Posts tagged Economics
20 years ago NAFTA passed, This is what one of the greatest free market economists ever had to say about it at the time.0
20 years ago NAFTA passed, This is what one of the greatest free market economists ever had to say about it at the time.
This essay by Murray Rothbard holds particular relevance as the Trans Pacific Partnership continues to be negotiated in secret.
Yet Nafta is more than just a big business trade deal. It is part of a very long campaign to integrate and cartelize government in order to entrench the interventionist mixed economy. In Europe, the campaign culminated in the Maastricht Treaty, the attempt to impose a single currency and central bank on Europe and force its relatively free economies to rachet up their regulatory and welfare states.
In the United States, this has taken the form of transferring legislative and judicial authority away from the states and localities to the executive branch of the federal government. Nafta negotiations have pushed the envelope by centralizing government power continent-wide, thus further diminishing the ability of taxpayers to hinder the actions of their rulers.
By Tyler Durden
Obama’s ‘Socialism’ Experiment Brought Home
Submitted by Martin Armstrong via Armstrong Economics,
An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, “OK, we will have an experiment in this class on Obama’s plan”.. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).
After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.
The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F.
As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. Could not be any simpler than that.
Here are possibly the 5 key points about such an experiment:
1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
2. What one person receives without working for, another person must work for without receiving.
3. The government cannot give to anybody anything that the government does not first take from somebody else.
4. You cannot multiply wealth by dividing it!
5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.
Or in graphical format…
The Noble Lie of Government Healthcare
These words, spoken by U.S. President Barack Obama in various forms and iterations, have become a running joke amidst the rollout of the Affordable Care Act. All across the country, hundreds of thousands of citizens are receiving cancellation notices in the mail. The stringent requirements for insurance plans under the new edict are curtailing many individual policies. A simpleton can grasp the economics: you prohibit something, it goes away. And yet, for years prior, the White House ignored the oncoming train and is now slowly inching away from the wreckage.
This was not the unforeseen consequence of good-intentioned legislation. According to an investigative report from NBC, the Obama Administration was fully aware of the result its health care bill would have on the marketplace for insurance. A provision written in the original version of the law would have allowed for the grandfathering of existing plans that did not meet the new standards. However, the Department of Health and Human Services rewrote the stipulation to radically narrow the rule, so that an estimated “40 to 67 percent of customers will not be able to keep their policy.” Not one to be a wet blanket, President Obama continued to assuage the public and reassure everyone that their preferred insurance policy would not being going away.
This was a lie. And not one kept close-to-the-chest by a few high-level officials. House Democratic Whip Steny Hoyer admitted that many in his party knew “there would be some policies that would not qualify and therefore people would be required to get more extensive coverage.” A presidential election and a litany of Senate seats were won based on the falsehood that America’s health insurance market would not be totally disturbed.
The admission of guilt may have ramifications for supporters of big government. In the short term, it undermines the President and the promises he makes going into the future. But voters are fickle and have a memory prone to lapses. When the subsidies start flowing, they will begin to smile again. The balancing act will be whether the boost in tax benefits outweighs being forced to pay a higher cost for what was once a cheaper product. Those who are net beneficiaries will be content while the losers may sulk but will ultimately accept the “new normal.”
The deceit behind ObamaCare is nothing new in the practice of governing. The state’s monopoly power makes it a natural target of suspicion. Even the most ardent worshiper of socialism is still wary that his nation’s controllers will turn on him. He keeps an ear out for fiction spun by his rulers but will not question larger injustice as long as he is fed well enough. Even with the preponderance of lies, there is still the naive hope “good folks” will soon come along who have a deep aversion to dishonesty. The white knight never arrives, but optimism prevails.
The happy voter is the one who refuses to grasp the obvious point that government serves as a vehicle for the worst in society to play out their violent fantasies. As Hayek put it, “the unscrupulous and uninhibited are likely to be more successful” in operating the machinery of total intimidation. It is always from the throne of authority that the worst deeds are accomplished. This includes mass aggression against property as well as the truth. The productive capacity of society is decimated enough by government’s necessarily parasitical operation; the public’s concept of verity is challenged by the various ministries of agitprop that disguise their actions as beneficial rather than schemes of plunder.
The false characterization needed to sustain Obama’s signature piece of legislation was another variation of Plato’s noble lie. In his widely heralded Republic, the classical philosopher wrote on the necessity of the few lording over the many to achieve harmonious social relationships. These “philosopher-kings” could govern best by spreading falsities that would have the “good effect” of making the underlings “more inclined to care for the state and one another.” One could call this a textbook lesson in the art of ruling over a dim and detached populace.
