6 posts tagged “inflation”

Some of his articles:

• "Fed Up"
• "Tooth Fairy Economics"
• "Washington and the Stimulus: A Parade of Blockheads"
  
• "Banana Republic, U.S.A."
• "Unnatural Disaster"
• "The Deck Chairs Are Fine Where They Are"
• "We Need Our Heads Examined, Says Harvard"
• "Government: The Cause of – and Solution to – All Our Problems" (MP3 Here)
  
• "Don't Know Much About Capitalism"
• "The Harding Way"
• "No, the Free Market Did Not Cause the Financial Crisis"
• "Beware of Obamanomics"
• "Question Authority (Unless I Say Not To)"
• "Response to the 'Market Failure' Drones"
  
• "Krugman Failure, Not Market Failure"
  
• "Should We Absolve the Fed?"
  

And visit his website.

***

Perhaps it was about ten months ago---although I am uncertain---that I turned my radio on to hear what Mr. Sean Hannity had to say. I could not take listening to his program for any longer than about five minutes. He was ranting on how the "fundamentals" of the economy are sound and then repudiated those who claimed that the economy was in a recession.

Of course today everyone will admit there is a recession. Statists like Mr. Hannity have been proven to be absolutely incorrect----whereas gentlemen like Dr. Ron Paul have been proven to be absolutely correct. (See, e.g., chapter six of The Revolution: A Manifesto.)

Unfortunately, I think one can say the exact same thing about the "d" word, depression. I.e., the establishment will be forced to admit that the "d" word is an accurate description of the situation. Things are going to be getting a lot worse, and we are just in the beginning of this.

Due to the State's monetary policies and due to the fascistic arrangement the banking industry and much of big business has with the State, many individuals and families have been living in a credit card illusion.

We live in a world of monetary socialism. It is with this arrangement, ever since the creation of the Federal Reserve System, that over 95 percent of the value of the dollar has been lost.

It's an arrangement that has encouraged debt, short-term thinking, and short-term planning. It's an arrangement that punishes thriftiness and other conservative work ethics. Thus I would call the Fed not only an anti-economic institution but an anti-social institution as well. (For a more extensive look into its anti-social nature, see "The Cultural and Spiritual Legacy of Fiat Inflation" in The Ethics of Money Production by Dr. Jörg Guido Hülsmann. Download PDF here.)

It's an arrangement that has also brought about various artificial bubbles, leading to unsustainable booms, which then lead to inevitable busts. This occurs when the Fed floods the banking system with credit, thereby lowering the interest rate.

But the only "natural"----versus artificial----way interest rates can lower is if man saves more. Briefly, this means that man has held off present consumption for the future; that he is saving and investing more in temporally lengthy projects. If the Fed, on the other hand, floods the market with credit (via the printing up of money from nothingness), this in turn artificially lowers the interest rate, despite the fact that man has not saved more. Temporal coordination of production in the economy is consequently distorted. Investments that receive the credit are made to seem profitable. In effect, such industries get subsidized as they are flooded with this new credit that was created from thin air. An artificial bubble develops (à la housing). But as this new money trickles through the market, the old consumption-saving proportions reassert themselves (which, to iterate, determine the "natural" interest rates) and those investments are then seen for what they really are; namely, hot air. They will no longer be profitable. Resources are not there to keep the "boom" going. People have not saved more. People, instead, wanted more present oriented things. And, furthermore, people were actually pushed into saving less (and hence consuming more) than they otherwise would be due to the lowering of the interest rate. But investors were being incompatibly pushed, by the artificial paper money stimulus, into future oriented things based on the illusion of freed up resources, with its large pool of savings, in the future. This is when a recession or depression occurs.

So, since today's artificial "boom" resulted in massive misallocations of resources into various temporally unsustainable lines of production (via credit expansion and hence an artificially depressed interest rate below what the market would have set it), it is only the bust that will get us on the correct course. More production projects were started up than could be completed. Thus technically speaking, the bust is not the problem; it was the "boom" generated by the Fed. Resources, capital, and labor must be able to move with the market---a market that is ridding itself of these government-generated bubbles.

It is accordingly imperative that the State not interfere with this adjustment process.

As Mr. Jim Rogers says, the unsound must fall and the sound must rise. And therefore, to repeat what has been said on this blog before, the government must allow the market's pricing system to rediscover what is truly sound and what is truly unsound, and allow men to act accordingly.

Politicians, no doubt, don't like to hear that.

Neither do they have a real incentive to listen. This is because a crisis is a great time for them to expand their power and wealth. Consequently, there is little reason to be optimistic concerning the future.

(But if they want to "do something," I do have some advice later in this blog entry.)

Moreover, these politicians propagate to the public false hopes that the State is savior. They act as if they can magically create something from nothing. This propaganda is truly sophomoric. The State has no wealth of its own which it does not coercively take from others in the productive economy. All it can do is redistribute wealth and override the market's free and voluntary interactions of men.

You can accordingly call the "stimulus" bill a wealth destruction bill.

If the politicians keep this up, they will be sending us into a deep and long depression.

***

We must keep in mind the big picture, always. Henry Hazlitt, one of the great Austrian school economists, was right. We must think about the seen and the unseen, the short-term and the long-term, individual groups and all groups. Only in this manner should we examine so-called government "solutions."

For example, the State can "create" jobs only by taking away jobs that would have been created in the market. You might see the government jobs and so forth, but you don't see that there has only been a diversion. Instead of those jobs employing resources and money to serve the direct needs of consumers, resources and money are being employed by these jobs through State dictate; independent of voluntarily paying consumers, independent of the market's profit-and-loss system, independent of the market's competitive milieu. Ordinary people are made that much poorer because they are forced to pay for these jobs, if they like it or not, and have that much less money to spend (or save) on what they want, employing who they want.

And what does it tell us that such "created" jobs are independent of voluntarily paying consumers? They must not be worth much to the needs of ordinary people. It must be wasteful. And, even if it is not, there is no way to tell, unless we subject such jobs to the market. Only then can we see if the costs are justified, i.e., if the costs of this labor are less than what this labor produces. In addition, only then can we determine if those jobs are serving the higher versus lower needs of people. The costs and expected profits can subsequently be compared and contrasted with other possible labor employments. This additional point is important, since we live in a world of changing conditions and uncertainty. Consumer demands are not static, after all. But State "created" jobs cannot engage in cost accounting and will be restrictive in movement as against a free market of labor. The maximization of wealth with a free market's labor mobility is non-existent and hence standards of living must be lower than they otherwise would be.

Such "created" jobs might even be completely destructive in every way, i.e., the costs might be greater than the output. (Even if they are not, there is no way to know if these jobs are serving the higher or lower needs of the public, as shown above.) Indeed, the State can "create" lots of jobs. It can have men build many bridges, if they lead to somewhere is beside the point. It can draft all young men into the military. [Hey, Mr. Obama, I thought we were getting out of Iraq?!] And so forth.

