Sunday, April 18, 2021

More on Friedman: Good Guy or Bad Guy?

Milton Friedman

I see my post, Conservatives Discover Milton Friedman Not the Hero They Thought He Was, has gotten quite a bit if feedback which I want to discuss further.

Dominick writes in the comments:

Don't agree at all. Everything in context, RW. Withholding was proposed as a WW 2 "war time" emergency measure; the all "volunteer" army was to replace the most anti-libertarian of policies: military slavery/draft; school vouchers provided some choice in schooling (some choice is better than no choice) and is NOT necessarily (logically) connected to government-determined curriculum or teacher qualifications; and Friedman's monetary rule (no discretionary power for the Fed; simple automatic 3% increase) neuders the Fed looks positively benign compared to what progressives, conservatives (and even some libertarian/Austrians) propose. Friedman may not have been a radical libertarian (and he was no Austrian) but to call him a "very bad guy" because his policy proposals were not radical enough is a mistake and a variation of the Demsetz Nirvana fallacy. Even Mises--and especially Hayek--fail the absolute purity test on policy. And in the case of Mises and Hayek....they (unlike Friedman who was not an Austrian by training) had no excuse...

RW response:

Well, it was mentioned in the video I posted that it was a WW2 "war time" emergency measure.

Without trying to sound like a smart alec, World War 2 is over and the withholding tax still exists. This is the problem with technocrats like Friedman they devise "temporary" measures that go on and on. It was a very bad move by Friedman.

If everyone had to scramble up all the taxes they owed on one day, April 15, taxes would be a lot lower.

Friedman helped the state enormously here.

Further, why should Friedman get a pass even if it was only to help finance World War 2? Are we actually supposed to cheer methods created to expand a horrific war where hundreds of thousands of American soldiers were killed for no good reason?

Yes,  the all "volunteer" army was to replace the most anti-libertarian of policies: military slavery/draft but if Friedman would have kept his mouth shut about paying free-market wages for soldiers, the draft would have ended anyway and the military would have had to have shrunk dramatically in size. Friedman gave them the military the method by which it could maintain its vast outposts around the world.

As for "school vouchers provided some choice in schooling (some choice is better than no choice)," this is still about leaving the government in control of what is education. Why would any libertarian push this? This can get as much out of control as public school education. I don't see how it can be stated that it "is NOT necessarily (logically) connected to government-determined curriculum or teacher qualifications." 

Is the government really going to allow vouchers to be used by me to teach my views on climate change, political correctness, etc.? Where is this being allowed now?

Friedman is a monetary quack. There is no reason in the world for an automatic 3% money growth. Again, he does the technocratic thing to keep the government in the game.

As far as "Even Mises--and especially Hayek--fail the absolute purity test on policy. And in the case of Mises and Hayek....they (unlike Friedman who was not an Austrian by training) had no excuse..."

This is not about a purity test. I deal with Hayek below but I can't think of a policy Mises is responsible for in the United States that has resulted in helping take any of my liberty away. This can not be said of Friedman given the withholding tax and a massive military that exists.

Econophile writes:

Good call. It's like Jefferson owned slaves and that cancels him out? Ditto Friedman. The positives outweigh the negatives by far.

RW response: 

Again this is not a purity test. It is about the weight of actions in the context of the time. It is not about Jefferson owning slaves. What Friedman did would be comparable if Jefferson introduced the concept of owning slaves.

That is what Friedman did with withholding taxes, market-rate wages for the military and vouchers, he introduced and/or prompted the ideas.

evmazu writes:

On the other hand:

- opposed Iraq war when everyone else was giving into the hysteria

- called for abolition of the Fed https://www.youtube.com/watch?v=m6fkdagNrjI

not just this one clip, I've got stuff on him dating at least back to the 1970s saying this

- was one of the very few who could get through to the conservatives about the drug war without being labeled a kook. There's a reason for William F. Buckley came out against the drug war in National Review and that reason is Milton Friedman

And complain about vouchers if you want but if your kid was zoned in a horrible government school today and vouchers came along tomorrow to bring you some options for something a lot better (or at least not horrible) it would be one of the best things to actually improve your kid's quality of life now and in the future


I'd encourage everyone to listen to the Milton Friedman Speaks series of podcasts available below and on iTunes: https://blog.freetochoosenetwork.org/podcast/episode-1-milton-friedman-speaks-what-is-america-podcast/

RW response:

I have never said that Friedman did not have sone good things to say. He opposed the Iraq war but so did many others. BUT if it wasn't for Friedman's technocratic advice to switch to a free-market wage paid military, the US would never have the military to go to war with Iraq.

