Thursday, March 22, 2018


By Don Boudreaux
We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs.
Forget the live question of whether or not we Americans have a trade deficit with Canada.  Forget even the deep ignorance revealed by anyone who draws any conclusions whatsoever from the existence or not of a bilateral trade deficit.  Instead, notice Trump’s utter cluelessness in – in a single sentence – his complaint of the flow of capital from both Mexico and Canada to the U.S. (that is, the U.S. trade deficits with Mexico and Canada) and his complaint of the flow of capital to Mexico and Canada from the U.S. (the alleged “massive relocation of companies”).
Anyone who says such a thing as Trump here said should be disqualified for life from having any influence whatsoever over trade policy.  Such a person’s knowledge of trade is as laughably deficient as is, say, a flat-earther’s knowledge of geography or a faith-healer’s knowledge of cardiology.  And yet Trump is about to put his total ignorance into action by imposing punitive taxes on millions of Americans who buy steel and aluminum.
The above originally appeared at Cafe Hayek.

Rand Paul Explodes

With Congress teetering on the brink of its third government shutdown in three months, Sen. Rand Paul still hasn't seen the details of a new budget bill that's likely to be 1,000 pages long — and he's not pleased, reports McClatchyDC.

In an interview with McClatchy he said, this is a "rotten, terrible, no good way to run your government."

"I ran for office because I thought the Obama spending and trillion dollar annual deficits were a real problem for our country and now Republicans are doing the same thing.

“So I'm giving them the same grief I gave Obama."

Go Rand, let them have it!

-Robert Wenzel 

US Debt Climbs By a Trillion in Six Months!

Welcome to Trump world, where you borrow until you can't anymore.

It has taken a little more than six months for the U.S. national debt to grow by a trillion dollars, a quick clip that has little precedent over the nation’s recent history, writes Robert Schroder.

Last week, the debt hit $21 trillion for the first time, rising from the $20 trillion mark it notched on Sept. 8. The debt is guaranteed to go higher, with President Donald Trump having signed a debt-limit suspension in February, allowing unlimited borrowing through March 1, 2019.

The Committee for a Responsible Budget projects trillion-dollar deficits returning permanently by next year, and debt exceeding the size of the economy within a decade.

Please note: This isn't about screwing kids in the future. It is about us being screwed now. The borrowing will crowd out the private sector, meaning savers will end up buying Treasury debt instead of financing productive private sector debt or the Fed will monetize the debt by buying it and putting further price inflation pressures on the economy. Either way, we are going to get screwed in the here and now.

-Robert Wenzel 

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 

Saturday, March 17, 2018

Nancy MacLean Continues to Embarrass Duke, but Exposes its Double Standards

By George Leef

Last year, Duke University History Professor Nancy MacLean became one of the country’s best-known academics for her book Democracy in Chains. That is not, however, to say that her book was so praiseworthy that it made her famous. Quite the opposite—Democracy in Chains was excoriated by academic critics for its blatantly dishonest attack on the thinking and indeed the character of the late James M. Buchanan, the 1986 Nobel Prize winner in economics.
MacLean sought to depict Buchanan as a closet racist whose intellectual breakthrough of what is now called “public choice” theory was actually meant to help segregationists ward off the integration of public schools in the South. While her conclusions were embraced by most leftists because they cast such an ugly shadow over the intellectual opponents of big government, scholars who have actually read Buchanan objectively and many who knew him (he died in 2013) blasted the book with salvo after salvo of careful criticism.
I noted a few of those attacks in this Forbes article, in which I lamented that the federal government had helped to underwrite MacLean’s shoddy “research.” Especially telling was this review by a faculty colleague at Duke, Professor Michael Munger, who found it strange that she would write a book on Buchanan without bothering to discuss her thoughts about him with leading public choice scholars who had first-hand knowledge of his life and work.
Read the rest here.

The Brad DeLong Attack on Larry Kudlow, Part 2

Frist, we had Berkely professor Brad Delong speculating as to whether Larry Kudlow's bad news drug life of more than 25 years ago had damaged his brain.