A free market, in contrast, allows rational calculation. It helps prevent labor (and resources in general) from being allocated to unwanted and uneconomic lines of production. This is because it is based on private property which allows for profit-and-loss calculations with a universal medium of exchange. What is more, activities in a free market are not only dependent on voluntary consumer demands, but are also in a milieu that is competitive. As a result, it helps divert labor away from their less wanted and less needed locations and into their more wanted and more needed locations. And, implied in this, the free market helps men cut down on waste and to economize to the conditions of what people demand and to the underlying reality of the finite supplies of goods and natural resources that are in existence.

However government has no such ability, by definition. Thus, government "created" jobs will be arbitrary in terms of real wants, needs, expenses, and resources. There will be general misallocation, and hence standards of living will be lower than they otherwise would be. Since such "created" jobs are not based on voluntary demand, their activities will be independent of the wants and needs of people. Thus, given such a non-market position, this labor's costs can be very high and its quality output can be very low. This will actually multiply due to the fact that such labor has no need to worry about competition. And, because the factors of production employed by such "created" jobs cannot be sold on the market, they will be independent of their capital value and hence there will be over and under utilization thereof.

The very same basic lesson of the seen and unseen applies to the wealth destruction bill in its multiplicity of schemes [see the link --- an essay by Dr. Woods]. All that it will do is override people's free choices and make people that much poorer. Dr. Woods calls it "tooth fairy economics." We all must remember: the State has no resources and it lacks the free market's ability to economize. If we are to come out of this economic downturn fast, we need the pricing system to sort out resources. All the State can do is distort that process and make this downturn that much longer and that much deeper.

***

Or, the State can try to inflate more as a "solution." Though all that would do is intensify bubbles and increase the pain at the end of the road. It would be an attempt to cure our problems by the very means that caused our problems (as I wrote about above). It would result in the unsound increasing and the sound decreasing. More than that, a redistribution of wealth would occur from the poor and middle classes to those special interests who received the new money first.

And, we should all be aware, it is perfectly clear that wealth is expanded by enlarging the amounts of goods (not money). Wealth, for society at large, is not increased by growing money on trees. Just as important, it is about increasing capital. That means saving is a good thing------despite what the mainstream media might say. Even at an intuitive level, it should be crazy to anyone when a talking head suggests that an individual, a family, a community, a society in financially difficult times should go on a spending spree.

And, to repeat again on this blog, men saving would actually make the recovery faster. Time preferences would have gone down and, hence, would put man closer to the artificially low interest rates. Less adjustment would be needed because "real" rates would be closer to the "fake" rates, so to speak. (See Rothbard on this.)

***

Though I am pessimistic, the only way that we all can avoid a long and deep depression is if government stops doing anything more than it has already done. Yes, there will be some major pain. But at least it would be over (comparatively) quickly.

Even better: it can cut its budget. And while this is a radical statement, I suppose, it is a much needed statement: money and banking must be uncut from the government; namely, it must be left to the private market. We need private money (which would most likely be gold and silver): private minting, private coining, etc. without a central bank, legal tender laws, fractional reserve banking, etc.

Furthermore, we all need to see the State as it really is. It's essentially a parasitic institution, and should be treated as such.

If a given activity is by definition theft and if it is unethical, then it is not possible to deny that this unethicalness of theft applies consistently without throwing out the first starting principles. An act of theft/murder/slavery/etc. does not become right because a man of the State is doing it. Socialism in all of its forms must be rejected.

***

I'll conclude this entry by saying that modernity has brought a de-civilizational decline in cultural and social life. Modernity might also, ultimately, do the same with material wealth. There has been, what you can almost call, financial stagnation and soon we may have a financial depression. The credit card illusion will be ending. On top of this, statism has become so powerful with its welfare-warfare apparatus that it will ultimately bankrupt itself (unless the market creates some huge innovation to keep it going longer, e.g., a new energy source).

Now I'm sure some would criticize me as a "naïve youngster." Though, all a man has to do is glance back at how the culture was, say, 60 years ago (even though he must take into account the problems of those years as well). Performing such a glance is not that difficult. Just look at the differences between the television shows back then and those of today.

An underlying error of my make-believe critic is to subconsciously accept a Whig theory of history and to be so orientated to what exists at present-------as if the present is detached from the past; detached from what it carves out for the future; and is King.

This overall attitude explains, I think, why so many men will not accept a statement like this: "The U.S. Empire will not last forever." It explains why many men think an economic depression "could never happen again."

It additionally explains why it is too difficult for many men to think about the future Death of the West. Today's ethos makes this thought about the future too shocking to be thought of as true: "Dying civilization?" "It can't happen here. ... That only occurred in the irrelevant and detached past. ... Open your eyes and see what is around you. The present is totality."

Man's present orientation, high time preference, and subconscious acceptance of the Whig theory of history, makes him go with a leftist and statist flow, and being part of that flow makes it hard for him to discern right from wrong. It makes him unable to see, for example, that the culture is in a major crisis, and that the West is dying. And, for example, it makes him unable to see that the current monetary system, with its high fragility, cannot last forever.

***

Some Previous Entries on The Paleo Blog:

• "Money and Civilization" (If you only read one, please read this one.)
• "Prolonging and Deepening the Recession"
• "Hazlitt: 'Saving the X Industry'"
• "Subsidizing Badness"
  

[Hmm ... I retired this blog? Oh, well... This subject is too important.]

Mr. Rockwell writes in his piece "The Myth of Good Government": "If ... money is used to prop up failing companies, that's particularly bad since it is an attempt to override market realities, an attempt that is about as successful as trying to repeal gravity by throwing things up in the air."

Redirecting the market economy to have resources flow out of relatively sound lines of production and into relatively unsound lines of production cannot possibly speed along the recovery. As Henry Hazlitt said, doing this will drive capital and labor "out of industries in which they are more efficiently employed to be diverted to an industry in which they are less efficiently employed. Less wealth is created. The average standard of living is lowered compared with what it would have been."

Government interventionism that does this, in essence, rewards those who have used their resources and money unwisely and punishes those who have used their resources and money wisely. No sound economy can work on this principle without bad consequences.

When you think about this, it becomes apparent that this is how almost all statist interventions work. Many of the government's operations work on a principle that has the effect of rewarding losers and punishing thrifty individuals. Jeffrey Tucker's wonderful article "Good Kids, Bad Kids" does a great job illustrating this point; a point that I have been recently talking about to a friend.

