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Posts Tagged ‘Federal Reserve System’

Bankers, Fed Origins, and World War I

Posted by M. C. on December 2, 2024

Let me issue and control a nation’s money and I care not who writes the laws.—Rothschild

The American people are suckers for the word “reform.” You just put that into any corrupt piece of legislation, call it “reform” and people say “Oh, I’m all for ‘reform,’” and so they vote for it or accept it.”—G. Edward Griffin

The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson…—FDR

Of all people, FDR should know.

https://mises.org/mises-wire/bankers-fed-origins-and-world-war-i

Mises Wire • Joshua Mawhorter

Though there had been steady steps toward centralization of the monetary and financial system in the United States—especially since banking and the federal government were connected by the National Banking System during and after the Civil War (ca. 1863-1913)—the financial-banking elite, especially in New York, still had several complaints prior to the creation of the Fed.

New York Banks, Wall Street, and “Monopoly”

The movement toward central banking, the Federal Reserve System, in America was a keystone of the Progressive movement. Like all other regulations and reforms of the Progressive era—as perfectly encapsulated by G. Edward Griffin’s quote above—the movement toward the Fed was ironically presented publicly as fighting banking “monopoly,” “stabilizing” the system, curbing inflationism, and disciplining banks and financial elites. In fact, it would involve the establishing of a monopoly in the name of fighting monopoly. Consequently, this would furnish government a handy tool for greater inflationism and would allow the banks in the system to engage in unsound monetary practices with the promise of government bailouts. Remarks Rothbard in A History of Money and Banking,

Fortunately for the cartelists, a solution to this vexing problem lay at hand. Monopoly could be put over in the name of opposition to monopoly! In that way, using the rhetoric beloved by Americans, the form of the political economy could be maintained, while the content could be totally reversed.

Banker Complaints

Prior to the establishment of the Federal Reserve, however, the movement toward centralization of the monetary and financial system was incomplete from the bankers’ perspective. The financial interests were still missing a few key factors and still observed major “flaws.” In summary, their main complaint was “inelasticity,” that is, banks within the national banking system were not able to expand money and credit to the extent that they wanted. These financial elites disliked the lack of complete centralization provided through the halfway step of the National Banking System, the lack of cartelization, competitive pressures from non-national banks, and the threat to New York banks’ financial supremacy. Regarding the New York financial interests, Ron Paul and Lehrman, in their Case for Gold (1982), avow,

…the large banks, particularly on Wall Street, saw financial control slipping away from them. The state banks and other non-national banks began to grow instead and outstrip the nationals.

Similarly, Gabriel Kolko in The Triumph of Conservatism (1977), argues,

The crucial fact of the financial structure at the beginning of this century was the relative decrease in New York’s financial significance and the rise of many alternate sources of substantial financial power.

For example, throughout the 1870s and 1880s, most of the banks were national banks, with financial standards determined by Washington, but by 1896, non-national banks—state banks, savings banks, and private banks—made up 61 percent of the total number of banks, providing competitive pressure. By 1913, 71 percent of banks were non-national banks, again putting competitive pressure on Wall Street banks. This was unacceptable to the national banks, especially the New York financial-banking elite. Kolko writes that, “This diffusion and decentralization in the banking structure seriously undercut New York’s financial supremacy.” Regarding the fundamental changes brought about by Federal Reserve System, Kolko further explains,

The economy by 1910 had moved well beyond the control of any city, any group of men, or any alliance then existing in the economy. The control of modern capitalism was to become a matter for the combined resources of the national state, a political rather than an economic matter.

The Panic of 1907, in which major banks were allowed by the government to suspend specie payments and continue operations—being legally released from contractual obligations—led to calls for “reform,” naively agitating for central banking. Unfortunately, these so-called “reforms” would facilitate the most powerful banks engaging in similar inflationary practices, but on a greater scale, insulated from the consequences by the government. Rothbard explains,

Very quickly after the panic, banker and business opinion consolidated on behalf of a central bank, an institution that could regulate the economy and serve as a lender of last resort to bail banks out of trouble.

The banks plus the government partnered to create these boom-bust crises through their inflationary policies through the National Banking System. Then, when the inevitable consequences of these policies were realized, banks and governments would further “reform” the system toward a central bank, legally uniting them, and protecting them from competition and consequences. Problems caused by monetary policies of the government, allied with banks, were to be solved, Americans were told, by the government creating a “bank of banks” that could regulate the entire monetary system.

