Saturday, March 31, 2018

The Report Is In: Wenzel at Ramapo College

Dr. Murray Sabrin introduces Wenzel at Ramapo College as he holds up a copy of Wenzel's new book.

By Erica Meline

Economist hosts talk on Trump's economic plans

Robert Wenzel, editor and publisher of and Target Liberty, gained notoriety over a decade ago when he accurately predicted the 2008 financial crisis in real time, as well as when he gave warning of the developing housing bubble of 2005.

In addition to his various years spent on Wall Street, Wenzel has authored books such as “The Fed Funks: My Speech at the New York Federal Reserve Bank” and most recently, “Foundations of Private Property Society Theory: Anarchism for the Civilized Person.”

His work in economics has led major publications to quote Wenzel, including the New York Times, Forbes and Bloomberg.

Wenzel came to Ramapo College last Tuesday to speak in the Sabrin Center for Free Enterprise and Anisfield School of Business’ last speaker series for the academic school year to address the current economic policies President Trump has implemented throughout his presidency.

His presentation, entitled, “Donald Trump: The Good, the Bad and the Ugly,” dissected the positive and negative components of President Trump’s economic plans, as well as the repercussions his policies will have on the country’s well being.

“The most difficult part was finding the good,” said Wenzel. “I just think he’s bad across the board.”

The only economic policy Wenzel viewed with any positivity was President Trump’s policies regarding

Read the rest here.

Goldman Sachs Offers a Savings Account with Excellent Perks —And Anyone Can Use It With Just $1

Goldman Sachs has revamped its retail banking service to become "Marcus by Goldman Sachs," with online offerings for just about anyone to use.

One element of Marcus is a high-yield savings account, with a 1.50% annual percentage yield and no transaction fees or minimum account balance. There aren't even any fees for money transfers out of a Marcus account.

I have written in the EPJ Daily Alert that it is best to hold cash deposits with the banksters, Goldman Sachs, JPMorgan and Citibank, since these are the most likely to be protected during a financial crisis. Marcus fits in well with this theme.

The Marcus account, however, is not a daily use banking account. The accounts are not connected to any ATM system, and it doesn't have a mobile app. Savers can make only six transfers or withdrawals a month.

-Robert Wenzel 

(Source: Business Insider)

Friday, March 30, 2018

Bitcoin Breaks Below $7,000

Bitcoin is now trading below $7,000. Last trade: $6793.50.

This is down from a December all-time high of $19,343, a decline of 68%.

-Robert Wenzel 

Flash Warning on the US Stock Market

At the EPJ Daily Alert, I just put out a flash warning on the stock market.

I haven't been this bearish since I called the 2008 financial crisis.

Find out the details by subscribing to the EPJ Daily Alert at the three-month trial subscription rate of  $33.00. This is a huge discount off of the regular three-month rate of $55.19.  Order by clicking here:

Trump’s Latest Trade Target: Rwanda

President Trump said Thursday that he will soon suspend Rwanda’s participation in a program that allows African countries to export apparel to the United States on a duty-free basis, citing the country’s refusal to permit U.S. exports of used clothing, reports The Washington Post.

What an economic ignoramus.

By the way, Rwanda has an annual per capita income of around $700. This could have serious repercussions for a people with such a low income.

-Robert Wenzel 

Oh No!: Piketty, Again

The socialist economist that mainstream media and mainstream economists love, Thomas Piketty, has a new book coming out in May:

Order here:

Economic Equality—Socialism’s Unattainable, Undesirable Pie in the Sky

By Robert Higgs

Socialism’s greatest appeal springs from its promise of economic equality. Many people, upon their first encounter with the ideology, find this promise the very heart and soul of justice. Yet, completely apart from whether such an outcome could or would ever be attained in practice, a great and insuperable problem remains: in a world where individuals always differ enormously in personal attributes and circumstances, in personal conduct and social constraints, it is difficult to think of anything more unfair than forcefully ensuring that in spite of all these differences, everyone ends up with the same income or wealth. The whole idea is an ill-considered, falsely attractive attribute of pie-in-the-sky socialism even if it were possible to bring it about.

