Central Bank Currency Creation and Inflation in America

Who could have predicted this? As CNBC reports:
The consumer price index rose 6.2% year over year and on a monthly basis, CPI increased 0.9%, both significantly above estimates.
Stunning. The goal of overshooting the arbitrary 2% inflation target has finally been met in a major…
Who could have predicted this? As CNBC reports:
The consumer price index rose 6.2% year over year and on a monthly basis, CPI increased 0.9%, both significantly above estimates.
Stunning. The goal of overshooting the arbitrary 2% inflation target has finally been met in a major way. Let’s see what two economic experts have to say.
According to Jason Furman, a Harvard professor and former Chairman of the White House Council of Economic Advisors under President Obama:
There’s no easy fix if the Federal Reserve is ultimately proven wrong about the inflation being “transitory.” 
Of course, the “transitory” inflation narrative has been critiqued, doubted and explained many times by various authors at the Mises Institute. I wrote in April that Transitory Inflation Is the New Buzz Phrase at the Fed, expressing various concerns including the idea that without transitory deflation, or a period where prices decline, all price increases become permanent.
Even “if” the consumer price index rose by only 2% next year, the cost of living will increase next year as well, and the compounding effects of inflation will continue.
The professor continued, quoted as saying:
What we are seeing is inflation before the unemployment rate gets all the way to where we want it to get… Some people didn’t think we could have inflation before you have unemployment below 3.5%, or some number like that.
Seems strange. It sounds like he believes there really exists a trade-off between inflation and unemployment. As for the significance of unemployment at 3.5%, or in his words “some number like that,” mainstream economists, like members of the Fed, continue to exhibit great difficulty in explaining their economic reasoning.
Professor Furman illustrates more of this confusion:
It turns out, in the short run, you try to push too hard, too fast, and the economy can’t make the adjustment on the real production side, and you end up with more inflation and that’s what we are seeing.
It’s true that central bank money creation and government stimulus checks (paid through money creation) is a great way to stimulate demand and prices… but that’s about all that gets stimulated. Large parts of the economy shutting down exacerbated the situation, likely leading to a reduction in production activities.
Yet current White House Council of Economic Advisers member, Jared Bernstein, illustrates a deeper disconnect to the real economy by saying:
When Covid hit there was a massive shift from in-person services to goods demand, and savings went up as people stopped eating out and staying in hotels, and that combined with the financial relief provided by the government led to even greater savings and demand which have ultimately contributed to the issues at ports.
It’s odd that “savings” or refraining from eating out and going to hotels takes credit for the country’s economic woes. Mr. Bernstein follows with:
I just don’t think there’s a coherent story about inflation without recognizing Covid’s role, and every forecast I’ve seen has it settling down in the second half of next year.
What more can be said when the White House’s very own economic experts show little interest in understanding the history of inflation, the effects of changes to the money supply, or very basic economic ideas like the role of savings and production in an economy? Hopefully his forecast is accurate that in the second half of 2022 prices will settle down a bit… but that’s about all we can hope for at the moment.
In an era where entrepreneurs feel compelled to be agents of social change displaying deep commitments to social causes can yield immense admiration. Therefore, Corporate Social Responsibility (CSR) has become a seminal topic in the arsenal of entrepreneurship research. Often researchers divulge…
In an era where entrepreneurs feel compelled to be agents of social change displaying deep commitments to social causes can yield immense admiration. Therefore, Corporate Social Responsibility (CSR) has become a seminal topic in the arsenal of entrepreneurship research. Often researchers divulge the pros and cons of CSR, though few consider the impacts of social obligations on entrepreneurship at the community level.
Large businesses are resourced to fund social activities, however prioritizing social obligations pertaining to family and community can hamper business growth. Unlike the narrative of CSR, social obligations are embedded in micro-structures operating at the family or communal level. The former is a call for companies to curate transcendental goals that comply with socially progressive causes. Yet there is an appreciation that companies can only fund social causes when they are prosperous.
Although some dispute the efficacy of CSR at least advocates accept that businesses are better situated to accommodate social demands when they are financially successful. However, the norm of social obligation in a communal setting is a different affair. In the context of social obligation, responsibilities are foisted on entrepreneurs because of the perception of prosperity. Social obligations are more relevant in collectivist societies where people are pressured to satisfy the interests of the group to the detriment of individual achievement.
Shedding light on the norm of social obligation can plausibly explain variations in high-growth entrepreneurship across regions. The potential for growth is stifled when a small business owner is expected to cover the expenses of family members and friends, due to the speculation that “he is rich.” Unfortunately, for the entrepreneur dismissing the solicitations of associates could result in him being depicted as selfish, so to avert this image, he may indulgence costly demands.
Using Africa as a case study researchers illuminate the adverse effects of committing to social obligations: “The kinship system in Africa exerts pressure on individuals to provide for the needs and obligations of other kin members. In East Africa, demands from one’s social relations, particularly kin, may include financial contributions to community projects, paying school fees or medical expenses, and providing for financial expenses of social events like weddings and dowry payment.” People usually comply with these burdensome requests to prevent social exclusion: “Because of fear of consequences of non-conformity to the kinship normative value “ “sharing without reckoning,” for instance losing legitimacy, status, and a following, entrepreneurs are forced to comply with demands from their social relations.”
Such developments exist because of the mistaken belief prevalent in some quarters that entrepreneurship ought to serve a social agenda. Similar beliefs are less pervasive in individualistic cultures, where people value autonomy, achievement, and self-actualization than group solidarity. Since individualistic societies, emphasize personal achievements entrepreneurs in these societies are more likely to perceive entrepreneurship as a tool to attain success by creating value.
In contrast, the constraints of social obligations levied on small entrepreneurs in a collectivist setting diverts attention from business expansion when scarce resources are directed to social obligations. By nature, the process of entrepreneurship aims to procure value for society. Hence jobs and the capacity to assist family members are merely the consequences of producing value. When one becomes an enabler of social requests, he is no longer managing a business, but existing to serve a social agenda.
