Archive for June, 2017

[reposted article – Mises Institute]

Is America Really Coming Apart, As Charles Murray Suggests?


A new Rasmussen poll reports that a majority of voters think so, and it certainly feels that way. Since Donald Trump’s election in November, the pace and intensity of deeply divisive rhetoric has accelerated. Antifa and the Alt-Right are literally fighting in the streets. Combative talking heads on cable news, vicious social media exchanges, riots at universities, a bitter special election in Georgia, and even the shooting of a congressman have both sides rethinking the entire political process and talking about abandoning the “rule of law.”

It is an uneasy time, a time for hard questions. Can politics really provide a solution to our problems, or is it the cause? Should we still abide by democratic processes when a significant portion of the country is enraged by the outcome? What if voting and elections simply weren’t anymore? These are the questions we need to ask and answer honestly.

Progressives, including Hillary Clinton, now openly label themselves the “resistance” and call for Trump to be removed from office. Anti-Brexit forces in the UK call for Theresa May simply to repudiate the referendum. Democratic elections, a cornerstone of neoliberalism, are not so sacrosanct when the wrong guy wins. Progressives’ sense of inevitability has been deeply shaken by Trump and the rise of nationalist movements in Europe. Has it been shaken enough to consider real alternatives to social democracy?

Conservatives too have radically changed their talking points. Bill Kristol tweets that he prefers a Deep State silent coup to living under the Trump state. David Frum calls Trump a liar and an autocrat. George Will claims the president has a “disability.”

But one conservative offers a workable answer to our unsettling situation. Angelo Codevilla, retired professor of the Claremont Institute recently wrote a remarkable article titled “The Cold Civil War.” The piece is remarkable not only because he worries about that civil war turning hot, or because he agrees —from the Right — with the idea of sanctuary cities or states that defy Washington. Why, Codevilla asks, could red states not employ some “Irish democracy” when it comes to hyper-politicized social issues like abortion, sexuality, and guns?

And why shouldn’t blue states do the same? This is already happening, as prominent mayors like Bill de Blasio have announced their opposition to the Trump agenda on issues like global warming. Could blue state nullification of federal edicts extend to healthcare, gun laws, and taxes?

The sheer scope of progressive victories in the culture wars compels Codevilla to offer a prescription for truly radical decentralization. Let the federal government control a few key functions like defense, but leave the rest to the states. Let California be California, and let Texas be Texas. To Codevilla, our intractable political, social, and cultural differences are simply not worth fighting over anymore. They’re certainly not worth shooting each other.

Mr. Codevilla’s is asking himself, and us, nothing less than whether the current political arrangement should continue.

Ludwig von Mises, the great economist who experienced combat in World War I, famously stated that “having to belong to a state to which one does not wish to belong is no less onerous if it is the result of an election than if one must endure it as the consequence of a military conquest.”

This bold statement rings as true today as 1927, when Mises wrote it in a book titled Liberalism. Certainly most Hillary Clinton voters view the Trump administration as a hostile and illegitimate occupier with no legal or moral authority to govern. And undoubtedly Trump supporters would feel equally aggrieved under a Clinton regime.

A government big and powerful enough to cause widespread psychosis after presidential elections is a government without much legitimacy. People become irrational about politics precisely because government depressingly controls so much of our lives. It chooses winners and losers. It is the superstar player in American society, rather than the referee.

The obvious and reasonable option staring us all in the face is to go our separate ways. Let us consider political secession, radical decentralization, nullification, and localism as the realistic alternatives to a much more unpleasant conflict. Let us reconsider living as a loose confederation of states. 320 million vastly diverse people, from Anchorage to San Francisco to Topeka to Miami, cannot be governed by a top-down central authority in Washington.

Surely divorce, in whole or in part, is better than an abusive marriage.


There have been a lot of articles over the years that suggest that the USA would be a lot better off if it was broken up – A lot like the Too-Big-To-Fail Banks really…








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I was recently thinking about writing a piece on “Deflation”.  But never quite got around to it.  As it happens, someone else has written it for me, lol.

So – What he says….


Four Reasons Central Banks Are Wrong To Fight Deflation

Authored by Jorg Guido Hulsmann via The Mises Institute,

The word “deflation” can be defined in various ways. According to the most widely accepted definition today, deflation is a sustained decrease of the price level. Older authors have often used the expression “deflation” to denote a decreasing money supply, and some contemporary authors use it to characterize a decrease of the inflation rate. All of these definitions are acceptable, depending on the purpose of the analysis. None of them, however, lends itself to justifying an artificial increase of the money supply.