Now, DeLong has launched another drive-by shooting Kudlow's way.

He writes:
There has long been discussion of whether Larry Kudlow believes what he says. (1) Is he one of the professional Republican commentators like Stephen Moore, James Glassman, and Kevin Hassett who knows that what he says is wrong, but says it because it is just a game—that feeding one's readers and viewers something that is not bullshit is simply not a goal, and telling the truth will serve when it does not conflict with one's goals? Or (2) is he just not aware of the world outside him, in the sense in which people are usually oriented toward reality?

Well, why not both?...

I do see a sharp contrast between the Kudlow of the 1980s and the Kudlow I have run across since, say, 1992: the later Kudlow seems to know much less, and to have a much more difficult time figuring out that he needs to alter his range and rhythm whenever he is speaking to an audience that is neither Fox News viewers nor right-wing investors who are easy prey to affinity fraud...
Look, it does appear that Kudlow has joined the Baghdad Hasset cheerleading team (He is now forecasting 4% to 5% economic growth). DeLong does have a point here but DeLong continues to be pretty vicious when making his point. Kudlow, on the other hand, with his making himself an all too easy of a target for DeLong.

-Robert Wenzel 

My PPS Book On Sale!

Well, this is interesting.

First, buyers of my new book, Foundations of Private Property Society Theory: Anarchism for the Civilized Person, broke Amazon's algorithm by buying more books than the Bezos equations thought would be bought, forcing Amazon to list the book as "temporarily out of stock."

Now, Amazon is listing Foundations at a 16% discount. My experience is that these discounts don't last, so grab it while you can. At the same time, Bezos is giving the discount, the book is still listed as "temporarily out of stock," but, there are plenty of books in the system so if you order at the discount price, it will probably ship by the end of the upcoming week at the latest.

To order from Amazon click here.

Alternatively, I see Barnes & Noble still has copies in stock but their discount is gone.

The book is also available from Lulu.

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

-Robert Wenzel 

Larry Kudlow Begins to Kiss the Trump Ring

Fortune reports that the new director of the National Economic Council, Larry Kudlow, on Wednesday backed off earlier criticism of Trump’s tariff plans, saying he is “on board” with the steel and aluminum duties Trump imposed.

Kudlow knows better. Tariffs always lower the standard of living for countries that implement them.

In Kudlow, we may be getting the second coming of Herbert Stein on steroids.

Stein, who was chairman of the Council of Economic Advisers under Richard Nixon and Gerald Ford, knew that price controls would only mess up the economy, but in his book, Presidential Economics, he attempted to justify his support for Nixon price controls when he wrote he was caught up in the "excitement" of the moment:
I had spent much of my career arguing against wage and price controls, even in World War II. And here I was, economic adviser to the President ...I was an active participant in the most exciting event in the record of economic policy...

-Robert Wenzel 


Now Kudlow is tweeting out nonsense about Trump's tariff "strategy":

Bitcoin's ‘Death Cross’ Looms

This won't mean much to Bitcoin buyers who seem to think investment and trading principles don't apply to Bitcoin, you see Bitcoin levitates and those who bought Bitcoin at $19,783 are just "down a bit," but, as Bloomberg notes, Bitcoin’s 50-day moving average has dropped to the closest proximity to its 200-day moving average in nine months. Crossing below that level -- something it hasn’t done since 2015 -- signals fresh weakness to come for technical traders who would dub such a move a "death cross."

Not all technical analysis is sound but analysis that measures buying momentum and exhaustion, such as the death cross, does tell us about current buying exhaustion, something I  warned about when Bitcoin was trading at $15,000, I wrote on December 21, 2017 in the EPJ Daily Alert:
Over the last two weeks, Bitcoin has climbed to near $20,000 and is now trading in the $15,500 range. This trading strikes me as significantly different from the trading in the period just before this.

Among the four potential factors that I have listed that could bring the price down was buying exhaustion.