To say he called for the abolition of the Fed is misleading. It is not the reasonlibertarians call for the abolition of the Fed. Libertarians want to abolish central banking. Friedman was not in favor of abolishing central banking, he just didn't like the way the Fed was conducting money printing policy. He wanted a central banking institution that created money according to his quack formula.

As far as drugs, as far as I know, he was fine on the subject.

As for:

And complain about vouchers if you want but if your kid was zoned in a horrible government school today and vouchers came along tomorrow to bring you some options for something a lot better (or at least not horrible) it would be one of the best things to actually improve your kid's quality of life now and in the future

Just where do you get the idea that the voucher system would be any better if it was the only method by which government-controlled education?

It seems that you have no idea of what is at the core of central planning. When central planning becomes a significant enough factor, in any form, in any sector, the bad guys will move into the sector to control it. Your support for government vouchers suggests you don't understand this very important fundamental about government control.

Dominick writes:

Was Adam Smith a "slick statist"? Or how about Hayek..(in The Constitution of Liberty) who had far more objections in policy to the free market than Milton? Or how about David Stockman whom you regularly publish? William Graham Sumner, the subject of my dissertation, was as close to a pure libertarian/free market economist as there was 150 years ago (he even anticipated and rejected antitrust law) BUT he supported public schools and some "public works" projects. Does that make Sumner a "slick statist?" Look, if we ever want to be taken seriously, we must stop putting people such as Friedman in with real slick statists like Galbraith and Krugman. As has been noted, Friedman (and Rand) probably turned more people on to free market ideas and policies than almost anyone in the last 50 years. And if my friend Walter Block chimes in that Friedman was really a "socialist" I will take him to the woodshed when I see him next!! Come on guys, get real.

RW response:

As to the question, "Was Adam Smith a 'slick statist'?," taking my lead from Murray Rothbard, I have made clear that Adam Smith was an economist of mixed value, more bad than good. See: Adam Smith's Role in Launching Marxism.

As for "Or how about Hayek..(in The Constitution of Liberty) who had far more objections in policy to the free market than Milton?," I posted this: 48 Non-Libertarian Positions Held By Friedrich Hayek.

On the other hand, Hayek's  The Counter-Revolution of Science is masterful as is his commentary on the problems with the concept of social justice. And there is his masterful observation in Chapter 10 of The Road to Freedom on why the worst get to the top, to name just some positives.

Hayek is a mixed bag. He sometimes went way off the track but at other times he was brilliant with very original observations. Friedman at best was a great presenter of free-market ideas but I can't think of much that was original and of great insight by him.

As for David Stockman, I would classify him as a very solid paleo-conservative. Again this is not about some kind of purity test. It is about a personality, Friedman, who always finds new creative ways to keep the government in the game on a massive scale. Ways where in many cases a part of government would have withered away if it wasn't for his advice.

Stockman doesn't come close to this. He is a solid small government man who as far as I know is against war, against big-spending, against the expanding state and anti-woke. He is in favor of some taxes that I am not but that is what you get from a paleo-conservative. I oppose him on that but given what we now have in Washington D.C., I wouldn't mind him as president. Nor would I mind Mises as president.

Hayek, I would be very nervous about and I would be extremely nervous about the technocrat Friedman. And Dom, I want to make clear, you pass the test, despite the fact we occasionally disagree on some point, if you decide to run for president, I would support you 100% and probably vote for the first time in my life.

Finally, I grant that Friedman has introduced a lot of people to free-market economics and that is good, however, he has done a lot of bad with the government technocrat side of his personality and we must warn about that.

 -RW

Saturday, April 17, 2021

Russia Retaliates Against the United States


The tit for tat, the games go on.

In response to the new sanctions placed by the Biden administration on various Russian organizations and individuals, Russia has responded with its own set of sanctions.

