You are browsing the archive for 2014 October 28.

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NJ Political Heavyweights Debate Gold Standard

October 28, 2014 in Economics

By Joseph Salerno

599px-1857_gold_dollar_obverse

During the past two weeks, James Florio, a former Democratic governor of New Jersey, and Steve Lonegan, the 2013 Republican nominee for U.S. Senate  wrote opposing op ed pieces on the gold standard for New Jersey’s leading newspaper.   That the gold standard is now being seriously debated by state-level pols in a mainstream media outlet is a remarkable and welcome development.

The piece by Florio–whose signature act as  governor was significantly raising State taxes during the throes of the 1990-91 recession–is predictably inane, reiterating the tired old litany of misconceptions about the gold standard.  Florio even conjures up two new ones.  He bemoans  unspecified “environmental harm”  associated with seeking new gold supplies and cites the potential health hazards in disposing of arsenic trioxide, a  toxic byproduct of the gold-mining process.  Florio does not tell us if we should discontinue the large-scale use of this chemical compound in forestry products, colorless glass production, and electronics.  Nor does he call for rescinding the FDA’s approval in 2000 of the use of  arsenic trioxide (Trisenox) for treating certain forms of acute leukemia.

In his response , Mr. Lonegan does a good job of rebutting Florio’s spurious charges against the gold standard.  Unfortunately, Lonegan gets himself into difficulties by his failure to recognize the difference between the pre-1914 genuine “classical” gold standard and the post-World War 2 Bretton Woods system, which was an intergovernmental price-fixing scheme masquerading as a gold standard.  Lonegan laments the collapse of the Bretton Woods phony gold standard  in 1971, which was inevitable and long foretold by leading advocates of the classical gold standard like Jacques Rueff, Henry Hazlitt, Michael Heilperin, and Ludwig von Mises.  Even more worrisome is the fact that Lonegan accepts the view promoted by proponents  of restoring a Bretton Woods-type monetary system like Nathan Lewis and Steve Forbes that a mystical property of gold somehow ensures a stable value of money without limiting its supply.  Writes Lonegan:

 The gold standard insures the quality, i.e. buying power, of the dollar. It doesn’t limit the quantity of money. As economist Nathan Lewis has calculated, from 1775 to 1900 the money supply increased by 163 times while gold reserves rose only 3.4 times. The gold standard defines, rather than restricts, money.

In fact, it is precisely by  strictly limiting the supply of money that governments and central banks were able to create  that the classical gold standard enabled the value of money …read more

Source: MISES INSTITUTE

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Breitbart Oped: The Government Can Seize Your Property in Violation of the 5th Amendment

October 28, 2014 in Politics & Elections

If you have ever been to or traveled through Arnolds Park, Iowa, chances are you have seen or at least heard of Mrs. Lady’s Mexican Food. Known for it’s large portions and low prices, this family-owned, cash-only restaurant has become a staple for those living in Dickinson County.

Carole Hinders has made an honest living owning and operating Mrs. Lady’s for the last 38 years. But in August of 2013, everything she saved-roughly $33,000-was seized by the Internal Revenue Service. Hinders has not been charged for tax evasion, or money laundering-in fact, one year later, she still has not been charged for any crime at all. The IRS claims her bank account was seized solely because she was depositing less than $10,000 at a time. Last time I checked, making small cash deposits into a personal checking account is not a crime.

According to the New York Times, the IRS seized Hinders’ honest living by enforcing an ‘increasingly controversial’ law known as civil asset forfeiture. This law allows property to be seized if it is suspected of being connected to criminal activity. The problem is, law enforcement is not required to explain what the criminal activity is, much less prove that the person is guilty of such activity.

Under current law, law enforcement agencies may take property suspected of involvement in crime without ever charging, let alone convicting, the property owner. In addition, state agencies routinely use federal asset forfeiture laws; ignoring state regulations to confiscate and receive financial proceeds from forfeited property.

The government should never be able to take property from innocent Americans. That is a blatant violation of our Fifth Amendment rights. Clark Neily of the Institute for Justice put it best: ‘A dismaying combination of perverse incentives, unfair laws, and lack of oversight makes civil forfeiture one of the most dangerous and blatantly unconstitutional policies America has ever seen.’

When I took office, I swore to uphold the Constitution and protect our Bill of Rights. This is why I have introduced the Fifth Amendment Integrity Restoration (FAIR) Act, which would protect the rights of citizens and restore the Fifth Amendment’s role in seizing property without due process of law.

