Sunday, April 22, 2018

This is The Original Sin in Accounting That Tries to Distort How You Think About Cash

This is a great discussion (in under three minutes!) by the great Bill Bergman, Director of Research at
Truth in Accounting, on the shady move by some accounting theorists to muddy the difference between physical cash you have in your hand and cash held in a bank.

-Robert Wenzel  

Trump's Desire to Destroy the Value of the US Dollar

Robert Burgess of Bloomberg correctly notes:
If there was any doubt that the White House is actively seeking to weaken the dollar, then a tweet from President Donald Trump Monday should put the issue to rest. Trump wrote on Twitter that “Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!” The Bloomberg Dollar Spot Index promptly fell the most in three weeks.

 By singling out the currencies of China and Russia, Trump is effectively putting the foreign-exchange market on notice that a race to the bottom is on. In Trump’s view, one of the keys to winning a trade war is through a weak currency, which helps make exports more attractive. Last April he grumbled about the dollar, telling the Wall Street Journal, “I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me.” Then in January, U.S. Treasury Secretary Steven Mnuchin said that a weaker dollar is good for U.S. trade. “These weak dollar expectations will remain entrenched in currency markets, especially if the administration continues its mercantilist policy focus,” Viraj Patel, a London-based currency strategist at ING Groep, told Bloomberg News. The Bloomberg Dollar Spot Index is down 6.79 percent since Trump’s election victory and 10.8 percent since his inauguration, a move that some strategists cited as reason for the rally in stocks last year. But Trump is playing a dangerous game with the dollar.  
Of course, what a weak dollar really does is make foreign goods more expensive for Americans. It will be one of the driving factors of the acceleration in price inflation that I expect.

Trump has an incredibly naive mercantilist view on trade that will do nothing but shrink trade and lower the standard of living for us all.

-Robert Wenzel  

Heroic Robotics

A pair of robots has assembled an Ikea chair.

The Economist reports:
In a paper just published in Science Robotics, a group of researchers at Nanyang Technological University, in Singapore, report having managed to get a pair of ordinary industrial robots to assemble most of a piece of flat-pack IKEA furniture.

The chair in question was a model called STEFAN. The robots’ job was to assemble the frame. This requires several pieces of dowelling to be inserted into pre-drilled holes before the parts are pressed together. In total, says Pham Quang Cuong, one of the paper’s authors, 19 components are involved.

The robots were off-the-shelf arm-shaped machines of the sort found in factories around the world, combined with a stereoscopic camera that can produce three-dimensional images. A pair of videos released by the researchers show the robot arms making various mistakes, dropping dowelling on the floor or misaligning components, before succeeding at their task after almost nine minutes of slow, careful work...

the robots needed quite a bit of hand-holding. They were given precise instructions before they started (along the lines of, “Arm 1: take the side piece. Arm 2: grab a dowel. Arm 1: rotate side piece so that hole is pointing up. Arm 2: insert dowel into top-left hole.” And so on.). Before the nine minutes of assembly began, the robots spent a further 11 minutes scanning their environments and planning the movements needed to carry out these instructions, before they tried to execute them

-Robert Wenzel  

Saturday, April 21, 2018

Bitcoin Processor Bans WikiLeaks Shop

Oh yeah, Bitcoin is really the way around government. #FakeClaim #DelusionalClaim

Cryptocurrency payment processor Coinbase has banned the WikiLeaks Shop without providing them with any explanation, reports The Gateway Pundit.

According to Gateway, the WikiLeaks Shop provides t-shirts, hoodies and other merchandise which supports their journalistic efforts. It is run by a valid Canadian business and licensing fees are paid to WikiLeaks, so nothing they are doing is in violation of any laws.

Gateway spoke to someone involved with running the shop who has asked that the news organization keep their identity anonymous for security reasons.  They explained that their crypto payments have been cut off since March 22, just days before WikiLeaks founder had his internet blocked by the Ecuadorian government.

When asked by Gateway why the payments were cut off, the response from Coinbase was that they are “a regulated Money Services Business under FinCEN (, and as part of our responsibility, we are legally obligated to implement regulatory compliance mechanisms.”