The harmful character of deflation is today one of the sacred dogmas of monetary policy. The champions of the fight against deflation usually present six arguments to make their case. One, in their eyes it is a matter of historical experience that deflation has negative repercussions on aggregate production and, therefore, on the standard of living. To explain this presumed historical record, they hold, two, that deflation incites the market participants to postpone buying because they speculate on ever lower prices. Furthermore, they consider, three, that a declining price level makes it more difficult to service debts contracted at a higher price level in the past. These difficulties threaten to entail, four, a crisis within the banking industry and thus a dramatic curtailment of credit. Five, they claim that deflation in conjunction with “sticky prices” results in unemployment. And finally, six, they consider that deflation might reduce nominal interest rates to such an extent that a monetary policy of “cheap money,” to stimulate employment and production, would no longer be possible, because the interest rate cannot be decreased below zero.

However, theoretical and empirical evidence substantiating these claims is either weak or lacking altogether.

First, in historical fact, deflation has had no clear negative impact on aggregate production. Long-term decreases of the price level did not systematically correlate with lower growth rates than those that prevailed in comparable periods and/or countries with increasing price levels. Even if we focus on deflationary shocks emanating from the financial system, empirical evidence does not seem to warrant the general claim that deflation impairs long-run growth.

Second, it is true that unexpectedly strong deflation can incite people to postpone purchase decisions. However, this does not by any sort of necessity slow down aggregate production. Notice that, in the presence of deflationary tendencies, purchase decisions in general, and consumption in particular, does not come to a halt. For one thing, human beings act under the “constraint of the stomach.” Even the most neurotic misers, who cherish saving a penny above anything else, must make a minimum of purchases just to survive the next day. And all others—that is, the great majority of the population—will by and large buy just as many consumers’ goods as they would have bought in a nondeflationary environment. Even though they expect prices to decline ever further, they will buy goods and services at some point because they prefer enjoying these goods and services sooner rather than later (economists call this “time preference”). In actual fact, then, consumption will slow down only marginally in a deflationary environment. And this marginal reduction of consumer spending, far from impairing aggregate production, will rather tend to increase it. The simple fact is that all resources that are not used for consumption are saved; that is, they are available for investment and thus help to extend production in those areas that previously were not profitable enough to warrant investment.

Third, it is correct that deflation—especially unanticipated deflation—makes it more difficult to service debts contracted at a higher price level in the past. In the case of a massive deflation shock, widespread bankruptcy might result. Such consequences are certainly deplorable from the standpoint of the individual entrepreneurs and capitalists who own the firms, factories, and other productive assets when the deflationary shock hits. However, from the aggregate (social) point of view, it does not matter who controls the existing resources. What matters from this overall point of view is that resources remain intact and be used. Now the important point is that deflation does not destroy these resources physically. It merely diminishes their monetary value, which is why their present owners go bankrupt. Thus deflation by and large boils down to a redistribution of productive assets from old owners to new owners. The net impact on production is likely to be zero.

Fourth, it is true that deflation more or less directly threatens the banking industry, because deflation makes it more difficult for bank customers to repay their debts and because widespread business failures are likely to have a direct negative impact on the liquidity of banks. However, for the same reasons that we just discussed, while this might be devastating for some banks, it is not so for society as a whole. The crucial point is that bank credit does not create resources; it channels existing resources into other businesses than those which would have used them if these credits had not existed. It follows that a curtailment of bank credit does not destroy any resources; it simply entails a different employment of human beings and of the available land, factories, streets, and so on.

In the light of the preceding considerations it appears that the problems entailed by deflation are much less formidable than they are in the opinion of present-day monetary authorities.

Deflation certainly has much disruptive potential. However it mainly threatens institutions that are responsible for inflationary increases of the money supply. It reduces the wealth of fractional-reserve banks, and their customers-debt-ridden governments, entrepreneurs, and consumers. But as we have argued, such destruction liberates the underlying physical resources for new employment. The destruction entailed by deflation is therefore often “creative destruction” in the Schumpeterian sense.

The only thing I would particularly add or point out, is that “deflation” is the only way to restore the purchasing power of a population.
And – inflation was/is THE mechanism for funding war.  Deflation makes ‘making war’ much much harder.  Some might argue that would be a good thing.









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The Ron Paul Peace and Prosperity Institute

Are We Fighting Terrorism, Or Creating More Terrorism?

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