You are browsing the archive for 2013 September 03.

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Sen. Paul Questions Sec. Kerry at Senate Foreign Relations Committee Hearing- September 3, 2013

September 3, 2013 in Politics & Elections

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Source: RAND PAUL

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Policy Mic Op-Ed: Obama Will Not Get Away With a Syria Strike On My Watch

September 3, 2013 in Politics & Elections

In 1971, Secretary of State John Kerry famously questioned: ‘How can you ask a man to be the last one to die for a mistake.’ I would ask Secretary Kerry how can you ask a man to be the first one to die for a mistake? That is what he would be doing if the U.S. intervened in the Syrian civil war.
While the death and destruction stemming from the Syrian civil war is difficult to watch, I believe the U.S. must exercise maximum restraint and uphold the constitutional requirement that grants Congress, not the president, the right to declare war. The president’s announcement that he will seek congressional approval before unilaterally going to war is a step in the right direction.
From a strategic standpoint, there are three questions that should always be asked and sufficiently answered before going to war: What is the U.S. national interest? What is the military objective? What is the exit strategy?
We should also be skeptical of the Islamic rebels that our nation would be fighting alongside. Our knowledge of the relationship with these rebels is murky at best. What reason do we have to believe that they have America’s best interest? The enemy of my enemy is not always my friend. On one side, we have Assad; on the other, we have Al-Qaeda. On one side we have Islamic jihadists; on the other, we have Christians. We have priests and civilians kidnapped and killed by Islamic rebels. It seems on all sides we have chaos and it is unclear if any side will, in the end, be a friend to the United States.
Those who seek military action have an obligation to publicly address these concerns before intervening in another Middle Eastern war. Shooting first and aiming later has not worked for us in the past, and it should not be our game plan now. I will not vote to send my sons, or your sons, daughters, brothers, sisters or friends to fight for a stalemate.
There are other consequences to be reaped if we make the wrong choice here. Has the Obama administration considered the retaliation from Syria or Iran that could occur on Israel, Jordan, Turkey and our other allies in the region? I don’t think those in favor of intervention realize how quickly this could spiral out of control.
Laws can be amended, repealed or replaced; lives can’t be.
Of course, the sight …read more

Source: RAND PAUL

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Bubbles, Booms, and Busts: What Have We Learned?

September 3, 2013 in Economics

By John P. Cochran

Bubbles, Booms, and Busts: What Have We Learned?

The always insightful and provocative George Selgin has some excellent commentary at Free Banking on the role of central banks in creating booms and busts. Selgin’s commentary and cautions to both monetarists and Austrians are excellent follow-ups to increased awareness of the importance of Austrian contributions by ‘mainstream’ economists recently highlighted here and here.

Selgin’s discussion along with these recent mainstream discussions provide a good time to re-asses some of what has been and still needs to be done within a capital-structure based macro (or perhaps following recent extension of ABCT by Andrew Young a time-structure based macro?). Selgin’s major suggestion for Austrians is that they pay more attention to the possibility of a monetary induced bust – the credit channel can work in both directions. A Freidman “pluck” may explain some ‘recessions’ or contribute to a more severe downturn and slower recovery from a boom induced bust. I would add real shocks a la RBC may also contribute to fluctuations. Monetarist, especially many market monetarist such as Scott Sumner, should recognize, as have many others; among them, Selgin’s list Anna Schwartz, Allan Meltzer, and John Taylor, and now Calvo, Borio, and White, that credit creation accompanied by artificially low interest rates can (and did recently back to back) create an artificial boom and subsequent bust. In fact, Calvo and Borio argue recent evidence strongly suggests credit booms precede financial crises and busts.

Roger Garrison (here, 446) makes two important points on what we should learn from the discussions:

  1. “The terms boom and bubble are often used interchangeably in the literature on business cycles. It may be preferable, however, to use boom—or more specifically artificial boom—to refer to the credit-induced simultaneous expansion to various degrees of different interestsensitive sectors of the economy and to use bubble to refer to the artificial boom’s most dramatic manifestation. Which sector reveals itself as the bubble depends on the circumstances in which the credit expansion occurs.”
  2. ABCT, when applied to an historical episode is a variation on a theme (Time and Money Ch. 6 or Andrew Young). Often central bank policy contributes to bubbles and booms by  “As indicated earlier, artificial booms entail a turbocharging of whatever else is going on at the time.”