The above originally appeared at the Independent Institute.

Thursday, March 29, 2018

The Cafe Con Leche Index: Venezuelan Price Inflation Hits 6567%

This is what happens when super aggressive money printing, totalitarianism and socialism meet.

Bloomberg reports:
We called it the Bloomberg Cafe Con Leche Index, and as the name would suggest, it tracks just one item: a cup of coffee served piping hot at a bakery in eastern Caracas. Its price has jumped to 120,000 bolivars* from 1,800 bolivars over the past 12 months, an increase of 6,567 percent.
-Robert Wenzel 

STOCKMAN: The Wall is the Dumbest Waste of Money I've Heard Of

David is awesome on the Wall here and wait until you hear his solution for the drug war.

-Robert Wenzel 

Wenzel With David Stockman

After my visit to the Council on Foreign Relations, I met up with David Stockman in the evening at his place in New York City, which towers directly over the Mayor's mansion, now occupied by the commie Bill deb Blasio.

It looks like an anthill from David's perch.

David is the former director of the Office of Management and Budget under President Ronald Reagan. A former Blackstone partner, he currently writes David Stockman's Contra Corner.

David, if it is possible, is more concerned about the debt situation than I am.

This is what a David Stockman-Robert Wenzel selfie looks like.

At our evening discussion, he pointed out that the Fed is now doing the exact opposite of what it had been doing since the Great Recession. Whereas they were previously adding to their balance sheet, they are now starting to shrink it. So they are putting securities into the market at the same time the Treasury has to offer huge amounts of new debt. This is not a formula for a sound bond market.

And here's the kicker, David thinks smart money will start front-running the Fed security liquidations which will at some point lead to massive liquidations in the bond market.

He also has done some great research on the poison that was used on the two Russians in London.  After you read what he has discovered, you will think that he is probably the only journalist covering the story who is doing serious research. I'll run the poison story at Target Liberty when he publishes it.

-Robert Wenzel 

Wenzel at the Council on Foreign Relations

While in New York City, I took the opportunity to meet up with a couple of acquaintances at the Council on Foreign Relations to get the establishment pulse on President Trump, his policies and the economy.

Not surprising, CFR people are not very impressed with Trump.

Indeed, when you walk into the CFR offices, you are greeted with a portrait of Joe Biden.

Among those that I met up with was Benn Steil who is senior fellow and director of international economics at the CFR.

He has a new book out, The Marshall Plan: Dawn of the Cold War. I haven't read it yet but his previous book, The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order, was excellent. It was well researched and well written.

Benn tells me that he thinks this is an even more important book. The reviews to date have been very positive.

In Benn's office with his new book, "The Marshall Plan" in his hand,

-Robert Wenzel 

Wednesday, March 28, 2018

Trump Wants US Military to Pay for the Wall

So much for Mexico paying for the wall.

President Donald Trump, who repeatedly insisted during the 2016 campaign that Mexico would pay for a wall along the southern border, is privately pushing the U.S. military to fund construction of his signature project, reports The Washington Post.

Trump has told advisers that he was spurned in a large spending bill last week when lawmakers appropriated only $1.6 billion for the border wall. He has suggested to Defense Secretary Jim Mattis and congressional leaders that the Pentagon could fund the sprawling project, citing a "national security" risk.

Understand the logic here.

The military paying for the wall means taxpayers pay for the wall.

So under Trump latest, taxpayers would pay for a wall to prevent the people who mow our lawns and clean our offices from entering the US.

What a clown.