FinCEN is the financial crimes enforcement network of the US Department of the Treasury.

-Robert Wenzel  

Bill Murray on Teaching Kids About Taxes

Confusion at the Wall Street Journal on Trade Deficits

Greer, South Carolina BMW plant
Here’s a Don Boudreaux letter to the Wall Street Journal:

Greg Ip writes that “The U.S. runs a trade deficit because it consumes more than it produces while its trading partners, collectively, do the opposite” (“How the Tax Cut President Trump Loves Will Deepen Trade Deficits He Hates,” April 19).

Not so.  A U.S. trade deficit does not imply that the U.S. consumes more than it produces (although the unfortunate conventional description of trade deficits as resulting from shortfalls of domestic savings over domestic investment fuels this fallacy).  What a U.S. trade deficit does imply is that global investors find the U.S. to be an especially attractive place to invest.  With the U.S. receiving a net inflow of global capital, the size of the U.S. capital stock grows.  In turn, production in the U.S. rises to heights that it would otherwise not reach.

An example will expose the fallacy of Mr. Ip’s claim.  When BMW built its automobile factory in Greer, SC, in the 1990s the U.S. trade deficit rose as a result of Germans not spending on American exports the dollars that they invested in the factory.  But this investment was neither evidence of, nor a cause of, the U.S. producing less than it consumes.  This German investment caused more cars to be produced in the U.S.

At the very least, this increased production of cars in the U.S. offset the decreased production of particular American exports caused by the higher U.S. trade deficit.  But in the long run this foreign investment in the U.S. raised total production here by increasing the amount of productive capital in operation on our shores.

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
The above originally appeared at Cafe Hayek.

The Unequal Distribution of Talent

-Robert Wenzel  

Friday, April 20, 2018

Turkey Will Repatriate All Its Gold Held in the US; But Why?

This morning, the government of Turkey announced that it has decided to repatriate all its gold stored at the New York Federal Reserve bank and have it delivered it to the Istanbul Stock Exchange.

According to the latest IMF data, Turkey’s gold reserves are estimated at 591 tons, worth just over $23 billion. This makes Ankara the 11th largest gold holder, behind the Netherlands and ahead of India.

Turkey's President Erdogan has taken a tough stance against the US dollar.

"Why do we make all loans in dollars? Let’s use another currency. I suggest that the loans should be made based on gold,” Erdo─čan said during a speech at the Global Entrepreneurship Congress in Istanbul on April 16, according to Hurriyet.

He added that “with the dollar the world is always under exchange rate pressure. We should save states and nations from this exchange rate pressure. Gold has never been a tool of oppression throughout history."

Gold bugs shouldn't hail this as a government coming to its senses. Money supply in Turkey is growing at a pace in excess of 20% and Erdogan has been forceful in preventing the Turkish government from aggressively raising rates to halt the money growth explosion.

More than holding Turkey's gold in reserve to back up the Turkish currency, the lira, Erdogan may want to hold the gold in the homeland so that he can sell it.

-Robert Wenzel  

(Sources: IMF, Hurriyet, ZeroHedge, TradingEconomics)

Is Trump Going to Interfere With Federal Reserve Monetary Policy?

Can Trump get into Jay Powell's head.
Sam Fleming at the Financial Times notes:
The Trump administration is proving more willing to comment on Federal Reserve rate moves after saying little about central bank policy in its first year, in a development that risks unsettling financial markets.

Donald Trump has never made a secret of his appetite for cheap borrowing costs, calling himself a low-rates person. But in his first year as president his administration shied away from discussing the central bank’s decisions. This was partly under the influence of Gary Cohn, the former National Economic Council director, who understood the market sensitivity of its work.