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Source: MISES INSTITUTE

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Coase and the Austrians

September 3, 2013 in Economics

By Peter G. Klein

Ronald Coase passed away yesterday at the age of 102.  Coase is one of the most influential economists of the twentieth century, perhaps of all time. Here is an official notice from the University of Chicago law school; here are comments from Lynne Kiesling, Mike SykutaPete  Boettke, Josh Gans, and me.  Much will be written in the coming days on Coase and his contributions, so let me just highlight a few points about his relationship with the Austrian school.

Coase was no Austrian, but was friendly with many Austrian economists, was deeply critical of modern positivism and instrumentalism, and was skeptical of most regulations. Austrians have generally rejected Coase’s approach to property rights, externalities, and liability (see Block, 1977Rothbard 1982, and Cordato, 1992, for examples of a large literature). However, Coase’s insight that legal entitlements are often traded, and that trading partners can often “contract around” legal and regulatory barriers, is important and useful, even if contemporary law-and-economics scholarship has drawn the mistaken implication that judges can somehow use this insight to determine the “optimal” allocation of property rights.

Coase’s approach to the firm has both its supporters and detractors within the Austrian literature. My own work fits mostly within the “Coasean” tradition in which the firm and market are regarded as alternative resource-allocation mechanisms, and in which legal and contractual issues, rather than knowledge or spontaneous order, are central to the theory of the firm. Quoting from a piece I wrote on Oliver Williamson:

Some Austrians have argued, following Alchian and Demsetz (1972), that Coase and Williamson wrongly claim that firms are not part of the market, that entrepreneurs substitute coercion for voluntary consent, and that corporate hierarchies are somehow inconsistent with the free market (e.g., Minkler, 1993Langlois, 1995Cowen and Parker, 1997; Matthews, 1998). I think this is a misreading of Coase and of Williamson. It is true that Coase speaks of firms “superseding” the market and entrepreneurs “suppressing” the price mechanism, while Williamson says firms emerge to overcome “market failure.” But they do not mean that the firm is outside the market in some general sense, that the market system as a whole is inefficient relative to government planning, or anything of the sort.

Coase was certainly familiar with Mises’s and Hayek’s arguments about central planning, having learned them directly from Hayek. In an entry on Hayek for the …read more

Source: MISES INSTITUTE

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Sen. Paul Appears on NBC's Meet the Press- September 1, 2013

September 3, 2013 in Politics & Elections

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Source: RAND PAUL

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Bush-Obama-Fed Great Stagnation

September 3, 2013 in Economics

By John P. Cochran

John B. Taylor has asked What to Call This Very Slow Recovery? In a post that pre-dates the Taylor question, I had suggested the Bush-Obama Great Stagnation. This suggestion was based on discussions in Mises Daily referring to 1929-post WWI as the Hoover-Roosevelt Great Depression and an excellent QJAE paper written circa 2009 by Mark Thornton who makes the Bush-Hoover connection (“Hoover, Bush, and Great Depressions).

More recently, while I was working on a forthcoming Daily providing more evidence on why Krugman is wrong about the Austrians and ABCT, I amended this to the Bush-Obama-Fed Great Stagnation.

Steve Horwitz’s commentary in a new blog at LSE, provides support on why the Fed belongs on the list of usual suspect. Horwitz argues that “post 2008 Fed policy has contributed to the excessively slow recovery while creating significant problems moving forward.” Titled “The Fed’s monetary policies since 2008 have undermined the creation of a growth-producing economic environment” he further argues, that by paying a small amount of interest on reserve balances, the Fed has discouraged banks from lending, leading to a de facto bailout program. Now, the Fed faces the very real problem of how to avoid inflation as QE ends and recovery begins.”

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Source: MISES INSTITUTE

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Should America Enter Syria's Hell?

September 3, 2013 in Economics

By Doug Bandow

Doug Bandow

On Saturday President Barack Obama surprised most everyone in America by making the right decision and asking Congress for authority to go to war in Syria. Now Congress should make the right decision and vote no.