-Robert Wenzel 

Against the Whole Concept and Construction of the Balance of International Payments

By Robert Higgs

The root of a great and destructive economic misunderstanding can be traced to an accounting statement known as the balance of international payments. As the name suggests, this accounting statement rests on the idea that nations (in the form of individuals, firms and other organizations, and governments) trade with other nations (similarly composed). But the aggregation of the individuals, firms and other organizations, and governments in accordance with the country in which they are located sets in motion a basic misunderstanding.

In reality, individuals, firms and other organizations, and governments trade with other such entities, some of which are located in the same country and others of which are located in other countries. The location of the trading partners has no economic significance whatsoever. Trading entities enter into exchanges voluntarily, each one in each transaction anticipating a gain from the trade. Hence, in expectational terms, every such trade entails a gain from trade, or in other words an addition to the trader’s wealth.

Separating the trading entities into national aggregates allows a variety of fallacious conclusions to be drawn by artful intriguers. Historically such intriguers formed practically an entire “school” of economics known as mercantilism. In his classic 1776 work The Wealth of Nations, Adam Smith showed many of the errors and misconceptions of this school and argued forcefully for freedom of trade as the policy consistent with maximization of people’s wealth as a whole, as distinct from augmentation of the intriguers’ wealth at the expense of the general public.

A little later David Ricardo, drawing on earlier analysis by James MIll, explained the logic of the Law of Comparative Advantage, demonstrating that even traders with “absolute advantage” in every type of production could still gain by obtaining certain products by trade rather than by their own production. This foundational principle of economics has debunked mercantilism and its evil policy offspring, protectionism, ever since. Yet given the public’s ignorance of economic principles, artful intriguers have never ceased to profit by bamboozling people into believing that protectionism and national self-sufficiency can enhance national prosperity. Today the U.S. government proudly pursues these fallacious and immoral policies, and many people support Trump and his advisers as they peddle these ancient mistakes.

But if there were no accounting concept or set of data organized as the balance of international payments, such misconceptions and errors would have nowhere to hide. Trade would be seen as a means of enhancing the wealth of all the traders regardless of the country in which they reside. Nonsense about harmful deficits in the national balance of trade in goods and services (the so-called current account) would evaporate like the morning mist in the rising sun. Politicians would lose powerful rhetorical cover for their schemes to enrich their private-sector cronies (and hence themselves in political pay-back). The best thing that could ever happen in regard to the public’s understanding of international trade and financial flows would be for the balance of international payments to simply disappear. It is greatly to be regretted that this accounting system was not throttled in its cradle.

The above originally appeared at the Independent Institute.

Tuesday, March 27, 2018

Tonight Wenzel Talks Trump in New Jersey

Tonight I will be speaking at Ramapo College in  Mahwah, New Jersey

My topic:

"President Donald Trump’s Economic Policies: The Good, the Bad and the Ugly"

It's not too late to register to attend. It will also be streamed live.  Details here.

-Robert Wenzel 

Milton Friedman Destroys a Supporter of Wealth Redistribution

Friedman is very good here.