Accordingly, Khayesi and George (2011) argue that high levels of communal orientation increase the acquisition of resources due to compliance with unreasonable social obligations and demands from kinship ties. Another recurring problem in these settings is that entrepreneurs might feel obliged to employ family members as a noble gesture. Yet, as research shows this can be a great error considering that the distribution of skills possessed by relatives could be narrow thereby limiting the scope of talent available for business expansion.
Moreover, neither is it cheap to maintain a network of dependents. In fact, researchers describe social payments to dependents as a solidarity tax, since failure to comply with demands will result in the isolation of entrepreneurs. Furthermore, beneficiaries of the entrepreneur’s benevolence often develop an entitled mindset motivating them to believe that the entrepreneur is permanently obligated to service their desires. This automatically slows growth by reducing resources available for capital expansion. However, in the long-term, beneficiaries are also victims.
By succumbing to their requests, the entrepreneur has ensured that they remain mendicants and this could deter them from acquiring the skills required to compete in an economy. On a broader scale, the negativities associated with excessive communal involvement often lead to declining profitability, negative firm growth, and ultimately financial demise. In hindsight, it is evident that unnecessary social obligations also impede the actualization of other businesses that could have been created with greater capital. Similarly, expending resources on social projects would have also depleted investments available for retooling.
However, the most pernicious effect of this arrangement is the perpetuation of the narrative that entrepreneurs exist to serve a social agenda. Without altering cognitive styles future generations will mature to embark on similar ventures, even to the extent of prioritizing social obligations before job performance.
To remedy the problem policymakers in developing countries where the situation is most dire ought to focus on reorienting cognitive perceptions of entrepreneurship. Entrepreneurship must be conceptualized as a medium to create value and not a tool to pursue social agendas.
We must reduce government power to a bare minimum, or the next threat to our security will lead to an even greater loss of individual freedoms.
In life, we are constantly making trade-offs between life, liberty, and property. When we take our car out for a ride, we trade life for liberty…
We must reduce government power to a bare minimum, or the next threat to our security will lead to an even greater loss of individual freedoms.
In life, we are constantly making trade-offs between life, liberty, and property. When we take our car out for a ride, we trade life for liberty: walking is safer than driving. When we take our car to work, we trade life for liberty and property. The minute we get out of bed, we make these trade-offs, and we do it so often that most times we don’t even realize we are making them: Indeed, our entire lives are a series of continuous trade-offs. However, for this pandemic, politicians decided they knew the best trade-off for everyone, and like sheep we should blindly accept these government edicts. They even tried to “infantilize” their populations (e.g. most COVID propaganda used child-like cartoons) to quash any dissent.
 The general rationale for such government dictates is that individual decisions on life, liberty, and property do not consider the externalities on the life, liberty, and property of others. Not wearing a mask may spread the disease, affecting the lives and liberties of others. Individuals are said to be flawed and selfish.
Yet, the government is an association of individuals, so doesn’t that also make the government flawed and selfish? Or do we have leaders who are flawless and altruistic individuals? How do we ensure these individuals are in power at the right moment? Also, is a unique strategy optimal for everybody and how do we determine this optimality with no comparison strategies? (See here and here.)
John Stuart Mill’s arguments in On Liberty (1859, Chapter III), said:
The spirit of improvement is not always a spirit of liberty, for it may aim at forcing improvements on an unwilling people… but the only unfailing and permanent source of improvement is liberty, since by it there are as many possible independent centers of improvement as there are individuals.
Mill argues individuals make different trade-offs and pursue different paths to individual strategies. This tatonnement process of trial and error based on imperfect information will ultimately lead to an overall strategy or strategies adopted voluntarily by others. This is a market-like process (mutually beneficial voluntary actions) and will be more popular and accepted than the one-size-fits-all strategy currently being enforced by virtually all governments.
France closed all its ski resorts during the winter of 2020-21, violating owners’ property rights. Switzerland was open for skiing, but with added restrictions on liberty and property. Which strategy was better? Before responding, why are we forced to choose between two strategies instead of many? Individual resort owners could have made those decisions and others about the use of their property. Where is the outrage over these restrictions on fundamental liberties? Do you own property if you cannot dispose of it as you wish? Of course, letting everyone find a strategy is judged as chaotic, and our benevolent government leaders cannot conceivably allow such a solution. Yet, just like a competitive market process is Pareto efficiency, this semblance of chaos would have led to a more accepted social outcome.
This pandemic has taught us a multitude of lessons about liberty and government.
First, democracy is no guarantee of freedom nor of protection from despotism. The advantage of democracy is that it is more likely to ensure peace since we have a peaceful transfer of power from one majority to another. However, democracy can be as despotic as any other form of government. People forget Hitler was elected democratically, and many Germans knew of the holocaust during the war.1 Democracy must have a rulebook to protect minorities from the majority. For the USA, that is supposedly the Constitution. But those rules need to be explicit and binding. Today, no one is batting an eye about taxing billionaires to pay for social programs. These billionaires are a minute minority (700 in this case), but nonetheless with fundamental freedoms of life, liberty, and property. Voting to limit the freedoms of others or minorities is a risky business, since tables can turn as many Jews discovered even before WW II.
Second, the police can rapidly be turned into an instrument of despotism. Today in France, the police will stop you if you cross a street in an open market because you are not wearing a mask. To enter many businesses, you must be vaccinated. Yet, one of the fundamental pillars of liberty, developed by John Locke and others, is a natural immutable right over one’s own body. 
Third, we can identify which politicians, from governor to dog catcher, respected and valued individual liberties, and those who saw individual liberties as an obstacle to their vision of right and wrong.
Many individuals, even those who do not classify themselves as libertarians, understand that fundamental freedoms were lost over these last two years. A way to turn the pendulum back is to have a serious debate and draft legislation to limit the scope of government actions. As Bastiat made clear (here) in his seminal work, the only or exclusive role of government is the defense of an individual’s life, liberty, and property, and nothing else.
We must stop idolizing plunderers, and demand that the power of government be used to protect, and not plunder life, liberty, and property.
