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Category: C.Jay Engel

Jim Grant Smashes an Apologist for Negative Interest Rates

What a zinger. Jim Grant obliterates Ken Rogoff’s lousy case for negative interest rates. Grant writes of Rogeff:

As for the campaign for zero cash in the service of negative interest rates, Mr. Rogoff’s brief is best seen not as detached scientific analysis but as a kind of left-wing crotchet. Strip away the technical pretense and what you have is politics. The author wants the government to control your money. It’s as simple as that.

Here’s another great quote:

A positive integer would almost seem inherent in the idea of interest. When most of us want something, we want it now. And if we don’t have the money to buy it now, we borrow. “Present goods are, as a rule, worth more than future goods of like kind and number,” posited the eminent 19th-century Austrian theorist Eugen von Böhm-Bawerk. He called this behavioral truism the core of his theory of interest.

Interest rates are prices. They impart information. They tell a business person whether or not to undertake a certain capital investment. They measure financial risk. They translate the value of future cash flows into present-day dollars. Manipulate those prices—as central banks the world over compulsively do—and you distort information, therefore perception and judgment.

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Reading Recommendations Galore!

I updated two reading recommendations pages on the Reformed Libertarian site.

The first is a “30 day reading plan” (if you are really ambitious) which serves as an introductory list of some basics people should understand if they are trying to learn about Austro-libertarian ideas. Here is the link.

The second is a holistic and complete book recommendation list categorized by subject matter and difficulty level. Here is the link.

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Murray Rothbard on Why the Paleo Movement was Founded

I am in the midst of the unenviable task of going through the pending FAQ page on the main site and answering each and every question. I came to this one, which I think would be good to answer: “Why do you call yourself a Paleo-Libertarian?” So in preparing my short answer, I reread Murray Rothbard’s essay on “Why Paleo?” (May, 1990).

Here is an interesting excerpt:

Screen Shot 2016-09-02 at 9.04.32 PMBut that is not the point, although I agree that liberty will tend to flourish most in a bourgeois, Christian culture. I am willing to concede that you can indeed be a good, hard-core libertarian and still be a hippie, an aggressive anti-bourgeois and anti-Christian, a drug addict, a moocher, a rude and intolerable fellow, and even an outright thief. But the point is that we paleos are no longer willing to be movement colleagues with these sorts of people. For two separate and powerful reasons, each of which would be good enough reason to form a separate and distinct paleo movement. One is strategic: that these sorts of people tend, for obvious reasons, to turn off, indeed to repel, most “real people,’ people who either work for a living or meet a payroll, middle class or working class people who, in the grand old phrase, enjoy “visible means of support.”

In the Libertarian Party, the prevalence of these sorts of people has kept the membership and the votes low and even declining. But also in the broader movement, these luffmensch types have almost succeeded in making the glorious word “libertarian” a stench in everyone’s nostrils, synonymous with nut or libertine. At this stage, the only way to save the glorious word and the concept of “libertarian” is to affix the word “paleo” to it, and thereby make the distinction and separation crystal clear.

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Alex Epstein Obliterates George Clooney

Alex Epstein, who wrote this book (which I need to read– as this post reminded me), issued a response to the following George Clooney statement on climate change:

Well it’s just a stupid argument. If you have 99 percent of doctors who tell you ‘you are sick’ and 1 percent that says ‘you’re fine,’ you probably want to hang out with, check it up with the 99. You know what I mean? The idea that we ignore that we are in some way involved in climate change is ridiculous. What’s the worst thing that happens? We clean up the earth a little bit?

The-Moral-Case-for-Fossil-Fuels
The Moral Case for Fossil Fuels, Written by Alex Epstein

Epstein writes:

I am something close to terrified about Clooney’s comment: “What’s the worst thing that happens? We clean up the earth a little bit?”

Clooney is talking about the idea that we should “do something about climate change.” For Clooney’s environmentalist allies, that typically translates into: globally outlaw 80-95 percent of future fossil fuel use and force us to try to subsist on expensive, unreliable solar and wind energy.

And again:

For someone who understands that affordable energy is a life and death issue, this does not translate into “clean up the earth a little bit,” it translates into “making life on earth hellish for billions.” It would mean that the 1.4 billion people around the world who lack electricity—and thus have a life expectancy of 48—would not be lifted out of poverty, but would be joined by billions more.