The following individuals have been banned from entering Russia for what the government calls anti-Russia policies:

  • Merrick  Garland, United States Attorney General;
  • Michael  Director of the Federal Bureau of Prisons;
  • Alejandro Mayorkas, United States Secretary of Homeland Security;
  • Susan Rice, Director of the United States Domestic Policy Council, former US Permanent Representative to the United Nations and National Security Advisor;
  • Christopher Wray, Director of the Federal Bureau of Investigation;
  • Avril Haines, Director of US National Intelligence
In addition to these members of the Biden administration,  Russia will also deny entry to John Bolton, former National Security Advisor to the United States President, former US Permanent Representative to the United Nations, and James Woolsey Jr., former director of the US Central Intelligence Agency.

In a press release, the Russian government stated, "In view of the unprecedented complications in Russia-US relations provoked by Washington, it was decided to deviate from the usual practice of not making public the response measures taken by the Russian side."

 -RW

Why is Paul Krugman Protecting the Federal Reserve?

Paul Krugman

Well, I knew that couldn't last long.

After writing some decent commentary about the economically ignorant Andrew Yang, who is running to become the next mayor of New York City, Paul Krugman has gone off the deep end in a way that competes quite well with Yang's babbling economic absurdities.

In a new column for the New York Times, he devotes the entire column to the developing price inflation. 

He focuses on the supply-side bottlenecks that are developing as a result of the lockdowns:

 Mainly because the pandemic had weird economic effects, sharply depressing some activities while boosting others. And this probably means that we’re going to have a weird recovery too, with huge surges in things like travel, plus an unusual set of bottlenecks, like the global container shortage, resulting from the pandemic hangover.

So I expect to see a lot of price blips outside food and energy — some resulting from “base effects,” that is, recovery of prices that were depressed during the worst of the pandemic, some resulting from those bottlenecks.

I should point out that I warned in the EPJ Daily Alert about supply disruptions in the early stages of COVID-19 when it was just a problem in China.

I wrote in the February 24, 2020 edition of the Alert :

Given the slowdown in production from parts of China and this new "entry closed"
development, the fears of a supply chain problems could be very real. Indeed, it
could result in the opposite of the smothering of price inflation by productivity
increases out of China. We may see a kind of anti-productivity situation where we
could see tight supplies in the US this summer, even if the virus peaks soon, as
Chinese manufacturing would have to crank up and then be shipped to the US. This
would mean upward pressure on prices.

As the COVID-19 panic escalated in the United States, throughout the summer I warned about the likely increasing bottlenecks because of the lockdowns her in the US. For example, in the middle of it all, in August of last year, I wrote in the  Alert

As I have noted before, the Fed is launching its AIT adjustment based on the idea that
price inflation will advance at a very slow rate but there is zero in theory that supports this
claim. Indeed, with the amount of money pumped in over recent months and COVID-19
lockdown supply related disruptions the potential for a major spike in price inflation is just
ahead.

And therein lies the rub, while I recognized the tight supplies as a price inflationary problem months before Krugman, I also recognized that the massive Fed money printing was going to a big part of the problem.

Money supply has absolutely exploded during the lockdowns.


Last year money supply growth hit more than 26%. This is massive growth not seen in many decades---and the Fed is still printing at mad rates.

This kind of money growth on top of supply bottlenecks is driving the price inflation but you can't ignore the irresponsible money printing by the Fed and the major role it is playing in the price inflation and just blame it all on bottlenecks.

Yet Krugman does not mention, not once, the Fed money printing as he discusses the coming price inflation.

So the question becomes why is Krugman protecting the Fed?

He has to understand that money growth is playing a major role in the price inflation. I don't think he really is the economic ignoramus that Yang is.

 -RW

Friday, April 16, 2021

Biden's Sanctions on Russia: What Do They Mean?

Russian President Vladimir Putin

Joe Biden has imposed new sanctions against Russia including measures targeting its government debt.

The sanctions ban US financial institutions from trading in newly issued Russian state debt, known as OFZs, and bonds issued by the Russian central bank and National Wealth Fund. The ban affects debt issued after June 14.

But it does not stop American institutions from dealing in previously issued Russian bonds. And, significantly, it does not, for now, apply to foreign banks or investment firms.

It can certainly, therefore, be labeled a measured action, if one has the dubious view that any action was needed.

Russia’s government sells most of its sovereign debt domestically, and it finances its operations overwhelmingly through the sales of energy. American investors hold only seven percent of Russian government debt denominated in rubles, according to Oxford Economics in London.

Russia’s total debt issued in rubles rose to 14 trillion ($180 billion) by the end of the year, about 80 percent of it held by local investors.