The release of No Time to Die marks the end of Daniel Craig’s run as James Bond.  Since embarking on this role in 2006 for Casino Royale, critics have hailed his movie’s more realistic take on Ian Fleming’s famous spy.Elvy, Craig, (2021). James Bond: Every Way Daniel Craig’s Era Changed 007…
The release of No Time to Die marks the end of Daniel Craig’s run as James Bond.  Since embarking on this role in 2006 for Casino Royale, critics have hailed his movie’s more realistic take on Ian Fleming’s famous spy.1 And with blonde hair and a head the size and shape of a medicine ball and matching visage, Craig was certainly a visual departure from his predecessors.  It is only fitting then that his finale comes in a film where the reality of our rulers’ failed planning and violent intervention that begets more violent intervention are on full display.
The plot of No Time to Die, such as it is in a movie where an explanation of key characters’ motivations or funding sources did not make the final cut, involves Bond trying to prevent the usage of Project Heracles which can target and kill specific people based on their DNA.  The rub is that he is attempting to destroy a weapon that M sanctioned the development of only to have it stolen from MI6 by SPECTRE who in turn have it purloined from them by the film’s uber-villain, Lyutsifer Safin.  When Bond confronts his boss about such an error in judgment, M resorts to pleas of patriotism and protecting the masses to rationalize greenlighting Project Heracles, arguments that fail to impress his best state-hired assassin.
It is in this scene that the film presents the audience with some semblance of reality.  We have the leader of a tax-funded organization lacking the foresight to see that creating something as powerful and dangerous as Project Heracles might not go as well as planned.  Bond’s incredulity is almost Hayekian in that it brings into focus the inability of state functionaries, no matter how well informed, to create plans that achieve the ends they desire.  Of course the dictates of plot require that Bond’s misgivings do not change him and he sets out to violently undo his employer’s mistake, actions in keeping with Mises’s statement that, ‘If the government will not set things right again by desisting from its interference…then it must follow up the first (intervention) with others’.2
While Hayek was writing about a different form of central planning and Mises’s above quote concerns price controls, their insights apply to more violent forms of state intervention.  Perhaps it is telling that both men served as officers in the Austro-Hungarian army during the First World War,3 an event that is almost a case study in how those that rule over us, those with the most information, can get it very wrong.  For instance, some in July 1914, including the Kaiser and Tsar, had a premonition of the disaster their actions would bring and yet they plunged into the abyss anyway.  These choices were all the more unconscionable for the statesmen of Russia, who, only nine years previous, had experienced a disastrous military defeat followed by revolution.  In 1917, the second coming of each was far worse. 
This example of Russia or the Americans’ hurried exit from Afghanistan calling to mind an ignominious flight from Saigon lend themselves to the cliché that history repeats itself.  Or, as Marx referred to Napoleon and his less illustrious nephew, ‘world-historic facts and personages appear…twice…the first time as tragedy, the second time as farce’.4  But history repeats itself only insofar as people make similar mistakes because they are prone to age-old vices like a lust for power, myopia, or the vanity that they can control things they most certainly cannot.  At the individual level, the problems these shortcomings create remain localized.  When present in state functionaries, those that would perfect the world with their intentions, they lead to theft, the upending of the social order, gulags and killing fields; all historical events brought about by an iniquity and ineptness that Hayek and Mises witnessed firsthand.
In the penultimate scene of No Time to Die, the state-sponsored murderers from MI6 drink expensive liquor in a lavish office, all of it funded by the taxpayers their acts have nearly destroyed.  Then they depart to carry on their interventions elsewhere in the world, seemingly having learned nothing and reminding the viewer of the CIA agents at the end of the Coen brothers’ superior film, Burn After Reading.  ‘I guess we learned not to do it again’, one of the agents says, although he admits to having no clue what they did the first time around.  Such comments are farcical enough on the silver screen.  In real life, they are only too tragic.
János Kornai was born in 1928, in a century of bloody and tragic twists and turns. His homeland, Hungary, was especially a dangerous place during the 20th century. Among other things, it fell under both totalitarian regimes: Nazism and Communism.
Kornai’s personal life was also shaped by…
János Kornai was born in 1928, in a century of bloody and tragic twists and turns. His homeland, Hungary, was especially a dangerous place during the 20th century. Among other things, it fell under both totalitarian regimes: Nazism and Communism.
Kornai’s personal life was also shaped by that century. His father became a victim of the Holocaust. He was assigned to a special labour-service corps of the Hungarian Army, into which Jews were drafted as a supplementary force destined to perish. Kornai, however, was fortunate enough to survive the war. For him the arrival of Soviet troops literally meant liberation. No wonder that the young Kornai, who had been destined to perish, became a Communist. His turn towards Communism was heavily influenced by the reading Das Kapital in 1947. He became a journalist of the central newspaper of the Hungarian Communist party. However, one of the show trials of the Stalinist era opened his eyes and changed his life-trajectory. Kornai, the formerly devoted communist journalist, increasingly distanced himself from the regime. He became a supporter of reforms and opted for an academic career as economist in 1955. He participated in the 1956 revolt, and after the bloody re-imposition of communism by Russian troops, he abandoned his Marxist beliefs.
Nonetheless, the reinstalled regime, led by János Kádár, had increasingly distanced itself from the openly repressive practices of the Stalinist period. In this new era, Kornai could return to follow his academic work.
At the beginning of his research career, he criticized the over-centralization of state planning and argued for a more decentralized market-mimicking socialist economy. In the reform-era of the Kádár-regime, from the late fifties to the early sixties and onwards, his academic work also contributed to the regime’s cautious, limited and selective marketization and liberalization reforms. The so-called goulash socialism brought prosperity compared to the high Stalinist period in Hungary. However, Kornai was keenly aware of the internal contradictions and deep-seated problems of the so-called happiest barracks of the Soviet camp. In the eighties, he became one of the most important modern critics of the then existing socialism. His ground-breaking work, The Economics of Shortage, argued that there are deep-seated internal reasons for the inevitable and unsolvable problems of the socialist system. His analyses of the systemic malfunctions of socialism are a staple for those who really want to know why Marx’s socialist utopia is inoperable and anti human. His theoretical constructs, such as deficit and surplus economy, soft and hard budget constraint, which he developed for the analysis and comparison of the ideal systems of socialism and capitalism provided an important starting point and theoretical framework for further research.