It would mean a far dirtier environment—only high-energy, highly-developed countries have clean environments. And it would mean a far more dangerous climate. While Clooney makes time to publicly declare his solidarity with the victims, he should take some time to think about what would have actually protected them: industrial development powered by affordable, reliable energy.

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Benjamin Keach Against Redemptive Egalitarianism

God is not an egalitarian.  He does not treat all sinners in the same way. But he does treat all sinners justly.  The modern battle cry of egalitarianism extends itself throughout the whole of Western society.  From religious concerns to political matters, there is a running, and false, assumption that inequality is a great and terrible thing.  In fact, this inequality is actually considered unjust. But this is not accurate.  God did not create all of man to be the same and in fact, created each to be different.  The free economy therefore will reflect both inequality and differences of outcome; but it certainly will not produce an egalitarian utopia.  Which is why the State, considering itself Almighty, deems itself chief provider of equality of outcome.

The modern push for egalitarianism has corrupted society and destroyed the true meaning of justice.

Indeed, even in salvation God is no egalitarian.  And contrary to modern definitions of justice, God cannot not be considered unjust for only electing a few sinners for salvation.  For all deserve His eternal wrath. In passing over many, he does not withhold from them something they deserved.  And in saving the few, he gives to them what Christ has won on their behalf.

Here is Benjamin Keach on the matter of God’s election.

200px-Benjamin_KeachGod’s special Love and Election is not from any Man’s willing, or running; it riseth not from Natural Powers improved, not from his Desires, Good Deeds, or Good Inclinations, or from the fore-sight of his Faith and Obedience; but from and of God’s mere Mercy, Sovereign Grace and Favor: The Truth is, to deny God to have the power of his own Free Act in dispensing his own Sovereign Bounty, is to Eclipse his Glory, and to render him to have less Sovereign Power than that which he hath given, and allowed to Mankind: May not a Man show his Favor and Goodness in redeeming a few Captives, out of a Multitude, who willfully brought themselves into Bondage, but he must redeem them all, or be unjust? Or cannot a Man give a bountiful Gift to One or Two poor Men in a Parish, but he must bestow like Bounty to all the Poor in the said Parish? Or, can’t a King contrive and enter into a Covenant of Peace for a few Rebels that have (with a Multitude of others) taken up Arms against him, but he must be charged with Injustice, because he did not extend like Favor in the said Covenant to them all; sure, no Man, in his right Senses, will deny him this Liberty: And now, Shall not GOD have like power to dispense his Sovereign Grace to whom he pleases, who is said to do all things according to the pleasure of his own Will, and eternal purpose in Jesus Christ?

-Taken from “The Display of Glorious Grace.” [Bold added]

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H.L. Mencken on the Government’s Money and Services

HL Mencken from his article More of the Same, original published in the American Mercury in 1925:

When a private citizen is robbed a worthy man is deprived of the fruits of his industry and thrift; when the government is robbed the worst that happens is that certain rogues and loafers have less money to play with than they had before. The notion that they have earned that money is never entertained; to most sensible men it would seem ludicrous. They are simply rascals who, by accidents of law, have a somewhat dubious right to a share in the earnings of their fellow men. When that share is diminished by private enterprise the business is, on the whole, far more laudable than not.

The intelligent man, when he pays taxes, certainly does not believe that he is making a prudent and productive investment of his money; on the contrary, he feels that he is being mulcted in an excessive amount for services that, in the main, are useless to him, and that, in substantial part, are downright inimical to him. He may be convinced that a police force, say, is necessary for the protection of his life and property, and that an army and navy safeguard him from being reduced to slavery by some vague foreign kaiser, but even so he views these things as extravagantly expensive – he sees in even the most essential of them an agency for making it easier for the exploiters constituting the government to rob him. In those exploiters themselves he has no confidence whatever. He sees them as purely predatory and useless; he believes that he gets no more net benefit from their vast and costly operations than he gets from the money he lends to his wife’s brother. They constitute a power that stands over him constantly, ever alert for new chances to squeeze him. If they could do so safely they would strip him to his hide. If they leave him anything at all, it is simply prudetially, as a farmer leaves a hen some of her eggs.