Perhaps the best exponent of the noble lie was the late, neoconservative king Irving Kristol, who held political theorist Leo Strauss as a strong intellectual influence. Kristol affirmed what many thinkers before him found when it comes to truth:
“There are different kinds of truths for different kinds of people. There are truths appropriate for children; truths that are appropriate for students; truths that are appropriate for educated adults; and truths that are appropriate for highly educated adults, and the notion that there should be one set of truths available to everyone is a modern democratic fallacy. It doesn’t work.”
In many ways, this statement is completely accurate. In a democracy, the people must be corralled. They must get behind measures that ordinarily wouldn’t receive a lick of support outside of a few special interests. The naked, unvarnished truth is a dangerous weapon against tyranny. So it must be distorted to fit the agenda of collectivists, statists, dictators, and despots. Anything will do to assure for maximum support with minimum resistance.
Had President Obama been upfront about the full ramifications of his health care edict, the public may have turned. It’s one thing to apply for and receive a subsidy. It’s another to disrupt lives and force people to take action they otherwise wouldn’t. Outside disturbances are a nuisance to common folks trying to make the best go at their lives. Like a dog with its tail between its legs, the Administration is now backtracking on its own selling point. In a recent press hearing, White House spokesman Jay Carney, the quivering apparatchik of social democracy, was quick to ignore past statements and highlight the benefits of the health care bill. He told Fox News correspondent Ed Henry,
Well, let’s just be clear, what the President said and what everybody said all along was that there were going to be changes under brought about by the Affordable Care Act that create minimum standards of coverage — minimum services that every insurance plan has to provide.
So goes the guarantee of “if you like it, you can keep it.” As progressive columnist Clarence Page admitted to radio host Hugh Hewitt, it was “one of those political lies, you know.” The promise will eventually find itself lodged somewhere in the memory hole along with the guarantee of liberty in a security state. The state itself is a great lie. It purports to be the great savior of mankind. The political class likens itself to the great deliverance from struggle and despair. The reality ends up not as rosy.
Kristol was right on one thing: not everyone accepts the truth. They will self-deceive to feel comfortable in their own skin. It is this weakness the politician will manipulate for his own aggrandizement. Honesty and truth are always a virtue. And that’s why they are wholly absent from the halls of power.
James E. Miller is editor-in-chief of the Ludwig von Mises Institute of Canada. Send him mail
Image credit: http://mises.ca
Peter Schiff Exposes Media Lies About Janet Yellen
This is a must-see video. Watch through the last 10 minutes where Schiff shows clips from 2006 where he was ridiculed for being 100% correct.
Published by Peter Schiff
The Schiff Report (10/18/2013)
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A Political Shift in America – Lew Rockwell (video)
Published by NextNewsNetwork
Illogic in Fractional Reserve Banking
If there was one business venture the leftist and forgotten “Occupy” movement was right to distrust, it was the banking industry. In the wake of the 2008 financial crisis and subsequent bailing out of the world’s financial system by fascist states, taxpayers – especially the progressive types – were correct to feel amiss. But rather than take a scrutinizing look into the privilege afforded to the banking class, the outraged took to political action in the callow hope of correcting a wrong.
Like any popular uprising, the goal was quickly smothered in favor of further rent-seeking. Instead of aiming consternation at the incestuous relationship between government and the money-changers, occupiers wanted the quick-fix of redistribution. The cries of “this is what democracy looks like” might as well have been “this is what panhandling looks like.” Centralized banking went unquestioned. The nature of fractional reserve practices was ignored – or likely not understood by the pea-brained philosophers. Still, the radical levellers who set-up camp in Zuccotti Park were on to something by asking why their precious public officials voted to shore up the balance sheets of a disproportionately small member caste.
Banking is, to put it bluntly, a strange and unique business. The industry is centuries-old, and the legality of its operations has been questionable since inception. I am referring specifically to the practice of bankers lending out claimed reserves – a contentious issue among libertarian theorists. If the larger public were to become privy to this business model, it may spark a troubling curiosity in the less-moneyed class. But then again, this author never ceases to be amazed by the bounds of common apathy.
In banking, certain legal doctrines have guided the trade since antiquity, including the nature of contracts. The violation of these distinct forms of lawful guarantees once carried the weight of justice. But no longer; as the deliberately obscuring practice of loaning out deposits meant to be available on-demand has created such instability in the banking system, the incessant teetering on the cliff of insolvency remains an ever viable threat to economic tranquility.
Libertarians – specifically those schooled in the Austrian, causal-realist tradition of economics – are intellectually miles ahead of the Occupy folks when it comes to the study of currency. And while the students of Mises and Hayek are fervently opposed to any central bank management, there remains a sharp divide on the ethics of fractional reserve banking. In a recent missive in the Freeman, economist Malavika Nair questions the Rothbardian ethic that finds the practice of banks creating credit out of thin air fraudulent. The piece, which deconstructs the dean of the Austrian school’s original argument, frames banking away from the supposed cut-and-dry thinking model of anti-fractionalists.
