Ten Times Worse Than RadioShack

By Bionic Mosquito

David Stockman has written a very thorough piece on the condition of the economy – specifically the amount of debt and the impact that the debt has on inflating many things, including asset prices and favored economic indicators, specifically GDP.

I would like to focus on one aspect of his commentary – and it starts right at the top:

Is Money a Unit of Value or Unit of Measure?

By Bionic Mosquito

Answer first, analysis later: money is a perfect unit of measure; there is no such thing as a unit of value.

John Tamny is out with a piece suggesting that David Gordon, of the Mises Institute, inadvertently attacked Ludwig von Mises when Gordon reviewed Money, the book released last summer by Steve Forbes and Elizabeth Ames. (HT EPJ)

I have, in the past, found much to agree with in Tamny’s writings, and some to disagree with.  I have agreed with him on topics that were disagreeable to some in the Austrian school.  Sadly, Tamny even prompted me to write one of the dumber posts I think I have ever written – or at least one aspect of my post was such (boy, I hate re-living that one…).

Back to the current Tamny piece:

What struck this writer as odd is that in lightly attacking Forbes and Ames, Gordon only succeeded insofar as he perhaps unintentionally revealed a strong disagreement about money with the intellectual father of the Institute which employs him, Ludwig von Mises.

I am not going to deal with the views of Mises on this matter, for two reasons: first, I don’t read enough of Mises directly to comment either way.  I have explained why this is so elsewhere, but in a nutshell: I want to work through problems of economics myself; if I later find that I landed where someone like Mises has previously landed, I feel pleased. If I find I disagree with someone like Mises, I feel confident.  But for me, the journey is most important.

Second, if someone wants to challenge David Gordon on just about any topic, he better bring his lunch…and dinner.  Don’t let Gordon’s

On Thick, BIG Libertarians

By Bionic Mosquito

Matt Zwolinski is out with his bleeding-heart argument, not only thick but BIG, as in

The Junk Science of Modern Macro-Economics

By Bionic Mosquito

John Mauldin has published another almost-there Thoughts from the Frontline: GDP: A Brief But Affectionate History.  I say “almost-there,” because like many of Mauldin’s pieces, he gets almost-there – almost to the truth about economics and economists – without going all the way to the evident conclusion.

In this piece, he

Inside the Mind of a Mosquito: Q&A with Bionic Mosquito

By Political Badger

Many of you have read his pieces on his blog bionic mosquito. You have seen his stuff all over the place: on lew rockwell, economic policy journal, lions of liberty…

After hearing some talking head on CNBC refer to Ron Paul as a mosquito, the author thought to himself, “If Ron Paul is a Mosquito, he is a powerful one.” Hence the name. Jonathan Goodwin is bionic mosquito and was kind enough to give us a peek into his not-so-mosquito-sized brain.

Political Badger: What was the impetus for starting your blog?

Murphy Rothfar’s “Libertarian Estates”

By Bionic Mosquito

NB: This story is fictional.  The characters are not real.  Any resemblance to real events or persons is purely coincidental.

There was once a man, a property developer, by the name of Murphy Rothfar.  He was a creative man; he had thoughts about real estate, property development, and construction that were far outside of the mainstream.  He had a vision beyond that of many of his predecessors and one that provoked a jealousy amongst some and anger amongst others of his contemporaries.  Frankly, most just thought of him (if they thought of him at all) as a kook.

He decided one day to

Is Proportionality “Thick”?

By Bionic Mosquito

Robert Wenzel has written a very interesting post, entitled “Why It Would Be Okay, in a Libertarian Society, for Macy's to Execute Shoplifters.”

The best way to understand my view on this is to understand that I believe the libertarian perspective on relief that must be paid for violation of the non-aggression principle must be entirely left up to the victim.

…lets take the case of a shop owner, who has caught a shoplifter. In my view, the owner, as would, say a large retailer such as Macy's, have the right to treat a shoplifter in any manner he chooses, including execution.