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Dan Sanchez on the Apple Tax Debacle

1*dmZlVLiyxE8q8_EFcwZEWwDan Sanchez has some great thoughts, as always, on Apple and Ireland here. Snippet:

[The] European Commission slapped Apple with a $14.5 billion bill for back taxes, ruling that Ireland had violated European Union rules by taxing the technology company at such a low rate. But the Irish government doesn’t want the money! It had promised the low rates back decades ago to entice Apple to set up and keep shop in Ireland, bringing the struggling country desperately needed jobs and economic growth. The government is worried that if it reneges on that deal, it will risk driving off the geese that lay the golden eggs: Apple, and other businesses as well.

But no, insists the European super-state: sustainably prudential parasitism is not an option. The Irish government must join the rest of the Union in recklessly bleeding its private sector hosts dry until the whole system collapses under its own dead weight.

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Charles Finney and the Welfare State

Murray Rothbard, in his essay on “Origins of the Welfare State in America,” writes:

“Perhaps the most fateful of the events giving rise to and shaping the welfare state was the transformation of American Protestantism that took place in a remarkably brief period during the late 1820s. Riding in on a wave from Europe, fueled by an intense emotionalism often generated by revival meetings, this Second Great Awakening conquered and remolded the Protestant churches, leaving such older forms as Calvinism far behind. The new finneyProtestantism was spearheaded by the emotionalism of revival meetings held throughout the country by the Rev. Charles Grandison Finney. This new Protestantism was pietist, scorning liturgy as papist or formalistic, and equally scornful of the formalisms of Calvinist creed or church organization. Hence, denominationalism, God’s Law, and church organization were no longer important. What counted was each person’s achieving salvation by his own free will, by being “born again,” or being “baptized in the Holy Spirit.” An emotional, vaguely defined pietist, non-creedal, and ecumenical Protestantism was to replace strict creedal or liturgical categories.

[…]

“While a nominal Presbyterian, in 1821 at the age of 29, Finney converted to the new pietism, experiencing his second baptism, his “baptism of the Holy Spirit,” his conversion being greatly aided by the fact that he was self-educated in religion, and lacked any religious training. Tossing aside the Calvinist tradition of scholarship in the Bible, Finney was able to carve out his new religion, and to ordain himself in his new version of the faith. Launching his remarkably successful revival movement in 1826 when he was an attorney in northeastern Ohio, his new pietism swept the Yankee areas in the East and midwest. Finney wound up at Oberlin College, in the Western Reserve area of Ohio, where he became president, and transformed Oberlin into the preeminent national center for the education and dissemination of postmillennial pietism.”

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On the Alt-Right Scare: Who Cares

Here’s the deal. Hillary dismissed Trump and his base as a bunch of Alt-Righters. This was smart. She’s a good politician. She was playing a classic strategy of taking a teeny tiny group that pretty much nobody likes or actually belongs to and dismissing all her opponents as belonging to that group. This is, as I said, classic. Once the booboisie hears that non-Hillary supporters are alt-right folks, Hillary’s achieved victory.

It’s the whole dismissing someone as racist or sexist thing simply for dissenting. It works. And politics is about pragmatism. Mencken observes:

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.

But seriously who cares. Either Trump is good on liberty or he is not. He isn’t. There’s no need for libertarians to get caught up in the virtue signaling of fashionably ensuring that everyone knows how non-racist, non-sexist, anti-alt-right we are.

Congratulations, its 2016 and you’re against racism. I’m proud of you. So is everyone else. I love what Tom Woods wrote on the “taking a stand” on opinions with which 95% of people agree:

In light of recent libertarian showboating I have composed this couplet:

Hey, reporter, look at me
I’m against slavery!

It took a lot of courage to oppose slavery in, say, 1855. It takes zero courage to oppose it today. This is one reason I am convinced that those who are most ostentatious in their aversion to slavery in 2013 are the least likely to have opposed it at the time. Their excessive eagerness to disassociate themselves from perceived “extremism” would not have served them well in the 1850s, when abolitionism, which had zero electoral success, was the most notorious extremism of the day.