As a young man I have seen how public education reacts to students who should not be there. If you are around my age (or younger), then you know what I mean. In no sense should these specific youngsters be at school. But compulsory education forces them to be there, despite their loutish behavior and almost complete uninterest in academic work. On net they contribute more negative than positive to the environment.

Instead of a system that expels them (punishes them), and thereby forces them into the workforce to develop productive and civilized skills, the system practically allows them to get away with their conduct and/or places them into "special education." This not only brings down the environment, and thus hurts students that should/can be there, but it additionally has a bad impact on these youngsters as well. They are allowed to "free ride" the system and do not get their just ejection which would have forced them to mature. As a whole, society is hence made worse off. This entire system sets into motion an increase of uncivilized behavior and decrease of civilized behavior.

To return to Mr. Tucker's article, he mentions that inflation is a prime example of how the State "discourages goodness and subsidizes badness." That it is. Nothing is so forcefully fused into the market economy than monetary socialism.

Money, as you all know, is what makes the market work. It is what allows transactions to develop without the need to constantly pray and hope for a double coincidence of wants. Money integrates the economy. It is similar to language. Furthermore, it is what allows the vital importance of cost accounting (calculation) to develop.

Thus to impose socialism in this vital area----the economy's "lifeblood"----is only asking for trouble. And, yes, trouble is what we have got from this arrangement. Financial incompetence is what monetary socialism rewards. Society becomes a credit card society. "It rewards," Tucker writes, "short-term thinking and punishes long-term thinking. It rewards debtors and punishes savers. To that extent, it degrades our characters and causes cultural decline."

One of the side effects of inflation is the distortion of cost accounting. Murray Rothbard wrote in What Has Government Done To Our Money:

“By creating illusory profits and distorting economic calculation, inflation will suspend the free market's penalizing of inefficient, and rewarding of efficient, firms. Almost all firms will seemingly prosper. The general atmosphere of a 'sellers' market' will lead to a decline in the quality of goods and of service to consumers, since consumers often resist price increases less when they occur in the form of downgrading of quality. The quality of work will decline in an inflation for a more subtle reason: people become enamored of 'get-rich-quick' schemes, seemingly within their grasp in an era of ever-rising prices, and often scorn sober effort. Inflation also penalizes thrift and encourages debt, for any sum of money loaned will be repaid in dollars of lower purchasing power than when originally received. The incentive, then, is to borrow and repay later rather than save and lend. Inflation, therefore, lowers the general standard of living in the very course of creating a tinsel atmosphere of 'prosperity.'”

Why, this is (sadly) easy to apply to today's situation.

What's more, monetary socialism leads to chaotic booms-and-busts in the economy. Jim Cox writes in The Concise Guide To Economics:

“When an artificial increase in the money supply through the banks occurs, this increases the available money in savings and depresses the interest rate, thereby encouraging an artificial increase in spending which is highly sensitive to the interest rate--capital spending. This run-up in the capital goods industry is the boom, and the subsequent depression results when consumers reestablish their consumption to saving ratio--thus revealing that the capital goods boom was indeed artificial. The only way to prevent the depression is to pump another dose of new money into the system to maintain the higher savings ratio, but eventually this must end or there will be a runaway inflation.

“The artificial increase in the money supply therefore is a government subsidy--through monetary policy--to the capital goods industry. Naturally the subsidy stimulates production in the capital goods industry. Once that subsidy is removed by consumers reestablishing their preferred saving ratio, there is a crash in the capital goods industry.”

Dr. Cox gives the popular analogy of a drug addict. Meaning, we as a society are a bunch of drug addicts when it comes to credit. (This is what monetary socialism brings about.) It is the Federal Reserve's pumping of credit into the market that brings the "high." Sustaining this high requires more and more pumping. However, as the author mentions, there is a limit to this. Near the end of the road either this pumping must be stopped or hyperinflation will occur. When the pumping stops pains of withdrawal occur.

These necessary pains are when the market adjusts back to reality, and away from the artificial high. As the credit (money) expansion flows through the entire economy, the real consumption-saving ratio will be reasserted (with men spending this new money) and the government-generated bubbles and distortions then dissolve.

A (general) deflationary credit contraction is another possible ("secondary") happening in a recession/depression. To be concise, this occurs----besides the (specific) unsound naturally falling----because banks are generally more conservative during this time, and this thereby lowers the supply of money. Additionally, demand for money generally increases. This happening is actually a good thing. It increases the speed of the recovery since it helps reverse inflationary effects. Thus it gives an additional push for men to save and invest more in capital production, and helps to purge malinvestments. (On deflation, read Deflation and Liberty [pdf] by Jörg Guido Hülsmann. And read Rockwell's latest article "The Force Is With Us": "falling prices are an important means for flushing economic error out of a system that is rife with malinvestments generated during boom times." If this deflation will last, is another question...)

In terms of our current economic predicament, not only has the Federal Reserve's Soviet-like management of the economy created massive misallocations (which brought us to where we are today) but the economy's ill-health has been further augmented by the moral hazard created by government protected (and created) Fannie Mae and Freddie Mac and the forcing of banks to engage in uneconomic affirmative action policies. Government, because of this, created a competitive field where it became necessary for banks to engage in bad loaning practices. In other words, the State encouraged bad behavior and discouraged good behavior. Realizing this does not require reading a 1,000 page economic treatise.

For today's economy to be healthy it goes without saying that government should not be subsidizing badness. So exactly what should it do? The answer is nothing. Doing something is what brought us here. Doing nothing would let the market's pricing system, and its checks and balances (which the government ceaselessly attacks), rediscover what is truly sound and what is truly unsound, and let men act accordingly. As Mr. Tucker says: "Laissez-faire is sometimes seen as an 'anything goes' philosophy. It might more accurately be described as a 'reap what you sow' philosophy."

The government, nevertheless, can help the adjustment process along by cutting spending, regulation, and taxation across the board. These actions would be compatible with it "doing nothing." Ending monetary socialism, especially, would be a great thing to do. It would prevent future bubbles. The allocation of resources in higher and lower order industries would be untainted with artificial tamperings of the interest rate.

The last thing the government should do in this period of market correction, according to Rothbard in America's Great Depression (a must read), is to "prevent or delay liquidation," "inflate further," "keep wage rates up," "keep prices up," "stimulate consumption and discourage saving," or "subsidize unemployment." Any of these interventions will only prolong and deepen the adjustment process. These things promote badness, and therefore can turn a year recession to a ten year depression.

Not that the government is likely to listen to those who predicted today's mess, viz., the Austrians and Austro-libertarians. But we all can hope.

To use the lines of libertarian activist Ernest Hancock: "Freedom is the Answer. What's the Question?"

It is freedom, and freedom alone, that brings us financial affluence.

***

See the Following:

• "The Austrians Were Right" by Ron Paul.
• "How the Government Wrecked the Economy": Rockwell interviews Peter Schiff on why we are here and what is to come. (A must listen.)
  