The ruble dropped as much as 2.2 percent in early trading on Thursday to about 77.5 to the US dollar after the sanctions were announced. 

Russia’s foreign ministry summoned the US ambassador John J. Sullivan to its headquarters for what it said would be a “difficult” discussion.

Kremlin Spokesman Dmitry Peskov said that Moscow would act in accordance with the principle of reciprocity in its relations with Washington. He noted that new US sanctions would not facilitate the organization of a meeting that Biden proposed to Putin for this summer.

The sanctions also include the expulsion of 10 Russian diplomats from the US and sanctions against 38 entities, individuals and companies for allegedly taking part in efforts to interfere in US elections and conduct cyber attacks.

The European Union has currently ruled out introducing restrictions against Russia’s national sovereign debt to follow in step with the US, according to sources.

 -RW

Krugman Puts Out a Hit Piece on Andrew Yang

Paul Krugman receiving the Nobel Prize

Paul Krugman has turned his evil pen on new York City mayoral candidate Andrew Yang. There are very few that deserve the Krugman jab but Yang is one of them.

For those who read only the first two or three of paragraphs of  New York Times commentaries, it doesn't often get much better than this oozing from Krugman's pen:

Will Andrew Yang, the current front-runner, become New York City’s next mayor? If he wins, would he be any good at the job? I have no idea, although I’m skeptical about the latter.
My guess is that the mayoral office needs an effective political brawler, not an intellectual, and Yang, who has never held office, owes his prominence largely to his reputation as a thought leader, someone with big ideas about economics and policy.
What I do know is that Yang’s big ideas are demonstrably wrong. Shouldn’t that be cause for concern?

For the first time ever, I really hope Krugman doesn't get ink blots on his hands and shirt.

But Krugman didn't stop with the introduction, he went on to specifically smash Yang's aggressive support for a universal basic income:

Yang’s claim to fame is his argument that we’re facing social and economic crises because rapid automation is destroying good jobs and that the solution is universal basic income — a monthly check of $1,000 to every American adult. Many people find that argument persuasive, and one can imagine a world in which both Yang’s diagnosis and his prescription would be right.

But that’s not the world we’re living in now, and there’s little indication that it’s where we’re going any time soon..

For what it’s worth, my guess is that Yang started preaching the dangers of automation without ever having looked at economic data; it was a story too good to check..

And then this:

 But even if we don’t think Yang is right about the problem, what about his solution? Is his universal basic income proposal a good idea?

No, it isn’t. It’s both too expensive to be sustainable without a very large tax increase and inadequate for Americans who really need help. I’ve done the math.

First, we really would be talking about a lot of money. The recently enacted American Rescue Plan gave most adults a one-time $1,400 payment, at a cost of $411 billion...

But the Yang proposal to pay $12,000 a year would cost more than eight times as much every year — well over $3 trillion a year, in perpetuity. 

I have eliminated the shaky arguments that Krugman makes in the column but this takedown of Yang was necessary by someone at the Queer Black Lady and I am glad Krugman stepped to the plate. 

  -RW

Thursday, April 15, 2021

Conservatives Discover Milton Friedman Not the Hero They Thought He Was

 Dale Steinreich writes:

On this Tax Week in April (even though the real individual filing deadline for this year has been extended to May 17, 2021), some conservatives are discovering that Milton Friedman isn’t the hero they thought he was. Friedman was behind “one of the most far-reaching extensions of federal power,” the purpose of which was to keep federal coffers copiously filled to fight World War II.  Of course the war ended but Friedman’s “gift that keeps on giving,” federal withholding, is still here.  More than just making federal taxes appear lower than they actually are, through typical overpayment withholding gives the federal government a nice, big interest-free loan every year.  Thanks, Milton!

This 1 minute and 26-second clip explain Friedman's role in withholding taxes. 


I want to also point out that while Friedman had a strong knack for defending free-market positions when it came to his actual policy advice he always landed on the side of being a big government technocrat.

During the period of the Vietnam War when there was growing anti-war, anti-empire sentiment in the United States, instead of promoting a shrinking U.S. military, Friedman promoted the paid-for army, which of course he labeled with the "all volunteer" army. It was actually a "keep the large military intact" program. He provided the military with the tactic to keep the military massive in the U.S. when the draft was not going to last.

