One Year Later at PTPOL

One Year Later at PTPOL.

Well, this blog has been registered at WordPress.com for one year now. It took a while to get it off the ground, but it hit the ground running. (How’s that for a mixed – and contradictory – metaphor, by the way?) Click here to learn more about the blog, and here to learn a little bit about it’s author.

140 posts, 6,602 views, 482 comments, 200 WordPress likes, 192 Facebook likes, 54 followers on WordPress, 1150 followers on Twitter.

Not bad for an amateur one-man team, right? Well, its the readers that are more to thank. Without them there really is no point in writing.

Continue reading

My Congressman Voted No

My Congressman Voted No.

Dennis Rehberg, Montana’s only congressman voted against the “fiscal cliff deal,” which passed the House 257-167 yesterday evening. Whether he did it because of his principles or he listened to his constituents or to his base, or was simply trying to uphold his oath of office, I applaud him. I had emailed him yesterday afternoon, a few hours before the deal went through and asked him to reject this “compromise”. I do not think I convinced him to vote the way he did, of course. It may well be that he was flooded with emails and phone calls. Or perhaps he really thought it was a bad bill. Continue reading

Tea Party Heroes Ron And Rand Paul Make For A Bitter Brew; Seventh Response

Tea Party Heroes Ron And Rand Paul Make For A Bitter Brew; Seventh Response.

The following is the seventh paragraph of Barry Germansky’s op-ed Tea Party Heroes Ron and Rand Paul Make for a Bitter Brew, from earlier this year, interspersed with my rebuttals from within the last few days.

BARRY GERMANSKY: The Pauls’ default stance of misrepresenting the historical record also helps them peddle the absurd Austrian School idea to deregulate all private businesses and subsequently create a utopian free market.

HENRY MOORE: We have already dealt with the historical record, which you have ignored, but must you now ignore the point of science (economics is a social science, one for which there are many competing theories)? You are here misrepresenting the Austrian School of Economics. To quote Walter BlockNo, Austrian economists can’t oppose or favor anything. To say that they do is to violate the normative positive distinction. Austrians are limited to saying that a given policy will have thus and thus effects; they logically cannot say, qua Austrians, that a policy is good or bad, nor may they favor or oppose it, again qua Austrian economists. Certainly, they can do so as citizens, as ethicists, as philosophers, but economics per se is and must be value free, despite the fact that this stricture is all too often violated, as in the present case.”

So Austrians do not oppose or favor any policy, such as deregulation, privatization, “utopian” free markets, as Austrians. They may do so as libertarians, which many Austrian economists are in varying degrees, but not as members of the economics profession, regardless of the school they find the most useful. Why is adherence to the Austrian school or other free market theories, and to libertarianism often found in the same people? Emphasis on such things as individual choice and individual action, as well as the fact that utility (relative to societal norms) applied to knowledge gleaned from the scientific theory, and the morality of the philosophical/political theory often lead to compatible conclusions.

A general example would be where policy a leads to unintended result b, an Austrian neither favors nor opposes policy a in and of itself, rather its merit depends on whether result b is in line with the original intent of policy a and/or the societal norms that the policy derives from or is in reaction to. To the scientist, the policy and its result have no moral value relative to science, only relative to the purported intentions of the policy in question. To the philosopher, especially one coming from a framework that values liberty highly, the Austrian (though not as an Austrian) may oppose the policy (and favor alternatives) on those grounds, regardless of whether or not he favors or opposes them (or remains objective, in the case of science) on other grounds.

A specific example following these same lines would be economically interventionist policies that intend to increase homeownership rates because the societal norm is that home ownership is a worthy and valuable goal, which then have the result of decreasing homeownership or stopping the growth of home ownership in the long run, or that have myriad other unwelcome (by society, not necessarily the scientist, who is mostly an observer) effects that outweigh those results considered more positive. The Austrian that is also a libertarian might oppose these policies on the grounds that public policies favoring one group (generally socio-ecnomic, ethno-cultural, political, or regional) at the expense of others necessarily violates the rights of the those in other groups. I just described to you the Housing Bubble and ensuing economic crisis.

[It is sometimes observed that Austrian school luminary Ludwig von Mises, though libertarian in his conclusions, was very much a utilitarian/consequentialist, and when coming to conclusions about the moral worth of a policy, applied this to his scientific knowledge, rather than a deontological libertarianism apart from his scientific knowledge. This is somewhat true, taking into account semantics, but upon further study, when all is put into context, the label is somewhat of an oversimplification.]