Recently, officials have become more vocal. Peter Navarro, the president’s trade adviser, has made perhaps the most direct intervention, telling CNBC this month that he was “a little puzzled when the Fed announced three rate hikes before the end of the year”, arguing there was no inflation to speak of in the US economy. This week, Mr Trump used Twitter to accuse Russia and China of devaluing their currencies while the US “keeps raising interest rates”, saying the situation was not acceptable.
Trump's economic advisers and Trump himself may comment more about Fed policy but it is difficult to see how they will have much influence unless Trump, or someone on his team, can somehow get into the head of Jay Powell the way Richard Nixon got into the head of Arthur Burns by using Alan Greenspan.

-Robert Wenzel  

How Will the Supreme Court Rule on Across the State Border Online Sales Tax Pain?

Will the Supreme Court rule that online retailers have to collect sales taxes in states where they have no physical presence? In other words, if you live in New York and buy something online from a seller in  Alaska are the Supremes going to force the Alaska seller to collect an online tax from you and pay it to New York?

South Dakota v Wayfair is before the court and it will determine the outcome.

According to The Economist, going into the South Dakota v Wayfair hearing, conservative Justices Neil Gorsuch, Clarence Thomas and Kennedy all seemed inclined to rule in a way that would result in cross-state border online taxes. Conservative?

But the oral argument in the case added a surprise fourth justice to that list: Ruth Bader Ginsburg, the court's fiercest liberal. In her questioning of George Isaacson, the lawyer for several online stores including Wayfair, a homewares company, she repeatedly called an earlier SC case  Quill v North Dakota “obsolete”. Requiring an “out-of-state seller to collect tax on goods shipped in-state” is “equalizing sellers”, she said. Yes, equalizing consumer tax pain by requiring more pain for consumers is her apparent perspective on balancing things out.

It would take five justices to overrule Quill and require states to force out-of-state retailers to step up and collect taxes on online sales. It appears at least four are set to vote that way

 Justice Stephen Breyer may hold the key vote but get a load of the comment he made.
“When I read your briefs, I thought absolutely right”, he told the lawyer for South Dakota. “And then I read through the other briefs, and I thought, absolutely right. And you cannot both be absolutely right.” 
With a comment like this, there is no way to know how he will vote.

 The Supreme Court will hand down its tax pain decision in May or June.

-Robert Wenzel  

Thursday, April 19, 2018

Why Are Credit Card Numbers on the Back Now?

By Jaime Dunaway

If you’ve recently received a new credit card, you may have noticed a change. Perhaps what was missing caught your attention. A growing number of credit cards have a sleek design on their faces without bulky, raised account numbers running along the bottom. Don’t panic. It’s not a scam. Flip the card over, and you’ll see that the numerals have been moved to the back with the rest of the card information.

It’s a trend that has taken off across the industry in the past few years, from elite cards like American Express Platinum to low-cost accounts like Capital One 360. Although it’s difficult to determine exactly when this style started taking off, credit card companies have increasingly modeled their cards in this fashion as they search for new ways to make users feel confident and look classy while using their cards, a spokesperson for credit card manufacturer CPI Card Group told Slate.

The biggest reason for this innovation might be that physical numbers are no longer needed for a card to function. Years ago, numbers had to be raised on the front of the card; when it ran through a card reader, an imprinted image of those numbers would appear on a slip of paper for customers to sign. But traditional magnetic strip cards, which required a customer’s signature for security reasons, have largely been replaced by chip cards that encrypt cardholder information into a unique code that is difficult to copy. The microchip’s added layer of protection renders embossed numbers unnecessary, allowing credit card makers to issue cards that have a decidedly different look.

Read the rest here.

More Proof Trump is on Steroids When He Works for the Military-Industrial Complex

The Trump administration just rolled out an overhaul of U.S. arms export policy on Thursday aimed at expanding sales to allies, saying it will bolster the American defense industry.

According to Reuters, companies that stand to benefit from the new policy most include Boeing Co  and the other top U.S. defense contractors, Lockheed Martin Corp, Raytheon Co, General Dynamics Corpand Northrop Grumman Corp.

The planned revision of U.S. weapons export policy also includes a new drone export policy that allows smaller lethal drones that can fire missiles and surveillance drones of all sizes will soon become more widely available to U.S. allies.

