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Judy Shelton’s Remarkable Attack on the Fed | Mises Institute

Posted by M. C. on June 13, 2019

https://mises.org/power-market/judy-sheltons-remarkable-attack-fed

Jeff Deist

Judy Shelton’s recent interview with the Financial Times is nothing short of remarkable…

…Consider this salvo against the Fed’s inescapable role as central planner:

How can a dozen, slightly less than a dozen, people meeting eight times a year, decide what the cost of capital should be versus some kind of organically, market supply determined rate? The Fed is not omniscient. They don’t know what the right rate should be. How could anyone?” Ms Shelton said. “If the success of capitalism depends on someone being smart enough to know what the rate should be on everything . . . we’re doomed. We might as well resurrect Gosplan,” she said, referring to the state committee that ran the Soviet Union’s planned economy.

And her attack on the Fed’s outsized role in the economy:

She also said that the Fed should continue to reduce its balance sheet below the $3.5tn target set by Jay Powell, the chairman. “I would rather the Fed be less of an entity. When a central bank buys up government debt, that’s the beginning of compromised finances.”

She also recognizes malinvestment:

“It’s the distorting aspect of the Fed that is the worst aspect — it’s a wag-the-dog situation. People are fixated on the Fed and are making money by arbitraging, trillions of a second after the latest FOMC announcement,” she added.

And she isn’t afraid to support a role for gold in monetary policy:

Ms Shelton has long been sympathetic to the gold standard, which the US fully abandoned in the early 1970s in favour of a flexible exchange rate for the dollar. “People call me a goldbug, and I think, well, what does that make them? A Fed bug,” she says.

“Fed Bugs”! Why didn’t we think of this?

Shelton, who works as an economic adviser to Trump, is not an economist by training. Her PhD in business administration, from Utah State no less, is sure to draw jeers from the Ivy League central bank crowd. But it’s Ivy League economists, after all, who created the last crisis in 2008. And needless to say they’re sounding alarm bells about Mrs. Shelton. The worst offender is former Treasury official Larry Summers, who shamelessly calls Shelton “dangerous.”

Sorry, but a financial terrorist and chief architect of the weaponized derivatives market in the 2000s should have the simple decency to keep quiet and thank his lucky stars he’s not in jail…

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Regulation blizzard: Government adds 1,516 pages to the ...

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Socialist Promises – LewRockwell

Posted by M. C. on May 22, 2019

Socialism promises a utopia that sounds good, but those promises are never realized. It most often results in massive human suffering. Capitalism fails miserably when compared with a heaven or utopia promised by socialism. But any earthly system is going to come up short in such a comparison.

https://www.lewrockwell.com/2019/05/walter-e-williams/socialist-promises/

By

Presidential contenders are in a battle to out give one another. Senator Elizabeth Warren proposes a whopping $50,000 per student college loan forgiveness. Senator Bernie Sanders proposes free health care for all Americans plus illegal aliens. Most Democratic presidential candidates promise free stuff that includes free college, universal income, “Medicare for All” and debt forgiveness.

Their socialist predecessors made promises too. “Freedom and Bread” was the slogan used by Adolf Hitler during the National Socialist German Workers’ Party (Nazi) campaign against president Paul von Hindenburg. Hitler even promised, “In the Third Reich every German girl will find a husband.” Stalin promised a great socialist-Marxist society that included better food and better worker conditions. China’s Mao Zedong promised democratic constitutionalism and the dream that “farmers have land to till.” These, and other promises, gave Mao the broad political support he needed to win leadership of the entire country in 1949…

Capitalism, or what some call free markets, is relatively new in human history. Prior to capitalism, the way individuals amassed great wealth was by looting, plundering and enslaving their fellow man. With the rise of capitalism, it became possible to amass great wealth by serving and pleasing your fellow man. Capitalists seek to discover what people want and produce and market it as efficiently as possible as a means to profit. A historical example of this process would be John D. Rockefeller, whose successful marketing drove kerosene prices down from 58 cents a gallon in 1865 to 7 cents in 1900. Henry Ford became rich by producing cars for the common man. Both Ford’s and Rockefeller’s personal benefits pale in comparison to the benefits received by the common man who had cheaper kerosene and cheaper and more convenient transportation. There are literally thousands of examples of how mankind’s life ha been made better by those in the pursuit of profits. Here’s my question to you: Are the people who, by their actions, created unprecedented convenience, longer life expectancy and a more pleasant life for the ordinary person — and became wealthy in the process — deserving of all the scorn and ridicule heaped upon them by intellectuals and political hustlers today?..