Furthermore, your idea of regulation is arbitrary. Because there is a public policy and it is called a “regulation,” that automatically means it regulates? No. Often so called “regulations” create irregularities, and occasionally the blame for economic crises rests on their shoulders. The free market, on the other hand, is capable of regulating without the aid of government so-called experts. Markets can regulate themselves because each person only needs knowledge about a small portion of that which affects him, whereas central planners can not regulate markets because there are far fewer of them and by comparison the knowledge required is too vast for them to master, in a given point in time, let only keep tabs on throughout a large span of time. This is an overly simplistic way of looking at it, of course, but when one clearly can not even grasp this concept, up till now I hope, it is pointless to delve much further. Though I have attempted to do so hereherehereherehereherehere, and here.

BARRY GERMANSKY: The Pauls refuse to believe that deregulation caused the Great Depression and the 2008 recession, despite vast quantities of evidence to the contrary.

HENRY MOORE: There is hardly any evidence (it is certainly not vast) that deregulation caused the Great Depression or the 2008 Recession, unless of course we see deregulation (which is often cleverly misused to refer to not only deregulation, but regulation, reform, and combinations of all the aforementioned) as a mitigating factor (e.g., rapid deregulation of a sector accustomed to regulation can indeed cause “problems,”; a separate issue entirely is the fact that these “problems,” though painful for some, are necessary to liquidate malinvestments and to shift misallocations, and that without these temporary wounds reopening, worse infections would fester).

In fact, it is more accurate to blame regulations. I use the term loosely (but nowhere near as loosely as some use the term “deregulation”) to refer to such things (during the 2008 Recession) as the Federal Reserve’s Dual Mandate of price stability and low unemployment, manipulation of interest and exchange and tax rates, price controls, implicit bailouts (this is the  type of regulation most commonly ignored by progressive-types griping about the so-called “repeal” of the Glass-Steagall Act, which often bears the brunt of the blame for the 2008 Recession), the Community Reinvestment Act and related or similar laws, the financial actions of certain Government Sponsored Entities, and the exacerbation of the ensuing problems with things like explicit bailouts, stimulus, and Quantitative Easing.

BARRY GERMANSKY: Following the Great Depression, when FDR introduced strict, compartmentalized regulation of the marketplace, the United States enjoyed a forty-year period of virtually uninterrupted growth, transforming the country into a superpower.

HENRY MOORE: The growth was not the result of any regulations, it was the result of a reinvigorated post-world war private sector, which had been stifled by the Hoover and Roosevelt economic and foreign policies in the 1930s and early 1940s. Without these policies the boom would have been that much sooner and by the time in question that much bigger. This is part of the reason the US became a superpower (it already was prior to the Great Depression, but after World War Two, increasingly so), but just as significant was what occurred with World War Two. The United States was comparatively insulated from the world wars in terms of structural damage. So it recovered from them more readily than the other superpowers, those in Europe and Asia. The competition, even that from the other supposed superpower, the Soviet Union, simply did not compare.

BARRY GERMANSKY: Then, when Reagan took office in the 1980s, he was aided by Alan Greenspan and company to remove the historically-proven regulations.

HENRY MOORE: The regulations were not historically proven. They led to the end of Bretton Woods in 1971, and the regulations imposed because of that (which were diminished some by Carter, Reagan, and Volcker), including wage and price controls, and the slow unravelling of the currency, both of which were major factors in 1970s Stagflation.

A lot of the regulations that Reagan got rid of were not just FDR’s. Some of them were also Nixon’s. Paul Volcker (under Carter and Reagan) actually did more to deregulate than Greenspan (only briefly under Reagan, more closely associated with Bush Senior, Clinton, and Bush Junior) ever did. A lot of Reagan’s policies, including deficit spending were the opposite you make them out to be. Supply-side economics is not the same thing as free market economics. Any “economics” that puts too much (i.e., artificial) emphasis on either the supply side or the demand side (or on both as they are not mutually exclusive) is liable to create distortions. It is true that supply drives demand, but this does not mean supply should be propped up in any way by government. For the record, supply-side economics is subtle corporate welfare (as opposed to that which artificially prop up demand which is things like wage and price controls and welfare for the poor) and has been practiced by every administration and Congress going back for decades, including FDR, often in combination with more policies aimed at propping up demand.