[…]

Unlike Kuznicki, I say things that go against the grain even though I know they will yield me nothing but grief. I hope this means I would have opposed injustice when it counted and when it might have done some good, and not just 150 years later, when I safely say what everyone thinks, to the applause of the world.

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Welcome to the New Site!

Hurrah! The new site is up! Click here.

What do you think? Please know: it’s still a work in progress and I’m still adding features and making tweaks. So I know some of you are going to really have some major critiques. Please be nice. But I welcome feedback and suggestions.

Please click on at least one of the newest 4 articles when you get to the site to get a feel for how it looks.

A couple notes on the new structure of things:

The very biggest change is the main site where all the major articles and pages are hosted is now distinct from the blog. As you will find on the main site in the menu area (far right), “The Blog” takes you to the subdomain where the blog exists. Here’s the cool thing: each and every blog post feeds into the various pages on the main site in the sidebar section so if you visit the main site, you can still see all the blogposts; clicking it will just take you to the blog site. The blog site is blog.reformedlibertarian.com .

What is the difference between an article and a blog? An article is original content, developed arguments, and longer/more thought out material. The blog, on the other hand, will be shorter and mostly unelaborated. You will find links, memes, jokes, quotes, quick thoughts, and references to outside pieces.

The transition between the main site and the blog site is pretty seamless. You will hardly notice.

I’m still working on the photo sizes on the front page. So some of them may seem a little off. Just bear with me. I have lots of tweaks to do. The mobile site is very cool. The side menu option (the three lines on the upper right hand side) is available on both desktop and mobile. The primary menu is only seen on desktop, and it is just the major categories, plus a link to the blog site.

I am going to be putting all the major pages (i.e. The Reading List) in the side menu (three line thing) and leave the primary menu for the site’s categories (topics).

The biggest annoyance for me right now is the block quotes on the main site’s articles. The default formate is all capital letters. I am working to get this changed to cursive. So again, bear with me.

Any other suggestions or feedback is appreciated. Some of you may think the blog/site distinction is a little odd. But four things: 1) You’ll get used to it. 2) How cool is it that you can scroll straight down the blog page and it reads like a legit blog! 3). I had to do it this way with the way the main theme is in order to make a single tiny blogpost not look really weird on the site.

And #4: I have a couple really cool plans in store for the blog site that I am still working on. Stay tuned for that announcement!

I will be adding new features and cool designs all week. So keep checking back in. It’s not complete yet. But for the most part it’s ready to launch. So check it out.

And finally, thank you to all who contributed to this next step with a small donation. It is always helpful and shows me the kind of interest that exists for these types of resources. I’m always appreciative. Here is what I said yesterday on Facebook on this topic:

Hey everybody, time to do this again. Once a year, I do one round of extremely low pressure fundraising for some site expenses. Let me say the same thing I say every single time: there is nothing on the site that will be prevented if no one donates. I have the same hosting/domain/theme expenses I always do and I personally have the funds to pay everything. So it’s not like you would be keeping the site up. It’ll be up regardless.

However, the reason I do this is because I know many of you have benefitted from the site and may want to express yourself in this way. A few people per year do ask me if I need any help financially and I always tell them I don’t need help per se, but there are expenses and I am indeed honored to receive contributions.

My one big change that I am doing this month is –finally– getting a modern and beautiful theme all installed. A much better one than just the tinkering with the current one I’ve been doing off and on. You guys deserve it. It’s going to be legit. So anyways, besides the regular expenses, that’s what I’ll be spending money on this time around.

If you want to contribute, I’d be thrilled. Here is the link:

https://paypal.me/reformedlibertarian

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Trumped! New Stockman Book

David Stockman has announced a new book that is coming soon:

I am in the throes of finishing a book on the upheaval represented by the Trump candidacy and movement. It is an exploration of how 30 years of Bubble Finance policies at the Fed, feckless interventions abroad and mushrooming Big government and debt at home have brought America to its current ruinous condition.

It also delves into the good and bad of the Trump campaign and platform and outlines a more consistent way forward based on free markets, fiscal rectitude, sound money, constitutional liberty, non-intervention abroad, minimalist government at home and decentralized political rule.

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The Cycle of Decivilization

The state artificially creates a variety of laws from fiat.

People inevitably break these laws.

The state uses its coercive power to enforce the law.