He also promoted school vouchers, which of course keeps government in the role of the final determinant of who can teach and what to school children

And last, but not far from least, he promoted a quack technical argument to promote monetary expansion by the Federal Reserve.

This is the real Milton Friedman legacy:

Creating withholding taxes.
Promoting the paid-for-army.
Promoting school vouchers.
Promoting a use for a central bank.

In sum, when you weigh the good he did with his free-market arguments and his technocratic policy advice to keep governments growing, there is no question he was a very bad guy when all the pluses and minuses are calculated.

 -RW

What Has Been the Largest Earthquake in Your State?

For the record.

Alaska is the winner by far.
 

 


 -RW

Ketchup Packet Supply Delays Results in Packets Being Sold on Ebay

COVID-19 lockdown-related supply chain distortions have reached the Ketchup packets market.

Packet prices are up 13% since January 2020, and their market share has exploded at the expense of tabletop bottles, according to restaurant-business platform Plate IQ.

The pandemic turned many sit-down restaurants into takeout specialists, making individual ketchup packets the primary condiment currency for both national chains and mom-and-pop restaurants, notes The Wall Street Journal.

Now those with personal stashes of saved ketchup packets are listing them on eBay Inc. and Facebook Inc.’s Marketplace.

The Journal reports:

Lindsey Cohen, a retiree from Indianapolis, logged onto eBay and posted 20 Heinz ketchup packets for sale for $8 after The Wall Street Journal reported April 5 on restaurants’ squeezed ketchup supplies. Ms. Cohen, who said she amassed her collection during fast-food stops on a recent road trip, typically uses eBay to clear clutter from her house but thought hawking ketchup sounded like fun.

About 12 hours later, the packets sold. “I’ve never gone so far as to sell condiments,” said Ms. Cohen. With ketchup, she said, “I jumped on the bandwagon.”...

The prices in dozens of ketchup-packet listings posted online range all the way from a quarter to $5 each, the latter in a lot of 20 packets for $100. Each has about a third of an ounce of ketchup.

Kent Reining, a Facebook Marketplace seller from Danville, Ill., offered packets for $4 each, or a bargain price of 20 for $50.

“There’s a shortage,” he wrote. “Don’t try to lowball me, I know what I’ve got.”...
Ms. Cohen, the eBay seller from Indianapolis, said when she heard about the ketchup squeeze, experience taught her to move quickly. She recalled how following the death of writer Maya Angelou in 2014, she sold a signed book of Ms. Angelou’s essays for $130.
“It’s all about supply and demand,” she said.

 -RW

Wednesday, April 14, 2021

Cryptocurrency Mathematician Found Dead Floating in Hudson River

Shuvro Biswas

The man whose body was found floating in the Hudson River Monday has been identified as a mathematician working with cryptocurrency, reports The New York Post.

Shuvro Biswas was self-employed and most recently working on a cryptocurrency security program.

His brother said the family started to see changes in Biswas’ demeanor over the past year, but that he largely kept his struggles to himself.

According to the Post, in February, the management of  Biswas’ West 37th Street apartment building took him to Manhattan Supreme Court, seeking to evict him over a slew of alleged bizarre acts inside the building, including setting fires, openly brandishing a knife and smearing blood inside the elevator, court filings show.

“Defendant is a ticking time bomb who, just months into the Lease, has engaged in numerous incidents of escalating, offensive nuisance-type conduct that threatens the lives, health, safety and well-being of Building staff, Building residents and Building property,” lawyers for the building wrote in one filing.

 -RW

Texas Nearly Went Dark Last Night


Texas came uncomfortably close to another round of rolling blackouts Tuesday night because grid operators misjudged the weather, reports BloombergGreen.

The Electric Reliability Council of Texas, which manages most of the state’s grid, had counted on a mild cold front sweeping the state, lowering demand for power. It didn’t happen. On Tuesday, temperatures in Dallas, Brownsville and Houston were moderately higher than normal, reaching or exceeding 80 degrees Fahrenheit. As a result, demand on the grid was about 3,000 megawatts higher than anticipated -- or the equivalent of 600,000 homes.

BG reports:

Tuesday’s weather was hardly extreme, and the close call has raised questions about whether the grid operator, known as Ercot, can prevent a repeat of the February energy crisis.
“It’s a disgrace for a power grid in modern times to struggle to keep the lights on during a mild day,” said Daniel Cohan, an associate professor of environmental engineering at Rice University. “We’ll be in trouble when a summer heat wave comes in and demand is one-and-a-half times as much as it was yesterday.” 

