economy.

But it was in his often-neglected work, Theory and History: An Interpretation of Social and Economic Evolution, that Ludwig von Mises systematically challenged the underlying philosophical premises behind many of the socialist and interventionist presumptions of the last one hundred years. This year marks the sixtieth anniversary of the publication of Theory and History in 1957, and it seems, therefore, worthwhile to appreciate Mises’s arguments and their continuing relevance for our own time.

The Illusive Search for Meaning and Purpose in Life

The world is a confusing and uncertain place. While we may live in communities and societies the values, traditions, customs and routines of daily life of which we have grown up in and tend to take for granted, and which provide us with degrees of orienting certainty and predictability in our everyday affairs, they still fail to answer a variety of “big questions.”

…click on the above link to read the rest of the article…

Trump Falls in Line with Interventionism

September 19, 2017

Trump Falls in Line with Interventionism

Exclusive: President Trump’s U.N. speech showed that despite his America First rhetoric, his policies are virtually the same as the neocon strategies of George W. Bush and liberal interventionism of Barack Obama, says Robert Parry.

In discussing President Trump, there is always the soft prejudice of low expectations – people praise him for reading from a Teleprompter even if his words make little sense – but there is no getting around the reality that his maiden address to the United Nations General Assembly must rank as one of the most embarrassing moments in America’s relations with the global community.

President Trump speaking to the United Nations General Assembly on Sept. 19, 2017. (Screenshot from Whitehouse.gov)

Trump offered a crude patchwork of propaganda and bluster, partly delivered as a campaign speech praising his own leadership – boasting about the relatively strong U.S. economy that he mostly inherited from President Obama – and partly reflecting his continued subservience to Israeli Prime Minister Benjamin Netanyahu.

However, perhaps most importantly, Trump’s speech may have extinguished any flickering hope that his presidency might achieve some valuable course corrections in how the United States deals with the world, i.e., shifting away from the disastrous war/interventionist policies of his two predecessors.

Before the speech, there was at least some thinking that his visceral disdain for the neoconservatives, who mostly opposed his nomination and election, might lead him to a realization that their policies toward Iran, Iraq, Syria and elsewhere were at the core of America’s repeated and costly failures in recent decades.

Instead, apparently after a bracing lecture from Netanyahu on Monday, Trump bared himself in a kind of neocon Full Monte:

–He repeated the Israeli/neocon tripe about Iran destabilizing the Middle East when Shiite-ruled Iran actually has helped stabilize Iraq and Syria against Sunni terrorist groups and other militants supported by Saudi Arabia and – to a degree – Israel;

…click on the above link to read the rest of the article…

Reasons to Risk Nuclear Annihilation

November 12, 2016

Reasons to Risk Nuclear Annihilation

Exclusive: The latest neocon/liberal-hawk scheme is for the U.S. population to risk nuclear war to protect corrupt politicians in Ukraine and Al Qaeda terrorists in east Aleppo, two rather dubious reasons to end life on the planet, says Robert Parry.

Obviously, I never wanted to see a nuclear war, which would likely kill not only me but my children, grandchildren, relatives, friends and billions of others. We’d be incinerated in the blast or poisoned by radiation or left to starve in a nuclear winter.

But at least I always assumed that this horrific possibility would only come into play over something truly worthy, assuming that anything would justify the mass extinction of life on the planet.

Peter Sellers playing Dr. Strangelove as he struggles to control his right arm from making a Nazi salute.

Now, however, Official Washington’s neocons and liberal interventionists are telling me and others that we should risk nuclear annihilation over which set of thieves gets to rule Ukraine and over helping Al Qaeda terrorists (and their “moderate” allies) keep control of east Aleppo in Syria.

In support of the Ukraine goal, there is endless tough talk at the think tanks, on the op-ed pages and in the halls of power about the need to arm the Ukrainian military so it can crush ethnic Russians in eastern Ukraine who dared object to the U.S.-backed coup in 2014 that ousted their elected President Viktor Yanukovych.

And after “liberating” eastern Ukraine, the U.S.-backed Ukrainian army would wheel around and “liberate” Crimea from Russia, even though 96 percent of Crimean voters voted to leave Ukraine and rejoin Russia – and there is no sign they want to go back.

So, the world would be risking World War III over the principle of the West’s right to sponsor the overthrow of elected leaders who don’t do what they’re told and then to slaughter people who object to this violation of democratic order.