The FAIR Act would change federal law and protect the rights of property owners by requiring that the government prove its case with clear and convincing evidence before forfeiting seized property-so …read more

Source: RAND PAUL

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My Upcoming Speech at Columbia University

October 28, 2014 in Economics

By Walter Block

images

Topic:

Adam Smith, F.A. Hayek, Ludwig von Mises.

Smith, Hayek and Mises are not only important figures in economics, but in ethics and political philosophy too. The former would have won the Nobel Prize in economics, if this award were given during his lifetime. The middle mentioned one actually did have this honor bestowed upon him, in 1974. The latter should have won this too, but, scandalously, did not. These three are very important for students in that modern economics courses, and economists, tend to ignore all of them, particularly the latter two, who were members of the Austrian School of economics. Block’s lecture will attempt to right this imbalance.

Speaker:

Dr. Walter Block
Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics
Joseph A. Butt, S.J. College of Business, Loyola University New Orleans

Time and Location:

Monday, November 10, 2014, 7:30pm.
702 Hamilton Hall, Columbia University (entrance at 116th and Broadway or Amsterdam)
Free and open to the public

Hosted by the Columbia College Libertarians (libertarians@columbia.edu)

…read more

Source: MISES INSTITUTE

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More Politics Means More Conflict

October 28, 2014 in Economics

By Ryan McMaken

kids2

Mises Daily Tuesday by Ryan McMaken:

A recent study shows that one’s political views are now the most widespread source of discrimination and conflict in American society. Politics is now more important than ever because the state is now more powerful than ever.

…read more

Source: MISES INSTITUTE

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American Protectionism Threatens US-China Trade

October 28, 2014 in Economics

By K. William Watson

K. William Watson

The United States and China have one of the largest trading relationships in the world, at over $550 billion per year. U.S. policymakers are right to cry foul when the Chinese government distorts that trade to protect domestic interests. Unfortunately, U.S. policymakers do the same thing and, in the process, harm the U.S.-China relationship.

One example is Washington’s continued use of so-called “non-market economy methodology” when deciding whether Chinese goods are being “dumped” into the U.S. market at unfairly low prices. The designation is a holdover from the Cold War that exists today only because its mystical formula enables U.S. officials to impose higher punitive tariffs to protect inefficient domestic industries.

The practice is actually illegal under World Trade Organization rules. But when China joined the organization in 2001, the United States insisted that an exception be created, allowing it to continue discriminating against Chinese imports for 15 years. Time has passed, and unless the United States government changes its practice by the end of 2016, it will be in flagrant violation of U.S. trade obligations.

For all its complaints about Beijing’s unfair trade policies, the U.S. unfairly targets Chinese goods.”

Unfortunately, the United States is almost certainly not going to comply. There is a shameful history of law-breaking by U.S. trade officials abusing the non-market economy methodology. Both U.S. law and international trade rules have been consistently stretched or outright ignored for decades, and there is little indication that this trend will change.

The U.S. government tries to justify its discriminatory treatment of Chinese imports by claiming that Beijing is in fact still a non-market economy. To be sure, the Chinese government retains an outsized role in directing its country’s economic affairs through influence in the labor market and banking industry as well aggressive macroeconomic interventions. But the days of large-scale central planning are long gone.

Most importantly, Chinese exporters are profit-seeking enterprises that make their own pricing decisions based on market factors like the cost of production and consumer demand. Critics point to government influence in upstream industries that affects the price that exporters pay for raw materials, but those distortions simply do not justify a non-market economy designation. For one thing, dumping determinations are supposed to compare export price with domestic sales—if both are distorted by low costs of production, there is no dumping. Secondly, in many industries, China’s government is less distortive of production costs …read more

Source: OP-EDS

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Suffering through the Neocon Moment: Warmongering and Nation-Building Don't Work

October 28, 2014 in Economics

By Doug Bandow

Doug Bandow

With President Barack Obama further tarnishing his Nobel Peace Prize by starting yet another Middle Eastern war, exuberant Neoconservatives claim their moment has arrived. And it has, though not in the way they believe. The spectacle of Washington using the military in Iraq to destroy equipment provided by Washington in its last Iraq war illustrates the absurdity of the Neocons’ claim that war-mongering and nation-building serve America’s interests.

In 2001 President George W. Bush initiated what was supposed to be The Neocon Moment, projecting a swaggering global presence in which the U.S. would bomb, invade, occupy, and otherwise intervene whenever and for whatever reason it chose. Autocrats would flee, candies would be tossed, enemies would be defeated, flowers would bloom, allies would comply, cakewalks would be held, democrats would flourish, and the lion would lie down with the lamb.

