Thursday, March 22, 2018

Keep the Penny, Ditch the Fed

Great minds think alike.

Following up on my post of yesterday, Should the US Mint Retire the Penny and the Nickel?Dr. Walter Block emails to remind me of his 2001 essay that is pretty much along the same lines: Keep the Penny, Ditch the Fed.

Hey, being only 17 years behind Dr. Block is not a bad thing.

-Robert Wenzel 

Wednesday, March 21, 2018

Finally, My Private Property Society Theory Book is Back in Stock at Amazon

You can order it here:

Federal Reserve Hikes Interest Rates

Under the leadership of new Federal Reserve chairman Jay Powell, as expected, the Fed has announced it raised the interest rates it controls by 25 basis points.

The Feds monetary policy committee, the FOMC, voted to raise the fed-funds rate to a range of 1.5% to 1.75%.

The Fed also indicated they expect to hike interest rates two more times this year and to raise rates three times in 2019.

-Robert Wenzel 

EXPLOSIVE Snowden Documents Reveal: NSA Has Been Tracking Bitcoin Users Since 2013

By Robert Wenzel

Classified documents provided by whistleblower Edward Snowden show that the National Security Agency indeed worked urgently to target bitcoin users around the world — and wielded at least one mysterious source of information to “help track down senders and receivers of Bitcoins,” according to a top-secret passage in an internal NSA report dating to March 2013, reports Intercept.

According to Intercept, the data source appears to have leveraged the NSA’s ability to harvest and analyze raw, global internet traffic while also exploiting an unnamed software program that purported to offer anonymity to users, according to other documents.

Although the agency was interested in surveilling some competing cryptocurrencies, “Bitcoin is #1 priority,” a March 15, 2013 internal NSA report stated.

The documents indicate that “tracking down” bitcoin users went well beyond

How to Find Spectacular Professional Service

By Robert Wenzel

Reader John Higgins emails:
Why don't you create a small course on interviewing and finding an accountant?  I'm interested in getting a small business up and running and want to keep my taxes as low as possible.  But I have no idea what to ask an accountant or what I should be looking for.

Long ago you wrote something about interviewing accountants, but you didn't say what we should be looking for.

There is no need for a video on this. The process I use to hire any professional when I need something important done is very simple.

I recognize that the skill level of professionals in every category is probably shaped something like a normal bell curve. Way to the left there are a real bunch of idiots. In the middle are a lot of dull components and on the right side of the bell curve are truly spectacular creative people.

To find the spectacular, what I do is

Federal Reserve Expected to Raise Interest Rates Today

Under the new leadership of Jay Powell, as chairman of the Federal Reserve, the Fed is expected to raise interest rates today following a two-day meeting of the Fed's monetary policy committee, the Federal Open Market Committee.

The hike is expected to be 25 basis points (.25 of one percent). The current effective Fed Funds rate is 1.45% . The new hike will push the effective Fed Funds rate to 1.70%.

The hike will be the sixth Fed hike since December 2015.

At the time of the 2105 hike, Austrian-lites claimed that the hike back then would result in an immediate recession and the Fed having to reverse the hike. Of course, none of this happened, Two and one-half years later there is still no recession and the likelihood of a recession this year is slim.

In the EPJ Daily Alert, I put the odds of a recession in the second half of 2018 at only 15%. Although at the present time, I am wary of the general stock market.

The chance of a recession in 2019, from my perspective, is about 50/50.

A sampling of the comments at EPJ just before the 2015 hike and immediately after:
The Federal Reserve will not raise interest rates. If they do this debt-ridden world economy will choke. On the higher debt service costs.-November 22, 2015
Robert how can you not look at manufacturing and bulk dry shipping and every single commodity and retail sales and not think recession hasn't begun?-December 15, 2015
[T]his will be the only time they will raise them, then they will need to begin QE4, and most likely lower the rates back down due to the chaos it will create. -December 15, 2015
Raising to 1% would gouge the bubble and all hell would break loose in financial markets heavily addicted to free money. The bust cycle would erupt in earnest.-December 15, 2015

Don't worry Robert, rates will eventually rise and then you will be able to show all of us how absurd our comments were.-November 22, 2015

-Robert Wenzel 

Tuesday, March 20, 2018

Should the US Mint Retire the Penny and the Nickel?

The Wall Street Journal has a feature out discussing the merits of the retirement of the penny and the nickel.

One part of the feature includes an essay by Henry Arraon, Senior Fellow in the Economic Studies Program at the Brookings Institution. He believes the coins should be retired.