…click on the above link to read the rest of the article…

A Convocation of Interventionists – Part 1

September 10, 2016

A Convocation of Interventionists – Part 1

Modern Economics – It’s All About Central Planning

We are hereby delivering a somewhat belated comment on the meeting of monetary central planners and their courtier economists at Jackson Hole. Luckily timing is not really an issue in this context.
central bank HQs 2 Central bank headquarters: the Fed’s Eccles building, the ECB’s hideously expensive new tower in Frankfurt, and the BOJ’s Tokyo HQ (judging from the people in the foreground, it may be a source of noxious fumes).

When discussing papers and speeches delivered at the annual Jackson Hole meeting, it is important to consider the wider socio-economic context. As this article suggests (still the most recent reference available on the topic), the Federal Reserve has essentially bought off the economics profession.

A great many US economists list “monetary policy” in some shape or form as a specialty, or more generally, “macroeconomic policy formation and aspects of public finance”. More than half of the editors of the top seven academic economic journals are on the Fed’s payroll and serve as gatekeepers. The Fed employs hundreds of economists directly, and provides 100ds of millions of dollars in grants to outside economists.

We are quite certain that the situation in other countries is very similar. It is easy to see why practically no fundamental criticism of the monetary system is forthcoming from the economics profession. The basic assumption that money and credit should be centrally planned is rarely challenged (or almost never). Economists naturally won’t bite the hand that feeds them.

Instead, debate as a rule revolves around various “plans”. Their authors are mainly suggesting what they think are improvements on existing plans. Obviously, not all of these plans can be correct; but how can one possibly know which ones might be?

…click on the above link to read the rest of the article…

“Free Stuff” Isn’t All That It’s Cracked Up to Be

April 8, 2016

“Free Stuff” Isn’t All That It’s Cracked Up to Be

To my British and American friends who must deal with the socialist nonsense of Bernie Sanders and Jeremy Corbyn, I found this poem. It was written by Rudyard Kipling, the writer most hated by English Socialists in the 40s and an opponent to the interventionist policies implemented by the Labour Party after the second world war:

In the Carboniferous Epoch we were promised abundance for all,

By robbing selected Peter to pay for collective Paul;

But, though we had plenty of money, there was nothing our money could buy,

And the Gods of the Copybook Headings said: “iƒ you don’t ‘work you die.

This poem is not an exaggeration. At the time, it was decreed by the Control of Engagement Order that “no man between the ages of 18 and 50, or woman between the ages of 18 and 40, can change occupations at will. The Minister of Labor has the power to direct such workers to the employment he considers best for the national interest.” This Order was abolished only in March 1950.

At the time, the consequences of “democratic socialism” were disastrous: no food, no housing, no clothing, no fuel. By 1948, rations had fallen well below the wartime average. At the same date, one could read in The New Statesman, which was by no means a virulent opponent of Planning: “You may have social security, but you cannot go into a store and buy two quarts of milk.” To which an English commentator replied: “You not only cannot buy two quarts of milk. You cannot buy one. You can only get two quarts of milk on your doorstep a week. If you try to get more you are apt to land in jail.”

…click on the above link to read the rest of the article…

The Pitfalls of Currency Manipulation – A History of Interventionist Failure

March 30, 2016

The Pitfalls of Currency Manipulation – A History of Interventionist Failure

The G-20 and Policy Coordination

Readers may recall that the last G20 pow-wow (see “The Gasbag Gabfest” for details) featured an uncharacteristic lack of grandiose announcements, a fact we welcomed with great relief. The previously announced “900 plans” which were supposedly going to create “economic growth” by government decree seemed to have disappeared into the memory hole. These busybodies deciding to do nothing, is obviously the best thing that can possibly happen.
Yuan, weekly – since the sharp move in USDCNY in August, market participants have begun to worry about the yuan and China’s shrinking foreign exchange reserves – click to enlarge.

There have been rumors though that they did at least strike some sort of sub rosa agreement with respect to the future course of yuan manipulation. In other words, some kind of policy coordination between China and other major currency issuers has quite possibly been agreed upon, even if only tacitly. Officially, China merely used the occasion to “reassure trading partners on foreign exchange”:

“Chinese policymakers on Thursday ruled out an imminent devaluation of the yuan as they seek to reassure trading partners ahead of the G20 summit that they can manage market stability while driving structural reforms.”