But then BG made an absurd claim:

 Texas has long taken a laissez-faire approach to its power grid, allowing market forces -- rather than regulations -- to ensure there’s enough power on hand to satisfy demand. State lawmakers have been reluctant to rethink that method as they consider addressing the problems that led to the crisis in February.

Anything run by a "Council of Texas" that manages the state's entire electric grid is not a laissez-faire approach.

It is time that Texas think about a true laissez-faire electric market. (For more on this, see the February piece: How Did a Cold Freeze Result in Texas Becoming the Venezuela of Supplying Energy to Local Customers?)

And they shouldn't waste any time.

BG notes:

The coming weekend may present another test for grid operators. Temperatures are set to dip into the 40s across Dallas, Fort Worth and Austin and fall to the 50s in Houston and San Antonio. While hardly the frigid readings that sparked the winter crisis in Texas in February, that could drive heating demand that’s largely powered by electricity in the state.
“That’s chilly for them for late April and could invoke a bit of overnight to morning heating demand,”said [Matt Rogers, president of the Commodity Weather Group LLC in Bethesda, Maryland. ]

Summer could be ever worse. Already, almost 75% of Texas is gripped by drought, and more than 91% is abnormally dry. Drought makes heat worse because the sun’s energy goes into warming the air rather than evaporating ground moisture.

“This doesn’t bode well for summer when they are already issuing these kind of alerts,” said Jim Rouiller, lead meteorologist at the Energy Weather Group. “The cold killed people. The heat will kill a lot more people.”

 -RW

Former CIA Director Comes Out in Favor of Bitcoin

 Well, this is a mad twisted story.

The newly formed lobbying group Crypto Council for Innovation (whose founding members include Coinbase, Fidelity Digital Assets, and Square) recently paid Michael Morell, a former acting director of the Central Intelligence Agency, to write a paper on bitcoin.

His study (An Analysis of Bitcoin's Use in Illicit Finance ), surprise, reaches conclusions that line up with the crypto group that paid him to write the paper---that crypto is a good thing.

But, his support is quite bizarre if one looks at it from the crypto sector perspective and at a deeper level.

One of the key reasons he supports cryptocurrencies is because blockchain analysis is a highly effective crime-fighting and intelligence-gathering tool.

Got that "intelligence-gathering tool"?

Forbes reports:

[I]nteresting to Morell was how analytic firms such as Chainalysis, CipherTrace, and Elliptic can employ forensic and artificial intelligence tools to find illicit actors and activity on blockchains. In fact, he said that he was “literally blown away by how they find illicit activity...this is great intelligence work.” 

He also made sure to point out that this analysis works on multiple levels because it can be used to track the actions of known actors as well as identify previously unknown people of interest.

Basically, Morell is stating the obvious that cryptocurrencies are highly trackable. 

I am not sure why the Crypto Council is proud of this study (They are aggressively promoting Morell's paper). From my perspective, it sticks a knife in the heart of cryptocurrencies.

From Morrell's paper (my highlight):

All of the experts we consulted believe that governments have been slow to recognize the forensic power of blockchain technology. This lag reflects a lack of awareness
at senior and working levels, as well as the challenges understanding and working with the extreme complexity of the computer science associated with blockchain forensics. While there is a growing cadre of government officials who have successfully used blockchain analytic tools to prosecute bad actors and seize illicit proceeds, relatively few current government employees have the skills to use this technology to its full potential.
One expert went even further, saying that the biggest threat involving cryptocurrencies is not illicit finance but rather that governments do not yet fully understand the power of blockchain as a tool for law enforcement and intelligence agencies

One further note, the study is put together in what best can be called a time-share promotion brochure style.

These pictures were all in the study:




What the hell do these pics have anything to do with a serious study?

I have really never seen a study put out in glossy format before.

Snippets of a study are occasionally put out as a part of a promotion brochure but never the entire study.

I have profitably traded in and out of bitcoin three times in the EPJ Daily Alert but it has never left my consciousness when trading that I was only surfing a mad craze.

Digital currencies whether coming out of the private sector or central banks are a very bad idea in terms of the dangers to privacy. It provides a key-turn system for use by authoritarian governments, present and future, to track transactions and indeed force or prevent transactions.