During his long academic career Kornai had arrived at a vision close to the position of Austrian School of Economics. This was primarily based on his experience in a functioning socialist system. At the same time, he became one of the greatest pro-market thinkers of our time. Despite the shared vision, he never considered himself as belonging to the Austria School, although he admitted his intellectual debt to Mises, Hayek, Kirzner and especially to Schumpeter.
The reason for the shared vision is that key figures of the Austrian School, like Eugen von Böhm-Bawerk and Ludwig von Mises at the turn of the century and in the early twenties took on the challenge of criticising Marxism and the Marxist utopia of socialism. They showed that the “scientific” work of Marx had insurmountable contradictions and socialism bound to lead to failure. Also, the members of the Austrian School contrasted the benefits of a market economy with the inbuilt problems of the utopian Marxian vision of socialism. They argued most forcefully among the economic schools that capitalism is a dynamic economic system, and this dynamism is the key to human progress. Also, the Austrians were eminent among those who argued that the cause of the dynamism of capitalism is private property, entrepreneurship and competition.
One of the last important books of Kornai’s life is Dynamism, Rivalry and the Surplus Economy. The main theme of the book is the comparison of socialism (state planned economy) and capitalism (market economy). Comparison of the economic system of the shortages with the system of the surpluses.
Socialism produces shortage, capitalism produces surplus. The basic reason for this difference, according to Kornai, is that there is no opportunity and space for innovation in socialism unless it is considered important by the centralized planning state for some political purpose. Therefore, there is no room for entrepreneurs, whose function is to apply inventions in an innovative way. In contrast, the most important feature of capitalism is that it gives the entrepreneur freedom to realize inventions and satisfy consumer demand.
Kornai’s argument is by and large the same as the position of the Austrian School of Economics. One of the major differences is the method of inquiry between the Austrians and Kornai. Menger, the founding father of Austrian school, first established that the goal of economic theory is to discover cause and effect linkages in economic life.
 Kornai, using the contemporary language of positivist economic thinking, arrived at the same position that of Menger and Mises, who used a theoretical language, which is now considered outmoded by the mainstream literature. Kornai first discovers the economic facts, then analyses them and finally seeks to identify causal relationships. At the end, he arrives at basically the same positions as Menger: economic life is dynamic, the engine of dynamism is human invention and entrepreneurship, and there are cause and effect linkages, which shape human behaviour.
He would have deserved the Nobel Prize in Economics. What a pity that, with his death, he deprived the Nobel Prize Committee of the opportunity to recognize Kornai’s enormous significance not only in building economic theory, but also in undermining the scientific legitimacy of the Marxist vision of socialism and state planning.
It is even more painful that with his death he was deprived of the opportunity to educate us: interested lay readers, his fellow scholars, and last but not least, politicians. It is a pity, because the average citizens, scholars and politicians of our time are not acknowledging the benefits of capitalism but support economic policies furthering state interventionism. It is a bitter situation, as he learned through his own experiences, that state planning is a non-workable system. He forcefully argued that only a capitalist economic system can dramatically improve people’s lives and quality of life. He also believed that capitalism is also a necessary condition of democracy, and of avoiding totalitarian regimes, which were so abundant in the last century.
Navigating the Judicial System can be a difficult endeavor for those unfamiliar with, untrained in, and inexperienced with legalistic language, court procedures, or even the resources for attorneys who are. This mixed with the often broad nature of the law makes the United States a highly…
Navigating the Judicial System can be a difficult endeavor for those unfamiliar with, untrained in, and inexperienced with legalistic language, court procedures, or even the resources for attorneys who are. This mixed with the often broad nature of the law makes the United States a highly litigious society with legal fees and spending on legal matters accounting for 2.2% of domestic GDP.
This follows as Civil court cases take upwards of two years just to get a court date and are long drawn out processes once you get to court. As a direct result of intense Judicial Bureaucracy, we find the U.S. with a judicial system that confuses and delivers inadequate and inequitable results to its users.
So does an alternative exist? Citizens of the United States are indeed bound by the rulings and laws of its legal system but in the procedure of how we resolve legal conflicts, there is a practiced alternative that seeks to avoid the long costly court battles of today.
Arbitration is that way, a legal process of out-of-court settlements of disputes between parties through a third-party arbitrator that is faster and more cost-effective than litigation. How is it faster and more cost-effective? Arbitration imposes set time limits and more streamlined approaches to evidence gathering and presentation that provide a cost-effective and timely decision to disputes between parties.
Some do argue its limitation is evidence gathering is a hindrance to the presentation of facts. The problem with this criticism is that the court’s “advantage” comparatively is the rules of evidence that will omit evidence that may be extremely relevant, but doesn’t fall into a red-tape standard of what they expect from evidence. The “flaws” in arbitration are avoidable, as arbitration relies heavily on the ability of arbitrators and to a lesser extent the parties involved’s knowledge of the issue they are in arbitration over.
Arbitration does have its limitations, specifically in what Arbitration can apply to and when. Since Arbitration is an attempt to seek a resolution to conflicts between two parties, criminal wrongdoings, such as theft or murder would not be under the scope of arbitration, as the desired outcome is not equitable outcomes in conflict resolution, but punishment and restitution for violent harm. Though even in some civil scenarios drawbacks can be observed.
To demonstrate, divorce proceedings are often an ugly process and this is usually because of a criminal component to the case. Around 25% of divorces are because of domestic violence in the relationship, a situation that finding a resolution that did not involve punishment and restitution is nearly impossible for good reason.
That still leaves 75% of divorces that are in fact not due to criminal reasons that could and should fall under arbitration. As previously established, litigation becomes a costly and time-consuming endeavor with its confusing and dense procedure that does not create outcomes that serve both parties’ interests, even when they are not mutually exclusive.