Central Banking & World War I

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How the Business Cycle Happens | Mises Institute

Posted by M. C. on August 17, 2023

What, then, was the proper government policy during the 1920s? What should government have done to prevent the crash? Its best policy would have been to liquidate the Federal Reserve System, and to erect a 100 percent gold reserve money; failing that, it should have liquidated the FRS and left private banks unregulated, but subject to prompt, rigorous bankruptcy upon failure to redeem their notes and deposits

https://mises.org/library/how-business-cycle-happens

Murray N. Rothbard

Study of business cycles must be based upon a satisfactory cycle theory. Gazing at sheaves of statistics without “pre-judgment” is futile. A cycle takes place in the economic world, and therefore a usable cycle theory must be integrated with general economic theory. And yet, remarkably, such integration, even attempted integration, is the exception, not the rule. Economics, in the last two decades, has fissured badly into a host of airtight compartments—each sphere hardly related to the others. Only in the theories of Schumpeter and Mises has cycle theory been integrated into general economics.1

The bulk of cycle specialists, who spurn any systematic integration as impossibly deductive and overly simplified, are thereby (wittingly or unwittingly) rejecting economics itself. For if one may forge a theory of the cycle with little or no relation to general economics, then general economics must be incorrect, failing as it does to account for such a vital economic phenomenon. For institutionalists—the pure data collectors—if not for others, this is a welcome conclusion. Even institutionalists, however, must use theory sometimes, in analysis and recommendation; in fact, they end by using a concoction of ad hoc hunches, insights, etc., plucked unsystematically from various theoretical gardens. Few, if any, economists have realized that the Mises theory of the trade cycle is not just another theory: that, in fact, it meshes closely with a general theory of the economic system.2 The Mises theory is, in fact, the economic analysis of the necessary consequences of intervention in the free market by bank credit expansion. Followers of the Misesian theory have often displayed excessive modesty in pressing its claims; they have widely protested that the theory is “only one of many possible explanations of business cycles,” and that each cycle may fit a different causal theory. In this, as in so many other realms, eclecticism is misplaced. Since the Mises theory is the only one that stems from a general economic theory, it is the only one that can provide a correct explanation. Unless we are prepared to abandon general theory, we must reject all proposed explanations that do not mesh with general economics.

Business Cycles and Business Fluctuations

It is important, first, to distinguish between business cycles and ordinary business fluctuations. We live necessarily in a society of continual and unending change, change that can never be precisely charted in advance. People try to forecast and anticipate changes as best they can, but such forecasting can never be reduced to an exact science. Entrepreneurs are in the business of forecasting changes on the market, both for conditions of demand and of supply. The more successful ones make profits pari passus with their accuracy of judgment, while the unsuccessful forecasters fall by the wayside. As a result, the successful entrepreneurs on the free market will be the ones most adept at anticipating future business conditions. Yet, the forecasting can never be perfect, and entrepreneurs will continue to differ in the success of their judgments. If this were not so, no profits or losses would ever be made in business.

Changes, then, take place continually in all spheres of the economy. Consumer tastes shift; time preferences and consequent proportions of investment and consumption change; the labor force changes in quantity, quality, and location; natural resources are discovered and others are used up; technological changes alter production possibilities; vagaries of climate alter crops, etc. All these changes are typical features of any economic system. In fact, we could not truly conceive of a changeless society, in which everyone did exactly the same things day after day, and no economic data ever changed. And even if we could conceive of such a society, it is doubtful whether many people would wish to bring it about.

It is, therefore, absurd to expect every business activity to be “stabilized” as if these changes were not taking place. To stabilize and “iron out” these fluctuations would, in effect, eradicate any rational productive activity. To take a simple, hypothetical case, suppose that a community is visited every seven years by the seven-year locust. Every seven years, therefore, many people launch preparations to deal with the locusts: produce anti-locust equipment, hire trained locust specialists, etc. Obviously, every seven years there is a “boom” in the locust-fighting industry, which, happily, is “depressed” the other six years. Would it help or harm matters if everyone decided to “stabilize” the locust-fighting industry by insisting on producing the machinery evenly every year, only to have it rust and become obsolete? Must people be forced to build machines before they want them; or to hire people before they are needed; or, conversely, to delay building machines they want—all in the name of “stabilization”? If people desire more autos and fewer houses than formerly, should they be forced to keep buying houses and be prevented from buying the autos, all for the sake of stabilization? As Dr. F.A. Harper has stated:

This sort of business fluctuation runs all through our daily lives. There is a violent fluctuation, for instance, in the harvest of strawberries at different times during the year. Should we grow enough strawberries in greenhouses so as to stabilize that part of our economy throughout the year.3

We may, therefore, expect specific business fluctuations all the time. There is no need for any special “cycle theory” to account for them. They are simply the results of changes in economic data and are fully explained by economic theory. Many economists, however, attribute general business depression to “weaknesses” caused by a “depression in building” or a “farm depression.” But declines in specific industries can never ignite a general depression. Shifts in data will cause increases in activity in one field, declines in another. There is nothing here to account for a general business depression—a phenomenon of the true “business cycle.” Suppose, for example, that a shift in consumer tastes, and technologies, causes a shift in demand from farm products to other goods. It is pointless to say, as many people do, that a farm depression will ignite a general depression, because farmers will buy less goods, the people in industries selling to farmers will buy less, etc. This ignores the fact that people producing the other goods now favored by consumers will prosper; their demands will increase.

The problem of the business cycle is one of general boom and depression; it is not a problem of exploring specific industries and wondering what factors make each one of them relatively prosperous or depressed. Some economists—such as Warren and Pearson or Dewey and Dakin—have believed that there are no such things as general business fluctuations—that general movements are but the results of different cycles that take place, at different specific time-lengths, in the various economic activities. To the extent that such varying cycles (such as the 20-year “building cycle” or the seven-year locust cycle) may exist, however, they are irrelevant to a study of business cycles in general or to business depressions in particular. What we are trying to explain are general booms and busts in business.

In considering general movements in business, then, it is immediately evident that such movements must be transmitted through the general medium of exchange—money. Money forges the connecting link between all economic activities. If one price goes up and another down, we may conclude that demand has shifted from one industry to another; but if all prices move up or down together, some change must have occurred in the monetary sphere. Only changes in the demand for, and/or the supply of, money will cause general price changes. An increase in the supply of money, the demand for money remaining the same, will cause a fall in the purchasing power of each dollar, i.e., a general rise in prices; conversely, a drop in the money supply will cause a general decline in prices. On the other hand, an increase in the general demand for money, the supply remaining given, will bring about a rise in the purchasing power of the dollar (a general fall in prices); while a fall in demand will lead to a general rise in prices. Changes in prices in general, then, are determined by changes in the supply of and demand for money. The supply of money consists of the stock of money existing in the society. The demand for money is, in the final analysis, the willingness of people to hold cash balances, and this can be expressed as eagerness to acquire money in exchange, and as eagerness to retain money in cash balance. The supply of goods in the economy is one component in the social demand for money; an increased supply of goods will, other things being equal, increase the demand for money and therefore tend to lower prices. Demand for money will tend to be lower when the purchasing power of the money-unit is higher, for then each dollar is more effective in cash balance. Conversely, a lower purchasing power (higher prices) means that each dollar is less effective, and more dollars will be needed to carry on the same work.

The purchasing power of the dollar, then, will remain constant when the stock of, and demand for, money are in equilibrium with each other: i.e., when people are willing to hold in their cash balances the exact amount of money in existence. If the demand for money exceeds the stock, the purchasing power of money will rise until the demand is no longer excessive and the market is cleared; conversely, a demand lower than supply will lower the purchasing power of the dollar, i.e., raise prices.

Yet, fluctuations in general business, in the “money relation,” do not by themselves provide the clue to the mysterious business cycle. It is true that any cycle in general business must be transmitted through this money relation: the relation between the stock of, and the demand for, money. But these changes in themselves explain little. If the money supply increases or demand falls, for example, prices will rise; but why should this generate a “business cycle”? Specifically, why should it bring about a depression? The early business cycle theorists were correct in focusing their attention on the crisis and depression: for these are the phases that puzzle and shock economists and laymen alike, and these are the phases that most need to be explained.

The Problem: The Cluster of Error

The explanation of depressions, then, will not be found by referring to specific or even general business fluctuations per se. The main problem that a theory of depression must explain is: why is there a sudden general cluster of business errors? This is the first question for any cycle theory. Business activity moves along nicely with most business firms making handsome profits. Suddenly, without warning, conditions change and the bulk of business firms are experiencing losses; they are suddenly revealed to have made grievous errors in forecasting.