Greenspan’s policies were far from free market reforms. For a former proponent of the gold standard and follower of Ayn Rand, he had comparatively little to show for it in his actual policies, often moving in the opposite direction.

BARRY GERMANSKY: This helped big businesses make more profits while sending the rest of America into the gutter. This culminated in the 2008 recession.

HENRY MOORE: So is it deregulation or profit that causes recessions? Which is it? Didn’t small businesses get profits too? And didn’t some wages go up in real terms? And weren’t the wages that didn’t go up start on that trend before Reagan and Greenspan? What is it about profit (or deregulation) that sends “the rest of America” to the gutter? Is it that some of these new profits are not in fact new, but simply the same profits but less of them stolen through taxation? In other words, is the reason that some of these Americans were no longer permitted to live off of someone else? If you want a policy to blame for making the middle class poor and the poor desperate, look at things like minimum wage laws, which take the bottom rungs off the employment ladder; unsustainable lines of production encouraged by an elastic currency and cheap credit; dependence on high priced foreign cartel energy sources because the Executive Office, Department of Energy, Environmental Protection Agency, and public rent seeking special interests don’t want the United States to access her own abundant natural resources; and outsourcing caused by high tax rates, onerous regulations and managed trade. Those are your culprits.

BARRY GERMANSKY: The Pauls are able to ignore all of these historical events because they treat their personal ideology as more credible than primary evidence. This is a big no-no for any serious historian.

HENRY MOORE: You mention few, if any, actual historical events, and virtually no reliable evidence. Mostly personal ideology and vague platitudes.  And hardly any context to accompany them. You are not a serious historian. Neither are most of the people you have been reading or listening to. You are all certifiable laughing stocks. You and your arguments have no credibility whatsoever.

Remember, Remember! and Don’t Forget: Just Who is Co-Opting the Liberty Movement?

Remember, Remember! and Don’t Forget: Just Who is Co-Opting the Liberty Movement?.

“Remember, remember

The fifth of November
The gunpowder treason and plot.
I know of no reason
Why the gunpowder treason
Should ever be forgot.”

That was technically yesterday (Mountain Standard Time), though I when I started this piece I hadn’t gone to bed yet. Today is officially election day. This post is intended to bring a few things to everyone’s attention. Many people already know these things. Some don’t. Either way, as usual, I will put a little of my own spin on it.

First on the election.

On the presidential elections (I still have not voted yet today, but I think I will make it to the polls before they close), voting doesn’t really effect the election outcome unless you are in a battleground state. So I hope most people will be voting their consciences. Voting, however, does send a message, and that message for each voting block is the same REGARDLESS of the outcome. What I mean by this is, if you support someone but vote for someone else, odds are that not only will that vote have no effect on the outcome (unless, as I said, it is a tight race) in terms of who the next president is, but you are also keeping people from knowing what you truly believe. Voting to send a message therefore has much more of an impact than voting to put someone in power.

And now, the rest of the post on ongoing and attempted takeovers of the liberty movement by 1) Occupy Wall Street (this was only a minor and unintended offense on their part), 2) the rank and file of the Tea Party (originally a good thing, but now more or less synonymous with the GOP), and 3) the Kochtopus (who in my conspiratorial mind own Jesse Benton, Paul Ryan, Mitt Romney, and a good portion of many Republican, Tea Party, and Libertarian groups, organizations, and individuals, though I do not allege that everyone employed are receiving funds from the Koch Brothers is automatically a blind tool).

407 years ago this night was the Gun Powder plot where a group of English Catholics attempted to Assassinate James I of England. All religious considerations aside (I am not a Catholic), it was an act against oppression and thus a tradition has come down to us today, mainly in England, to celebrate the anniversary. I won’t go into any details about how the Fifth of November, AKA Guy Fawkes Day is traditionally celebrated, but I do want to call attention to the man it was named after. But not the historical man because that is fairly boring. It is to the fictionalized, mythologized, romanticized, and later Hollywoodified version that I will point you. Guy Fawkes is a Robin Hood-like hero in these later accounts, and much the same he has captured many hearts and minds. Like Robin of Loxley, he stands against the existing order, the status quo, and evades the unjust authorities, but perhaps unlike him, the whole idea of tyranny. What more could I ask for?