If someone gets a divorce simply for the fact they feel no love for the other partner, why should they endure a long costly battle, when Arbitration would deliver an outcome favorable to both parties? Most divorces will fall into this level of intensity that sees better dispute resolution than in trial proceedings.
The final limitation of Arbitration, however, is that its ability to be binding is tenuous at best. Arbitration works best when it is final and binding, as it incentivizes parties to reach equitable outcomes promptly for the both of them, rather that they can continue to appeal and sue or delay proceedings to “wait out” the other party or find some legal loophole where they can come out on top. The problem today lies in that if a party does not like an outcome of arbitration they can just take the issue to court if the Arbitration is non-binding, which many are. In binding arbitration, both parties agree not to sue one another as a condition of a successful arbitration, but binding arbitrations are only ever seen in an employee, employer context, as arbitration is agreed to before a dispute.
In most arbitrations, appeals can be made to the courts to change the outcome of the arbitration. The process is wrapped in the same judicial bureaucracy which holds down our civil courts and skews outcomes towards those with wealthy lawyers who can find loopholes in the thousands of pages of legal procedure and understand legalistic language.
The reasoning for the State’s insistence on hindering arbitration as an alternative to the courts is exactly because it demonstrates a lack of need for them. Why use a clunky, more expensive service that is a gamble between a favorable result and an untenable result, when the alternative is cheaper, easier to understand, and delivers better results on the whole?
The government is forced to compete with the private sector or alternative forms of conflict resolution and as competition does, it reveals the inefficient and less valuable service and it is then outcompeted by the services that are efficient and more valuable in the eyes of its consumers.
The article “Marxism versus Libertarianism: Two Types of Internationalism”
argues that socialist internationalism was postulated by the founders of Marxism without a coherent proof of the proposed premise. This axiomatic notion was necessary to achieve the inner logic of historical…
The article “Marxism versus Libertarianism: Two Types of Internationalism”
argues that socialist internationalism was postulated by the founders of Marxism without a coherent proof of the proposed premise. This axiomatic notion was necessary to achieve the inner logic of historical materialism. The matter of fact is that Marx and Engels could not imagine how the global socialist change could unfold in economically interconnected countries. Their solution was to call for an international brotherhood of proletarians who would be the agents of the coming socialist revolution.
Their justifications boiled down to the fact that the capitalists united the economies of all countries – thereby incidentally confirming the truism that capital has no borders and that entrepreneurs are truly international – and that is why the proletariat must be organized into world associations, in order to imbue them with class consciousness and ensure readiness for an upcoming struggle. The emancipation of the working class ran like a cross-cutting theme in the writings of Marx and Engels because it was they who assigned workers the role of gravediggers of world capitalism, which the proletariat itself did not even know about.
On the other hand, the founders of Marxism pursued another goal. They wanted their contemporaries to see their theory as not only scientific but also morally superior to any competing doctrines. Highlighting the predetermined historical role of the proletariat, Marxism insisted that people with the best intentions would make the social change, in order to eliminate the contradictions in the development of productive forces and production relations under capitalism. Marxism endowed the proletariat with the moral qualities of holy people – this is an innate sense of equality, brotherhood and justice, unconditional love for different ethnic groups and races, contempt for fetishism and wealth, and readiness for mutual help. That is why, from the earliest works, they intensively hammered the point of internationalism as the highest form of collective proletarian brotherhood in opposition to capitalist individualism. Internationalism became a trademark of Marxism, concluding the Communist Manifesto with the powerful slogan “Proletarians of all countries, unite!”
In fact, Marx’s conclusions have not stood the test of time. At the very first actual trial, where the working class had to show its moral superiority over the bourgeoisie and choose an internationalist stand, the proletariat showed a willingness to fight and die for their countries in the First World War. The overwhelming majority of European socialist parties supported their people, regardless of class affinity, and did not unite with the proletariat of their enemies. Lenin noted with bitterness that in more than two years of war, the international socialist and workers’ movement in each country formed three currents: social chauvinists, “center” and true internationalists, where he ranked the Bolsheviks.
Proletarian internationalism became a stumbling block in the labor movement, and insoluble contradictions between various factions led to the dissolution of the Second International in 1916. Moreover, the First World War became the catalyst for precisely the opposite trend, namely the nationalist turn in the socialist and workers’ movement and the departure from the principles of orthodox Marxism. During the interwar period, National Syndicalists, Fascists, and National Socialists emerged on the European political scene and challenged ideological tenets of the communist international.
Ironically, even within the communist international, the racist card was played, as can be seen in a bitter quarrel between the Soviet and Chinese communist parties in the early sixties. For instance, the Chinese stated that communism for non-white peoples should be kept separate from the communism of such “non-Asian whites” as Russians. Maoists prevented the Russian delegation’s participation in an Indonesian journalists’ conference on the premise that “the whites have nothing to do here.” The Chinese went so far that the Maoist version of internationalism apparently read: “Non-white workers of the world, unite!” – effectively killing Marxian objectives by replacing class solidarity with racism.
But there is something else that rips the internationalist mask off the face of leftist movements. Internationalism is an all-encompassing and reciprocal concept that is falsified if there is even a single exception or contradiction. If an individual, community, party, or country exhibits love for everybody except one, their internationalism does not pass the criterion of all-inclusiveness and thus gets debunked.
Historically, anti-Semitism turned out to be a litmus test that unmistakably distinguished an internationalist from a nationalist and a real internationalist from a false one. The recent book by German historian Götz Aly, Europe Against the Jews, 1880-1945, examines the prehistory of the Holocaust, which, the book posits, would not have been possible without the assistance of thousands of collaborators worldwide belonging to different ethnicities, social statuses, and political affiliations. In his groundbreaking research, the author has collected historical evidence of blatant anti-Semitism, including from prominent figures on the traditional left. For example, the author pointed out that French socialists such as Pierre Leroux, Pierre Proudhon, Georges Duchene, and Auguste Blanqui displayed fervent anti-Semitic sentiments, not to mention that the leaders of the Paris Commune and members of the First International Gustave Tridon and Albert Regnard were openly Jew haters. There are many such examples in the book. The truth comes out over time and the reappraisal of certain heroes of the socialist movement is still waiting in the wings.