I am not a fan even if the pitch is made with a colorful brochure. I am more concerned about why a former acting CIA director thinks it is a great tool for government intelligence.

 -RW

Tuesday, April 13, 2021

Federal Reserve Board Chairman Powell Has His Head in the Sand


 As a follow up to the recently released government price index numbers, John Hopkins economist Steve Hanke, who follows price inflation rates around the world, gets it right:

US producer prices are soaring—March showed the largest YoY spike in PPI in 9.5 yrs. Yet, Fed Chairman Powell still has his head in the sand. He is a  “see no inflation, hear no inflation, speak no inflation” kind of guy.

 -RW

Price Inflation Comes in Hot

Click on chart for larger view

 

The consumer price index came in with an increase of  0.6-percent for the month of March. That is an annualized rate of  7.2-percent

This is a developing story, return to this post for updates. 

UPDATE 1

The March 1-month increase was the largest rise since a 0.6-percent increase in August 2012. Over the last 12 months, the index increased 2.6 percent.

UPDATE 2

The gasoline index continued to increase, rising 9.1-percent in March. For the last 12-months gasoline prices are up by 22-percent.

 -RW

Chris Wallace Grills Buttigieg on False Jobs Claim: 'Why mislead people?'

 Pete Buttigieg

Chris Wallace is an unsteady ally of free market policy but on Sunday he gave a good and deserved, well, butt-kicking to  Transportation Secretary Pete Buttigieg.

On "Fox News Sunday" anchor Wallace noted that Buttigieg and other Biden administration officials have been overstating the number of jobs that would be created by Biden's "American Jobs Plan." He then asked, "Why mislead people?"

"You're right. I should have been more precise," Buttigieg replied.

Buttigieg then attempted to spin the projected number of jobs created by saying that there would be over 2 million more jobs created with the "infrastructure" plan than if there wasn't a plan, notes FOX News.

Wallace said there was a huge difference between 2 million jobs created and 19 million jobs, prompting Buttigieg to say it's "very important" for Americans to know 2.7 million jobs will be created. He then asked Buttigieg whether he agrees that he and other Biden administration officials exaggerated the "jobs impact."

"Secretary, you're the one who cited Moody's Analytics as 19 million, and it's actually 2.7 million, which is a bunch, but it's not what you said," Wallace said.

According To FOX, during an appearance on NBC's "Meet The Press" last Sunday, Buttigieg claimed that Moody's estimated the Biden plan would create 19 million jobs. National Economic Council Director Brian Deese also pushed the talking point last week on "Fox News Sunday."

"It's part of a scenario that Moody says will create 19 million jobs, but the bottom line is it's going to add jobs and this is a direct refutation of people who are saying otherwise," Buttigieg said. "So yeah, you're right, I should be very precise. The difference in jobs that that particular analysis suggests is 2.7 million more. That is a great place to be."

Of course, no net new jobs are created by government spending. The funds to pay for governmnet-created jobs are taken via taxation or price inflation from the private sector which means jobs are lost in the private sector.

Markets clear, there is no need for government programs to create jobs. All government programs do is shift jobs to benefit cronies around the government and to buy votes. But Wallace didn't go anywhere near these points, which would have completely exposed Buttigieg.

-RW

Monday, April 12, 2021

CEO of a Top Bitcoin Exchange Warns a Crackdown on Cryptocurrencies May Be Coming


“I think there could be some crackdown [on cryptocurrencies]” Jesse Powell, CEO of Kraken, told CNBC in an interview.

“Something like that could really hurt crypto and kind of kill the original use case, which was to just make financial services accessible to everyone,” he said.

“I hope that the U.S. and international regulators don’t take too much of a narrow view on this,” Powell continued.

Kraken’s CEO said he feels the U.S. is more “shortsighted” than other nations and “susceptible” to the pressures of incumbent legacy businesses — in other words, the banks — that “stand to lose from crypto becoming a big deal.”

Kraken is the world’s fourth-largest digital currency exchange in terms of trading volume.

-RW

Fed Chairman Jay Powell Shrugs About Developing Price Inflation


Federal Reserve chairman Jay Powell was interviewed by "60 Minutes" correspondent Scott Pelley this past Wednesday. The interview was released on the airwaves Sunday evening on CBS.

Remarkably, Powell continues to show little concern about the price inflation that is developing.