When global stock markets swooned in late August 2015 and again in January 2016, the decline in the yuan’s exchange rate was widely blamed as the cause. Considering various central bank policy decisions announced since the G20 meeting, it does appear as though a coordinated move aimed at halting the yuan’s slide and support wobbly risk asset prices has been underway.

…click on the above link to read the rest of the article…

Three Reasons to Be Worried About the Economy

February 8, 2016

Three Reasons to Be Worried About the Economy

On January 12, America’s central planner-in-chief gave his State of the Union address. The president promised nothing less than to feed the hungry, create jobs, shape the earth’s climate, and make everyone a college graduate. There’s nothing new here, though. We’ve heard variations of this silly song and dance every year under both Democrats and Republicans. The president lambasted naysayers as fear-mongers that were too partisan to admit we have a booming economy. The fact that the Dow Jones cratered roughly 9 percent in the same thirty-day period President Obama gave his address did nothing to quell Obama’s optimism about America’s future. In fact, he labeled the US economy “the strongest and most durable in the world.”

Despite our leader’s unwavering confidence in America’s fortunes, a quick peak under the hood reveals a pretty grim state of American commerce.

1. The Federal Reserve and US Government Have Warped the American Economy

In just the past decade, the Federal Reserve’s balance sheet has grown from roughly $800 billion to over $4 trillion. Our central bankers engaging in massive asset purchases to pummel interest rates downward is not news to anyone. We’ve been living in a world of falling interest rates since the 9/11 terrorist attacks. Yet, few mainstream economists have taken a good look at the destructive effects of this unprecedented monetary expansion. The calamitous distortions Fed policy has created for actors on both Main Street and Wall Street since 2008 have laid the groundwork for yet another crash.

Low interest rates stemming from a growing money supply are the only reason the US government has managed to service its gargantuan debt in recent years. The Congressional Budget Office itself has pointed out that even a slight rise in interest rates could potentially result in anywhere from $700 to $900 billion in annual tax payments just to service the interest on our debt.

…click on the above link to read the rest of the article…

How Neocons Banished Realism

January 17, 2016

How Neocons Banished Realism

The grip that neocons and liberal interventionists have on Official Washington’s opinion circles is now so strong that “realists” who once provided an important counterbalance have been almost banished from foreign policy debates, a dangerous dilemma that James W Carden explores.

In a widely remarked upon article for the online version of Foreign Policy last week, Harvard’s Stephen Walt asked a very good question. Why, Walt asked, are elite outlets like the Washington Post, the Wall Street Journal and the New York Times “allergic to realist views, given that realists have been (mostly) right about some very important issues, and the columnists they publish have often been wrong?”

Walt then went on to do something pundits are generally loath to do: he admitted that he’d didn’t really know the answer. This is not to say that I do, but I think Walt’s question is worth exploring.

Prominent neocon intellectual Robert Kagan. (Photo credit: Mariusz Kubik, http://www.mariuszkubik.pl)

Why indeed? My own hunch is that we realists are a source of discomfit for the Beltway armchair warrior class not so much because we have been right about every major U.S. foreign policy question since the invasion of Iraq, but because we dare to question the premise which undergirds the twin orthodoxies of neoconservatism and liberal interventionism.

The premise, shared by heroes of the Left and Right, is this: America, a “shining city on a hill” (John Winthrop, later vulgarized by Ronald Reagan) “remains the one indispensable nation” (Barack Obama) and deprived of America’s “benevolent global hegemony” (Robert Kagan) the world will surely collapse into anarchy.

This strain of messianic thinking has deep roots in the psyche of the American establishment and so, in a sense, neoconservatism, which is really little more than a latter-day Trotskyist sect, is as American as apple pie.

…click on the above link to read the rest of the article…

The Formlessness of Progressivism

December 30, 2015

The Formlessness of Progressivism

Progressives are often good people with good intentions. However, modern Progressivism has evolved into something so shapeless and amorphous as to amount to little more than a belief in “things that sound nice.” Mainstream Progressives have done an abysmal job of outlining precisely, in their view, the proper role of government and what (if any) limiting principle(s) apply to the state as a whole.

Everything Is Now a Taxpayer-Funded “Right”

Problems with today’s leftism begin with the ideology’s conception of “rights.” In the common laissez-faire view, rights are universal because they do not impose a duty on others to act positively on our behalf. Simply put, the proper view of human rights is that they prohibit us from initiating coercion against others.