We’ve all seen the Guy Fawkes masks, the ones that come from the movie V for Vendetta. The first people that used them as activists, perhaps to the surprise of many, were in fact Ron Paul supporters. Not the hackers group Anonymous, and not the Occupy Wall Street movement. Just like with the Tea Party movement.

Speaking of Anonymous, Guy Fawkes, and Ron Paul, check out this “leak” and the video below.

https://cdn.anonfiles.com/1351956247586.pdf

Ron Paul raised $4.3 Million on Guy Fawkes Day in 2007. Why a similar money bomb didn’t occur in 2011 is probably due to former Campaign Manager Jesse Benton’s fear and loathing of anything resembling disorder or fringe or passion.

Most Ron Paul supporters had their suspicions of Jesse Benton. Some smelled a rat early on. Other reserved judgement until it was too late.

Adam Kokesh was one in the former category. [Warning: Foul Language!]

He regarded Jesse Benton and Campaign for Liberty (under Benton’s leadership at the time) with disdain from early one, at first for what seemed to be personal reasons, but later what turned out to be a dead-on instinct.

This all reminds me of an historical episode that occurred between another Jesse Benton, and a man who might be considered Ron Paul’s role model against the Central Bank, President Andrew Jackson.

Campaign for Liberty was perhaps the first real Tea Party organization, although in a sense Dick Armey’s Freedom Works (2004), the Koch Brothers’ Americans for Prosperity (2004) Grover Norquist’s Americans for Tax Reform 1985), and the Koch Brothers’ Citizens for a Sounds Economy (1984) all deserve honorable mention.

Even Murray Rothbard can be said to have had a role, albeit a small one.

The New Boston Tea Party – Murray Rothbard

And speaking of Murray Rothbard and the Kochtopus, I suggest you read some of these links I have done many hours worth of research looking for. I have read a number of them myself. There is some really juicy stuff in there. And it should be required reading for any liberty minded person worried about the corrupting influences to be found in politics, even in the libertarian movement. I don’t know entirely what to make of it all other than that the Koch brothers have done many great deeds for which they should be praised, but all for what appear to be the wrong reasons, reasons, which have also caused them to do a great deal of  more sinister things. Perhaps enough to outshine their more praiseworthy endeavors. They are corporate fascists and elitists no less than George Soros and Warren Buffet. They just have a different strategy. Perhaps the most clever and dangerous.

1969

Libertarian Cover for the Corporate State by Murray N. Rothbard

1980

The Clark Campaign: Never Again by Murray N. Rothbard

1981

http://mises.org/journals/lf/1981/1981_01-04.pdf

Konkin on Libertarian Strategy – Murray N. Rothbard – Mises Daily

Samuel Edward Konkin III “Reply to Rothbard”

http://mises.org/journals/lf/1981/1981_06-07.pdf

1993

WHY THE PRO-NAFTA HYSTERIA?

May 28, 2007

Conference on Austrian Economics and the Firm « Organizations and Markets

March 25, 2008

How Libertarian Is the Kochtopus? « LewRockwell.com Blog

April 22, 2008

The Kochtopus vs. Murray N. Rothbard by David Gordon

May 12, 2008

The Kochtopus vs. Murray N. Rothbard, Part II by David Gordon

October 22, 2008

The Board Game of Libertarian Public Policy

January 2, 2009

Tyler Cowen: Statist, anti-Rothbardian agent of the Kochtopus | TIME.com

March 2, 2009

The Kochtopus and Power « LewRockwell.com Blog

March 6, 2009

‘Libertarian’ Hero « LewRockwell.com Blog

August 28, 2009

Cowenian Second-Bestism Smackdown

Good for Pete Boettke « LewRockwell.com Blog

March 30, 2010

Koch Brothers Fund Trey Grayson’s Campaign « LewRockwell.com Blog

re: Koch Brothers Finance Trey Grayson’s Campaign « LewRockwell.com Blog

April 22, 2008

The Kochtopus vs. Murray N. Rothbard by David Gordon

April 16, 2008

‘Reason’-Funder To Host Cheney « LewRockwell.com Blog

August 4, 2010

Radical Roots of Libertarianism by Samuel E. Konkin III | JustLive

August 30, 2010

The Billionaire Koch Brothers’ War Against Obama : The New Yorker

In Defense of the Kochtopus by Justin Raimondo — Antiwar.com

August 31, 2010

Austrians Again « LewRockwell.com Blog

September 3, 2010

David Koch Attacks Alan Grayson « LewRockwell.com Blog

September 15, 2010

“Who’s Funding This?!”