-Robert Wenzel 

Pat Buchanan’s Embarrassing Views on International Trade

A Don Boudreaux letter to The American Conservative:
You harm your conservative cause by publishing attacks on free trade that are as severely flawed as is Pat Buchanan’s “Why are Republicans Afraid of Tariffs?” (March 6).  A correction of all of his errors would fill a thick monograph.  So I here mention only two of his myriad mistakes.
First, the evidence contradicts Mr. Buchanan’s assertion that protective tariffs were key to U.S. economic growth in the 19th century.  Here’s Dartmouth economist Douglas Irwin in his richly researched 2017 volume, Clashing Over Commerce, writing about America during the post-Civil War 19thcentury:
[P]roductivity growth in non-traded sectors (such as transportation, services, utilities, and communications) was much more rapid than in agriculture and in manufacturing, the sectors more affected by trade. Productivity growth in the service sector is usually explained by particular technological innovations – such as railroads, electrification, and the telegraph – none of which depended on protective tariffs.  And yet the service sector was key to US economic performance during this period [pp. 280-281].
And here’s Irwin, writing last September in the Wall Street Journal, on the several decades prior to the Civil War:
As Treasury secretary, Alexander Hamilton wanted moderate tariffs, not protectionist duties. In his day, tariffs accounted for nearly all federal revenue. He wanted to keep imports flowing so he could finance the federal government’s Revolutionary War debt and secure the young nation’s credit. President Polk, far from being a protectionist, was a small-government Democrat. He slashed tariffs dramatically in 1846.
A second error is caused by Mr. Buchanan’s complete ignorance of the meaning of trade deficits.  After spilling much ink early in his essay bemoaning American trade deficits and interpreting these as evidence of U.S. economic decline, Mr. Buchanan writes this doozy: “We should tax foreign-made goods and use the revenue, dollar for dollar, to cut taxes on domestic production.  The idea is not to keep foreign goods out, but to induce foreign companies to move production here.”  Mr. Buchanan obviously does not realize that “to induce foreign companies to move production here” is to induce foreign companies to use their dollars, not to buy American exports but, instead, to invest those dollars in America – investments that put upward pressure on the U.S. trade deficit!
Someone whose potted economic history is so defective, and whose ignorance of even the meaning of basic concepts such as “trade deficit” is so deep, has no business writing 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 
The above originally appeared at Cafe Hayek

Monday, March 26, 2018

Twitter to Ban Cryptocurrency Ads

Twitter Inc, will ban cryptocurrency advertising, joining Facebook and Google.

The prohibition will cover advertising of initial coin offerings (ICOs) - crowdfunding used to raise cash by creating new coins - as well as token sales and crypto-wallet services, the firm told Reuters.

Twitter said this month it was taking measures to prevent crypto-related accounts from “engaging with others in a deceptive manner.”

-Robert Wenzel 

Williams May Not Get NY Fed Job, Because He is White

The Federal Reserve is facing a backlash over its lack of diversity in key positions after it emerged this weekend that John Williams, the current president of the San Francisco regional branch, is a front-runner to succeed William Dudley as head of the powerful New York Fed, reports Bloomberg.

Bloomberg continues:
[C]riticism over lack of diversity could pose a real problem.

“We are dismayed by the prospective failure to appoint someone who reflects the diversity of the district and the opaque process by which he was selected,” said Jordan Haedtler, campaign manager for Fed Up, an advocacy group that has pushed for greater Fed diversity.
Hey, who cares about policy (not that Williams is any good) just bring in people with different skin colors or people who identify as non-white!

-Robert Wenzel 

The Eurozone Time-Bomb in Italy

Beppe Grillo, founder of the Five Star Movement
Wolfgang M√ľnchau reports:
[N]o Italian political parties have promised serious reforms, and the two winning parties in the recent general election, Five Star Movement and the anti-immigrant League, have threatened to unleash the very opposite of fiscal restraint. So if the global economy turns down, it will take Italy with it....
Populist parties account for some 60 per cent of Italian MPs and senators. Their priority will not be to follow the fiscal rules of the EU. When governments are weak, parliaments are strong. The majority in the Italian parliament does not look as though it will approve yet another austerity budget...
Unless Five Star or the League agree to self-destruct, they cannot afford to let go of their election promises. Five Star promised a universal basic income; the League wants a flat income tax. Both intend to reverse pension reforms. These promises are simply inconsistent with adherence to the EU’s fiscal rules.
New elections would not solve the problem. They might produce the same result or an even larger share of the vote for extreme parties. There will still be no majority for economic reform and fiscal restraint. In other words: of all the feasible constellations it is hard to see one that offers compliance with the fiscal rules of the EU.

Robert Wenzel note: Not that EU fiscal rules are sound. They are designed by banksters to squeeze the populous but the big government, big spending proposals of the emerging Italian political parties are not the answer either. Smaller government just doesn't seem to be anywhere on the Italian agenda.