Nair begins with a false choice by asking: “Would fractional reserve banking exist in a world without a central bank? Put another way: Is fractional reserve banking inherently fraudulent?” These statements are not one in the same; they reference two separate conditions. Absent central banking, unbacked credit expansion could still exist. Back in mid-to-late 19th century America where the Federal Reserve was still a twinkle in the centralizers’ eyes, fractional reserve banking and pyramiding credit were common practice. The question at hand is whether such business is based on a fraudulent understanding of the nature of goods.
Nair finds issue with the essence of contracts and how they relate to the duty of those individuals entrusted with safeguarding money. The contract – an extension of humanity’s self-ownership and free will – has been a recognized covenant enforceable by compulsion for as long as man first conceived of himself as an autonomous being. It finds legitimacy in the human understanding of bonds and keeping one’s word. The evolution of common law has dictated that any activity stipulated in a compact cannot entail unlawful activity. To enforce an illegal activity would thereby be a crime in itself – an ipso facto contradiction in reason.
The contract is key for banking operations. Nair argues that bank functions, both deposit and lending, are plainly justifiable; the discrepancy arises in the manner that customer funds are utilized. Currently, bankers freely lend out money that is available on command by both the borrower and depositor. In practice, this is the creation of two goods from one ex nihilo. In a totally isolated instance where a bank were to service only two patrons, the act of creating what Mises called “fiduciary media” would appear as the very perversion of intuitive law it embodies. It would simply come off as no more than a violation of the known rules of the world.
Nair counters by asserting that a “claim to money is not the same thing as the money itself.” This is a confusing affirmation as antagonists to fractional reserve banking hardly make that claim. The point of contention is that promissory notes for bank deposits represent real money, though they may circulate as mediums of exchange and fulfill the role of currency. Should two or more of these “I owe you” certificates be created to represent one unit of bank reserves available on-demand, there is a direct and unquestionable inconsistency. It is certainly true, as Nair points out, that the fungible quality of money dictates it be treated differently than non-substitutable goods. However, the fact that cash is interchangeable does not dismiss its limited character.
If the principle of unbacked expansion of credit were applied to other industries such as automobiles or condominiums, titles to the same good could theoretically be multiplied, but not without controversy. Having two titles for one car is not based on logic or a firm understanding of universal law. You simply cannot create real, definite material by declaration. Nair asserts that this is not true when it comes to the market of money. In his words, the over-issuing of redeemable bank notes “does not mean one thing is in two places at the same time” but that “two different things are in two places at the same time.” This is only so much sophistry, as the claims to bank reserves are still representative of real goods. There may be multiple slips of paper representing one unit of money-proper floating around in the economy, but that does not dismiss the plain and true fact that there are more claims than what is available.
As economist Jesús Huerta de Soto documents in his tour de force Money, Bank Credit, and Economic Cycles, government has played a leading role in fostering this banking fraud for centuries. The state is forever on the search for more resources to carry out its bidding. Cooperation with the leading money-lending institutions was an obvious route for subverting the moral means to wealth creation. Since the days of classical Greece, it was well understood that transactions of present goods fundamentally differed from those involving future goods. In practical terms, deposits for safekeeping were of considerable difference to those made for the strict purpose of lending out and garnering a return. Bankers who misappropriated funds were often found guilty of fraud and forced to pay restitution. In one recorded episode, ancient Grecian legal scholar Isocrates lambasted Athenian banker Passio for reneging on a client’s depository claim. After being entrusted to hold a select amount of money, the sly banker loaned out a portion of the funds in the hopes of earning a profit. When asked to make due on the deposit, the timid Passio pleaded to his accuser to keep the transgression “a secret so it would not be discovered he had committed fraud.”
The underlying chicanery behind fractional reserve banking has existed since the days of Plato. Modern technology has not negated the rationale used to discover and affirm natural law. Binary codes on a computer screen do not create a new reality. The governing doctrines of humanity are, in de Soto’s words, “unchanging and inherent in the logic of human relationships.” While fractional reserve banking could exist in a free market environment and regulate itself through vigorous competition, that theoretical scenario does not prove the entire fulcrum of the business rests on solid ground.
The truth remains, and will always remain, that an organic product is not replicable through any kind of witch doctoring. A thing is a thing is a thing. Any money substitute that represents a real piece of fungible currency cannot pertain to that which is not in existence. Such is the lawful understanding that goes back to the time preceding the Hellenisitc period.