People get annoyed, some react with physical violence (unwise).

The state clamps down and gets more fierce.

This causes more blowback.

[fast forward decades]

Behold, the cycle continues. Hoppe’s theory of the decivilization effects of Democracy and public law is being proven correct.

More laws, more crime. More crime, more tension between state and people.

Some blame institutionalized racism. This is wrong. Racial disparity in the enforcement of artificial law does not itself logically imply racism (the theory that certain races are morally or biologically superior to others).

Others see zero guilt in the law enforcement and only consider them categorically as heroic. This is wrong. See above for the state’s role.

The state grows more powerful and more tyrannical as it becomes more desperate to maintain its beloved grasp on society. But this is a continuation of the spiral and feeds the careless and unthinking mob-like reaction. Back and forth it all goes.

Society collapses upon itself.

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Jim Hale’s Change of Heart

Yesterday I was so impressed by Jim Hale’s exclusive article over at the Ron Paul Institute wonderfully titled “Confessions of a War Propagandist,” that I also posted here on TRL. A major reason for my being impressed, of course, was because of who Jim Hale is. As the article states, Hale was the media relations director at the Committee of the Liberation of Iraq, a key influencer on behalf of the War Party’s efforts for regime change in Iraq. Hale worked closely with neocon head honcho Bill Kristol and their favorite advocate in the Federal Government: John McCain.

At any rate, today Tom Woods published Hale’s first interview since “confessing” his role in the deceitful and destructive efforts toward a completely unnecessary, unjustifiable, and unconstitutional war in Iraq. It was pretty fascinating. Apparently, Hale was one who knew Ron Paul was right in his understanding of the facts and the theory of the entire war effort, both in terms of the actual cause of the events and also in terms of the propaganda that was being promoted to drive the country toward war. But both in 2008 and 2012, Hale admits rejecting Paul’s arguments by rationalizing the very false narrative to himself until just this year when first Rubio and then Cruz quit the GOP race. At that point, Hale knew it was over and he “woke up one morning” and decided he was done.

He even cites his faith as a key motivator to his change of heart.

He literally stumbled onto Tom Woods’ site by accident, starting listening to the podcasts, bought a whole stack of the site’s recommended books to educate himself on the liberty philosophy (and no doubt on all the war-related podcasts Tom Woods has done). He even decided to give Ron Paul’s book The Revolution a chance. This was all a couple months ago, apparently. He messaged Tom Woods and recorded his first public reflection on the matter.

Completely remarkable. I mean this guy was at the very top of the propaganda efforts and here he is today, the weight of his lies finally off his chest, ready and willing to dig into the liberty movement’s resources and  open up about his change of heart. We always like the dream of the day when an “insider” will finally come clean about the corruption and lies that go on, to expose himself and his colleagues and to tell the truth about what they are doing. It’s been done before, but this truly is a great moment.

Here is the interview, give it a listen!

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FedGov and Statist Christian

The role of the Federal Government is to make up laws out of thin air and then convict people and businesses who happen to fall short of the arbitrary, often socially and economically harmful, standard.

The role of the statist evangelical Christian who lacks a coherent political theory is to praise the Federal Government for upholding “law and order” and stigmatize the person/business for acting “illegally.”

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Robert Higgs on Minimum Wage Studies

From his Facebook page:

Suppose you wanted to know how many of the soldiers who served in World War II were killed in that war. So you sent inquiries to a random sample of veterans of that war, asking: were you killed in the war? I presume that all of those who responded to the survey would reply, no. Having conducted your scientific poll, you could then conclude that none of the soldiers who participated in World War II were killed.

The mistake you would have made in this case is known as the result of survivorship bias. It affects many sorts of studies, including many where the study design is not so obviously stupid as in my foregoing example. Surveys have sought, for example, to determine how an increase in the legal minimum wage affected employers’ amount of.employment. Such a forced wage increase, especially if it were a large one, might well cause some firms to go out of business. They would then be unavailable to respond to a poll or other survey to indicate that the increased minimum wage had caused them to reduce their employment to zero, wiping out however many jobs they had previously maintained.

You might think that any well-trained economist would be aware of survivorship bias and would not draw unwarranted conclusions by failing to take it into account in designing or conducting a study. But if you thought so, you’d be wrong. Mainstream economists, including super-duper econometricians, not uncommonly make this freshman mistake.

