What Has Government Done to Our Money?

It appears that the latest (of many, historically recent) shock in the international finance market comes as a huge surprise to most people. Some are even talking about a "market failure" and/or a "flaws in capitalism".

I understand statements like these. I understand them because I know where they come from and what their basis is. They come from populist preachers of faulty economics.

So how should one understand the latest (of many) crisis in the world's financial markets? The answer is here. Written in 1980 (as fourth edition of the publication, so the text is considerable older), was the following:

Until and unless we return to the classical gold standard at a realistic gold price, the international money system is fated to shift back and forth between fixed and fluctuating exchange rate,s with each system posing unsolved problems, working badly, and finally disintegrating. And fueling this disintegration will be the continued inflation of the supply of dollars and hence of American prices which show no sign of abating. The prospect for the future is accelerating and eventually runaway inflation at home, accompanied by monetary breakdown and economic warfare abroad. This prognosis can only be changed by a drastic alteration of the American and world monetary system: by the return to a free market commodity money such as gold, and by removing government totally from the monetary scene.

I dare anyone to say that this prognosis hasn't come true. History and sound economics will quickly kick such a denial to the ground. Do you dare?

The Case for Radical Idealism

If libertarians refuse to hold aloft the banner of the pure principle, of the ultimate goal, who will? The answer is no one, hence another major source of defection from the ranks in recent years has been the erroneous path of opportunism.

The Case for Radical Idealism, by Murray N. Rothbard

We are deceived by money - by Socialists!

Says Bastiat:

We are deceived by money. To demand the cooperation of all the citizens in a common work, in the form of money, is in reality to demand a concurrence in kind; for every one procures, by his own labour, the sum to which he is taxed. Now, if all the citizens were to be called together, and made to execute, in conjunction, a work useful to all, this would be easily understood; their reward would be found in the results of the work itself.

But after having called them together, if you force them to make roads which no one will pass through, palaces which no one will inhabit, and this under the pretext of finding them work, it would be absurd, and they would have a right to argue, "With this labour we have nothing to do; we prefer working on our own account."

A proceeding which consists in making the citizens cooperate in giving money but not labour, does not, in any way, alter the general results. The only thing is, that the loss would react upon all parties. By the former, those whom the State employs, escape their part of the loss, by adding it to that which their fellow-citizens have already suffered.

Copenhagen's Secret Service

Those who use Copenhagen's metro service these days (or go to the movies in Denmark) cannot avoid seeing a ridiciouls advertisement clip that Copenhagen municipality is wasting my tax-receipts on. A serious man knocks on a door of a surprised citizen, who is told how many pizza boxes and plastic glasses he has thrown on the streets for his entire life. The point? To make people feel bad about the city of Copenhagen FAILING to clean the streets of this filthy city. Yes, make people feel bad because a government spy has been accumulating information about everyday behaviour. Yuk!

The Case for Liberty

Economic science, in short, establishes existential laws, of the type: if A, then B. Mises demonstrates that this science asserts that laissez-faire policy leads to peace and higher standards of living for all, while statism leads to conflict and lower living standards. Then, Mises as a citizen chooses laissez-faire liberalism because he is interested in achieving these ends. The only sense in which Mises considers liberalism as “scientific” is to the extent that people unite on the goal of abundance and mutual benefit. Perhaps Mises is overly sanguine in judging the extent of such unity, but he never links the valuational and the scientific: when he says that a price control is “bad” he means bad not from his point of view as an economist, but from the point of view of those in society who desire abundance. Those who choose contrasting goals--who favor price controls, for example, as a route to bureaucratic power over their fellow men, or who, through envy, judge social equality as more worthwhile than general abundance or liberty--would certainly not accept liberalism, and Mises would certainly never say that economic science proves them wrong. He never goes beyond saying that economics furnishes men with the knowledge of the consequences of various political actions; and that it is the citizen’s province, knowing these consequences, to choose his political course.

From Rothbard's In Defense of "Extreme Apriorism". Beautiful!

Blame Governments, Not Speculators for High Oil Price

This is why.

If I DON'T brake the law, do I become a moral person?