By the way, I’m not making an outright condemnation of socialism. I run my household on the Marxist principle, “From each according to his ability, to each according to his needs.” That system works when you can remember the names of all involved.

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The Socialist Utopia [MYTH] of Nordic Countries - Ben ...

 

 

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How College Profs Push Students to Socialism | Mises Wire

Posted by M. C. on May 11, 2019

The true aim of these “scholar activists,” as many academics have begun calling themselves, is to propagate socialism by redefining capitalism to encompass every evil of human history.

https://mises.org/wire/how-college-profs-push-students-socialism

After the collapse of the housing market in 2008, professional historians gave birth to a new sub-field of history usually referred to as “the new history of capitalism.” Economic history is hardly novel, but the new history of capitalism takes the approach that capitalism is the “thing” that needs to be explained. In the past decade, this field has become one of the most fashionable trends in the history profession, with centers for the study of capitalism being established at Cornell and the University of Georgia.

Predictably, the scholarship that falls under this label is replete with problems. Most self-described “historians of capitalism” know nothing of economic theory even as they try to incorporate it into their writings. Seth Rockman, from Brown University, for instance, supports his analysis of antebellum Baltimore by quoting Adam Smith’s exposition of the labor theory of value. Rockman seems to be taking a sly shot at proponents of capitalism—“even your precious Adam Smith believes labor is the source of value”—but he appears to be entirely unaware that economists abandoned the labor theory of value more than a century ago.1

These historians have also uniformly accepted that slavery and capitalism are inextricably linked. This idea has been around since at least 1944, when the Marxist historian Eric Williams published Capitalism and Slavery, arguing that British industrialization depended on the slave economy of Barbados.2 But the idea has evolved to the point that historians have established a consensus on claims that defy empirical substantiation… Read the rest of this entry »

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Capitalism Isn’t the Problem Here – LewRockwell

Posted by M. C. on April 15, 2019

If a company is creating value, it is rewarded with profits. If it is destroying value, it is punished by losses.

The Federal Reserve and its manipulation of the monetary system short-circuits this process. You end up with a misallocation of recourses and all kinds of asset bubbles — not to mention piles of debt.

The only joy I would receive from the War Street Journal was in the comments section after Janet Yellen would repeat the state of the economy address (which was always the same as the last). The Journal would bloviate on what a great job Yellen was doing. The commenters would mostly all agree she didn’t have a clue and was worthless.

It made me wonder why all these commenters read the journal to begin with.

https://www.lewrockwell.com/2019/04/no_author/peter-schiff-capitalism-isnt-the-problem-here/

SchiffGold.com

How are all of these unprofitable companies staying afloat and even making big splashes with media-hyped IPOs?

Peter Schiff addressed this question, along with the supposed “failure” of capitalism in his most recent podcast.

The rideshare company Lyft had its lowest close since going public yesterday (April 9). In fact, the company has only closed above its IPO price twice – the day it went public and last Friday. This probably shouldn’t shock anybody, given that the company has never turned a profit. The

Meanwhile, social media company Pinterest is gearing up for its IPO with a lot of media hype. The company has been around since 2010. It’s never made any money either.

Peter asked a poignant question. What makes people think these companies will ever make any money?

[Pinterest] has been around for 10 years. If they haven’t figured out how to make a profit yet, are they ever going to do it? Because at least in the frenzy of the dot-com mania, people were saying, ‘Look, the company hasn’t made a profit yet because it’s only been around for a year. But don’t worry because it’s got all of this explosive growth.’ You know, ‘We’re grabbing eyeballs,’ or whatever it was. But people were willing to bet the companies would eventually be profitable, and they didn’t have a lot of data to go on because the companies hadn’t even been in existence for very long before they were going public. It was a rush to the market. But now that you’ve got these companies that have been going on for 10 years — I mean, they’ve had 10 years at Pinterest to try to figure out how to make a profit and they haven’t done it.”