Trump has pressed foreign governments to buy more U.S.-made weapons in nearly every call he has had with a head of state of major allies, a State Department official said earlier this week, reports Reuters.

Aside from the questionable idea of a US president promoting any US products to foreign leaders in what are likely give and take discussions, the idea of promoting weapons to governments is completely reprehensible. Not exactly the way to bring peace and harmony to the world.

Once again we see the authoritarian-militaristic perspective of Trump.

-Robert Wenzel  

Venezuela Price Inflation Hits a New Annual Rate of 18,926%

Try and plan your budget in this economy.

Via Prof. Steve Hanke
-Robert Wenzel  

Amazon Filed Patent to De-Anonymize Bitcoin Transactions

Dark City Crypto reports that in 2014, Amazon applied for a patent that would help de-anonymize cryptocurrency transactions. They would then sell that information to law enforcement and government agencies. Although Bitcoin was never meant to be totally private, the patent looks to remove almost all levels of anonymity from cryptocurrency transactions if possible.

The patent explains a “streaming digital marketplace” where data points form different sources are used to pinpoint users identities.

The idea that cryptocurrencies are some kind of move away from authoritarianism is absurd. They are the most trackable currency.

-Robert Wenzel  

The Evil Supreme Court Decision on Eminent Domain

Don Boudreaux writes:
In what is perhaps the worst U.S. Supreme Court decision in my lifetime (although here is one of a handful of competitors for that awful honor), the highest court in the land sunk to the low depths at which typical politicians slither.  The Court in Kelo did so by distorting the plain meaning of the U.S. Constitution into a grant of power to governments to seize private property whenever governments assert that they’re doing so for good reasons.
Also from Boudreaux:
On this tenth anniversary of Kelo v. City of New London – a detestable monument both to “Progressives'” contempt for the rights of ordinary people and to conservatives’ mindless habit of demanding judicial restraint – I offer here some links specially selected for this anniversary of that decision.
Ilya Somin, a brilliant GMU colleague over at the law school, penned in yesterday’s Wall Street Journal this excellent account of Kelo and its aftermath. (gated)  (See also here.  And here.)  A slice: 
Although Kelo was a painful defeat for advocates of property rights, it led to important progress. The ruling generated an enormous backlash: More than 80% of the public disapproved of the court’s decision. The opposition cut across racial, partisan and ideological lines. Kelo was denounced by such unlikely bedfellows as Ralph Nader, Rush Limbaugh and the National Association for the Advancement of Colored People....

Richard Epstein writes today in National Review.  Here’s his opening paragraph:Ten years ago, on June 23, 2005, the United States Supreme Court dropped a judicial thunderbolt in Kelo v. City of New London. By a narrow five-to-four margin it rejected a spirited challenge that Susette Kelo and her neighboring landowners had raised against the ambitious land-use development plan put forward by the City of New London, Ct. The formulaic account of the holding is that a local government does not violate the “public use” component of the Constitution’s takings clause — “nor shall private property be taken for public use, without just compensation” — when it condemns property that will be turned over to a private developer for private development. Under the logic of Justice John Paul Stevens, so long as there is an indirect promised public benefit from the development process, the public-use inquiry is at an end, and Ms. Kelo can be driven out of her pink house by the water.

The trailer from the just released movie:

-Robert Wenzel  

The Truth About "Wild, Wild Country"

-Robert Wenzel  

Wednesday, April 18, 2018

Help-Wanted Ads Point to Boston, D.C. Area as Top Sites for Amazon HQ2

By Jeffry Bartash

Boston and the greater Washington, D.C. metro might be the most likely places for Amazon to build its second headquarters — if help-wanted ads are any indication.

One of key determining factors for Amazon  is expected to be the available supply of well-educated workers. Amazon wants to be near a major metro with a “strong university system” so it can fill thousands of jobs for computer engineers, marketing types, managers, accountants and the like.

