Category Archives: Economics

John Maynard Keynes

Writes Robert Katz:

John Maynard Keynes, 1883 – 1946, was an infamous British mountebank and soothsayer who overpoweringly advanced the idea that an effective way for the State to defray the extravagant expenses met on route to its worldwide barbarous pillaging would be for it to engage in mass counterfeiting. He based his prognostication of the scheme’s efficacy on the premises that the multitude was either ignorant enough to believe that the debasement of their money was beneficial or wicked enough to energetically participate as the State’s privileged partner in the sham of taking in sound money and passing out fake. He was alarmingly accurate on both behavioral suppositions. Some of the biggest and most dishonorable swindlers of this morally offensive confidence game are Alan Greenspan, Ben Bernanke, Janet Yellen, and Jerome Powell.

The Birth of “Irrational Exuberance”

It’s still with us. Article by George F. Smith.

Excerpt:

John Law, the early eighteenth-century Scottish gambler and financier, thought the best way to revive an ailing economy was to remove the “great scarcity of money,” as he wrote in a 1705 monetary tract. A decade after its publication he took his ideas to the Continent and sold them to Philippe d’Orleans, the regent in charge of France’s finances, who needed a scheme more sophisticated than his failed program of coin clipping and confiscation to save the nation from bankruptcy.

In 1716 Philippe set Law up as head of the Banque Générale, the country’s central bank, giving it and him monopoly control of the note issue. Having won the nation’s trust with declarations of allegiance to sound money principles – he had promised his banknotes would be “payable on sight” in unadulterated gold coin – Law proceeded to apply another element of his theory. Because a scarcity of money, he believed, was the root of France’s economic problems, and since banknotes backed purely by precious metals would be in short supply, he began issuing notes “backed” by the nation’s vast landholdings. Exactly how one would redeem banknotes for acreage he neglected to explain.

Is John Law regarded as a charlatan today? Not whatsoever. The most influential economists of modern times regard Law with sympathy and respect. One eminent economic historian places Law in the “front ranks of monetary theorists of all time.” Others view him jealously for being the first economist to run an entire country, even if it meant running it into the ground.

Saint-Simon concluded,

[T]he chimera of the Mississippi, with its shares, its special jargon, its science (a continual juggle for drawing money from one person to give it to another), was to almost guarantee that these shares should at last end in smoke (since we had neither mines, nor quarries of the philosopher’s stone), and that the few would be enriched at the expense of the many, as in fact happened.

The allure of easy money drives irrational behavior, then and now.  End the Fed.

Net Zero means zero growth

Interview (podcast) on spiked-online.com with Jon Moynihan. Interviewer is Brendan O’Neill.

Introduction of the written excerpts:

Britain, the nation that birthed the Industrial Revolution, is now a world leader in deindustrialisation. The power stations, oil refineries and steelworks that helped make the UK wealthy are now closing down and moving abroad. High energy prices are crippling industry and hurting households. Yet politicians are doubling down on precisely the policies that have brought us here. Reducing carbon emissions, they say, must be the nation’s priority. Apparently, we need to embrace a Net Zero future, no matter what it costs our economy.

Playing with Fire: Money, Banking, and the Federal Reserve

Video by the Mises Institute.

The Fed has been the source of booms, busts, and the ongoing impoverishment of Americans since the Fed’s founding.

This is why a new, critical look at the Federal Reserve is needed, and why the Mises Institute is now happy to bring you this new documentary on the Fed.

Playing with Fire provides a look at how the Fed uses its expanding power to damage our economy, increase inequality, and to impoverish ordinary Americans. The film also looks at how much the Fed has expanded its own power since the Financial Crisis of 2008.

Featuring interviews with Ron Paul, Tom DiLorenzo, Joseph Salerno, Mark Thornton, Jim Grant, Alex Pollock, and Jonathan Newman, Playing with Fire explains what the Fed is, where it came from, and why it is so dangerous. Perhaps most importantly of all, Playing with Fire shows why we need to end the Fed altogether.

The UK gov’t wants to legalise “assisted dying”. Here’s what happens next.

Article by Kit Knightly

[Gotta get those pension and welfare liabilities down somehow. PwG]

The Parliament of the United Kingdom is moving forward with a vote on a new bill that will legalise assisted dying for those diagnosed with terminal illness.

The bill, proposed by Labour MP Kim Leadbeater, has yet to be published in full. According to the BBC:

The details have not been finalised but the bill is likely to be similar to a proposal in the House of Lords, which would allow terminally ill adults with six months or fewer to live to get medical help to end their own lives.

This is the culmination of a years-long political, media and entertainment industry wide campaign to normalise euthanasia in the UK’s public mind.

