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By Ryan McMaken

Well, she didn’t actually say that, but she might as well have. Her position is that the investors who loaned her regime money are now “terrorists” for wanting to be repaid, noting, in a speech at the United Nations, that “terrorists are also those who destabilize a country’s economy through speculation.”

Of course, Argentina wouldn’t even have needed those investors if the government had simply stuck to spending only what it collected in tax revenues. Instead, over the past decade, Argentina has been on a spending spree.

Kirchener, when she made these remarks, was perhaps anticipating Monday’s legal development in which Argentina was declared in contempt of court for refusing to pay its debts.

Now, as Christopher Westley has shown, the Argentinian state should just default on its debt, since the taxpayers have been abused enough at this point, and should not continue to be on the hook to pay for the state’s profligacy. And Argentina is indeed in the process of defaulting. But Kirchner wants to default and still be legally not in default, so that the next spending spree can get started all the sooner.

For more:

Understanding Argentina’s Coming Default by Nicolás Cachanosky 

Confiscatory Deflation: The Case of Argentina by Joseph T. Salerno

Myths and Lessons of the Argentine “Currency Crisis” by Joseph T. Salerno

Argentina’s Politicians Should Read Mises by Iván Carrino

Argentina’s Paper-Money Mire by Grant M. Nülle

…read more

Source: MISES INSTITUTE

By Peter G. Klein

Alan Greenspan once vigorously defended the gold standard, before taking command of the world’s largest printing press. Now back in civilian life, and lacking any opportunity to put his professed principles into action, Alan is again friendly to gold:

The broader issue — a return to the gold standard in any form — is nowhere on anybody’s horizon. It has few supporters in today’s virtually universal embrace of fiat currencies and floating exchange rates. Yet gold has special properties that no other currency, with the possible exception of silver, can claim. For more than two millennia, gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or direct claims to gold are offered in payment of an obligation; it was the only form of payment, for example, that exporters to Germany would accept as World War II was drawing to a close. Today, the acceptance of fiat money — currency not backed by an asset of intrinsic value — rests on the credit guarantee of sovereign nations endowed with effective taxing power, a guarantee that in crisis conditions has not always matched the universal acceptability of gold.

…read more

Source: MISES INSTITUTE

By Matthew Feeney

Matthew Feeney

The British government recently launched an independent review of the sharing economy in order to assess its “social and economic potential.” Although this approach to the sharing economy is in stark contrast to what is often seen on the other side of the Atlantic, sharing economy fans should be wary of what the review may recommend.

The website for the review (published on Monday) does not currently contain many details, however it does mention that three sectors where the sharing economy is firmly established in the U.K. will be examined. These three sectors are 1) “personal and commercial space,” 2) “transport,” and 3) time and skills.”

The “personal and commercial space” sector includes companies such as Airbnb and One Fine Stay, online marketplaces where homeowners can advertise their properties for short-term rents. Thanks to laws enacted during the 1970s, homeowners in London who want to rent their homes for less than three months must have permission from local LOCM -2.44% authorities to do so. However, in June Secretary of State for Communities and Local Government Eric Pickles said, “It’s time to change the outdated, impractical and restrictive laws from the 1970s, open up London’s homes to visitors and allow Londoners to make some extra cash.” Changes in the laws are included in the Deregulation Bill, which is currently at the committee stage in the House of Lords.

“It should not come as a surprise if the British government’s independent review recommends policies which allow for the sharing economy to function in a potentially problematic regulatory framework.”

The “transport” sector of the sharing economy in the U.K. includes Uber, which is competing with London’s iconic black cabs. London cabbies held a protest earlier this year against how Uber was being treated by London’s transportation regulator; a move that Uber claimed resulted in an explosion in British signups. London mayor and self described fan of rules-based anarchy Boris Johnson said shortly after the London cabbie protests that banning Uber in the U.K.’s capital would be difficult. Lyft, one of Uber’s main U.S. competitors, has yet to launch in the U.K., but a British entrepreneur could develop an app to compete with Uber’s technology. GetTaxi, an app that allows users to hail a licensed black cab, is already providing Uber with some competition.

The last firmly established sector of the sharing economy that will be subject to the British government’s review is …read more

Source: OP-EDS

By Ryan McMaken

The September issue of The Free Market, the Mises Institute’s monthly,  is now online!