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Excerpt from Mises’ Biography

I like this first part of the preface of Mises: The Last Knight of Liberalism, brilliantly researched and written by Jorg Guido Hulsmann. It really captures Hulsmann’s appreciation for Mises, and touches on Mises’ contributions to the freedom philosophy.

IN THE SUMMER OF 1940, with Hitler’s troops moving through France to encircle Switzerland, Ludwig von Mises sat beside his wife Margit on a bus filled with Jews fleeing Europe. To avoid capture, the bus driver took back roads through the French countryside, stopping to ask locals if the Germans had been spotted ahead—reversing and finding alternative routes if they had been.1970023

Mises was two months shy of his fifty-ninth birthday. He was on the invaders’ list of wanted men. Two years earlier, they had ransacked his Vienna apartment, confiscating his records, and freezing his assets. Mises then hoped to be safe in Geneva. Now nowhere in Europe seemed safe. Not only was he a prominent intellectual of Jewish descent; he was widely known to be an archenemy of National Socialism and of every other form of socialism. Some called him “the last knight of liberalism.”

He had personally steered Austria away from Bolshevism, saved his country from the level of hyperinflation that destroyed interwar Germany, and convinced a generation of young socialist intellectuals to embrace the market. Now he was a political refugee headed for a foreign continent.

The couple arrived in the United States with barely any money and no prospects for income. Mises’s former students and disciples had found prestigious positions in British and American universities (often with his help), but Mises himself was considered an anachronism. In an age of growing government and central planning, he was a defender of private property and an opponent of all government intervention in the economy. Perhaps worst of all, he was a proponent of verbal logic and realism in the beginning heyday of positivism and mathematical modeling. No university would have him. Margit began to train as a secretary.

Over the next decade, they would slowly rebuild and Mises would find new allies. He would also publish his most important book, Human Action. It would earn him a following whose admira- tion and devotion were beyond anything he had known in Europe.

When he died in October 1973, he had only a small circle of admirers and disciples, but this group became the nucleus of a movement that has grown exponentially. Today his writings inspire economists and libertarians throughout the world, and are avidly read by an increasing number of students in all the social sciences. There is an entire school of “Misesian” economists flourishing most notably in the United States, but also in Spain, France, the Czech Republic, Argentina, Romania, and Italy. This movement is testimony to the lasting power and impact of his ideas.

The purpose of the present book is to tell the story of how these ideas emerged in their time. It is the story of an amazing economist, of his life and deeds. It is the story of his personal impact on the Austrian School and the libertarian movement. It is above all the story of a man who transformed himself in an uncompromising pursuit of the truth, of a man who adopted his ideas step-by- step, often against his initial inclinations.

Once a student of the historical method in the social sciences, he would become the dean of the opposition Austrian School and humanistic social theory. He went from left-leaning young idealist in Vienna to grand old man of the American Right. Dismissive of “the metallists” early in his career, he became an unwavering spokesman for a 100 percent gold standard. His example inspired students and followers, many of whom would take his message and method farther than he himself would go.

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A Wealthy Zuckerberg’s Sly Move

In our wealth management practice, there is an important reminder that we help some of our extremely wealthy clients to remember: it is better to be in control and not be an owner than to be an owner and have limited control.

What we mean by this is that there are certain legal disadvantages to personally owning something, including tax and inheritance implications. Among these “somethings” that can be owned is stock of a given company.

This is how we should view the recent hoopla surrounding Mark Zuckerberg’s announcement that he will be “giving away” 99% of his ownership in Facebook. The progressive left when berserk. “This is what the wealthy SHOULD be doing! Good for Mark!”

Here’s the deal: this is exactly what the wealthy should be doing indeed, and it is what I might advise (some) people to do (if their situation calls for it). Why? Because what he just did was to transfer the wealth from his own taxable control (ownership) to a new foundation that is controlled by– you guessed it– him. Now he still controls the wealth, but he does not own it; therefore, he will not be taxed on it. That’s right: capital gains tax on the transfer? Nope. Future estate taxes for his heirs? Nada. But what about a tax deduction for the donation? You bet!