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Great Villians

Posted by M. C. on March 10, 2022

Jerome Powell, the Fed’s current chairman, will forever be remembered for claiming that price inflation, which is currently hitting Americans hard, would be “transitory.”

These people are the wrongiest of the wrong, every time.

https://mailchi.mp/tomwoods/fed?e=fa1aba8cd8

One of the great villains of American history — who ranks in the “Near Great” category according to our brain-dead historians — is Woodrow Wilson.

So much bad, including much of what ails us today, can be traced to the self-righteous former president of Princeton University.

The Federal Reserve System, whose boom-bust cycles and price inflation have littered more than one hundred years of U.S. history, was signed into existence by Wilson.

A sliver of the liberty movement has been tricked into thinking Wilson eventually came to regret having established the Fed. They point to a spurious quotation that begins, “I am a most unhappy man. I have unwittingly ruined my country.”

Wilson never said this. He was in fact proud of creating the Fed.

The rest of the quotation they use to claim that Wilson regretted creating the Fed is patched together from speeches on other subjects he gave while running for president, before the Fed was even established.

Others think John F. Kennedy was assassinated for trying to abolish the Fed. Oddly enough, most of these people have read, and have great praise for, G. Edward Griffin’s book The Creature from Jekyll Island. But if they’d read closely, they’d see that Griffin debunks the idea that Kennedy made any serious move against the Fed.

I’m not sure why people cling to these myths, although I have a theory: it’s much more comforting to live in a world in which there were some decent presidents who tried their best to advance the people’s interests. It’s nice to think Wilson was duped into creating the Fed, and that JFK heroically gave his life to try to stop it.

It’s much harder to live in a world in which they’re all in on it, and you and I are on our own.

The Fed is the principal regulator of the American banking system. In the years leading up to the 2008 fiasco, chairman Ben Bernanke assured us that the system was sound, that there was nothing fundamentally wrong with the housing market, and on and on with downright laughable denials of reality.

Then the crash came, and the alleged experts all pretended no one could have seen it coming.

Ron Paul and his economist colleagues saw it coming, some of them describing to a T precisely what would happen, but since Dr. Paul wasn’t fashionable he wasn’t listened to.

Jerome Powell, the Fed’s current chairman, will forever be remembered for claiming that price inflation, which is currently hitting Americans hard, would be “transitory.”

These people are the wrongiest of the wrong, every time.

It is not true that the Fed gave us fewer and shallower recessions than we saw before, or that we’ve had more stability with the Fed. Whatever the propaganda in the Fed’s favor, you can be sure it’s made up.

Well beyond COVID, I devote every single weekday on the Tom Woods Show to debunking the ridiculous narratives that the establishment expects us to believe.

I’ve spent plenty of time discussing the economics of the Fed, but I recently had the great Saifedean Ammous on the show to discuss other, less obvious consequences of fiat money, among them the industrial sludge we’re urged to eat.

Enjoy, and consider joining the tens of thousands who make the Tom Woods Show part of their daily routine:

Ep. 2071 Fiat Money: Its Damage Goes Beyond Economics

Tom Woods

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Is Price Stability Really a Good Thing? | Mises Wire

Posted by M. C. on November 19, 2021

Contrary to popular thinking, there is no such thing as a price level that should be stabilized by the central bank in order to promote economic prosperity. Conceptually, the price level cannot be ascertained, notwithstanding the sophisticated mathematics. Obviously if we do not know what something is, it stands to reason that we cannot keep it stable. Policies aimed at stabilizing an unknown price level only stifle the efficient use of scarce resources and lead to economic impoverishment.

https://mises.org/wire/price-stability-really-good-thing

Frank Shostak

One of the mandates of the Federal Reserve System is to attain price stability. It is held that price stability is the key as far as economic stability is concerned. What is it all about?

The idea of price stability originates from the view that volatile changes in the price level prevent individuals from seeing market signals as conveyed by changes in the relative prices of goods and services.

For instance, because of an increase in the demand for apples, the prices of apples increase relatively to the prices of potatoes. This relative price increase gives an impetus to businesses to increase the production of apples relative to potatoes.

By being able to observe and respond to market signals as conveyed by changes in relative prices, businesses are said to be able to stay in tune with market wishes and therefore promote an efficient allocation of resources.