September’s issue features a new book review from David Gordon, and on the 100^th anniversary of World War I, Hunt Tooley reflects on modern views of the war:

In his new book Money, Steve Forbes offers a new scheme for tying the dollar to gold.  But, of course, things are not what they seem, and in the Forbes plan, there is no true gold standard to be found. David Gordon writes:

Imagine that someone wrote an eloquent book about price and wage controls. The book showed how attempts to control prices led to economic disaster. Faced with an abundance of incontrovertible evidence that demonstrated the bad effects of these measures, an informed policymaker would find only one rational choice available to him. He should not impose comprehensive price controls but rather should use controls in moderation. Would it not be obvious what had gone wrong with our imagined book? If price controls do not work, they should be done away with altogether. “Moderation” in the use of a bad measure is no virtue. If cyanide is poison, “drink in small doses” is not the appropriate response. Money falls exactly into the bad pattern just described.

Also in this issue, historian T. Hunt Tooley examines how historians’  views of the First World War have varied greatly over time. Dr. Tooley looks in detail at how the written history of the war has evolved, and the role of Austrian economists in shaping those views:

Mises really offered the revisionist school a theoretical framework which had been missing. He also encouraged many students in this direction, including Murray N. Rothbard and Ralph Raico. Rothbard contributed very substantially to the field of technical studies of World War I as he folded the theory of Mises into the older revisionist school. His works on war collectivism, “war as fulfillment,” the financial history of the war, and other topics stand at center stage in modern paleo-revisionism.

Indeed, Rothbard really expanded the agenda of revisionism to encompass a variety of new topics in intellectual, economic, and social history relative to the first conflict. Along with Mises, Rothbard took revisionism in a direction away from the unqualified support of Germany under the Kaiser, a kind of caricature position in which some revisionists had become stuck. Rothbard critiqued the state as state, including the German version of it.

And don’t miss our round-up of this year’s …read more

Source: MISES INSTITUTE

By Ryan McMaken

Well, war is good for certain sectors of the economy. For example: weapons manufacturing. Taxpayers and holders of US dollars won’t fare quite as well.

Writes Bloomberg:

Led by Lockheed Martin Corp. (LMT), the biggest U.S. defense companies are trading at record prices as shareholders reap rewards from escalating military conflicts around the world.

Investors see rising sales for makers of missiles, drones and other weapons as the U.S. hits Islamic State fighters in Syria and Iraq, said Jack Ablin, chief investment officer at Chicago-based BMO Private Bank. President Barack Obama approved open-ended airstrikes this month while ruling out ground combat.

“As we ramp up our military muscle in the Mideast, there’s a sense that demand for military equipment and weaponry will likely rise,” said Ablin, who oversees $66 billion including Northrop Grumman Corp. (NOC) and Boeing Co. (BA) shares. “To the extent we can shift away from relying on troops and rely more heavily on equipment — that could present an opportunity.”

Basically, it’s party time at places like Lockheed Martin where highly paid engineers live off the sweat of the taxpayers to develop more efficient ways to kill people 10,000 miles away. The idea of a war with few American casualties, but with incredibly expensive weaponry, is a crony capitalist’s dream come true. Politically, there’s no down side, from their perspective. Voters don’t care about dead Arabs, and with so few American personnel likely to be killed, there’s virtually limitless potential for the defense industry in this open-ended conflict. Thousands of bombs, each costing $250,000 will be dropped, with thousands more rolling off the production lines.

Thanks to the central bank and American enthusiasm for limitless spending on wars, there’s no better business than the war business. In fact, with election season right around the corner, watch for conservatives to be claiming that the administration isn’t spending enough on war.

…read more

Source: MISES INSTITUTE

By David Howden

Lots of people like to concentrate on the deficit when looking at public finances. In 2013, he federal government of the United States ran a budget deficit of $614 billion, which is quite a bit, but seemingly small relative to the $17 trillion economy. (Though as I recently showed, if you want to understand how precarious public finances are you should assess them relative to tax receipts and not a country´s total income.)

David Stockman´s recent article raises a whole new reason to be scared.

The actual amount of borrowing that the federal government did in 2013 was over $8 trillion! Because so much of Uncle Sam´s debt is of a short-term nature, it is necessary for the federal government to continue seeking the kindness of strangers to keep its debt rolled over.

Since total federal tax receipts amount to just shy of $2 trillion last year, the government needed to borrow four times more than its annual “income” just to stay afloat.