Look, if you want to stop reading now, I understand; I almost did the same when I read the original.  I know Wenzel can be

Virtually Every American Soldier who Died in a War Died for a Lie

By Bionic Mosquito

Memorial Day is a US federal holiday wherein the men and women who died while serving in the United States Armed Forces are remembered.

This weekend and continuing through Monday Americans will witness countless varied acts of praise for those who have died in America’s wars.  Ball games, parades, pancake breakfasts, even Sunday church service (Laurence Vance, be on alert) – one or more of these will offer opportunities for just about any patriotic American looking for an opportunity to worship.

Apparently, about 1.3 million Americans died in the wars since 1775 (not counting suicides, apparently one every 65 seconds since 1999).  It is worth considering: for what did they die?  Was any of

Sheldon Richman Takes Down Walter Block & Lew Rockwell?

By Bionic Mosquito

(Note: I am trying something suggested by Robert Wenzel in his post “Note to Libertarian Bloggers: How to Boost Traffic to Your Sites.”  I am going for a three-bagger with my title; the power hitter in the bunch should be pretty obvious.)

We have a new post from Sheldon Richman regarding thick libertarianism.  In this post, he contrasts his vision of libertarianism with that of Walter Block and Lew Rockwell, via recent posts by these two. 

His first couple of paragraphs are better left ignored.  I will start by offering Richman’s proposition:

The proposition on the table is that the most robust case for the libertarian philosophy (such as I articulated but of course did not originate) entails commitments not only to the Nonaggression Principle — or what I now call the Nonaggression Obligation — but also to other values that don’t directly relate to aggression (for example, opposition to even non-rights-violating forms of racism).

This is not a good start.  Do we really need to

Taking Apart Rand Paul, Line By Line

By Bionic Mosquito

I have written several posts regarding Rand Paul – primarily around the time and decision

where he first sent strong signals that his approach to politics would not be a principled one.  After a time, this theme got tired – how many times would I write such a thing about any other unprincipled politician? 

In the last six months, I have exactly one post labeled “Rand Paul,” and even this was only regarding a recent NY Times hack-job on his father and the Mises Institute.  The entire subject – Rand Paul isn’t principled – became a dead-horse to me.  I had made a soft-decision to drop this subject from my writing orbit.

Until today. 

Is a Russian-German Alliance Ahead?

By Bionic Mosquito

One of the longer running themes I have written about at this blog is the slow shrinking of the US orbit as empire, and the slow increase in orbit of an alliance including Germany, Russia, China, and ultimately perhaps including Japan (and…Australia).

For those not so familiar with my thoughts on this topic, perhaps my most thorough post on this topic is here.  This post was written shortly after events in Syria last summer – events that moved Russia forward and the United States backward in terms of importance of orbit.  One of the more significant events during that time was the British Parliament vote against military action in Syria.

Fast forward a few short months to Ukraine.  In November, Ukraine backed away from a closer relationship with Europe in favor of maintaining ties to Russia.  This set off apoplectic seizures in parts of the West – certainly Europe, but especially in the United States.

And of course, a recent chain of events brought us to the military posturing and belligerence of today.  No need to go through the details, I believe.

But what does this say of the evolving era, the shifting of orbits?  A couple of data points:

From EPJ, and as reported in the Telegraph:

A secret briefing document held by an individual walking into Downing Street has been photographed. It suggests the UK will oppose trade sanctions against Russia following the country’s invasion of Ukraine.

Is the photo authentic?  Is the policy position definitive?  I guess we will have to see how the British Parliament reacts in the coming days.

The document also suggests that the UK will not try and restrict Russian trade through the City of London.

The City of London isn’t London, but one square mile in the center of the larger city.  It is a distinct governmental entity.  For an enlightening, yet sanitary backstory of the City:

The City of London has been granted various special privileges since the Norman Conquest, partly due to its power as Britain’s financial capital. These are also mentioned by the Statute of William and Mary in 1690.