It is held that as long as the rate of increase in the price level is stable and predictable, individuals can identify changes in relative prices and thus maintain the efficient allocation of resources. However, when the rate of increase is unexpected, i.e., of a sudden nature, it tends to obscure the relative price changes of goods and services. This in turn makes it much harder for individuals to ascertain the true market signals. Consequently, this leads to the misallocation of resources and to a loss of real wealth.

Note that in this way of thinking changes in the price level are not related to changes in relative prices. Unstable changes in the price level only obscure but do not affect the relative changes in the prices of goods and services.

So if somehow one could prevent the price level from obscuring market signals, obviously this will lay the foundation for economic prosperity. Consequently, a policy that can stabilize the price level will enable businesses to observe the relative price changes. This in turn will allow businesses to abide by consumers’ wishes.

The Root of Price Stabilization Policies: Money Neutrality

At the root of price stabilization policies is a view that money is neutral—that changes in money only have an effect on the price level while having no effect whatsoever on the real economy.

For instance, if one apple exchanges for two potatoes, then the price of an apple is two potatoes and the price of one potato is half an apple. Now, if one apple exchanges for one dollar, then it follows that the price of a potato is fifty cents. The introduction of money does not alter the fact that the relative price of potatoes versus apples is two to one. Thus, a seller of an apple will get one dollar for it, which in turn will enable him to purchase two potatoes.

Under the framework of monetary neutrality an increase in the quantity of money leads to a proportionate fall in its purchasing power, i.e., a rise in the price level, while a fall in the quantity of money will result in a proportionate increase in the purchasing power of money, i.e., a fall in the price level. None of this will alter the fact that one apple will be exchanged for two potatoes, all other things being equal.

Now, following this logic, if the amount of money has doubled, the purchasing power of money is going to halve, i.e., the price level is going to double. This means that now one apple can be exchanged for two dollars and one potato for one dollar. Despite the doubling in prices, a seller of an apple can still purchase two potatoes with the two dollars obtained.

We have here a total separation between changes in the relative prices of goods (how many apples exchange per potato) and the changes in the price level. Why is this way of thinking problematic?

How New Money Enters the Economy: The Cantillon Effect

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12 Myths Fueling Government Overreach in Times of Crisis | Mises Wire

Posted by M. C. on April 26, 2021

Politics cannot be put aside. Politics is what politicians and political interest groups do. Partisanship is inevitable as political actors who seek conflicting ends struggle for maximum control of the government.

https://mises.org/wire/12-myths-fueling-government-overreach-times-crisis

Robert Higgs

Congress and the president have adopted many critically important policies in great haste during brief periods of perceived national emergency. During the first “hundred days” of the Franklin D. Roosevelt administration in the spring of 1933, for example, the government abandoned the gold standard, enacted a system of wide-ranging controls, taxes, and subsidies in agriculture, and set in motion a plan to cartelize the nation’s manufacturing industries. In 2001, the USA PATRIOT Act was enacted in a rush even though no member of Congress had read it in its entirety. Since September 2008, the government and the Federal Reserve System have implemented a rapid-fire series of bailouts, loans, “stimulus” spending programs and partial or complete takeover of big banks and other large firms, acting at each step in great haste.

Any government policymaking on an important matter entails serious risks, but crisis policymaking stands apart from the more deliberate process in which new legislation is usually enacted or new regulatory measures are usually put into effect. Because formal institutional changes—however hastily they might have been made—have a strong tendency to become entrenched, remaining in effect for many years and sometimes for many decades, crisis policymaking has played an important part in generating long-term growth of government through a ratchet effect in which “temporary” emergency measures have expanded the government’s size, scope, or power.

It therefore behooves us to recognize the typical presumptions that give crisis policymaking its potency.

The twelve propositions given here express some of the ideas that are advanced or assumed again and again in connection with episodes of quick, fear-driven policymaking—events whose long-term consequences are often counterproductive.

1. Nothing like the present situation has ever happened before. If the existing crisis were seen as simply the latest incident in a series of similar crises, policy makers and the public would be more inclined to relax, appreciating that such rough seas have been navigated successfully in the past and will be navigated successfully on this occasion, too. Fears would be relieved. Exaggerated doomsday scenarios would be dismissed as overwrought and implausible. Such relaxation, however, would ill serve the sponsors of extraordinary government measures, regardless of their motives for seeking adoption of these measures. Fear is a great motivator, so the proponents of expanded government action have an incentive to represent the current situation as unprecedented and therefore as uniquely menacing unless the government intervenes forcefully to save the day.