Sunday, March 25, 2018

Lessons About Mises the Man from His Moscow "Lost Papers"

This is an excellent presentation by Richard Ebeling.

-Robert Wenzel 

The Economist Involved in Blowing Up Long Term Capital Management is Part of a Team Launching a Cryptocurrency

Myron Scholes
Well, this should make cryptocurrencies official. Establishment cronies are about to launch their own cryptocurrency.

A bunch of establishment technocrat economists on Thursday announced plans to create their own cryptocurrency that governments should just love.

Included amongst the creative team is none other than Myron Scholes, who was an adviser to the hedge fund Long Term Capital Management, which managed to blow up billions with idiotic high-risk trading techniques. Scholes never saw the blow-up coming.

The new cryptocurrency, Saga, aims, according to the Financial Times," to position itself as an alternative digital currency that is more acceptable to the financial and political establishment."

It is being launched by a Swiss foundation with an advisory board featuring in addition to Scholes, Jacob Frenkel, chairman of JPMorgan Chase International and former governor of the Bank of Israel; and Dan Galai, co-creator of the Vix volatility index.

The Saga token aims to avoid the wild price swings of many cryptocurrencies by tethering itself to reserves deposited in a basket of fiat currencies at commercial banks. Holders of Saga will be able to claim their money back by cashing in the cryptocurrency.

And the currency, get this, also aims to avoid the anonymity afforded by bitcoin, which has raised financial crime concerns with regulators and bankers. Saga will require owners to pass anti-money laundering checks and allow national authorities to check the identity of a holder when required.

-Robert Wenzel 

Don't Believe the Nonsense That a Trade Deficit is a Problem

-Robert Wenzel 

Saturday, March 24, 2018

REPORT San Francisco Fed’s John Williams Is Front Runner to Serve as New York Fed President

San Francisco Fed President John Williams is the leading candidate to become the next president of the Federal Reserve Bank of New York, reports The Wall Street Journal.

I have followed Williams close enough to know banksters will love Williams.

John Willimas and Robert Wenzel

He is big on letting price inflation run hot by keeping the Fed money pumps running at full blast.

According to WSJ, Williams has been recommended by the New York Fed’s board for the position. If approved by the Washington-based Fed board of governors, Williams would succeed William Dudley, who plans to step down this summer.

-Robert Wenzel 

Hey Larry, Don't Get Addicted to Power

Larry, You know better.
It doesn't matter who "started" a trade war, you don't escalate.

I hope you are not going to spend your time in the White House justifying Trump's bad policy instead of trying to educate him.

-Robert Wenzel 

World Water Day is a Waste

By K. Lloyd Billingsley
March 22 is World Water Day but that may have escaped notice, particularly in flooded areas of the central United States. So what is this day about? According to the official site, it is about “exploring nature-based solutions to the water challenges we face in the 21st century.” As some readers may have noted, World Water Day is a proclamation of the United Nations, so it might be about a bureaucratic solution to water challenges. True to form, another UN Water Day site explains, “water is an essential building block of life. It is more than just essential to quench thirst or protect health; water is vital for creating jobs and supporting economic, social, and human development.” I mean, there had been a lot of confusion about all that until the UN cleared it up.
World Water Day is coordinated by UN-Water “the UN’s inter-agency collaboration mechanism for all freshwater related issues – in collaboration with governments and partners.” But wait, “there is no single UN entity dedicated exclusively to water issues. Over 30 UN organizations carry out water and sanitation programmes, reflecting the fact that water issues run through all of the UN’s main focus areas.” And water issues are at the heart of “recent milestone agreements” such as the UN Convention Framework on Climate Change.
Despite the 30 UN organizations, water is not evenly distributed between continents, countries, states, counties or even municipalities. Australia, a particularly arid nation, has achieved great success with a system of tradable water rights. Such water markets holds more promise for arid regions such as California than the vapors of a wasteful and unaccountable bureaucracy with an annual budget of $5.4 billion.
The above originally appeared at the Independent Institute.
Robert Wenzel note: I have also had a few things to say about water, here.