The problem is not just that the total amount of public debt outstanding is high, or that the yearly deficit adding to this debt is significant. It´s that so much debt is of a short-term nature, which necessitates the Treasury to continually seek out new borrowers. The risk is that one day borrowers will demand more than the paltry interest rates T-Bills are currently yielding, a situation that would result in either a terrible auction at low rates or significantly higher interest charges. I can´t really see Uncle Sam liking either of these options.

(Cross posted at Mises Canada.)

…read more

Source: MISES INSTITUTE

By Michael D. Tanner

Michael D. Tanner

Article 1, Section 9, Clause 7 of the Constitution says that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Aside from declaring war — something Congress never bothers with any more — few responsibilities are more basic or important for our national legislature.

And, under the rules of the House of Representatives, those appropriations (with certain exceptions) are supposed to be passed in one of twelve appropriations bills. The Congressional Budget Act of 1974 requires Congress to act on appropriation bills by June 30 of each year, although there is no enforcement mechanism if that deadline is missed. More realistically, then, Congress is supposed to act before the start of the new fiscal year, October 1.

Yet Congress has not passed all twelve appropriation bills since 1994. This year, in fact, Congress passed exactly none.

“Congress keeps ignoring its proper budgetary responsibilities.”

Of course, that’s not exactly shocking. Congress didn’t pass any last year either. It makes one wonder what exactly we are paying them for.

Actually, that’s not entirely fair. The House did manage to pass 7 of the 12 appropriation bills, just nudging itself over .500. On the other hand, the Senate, under the dynamic leadership of Harry Reid, failed to bring even one to the floor for a vote.

Therefore, this September, Congress again resorted to funding the government through a continuing resolution, a catch-all bill, that will fund the government through December 11, when a lame-duck Congress can come back and … pass another continuing resolution.

Although generally touted as maintaining 2015 spending at 2014 levels, the bill actually includes increased “authorization” for spending on disaster relief, “overseas contingency operations” (read: war), and other areas, without corresponding offsets. While exact spending on these items won’t be known for some time, it is likely that final spending in 2015 will exceed 2014 levels. The increase in OCO spending, while understandable, is particularly problematic since it is not subject to normal budget rules. In the past, Congress has treated OCO money as something of a slush fund.

Use of a continuing resolution did serve one useful function as far as Congress is concerned. It protected members from having to vote on contentious issues shortly before an election. Thus, the CR continues funding for the Export-Import Bank until June 30, 2015. Needless to say, Obamacare funding also continues. The CR also failed to extend a moratorium on …read more

Source: OP-EDS

By Nat Hentoff

Nat Hentoff

I am an atheist, but have never wavered in my conviction that persons with religious beliefs are entitled to the same freedom of choice as me. And in my vocation as a reporter, the person who has most influenced me was the late Frances Sweeney, a deeply religious Catholic editor of a penetratingly independent Boston newspaper where I first became a journalist in my teens.

Boston was then the most anti-Semitic city in the country, and in the Jewish ghetto where I grew up, boys knew if they walked alone down those streets at night, they could lose teeth from invading avengers of Christ’s death. I even lost some teeth.

Yet Frances Sweeney, in her newspaper and in public meetings, persistently criticized the city’s Catholic leadership for its continued silence on this bigotry. Threatened once with excommunication by Cardinal William O’Connell for her attacks, she nonetheless persisted in her criticism.

I was one of those teenage reporters who exposed some of the financiers of that anti-Semitism in her newspaper.

So I now have no hesitation, though still an atheist, in being drawn to a Catholic Church that, according to Pope Francis, “is poor and for the poor.”

In his first Apostolic Exhortation, Evangelii Gaudium (The Joy of the Gospel), presented last November, Pope Francis wrote: “Our faith in Christ, who became poor, and was always close to the poor and the outcast, is the basis of our concern for the integral development of society’s most neglected members …

“It means working to eliminate the structural causes of poverty and to promote the integral development of the poor, as well as small daily acts of solidarity in meeting the real needs which we encounter.”

Then, a Pope Francis advance: “It presumes the creation of a new mindset which thinks in terms of community and the priority of the life of all over the appropriation of goods by a few … This means education, access to health care, and above all, employment, for it is through free, creative, participatory and mutually supportive labour that human beings express and enhance the dignity of their lives.”

And dig this: “A just wage enables them to have adequate access to all the other goods which are destined for our common use.”

Lest you think Pope Francis was focusing solely on secular changes, he emphasized: “For the Church, the option for the poor is primarily a theological category rather than a cultural, sociological, political …read more

Source: OP-EDS