Since e-currency buying is completely driven by new buying rather than any underlying fundamentals, once the buyers stop coming the price will collapse. Current trading suggests that this may be exhaustion price activity. There may be some added buying coming in over Christmas as "bitcoin geniuses" sit around the Christmas tree telling their friends and relatives how easy it is to make money in Bitcoin but that could be the last upward draft. But I am not waiting around. It is time to take profits.

I identified the new "American run" in Bitcoin at around $4,000 anyone who was aggressive enough to buy at that time has very huge profits. The same thing with my mention of ethereum at $250 and again at $400,  It is now trading at $790.

There may be more upside in the future but e-currency is a very high-risk investment in the first place and it is now getting riskier. I'm out.
The current exhaustion in Bitcoin buying is now even more serious than when I took profits just before Christmas.

One technical analyst,  Paul Day of Market Securities Dubai Ltd., says further downward action could take Bitcoin down another 76 percent to $2,800 and that could very well be the case.

But, further, underneath this technical action, there are weak fundamentals largely based on the likelihood that more government regulation is coming that will hamper Bitcoin.

Look out below.

-Robert Wenzel 

Friday, March 16, 2018

A Letter to the White House Trade Alchemist

Peter Navarro
By Don Boudreaux

Here’s another letter to White House trade alchemist Peter Navarro – an economist seemingly innocent not only of any understanding of economics, but also of the rules of logic and of the most basic of facts.
Dr. Navarro:
During your CNBC interview this morning you justified the Trump administration’s imposition of punitive taxes on American purchasers of imports by repeating the assertion that the U.S. trade deficit is being driven upward by foreigners “buying up our assets.”  I’ve a series of questions for you.
(1) Do foreign purchasers of assets from Americans force Americans to sell these assets?  If not, why do you assume that such purchases are harmful to Americans?  And do you believe that, if Trump’s effort to reduce the U.S. trade deficit succeeds, the resulting reduced foreign demand for assets currently owned by Americans will somehow not reduce the value of Americans’ asset holdings?  Can you name any other goods or services whose prices will not fall if government succeeds in artificially reducing the demand for them?
(2) You repeatedly implied that assets owned by Americans are “our assets” – as in, ours collectively.  You spoke of “American factories” and “American real estate.”  Do you therefore believe that the assets that you, personally, own belong not to you but to “America” or to ‘us’?  If you believe that your assets really belong to “America” or to ‘us’ rather than to you personally, do you therefore embrace the label “socialist”?  (For that is exactly what you are if you hold such a belief.)  If, in contrast, you believe that your assets belong to you rather than to “America” or to ‘us,’ can you tell me what right “America” – in the form of some set of U.S. government officials – has to so object to your freedom to sell your assets to foreigners that it should shrink the size of the market for your assets by artificially reducing foreigners’ demand for your assets?
(3) Do you believe that the amount of capital in the world or in the U.S. is fixed?  If so, how do you explain the past 200 years of economic growth?  If not, why do you care if foreigners buy from Americans some assets given that Americans might well use the proceeds from these sales to create other, more valuable assets – assets that they would be unable to create absent these sales?
(4) Are you aware that inflation-adjusted private nonresidential fixed investment in the U.S. has since the U.S. began running annual trade deficits rather steadily increased, thus increasing the U.S. capital stock and, with it, worker productivity?  And did you know that, while the U.S. population is today 48 percent higher than it was in 1977 (when the current U.S. run of annual trade deficits began), real U.S. household and nonprofit net worth is today 255 percent higher than it was in 1977?*  If you’re aware of these facts, how do you defend your insistence that a steady run of annual U.S. trade deficits transfers asset ownership from Americans to non-Americans?  If you’re unaware of these facts, what business have you making public pronouncements about trade policy?
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
* See these data.  The data at this link are, I think, in nominal dollars.  So I adjusted the fourth-quarter 1977 net-worth dollar figure at this link to 2017 dollars in order to come up with the calculation in the letter.  (In Q4 1977, total net worth was, in 2017 dollars, $27,850.98; in Q4 2017 it was $98,745.54.)
The above originally appeared at Cafe Hayek