One of the impacts of being a superpower is that America has interests everywhere. However, most of those interests are modest, even peripheral. Conflicts and crises abound around the globe, but few significantly impact U.S. security. So it is with Syria.

The bitter civil war obviously is a human tragedy. However, the conflict is beyond repair by Washington.

Ronald Reagan’s greatest mistake was getting involved in the Lebanese civil war, which at one point contained 25 warring factions. The U.S. invasion of Iraq sparked civil conflict which killed tens or even hundreds of thousands of civilians. Allied intervention in Libya prolonged that brutal low-tech battle and left terrorism and instability in its wake. Egypt, where America has successively backed dictatorship, democracy, and military rule, seems headed towards growing violent conflict, with the possibility of terrorism and even civil war.

Civil wars are particularly resistant to outside solution. The antagonisms run deep and there often are multiple parties, none of whom may want peace. In Syria the radical Islamists appear to be gaining influence. It is not obvious how the same government officials who have made such a mess of so many other countries would fix Syria.

Nor would the fighting likely end even if the U.S. ousted the Assad regime. Insurgent factions then likely would fight for dominance of either the whole of Syria or breakaway regions. For many rebels revenge against those backing the regime, as well as members of groups noted for their support, such as Alawites and Christians, would become a top priority. Then the U.S. would have to intervene again — or ignore the bloodletting, as it did in Kosovo when ethnic Albanians exacted retribution.

Far from advancing U.S. security, getting involved in Syria would ensnare Americans in a completely unnecessary conflict.”

Even if nation-building in Syria wasn’t such a daunting task, the U.S. government should not risk the lives of its citizens in conflicts where Americans have no substantial stake. Policymakers have no warrant to be generous with fellow citizens’ lives. Protecting this nation, its territory, people, liberty, and prosperity, remains the highest duty for Washington.

Far from advancing U.S. security, getting involved in Syria would ensnare Americans in a …read more

Source: OP-EDS

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On Syria, Attention Shifts to Congress

September 3, 2013 in Economics

Support is gathering in Washington for military action in Syria. This past weekend, President Barack Obama surprised most everyone in America by making the right decision and asking Congress for authority to go to war. Now Congress should make the right decision and vote no. While the desire to do something in Syria is understandable, Cato scholars Doug Bandow and Christopher A. Preble argue that the conflict is beyond repair by Washington: “Syria is a tragedy. But it is not America’s tragedy. Legislators should reject war with Syria.”

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Source: CATO HEADLINES

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On Syria, Attention Shifts to Congress

September 3, 2013 in Economics

Support is gathering in Washington for military action in Syria. This past weekend, President Barack Obama surprised most everyone in America by making the right decision and asking Congress for authority to go to war. Now Congress should make the right decision and vote no. While the desire to do something in Syria is understandable, Cato scholars Doug Bandow and Christopher A. Preble argue that the conflict is beyond repair by Washington: “Syria is a tragedy. But it is not America’s tragedy. Legislators should reject war with Syria.”

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Source: CATO HEADLINES

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Polish Gold to be Repatriated?

September 3, 2013 in Economics

By Mises Updates

According to several Polish news sites, some groups in Poland, including the Mises Institute of Poland, are pressuring the Polish central bank to repatriate Polish gold. According to this story (loosely translated):

Poland currently owns around 109 tons of gold deposited abroad. Most of the reserves are stored in the UK.  In the face of financial crisis, every major country should keep gold within easy reach. Therefore, the Polish gold should return to their homeland – say the initiators of the “Give Us Our ​​Gold”.

The vast majority of Polish gold reserves are currently at the Bank of England, and went there before the Second World War…

In order to put pressure on the Polish National Bank, advocates have launched an action entitled. “Give Us Our gold” Among the partners are the Mises Institute of Poland…

Organizers cite the example of Germany, which has decided to bring its provisions into the country. The operation of moving the gold is already in progress. Similar plans are in the works Switzerland, which decided to hold a referendum on this issue.

Note: Other Mises Institutes worldwide are not affiliated with the Mises Institute in Auburn.

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Source: MISES INSTITUTE