He writes:
Pennies and nickels are a nuisance. They cost more to mint than they are worth, thus wasting labor, capital and otherwise perfectly useful metals—zinc, copper and nickel. No U.S. coin has ever been as worthless as today’s penny or nickel. Until 1950, the penny had a purchasing power greater than today’s dime. Until 1974, the nickel had purchasing power greater than the quarter does today.
This got me to thinking, the problem isn't the coins themselves but Federal Reserve money inflating policy that is destroying the value of these coins.

What I would like to see instead of the retirement of the penny and the nickel is for the Fed to stop printing money so that over time as productivity expands in the country the coins become of important value once again.

In fact, I am quite certain, given the productivity gains ahead if regulations don't mess it up, if the Fed stopped printing money, you might at some point be able to buy a good meal or even a decent suit with a nickel.

In other words, the penny and nickel are a nuisance now because of Fed policy destroying the value of the dollar.

Wouldn't it be great if the Fed adopted a policy of "strength for the nickel and penny" by halting their money manipulations?

This would be a great lift for the average citizen versus the banksters who profit from the Fed money manipulations

-Robert Wenzel 

The First Review of My PPS Book Is In: "The Good, The Bad and The Ugly"

Dr. Michael Edelstein emails Circle Rothbard-San Francisco members:

1. A paradigm shift for seasoned libertarians. Great intro for interested statists.

2. The state torn limb from limb.

3. Each chapter addresses one large subject clearly, logically, and scholarly.

4. Fundamental concepts defined crisply, including anarchy, subjectivism, utilitarianism.

5. Incisive, illustrative seminal quotes by major intellectuals, from Thomas Paine to Murray Rothbard.

6. An exciting and engrossing read.

1. Nada, zero.
1. Not even close.
You can order from Amazon by clicking here.

Alternatively, Barnes & Noble  has copies here.

The book is also available from Lulu.

And there are still copies of the hardcover limited edition available, but these are going fast.

Milton Friedman on the Best Argument Ever in Favor of Free Trade

-Robert Wenzel 

(via Cafe Hayek)

Monday, March 19, 2018

HORRIFIC Under New Bank Regulations Municipal Bonds Are Considered a Highly Liquid Asset

This is bad.

The eagle-eyed Bill Bergman spotted the change.

What's going on now is not real deregulation where government is getting out of the bank regulation business but just changes in regulation that benefit banksters and others.

Municipalities are now part of the "others" that benefit, since the new regulations that rank muni bonds as highly liquid will provide incentive for commercial banks to hold them rather than make commercial loans.

-Robert Wenzel 

Steve Bannon is a Cryptocurrency Fanboy

This guy is bullish on Bitcoin.
Steve Bannon is apparently hustling cryptocurrency deals.

We can surmise this because he spoke over the phone with the Greek shipping heir Taki Theodoracopulos who has filed a full report:
Basically the populist movement differs in each country, as it should. According to Steve, central banks are in the business of debasing currencies as the business and political classes are debasing citizenship, making us slaves. He compared the new serfdom to the pre–French Revolution situation, with Google, Amazon, and Facebook living it up in Versailles, urging us to eat cake. The Time’s Up movement he likened to the French Revolution. What will save us from the ogres, always according to Steve, is the new currency. This I found very interesting.

I understand currencies as well as I comprehend modern technology—i.e., zero. I nevertheless am still capable of not thinking of women long enough to concentrate, and here are the results: Entrepreneurs are now selling their own virtual currencies to raise money for software that they say they are building. In return for real money, investors receive digital tokens, similar to Bitcoin. These coin offerings rose out of nowhere last year to become a popular way for start-ups to raise tens of millions of dollars. That leaves bankers out of the loop, and entrepreneurs free to practice free enterprise. Steve Bannon is all for it, and I am also behind it, however little I understand, and it is very, very little. But it makes sense—the freeing of the serfs, that is—so I’m all for it.
Apparently there are already eight virtual currencies making the rounds, and all the Bitcoins in the world are worth around $185 billion. Caramba, as they say in Mexico...
I will be meeting with Steve next week in New York. We might work something out to save the world from the clutches of the greedy ones. I’ll keep you posted.

Yeah well, Bannon may talk a good game about Bitcoin, but as I warned you last week Taki, he is after your cash. Maybe he is talking Bitcoin to get your cash via an ICO (initial coin offering).

Be careful. Here's what Bannon didn't tell you. There are not eight cryptocurrencies, there are hundreds. Last I looked, there were around eight hundred. Even if we buy the delusion that one or two might make it that means for sure there will be some 798 cryptocurrency failures.