Anti-Semitism can be found in places that seem incredible at first glance. In his research paper, Anti-Semitism in International Brigades, Andrew Smalling explores the paradox of hatred toward the Jews in International Brigades during the Spanish Civil War, which were organized and managed by the Comintern and fighting a coalition of Nationalists supported by Italian fascists and German Nazis. Anti-Semitism was widespread enough to undermine military performance of the Brigades, according to a secret report by Soviet emissary Karl Sverchevskyi to his Moscow leadership. It turns out that irreconcilable enemies were able to find a common denominator in anti-Semitism, which in itself is a refutation of genuine internationalism in the leftist milieu.
Thus, proletarian internationalism is an empty slogan, which is weakly argued theoretically in Marxism and does not stand up in practice. This conclusion has great consequences not only as another exposure to Marxism but also as the overthrow of nationalism/racism as a factor influencing the polarization of the political spectrum. The paper The Theory of the Political Spectrum demonstrates, from a purely formal mathematical standpoint, that an element of nationalism/racism does not pass the test for sufficiency and necessity, and should not be used as a marker to distinguish ideologies on the political spectrum. This is due to the fact that nationalism, as a watershed between ideologies, loses its meaning when opposing doctrines converge on the national issue, whether in words or in deeds. The semantic constructs “if nationalism then the Right-wing” and “if internationalism then Left-wing” have neither logical nor practical argumentation under it but are a propagandistic cliché that has become an axiomatic blunder in contemporary political science.
The historical developments in the first part of the twentieth century invalidated Marxist postulate about an international brotherhood of proletarians. It turned out to be an ordinary political myth. But this myth has been kept alive by Communists as an extremely convenient propaganda ploy, allowing them to choose a high road in their international relations. The Communists often played this card, covering up their atrocities against their own people and other nations, on a par with the crimes against humanity of the fascists and nationalists, hiding behind the slogan of international duty.
In psychology, the effect has long been noticed when the guilty party blames others for the same sins that they themselves have committed. This is just the case that applies to the propaganda rhetoric of the leftists. They accuse their opponents of racism and xenophobia, while they themselves have racist skeletons in their closet. But the truth of the matter is that it was predominantly the leftist totalitarian regimes that created the nationalist monsters that killed millions of innocent souls, either overtly or through camouflaging their actions with internationalist rhetoric.
Who should take the blame (or credit) for Cuba’s 6,900% inflation rate?
Before the answer is given, consider the history of fiat currencies, from Roman times to Kublai Khan, pre-war Germany, to recent popular hyperinflations such as Venezuela and Zimbabwe. The common denominator is…
Who should take the blame (or credit) for Cuba’s 6,900% inflation rate?
Before the answer is given, consider the history of fiat currencies, from Roman times to Kublai Khan, pre-war Germany, to recent popular hyperinflations such as Venezuela and Zimbabwe. The common denominator is always the same. In the case of hyperinflation, it is always the result of government intervention. Despite the history of currency debasement and collapse brought on through increases to the money supply, countries across the world still struggle with learning from the past.
According to Cuban news sources:
The Cuban government recognized that the economic reform known as Task of Reorganization has caused inflation of 60% in retail prices in shops and 6,900% in the informal market…
Pay attention whenever hyperinflation is mentioned in the news. Often the headline will discuss outcomes of the currency debasement, such as shortages being the cause, or other backwards ideas such as an inexplicable demand for all goods and services.
Earlier this year Reuters news inadvertently noted the beginning of Cuba’s problems, saying:
Many goods are simply no longer sold in peso shops despite billions more pesos now being in circulation.
There exists a lingering idea that the government’s failure is due to the lack of printing enough currency which causes supply shortages and hyperinflation, rather than the excessive printing as the source.
Cuba’s reorganization, which began in January included:
…an increase in prices, wages and the reduction of subsidies, and a consequent devaluation of the Cuban peso (CUP)…
Along with a minimum wage increase “by around 450%,” the heart of a hyperinflation is always the same; money printing followed by a realization that the government will not abate in its inflationary stance, causing the masses to want to buy anything perceived of value rather than hold their local currency.
Few events cause a unilateral increase in the demand for all goods and services simultaneously. Yet when billions of pesos suddenly come into existence, everything except the increase in pesos is considered the culprit.
True, US imposed sanctions hurt Cuba’s economy, since their trading is restricted. However, Cuba’s government could have mitigated this in many ways a long time ago. Making Cuba a free market economy and/or not debasing the nation’s currency would have done wonders for the island nation.
The world over, no one wants to stop money creation. All the while, everyone is surprised when currencies collapse. Consider what the Havana Times suggests:
In addition to all of this, US sanctions increased and the embargo became stricter, which has been hindering financial operations since 1962, and makes it impossible for Cuba to access credit from international financial bodies.
Why any nation would want access to credit from “international financial bodies” remains a mystery. The number of times a nation has defaulted on a loan from the International Monetary Fund (IMF) should be legend by now. A “new loan” from the IMF would increase Cuba’s money supply, add to their debt burden and carry the propensity to be defaulted, which could lead to austerity measures.
When the choice is between printing a local currency into oblivion, borrowing from clandestine supranational organizations or to refrain from doing either are compared, only one outcome emerges as a clear winner. A nation should always stop printing money because money printing has never led to a favorable outcome for any nation. Why the clearest path to success is always the path not taken remains anyone’s guess.
When I was in grade school, I learned that America was a republic. There were checks and balances built into the political machinery of the country, our teachers taught us, and things like the Electoral College and indirect election of senators (now defunct) to insulate the body politic…
When I was in grade school, I learned that America was a republic. There were checks and balances built into the political machinery of the country, our teachers taught us, and things like the Electoral College and indirect election of senators (now defunct) to insulate the body politic against the will of the fickle masses. Our American history textbooks had a fluttering American flag on the front cover, and the textbook pages were filled with text and images about our republican heritage and way of life.