In that time we have been told that assisted dying is good for people, good for the NHS and good for the environment.

The bill is expected to be formally introduced on 16 October, with the first debate to take place later this year, meaning the vote will likely be held in early 2025.

I would be stunned if it doesn’t pass.

Here is my prediction for what happens next…

– For the first year or so it will just be an option, you won’t hear much about it except in articles with headlines like “Assisted dying saved my parent/partner/child from years of pain”.

– After a year or two a report will come out claiming success via some tortured invented statistical measure like “assisted dying boosts patient well being scores in surveyed NHS hospitals”.

– Another will follow claiming waiting lists have improved due to decreased overcrowding in palliative care wards. They might even claim it’s decreased the NHS’s carbon footprint.

– Opinion pieces will appear with titles like “Assisted dying success story shuts down conspiracy theorists”.

– The minimum age to be considered for assisted dying will gradually be lowered. And the list of diseases and conditions for which assisted dying is a “recommended treatment alternative” will expand.

– Eventually non-lethal diseases will be included, then psychological illnesses too. Then physical and mental disabilities.

– Then will come an “emergency” – a fake one, obviously – and the NHS will come out of it shining thanks to resources “freed up” by euthanasia programs.

– Next will come the editorials. “Assisted dying is good for patients and saved the NHS during [fake pandemic], it’s time to make it mandatory”.

– A backbench MP will introduce a bill forcing anyone diagnosed with a fatal illness to be put on an assisted dying list.

– The bill will fail, and most of the press will oppose it, but the government will issue “common sense” compromise regulations where assisted dying is the default, but patients can opt out of if they want.

– It will never actually BE mandatory. But it WILL be harder and harder to get out of. If you choose to opt-in and later try to change your mind, you will be said to be mentally incompetent.

– Patients who don’t want to sign DNRs or opt for end of life care will be branded “selfish” and “irresponsible”. Studies will claim they are a strain on the NHS’s resources.

– Down the line, opting out will incur penalties to your pension payments and mean you are charged for healthcare, making it impossible for many older people to afford to stay alive.

– Then they’ll start panels where patients who are “mentally incompetent” have assisted dying recommended by “mercy tribunals”.

…and the whole time the establishment will claim there is freedom of choice, and no slippery slope at all.

What Ludwig von Mises Meant by “Democracy”

Article by Ryan McMaken.

Excerpt:

“Democracy” is one of those terms that is essentially useless unless the one using the word first defines his terms. After all, the term “democratic” can mean anything from small-scale direct democracy to the mega-elections we see in today’s huge constitutional states. Among the modern social-democratic Left, the term often just means “something I like.”

The meaning of the term can also vary significantly from time to time and from place to place. During the Jacksonian period, the Democratic party—which at the time was the decentralist, free-market, Jeffersonian party—was called “the Democracy.” By the mid twentieth century, the term meant something else entirely. In Europe, the term came to take on a variety of different meanings from place to place.

For our purposes here, I want to focus on how one particular European—Ludwig von Mises—used the term.

Although many modern students of Mises are often highly skeptical of democracy of various types, it is clear that Mises himself used the term with approval. But, Mises used the word in a way that was quite different from how most use it today. The Misesian view contrasts with modern conceptions of a “democracy” in which majority rule is forcibly imposed upon the whole population. Because modern democratic states exercise monopolistic power over their populations, there is then no escape from this “will of the majority.”

Misesian democracy is something else altogether.

Mises’s vision of democracy must be understood in light of his support for unlimited secession as a tool against majoritarian rule. For Mises, “democracy” means the free exercise of a right of exit, by which the alleged “will of the majority” is rendered unenforceable against those who seek to leave.

Continue reading here.

The Fatal Conceit

That’s the title of Friedrich Hayek’s final book (published 1988).

According to the Wikipedia page of the book, the title drives “from a passage in Adam Smith’s The Theory of Moral Sentiments (1759), though the exact phrase does not occur in Smith’s book.”

Here is that Adam-Smith quote, according to Wikipedia:

‘The man of system … is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. … He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces on a chess-board. He does not consider that the pieces on the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse [choose] to impress upon it.’ Adam Smith, The Theory of Moral Sentiments, ed. D.D. Raphael and A.L. Macfie, Indianapolis: Liberty Fund 1984, VI.ii.2.17: 233-4.