October 25, 2010

Good for the Cato Institute « LewRockwell.com Blog

November 24, 2010

Liberty Central: Repo’d by the Koch brothers? | Smart v. Stupid

November 26, 2010

Libertarians Against the Regime by Justin Raimondo — Antiwar.com

January 26, 2011

Koch Brothers Feel the Heat In DC, as Broad Coalition Readies Creative Action to Quarantine the Billionaires Gathering in California Desert | Alternet

January 27, 2011

‘Koch Brothers Trot Out Ed Meese To Defend Them’ « LewRockwell.com Blog

EconomicPolicyJournal.com: Koch Brothers Trot Out Ed Meese to Defend Them

Koch conference under scrutiny – Kenneth P. Vogel and Simmi Aujla – POLITICO.com

February 2, 2011

EconomicPolicyJournal.com: Koch Brothers Hire Arnold Schwarzenegger’s PR Operative

February 3, 2011

More Adventures With the Kochs « LewRockwell.com Blog

February 6, 2011

EconomicPolicyJournal.com: Americans for [Koch] Prosperity

February 9, 2011

Monetary Policy Hearing Today: Ron Paul Versus the Kochtopus | Next New Deal

February 24, 2011

Why the Evil Koch Brothers Must Be Stopped: They Support Drug Legalization, Gay Marriage, Reduced Defense Spending | Peace . Gold . Liberty

February 26, 2011

Wisconsin, Reason, and the National Conversation

March 2, 2011

On Koch Supported Herman Cain by Robert Wenzel

The Koch Bros. Love Herman Cain & Hate Ron Paul | Peace . Gold . Liberty

March 10, 2011

Murray Rothbard on the Kochtopus by David Gordon

April 22, 2011

Gary Johnson: Caveat Emptor by Justin Raimondo — Antiwar.com

May 6, 2011

The Proto-Koch « LewRockwell.com Blog

May 9, 2011

Utah Court Strikes Blow for Free Speech, Dismisses Trademark and CFAA Claims Against Political Activists | Electronic Frontier Foundation

July 3, 2011

The Caravan Keeps Rolling « LewRockwell.com Blog

Their Master’s Voice | Lew Rockwell’s Political Theatre

July 8, 2011

Koch Brothers to Democrats: Stop Asking us For Money

July 22, 2011

Koch Bros. for Higher Taxes (on Their Competitors) | Lew Rockwell’s Political Theatre

July 25, 2011

Do the Koch Bros. Own Bachmann, Too? | Lew Rockwell’s Political Theatre

September 6, 2011

EconomicPolicyJournal.com: HOT: Mother Jones Releases Secret Koch Brothers Tapes

September 29, 2011

EconomicPolicyJournal.com: Oh Geez, Charles Koch Advised Friedrich Hayek to Sign Up for Social Security

October 3, 2011

Update: Austrian economics program denied at Loyola New Orleans

October 13, 2011

Could a Tea Party Occupy Wall Street? by Addison Wiggin

November 6, 2011

That 3rd Koch Brother | Lew Rockwell’s Political Theatre

November 16, 2011

MF Global and the Koch Bros. « LewRockwell.com Blog

January 1, 2012

From Vienna With Love: The Kochtopus Warms Up to Ron Paul

January 31, 2012

What’s wrong with the Cato institute? | Peace . Gold . Liberty

February 16, 2012

“History of the Libertarian Movement” by Samuel Edward Konkin III | Left-Liberty.net

March 1, 2012

Kochs launch court fight over Cato – Mike Allen – POLITICO.com

Koch Brothers sue Cato Institute, president – Think Tanked – The Washington Post

Cato says Koch engaged in “a hostile takeover” of the think tank – Think Tanked – The Washington Post

EconomicPolicyJournal.com: Billionaire Koch Brothers Sic Super Lawyer on Widow

Koch Bros. Sue Ed Crane, Cato Institute « LewRockwell.com Blog

The Kochs vs. Cato : The New Yorker

March 2, 2012

EconomicPolicyJournal.com: Will Lew Rockwell Show at the Next Meeting of the Cato Board?

The Volokh Conspiracy » Koch v. Cato

The Cato Putsch | The American Conservative

March 3, 2012

‘Cato Putsch’? « LewRockwell.com Blog

Brad DeLong: Ed Crane and the Cato Institute vs. the Kochtopus!