The Norman Conquest marked the end of medieval decentralization on the island, and the beginning of centralization, including the insidious idea that all land belonged to the king).

Author and journalist Nicholas Shaxson argues that, in return for raising loans and finance for the British government, the City “has extracted privileges and freedoms from rules and laws to which the rest of Britain must submit” that have left the corporation “different from any other local authority”. He argues that the assistance provided to the institutions based in its jurisdiction, many of which help their rich clients with offshore tax arrangements, mean that the corporation is “a tax haven in its own right”. Writing in The Guardian, George Monbiot argued that the corporation’s power “helps to explain why regulation of the banks is scarcely better than it was before the crash, why there are no effective curbs on executive pay and bonuses and why successive governments fail to act against the UK’s dependent tax havens” and suggested that its privileges could not withstand proper “public scrutiny”.

Money that doesn’t want to be found or known finds a home in this tiny enclave:

Although there is no agreed definition of a tax haven, many authors have accused the City of London of being one.  The Tax Justice Network, goes further and accuses the City of London as being “the biggest tax haven in the world” as well as ‘a state within a state’.

Ian Doyle and Jem Bendell, summarise these claims with the following statement:

…the City “is the most powerful lobby in Britain and possibly the world, and as a result . . . exerts enormous political influence to resist regulation and extract tax exemption. It has fostered criminality by ensuring that the City ranks amongst the least accountable of financial centres on the face of the Earth”.

In other words, when one thinks of global-elite money-power, operating independent of and above government, this is a pretty good description.

So back to the EPJ post; I commented at the site:

If one accepts that the same elite that controls Washington also controls London, this is the second of at least two interesting events in the recent past, the first being the British parliament vote against military action in Syria.

Is it decided that the US state is pushing it too far?

The political actors we see every day are puppets, but not in the traditional sense.  The puppet master does not have a physical string to these puppets – in other words, no direct red-phone.

Instead, most of the key political actors are chosen due to their demonstrated propensity to act in a desired manner.  Did Bernanke need a daily call in order to decide to inflate?  Of course not; his entire academic career demonstrated how he would behave when the time came.

And why did Obama come out of nowhere six years ago when Hillary (or even McCain) would have been victorious (and seemingly perfectly acceptable)?  Perhaps because he was seen as the least belligerent of the (acceptable) bunch – while still keeping up the façade of the necessity of government as currently practiced (a trait which the non-belligerent Ron Paul lacked, and therefore made him unacceptable).  If a less belligerent America was desired, Obama has performed fairly well.

What of Germany and Russia in all this?  Pepe Escobar notes, in his article “Carnival in Crimea”:

As Immanuel Wallerstein has already observed, Nuland, Kagan and the neo-con gang are as much terrified of Russia “dominating” Ukraine as of a slowly emerging, and eventually quite possible, geopolitical alliance between Germany (with France as a junior partner) and Russia. That would mean the heart of the European Union forging a counter-power to the dwindling, increasingly wobbly American power.

Nuland and Kagan might be terrified of a lesser US orbit, because they have been trained to work for a greater US orbit.  But it doesn’t mean they are on the right train.  Events seem to indicate a different path.

Given the proximity to Europe, it is no surprise that many eyes look to Merkel as playing a leading role:

If there is a solution to the crisis, it may lay in Berlin, in the personage of Angela Merkel, the German Chancellor and the de facto leader of the European Union.

Russia is Germany’s biggest supplier of energy, and it still regards Germany as an ally rather than a potential enemy.

Windmills aren’t going to power Germany’s industrial economy.

Merkel, despite having criticized Russia for its human-rights violations on several occasions over the years, has maintained a businesslike relationship with Putin, who speaks excellent German.