Am I saying he shouldn’t be allowed to do this? On the contrary! He should indeed! We need these strategies to protect our wealth!

What should the wealthy person do to protect wealth from the state and from the masses who demand its redistribution? What should the wealth do as a strategy to preserve the long term integrity of his wealth? He should do what Zuckerberg just did. But won’t the media and the Progressive Left be super angry?? Not if you do it under the guise of giving away your wealth for future generations. Like Zuckerberg just did. Then they lavish praise on you!

Robert Wenzel comments on the matter:

Zuckerberg Announces He Is Going To Take His Money Out Of His Left Taxable Pocket and Put It Into His Right Non-Taxable Pocket

We may have our first full-fledged billionaire couple with child, who can most aptly be described as slogan Marxists. It doesn’t appear they have any deep knowledge of Marxism, or any other social theories, they are just sloganeers: “equality for all, especially future generations.”

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Interest Rates and the Strength of the Economy

Janet Yellen’s explanation for continuing the absurd trend of ZIRP (Zero Interest Rate Policy) was essentially that, while the Fed had hit its official unemployment level goals (for clarification, the reason for this is that the labor participation rate is at historically low levels and also because we are in a boom phase of the business cycle due to the expansion of the money supply, per the Austrian Business Cycle Theory.), the economy itself was not yet strong enough to withstand the beginnings of a raise in the Federal Funds rate.  The economy is still holistically too weak for the Fed to be comfortable with a 25 basis point uptick in the price of credit.

Richmond Fed President Jeffrey Lacker was the lone dissenting voice from this position. In his estimation, the economy is actually strong enough to take on the early stages of what must eventually be a long haul toward historically normal interest rate levels.

CONTINUE READING

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Matt McCaffrey Defends Misesian Economics

Matt McCaffrey defended Austrian economics against John Mueller’s odd claim (in the Quarterly Journal of Austrian Economics!) that there’s a missing element in Austrian economics; namely, that it cannot account for things like love because Austrian economics (especially Misesian economics), centered on the methodology of praxeology, which sees all human action as a result of self-interest. Stated differently, all human beings have ends that need to be satisfied and therefore they act; this action constitutes employing means to accomplish that end.

Mueller then, presupposing that love itself must not be self-interested, states that there is a missing element in Austrian economics. For in his eyes Austrian economics is limited to action stemming from self-interest.

I think Mueller’s claim is remarkably silly.  McCaffrey easily overcomes Mueller’s observation, first by stating Mueller’s example:

For example, a mother who feeds her child is not acting out of self-interest, but of love for her infant, which explains why she feeds her child rather than consuming all her food herself. According to Mueller, standard economic assumptions cannot account for either the mother’s loving behavior or her distribution of food to her child. Likewise, there are an enormous number of similar non-exchange behaviors that fall outside economic analysis. What is needed then is a thorough revision of theory to incorporate these missing actions, and this is what Mueller sets out to do.

Nevertheless, readers of Mises will perhaps see the difficulty with Mueller’s argument: praxeology suggests that all action is self-interested in that it tries to substitute a more for a less satisfactory state of affairs, from the point of view of the actor. Action is thus a kind of exchange, though not necessarily an exchange of goods and services. Rather, when a loving mother feeds her child, she exchanges the less desirable state of the child’s hunger for the more desirable state of the child’s nourishment. Taken this way, selflessness, or love, does not pose much of a problem for economic theory.

And actually, I think there is a much stronger defense of Mises’ praxeology than McCaffrey himself gives.  Beyond McCaffrey’s point, the fact remains that the mother actually is acting in self-interest (properly understood) in feeding her child.  And this is proven by the action itself! Every single act is a revelation of the value placed on a given means/ends relationship as considered by the human actor.  The mother does not feed her child even though she would rather feed herself; she actually feeds her child because she sees the act of feeding her child as bring her more satisfaction than the act of feeding herself.  In other words, she weighs the value, mentally, of the satisfaction that would be brought about in her mind by feeding herself, against the value of the satisfaction that would be brought about by feeding her child.  Praxeology explains why she acted in that way: her self-interest made her choose the option that would satisfy her more.

In a previous post, I quoted Jonathan Edwards:

A man never, in any instance, wills any thing contrary to his desires, or desires any thing contrary to his will.