• "Von Hayek in 1975": An interview with Hayek on inflation. (Keynesian nonsense is all over this interview, e.g., trading off unemployment for inflation.)
• The Depression Reader at LRC.
• The Bailout Reader at Mises.org.
  

Economics in One Lesson: Still Relevant Today.

“The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.”

You will find at the Mises Institute a series of online videos discussing Economics in One Lesson by Henry Hazlitt. Among the various videos, please let me highlight the one with Thomas Woods where he chats about credit and loaning. He applies some of the book's lessons to what is happening now.

Watch Here at Youtube.

Another video of this series to highlight----even though you should watch them all----would be the one with Roger Garrison. Dr. Garrison chats about business cycles and the myth that saving is "bad."

Watch Here at Youtube.

This book of Hazlitt's was first published in 1946. It is 2008 now, and it would be putting it mildly to say that the central lessons that are contained in this work have still not been learnt. (I guess economics is "the dismal science," as Thomas Carlyle called it.)

On Friday I was watching The McLaughlin Group and just could not believe what I was hearing. Now, true, I am just a dumb layman, but how individuals in the media are viewing this mess baffles my mind.

Thanks, Government. Thanks a lot.

Watch Jim Rogers at LRC.

Mr. Rogers, a great prophet of this depression, says that the bankrupt must go bankrupt. Everything the government is doing is the wrong move (surprise, surprise). The frightening thing is, the current gang in power is likely to cause an "inflationary holocaust" when they are done with us.

(Government power never works. For a new liberty, anyone?)

No Problem.

"You Cannot Patch a Busted Dam With Water."

Says Mr. Shedlock. (Via CharlesGoyette.com)

"Regulation: The Cause, Not the Cure, of the Financial Crisis."

Writes Dr. Long.

A World Central Bank?

It might be coming...

Read Dr. Hoppe's excellent 1990 essay "Banking, Nation States, and International Politics: A Sociological Reconstruction of the Present Economic Order" [PDF].

The Free Market Economy is the Engine of Civilization: From Barter to Money.

Money is a crucial feature to any advanced civilization, notwithstanding how much it is looked at negatively and portrayed as intrinsically a nasty thing in "progressive" culture. Now before man can attempt to answer questions, such as, What is money?, Why do we have it?, or How does money develop in society?, there first must be an understanding of why there is any trade at all.

Comprehending that is reasonably straightforward. After that, we all will endeavor to answer those questions raised in regards to money. In so doing, the important connection money has to civilization and liberty will be concretized in the mind. Finally, we will look at the forces that undermine money, and thereby undermine civilization and liberty.

But first, imagine, following the lead-----I'm just attempting (please understand!), as a midget, to stand on the shoulders of giants-----of Murray N. Rothbard's work, that egalitarianism was not a "revolt against nature." That is, if all men were exactly alike in every single way imaginable. That even land was distributed in a homogeneous way in which every acre of land had an exactly equal proportion of resources. And, also, imagine that Mother Nature behaved in a way in which her affects were always and everywhere the same across the world in a homogeneous-collective manner as against one in which her behavior, so to speak, was different at different locations. And so on. Man in this world would be little different than a robot produced out of a mass production factory. Every man, being of identical nature, confined to his land, being of identical nature as well, would produce and consume exactly the same thing, in the same proportions as every other man. Clearly a division of labor qua society would not develop. To quote Ludwig von Mises (as Rothbard did on this subject): "No social life could have arisen among men of equal natural capacity in a world which was geographically uniform."

The real world, in which we live, is not like this at all. Rothbard is therefore absolutely correct when he said that egalitarianism is a "revolt against nature." Men, on the contrary, differ vis-à-vis each other. Land, too, is heterogeneous. Neither is Mother Nature a fan of egalitarianism. As Erik von Kuehnelt-Leddihn wrote, "'Nature' (i.e., the absence of human intervention) is anything but egalitarian; if we want to establish a complete plain we have to blast the mountains away and fill the valleys; equality thus presupposes the continuous intervention of force, which as a principle, is opposed to freedom. Liberty and equality are in essence contradictory."

Man would obviously not trade with his neighbor if his neighbor had everything he had. Man instead trades with his neighbor because his neighbor has something he does not have. More fundamentally, it is recognizing that trade in the second of the two cases is better or more profitable than trying to produce everything in isolation. A world with an extreme household protectionism would have extremely low standards of living. The population number would be nowhere near the number it is today.

It is the fact that engaging in a market economy with others is more profitable than not to engage that explains why barter developed. Man's needs and wants can be better fulfilled in the market economy. It is based on exchange and in production----production to be used in future exchange. Society is hence not an end to itself; it's a means. Men come together to do things together.

Now explanations of this development, from famous economists like Adam Smith, according to economist Hans-Hermann Hoppe, that pronounce the market economy developed for reason that man has an instinct to it and an inborn like of other men is erroneous. Both of these assumptions are not needed to explicate the development.

Trade may take place between two men, who might actually dislike each other, who rationally, opposed to instinctively, see the advantages of this type of interaction. If these two men trade with each other, then it is because the first man has something the second man wants and the second man has something that the first man wants. (Feelings of friendship, when voluntary cooperation has been established, can then truly develop!) This is not, though, the consequence of them viewing what they trade as equal to each other. No trade would result if that was the case. The trade is the consequence of them viewing these traded goods as having a different worth. One man ranks one thing higher and the other man ranks the other thing higher. Hence both trade because they see themselves as becoming better off than not trading.

This is the beauty of what Robert Nozick called "capitalist acts between consenting adults" (whose line the economist Walter Block often quotes). The mutually beneficial nature of all capitalist acts inter partes is logically implied when they take place (ex ante). It is because it is logically implied----because it must be logically implied----that such acts take place. Voluntary exchanges all logically imply it. For this reason, no empirical testing is required (and how would man go about that testing?) and no empirical testing can show this to be false. This logical deduction of action is not technically observed, but is implied even for an observer----who is an actor----who wishes to observe anything----i.e., it is implied in the way one observes anything----and for this reason cannot be refuted. It is the prerequisite (or praxeological precondition) for any voluntary exchange to take place. It is the foundation of these exchanges.

("Socialist" acts, contrariwise, we can call "acts between non-consenting adults." They imply something quite different than capitalist acts. Whereas capitalist acts take place because they are seen as advantageous for both parties, socialist, non-consenting acts are acts where one party aggressively forces his will on another. One party benefits; the other party has a loss to what was taken away. Furthermore, institutionalizing socialism above individual acts of random physical invasion is to make matters even worse for a society than "unsystematic socialism." Since institutionalized socialism is a systematic attack or redistribution of wealth from those engaging in capitalist acts----who under systematic socialism cannot rightfully defend their property from attacks----to those engaging in socialist acts, the costs of engaging in capitalist acts will be higher, and therefore there will be less capitalist acts in society. Consequently, there will be less wealth and wealth creation.)