Germany has not gone as far as others in the west regarding Russia; while signing a G-7 communiqué condemning Russia’s incursions:

…they oppose the idea of ejecting Russia from the G8 completely, which is something that Kerry and others have mooted. It isn’t even clear whether Germany would support economic sanctions against Russia, another possibility that the Obama Administration has raised. European Union rules require unanimity for the imposition of sanctions, and without Germany’s support the idea would go nowhere.

A peaceful solution to this western rift with Russia is in Germany’s interest:

That’s not just because Germany gets about a third of its energy from Russia, mostly in the form of natural gas; it also reflects Germany’s broader interests. Since the collapse of the Soviet Union, no country has benefitted more from expanded ties to Eastern Europe and friendly relations with Russia. As members of the E.U., many former Communist countries, such as Poland, Slovakia, and Romania, now serve as production centers and consumer markets for German manufacturers.

Germany sees Ukraine as another possible market; Germany also sees danger in treating Russia as a pariah:

Over the past few years, Merkel has made clear she would like for Ukraine to eventually join the club of Germany’s democratic trading partners. But, like all Germans, she also knows the dangers of lasting enmity with Russia.

There is no “but.”  It seems clear that if Germany sees opportunity in Ukraine, Merkel must find friendship with Russia.

Thereby increasing the orbit centering on Germany, Russia, China, and perhaps a few others.

And shrinking the US orbit.

The above originally appeared at Bionic Mosquito.

A Challenge to Milquetoast Libertarians

By Bionic Mosquito

Another day, another suck-the-joy-of-liberty-out-of-the-joy-of-liberty article.  This one, from Reason, is entitled “Time for a Guaranteed Income?”  And sadly, it isn’t followed by a simple one-word, two-letter response. 

The author is Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University.  Get any clues from this position and title?  I will give you another clue, in case you still haven’t caught on: The subtitle of the article is “The pros and cons of a welfare idea championed by liberals and libertarians alike.”

Raise your hands if you already know where this is headed.

OK, for the rest of you….

Switzerland will soon hold a nationwide referendum on granting a guaranteed and unconditional minimum monthly income of $2,800 for each Swiss adult. In America, where Lyndon Johnson's War on Poverty just celebrated its 50th anniversary of failing to achieve victory, liberals jumped on the Swiss news to reconsider the un-American-sounding idea of a universal basic income.

Surprisingly to some, they were joined by many libertarians. The list of intellectuals who have made cases for a guaranteed minimum income over the years includes such laissez-faire luminaries as Milton Friedman, Friedrich Hayek, and Charles Murray.

Let’s see, who are these libertarians?  A Chicago School Keynesian monetarist central planner (but I repeat myself), an Austrian economist who, unfortunately, supported many interventions in the market, and a fellow at the American Enterprise Institute.  Hear no libertarianism; see no libertarianism; speak no libertarianism.

And what libertarian cred do these three bring to the discussion?

Friedman favored a negative income tax (NIT), in which taxpayers who earn less than the established minimum taxable income level would receive a subsidy equal to some fraction of that difference. (A watered-down version of this became the Earned Income Tax Credit.) Hayek defended a minimum income floor, in which the government provides a conditional income to each adult. Murray's 2006 book In Our Hands argued for an unconditional $10,000 annual cash payment to all adult Americans, coupled with a repeal of all other welfare transfer programs.

A negative income tax…a minimum income floor…and $10,000 cash on the barrel-head.

Paid for by whom?  Enforced how?  Wait, sorry.  I am getting a bit too extreme in my libertarian thinking.

The author goes on to a long discourse about the pragmatic and utilitarian possibilities of such proposals.  Don’t get me started (and gpond, don’t be so eager to point out my logical flaws!).  She finds less and less reason to support any of the existing proposals, because they really don’t seem to help much.  Not because they require theft to implement, but because they don’t work very well.