Trump Beat Economists to This One: His Completely New Justification for Tariffs

Sad the neocon Bill Kristol gets to look sane next to Trump. He writes:
Speaking at a Republican fundraiser Wednesday in Missouri, President Donald Trump criticized Japan for unfair trade practices, and offered this example:

"It's called the bowling ball test; do you know what that is? That's where they take a bowling ball from 20 feet up in the air and they drop it on the hood of the car. And if the hood dents, then the car doesn't qualify. Well, guess what, the roof dented a little bit, and they said, nope, this car doesn't qualify. It's horrible, the way we're treated. It's horrible."

No one familiar with Japanese trade practices or the auto industry seemed to know what the president was talking about. My colleague Michael Warren found video of a David Letterman gag from a couple decades ago, which involved dropping a bowling ball onto a car from the roof of a building. Perhaps President Trump conflated an episode on a late night variety show with international economic policy?

-Robert Wenzel 

Why the Larry Kudlow Appointment as Trump's Top Economic Adviser May Mean Lower Taxes for Investors

By Robert Wenzel

President Trump’s appointment Wednesday of supply-side economist Larry Kudlow as head of the National Economic Council could result in a big tax break for investors. There is no more passionate advocate of having the president issue an executive order to index capital gains for inflation than Kudlow, reports John Fund.

Fund writes:
President Trump clearly wants to cut taxes again. He recently told an audience in the White House Rose Garden that “we’re going to do a phase two” tax cut. White House aides tell me he is considering taking matters into his own hands with a capital gains tax cut that wouldn’t require a tortuous months-long legislative process...
Kudlow laid out an example of what he meant in a CNBC column last August: “You invest $1,000 and, after ten years, you sell that investment for $1,200. But if inflation averaged 2.5 percent in that period, the $1,200 you receive will be worth less in real terms than the $1,000 you invested. And yet, under current law, you will pay a tax on your $200 capital gain.”
In other words, the capital gains tax paid on such investments can easily exceed 100 percent once inflation is factored in.
In his CNBC column, Kudlow noted that former Treasury Department economist Gary Robbins has calculated that about one-fourth of capital gains revenue stems from taxing inflationary gains. Indexing all parts of the tax code to inflation would end that disparity.
I'm all for tax cuts and indexation that lowers taxes but there is more to the tax cut equation and that is government spending. If you don't

Republicans Want an Internet Sales Tax

Many House Republicans are pressing GOP leaders to attach legislation to the omnibus spending bill that would let states collect sales tax from remote online retailers, reports The Wall Street Journal.

From a WSJ editorial:
The Supreme Court’s 1992 Quill decision forbids state and local governments from requiring businesses without a “physical nexus”—that is, property or employees—to collect sales tax. States complain that this restriction puts brick-and-mortar stores at a competitive disadvantage and reduces government revenues... 
The real reason some Republicans in Congress are now rushing to pass their kill Quill bill is that they want to get credit for axing the Court’s 1992 decision with retailers at home. But stuffing such an important policy change inside a huge spending bill with little debate would be a political scam. Raising taxes on small business and consumers won’t be a good look for Republicans in November, nor an inducement for investment and growth.
-Robert Wenzel 

Thursday, March 15, 2018

It's Out: "Foundations of Private Property Society Theory: Anarchism for the Civilized Person"

By Robert Wenzel

My new book, "Foundations of Private Property Society Theory: Anarchism for the Civilized Person" is out.

In the book, I consider ideas on how a civilized anarchist society is currently justified and how it is believed such a society could develop. I reject much of the current thinking on the topic.

In my book, I reject natural rights theory and also utilitarianism. I use as a guide Hayek's observation that subjectivism is at the root of every important advance in economic theory and apply this type of extreme subjectivism in an attempt to understand how a private property society could develop.