…but yet his Will and Desire do not run counter all: the thing which he wills, the very same he desires; and he does not will a thing, and desire the contrary, in any particular.

[…]

And therefore I observe, that the Will (without any metaphysical refining) is, That by which the mind chooses any thing. The faculty of the will, is that power, or principle of mind, by which it is capable of choosing: an act of the will is the same as an act of choosing or choice.

[…]It is sufficient to my present purpose to say, It is that motive, which, as it stands in view of the mind, is the strongest, that determines the will. But may be necessary that I should a little explain my meaning. By motive I mean the whole of that which moves, excites, or invites the mind to volition, whether that be one thing singly, or many things conjunctly. Many particular things may concur, and unite their strength, to induce the mind; and when it is so, all together are as one complex motive. And when I speak of the strongest motive, I have respect to the strength of the whole that operates to induce a particular act of volition, whether that be the strength of one thing alone, or of many together.

And then I commented on Edwards:

If the will is the faculty that chooses, and the will cannot choose anything contrary to the desires, then it is impossible to conceive of a situation in which we don’t choose that which satisfies the chief desires of our heart.  Thus, to obey God without our minds considering this activity the most satisfying thing at the moment is an idea that runs contrary to the entire nature of man himself.  This is an anthropological consideration; can man distance himself from his desires?  Can he act contrarily to his own will?  Piper and Edwards say no, and to disagree seems to fly in the face of reason and consistency.

Indeed, Mises economic theory does not overlook the role of love in praxeology, it merely incorporates it into the system. Mueller should understand this.

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Rothbard on inflation and interest rates; their connection

Rothbard’s “myth 4” out of the 10 myths he refuted here has to do with the relationship between inflation and interest rates:

Every time the Fed tightens the money supply, interest ratesrise (or fall); every time the Fed expands the money supply, interestrates rise (or fall).

The financial press now knows enough economics to watch weekly money supply figures like hawks; but they inevitably interpret these figures in a chaotic fashion. If the money supply rises, this is interpreted as lowering interest rates and inflationary; it is also interpreted, often inthe very same article, as raising interest rates. And vice versa. If the Fed tightens the growth of money, it is interpreted as both raising interest rates and lowering them. Sometimes it seems that all Fed actions, no matter how contradictory, must result in raising interest rates. Clearly something is very wrong here.

The problem is that, as in the case of price levels, there are several causal factors operating on interest rates and in different directions. If the Fed expands the money supply, it does so by generating more bank reserves and thereby expanding the supply of bank credit and bank deposits. The expansion of credit necessarily means an increased supply in the credit market and hence a lowering of the price of credit, or the rate of interest. On the other hand, if the Fed restricts the supply of credit and the growth of the money supply, this means that the supply in the credit market declines, and this should mean a rise in interest rates.

And this is precisely what happens in the first decade or two of chronicinflation. Fed expansion lowers interest rates; Fed tightening raises them. But after this period, the public and the market begin to catch on to what is happening. They begin to realize that inflation is chronic because of the systemic expansion of the money supply. When they realize this fact of life, they will also realize that inflation wipes out the creditor for the benefit of the debtor. Thus, if someone grants a loan at five percent for one year, andthere is seven percent inflation for that year, the creditor loses, not gains. He loses two percent, since he gets paid back in dollars that are now worth seven percent less in purchasing power. Correspondingly, the debtor gains by inflation. As creditors begin to catch on, they place an inflation premium on the interest rate, and debtors will be willing to pay it. Hence, in the long run anything which fuels the expectations of inflation will raise inflation premiums on interest rates; and anything which dampens those expectations will lower those premiums. Therefore, a Fed tightening will now tend to dampen inflationary expectations and lower interest rates; a Fed expansion will whip up those expectations again and raise them. There are two, opposite causal chains at work. And so Fed expansion or contraction can either raise or lower interest rates, depending on which causal chain is stronger.

Which will be stronger? There is no way to know for sure. In the early decades of inflation, there is no inflation premium; in the later decades,such as we are now in, there is. The relative strength and reaction times depend on the subjective expectations of the public, and these cannot be forecast with certainty. And this is one reason why economic forecasts can never be made with certainty.

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