But even this is not her main cause for objection.  Oh no:

But my main objection to a guaranteed minimum income is rooted in the wisdom of public choice: The poor structure of government incentives ensures that good intentions and elegant theories rarely equal expected results in public policy. The biggest risk in implementing a guaranteed income is that it won't completely-or even partly-replace existing welfare programs, but instead simply add a new layer of spending on top of the old.

Her main objection is not the violation of the non-aggression principle, or the breakdown of property rights; her main objection is that government is just not very efficient at doing what it publicly claims it wants to do.  If only government was more efficient.  Then, of course, they could violate liberty better than ever before.

So what are libertarians to support?

Here it is; the money line.  Please, Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University, drop some libertarian wisdom on us.  What should we support?

If nothing else, more research: We could use a new series of voluntary, dispersed trials aimed at finding ways to avoid work disincentives while delivering payouts more efficiently and tying the hands of special interests and politicians.

More research (funded by whom?); more trials (conducted by whom?); tying the hands of politicians (tied by whom?).

Can’t we support something much simpler, and – dare I say it – libertarian?  Can’t we support the end to the legalized initiation of aggression?

The author closes with a statement that indicates at least a germ of awareness regarding the proper answer:

But more importantly, as economists Peter Boettke of George Mason University and Adam G. Martin of Kings College in London remind us in a recent paper, libertarians shouldn't forget that "the most robust protection against poverty comes from institutions that generate a harmony of interests rather than those that foment distributional conflicts."

The single-best institution that generates a harmony of interests is the free-market.  I challenge any milquetoast libertarian to explain how it can be otherwise.  Try initiating aggression and otherwise violating property rights and see if expanded harmony is the result.

How is it possible to claim libertarianism through violations of the non-aggression principle – no matter how efficient one might hope to make the violations?

It isn’t.

Milquetoasts.

The NY Times Hack Job and Milquetoast Libertarians

By Bionic Mosquito

By now, most of you are likely aware of the NY Times commentary over the weekend, and especially the jabs taken at the Mises Institute, Ron Paul and Lew Rockwell.  Lew Rockwell himself has addressed the issue, with a post cross-published at both Mises andLRC.  Mr. Rockwell wears the criticism, considering the source, as a badge of honor – coming from the home of Krugman, Friedman, and the like, a rational decision on his part.  Robert Wenzel has also addressed the issue at EPJ.

The NYTimes piece has brought out waves of praise from various milquetoast libertarians – those who are working really hard to influence policy in the federal government.  You know the type: “Sure, if we could only get them to listen…and they might even like us!”

How Many Divisions Does the Algorithm Have?

By Bionic Mosquito

My second post on bitcoin.  First, a reminder from the first:

My view in a nutshell: I support a free market in money, credit, currency and banking.  If you think I write something counter to that in this post, you are mistaken; re-read the first sentence.

I took some time to consider the various issues raised by bitcoin before I wrote the first post.  It has been almost two weeks since then.  It seems about time to write a second. 

You will likely recognize the title of this post.  It is a slight modification of a line Stalin used regarding the power of the Catholic Church and the Pope.

I find fault in many of the defenses of bitcoin – for example the idea that it can succeed as an alternative currency and still ensure complete privacy.  I have read people who brag that they can buy anything on the internet with bitcoins.  Maybe so…but where do they have the package delivered?  Or that they can even buy airplane tickets with bitcoin.  In whose name was the ticket issued?

How are users of bitcoin dealing with the tax ramifications?  Sure, one might take comfort in the anonymity of the whole thing.  But those data storage centers in Utah aren’t for nothing.  Is it certain that, from the date of your last use of bitcoins, the statute of limitations on tax fraud will expire before the government figures out the code?

But all of this is peripheral.  I guess this is the bottom line for me about bitcoin: if the state wants to crush it, it will crush it.

Does this mean I hold no hope for a more decentralized world?  Certainly not – I think decentralization is quite likely, if not inevitable.  I have often pointed out concrete examples – the former USSR, Yugoslavia, and Czechoslovakia, each one broken into several pieces.  The struggle to hold the EU together is another bit of evidence as to the difficulty the elite are having in further centralization.