2. Unless the government intervenes, the situation will get worse and worse. Crisis always presents some sort of worsening of something: the economy’s output has fallen; prices have risen greatly; the country has been attacked by foreigners. If such untoward developments were seen as having occurred in a one-off manner, then people might be content to stick with the institutional status quo. If, however, people project the recent changes forward, imagining that adverse events will continue to occur and possibly to gather strength as they continue, then they will object to a “do nothing” response, reasoning that “something must be done” lest the course of events eventuate in an utterly ruinous situation. To speed a huge, complex, “anti-terrorism” bill through Congress in 2001, George W. Bush invoked the specter of another terrorist attack. Barack Obama, Invoking the specter of economic collapse, rushed through Congress early in 2009 the huge Economic Recovery and Reinvestment Act before any legislator had digested it. In a February 5, 2009, op-ed in the Washington Post, he wrote, “If nothing is done … our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.”1 At a February 9 press conference, he said “[A] failure to act will only deepen this crisis,” and “could turn a crisis into a catastrophe.”2

3. Today is all-important; we must act immediately.

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EconomicPolicyJournal.com: Best Evidence Top Federal Reserve Officials Have No Clue

Posted by M. C. on January 6, 2021

This climb in asset prices will very likely find its way in 2021 to consumer prices and the spike in consumer prices will be well over 2%. In the EPJ Daily Alert, I am forecasting price inflation will easily hit 3% this year and then 5% and possibly 10% within 18 months.

The Fed has no clue.

https://www.economicpolicyjournal.com/2021/01/best-evidence-top-federal-reserve.html

Loretta J. Mester, President and Chief Executive Officer of the Federal Reserve Bank of Cleveland delivered a speech at the Allied Social Science Associations Annual Meeting (via videoconference). Here is her remarkable comment on price inflation in the talk:

I expect this post-vaccination phase of the recovery to continue over the next few years, with growth above trend, declines in the unemployment rate, and gradually rising inflation…Nor would the strengthening in growth I expect to see later this year necessitate a change in our policy stance because I expect that the economy will still be far from our employment and inflation goals…The economy’s intrinsic dynamics suggest that inflation is not going to move up quickly above 2 percent. 

At the same ASSA meeting,  Chicago Federal Reserve President Charles Evans said:

It likely will take years to get average inflation up to 2 percent, which means monetary policy will be accommodative for a long time…The bottom line is that it will take a long time for average inflation to reach 2 percent.

This is the type of thinking going on in the Federal Reserve System.

It is absolutely stunning. They are simply looking at price inflation over recent past years and are making projections based on the recent past that price inflation will not spike above 2%.

This despite the fact that in 2020, the Federal Reserve increased the money supply by $4 trillion (an increase of 25% plus) and that asset prices from housing to the stock market to Bitcoin are soaring because of the massive money pump.

This climb in asset prices will very likely find its way in 2021 to consumer prices and the spike in consumer prices will be well over 2%. In the EPJ Daily Alert, I am forecasting price inflation will easily hit 3% this year and then 5% and possibly 10% within 18 months.

The Fed has no clue. By the end of 2022, I am going to have to update my book, The Fed Flunks: My Speech at the New York Federal Reserve Bank, with a new chapter pointing out the above failure of Federal Reserve officials to recognize the irresponsible money printing that they are now conducting. –RW

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The 75 IQ Version of American History – LewRockwell

Posted by M. C. on January 12, 2019

https://www.lewrockwell.com/2019/01/thomas-woods/the-75-iq-version-of-american-history-strikes-again/

By 

Tom Woods Show

From The Tom Woods Letter:

There’s still lots of talk about that 70% top marginal tax rate, and why it’s supposed to be a great idea.

Heck, they say, we had rates even higher before, and everything was fine!

Ahem.

I emailed you last week about that, and then I devoted episode #1314 of the Tom Woods Show — subscribe for free at TomWoods.com/iTunes — to further detail on the subject.

The (very quick) answer is that thanks to deductions and outright evasion, those high rates were essentially not paid.

Here’s how someone in my private group described the simpleton manner in which the topic is being discussed: Read the rest of this entry »

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