But as Peter pointed out, because of the easy-money policies of the Federal Reserve and the resulting availability of cheap capital, companies have been able to continue to operate even though they don’t make any money.

A lot of companies are able to attract funding and stay in business that under a normal free market system – a capitalist system – they would have gone bankrupt.”

This is one of the unseen impacts of central bank monetary policy. It distorts the market.

Consider Pinterest. The company has a lot of employees. It consumes a lot of resources to operate its website – land, labor and capital. These are resources that could be put to some other use if they weren’t being consumed by Pinterest. So, how do you know whether these resources being put to their best use? In a capitalist system, profits provide that information. Profits signal that resources are being well-used. The lack of a profit tells us these resources are not being put to good use. If the lack of profit persists, the company goes under and frees up those resources for better uses.

As Peter put it, if a company can combine resources to produce a product and then sell it at a higher price then the resources that it consumed, it is adding value to the economy. The consumer gets more enjoyment out of that product then the resources consumed in producing it.

You see, resources are scarce, but demand is unlimited. And the idea behind an economy is how to satisfy unlimited demand with limited resources. And resources that are utilized for one purpose are not available for another purpose. And if a company though is losing money, then the market is basically saying, ‘Hey, you’re destroying value. You’re creating products, but your customers don’t even value those products as much as the resources were worth that you used to make them.’”

If a company is creating value, it is rewarded with profits. If it is destroying value, it is punished by losses.

The Federal Reserve and its manipulation of the monetary system short-circuits this process. You end up with a misallocation of recourses and all kinds of asset bubbles — not to mention piles of debt…

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Bernie

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Capitalism Turns Luxuries Into Necessities | Mises Wire

Posted by M. C. on March 23, 2019

Finally, critics of luxury expenditures allow their loathing of the rich to blind them to the fact that many of their working class neighbors are employed making luxury items.

Recall the “yacht tax” of 1990? In an effort to soak the rich deciding to buy an expensive boat, the federal government imposed a 10 percent tax on the purchase of boats valued over $100,000. Predictably, the sale of such boats plummeted, and an excess of 100,000 blue collar jobs were eliminated. The rich were still rich, but many working class people were driven to the unemployment line.

https://mises.org/wire/capitalism-turns-luxuries-necessities

Bashing the rich is all the rage these days. In a clear appeal to envy, Democratic leaders are trying to outdo each other with escalating bids on how much of rich’s wealth should be stolen by government.

In one tweet, Elizabeth Warren called out a billionaire NFL owner for paying $100 million for a “superyacht,” insisting that instead he should be paying Warren’s proposed “Ultra Millionaire Tax” to those less wealthy.

The wealthy’s purchase of luxury items invites scorn from statists looking to tax their wealth, as well as those believing it is crass consumerism to indulge in such unnecessary extravagance.

How Luxury Goods Benefit Everyone

But the wealthy’s purchase of “luxury goods” serves a social purpose.

For starters, as Ludwig von Mises wrote, today’s luxuries turn into tomorrow’s necessities.

Indeed, years ago, people would say ‘nobody needs such luxuries’ about things like air conditioning, air travel, telephones, color TV, refrigerators, and other items that are common household items now owned by the masses. Never mind modern items like the internet, laptops and smartphones that sci-fi writers a generation ago couldn’t have conjured up in their wildest imaginations that are now taken for granted and virtually considered necessities for the common man.

As Mises related in a passage from his 1962 book Economic Freedom and Interventionism:

About 60 years ago Gabriel Tarde (1843–1904) the great French sociologist, dealt with the problem of the popularization of luxuries. An industrial innovation, he pointed out, enters the market as the extravagance of an elite before it finally turns, step by step, into a need of each and all and is considered indispensable. What was once a luxury becomes in the course of time a necessity.