But somewhere between grade school and grad school, America had turned into a democracy. It became retrogressive to insist, as I often did, repeating what I learned as a boy, that we lived in a constitutional republic. Then it became racist to do this (I still don’t quite understand how or why). All that mattered, somehow, was that America be more democratic. And not just in politics, but in everything. Democracy became a kind of mood lighting for institutions, corporations, sports teams, and social clubs. If you weren’t democratic, or at least working to be more so, then you were considered questionable in polite society, and then a positive danger to polite society. America a republic? I might as well have tried arguing that states have the right to secede (which I also did, and still do).
During the Trump years, this democracy-as-mantra phenomenon reached a fever pitch. Trump was anti-democratic, people kept insisting at me with very pained and worried expressions on their faces. He won the Electoral College by a landslide, but his opponent, Hillary “Dossier” Clinton, won the most votes overall, I was told. The country was in grave peril, apparently because the Electoral College was working just as it was designed. “Democracy Dies in Darkness” even became the masthead rallying cry of a famous American newspaper (owned by a distinctly un-democratic billionaire, but that’s a story for another broadsheet, I guess). Everywhere I turned, I heard people disclaiming the withering of democracy on the American vine. Anti-democratic forces were abroad, were smuggling in their malicious anti-democracy from Russia and other such reactionary places. “Democracy” had taken the place of “republic” not just in the political science trend-list, but in the zeitgeist overall. If you were for a republican form of government, you were bad. If you were for a democratic form of government—whatever that means, I still don’t exactly know—you were good.
But now, in 2021, I think another lurch has wracked our once republican republic, our erstwhile and ersatz democratic democracy. For autocracy is the name of the game today. Democracy really did die in darkness. Now we’re living in Creon’s Thebes. People don’t talk about democracy much anymore. What they want is results, and they want the president to issue proclamations to give those results to them, now.
This American flavor of tyranny is hardly a new development, to be fair. Long before Trump arose from the Pre-Cambrian oceans of flyover country to do a Godzilla number on Democracy, presidents Bush, Obama, Clinton, and many prior to their reigns had been making use of the Executive Order to bypass what were either, depending on your persuasion, republican or democratic norms. President Roosevelt used an Executive Order to put Americans in concentration camps during World War II. Roosevelt, still the grand champion of the genre, issued an astounding 3,720 other Executive Orders besides that one. Ulysses S. Grant issued 217 of the things during his time in the White House. Calvin Coolidge, you may be surprised to learn, issued 1,203 Executive Orders.
Old William Henry Harrison, the poor soul who died just a month after inauguration, ought to go down in history as the greatest American president, for he issued precisely zero Executive Orders during his tenure, making him the least autocratic chief executive of them all. But Harrison was the exception. What we have now is essentially rule by fiat, a slew of Executive Orders and other imperial rescripts with some democratic-republican bunting draped around the edges to make the kingly pretensions of our autocrats look nice and constitutional.
The progression (?) from republic to dictatorship is a twice-told tale, unfortunately. Rome springs immediately to mind. So does France. You can supply your own examples, I’m sure. But what is different about the American story, or should have been, is that America is supposed to be a federalist arrangement. We are supposed to have “little laboratories of democracy” called states, and those states are supposed to try out different ways of confronting the problems of our common political life. If and when one state hits on a good policy solution to a certain problem, then other states are supposed to copy that model, thus jazzing up efficiency across the board. That’s federalism, the political springiness to be able to adapt creatively to various challenges, and then to retool at various levels of government once bright ideas start to come online from the federalist R&D lines.
But if this is true, and if federalism is the flywheel of our republic, or democracy, then what are Executive Orders? How do we make sense of those? Aren’t those anti-federalist? Aren’t Executive Orders kind of statist? One guy, at a desk, signs a document, and more than three hundred million people fall in line? Or even more people, if the Executive Order has implications beyond the borders of the United States, which they often do. That doesn’t sound like federalism. It sounds like a federal employee grossly abusing his office.
Consider the so-called “vaccine mandate” which Mr. Biden is dictating to us born-free, red-blooded Americans. “Get this experimental serum jabbed into your arm, or OSHA will fine you fourteen thousand dollars a day,” Mr. Biden is reported to be contemplating threatening. Forget about the constitutionality of such a mandate, which is highly questionable. What happened to federalism? Why mandate from the top, when various states are working, even as we speak, on delivering an array of policy solutions to what is, after all, a pandemic, something which is affecting us all?
The governor of Florida, and the governors of many other states, are indicating that they will not comply with Mr. Biden’s diktat. That sounds a lot like real federalism to me. But then we are left with a quandary, because to be federalist it would seem that one must be anti-federalist, which under the current Hamiltonian-Madisonian dispensation doesn’t make a whole heck of a lot of sense.
The obvious answer seems to be that Hamilton and Madison got it wrong. Federalism is not federalist after all. That’s an irony, but not an unanticipated one. Before the Constitution was signed, there were many people in the United States who were Anti-Federalists.  They told Hamilton and Madison what they could do with their little Constitution. They saw, I think, what we are living today: if you take a whole bunch of mini-republics—call them “states” if you like—and put them together and put one man in charge of them all, then that one man is going to find a way to rejigger the republics so that more and more power will redound to the center, at the expense of the peripheries.
That is Hamiltonian, Madisonian federalism. That is, in other words, the federal government. It is a hulking, liberty-crushing beast precisely because the Founding Fathers gave us a political Voltron. They took a lot of parts and assembled them into a big machine. And that machine now rules us, just as one might have intuited, just as common sense would instruct. Give a man the means to power, and he will use those means to seize all power in his own two hands. That is human nature. The Federalists who pushed the Constitution on our forebears told us that they had solved that problem. This is precisely, however, what they did not do. We got played by Hamilton and Madison. We got punked by the people we were taught saved us from the clutches of King George III.
So here we are, with a vaccine mandate by a senile dotard (as King George III once was) whose main line of work is arranging massive payoffs for his not-quite-Picasso kid (something not even George III had the effrontery to try). It just wasn’t supposed to be this way. I’m pretty sure that what we have now is not what the Federalists intended, and especially not what they promised.