The Role of Intellectuals in Society

The concluding words in Murray N. Rothbard‘s book “The Case For a One Hundred Percent Gold Dollar” (pp. 71f):

There is no gainsaying the fact that this suggested program will strike most people as impossibly “radical” and “unrealistic”; any suggestion for changing the status quo, no matter how slight, can always be considered by someone as too radical, so that the only thoroughgoing escape from the charge of impracticality is never to advocate any change whatever in existing conditions.
But to take this approach is to abandon human reason, and to drift in animal- or plant-like manner with the tide of events. As Professor Philbrook pointed out in a brilliant article some years ago, we must frame our policy convictions on what we believe the best course to be and then try to convince others of this goal, and not include within our policy conclusions estimates of what other people may find acceptable. For someone must propagate the truth in society, as opposed to what is politically expedient. If scholars and intellectuals fail to do so, if they fail to expound their convictions of what they believe the correct course to be, they are abandoning truth, and therefore abandoning their very raison d’etre. All hope of social progress would then be gone, for no new ideas would ever be advanced nor effort expended to
convince others of their validity.

What Has Government Done to Our Money?

Book by Murray Rothbard, preface by Guido Hülsmann

I can name maybe half a dozen books (including the Bible) which have been pivotal to my intellectual development. What Has Government Done to Our Money, by Murray N. Rothbard, is one of them. Here‘s the Wikipedia page on the book.

I cite in the following excerpts from the preface by Professor Jörg Guido Hülsmann.

What Has Government Done to Our Money? is an outstanding example of Rothbard’s creative mind at work. Since it was first published in 1964 .[sic! Wikipedia and other sources say 1963], it has appeared in four editions in English, and has been translated into many foreign languages. It has served as a primer on monetary theory for all its readers. In fact, it is probably the most brilliant introduction to monetary theory ever written, presenting both the foundation of monetary theory and exploring the role of the state in the degeneration of monetary systems. The book is suitable not only for economists, but also for non-academics and all people interested in the subject. It is, like all of Rothbard’s works, a timeless and powerful statement. It leaves the reader with a completely new way to think about the relationship between money and state.

Here the elements and the functions of a free monetary system are presented with brevity and clarity. Rothbard shows how and why gold and silver are used as money on the unhampered market. Money originates neither from social compact nor government edict, but as a market solution of the problems and costs associated with barter. All other tasks usually considered monetary duties of the state — from minting to the definition of the monetary units to the precise form money will take — are left to private entrepreneurs on the unhampered market.

Where is the place of the state in this picture? Doesn’t the state have to guard our money? Doesn’t it have to adjust the money supply and supervise the banks? Rothbard’s answer to these questions is a clear no. Government intervention does not protect money at all but rather threatens its integrity. Government interference leads to more abuse and more instability than the free market would otherwise have tolerated. Instead of solving problems, intervention creates them. Instead of order they bring chaos and economic upheaval.

For Rothbard, the central issue is not whether monetary policy should stabilize the price level or the money supply; it is whether there is a role for the state in the monetary system at all. On this question, Rothbard answers decisively in the negative. Entrusting the money to the state is a grave error. It opens door and gate for totalitarian control of the society by interest groups closely connected to the state apparatus. The consequences are economic and monetary crises, and a relentless decline in the purchasing power of money. Rothbard illustrates this impressively with a short history of the monetary collapse of the West.

Rothbard’s chronicle of decline ends with the breakdown of Bretton Woods and a prediction that the future portends continued exchange-rate volatility, debt accumulation, inflation, crises, bailouts, and a political drive to further centralize control of money and credit. This prediction turned out to be a good summary of the monetary events of the last quarter century. The world economy adopted a de facto dollar standard, a managed monetary integration came to Europe, and crisis has followed crisis in Asia, Russia, Mexico, and Central and South America, along with exploding deficits and debts in the United States. Undoubtedly many more will come our way.

This new edition includes a detailed reform proposal for a 100% gold dollar [see online here], an essay first published in 1962, the same year that Man, Economy, and State appeared and two years before What Has Government Done to Our Money. That it was written a decade before the last vestiges of the gold standard were abolished does not diminish its power as a proposal for reform.

Would Rothbard’s plan work? Certainly. The limits are due not to its economic viability but rather to the same forces that keep all radical proposals for freedom at bay: political barriers and ideological opposition. Should the conditions ever become ripe for pure liberty again — and Rothbard was ever the optimist — this essay will serve as an outstanding blueprint.

Today all nations face a choice between sound money and continuing monetary depreciation and/or monetary crisis. Sound money, Rothbard shows, means the enforcement of strict separation between the state and money. Rothbard has shown that the world’s party of liberty can embrace what is usually said to be an impossible ideal: an international money protected against the arbitrariness of the state. His analysis and prescriptions deserve even more attention today than when they were first written.

Jörg Guido Hülsmann

Angers, France

April 2005