Cardi B is Getting Into Tax Policy

Yashar Ali writes:
Cardi B is getting into tax policy now. She says she's paying 40% of her income in taxes and wants to know where the money is going..."when you donate to a kid in a foreign country, they give you updates on what they're doing with your donation....I want updates on my tax money."
Now Cardi, apparently a big time rapper, is doing what should be considered Hayekian second-hand dealing here and getting the word out in the hood and beyond about taxes.

-Robert Wenzel 

Friday, March 23, 2018

George Mason Lands $5 Million Koch Foundation Donation for Department of Economics

George Mason University will use a $5 million gift to its Department of Economics to create three faculty positions, the school announced Thursday, according to the Washington Post.

The gift comes from the Charles Koch Foundation.

“It means a tremendous amount to the economics department,” Dan Houser, economics department chairman, said of the latest gift. “It allows us to compete for top faculty. The marketplace is highly competitive right now.”

The money will go toward helping the department hire for three tenure-track positions, including a senior scholar, who is a more experienced faculty member with experience teaching and conducting research, and two junior scholars who are at an earlier stage of their academic careers.

The spots are likely to be filled with beltarians but I could be surprised.

-Robert Wenzel 

The Nonsense of a House Being Sold for Bitcoin

An EPJ reader sends a link along to this story: NYC Apartments Sold For Bitcoin, Report Says.

Patch reports:
New York City real estate has reached a new frontier: Cryptocurrency. Developer Ben Shaoul of Magnum Real Estate Group has entered a contract to sell two Upper East Side apartments for Bitcoin, according to reports.
The two apartments being sold for Bitcoin are located in Magnum Real Estate's condo conversion at 389 E. 89th St, located between First and Second avenues, the New York Post first reported. The sale is believed to be the first time Bitcoin is being accepted in exchange for real estate in New York city, according to the report.

"It wasn't easy, but we are doing it," Shaoul said.

The transaction will go through a third-party business called BitPay, which will receive the Bitcoin payment and then pay the cash equivalent to Shaoul, the Post reported.
Look, this is a gimmick. The apartments undoubtedly were not priced in Bitcoin. That is the seller had a dollar ask price for the apartments that he was willing to accept in Bitcoin which he immediately flipped into dollars. It's a silly transaction to go through the extra step.

Actually selling apartments in terms of Bitcoin would go this way: I am selling my apartment for x number of Bitcoin.

If this was the case, it would mean that if the seller set terms in December 2017 when Bitcoin hit its all time high of $19,000 plus, the apartments in dollar terms would be now selling for 60% less in terms of dollars. No seller is going to take a 60% discount in dollar terms, he is going to ask for more Bitcoin. The Bitcoin part of the transaction is an extra step for nothing. The sales were ultimately dollar based.

-Robert Wenzel 

Thursday, March 22, 2018

TRADE WAR: China MAY Retaliate

Following President Trump announcing earlier today that he was imposing tariffs on over 100 goods imported into the United States from China, China has retaliated.

China just announced in a statement plans for reciprocal tariffs on 128 U.S. products that include pork, wine, fruit and steel.

Beijing will take measures against the U.S. goods in two stages if it cannot reach an agreement with Washington, the government said.

The U.S. goods, which had an import value of $3 billion in 2017, include pork, wine, fruit and steel. A 25 percent tariff could be imposed on pork imports while dried and fresh fruit imports could see a 15 percent duty, the statement said.

Trump signed an executive memorandum earlier today that will impose tariffs on up to $60 billion in Chinese imports. "This is the first of many" trade actions, the mercantilist thinking president said.

The world just got a little less focused on peaceful exchange and instead on government coercion.

Thanks, Trump.

The only positive is that China's tariffs appear "measured."

-Robert Wenzel 


Wire servives correct China MAY impose the above tariffs .


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)