With the progress enabled by capitalism, the process by which luxuries turn into necessities is drastically shortened. “There was in the past a considerable time lag between the emergence of something unheard of before and its becoming an article of everybody’s use,” wrote Mises. “It sometimes took many centuries until an innovation was generally accepted at least within the orbit of Western civilization,” he continued, adding “Centuries passed before the fork turned from an implement of effeminate weaklings into a utensil of all people.”…

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tax crime

Change that to ANY TAX.

 

 

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EconomicPolicyJournal.com: A Sophisticated Defense of Free Market Capitalism (From a Former Governor)

Posted by M. C. on March 13, 2019

The blind pig (WSJ) finds an acorn.

https://www.economicpolicyjournal.com/2019/03/a-sophisticated-defense-of-free-market.html

Wow, who has the ear of former Louisiana governor Bobby Jindal?

In a Wall Street Journal op-ed piece, he has written a pretty sophisticated defense of free market capitalism.

A key snippet:

Liberal politicians, abetted by the mainstream media, regularly document the alleged shortcomings of free-market capitalism. Politicians like Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez point to rising inequality and a supposed lack of upward mobility to make the case for socialism. Today, American Democrats have a more positive view of socialism than capitalism, and less than half of young adults have a positive view of capitalism. But the debate isn’t merely between left-wing socialists and right-wing capitalists. Even President Trump argues that capitalism generates prosperity abroad at the expense of American workers. Years of wage stagnation and diminished economic prospects have soured many Americans on the system that made the U.S. the world’s largest economy…

The problem isn’t market dynamics, but the increased government intervention in the economy that discourages competition. Rather than relying on innovation, many companies often now seek to exploit licensing arbitrage opportunities and engage in other rent-seeking behaviors. They try to beat competitors through regulatory capture and crony capitalism rather than making better products for less.

Almost every large company has calculated the benefits of lobbying government. It is no coincidence that the seemingly recession-proof Washington area dominates the list of the nation’s wealthiest counties. For consumers, this means fewer meaningful choices. For new producers, the goal is often not to displace an incumbent firm but to be purchased by one. Even many tech entrepreneurs hope to sell to Google or Facebook rather than become the next big thing…

Some argue that targeted government economic intervention is necessary to fix capitalism’s errors and prevent more-radical political elements from gaining power. Some historians credit President Franklin D. Roosevelt with saving free markets from rising support for socialism fed by the Great Depression. They argue the New Deal, by dramatically expanding the role of government, vaccinated capitalism against a more virulent form of socialism propounded by Huey Long and others. More-moderate modern leaders than Mr. Sanders and Ms. Ocasio-Cortez see today’s economic challenges as profound and argue they warrant similar inoculating shots of regulation.

These recommendations come from all across the political spectrum. Sen. Marco Rubio proposes paid parental leave, while Manhattan Institute scholar Oren Cass argues that some short-term growth should be sacrificed to strengthen families and prepare communities for long-term growth. President George W. Bush labeled his version of this approach “compassionate conservatism.”

Democrats, meanwhile, argue for a higher minimum wage, a more progressive income-tax code, stronger unions, and ObamaCare’s Medicaid expansion and exchange subsidies as the best alternative to a single-payer system. Others have pushed for breaking up larger companies—especially tech giants—expanding the earned-income tax credit, raising tariffs, and adopting a universal basic income as possible responses to the displacement caused by globalization and automation.

Small-government conservatives and their libertarian brethren still reject these notions. The biggest threat to American capitalism, they say, comes from liberalism and its incremental—but constant and accumulating—push for a larger, costlier and more powerful government. They see reform proposals from moderate Republicans as attempts to be partway pregnant. They wonder why the GOP would want to become a weaker, cheaper version of the Democratic Party. Free-market Republicans argue that conservatives should be consistently pulling in the direction of lower taxes, less regulation and smaller government.

–RW

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Dear Socialists: The People HAVE Seized the Means of Production… Using Capitalism.

Posted by M. C. on February 13, 2019

The government is what is standing in the way of the people fully seizing the means of production. Not the capitalists…

https://www.grnewsletters.com/archive/thedailybell_newswire/Dear-Socialists-The-People-HAVE-Seized-the-Means-of-Production-Using-Capitalism-656599203.html?e=&u=S6bT5&s=oHMPjb

By Joe Jarvis

The proletariat did not have to seize the means of production in a violent socialist coup.