The internet is a big part of the reason that I believe the decentralization will continue.  But if this is true, why not bitcoin – a child of the internet if ever there was one?

The control over money and credit is the single most important tool that the elite have in order to maintain control (although I can make an argument for education, also).  By elite, I don’t mean politicians or bankers.  I mean the people that the politicians and bankers work for – knowingly or not.

The elite will give up on much (take a step back, as the Daily Bell sometimes suggests) before they give up on control over money and credit.  I have written that it seems likely to me that they will even allow for sovereign defaults – real, no kidding defaults – if this allows the faith in regulatory democracy to continue for a longer time.  They will even allow some forms of political decentralization if this allows them to maintain overall control.

And control is the end.  Not wealth.  They have untold wealth – it is the control that allows this.

But if market money wins?  What do they have? Is it only coincidence that the century of virtually world-wide central banking coincides with the century of regulatory democracy and continuous war resulting in the closest thing to world government that has been achieved in recorded history?

The state, as tool for the elite, will crush bitcoin if this is so desired – and the only reason I see that it won’t be crushed is if the elite want to co-opt bitcoin.

Does this mean I believe the state is omnipotent?  Omniscient?  Omnipresent?  No, certainly not.  But it does not have to be these things.  A few very public hangings will suffice.

How did the state crush Swiss private banking?  The US government made very public examples of a handful of individuals and institutions - and guess what?  An entire industry came to heel.

Does the state have to be total in its destruction to achieve its ends?  Does a herd of elephants?  If I hear a herd of elephants charging my way, do I stay put in the comfort and certainty that not 100% of living things in the path of this devastation will die?  Do I not seek the storm cellar on approach of a tornado, even though not all in its path will be thrown into oblivion?

Does this mean that, through force the state will always come out on top?  No.  But the state is on top for now, and will be for the foreseeable future.  Too many people still have faith in the system.  Eventually enough will lose faith, and this will lead to a loss of power. All states require this faith by the people in the state, else the state cannot survive – why do you think they spend so much effort on propaganda?

The state is delivering the goods, so the masses continue to support the state. Eventually, too few independent will not be able to support the too many dependent via coercive state transfers.  That is likely when the faith will crumble.

Control over money and credit is the key tool of the elite.  They have demonstrated that they are not shy about using every possible means to maintain control.  There are not enough people ready to withdraw their consent from being controlled. 

But the numbers increase daily.  It just doesn’t strike me that today is the day.

This is my most fundamental criticism about bitcoin.

The above originally appeared at Bionic Mosquito.

The Federal Reserve and Stupidity Theory

John Mauldin Looks Into the Abyss…
By Bioic Mosquito

…with his eyes closed.

Recently Steve Forbes interviewed John Mauldin on the occasion of Mauldin’s new book, “Code Red.”  Mauldin, while getting much better at blaming the Fed, is getting no better at seeing the solution.  (All emphasis added to cited passages.)

John Mauldin: Part of the reason we had this very crisis was because of central bank policies and government regulations and the interweaving of large investment banks and politicians and central bankers. I don't want to get into conspiracy theories; I think it's just people's self-interest.

Steve Forbes: How about a stupidity theory?

JM: Some of it was stupid, but some of it was just greed.

Central bank policies and government regulation weren’t “part of the reason we had this very crisis”; these were precisely the reasons behind the crisis.

Mauldin doesn’t want to “get into conspiracy theories,” but without doing so he can never get to the right answers.  As he is not a stupid man, I can assume he doesn’t want to get to the right answers…publicly.

A Young Store Clerk with a Plan to Boost Sales

By Bionic Mosquito

The young store clerk was having a hard time of it.  He had been working at the Save-Mart for a few months, bagging groceries, stocking shelves, sweeping the aisles, and compressing and baling the cardboard boxes.  It bothered him only a little that this last duty seemed to be the most enjoyable – perhaps because it required the least interaction with people.