But, from the fact that these initial barter (direct) exchanges necessitate a situation where there is a double coincidence of wants (i.e., the first man has something the second man wants and the second man has something that the first man wants), there is a major hurdle to which man has to jump through to exchange with another. It might turn out, for example, that one man sees that another man has in his ownership something he himself very much wants, but cannot trade with him because he himself has nothing that this man wants. In each and every exchange there is this hurdle. The range of man's potential capitalist exchanges will be limited. Thus, the division of labor cannot be complex and diverse under barter. Specialization, like we have today, is not a possibility.

This is why indirect exchange develops. To fulfill man's desire to trade, as elucidated above, man must find ways to facilitate it in a way to overcome the difficulties of barter. Man wanting to expand his trading opportunities, by overcoming the lack of double coincidence of wants, must find goods that are greatly marketable. These are goods that are popular; that are in high demand; that many, many people want and value. By obtaining these goods a man has therefore opened up his trading opportunities to a higher degree. And the higher this degree is, the more wealth creation prospects he has. The value he places on these goods, unlike other goods, is that they help him in acquiring services and other goods. He values it for its exchange value as opposed to its potential use value. It also follows that he will have the incentive to find a marketable good that has divisibility (without losing value), which will allow him to divide it up so as to more easily purchase more than one item and to easily purchase both expensive and inexpensive items.

Uncertainty, it should be noted, is what pushes man to adopt money. It is the uncertainty of knowing whether or not one is able to trade. (Only a world of "perfect certainty" would money not be needed.) As long as at least one entrepreneurial man can perceive all of this, a society can then start to economically evolve out of the primitive barter stage. Other men will see this. They will see that he who does such progresses upward in the hierarchy of wealth. There will therefore be an increasing demand for goods qua a medium of exchange. The interconnection of the market will increasingly intensify. It will push other men, who otherwise might not be bright enough to see the advantage of doing so, to follow the lead. "The result is a reinforcing spiral," wrote Murray Rothbard. "[M]ore marketability causes wider use as a medium which causes more marketability, etc. Eventually, one or two commodities are used as general media----in almost all exchanges----and these are called money."

This reinforcing spiral will result in the choice of a commodity that is demanded (valued), dividable, durable, homogeneous, portable, scarce, stable in supply, etc. Money is dependent on man's valuing it in terms of its, to quote Rothbard, "preexisting prices on which to ground demand." It depends on its barter demand. Unwinding the spiral by a regression, one finds that the evolution of a good (or two) to the position of money is the result of it being originally valued by man as a good in itself to be consumed. Hence, money can only originally develop through the free market as a commodity. And, hence, the only way government can enter the picture of money is if it does so on top of the necessary market development of money. Fiat paper money, by itself (with or without government force), could never get off the ground; anymore than if you took a clean sheet of practically worthless paper, applied some ink to it, and tried to buy something with it. Money, like language, is a product of freedom. That is, of free interaction, association, and discrimination. The State did not create money; anymore than it created language.

With the development of money, to iterate, the severe limitations of barter go away. The market economy becomes integrated. "Capitalist acts between consenting adults" can happen right away with money. Practically everything can be bought and sold in terms of money, without the problem of double coincidence of wants. There will thus be more exchanges and productions of goods and services. The standard of living will thus rise.

Money, moreover, allows man to easily calculate. Cardinal calculations are possible. (But the development of this, which man has to place value on, is itself an ordinal choice or ordinal value. Further, it is the feature of a market money's homogeneity that makes these cardinal calculations possible.) Exchange ratios arise. The question of how to direct scarce resources to fulfill the most wanted desires of man becomes possible to answer with a common, universal medium of exchange. The entrepreneur can now more easily see what lines of production are (relatively) more profitable than others. He can compare them. Of course this, too, raises the standard of living exponentially. The businessman can see his profits and losses. He can calculate his capital and income. Money thus develops the pricing system, which helps direct the traffic of the market. Any complex society needs the pricing system to direct scarce resources which have alternative uses. The only alternative is chaos.

The Transformation of Capitalistic Money to Socialistic Money.

Increases in the supply of money, once money has been established in society, is of no particular importance in terms of net living standards. Unlike other goods and services, an increase does nothing to make society wealthier. Only insofar as an increase of the particular money confers a non-monetary benefit to be consumed (either directly or, as a capital good, in the production of a future consumer good), can such an increase be said to raise living standards. A greater supply of money, ceteris paribus, just means a smaller purchasing power. A lesser supply of money, ceteris paribus, just means a larger purchasing power.

Assuming that the money chosen was gold, as it has been in modern times, in a free "society, one can acquire money in only three ways," said Rothbard:

(a) by mining more gold [which, by the way, is an expensive and slow process that will generally not lead to "price inflation"---my note]; (b) by selling a good or service in exchange for gold owned by someone else; or (c) by receiving the gold as a voluntary gift or bequest from some other owner of gold. Each of these methods operates within a principle of strict defense of everyone's right to his private property.

In the world in which we live this might look a little foreign, no doubt. So obviously something happened to the development of capitalistic money to turn it into the socialistic money we have today. This is an involved subject, but economically speaking the transition follows a precise pattern.

Before this blog entry briefly gets into that, however, it is very important to understand that one can try to acquire wealth by counterfeiting money. This activity of fraud is in direct violation of private property rights. As such, it is not part of the three acceptable ways to obtain money, which Rothbard described above.

The societal development of money brings the formation of banks. Their job is the storage of money and to provide for increased transactions between savers and entrepreneurs. Banks can either obtain income legitimately, as covered above, or illegitimately. They can facilitate transactions between savers and entrepreneurs legitimately or illegitimately, as well. Fractional reserve banking is an example of illegitimacy. All banks might have the desire to engage in this activity, but their desire will be limited indeed as long as there is open entry into competition (with no government central bank regulating this away in which this limit or check is eliminated [see below]). In addition, with a free market it will be limited because of the possibility of bankruptcy. (Profit and loss is both salubrious and necessary for an economy. [Bank runs are beautiful.]) Only the government can change matters. It and only it can take away competition by force or can attempt to prevent bankruptcy when bankruptcy occurs. Either of the two interventions will create moral hazard (i.e., there will be more financially risky behavior) and encourage the practice of fractional reserve banking.