Alas, administration policy wrecked Iraq. Although President Bush never repudiated what he’d done, he appeared to lose his taste for war. Vice President Dick Cheney became a forlorn figure, pining for the old Bush. Washington still attempted to micro-manage the globe, but adopted a gentler tone and refrained from invading more countries.

Candidate Obama ran against the Bush presidency, but U.S. foreign policy little changed. President Obama followed his predecessor’s exit plan from Iraq, pursued the Bush program in Afghanistan with additional troops, promised even greater support to populous and prosperous Asian and European allies, launched deadly drone campaigns in Pakistan and Yemen, increased military spending throughout his first term, promoted democracy in the Arab world (with similar results), and started two new wars. Rather like the chastened Bush, President Obama used a friendlier tone and seemed reluctant even when he was starting a war. But no one could mistake the latter as a peacenik libertarian.

Except, apparently, for the Neocons. Horrified by the isolationist backwater they believed America became under Obama, they now proclaim The Neocon Moment. Explained Matthew Continetti, “monsters [have been] brought forth by American retreat,” and “the threat of those monsters requires unilateral deadly force wherever necessary to kill our enemies and deter our foes.”

Only when the American people insist that politicians make peace, not war, will The Libertarian Moment finally arrive.”

Retreat?

Admittedly, Obama could have done more from a Neoconservative standpoint. Bombing raids over Tehran and Damascus would have gladdened the hearts of ivory tower generalissimos everywhere. Deploying troops against the Russians in Ukraine would …read more

Source: OP-EDS

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U.S. Antidumping Policy toward China after 2016

October 28, 2014 in Economics

The use of antidumping measures to protect certain domestic industries may be the most widely abused trade policy instrument worldwide. And U.S. authorities reserve their most punitive and abusive practices for goods from China. But in 2016, certain WTO conditions allowing this discriminatory approach will expire, and the U.S. will no longer be in compliance with WTO rules. A new paper from Cato scholar K. William Watson explores the various scenarios that might unfold as the 2016 expiration date approaches.

…read more

Source: CATO HEADLINES

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Could the ‘Taylor Rule’ Have Prevented the Housing Bubble?

October 28, 2014 in Economics

By Ryan McMaken

broken measure

Mises Daily Tuesday:

Tom Woods and Mateusz Machaj discuss the problem with John Taylor’s rule for monetary policy.

…read more

Source: MISES INSTITUTE

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Sweden Hits the Zero Bound

October 28, 2014 in Economics

By Per Bylund

Neutrois

The Swedish central bank Riksbanken has just lowered the interest rate to zero (yes, zero) percent, which was reported at a press conference in Stockholm today. This is a response to a couple of months of deflation, and with it enormous pressure from both politicians and Keynesian know-it-alls to quickly and massively lower interest rates. Of course, the interest rate was already very low and at zero it can get no lower. In other words, we’ve reached the zero bound. Why? Depression phobia.

According to the Riksbanken, they do not expect to raise the interest rate until mid 2016. The decision means, according to media reports, that the central bank now “pays” a negative 0.75 % on banks’ funds held at Riksbanken.

The immediate effect in the financial and money markets was an expected fall of the krona’s (the Swedish currency) exchange rate. To the central banksters, journalists, and pundits this is great news, since this means a booming export sector, more expensive exports, and therefore price inflation to relieve the country from the horror of a possible deflation spiral.

I guess we’ll see. Sweden has a history of manipulating its currency, a standard “solution” in the 1970s and 1980s that led to the country suffering a depression in 1992. During the past two decades, there has been political consensus around cutting down expenditure through rolling back the welfare state, paying back public debt, and lowering taxes – partly to regain the lost confidence. Today’s decision by the Riksbanken is not an outright devaluation of the krona, the preferred measure of “old” Sweden, but has a similar effect.

Update: In an official statement, the Riksbanken notes that the Swedish economy is “relatively strong” and that the economic outlook is “improving,” but that inflation is “too low” (the central bank’s target is 2% price inflation). The only major potential problem is the public’s debt level, which is too high. (Especially mortgages, in a real estate market that is generally considered to be a bubble.) The debt level will not, of course, get lower with lower interest rates. For this reason, many “experts” expect a legal amortization requirement on mortgages in the near future to lower the public’s debt as well as “cool off” the real estate market.

Update 2: In the Q&A following the press conference, Riksbanken chairman Stefan Ingves makes it very clear that there are “no technical limitations” to lowering the interest rate (way) below zero. But this is not necessary …read more

Source: MISES INSTITUTE