From the interview  (my highlights throughout):

JEROME POWELL: [W]e can afford to wait to see actual inflation appear before we raise interest rates. Now, we don't want inflation to go up materially above 2% and go back to, you know, the bad, old inflation days that we had when you and I were in college back a long time ago. But at the same time, we do have the ability to wait to see real inflation. And that's what we plan on doing...

[W]e want to see inflation move up to 2%. And we mean that on a sustainable basis. We don't mean just tap the base once. But then we'd also like to see it on track to move moderately above 2% for some time. And the reason for that is we want inflation to average 2% over time. Inflation has been below 2%. We want it to be just moderately above 2%. So that's what we're looking for. That's the situation we're looking for. And when we get that, that's when we'll raise interest rates.

So when does Powell think the Fed will start raising rates? Pelley asked him:

SCOTT PELLEY: Near zero interest rates are with us for how long?

JEROME POWELL: Well we've said that we would look at raising interest rates when the labor market recovery is just about complete, when inflation is at 2% and on track to run moderately above 2% for some time. That's what we've said. I don't have a particular calendar date for that. But we would consider raising rates at that time.

SCOTT PELLEY: So all the way through the end of this year, you wouldn't see rates increasing?

JEROME POWELL: I think it's highly unlikely we would raise rates anything like this year, no.

No rate hikes this year! Powell has no idea the price inflation freight train that is coming down the road.

He wouldn't even commit to rate hikes in 2022:

JEROME POWELL: I think it's highly unlikely we would raise rates anything like this year, no.

SCOTT PELLEY: 2022?

JEROME POWELL: You know, I don't want to put a date on it. It really comes down to outcome-based guidance is what we call it. And it will not depend on the calendar. 

He just absolutely has no concern about current developing inflation or really any other economic factors.  

SCOTT PELLEY: Is there anything in the economy that's flashing red? 

JEROME POWELL: Flashing red? I really don't think so, no. I think there are always risks. I mentioned the risk of the spread of COVID. We're seeing more COVID cases again. Many parts of the country, as you know, are reopening with enthusiasm. And time is going to tell whether that was premature. But we do see cases moving up again. Not at a high level, but you wouldn't want to see them moving back up. You'd want to see them flat or continuing to decline. They're at much lower levels than they were in the winter. Vaccination is helping, but that's I think the main risk to the speed of the recovery.

Rather than being a conservative steward of the U.S. dollar, Powell is like the drunk who wants to take one more drink before hitting the road. He sees no danger ahead only because he doesn't seem capable of clearly seeing ahead at all.

Current Fed policy is one of the most reckless in the entire history of the Fed and there is not one member of the monetary policy-setting committee, the FOMC, raising any kind of significant concerns.

The Fed is going to be so slow reacting to the developing price inflation that the great danger is it could get way out of hand. 

Buckle your seat belts and hug your gold coins.

-RW

Sunday, April 11, 2021

Handing Out Money to Illegals: New Madness in New York State


It's called the Excluded Workers Fund

Last week New York state lawmakers passed a bill that includes one-time payments of up to $15,600 to undocumented immigrants who lost work during the pandemic. 

Thanks to the passage of the bill, $2.1 billion in funds have been earmarked in the state budget for the madness.

Johns Hopkins economist Steve Hanke correctly notes, "This handout for illegals is an open invitation for more illegals to come across the border. That’s common sense & econ 101. The handouts also flout the Rule of Law."

As I have stated before, I have no problems with undocumented who come across the border to work, as tourists, whatever, but handouts to illegals is an absurd idea on its face.

I have always had a rule to hire immigrants that are the first ones in a family to cross the border, be it a cleaning lady, nanny or office assistant.

The first one over is always the go-getter who is driven to succeed. Later she is the one who brings over other members of the family, who oftentimes are, well, not go-getters.

Always hire the first ones over.

This rule has an application to what is going on in New York.

These handouts encourage the wrong kind of people to cross the border. Those who will cross the border for free food, education, medical and maybe even an eventual universal basic income. These are really not the ones you want crossing the border.

The welfare wall must go up. No handouts of any kind for anyone crossing the border. Everyone fends for themselves. Then let's see what kind of people cross the border. They will be the workers. They should be welcomed.

This fund may be for those who are already here but it provides the sense for those back home that the United States is the land of handouts.

-RW