Fractional reserve banking occurs when a bank issues more paper receipts (titles) than actual commodity money they possess. A one-to-one ratio (one hundred percent reserve banking) does not exist. From this it should be straightforward to see that if a bank engages in the handing out of more paper receipts (called "fiduciary media") than gold it holds in storage, it is no different ethically than a garage storage place taking one's items away from their customers while they promise to guard them. This is a violation of private property and makes the given bank financially bankrupt. That is to say, if each and every customer would come to the bank to demand their money, the bank would not be able to fulfill its contracts. Those interested in a just and free society, then, must want the law-contract enforcement agents that be to prevent these kinds of practices.

Put in another way, there will be more titles representing money property than actual money property. It tries to make two equal to one. It is an attempt to create physical property from nothingness. Because these titles have no value except insofar as they serve as a function to represent what they are titles to, the notion of free and contractual fractional reserve banking seems to make little sense. When man A deposits x amount of money, it cannot be said that x amount of money is also owned by man B at the same time. Only if it was contractually loaned (or voluntarily given) to B can it be his, but it cannot be exclusively owned both by A and B at the same time.

But, as stated, it is free banking, with no central bank, that has a build-in major economic limitation to fractional reserve banking activity, even if the enforcers of law do nothing about it. Interactions do not just occur with one customer and his respected bank or two customers of the same respected bank. Interactions can happen between one customer of one bank and another customer of another bank. That is, one man of Bank A can write a check to a man of Bank B. The second bank, with the new check, will demand the money (all of it) from the first bank. If Bank A has been reckless in engaging in fractional reserve banking, it will not be able to fulfill Bank B's request. To cut to the chase, this associational environment will thus put a major constraint on this fraud. The more banks there are, the more this constraint will increase. (Another limitation is a public that is aware of fractional reserve banking and is very untrusting of any bank that engages in it.)

What is more, artificially increasing the supply of money (via, e.g., bank notes, bank deposits, or "checkbook money" that people can use in their daily affairs)----which, unhappily, costs virtually nothing----will lead to a host of unintended consequences. (More will be written on this a little later. The unintended consequences will be far more pronounced when this artificial increasing of the money supply is systematically implemented via government.) There will be a redistribution of wealth, as already indicated. The greater the supply of money, ceteris paribus, the less purchasing power it will have relative to all goods and services. However, the result of inflation (i.e., the increase of the money supply without "specie" or commodity backing) is a result that comes to pass in a way that trickles through the economy. It is not an instantaneous event. Those accordingly getting the fake new "money" get it at the parasitic expense of those who get it later or not at all. After this inflationary process has trickled its way through the economy, prices will have risen (ceteris paribus) to reflect the new condition of the larger money supply. It is this uneven process that results in what are called "Cantillon effects." Effects of which have the result of redistributing real wealth.

Government, wanting to expand its revenues, can see all of this. This is why governments have sought control over the supply of money and the making of an alliance with the banking industry. Such an alliance would be beneficial to both, if only they can ideologically corrupt the public to thinking that it is beneficial to them as well. That, sadly, is not too difficult taking into consideration that the public's knowledge of economics is abysmal. Both the government and the banking industry can then engage in robbing the wealth of the public by controlling the money supply. Government can then tax in a new way, an indirect and unseen way.

The monopolization of minting by government, in a nutshell, first occurs and then the debasement (coin-clipping) of money, which is enforced on the public by means of legal tender laws. This debasement it pockets to itself at the parasitic expense of everyone else. More coins are created by the debasement and then the public is forced to act like nothing has happened. Now given that government outlaws all competition, the government has no competition to keep it in check. Government can thus keep on providing a inferior money without worry of a competitor offering consumers a superior money. Moreover, any remaining superior money will be driven off the market, since government will be forcefully overvaluing inferior money and undervaluing any superior money.

Then the government has monopolized money paper titles (bank notes) and creates a central bank (à la the Federal Reserve System). Counterfeiting can then occur uniformly vis-à-vis the banks. The central bank becomes the "bankers' bank" and the "lender of last resort." Gold, as the commodity money, becomes nationalized. It starts to lose its role, in the minds of the public, as money. And banks can inflate, with the government's blessing, off of government's inflation through fractional reserve banking with bank deposits. They can no longer issue bank notes, since the central bank has monopolized their issue, but can still issue bank deposits as a way to inflate. In this monetary socialism, they can do this without too much worry, as long as the public does not wake up to what is happening (or hyperinflation occurs). The previous free banking constraints largely disappear. At this time the government will also have the desire to get off the gold standard completely, and thus allowing this check to go the way of the dinosaurs for it to fill its power and greed ambitions. Soon all that is left is a fiat paper money system----a system very easy to counterfeit with.

The government can inflate at will with the counterfeiting apparatus. All that is done, essentially, is that the central bank buys some, say, government bonds. This money is produced literally out of nothingness. The bond dealer takes it to deposit at a bank and the bank then deposits it at the central bank. This deposit is the bank's reserves. The bank can then make deposits, through fractional reserve banking, on top of these reserves, in the amount the government allows by law----i.e., the reserve ratio. A reserve ratio that is 10:1, for example, means that the bank can increase deposits by tenfold out of nothingness on top of that original money that, too, came from nothingness.

Additionally, in the U.S., there has been the further creation of other programs that give the false impression to the public that the banking system is a sound system; instead of it being seen as a house of cards. The making of the Federal Deposit Insurance Corporation (FDIC), for instance, is an example. However, wrote Rothbard, "the FDIC itself has less than one percent of the huge number of deposits it 'insures.'" He went on: "The very idea of 'deposit insurance' is a swindle; how does one insure an institution ... that is inherently insolvent, and which will fall apart whenever the public finally understands the swindle?" And the very existence of the FDIC makes the banking system more unstable by creating moral hazard and by relieving customers their responsibility to take good care of where they put their money.

Not only will this fascistic-statist system perpetually promote inflation, it will perpetually promote business cycles leading to recessions and depressions. By perpetually declining the purchasing power of money, this system will discourage savers and encourage non-savers and debtors. Consumption, leisure, short-term thinking and planning will be relatively encouraged. The cultural characteristics and work ethics that make a healthy economy are thus punished with this system; whereas the opposite is rewarded.* Many businesses will also be thrown off course because business calculations will be distorted as a result of inflation. There will be an overestimation of profits, during the initial effective stages of inflation, and this will misdirect many businesses, and might even lead them to use up their capital on these false signals. Just as the effects of inflation will reward bad financial behavior for the individual and for the family unit, it will do ditto for private enterprise.