Moreover, not only are the rights universal, but they are inherent to being human. To argue that the state confers these rights suggests that the state, through whatever “legitimate” institutions it may possess, can also take them away. This is an unacceptable possibility in a society of free people.

Modern Progressivism, however, has so warped the entire nature of rights as to turn almost any desired good or service into a right.

In this view, private employers refusing to subsidize birth control purchases by employees are violating a woman’s “right” to birth control. Business owners with religious convictions about homosexuality are denying “rights” by refusing to bake cakes for homosexual couples. Offering someone a job that pays wages belowsome arbitrary federal or state mandated minimum is now an act in violation of a “labor right.”

A service once voluntarily offered to the public is now a duty enforced by the violent arm of the state.

The list of our newfound rights is almost endless, but ten conversations with ten different Progressives will yield ten different sets of absolute rights.

…click on the above link to read the rest of the article…

The Six Most Disastrous Interventions of the 21st Century

October 9, 2015

The Six Most Disastrous Interventions of the 21st Century

On October 2 President Barack Obama, alluding to Russia’s decision to launch air strikes in Syria, told reporters at the White House that for Russia to view the forces targeted “from the perspective they’re all terrorists [is] a recipe for disaster, and it’s one that I reject.”

In other words, he was saying that Moscow is not (as it claims) really focusing on ISIL and the al-Nusra Front but on the anti-regime opposition in general, which supposedly includes “moderates.”

Never mind that Obama himself as well as Joseph Biden have on occasion pooh-poohed the existence of a moderate armed opposition that controls territory in Syria. Didn’t Biden say last year at Harvard that “there was no moderate middle [in Syria] because the moderate middle are made up of shop-keepers, not soldiers”?

And hasn’t it been shown that maps showing territory in the hands of the “Free Syrian Army” are the figments of propagandists’ imagination? The FSA has no coordinated command structure and its networks overlap those of groups that Washington would not normally define as “moderate” (unless it wanted to rehabilitate al-Qaeda, which having attacked the U.S. on 9/11 and supposedly the cause of all the—disastrous—post-9/11 U.S. military actions in the Middle East), has gradually become my-enemy-against-my-enemy and hence a new found friend.

Seriously. Gen. David Petraeus, architect of the “surge” in Iraq in 2007 and former head of the CIA (until brought down in a sex/email-misuse scandal), has actually suggested that the U.S. support al-Qaeda—the al-Nusra Front—in Syria to defeat the bigger foe that is ISIL. (It does seem one man’s extremist is another man’s “moderate,” especially under confusing crisis circumstances. And that every cable news anchorperson will call “moderate” whatever the State Department demands—without knowing jack-shit about the facts, this not being required by that profession.)

…click on the above link to read the rest of the article…

Why Big Tech May Be Getting Too Big

September 28, 2015

Why Big Tech May Be Getting Too Big

Conservatives and liberals interminably debate the merits of “the free market” versus “the government.” Which one you trust more delineates the main ideological divide in America.

In reality, they aren’t two separate things and there can’t be a market without government. Legislators, agency heads and judges decide the rules of the game. And, over time, they change the rules.

The important question, too rarely discussed, is who has the most influence over these decisions and in that way wins the game.

Two centuries ago slaves were among the nation’s most valuable assets, and a century ago, perhaps the most valuable asset was land. Then came another shift as factories, machines, railroads and oil transformed America. By the 1920s most Americans were employees, and the most contested property issue was their freedom to organize into unions.

In more recent years, information and ideas have become the most valuable forms of property. This property can’t be concretely weighed or measured, and most of the cost of producing it goes into discovering it or making the first copy. After that, the additional production cost is often zero.

Such “intellectual property” is the key building block of the new economy. Without government decisions over what it is, and who can own it and on what terms, the new economy could not exist.

But as has happened before with other forms of property, the most politically influential owners of the new property are doing their utmost to increase their profits by creating monopolies that must eventually be broken up.

The most valuable intellectual property are platforms so widely used that everyone else has to use them, too. Think of standard operating systems like Microsoft’s Windows or Google’s Android; Google’s search engine; Amazon’s shopping system; and Facebooks’ communication network.

…click on the above link to read the rest of the article…

Do We Need to Bring Back Internment Camps?

July 29, 2015

Do We Need to Bring Back Internment Camps?