I consider how culture would work in a PPS and how rules and laws could be developed without an overriding ruling body or legal theme that everyone must abide by.

I consider punishment in a PPS and reject the necessity and possibility of general rule guided proportional punishment.

I also consider how police-type security and "national" defense might develop in a PPS in a manner that is different from the insurance model advanced by Morris and Linda Tannahill and adopted by many libertarians.

I also reject the necessity of the labor mixed with land rule of homesteading promoted by many libertarians.

In short, there is a lot here that is very different from current libertarian thinking about anarchy.

There are two editions of the book that are available.

There is a special hardcover limited edition of 500 copies.

There are available at the present time 100 copies of this limited edition for $60.00 each. I will personally sign these copies and number them 1/100, 2/100 etc. and I will personally inscribe the copies to buyers, just right in the instructions how you want your copy(ies) inscribed.

To order a copy of the limited edition, click here.

Also, a standard paperback edition is available for $17.55.

It available to order from local booksellers and also from Amazon.

To order from Amazon click here.


 Amazon is temporarily out of stock but you can still order from them now and they should have more copies in a couple of days.

Alternatively, I see Barnes & Noble still has copies in stock and at a discount!

The book is also available from Lulu.

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

Russian Plane Loses 3 Tons Of Gold On Takeoff

A Russian plane with ten tons of gold, platinum and diamonds lost a significant part of its cargo upon taking off from an airport in the Russian region of Yakutsk, famous for its rich natural resources and diamond deposits.

The Nimbus Airlines AN-12 cargo plane hit problems during takeoff, resulting in a breach in the hull that allowed its cargo to fall all over the runway.

According to the Siberian Times, police sealed off the runway and a vast search is underway.

Local media reports that the bars seen in the photo are indeed gold, platinum and gems. TASS cited officials from the Interior Ministry as saying that some 172 gold bars weighing about 3.4 tons were recovered.

The technical engineers at the Yakutsk airport who prepared the plane for takeoff have been detained.

-Robert Wenzel 

(via ZeroHedge)

Stockman: Kudlow ‘Is Going To Help Trump Sleepwalk Right into a Tremendous Fiscal Collision’

David Stockman is absolutely correct here. The ine thing, though, is that the other names bandied about for NEC were much worse. Larry is Trumpian economic policy status quo if there is such a thing.

-Robert Wenzel 

Wilbur Ross' Ex-Wife Just Went Off the Deep End Defending Ross' Advocacy of Traiffs

Another Don Boudreaux letter to the New York Sun:
In one of the most astonishingly fallacious assertions in an essay teeming with astonishingly fallacious assertions, Betsy McCaughey writes “Critics claim tariffs will raise steel prices.  That’s questionable.  The opposite is more likely to happen, industry experts suggest.  Tariffs will shift demand to domestic steel, enabling plants here to operate closer to capacity.  That will bring down the unit price of American-made steel – not raise it.  That’s Economics 101” (“Case for Trump Tariffs Centers on the Danger Of a Genuine War,” March 13).
Ms. McCaughey – like her ex-husband, Wilbur Ross – must have failed Economics 101.  Here are relevant lessons that are really taught in Economics 101 (a class, by the way, that I teach every semester at George Mason University).  First, shielding producers from competition makes the outputs they produce more scarce, thus raising prices.  Second, if it is true (as Ms. McCaughey asserts) that untapped economies of scale are available by expanding outputs, and that such expansions will lower prices and enable (in this case) American steel and aluminum producers to profitably charge lower prices than they now charge, then American steel and aluminum producers will so expand their outputs without any government prodding.  So why have they not yet done so?
That is, if what Ms. McCaughey asserts about the current existence of untapped economies of scale is true, then the men and women who currently run American steel- and aluminum-producing firms should not be rewarded with protection from competition but, instead, fired for gross incompetence.
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
P.S. Bureaucrats at the Commerce Department – cited by Ms. McCaughey as “industry experts” – are, well, not such experts.