Many (false) arguments have been used to justify 'tax', i.e. the power of the State to forcefully demand a certain part of the individuals' property (for whatever reason). One of the most common arguments for taxation in the so-called "welfare" societies is the "distribution of the common burdens" of society, most notable the funding of the "rich" of education, health care and support for the poor so that a certain "equality" in lifestyles can be obtained. By soaking the rich, it can be guaranteed that "equal access" is to education´and health care and that everyone is insured a certain minimum income.

Fair enough I say. This attempt to obtain "equality" is a goal in itself, and those who rule the State can choose this goal or any other and wield the State to reach it. Hitler used the State to enslave and slaughter millions of people. The Social democrats use the State to soak the rich and distribute their property to other groups in society. Both goals are in themselves only different in their type of violation of individual rights - one takes the life of individuals away from them, the other robs individuals of their property.

The problem with these promoters of State-enforced equality is their self-declared moral stance. They claim that they are using the State to reach a moral goal - equality of income and "opportunities". The Social democrats would never accept my definition of them as violators of individual rights, different only from Hitler in the kind of violation they engage in with the use of the State. No, the Social democrats will say that tax is a necessary good (or evil) to obtain a moral goal, and it is therefore justifiable.

But now for the tricky part. Lets say that equality really is a moral goal. How is it moral to obtain it with force? If it is a moral action to donate money to the poor, how is a person moral for being forced to do it? Isn't a goal only morally reached if a person does so by his or her own free will? By demonstrating a free will to be moral. Or is a monkey a moral animal if I force it to bring food to the homeless?

The very morality of giving to the poor disappears as soon as force is used to make people give to the poor. The welfare society may very well have a moral objective (although I am not convinced about that), but the very existence of it (and its tax-forced funding of its "moral" actions) wipes all morality away from it, and replaces with force and violation of individual rights, which are very doubtful moral attributes of a society.

What is taxation?

"Taxation is not just a punishment of consumption without any effect on productive efforts; it is also an assault on production as the only means of providing for and possibly increasing future income and consumption expenditure. By lowering the present value associated with future-directed, value-productive efforts, taxation raises the effective rate of time preference, i.e., the rate of originary interest and, accordingly, leads to a shortening of the period of production and provision and so exerts an inexorable influence of pushing mankind into the direction of an existence of living from hand to mouth. Just increase taxation enough, and you will have mankind reduced to the level of barbaric animal beasts."

From The Economics of Taxation by Hans-Hermann Hoppe.

So true

"That a fact is deemed true by the majority does not prove its truth."
- Ludwig von Mises, Omnipotent Government

Politically Incorrect Guide to Capitalism, The

Soon I will finish a book that I think everybody should buy for themselves, read, and buy for all others (e.g. for birthday presents or just for no special reason at all). The book is called The Politically Incorrect Guide to Capitalism, and what a guide! It is the most compact executor of socialist myths I have ever come across. It doesn't dig into detailed analysis, but does just enough to encourage the reader to do so.

It is the starting guide to economics (later to be followed with Rothbard, Mises and Hayek, to name a few). Buy it for all your friends and family!

Available from (among others):
Mises Institute Store
Amazon.co.uk
Saxo.com

PS. No I am not getting any money for this endorsement on my little website. I just happen to really want to recommend this book!

Written in 2005

But there is also a darker side to the current boom. It is to a high degree driven by the cheap-money policy of the Federal Reserve. And it is not just the American economy which rests on this shaky foundation. Most other economies in the world are also dependent upon the cheap money policies of the Fed. This is partly because the rest of the world has grown increasingly dependent upon the rising trade surplus with America created by the excess demand in America spawned by Fed policy and partly this is because the downward pressure on the dollar created by the low interest rates has made other central banks emulate the cheap money policy of the Fed in order to prevent their currencies from rising too rapidly in value against the dollar. Moreover, world economic growth is also dragged down by structural problems in Europe and Japan.

Austrian economics, anyone?

Why Do Intellectuals Oppose Capitalism?

Schooled in the lesson that they were most valuable, the most deserving of reward, the most entitled to reward, how could the intellectuals, by and large, fail to resent the capitalist society which deprived them of the just deserts to which their superiority "entitled" them?