Capitalism handed the means of production to the workers voluntarily.

And it did so for a profit.

We traded violent destructive revolution for peaceful productive markets… and accomplished more than socialism could ever imagine. And we are just getting started.

Socialists have long seen injustice in the fact that the workers who do the labor don’t get to keep the entire product of their labor.

And capitalists have responded by claiming that providing the means of production and organization entitle them, not the workers, to the profits.

But the entire argument is moot.

Production costs have dropped so low that basically anyone can accumulate the capital to launch an independent endeavor.

And that has revealed that it was never really about the capital…

Socialists are right about one thing: labor is the main driver behind production.

Unfortunately, they fail to see the value in the labor of the capitalists and managers.

Allocating capital to productive endeavors takes skillful labor. Organizing and running a business takes skillful labor. That’s why most new businesses fail.

But any worker who has these skills can now buck their capitalist overlords, seize their own means of production, and the socialist revolution is complete…

Read the rest of this entry »

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EconomicPolicyJournal.com: Are Marxists Motivated By Love Or Hate?

Posted by M. C. on November 24, 2018

Great comment: Capitalism makes people richer, communism makes people dead. Exactly the opposite of what the Marxists promise.

Jordan Peterson

This tells you why the state media and educational system hate this guy.

http://www.economicpolicyjournal.com/2018/11/are-marxists-motivated-by-love-or-hate.html#more

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Capitalism vs. Socialism – LewRockwell

Posted by M. C. on May 30, 2018

Think Sean Penn Venezuela

https://www.lewrockwell.com/2018/05/walter-e-williams/capitalism-vs-socialism/

Several recent polls, plus the popularity of Sen. Bernie Sanders, demonstrate that young people prefer socialism to free market capitalism. That, I believe, is a result of their ignorance and indoctrination during their school years, from kindergarten through college. For the most part, neither they nor many of their teachers and professors know what free market capitalism is…

Tragically, two-thirds to three-quarters of the federal budget can be described as Congress taking the rightful earnings of one American to give to another American — using one American to serve another. Such acts include farm subsidies, business bailouts, Social Security, Medicare, Medicaid, food stamps, welfare and many other programs. Read the rest of this entry »

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Capitalism has new rules. And they’re seriously messed up. | The Daily Bell

Posted by M. C. on May 6, 2018

And New Rule #1 is: Businesses no longer need to make money.

Classic example easy cash via the Fed. Easy money+stupid government inspired programs=YOUR money down the drain.

The government subsidizes Tesla production otherwise it is economically unfeasible. The government provides rebates for Tesla buyers because otherwise they are economically unfeasible.

Tesla has production problems. No probs, there is more easy out there for investment.

Tesla is a bridge to nowhere on steroids.

Banksters and government (sorry, I repeat myself) are pushing for a cashless society.

Cash in your pocket is not part of the plan. The only wallet for digital dollars is a bank computer. Banks will charge you to keep your digits and there is nothing you will be able to do about it. Banksters/government can play there digital games to make money from your money then charge you for it. That is what ‘negative interest’ is all about.

Ron and Rand Paul want to end the Fed.

They want to keep government and banksters out of your business and your life.

Yes, you should have voted for Ron Paul and there is no substitute on the horizon.

http://www.thedailybell.com/news-analysis/capitalism-has-new-rules-and-theyre-seriously-messed-up/

It was just a month and a half ago that Tesla approved an eye-popping long-term pay package, worth as much as $50 BILLION to founder and CEO Elon Musk.

And on Wednesday afternoon, Tesla held its first corporate earnings call since then.

You’d think that Elon would have been gracious and professional, anxious to demonstrate that the shareholders’ trust in him has been well-placed.

Instead the call was filled with contempt and disrespect, with Elon outright refusing to answer questions that he deemed ‘boring’.

Bear in mind, Tesla’s financial results were gruesome; the company burned through yet another $1.1 billion in cash last quarter. That’s 70% worse than in the same period last year. Read the rest of this entry »

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