Malavika Nair offers an interesting argument by trying to justify the practice of creating something out of nothing; but it ultimately fails. The free lunch of artificial credit creation is nothing more than slipping out of the baker’s shop without paying. It would have served the Occupy crowd well to have recognized this shaky foundation upon which the modern financial system rests. Perhaps their message of widespread corruption would have been better received – at least more so than by creating shanty towns and defecating on the street. Instead, we were gifted with a muddled and confused political message made by an irate minority who hadn’t a clue of the forces that govern their own lives.
James E. Miller is editor-in-chief of the Ludwig von Mises Institute of Canada. Send him mail
Image credit: http://mises.ca
Glenn Jacobs (Kane) speaking tour in TN
(if you would like Glenn Jacobs to speak to your group, please e-mail us and let us know!
Mon Aug 26 – 7p – Rutherford Campaign for Liberty - Lanes, Trains, and Automobiles – 450 Butler Drive, Murfreesboro
Sat Aug 31 – 6p – Clarksville Liberty Fest – 430 Warfield Blvd, Clarksville
Tue Sep 3 – 5:30p – Smoky Mountain Tea Party – Blount County Public Library
Friday Sep 13 – 7p – Tri Cities Meeting – Logan’s Roadhouse in Johnson City
Thur Sep 5 – - 6:30p – Sumner United for Responsible Government – Hendersonville VFW – 73 New Shackle Island Rd
Thur Sep 12th – Morristown – TBD
Sep 19-21 – LPAC (with Ron and Rand Paul, Ted Cruz, and others) - Liberty Political Action Conference, Chantilly VA
(H/T) to my friend Matt Collins for sharing this information.
Good job & thanks to:
Hope to see you there!
Ron Paul Would Like to See Glenn Jacobs (aka Wrestler “Kane”) Enter the GOP Senate Race in Tennessee
Fed Czars go to War – Chuck Morse
Published by NextNewsNetwork
For what may be the first time in the 100-year history of the Federal Reserve System, two candidates are publicly contending to replace the Fed’s outgoing chairman, Ben Bernanke.
Janet Yellen, vice chairwoman of the Fed’s Board of Governors, is said to be locked in a dead heat with Larry Summers, former President of Harvard and a former high-ranking economic adviser to Presidents Clinton and Obama.
As is the case in electoral politics, the contest between Yellen and Summers has included dirty campaigning — with supporters of Yellen accusing Summers of sexist behavior as Harvard President. They also point out that Mr. Obama would make history by appointing Yellen to be the Fed’s first female chairman.
In substantive terms, there’s not much difference between Yellen and Summers. Both of them support the Keynesian model of economics in which debt-driven government spending is seen as the key to expanding the economy.
During the 1990s, Summers played a key role in creating the real estate and mortgage bubble and the huge derivatives market that grew out of it — all of which led to the financial panic of 2008 and the ongoing recession.
Yellen, for her part, believes that Bernanke’s energetic expansion of money and credit has been inadequate. If she is appointed as Fed chairman, Yellen might well inaugurate an era of hyperinflation.
The Fed Chairman has more power over the U.S. economy — indeed, the world economy — than either the president or the Congress. Why is this so? Why does the Federal Reserve exist, and are we stuck with it? We’ll discuss this today with radio host and economic analyst Chuck Morse.
In addition to hosting the nationally syndicated “Chuck Morse Speaks” program on the IRN/USA Radio Network, Chuck has written two books — The Art and Science of American Money, and The Socialist Bible. He is also a columnist whose work has appeared in the Boston Globe, the Washington Times, WorldNetDaily, and numerous other publications.
Posted by Robert Wenzel
The Best Introduction to Austro Libertarianism Ever Given
Walter Block writes:
Tom Woods gave the opening address for the Mises University of 2013 last night.. In my opinion, this was just about the best introduction to Austro libertarianism ever given.
I fully concur. This one is for the ages.
The Attractiveness of Austrian Economics | Thomas E. Woods, Jr.
Video location: https://www.youtube.com/watch?v=DStLhWMRERM#at=1116
Published by misesmedia
Video Information: Archived from the live Mises.tv broadcast, this lecture was presented by Tom Woods at the 2013 Mises University, hosted by the Ludwig von Mises Institute in Auburn, Alabama, on 21 July 2013.
June 28th podcast by Lew Rockwell
Ron Paul on Snowden, the Federal Reserve, the Gold Market, Homeschooling and Economics
Ron Paul is interviewed by Lew Rockwell, listen here.
Ron Paul and Lew Rockwell discuss today’s important topics, including Edward Snowden, the IRS, the gold and bond markets along with the current and future economics, homeschooling and the sad loss of life due to suicides by our veterans.
I would encourage all to set aside 18 ~ 20 minutes and listen in.