It is the facilitating of transactions between savers and entrepreneurs by the artificial expansion of credit (via fiat money) that sets into motion mass business cycles. The initial "boom," in the higher-order capital goods industries----which basically operate on man's ability to develop roundabout methods of production, and willingness to hold off instant gratification so as to invest present goods in such capitalistic production, that aims at an output with a higher net total of goods (than not doing so) in the temporal future----that received the credit, is artificial and the resulting bust phase is simply the market trying to correct the distortions that the government and the banking system created. Simply put, the ratio of consumption to saving (qua investment**) in society will not be reflected. With an artificially greater supply of credit, the interest rate (i.e., the cost of the procurement of money or capital in the present) is lower than it otherwise would be on the market. Instead of it reflecting the actual time preference levels (i.e., the rate in which man prefers present consumption over the future) and, on the other side of the same coin, saving levels (vis-à-vis spending-consumption levels) that men have in society, the market is misdirected to act like the time preferences are lower than what they actually are and to act like savings are higher than what they actually are. That is, instead of the boom being created out of actual savings with a low time preference that is temporally sustainable, the "boom" is based on hot air. And, remember, an increase of fiat money most certainly does not increase wealth for society. It does not and cannot increase (real) savings or lower time preferences.

A shaky imbalance in investments is created between consumers' goods (of the lower-order) and capital goods (of the higher-order). A mass of malinvestments becomes inescapable. When the rate of interest lowers, there is a shift from lower-order to higher-order industries. There will thus be an artificially greater investment in higher-order capital goods and correspondingly less investment in lower-order consumer goods. If private property and the market was respected, then it would be just the opposite given the current time preference and saving levels. However they are not respected. Even moreover, men will be saving less as lenders (and, hence, consuming more) because the return will be artificially lower than it otherwise would be. Thomas E. Woods, Jr., an historian and economist, has pointed out that, in effect, the anti-market intervention is in a tug-of-war match in which the economy is being pushed in two opposite directions at the same time. But, in the long-run, the market will win because real resources are not there to keep the "boom" going. These resources are consumed. (Insufficient resources have been freed up for the future. Instead of saving, men have been consuming. And instead of entrepreneurs producing for such present oriented things, they were being pushed into future oriented things.) The prices of these capital goods at first go up. These investments are made to seem profitable. A bubble develops. But as the effects of inflation trickles through the economy and the bank credit expansion ends, these investments will be seen for what they are, viz., hot air investments. Now they are seen (correctly) as not profitable. The prices of consumer goods will go up (with the given ratio of consumption to saving), with a shortage of resources, relative to the capital goods and there will be a redirection, in which a recession or depression occurs, of investments back to where they would have gone (in terms of production order), and the higher-order investments dry up. Hence, this process will produce another inescapable result: wealth destruction. "In sum," wrote Rothbard,

businessmen were misled by bank credit inflation to invest too much in higher-order capital goods, which could only be prosperously sustained through lower time preferences and greater savings and investment; as soon as the inflation permeates to the mass of the people, the old consumption-investment proportion is reestablished, and business investments in the higher orders are seen to have been wasteful.

*(To note, the more wealth, the lower the time preference tends to be. That is because it is less difficult to save with more wealth than less. One would hence expect that, because there is more wealth, real interest rates would be lower than the last generation. As Hoppe notes in his must read Democracy - The God That Failed book, they are higher with today's generation. This can only be the result of a systematic increase in time preferences. That is, society is more "child-like" today. ...... Mises himself recognized that the particular statist intervention of inflation is a direct attack on what we can call "conservative" values: The cultural damage of inflation is "epically strong among the youth. They learn to live in the present and scorn those who try to teach them 'old-fashioned' morality and thrift.")

**(The issue of "hording" has no direct influence on this discussion and thus will be ignored. But understand that all this would do is increase the purchasing power of the "remaining" money in circulation. For a very quick look into the un-evilness, in both an ethical and economic sense, of misers see Walter Block's Defending the Undefendable.)

Transforming Socialistic Money Back to Capitalistic Money.

Money is an important cornerstone to civilization. It is, as Murray Rothbard said, the "lifeblood" of the economy. Because of this, when men look at the evil affect the State and their banking allies have on money (and all the side effects that are produced), this should be all we need to know about the State and how regulations are designed not to protect consumers but to protect special interests.

Apologists for the status quo, especially mainstream conservatives (who are not at all friends or allies of liberty----who would be aptly described as largely fascists), fail to recognize that much of big business and big media are intermingled with the government. These businesses get granted special privileges and benefits that mom-and-pop shops do not. On the other hand, mainstream liberals that respond that money is therefore to blame for this is equivalent to saying that water is to blame for the coerced drowning of a person, instead of the criminal that murdered the person with the employment of water.

In itself money, like water, is neutral. Usage can be for good and evil. As long as there is this central machine of democratic power it is only natural that those with more influence will direct its usage to their own benefit and at the expense of others. It is therefore nonsensical to think anything but rich people will have the most direct influence on government. These particular rich people want to go to the government because it has power and they do not. For this reason, the problem is not wealth or money. The problem is power. They do not go to the government because they have power but because they don't.

The banking industry got tied into the governmental system because that system has power. And government is all too happy to get more power and control. The control over money allows the State to implement an "inflation tax." The president of the Mises Institute, Llewellyn H. Rockwell, Jr., has as a result said that the central bank is "[t]he heart of the modern state." If you understand the economics of money and the outcome of statist intervention on money, then you understand the modern state.

The justifications for the existence of the U.S. Fed can only be described as hilarious: for example, the idea that the Fed "fights" inflation. But its very nature is inflation. Since the creation of the Fed, over 95 percent of the value of the dollar has been lost. Not exactly a "fighter!" "Not worth a Continental," comes to mind. Then there is the claim that the Fed stops business cycles. Again, its very nature is business cycles. We have business cycles all the time. Right now we are in one.

Perhaps it should be also quickly noted that the Fed, as many suggest, is not a "private" bank. What is needed is a private free market in the banking industry, not more of the same. The Fed was created and established by the government, it is maintained by government, the officials in the Fed are largely appointed by the government, etc. A "Fed" could not exist if it were truly private. Competition would drive it out of business in a blink of an eye by hyperinflation over the production of worthless pieces of paper, which cannot be money without monopolistic government aggression and force.

Those that favor either no government or a very small, decentralized government must then work for the separation of State and money. This means an end to central banking and an end to fractional reserve banking. It means a return to a free market commodity money. It means an end to the house of cards we have now. It means an end to artificial bubbles generating booms-and-busts in the economy. No central plan is needed to move back to a free market of money and banking. A free market is the lack of a central plan. Accordingly, what needs to be done is the elimination of legal tender laws, the allowance of man to be free to choose his money, deregulation, and, ultimately, the abolition of the Federal Reserve. (In a manner of speaking, the inverse of "Gresham's Law" would occur.) For a guide to follow, we can turn to the recommendations of Rep. Ron Paul, a scholar in the economics of monetary issues and author of Gold, Peace, and Prosperity and The Case for Gold. In times like ours, seeking fiscal sanity is more important than ever.