I think this article is more or less accurate, and that the resentment of the word-smiths, the intellectual "elite", towards capitalism is mainly fueled by resentment of a system that does not reward them financially, as opposed to the school system that always gave them the highest grades and biggest rewards!

Environmentalism: A philosophy of death

Now imagine that a prominent environmentalist writes an article or gives a speech in which he expresses the wish for a virus to come along and wipe out a billion people. What will be the reaction of the environmental movement? Will that individual be denounced for misrepresenting the movement? Will the rest of the movement's leaders rush to assure the world that that individual was so far from representing environmentalism that he actually represented the diametric opposite of its principles?

Not at all. There will be no negative reaction of any kind from within the movement, not even a raising of eyebrows. I can say this with the utmost confidence, because such statements have already been made, and made repeatedly. And there has been no outrage, no negative response of any kind from within the environmental movement.

This text is taken from an excellent article by George Reisman - read it here.

Whoever believes that it is possible to be a "free-market environmentalist" is guilty of a contradiction in terms. The free market rests on a foundation of human life and well-being as the standard of value. Environmentalism rests on a foundation of the non-human as the standard of value. The two cannot be reconciled. It's either-or.

Amen!

Do you REALLY want to help the poor?

[I]f one thinks that people are unlikely voluntarily to donate to charity to help the poor, why is it assumed that they will support compulsory taxation for the same purpose? (#)

Indeed!

ENVIRONMENTALISM IS RECYCLED COMMUNISM AND NAZISM

Here's the essential common core of hatred and destruction in the doctrines of Communism, Nazism, and Environmentalism. Only the concretes differ, not the fundamental principle of hatred for human life and happiness.

Communism: The pursuit of individual self-interest causes monopolies, depressions, and exploitation of workers by capitalists. It must be replaced by self-sacrifice for the benefit of the working class and the Socialist State. Capitalists and landowners must be exterminated for the benefit of the proletariat.

Nazism: The pursuit of individual self-interest causes racial impurity, national decline, and exploitation of German workers by Jewish capitalists. It must be replaced by self-sacrifice for the good of the Aryan master race and the National Socialist State. Jews, Gypsies, and Slavs must be exterminated for the benefit of the German Nation.

Environmentalism: The pursuit of individual self-interest causes global warming, acid rain, and ozone depletion. It must be replaced by self-sacrifice for the good of other species--our "fellow biota"--and for the good of the planet, under the auspices of international treaties and a nascent Global Socialist State: the UN. Most of the human race must be exterminated for the benefit of exploited species and the planet. (This is what the environmentalist "extremists" already openly say. The "moderates" merely want to reduce carbon dioxide emissions by 90 percent and thereby reduce the American standard of living to that of a third world country, with a third world country's infant mortality and life expectancy.)

SAY NO TO RECYCLED COMMUNISM AND NAZISM. SAY NO TO ENVIRONMENTALISM

Source

What is 'class conflict'?

The Comte-Dunoyer thesis, influenced by J. B. Say, was that "ruling class" may be defined simply as that class which manages to rule the State, while the ruled are those dominated by the former through the State. Thus, class conflict does not inhere in the free-market economy or society, but is strictly in relation of State. Class harmony exists only on the free market; class conflict is generated by statism and by the relation of classes to the State.

Source. Couldn't have said it better myself!

Nationalized oil, worldwide, on the rise

"As we go forward, the benefits of higher oil prices will go more toward the national oil companies and away from the major oil companies." (source)

It seems that governments worldwide are squeezing "free" companies like Exxon and Chevron out of their fields, and bringing in their own national giants. This is bad news. In countries like Venezuela and Saudi-Arabia, all major oil fields are in the hands of government-owned companies. Their performance reflects this: Old equipment, reduced innovation and falling productivity are their symptoms.

If Exxon, Chevron, France's Total and others of this type are forced out of the game, the game will become less competitive, and its results will suffer the consequence.

Tired of driving? No worries. Soon enough you won't be able to, despite billions of barrels of oil beneath your feet, unattainable due to lack of competence by the oil industry.