EconomicPolicyJournal.com: Beltarians versus WaPoists on Koch-Cato

The Volokh Conspiracy » Koch v. Cato — A View from Cato

March 4, 2012

EconomicPolicyJournal.com: Murray Rothbard Haunts Koch-Cato from the Grave

Justin Raimondo on the Latest Cato Broadside « LewRockwell.com Blog

Bob Wenzel on the Lineage of the Cato Shares « LewRockwell.com Blog

March 5, 2012

Libertarian Ed Crane Decides to Act Like a Liberal. Will It Destroy the Cato Institute? | RedState

Koch Brothers, Worth $50 Billion, Sue Widow Over $16.00 of Nonprofit’s Stock » Counterpunch: Tells the Facts, Names the Names

What Goes Around Comes Around by Skip Oliva

EconomicPolicyJournal.com: What It Takes to Get Big Support from the Koch Brothers

CATO: From Libertarian to Republican? | The American Conservative

March 6, 2012

Is It Charles Koch’s Moral Duty . . . « LewRockwell.com Blog

Charles Koch Makes a Good Point by Thomas DiLorenzo

Cato and the Kochs | The Moral Sciences Club | Big Think

March 7, 2012

EconomicPolicyJournal.com: Where’s LewRockwell.com?

March 8, 2012

Charles Koch: I Am Not Backing Down « LewRockwell.com Blog

Koch vs. Cato — A Guest Post by Brink Lindsey | Bleeding Heart Libertarians

The Battle for Cato « ThinkMarkets

EconomicPolicyJournal.com: MIT Prof: The Kochs Will Not Takeover the World

March 12, 2012

Cato’s Amazing Hypocrisy as It Battles the Kochtopus » Counterpunch: Tells the Facts, Names the Names

March 19, 2012

EconomicPolicyJournal.com: For the Neocons, It’s Crane over Koch

March 22, 2012

Robert Lawson on Koch ‘n Cato « LewRockwell.com Blog

EconomicPolicyJournal.com: David Koch Gives Ed Crane an Employment Review

March 26, 2012

Family Feud | The Weekly Standard

April 11, 2012

Judge Napolitano Visits Cato

April 16, 2012

The Libertarian Challenge to Charles Murray’s Position on Property Rights and Homesteading by Walter Block

April 20, 2012

Digging the Hole Deeper « LewRockwell.com Blog

Independent and Principled? Behind the Cato Myth | The Nation

April 24, 2012

How Not To Change America’s Politics: Set Up a Public Policy Think Tank by Gary North

April 27, 2012

The Think-Tank Mentality by Skip Oliva

July 7, 2012

» Lessons from the UVA, Cato Wars Kleptarchy

August 17, 2012

The Paul Ryan Selection: The Koch Brothers Get Their Man – Roger Stone: The Stone Zone

August 30, 2012

Plutocrat David Koch Not a Libertarian « LewRockwell.com Blog

Two Additional Links I can’t put in the chronology:

Kochtopus

Interview With Samuel Edward Konkin III

One of the most interesting things (and there were many) I garnered from reading these is the Kochtopus’ love for Central Banking, despite their roots in Austrian Economics. Evokes memories of Alan Greenspan. And why the Koch Brothers put stock in Herman Cain. And why Rick Perry was derided by so-called conservatives when he called Ben Bernanke a traitor. And why their oh so brief ally Ron Paul is so hated by them and theirs anymore.

And it reminds me further of several graphics I have seen floating around on the various End the Fed sites and blogs. A stream of consciousness post like this would be seriously remiss without tying everything together with a few related images.

Do I need to spell out the connection?

Hydra/Kraken/Squid/Octopus/Kochtopus/Leviathon/Federal Government/Federal Reserve/National Bank/Petrodollar/Koch Industries/Corporations/Military Industrial Complex/Fascism Hello?!?!

Please don’t think I’m going all occult on you or anything (I do admit that I came across some pretty dubious sites looking for some of these images). I just really like mythology and history and metaphors and analogies.

From the Comments: Loose Fiscal and Monetary Policy is the Cause of the Problem, not the Solution

From the Comments: Loose Fiscal and Monetary Policy is the Cause of the Problem, not the Solution.