"Man cannot turn back the clock" might be the reply some men have to the idea of returning to a money of free market capitalism. But, to quote the great Richard M. Weaver, "I'm not turning it back; I'm setting it right."

References: I'm just striving to stand on the shoulders of giants. Hopefully I balanced the content in this blog entry successfully. Any shortcomings are my own. Above quotes of Rothbard's comes from, respectively, What Has Government Done to Our Money?, The Case Against the Fed, "Taking Money Back," and America's Great Depression. On egalitarianism, see his Egalitarianism As a Revolt Against Nature.

A number of essays and books have shaped by understanding of monetary issues (and my understanding is still being shaped). For those new to this subject, the first and best book to read is What Has Government Done to Our Money?. It is beautifully and clearly written. See the layman populist essay "Taking Money Back." Listen to this mp3 Rothbard lecture. And be sure to read his "Economic Depressions: Their Cause and Cure." Besides Rothbard, Bob Murphy provides a reading list here. Read "What You Should Know About Inflation" by Henry Hazlitt. Take a look at "The Business Cycle" in Jim Cox's The Concise Guide to Economics. See Hans Hoppe's "Banking, Nation States, and International Politics" and "How is Fiat Money Possible?." For something light and entertaining (although, slightly off topic), see "The Economics of Star Trek or What is Good for Business?" by Dmitry Chernikov.

If you just stumbled into The Paleo Blog and know little to nothing about economics, then the best book to read is Economics in One Lesson by Henry Hazlitt and then, if you are still interested, read Economics for Real People by Gene Callahan. Thomas DiLorenzo provides a more historical perspective on the importance of economic freedom in his great How Capitalism Saved America. I highly recommend it. For something a bit more advanced, but still short in size, see An Introduction to Austrian Economics by Thomas Taylor. 

Very sadly, I have to report that The Charles Goyette Show, at least on KFNX AM 1100 in Phoenix, is at an end. My very best wishes and prayers to Mr. Goyette and his new wife. Hands down he is the best talk radio show host in the nation.

Visit his website: CharlesGoyette.com.

The great Lew Rockwell is interviewed on AntiWar Radio. Listen here [mp3].

The Revolution Hasn't Ended: CampaignForLiberty.com.

Beltway Libertarians vs. Rothbardians:

• "Libertarianism’s Divergent Roads" by Justin Raimondo.
• "The Kochtopus vs. Murray N. Rothbard" by David Gordon.
• "The Kochtopus vs. Murray N. Rothbard, Part II" by Gordon.

Another Review of The Revolution: A Manifesto.

For those who have not read the book yet, go out and get it. It's an excellent and succinct book. Despite its short size, I believe Ron Paul covers the issues brought up in the book very well. It will bring a new generation in the Liberty movement. Among other things, he covers the foreign policy views of the founding fathers and of the traditional conservatives. He points to the work of Michael Scheuer, Philip Giraldi, and Robert Pape to document the underlying root causes of terrorism. For instance, Iran's Ayatollah Khomeini tried for years to create a Jihad against the West because, as the neoconservatives say, of the "freedom" we have. That didn't work out all that well. And if we compare this to Osama bin Laden, we find that he gets recruits by different rhetoric which rallies people against the foreign policy of the U.S. government. Or if we just look at all individual suicide attacks, these individuals who became terrorists for reasons of religion is statistically low. Well, there is much more---but you will have to get the book.

Butler Shaffer is a brave soul. He attended a Republican Convention. Here he writes about it.

Some Politically Incorrect Taboos about the U.S. Government:

1. "The United States has become a rogue state, a pariah nation, an evil empire.
2. "The United States' military is the greatest force for evil in the world.
3. "The United States is the arms dealer to the world.
4. "The United States is not the world's policeman.
5. "The United States cannot redeem the world through violence.
6. "The United States is not the God-anointed protector of Israel that enjoys a special relationship with God.
7. "The United States government is the greatest threat to American life, liberty, and property – not the leaders or the military or the people of Iraq, Iran, Syria, China, Russia, or Venezuela."

From "Christianity and War" by Laurence M. Vance.

The Empire has murdered a greater amount of persons than the terrorist organizations that originate from the Middle East. Or am I not allowed to say that? Maybe neoconservatives will follow the lead of their ideological left-liberal cousins in Canada and try to pass "Hate Speech" laws!

"War and the Common Good" by Anthony Gregory.

See "Legislating Tyranny," excerpted from The Tyranny of Good Intentions, by Paul Craig Roberts and Lawrence M. Stratton.

Now I do not relish seeing yet another administration in the White House. It is nothing but replacing one criminal gang with another. However, it will at least be nice to see the Bush nightmare administration gone. Why if only the modern version of "red state fascist" conservatism (and the whole Republican Party) would leave with him.

"The Spy Who Loves Us" by Philip Giraldi.

"You Want Change?" asks Justin Raimondo, "Me too – but don't hold your breath…"

Thomas J. DiLorenzo on Dictator Lincoln.

Dr. Wilson writes at Chronicles:

Thought experiment. According to widely accepted folklore, the Northern States fought the Southern States in 1861-1865 in order to free the slaves. If the South had freed the slaves after seceding, would the North have attacked them? (The answer is yes. The North attacked not to free the slaves but to “preserve the Union,” i.e., in order to keep the South captive for economic exploitation. The slaves being freed would have increased the incentive to attack and control the South because the Northern ruling class believed, mistakenly, that free blacks would provide cheaper and more profitable labour than slaves.)

"The ‘Good War’ and the Terrible Peace" by Patrick J. Buchanan.

Ludwig von Mises: “The desire for an increase of wealth can be satisfied through exchange, which is the only method possible in a capitalist economy, or by violence and petition as in a militarist society, where the strong acquire by force, the weak by petitioning.”

"War and Inflation" by Llewellyn H. Rockwell, Jr.
"What Are Just Prices?" by Jeffrey A. Tucker.
"Starving the World's Poorest" by Bogdan C. Enache.

Upcoming Book to Buy: Eliot and His Age: T. S. Eliot's Moral Imagination in the Twentieth Century by Russell Kirk. It will be out sometime in July. Here is it at ISI Books. Besides The Essential Russell Kirk, this book stands out the most in their Kirk collection. It should be a good read.

Most "discount" book clubs are not worth it. The ISI Books Readers Club seems to be an exception to the rule. It is $15 and there are no obligations. I am a member and I'm happy with it.

Speaking of Books: If you do not have Economics in One Lesson by Henry Hazlitt, then you must. The Mises Institute has a new edition out. Buy it.

In this 1998 essay Sobran asks: "Are you a Marxist?"
Did Someone Say "Blackmail in Politics"?

(Off-Topic) "'Some of us are owed an apology': Traditionalists and the Latin Mass" - An Interview with Thomas E. Woods, Jr.