It wasn’t supposed to turn out this way.  He was a very bright, if not well-adjusted boy.  He always got the best grades in school, and tested out the highest on his standardized tests.  He was accepted at one of the finest universities.  Unfortunately, he majored in one of those degrees that offer little in the way of a meaningful career opportunity.

Now he was a store clerk at the Save-Mart, the local grocery store in a town best known for…well, not much of anything.  There was the paper mill, but it shut down a while back. The semi-pro hockey team was about the best excitement around, but this would be their final season here – they were moving out of state.  Unfortunately, times were slow, and there was little reason to expect that this sad truth would change anytime soon.

Save-Mart was not immune to this malaise.  As one shop after another closed, the owner of Save-Mart saw his sales dwindle.  Sure, people always had to eat – and liquor sales had never been higher.  But people stopped buying steak – it was now ground beef.  And no one visited the “locally grown” section of the produce aisle anymore – iceberg lettuce was the vegetable of choice for many.  People still bought soda-pop and cereal, but more often than not it was now the generic variety – lower sales, and lower margins.  In every aisle, the lower priced substitute was always the most popular.  The store was barely holding on.

The young clerk knew that something had to be done; sales were slowing, and soon even this job would be at risk.  He considered the possibilities – what can be done at the Save-Mart to improve the situation?  How can we improve our sales?

Sadly, little in his formal education was helpful in his quest – he truly mastered a subject that was of little use in the real world, a condition that he shared with many of his generation.  Try as he might, he could not find an answer.  Two-hundred thousand dollars, clearly gone to waste.

He decided to go through his class notes – remember, he was always a smart student and he certainly was proud of his notes.  His notes were very thorough.  Perhaps he could find some clue.  Every evening after work, he would spend hours poring through his class notes.

Several weeks went by.  Then one day he found it – the answer to his problems, or more accurately, the problems at the Save-Mart.  He found the sure-fire way to increase sales. 

He could not sleep that night – he couldn’t wait to get to the store in the morning and tell the owner.  He was quite sure that the owner would reward this insight with a promotion and an increase in responsibility…well, as long as he could keep compressing and baling the cardboard, that would be OK.

Finally, morning arrived; the clerk ran to the store.  He rushed into the owner’s office with the news:

“I have it; I have it,” he shouted.  He couldn’t contain himself.

The owner responded: “Calm down, son.  What is it you have?”

“Well, you know how our sales have been slow, and almost every month has been worse than the last?”

“Yes, son.”

“I have been struggling every day and night with how to find a solution to this.  I would think and think, but couldn’t come up with anything.  Then it hit me: I decided to go through all of my notes from school and see if I could come up with something.”

The owner gave a little chuckle.  The clerk thought it was a laugh of excited anticipation; it was instead, of course, the best the owner could do to not burst out laughing – he knew the subjects that the clerk studied while in school, and he held no hope that from these might come a viable solution.

A moment passed, while the owner contemplated his own little inside joke.  

“Well, don’t you want to hear my solution?”

The owner did not want to discourage the young man.  “Please, tell me.”

“Raise prices.”

“Raise prices?”  The owner stopped chuckling.

“Yes, raise prices.  Don’t you see?  Our sales keep falling.  If we just raise prices, our sales will be higher.”

“Higher?  How do you figure.”

The clerk, feeling a bit smug because of his advanced degree, tried not to let his arrogance show in his response: “Well, every time someone buys something, we will get paid more for it.  Our sales go up.”

“But how can the people pay more?  Every month, a few more are out of work.  Every month, I sell more hamburger and less steak.  Every month my sales have been falling.”

“Yes, that is why you should raise prices.  People will want to buy more, because they know that they will have to spend even more next month if they put it off.”

The owner, ready to end the conversation, wanted to do so without hurting the boy’s feelings: “I will think about it.”