But it is not too late to admit that the Anti-Federalists were correct. We don’t have to worship at the Hamiltonian/Madisonian altar anymore. Apostasize from Federalism and be free! Because putative federalism is bunkum if it isn’t anti-federalism. Anti-federalism, indeed, is the highest form of federalism. “Take this union and shove it” is the ultimate safeguard of freedom. If you can’t walk away from a bad relationship, then the relationship is not just bad, it’s also abusive. If you can’t veto, with your turned back and walking boots, an arrangement that is just not working anymore, then you are little more than a slave. You are a slave, in fact. Because slaves have no vocabulary but, “Yes, sir.” And vis-à-vis the White House, neither now do we.
I wrote recently in these pages about the “constitution of no authority,” the insights of a great American named Lysander Spooner.  Spooner showed us that we don’t have to swallow the rhetorical hook, line, and sinker of constitutional claptrap. We don’t have to pretend that we owe it to the government to let it dictate terms to us. We are free men and women. We are better than that.
In that same spirit, I advocate now for anti-federalist federalism. Not because I’m against federalism, but because I am very much for it. I want there to be a scintillating mosaic of tiny republics, or monarchies, or anarcho-capitalist confederacies, or hippie communes, or agricultural cooperatives, or whatever. Even a “democracy” here and there so the rest of us can visit and have that nonsense shocked out of our systems from time to time. Let a hundred flowers bloom on the political veldt. Let federalism shine.
But let us have no more federalist federalism. That is the recipe for tyranny. That concentrates all the power into the center, precisely where power should never, ever be. Anti-federalism is real federalism. It is the right, born of human dignity, to walk away from “vaccine mandates” and all other manner of power-drunk devilry that the tyrannically inclined among us will always try to pull off.
Anti-federalism, my friends. For liberty. For a better America.
Let the governors of the states escort OSHA agents, and all other federal representatives, to the state line. State by state, until the federales are back in DC, properly scorned and ignored by the freeborn, as they ought to have been in 1789 and forever after.
An income tax audit is essentially a search. Why, consistent with the Fourth Amendment to the US Constitution, doesn’t it require a search warrant signed by a judge?
Since income-tax audits sometimes lead to criminal prosecutions and jail sentences, why is it not a requirement…
An income tax audit is essentially a search. Why, consistent with the Fourth Amendment to the US Constitution, doesn’t it require a search warrant signed by a judge?
Since income-tax audits sometimes lead to criminal prosecutions and jail sentences, why is it not a requirement that anyone whom the IRS wishes to audit first be given a Miranda warning, with its notification of the right to remain silent and to have an attorney present?
Why isn’t the Fifth Amendment to the US Constitution and its protection against self-incrimination a routine basis for the refusal to submit to an audit, thus requiring the IRS to make its cases without the cooperation of citizens forced to help in their own incrimination?
November’s Federal Open Market Committee (FOMC) meeting finally brought the long sought-after tapering. This month, instead of unleashing $120 billion into the market to lower the purchasing power of the dollar, the Fed will aim for closer to only $105 billion per month; hence the taper. As per…
November’s Federal Open Market Committee (FOMC) meeting finally brought the long sought-after tapering. This month, instead of unleashing $120 billion into the market to lower the purchasing power of the dollar, the Fed will aim for closer to only $105 billion per month; hence the taper. As per usual, the Q & A highlights offer great insight into seeing just how far gone the Fed is from economic theory.
Starting with a question of whether interest rates will be increased once or twice next year. Chair Powell responded:
We don’t think it’s time yet to raise interest rates. There is still ground to cover to reach maximum employment both in terms of employment and in terms of participation. 
Taken literally, he must believe there is a trade off between interest rates and employment. According to Powell, a rate rise would impede on achieving the maximum employment goal. But if this is true now, there’s no reason to say it won’t be in the future. To make matters worse, no one at the Fed has articulated what maximum employment means.
Powell reiterates the lack of definition elsewhere during the Q&A:
So, we don’t actually define maximum employment…
Despite both the media and the Fed not knowing what maximum employment means, the question was asked:
…do you think it’s possible or likely even that maximum employment could be achieved by the second half of next year?
Powell responded:
So, if you look at the progress that we’ve made over the course of the last year, if that pace were to continue, then the answer would be yes, I do think that that is possible. Of course, we measure maximum employment based on a wide range of figures, but it’s certainly within the realm of possibility.
Another question was asked about the wage price spiral; the idea that wages would rise too fast and cause prices to increase by too much, as explained by the head of America’s central bank:
You know, the concern is a somewhat unusual case where if wages were to be rising persistently and materially above inflation and productivity gains, that could put upward pressure on or downward pressure on margins and cause companies to [sic] their employers [sic] really to raise prices as a result, and you can see yourself, find yourself in what we used to call a wage price spiral. We don’t have evidence of that yet.
Perhaps something imposed by the government, like a mandatory minimum wage, could artificially raise the cost of labor, which in turn will hurt profit margins. Yet, every time they talk about the wage price spiral, minimum wage laws never come up.
Powell’s lack of understanding between changes to the money supply and changes to purchasing power was put proudly on display:
The inflation that we’re seeing is really not due to a tight labor market. It’s due to bottlenecks, and it’s due to shortages, and it’s due to very strong demand meeting those.
Consider the monetary and fiscal policy since the start of the pandemic. The Fed and Congress created many inflationary programs, like the Paycheck Protection Program or stimulus check programs, which created money for the purpose of giving it to certain members of society. With this new money comes no increase to the supply of goods and services in the economy. But there is an increase to the demand for goods and services. For Powell to say that bottlenecks, shortages and strong demand are causing prices to increase misses the very source of this demand (i.e., increase in money supply), which led to bottlenecks, shortages and price increases.
The Q&A continues with talk of climate change, the Fed’s mandate and much more discussion over economic issues, which is economics in name only. This dance between the Fed and media plays out its continuous loop over and over again, but it is all part of the process; an unapologetic gathering between those who control the media and those who control our money.

Power & Market offers a contrarian take on world events. We favor individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. Connect to Power & Market via twitter and RSS.
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