Last week, Retired General Wesley Clark, who was NATO commander during the US bombing of Serbia, proposed that “disloyal Americans” be sent to internment camps for the “duration of the conflict.” Discussing the recent military base shootings in Chattanooga, TN, in which five US service members were killed, Clark recalled the internment of American citizens during World War II who were merely suspected of having Nazi sympathies. He said: “back then we didn’t say ‘that was freedom of speech,’ we put him in a camp.”

He called for the government to identify people most likely to be radicalized so we can “cut this off at the beginning.” That sounds like “pre-crime”!

Gen. Clark ran for president in 2004 and it’s probably a good thing he didn’t win considering what seems to be his disregard for the Constitution. Unfortunately in the current presidential race Donald Trump even one-upped Clark, stating recently that NSA whistleblower Edward Snowden is a traitor and should be treated like one, implying that the government should kill him.

These statements and others like them most likely reflect the frustration felt in Washington over a 15 year war on terror where there has been no victory and where we actually seem worse off than when we started. The real problem is they will argue and bicker over changing tactics but their interventionist strategy remains the same.

Retired Army Gen. Mike Flynn, who was head of the Defense Intelligence Agency during the US wars in Afghanistan and Iraq, told al-Jazeera this week that US drones create more terrorists than they kill. He said: “The more weapons we give, the more bombs we drop, that just … fuels the conflict.”

Still Washington pursues the same strategy while expecting different results.

…click on the above link to read the rest of the article…

Stephen Poloz’s Zen Moment

July 17, 2015

Stephen Poloz’s Zen Moment

To cut or not to cut, that is the question. And fortunately for Bank of Canada Governor Stephen Poloz, it was a pretty easy question. A lagging US recovery, China’s downturn, lower oil prices and “bad weather” all contributed to this interest rate cut. “I wouldn’t describe it as a close decision,” he told the press, “It’s a decision where we had a number of trade-offs on the table. It requires a lot of deliberation and a lot of inputs, not a mechanical decision. Not even close.” But whereas Poloz admitted to feeling comfortable at the end of 2014, now there was a bunch of crap heading for the ceiling fan and that interest rate cut was Canada’s only way of taking cover.

Poloz is known for his metaphors but the above is mine. Poloz used the parable of the big oak tree to compare “analysing vulnerability” in the economy. The big oak tree is only a risk if there’s a branch that could break off and fall into your neighbours house. In Poloz’s mind, cutting interest rates must have been like sawing off that branch. He may have successfully migrated some future risk, but in doing so he didn’t bother with any long-term consequences. He may have sawed off that branch so it wouldn’t fall into the neighbours house, but by cutting without thinking ahead, the branch fell right into the neighbours house.

I hope that’s clear, because a lot of what the Bank of Canada says isn’t. Poloz is a fan ofGreenspeak but sometimes we get moments of incoherent clarity such as: “When other things are equal, a lower currency will be a stimulus to the economy.” When asked if China’s slow-down could affect Vancouver’s housing market and potentially the broader economy, Poloz crept back to his Greenspeak with a definite “I don’t know” and “I won’t speculate” sprinkled on top.

…click on the above link to read the rest of the article…

The Logic of Interventionism, or How to Wake up in a Prison

June 18, 2015

The Logic of Interventionism, or How to Wake up in a Prison

Archaic Financial Freedom

The mainstream press is still full of articles about the alleged evils of cash, which we regard as a typical “trial balloon” launched by the powers-that-be. The way this works is that they get a repressive measure they indent to implement out there, not only to propagandize in its favor, but also to gauge the reaction of the serfs. Is there an outcry? Does anyone care? If not, they quietly go forward with putting the measure into practice. If there is a great deal of pushback, they will simply wait for a better opportunity. A useful emergency always comes along after all. The Charlie Hebdo attack in France is a pertinent recent example: Under the false pretext that this is needed to “fight terrorism”, all cash transaction exceeding €1,000 have been banned in France.

1773

German daily Frankfurter Allgemeine Zeitung, has recently published an article about the “hoarding of cash” by citizens of Switzerland and the euro zone. With interest rates either at zero or negative, the cash currency component of the money supply has increased significantly, as more and more citizens prefer to hoard money under the proverbial mattress. The new European “bail-in” regime, so vividly demonstrated in Cyprus, is a major motive as well. Most recently, Greek citizens have resorted to withdrawing their deposits, with mainly small savers withdrawing cash (large depositors are more likely to simply transfer money to other parts of the euro area that seem safer).

…click on the above link to read the rest of the article…

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