A Minister-Free Health Care System

Also, "public" does not inevitably mean "state". Swiss health care is extremely decentralized. Switzerland does not have any Ministry of Health. Every canton and every self-governing administration unit is in charge of its own regulation, hospital accreditation, and funding. Thus, there are 26 slightly different systems in a country with a population of 7 million. A statist bureaucrat will immediately think of the chaos that must reign there. But an economist sees a different phenomenon: competition.

I like Swiss attitude towards the State, health-care and market solutions contra centralized state problems.

Burn that oil and worry not!

"The inescapable conclusion is that the human contribution is not significant and that observed increases in carbon dioxide and other greenhouse gases make only a negligible contribution to climate warming." Source.

Socialism disguised as "man made global warming" is quickly loosing all scientific credibility, thanks to scientists like John R. Christy and others.

Of course, when Earth's climate once again changes its temperature-trend from warming to cooling, the Socialists will simply switch their agenda from trying to "cool" the Earth to trying to "warm" it. When that happens it will be fun to read reports like these, and one more time point out that Socialism has no scientific basis.

Does man regulate the Earth's climate?

I just found a very interesting site (by accident), and present two quotes from it about the climate and its warming (which some still stubbornly declare is man-made):

In 2004 a group of UNIS geology students found an ancient polar bear jawbone at Svalbard. Now it turns out that this find could confirm that polar bear as a species has already survived one interglacial period, bringing hope that the first and foremost Arctic symbol can – in fact – also survive the current warming climate.

Second quote:

The greatest problem for the International Panel on Climate Change (IPCC) is that they fail to agree on what will happen to the world itself, he told the audience at UNIS. – The planet is itself taking part in the global warming, as the tundra regions emit more CO2 because of increasing temperatures. This is a non-stoppable process from one stable state of the Earth to another stable state; from a cooler climate to a warmer climate, like the ones in the past, Lovelock said.

Both quotes from the website of the University Centre in Svalbard.

What can we learn from this? First of all, polar bears can adapt to changes in the climate's temperature. Second, perhaps there is such a thing as a self-regulating mechanism in Earth's atmosphere, which adjusts when for example volcanoes erupt, leaves rotten and men drive cars fueled by oil.

Doomsday prophesies and socialism are therefore not requested at this time!

Why are we forced to read poems, but not study economics?

In school (as children), most of us are forced to read poems, learn how to play some musical instrument, know the names of the main rivers and towns in our country, learn the basics in a foreign language or two and read famous novels and books.

Very few of us are forced to study the basic principles of economics while the State is in control of our education and forces us to attend school. We must choose to study economics at later stages if we are interested.

This strikes me as weird. As members of society, we are constantly being bombarded with terms like "inflation", "interest rates", "consumption", "taxes", "employment" etc. All of these terms are a part of economics in one way or another. All of them influence our choices and understanding them is necessary to make rational decisions.

For example, I would not recommend anyone using his or her vote with complete absence of basic understanding in economics.

My theory is that the State, on purpose, does not force economics down our naive throats (like it does with poems and geography) because too much and widespread understanding in economics would greatly tie the hands of the State in its relentless inflationary, irresponsible tax-financed governance of our lives.

Are Libertarians "Anarchists"?

So answers Murray N. Rothbard:

Then, when, in the jousting of debate, the inevitable challenge "are you an anarchist?" is heard, we can, for perhaps the first and last time, find ourselves in the luxury of the "middle of the road" and say, "Sir, I am neither an anarchist nor an archist, but am squarely down the nonarchic middle of the road."

I must say that I am not happy with this answer. It's a boring wishy-washy ansewer and doesn't say any more than no answer at all! In my mind, I am a libertarian, and would say yes to the question. However, I would add that those on the left wing that call themselves anarchists are in fact not. They are confused socialists - promoters of violence and all-around State tyranny! Therefore, I agree with Rothbard when he said:

If it is proper and legitimate to coerce an unwilling Henry Thoreau into paying taxes for his own "protection" to a coercive state monopoly, I see no reason why it should not be equally proper to force him to pay the State for any other services, whether they be groceries, charity, newspapers, or steel. We are left to conclude that the pure libertarian must advocate a society where an individual may voluntarily support none or any police or judicial agency that he deems to be efficient and worthy of his custom.

As I oppose the notion of "limited government" just like any other forms of government, I am an anarchist. That's that!