There is a comment on one of my posts. It is really off-subject, but since I rarely get comments that aren’t pure spam (I even suspect that the comment in question is cleverly disguised spam), and since it is something that I talk about here on the site, replying to it and bringing it to my readers’ attention seemed like a good option. I don’t do this with all of the comments, just the ones that give me a clear opportunity to get a point across. It is probably bad blogger etiquette to do it at all, but at the moment I am working on several fairly extensive projects so I need a quick and easy post.

Mercadee: We have used both monetary and fiscal policy to battle this recession, and without the Fed’s actions to limit the downturn things would have been much worse. Fiscal policy in the form of the stimulus package, though too little, too late, and too tilted towards tax cuts, also helped to limit the damage to the economy. But when it comes to promoting a faster recovery, both monetary and fiscal policymakers have failed to do enough to help the economy return to full employment.

Me: Wrong! You are suggesting that policymakers should do those things which brought about the bubbles in the first place. What caused the depressions of 1920-1921 and 1930-45, and what made the latter one so long that did not occur in the case of the former? Loose fiscal and monetary policy. Stimulus to fund World War One, stimulus to pay off debts accrued from World War One, stimulus to fund public works projects, and stimulus to fund World War Two. What caused the housing bubble and its burst? The malinvestment that arose from the stimulative monetary and fiscal policy that was supposedly necessary to soften the blow of the dot-com burst, which was itself the result of prior loose policies. And here you are arguing for the same thing again. This time the bubbles are in student loans, car loans, and sovereign debt. It would be fine if there was a never ending series of bubbles that could burst and re-inflate, but there isn’t. Sovereign debt and government bonds are the end of the line. When that bubble bursts it will destroy the dollar, as the bubble and the false confidence it gave rise to is the only thing that has been propping it up. What gave rise to this bubble? There are many factors, and I suspect that, unlike the case of the other bubbles, this one was intended. Whether it is/was the Nixon Shock and completely detaching from a commodity standard; or wars for oil (the first one arguably being World War Two, as evidenced by the events leading up to Pearl Harbor, but perhaps more notable than this being the 1953 coup in Iran); or the creation of Bretton Woods in 1945; or the creation of the Fed in 1913; or the strengthening of the Fed in 1917; or the price controls and confiscation of gold in 1933; or the social programs and public works projects that created the current high levels of National Debt and Unfunded Liabilities, leading to the need to print more unbacked dollars; that is/was the chief cause I know not. And I care not as they are all contributing factors and all were misguided policies. The effects of these policies must be diminished. And similar policies must be prevented.

Does This Commenter Want To Revive Bimetallism? Greenbackism?

Does This Commenter Want To Revive Bimetallism? Greenbackism?.

I have had someone called “Silver Account” posting on some of my articles recently. I want to post their comments and my replies, all of which have to do with the Gold Standard and the Federal Reserve. Judging from their chosen username and what they said, I would say they are somewhere slightly to the left of William Jennings Bryan on more than a few issues. That’s just fine by me, home grown American Leftism is usually preferable to most imported varieties, although I have developed a soft spot for mutualists of late.

Comment from my piece Why I Am Writing In Paul And Not Voting For Johnson:

She [a voter quoted in my article] should stay in it [voting this election] and vote for the president [Obama]. Real people know the repubs are being swayed by the racist teabags. Paul has a good idea, but the resultant people elected (repubs) would be a disaster for working folks.The banks would take your houses like in the 1890′s, women and blacks would not be able to vote. And the copper(aka, robber)-barons would be back in charge of owning (stealing) stuff. And the ignorant south would be worse-off than they are now. There would be no subsidies the blue states are giving them.

My response:

For Obama? I doubt she would even consider it. If only the Republicans WERE being swayed by the Tea Partiers! All they are doing is using empty rhetoric to get the Tea Party to vote for them. The Republicans were listening to half of what the Tea Party was saying, they would at least have some credibility. But even if they did all of what the Tea Party wanted, it wouldn’t truly be enough in my opinion.

I take it you are referring to the Long Depression (1873-1896) and the ill effects of the hastily adopted Gold Standard? The Gold Standard actually improved the overall economic situation, and this period was the best, economically that the country had ever known. Unfortunately, the implementation of the Gold Standard after so many years of fiat greenbacks made the situation of debtors even worse. This was unjust. But what bimetallists and silverites won’t tell you is that the same thing would have happened with a silver standard or a gold-silver standard, just to a lesser degree.