It seems Bannon also didn't tell you that the Securities and Exchange Commission is aggressively cracking down on ICOs.

And Taki, think about this: Do you really think the banksters and the rest of the establishment, who make the laws and control the guns that count, are really going to walk away from the game that generates vast riches for them just because of Bitcoin and because Bannon says so?

Not going to happen.

Bannon hustling an ICO deal reminds me of the time when the Saudi billionaire arm's dealer Adnan Kashoggi crashed and burned and started hustling Vancouver penny stocks. I knew his ex- sister-in-law,  boy she could tell some stories.

I wonder who knows the stories about Bannon.

Watch your wallet,  Taki.

-Robert Wenzel 

What Tariffs Will Really Do To Jobs

By Benjamin Powell

President Donald Trump has, unfortunately, decided to deliver on his protectionist campaign promises by imposing tariffs on steel and aluminum. According to the New York Times, the tariff decision appears to have been the impetus behind the resignation of Trump’s top economic advisor, Gary Cohn, on Tuesday.

The president claims tariffs create jobs. His critics say tariffs will destroy more jobs than they create.

Both sides misconstrue the situation. These tariffs won’t

Sunday, March 18, 2018

An Open Letter to Andy Schlafly

Graphic via The China Morning Post
Mr. Schlafly:
I understand that you believe that by punitively taxing Americans who buy imports, Pres. Trump is “putting Americans first.”  What I don’t understand is why you are so timid in applying the logic of your argument.
Shouldn’t the governor of my state “put Virginians first” by punitively taxing Virginians who buy goods and services sold by non-Virginians?  Go further: shouldn’t the Board of Supervisors in my county of Fairfax “put Fairfaxians first” by punitively taxing Fairfaxians who buy goods and services sold by non-Fairfaxians?  Indeed, wouldn’t I magnanimously “put our neighborhood first” were I to threaten to cage or to shoot those of my neighbors who refuse to pay punitive taxes that I impose on their purchases of any goods and services sold by people who live outside of our neighborhood?
If in the off-chance you find these further applications of your logic to be indefensible, can you explain why you defend the application of this very same logic to America?
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030
Addendum: Protectionists never have good responses to such questions. (The reason, of course, is that there are no good responses. Protectionism, like any other illogical proposition, is indefensible with logic.)
The above originally appeared at Cafe Hayek.

The Latest on My PPS Book Saga with Amazon

Okay, Amazon continues to list  "Foundations of Private Property Society Theory: Anarchism for the Civilized Person" as "temporarily out of stock" but continues taking orders for the book here.

But an Amazon bookseller, super_star_seller, has figured out how to game Amazon.

Somehow the seller has managed to get into the top spot on Amazon for the PPS book, even above Amazon!:

Super_star_seller is offering the book for $18.88. The list price is $17.55. But there is more, the seller is charging $9.89 shipping. Unless he is shipping from disputed Syrian war zone territory, I have no idea why it would cost $9.89 to ship the book. This character has every angle gamed and appears to know the Amazon system better than Bezos.

I would advise that you NOT by the book from this seller. The seller reports that you will get the book in a week to 2 weeks, which means he is just going to get it from a distributor and then ship it out to you. He doesn't have only "one left in stock."

If you haven't ordered your copy yet, I would advise using one of these three methods:

Buy it directly from Amazon. My guess is that they will get new stock this week and ship the orders out right away.

Alternatively, I see Barnes & Noble still has copies in stock here.

The book is also available from Lulu.

And there are still copies of the hardcover limited edition available!

-Robert Wenzel 

Why Larry Kudlow Got the Top Economic Position in the White Hosue Despite His Past Heavy Cocaine Use

Larry Kudlow
On Friday, White House chief-of-staff John Kelly went off the record with a group of reporters.

Kelly's comments were leaked. Among his comments, he told reporters why Larry Kudlow's past heavy cocaine use was not a problem as far as Kudlow getting the top economic position in the administration.

Axios reports:
Kelly also said that Larry Kudlow’s past cocaine habit won’t be a problem for his security clearance, as it is public knowledge. Kelly joked that the 1990s were “a crazy time.”
The idea is that since it is public, no one can be in a position to blackmail Kudlow. And if it wasn't general knowledge before, it is now after a recent Brad DeLong post.

Kudlow reports he has been off the white powder for 26 years.

But, Larry still needs to be careful, power is addicting. It will make you say and do things that even a street junkie wouldn't attempt.

-Robert Wenzel