Using online ads as a guide, the Conference Board economic research group found that Amazon’s listings for those sort of jobs are growing the fastest in the Boston and Washington, D.C. metros. Amazon has short-listed not just Washington D.C. but also neighboring Northern Virginia and Montgomery County, Maryland for the second headquarters.

Only the New York City region has more online listings in 2017 for the kind of jobs Amazon is expected to create at its second headquarters, but those listings barely grew last year.

Read the rest here.

Will a Certain Type of Private Property Protection Prevent a Certain Kind of Artificial Intelligence Abuse?

It certainly could.

Jordan Peele and BuzzFeed teamed up to make the below fake youtube video using AI to create a statement by "President Obama".

According to Verge:
The video was made by Peele’s production company using a combination of old and new technology: Adobe After Effects and the AI face-swapping tool FakeApp. The latter is the most prominent example of how AI can facilitate the creation of photorealistic fake videos. It started life on Reddit as a tool for making fake celebrity porn, but it has since become a worrying symbol of the power of AI to generate misinformation and fake news.
Yes, we’ve had software to create fakes for a while, but AI makes the whole process easier. Researchers have developed tools that let you perform face swaps like the one above in real time; Adobe is creating a “Photoshop for audio” that lets you edit dialogue as easily as a photo; and a Canadian startup named Lyrebird offers a service that lets you fake someone else’s voice with just a few minutes of audio. Technologist Aviv Ovadya summed up the fears created by this tech, asking BuzzFeed News.
Obviously, these type of fake AI creations could lead to all kinds of problems.

In a Private Property Society, the solution would be simple: Property owners could prohibit the use of images and audio of others without their permission.

Of course, there could be wacko property owners who would prefer living in a wacko world where truth could not be told from fiction, sort of a circus world of distortion mirrors. Good luck if you want to spend most of your time on that kind of property.

Be careful, the alternative is government determining "trusted news sources," which is what is really being promoted in the video. Listen to the end of the video carefully.

-Robert Wenzel  

Larry Kudlow Throws Nikki Haley Under the Bus, Haley Throws the Bus Back at Kudlow

On Sunday,  U.N. Ambassador Nikki Haley said during an appearance on “Face the Nation” that Treasury Secretary Steven Mnuchin would be announcing new sanctions on Monday directed at companies associated with Syria’s chemical weapons program, “if he hasn’t already.”

But Monday came and went without an announcement.

Larry Kudlow, director of the National Economic Council, on Monday told reporters during a briefing in Florida that Haley “got ahead of the curve” when she said the U.S. would be slapping new sanctions on Russia on Monday.

Throwing Haley under the bus, he added, “There might have been some momentary confusion about that.”

Upon learning of Kudlow's comments, Haley threw the bus back at Kudlow.

She said in a statement to Fox News: “With all due respect, I don’t get confused.”

Kudlow called Haley to apologize Tuesday afternoon.

The back story, according to AP, is that a dispute between Haley’s team and the White House had been playing out largely behind the scenes since Haley’s initial comments. The White House had been struggling to explain Haley’s remarks amid reports that President Donald Trump put the brakes on the new sanctions.

Three senior administration officials said there were several attempts to get Haley to back off or clarify her comments, but she refused. That's when Kudlow made the comment that there was some momentary confusion on Haley's part.

-Robert Wenzel  

Walter Block on Wenzel's New PPS Book: "A Totally New Form of Anarchism"

Here's Part 1 of my debate with Dr. Walter Block on my new book, Foundations of Private Property Society Theory: Anarchism for the Civilized Person.

In this part, he states that the perspective advanced in the book is a:

 "Totally new form of anarchism."

With regard to Chapter 3, he says:

"The best short introduction to why we need society."

With regard to Chapter 5 he says:

"The best short critique of utilitarianism."

Overall he says, the book:

"Has the courage to take on critics."

You can order the book 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.

Is the IRS in Murray Sabrin's Corner?

With the online filing crash at the IRS, Murray gets to run his Tax Day money bomb for one more day!

Murray is a solid libertarian. It would be fun to see him in the Senate.

He is anti-war.



Anti-big government spending.

More here.

-Robert Wenzel