In any case, no Gold Standard (see this post) should be implemented from on high. Not only does this grant a monopoly to those who already have the most gold, but you may see a repeat of some of the goings on in the 1890s. You are correct on that count. That is why I support competition in currencies. Those whose debts are in fiat dollars won’t be forced into harder to pay off debts because they won’t be forced to use a gold standard currency. Commodity backed currencies will eventually beat out fiat currencies, but ideally at a slow enough rate that debtors in the fiat system won’t have their situation worsened. Everyone wins. No one is pitted against somebody else. Debtors, industrialists, lenders, depositors, etc. It is not a zero sum game.

And the women and blacks statement is absurd. No one jumps all over themselves, disgustingly so, to appease women and blacks more than the Republican party. Real racists and sexists will never have a real voice in the GOP. They can’t afford to be bludgeoned by the Democratic party. Besides, it was historically the Republican party that stood for equal rights for all races and genders, at the same time that they were the party of corporatism and corruption.

And for your information, the robber barons of today are much worse than the ones around the turn of the last century, and they are already in control. Most of the robber barons were monopolists and thugs, but at the same time, they brought many good things to this country, to all classes, races, and genders. Maybe not as good or as cheap as a more free system would have, but still faster than bureaucrats, populists, proletarian revolutionaries, or simply “nobody” could have.

The South is full of ignorant people to be sure, but no more so than most other regions. But you are on shaky ground to label an entire region or its entire population ignorant. The patronizing collectivism inherent in your statement is in fact responsible for most of the ignorance you allude to. Do you know why the South needs subsidies? Because it STILL hasn’t recovered from the Civil War. White and black alike are still suffering from Reconstruction, and exploitation from Carpetbagging Yankees. They are both kept on the two-party plantation. They have both been utterly destroyed by the public school system, in both the segregation and integration eras.

Comment from my piece Let Us Not Be Crucified Upon A Cross Of Gold:

The Fed’s performance since 1991 has been unquestionably superior to its record at any time since 1913. However, the larger, long-run question remains: Can the Fed as an “independent” central bank maintain price stability contrary to the wishes of an executive branch that seeks to use its fiscal powers to manage the federal government’s burgeoning long-term debt?

My response:

I am not sure what metric you are using to say the Fed is doing a good job, but I really beg to differ.

From 1913 (actually 1915) to 1917 was the Fed’s best era. This was before they were allowed to trade bonds, which is when the fiat currency really got off the ground.

Its policies from 1917 to 1919 led to two depressions, one lasting from 1920-1921 and the other 1929-1945. This latter Depression was the worse of the two, and obviously worse than anything we have experienced since. Having said this, the Fed’s main role was to trigger it. The length was more the result of the Federal Government’s reaction to the Depression, though the Fed did have something to do with it as well. Keynesians and Monetarists claim that the Fed didn’t expand the money supply enough. They are wrong. While contracting the supply of money would have its own problems, expanding it was what caused the problems in the first place. The best thing to have done would have been nothing, whether by the Federal Reserve or the Federal Government. During this period, the price of gold was fixed. One of the reasons the dollar didn’t collapse in this period is because gold (including that which was stolen from the American public) was used to prop it up.

But because price fixing eventually leads to shortages, this arrangement couldn’t last either. Hence Bretton Woods, which increased the flow of and access to gold. But just as before, this could only last so long. Shortage was still inevitable. At the same time the money supply was increasing. Hence the Nixon Shock.

As if the money supply wasn’t increasing at an insane rate before, taking the dollar completely off of gold only accelerated the process. Now the only thing holding the dollar up is its reserve status, something which coincided with the period between 1945 and now because of the United States’ increased influence after World War Two, which had greatly diminished the other powers.

Fed Policy didn’t really change much in these early years. But as it was no longer constrained by a scarce commodity, it could let lose. We saw the effects of this with stagflation, the dot com crash, and the housing crash. I put it to you that the Fed actions that caused these three things have only gotten worse since 1991, and continue to go down that path.

Price stability is only good in the short run or relative to increased prices. Decreased prices are not evidence of a recession, they are the result of deflation, which is a natural economic trend that has nothing to do with monetary policy.

The debt can not be managed. It can only grow until default. Default will occur whether hyperinflation happens or not. So you either have a default without Fed involvement (the better option) or default with Fed involvement (instead of just “austerity”, it will be austerity AFTER currency collapse).