Later that day, the owner had an epiphany; he really had to thank the clerk – if the clerk didn’t come up with the idea of raising prices, the owner might not have thought about this.  He decided to tell the clerk about his plan.

“You know, I have been giving your suggestion some thought.”

“Great, I will get the label gun loaded with tape.  How much should we raise prices?  I’m thinking 2% per week should do it.”

“Well, load the tape…but we are not raising prices.”

“Great, I’m loading…wait, WHAT?”

“We are not raising prices.  We are going to lower prices.”

The clerk had never heard of such a thing.  Everything in his notes said that in order to increase sales, one should raise prices – lowering prices was exactly the opposite thing that should be done.  Obviously, the owner wouldn’t know this because he never went to a school with as high a reputation as the one attended by the clerk.

“You can’t do that.  Lower prices will lower sales.  Once you lower prices, no one will shop – they will wait for even lower prices the next week.”

“Well, they can’t wait forever.  In the meantime, more people will be able to buy a little more – some will be able to buy steak again instead of hamburger.  I won’t complain about that!”

The young clerk was quite frustrated – he knew for sure this idea would cost him his job, as the store couldn’t stand a few more weeks of lower sales.

So he quit, and took a job that was better suited for his education.  He spent every remaining day of his life taking actions to spite the store owner.

And the owner of Save-Mart?  He did everything he could do to keep lowering prices.  He ushered in the greatest example of a discount store chain in the western world – a boon to consumers of all types.

(This story was inspired by the bombardment of Black Friday Sale commercials – I couldn’t help but wonder why every store in the land wants to harm the economy by lowering prices.  Don’t the store managers know better?  Meanwhile, all characters appearing in this work are fictitious. Any resemblance to real persons, living or dead, is purely coincidental – pictures notwithstanding.)

The above originally appeared at Bionic Mosquito.

Cato Calls to End the Fed…

By Bionic Mosquito

…objectives of targeting inflation and unemployment.  Fooled you, didn’t I?

I know it isn’t big news around libertarian circles that the Cato Institute is not libertarian, but every once in a while it is worth a concrete reminder.  In a commentary penned by Gerald P. O'Driscoll Jr., he asks: 100 Years Later, Was the Federal Reserve a Good Idea?

Now a clue to the answer may be found in Gerald’s professional background:

Gerald P. O’Driscoll is a senior fellow at the Cato Institute, and was formerly a vice president at the Federal Reserve Bank of Dallas.

I understand we all had to come from somewhere; while we all might have been born libertarian, the years of abuse and brainwashing in the indoctrination centers known as schools specifically, and in the brain-numbing bombardment by the mainstream media generally have taken a toll on many.  For most who find themselves in the libertarian camp, the journey was circuitous, unfortunately taking some for rides that, in hindsight, strayed from the good sense that God gave us at birth.

So maybe Gerald has returned to the wisdom that even a child possesses.  Maybe.

With the Fed in its centennial year, Janet Yellen facing confirmation hearings in the Senate, and questions swirling over whether the Fed will enact “tapering,” many monetary scholars are asking: Was the Fed a good idea?

Certainly, a clear and direct “no” won’t do – what kind of commentary would that be?  Over before it begins.  So Gerald highlights some of the bungles – attempting to establish his cred with the free-market community, I guess:

Not since the Great Inflation of the early 1980s has the Fed been so controversial. Its causal role in the housing boom and bust remains contentious. Other factors aside, the Fed was a poor overseer of the safety and soundness of the financial system. At best, the central bank was a passive bystander during the boom and early stages of the housing bust; it couldn’t even accept that we were in the midst of nationwide housing downturn.

…a look at the Fed’s unenviable performance over the past one hundred years shows how clearly it’s needed. On its watch, America endured the Great Depression, the Great Inflation and the Great Recession. Even excluding the Great Depression, real output has been no more stable than in the pre-Fed era.

In fact, the years of monetary stability under the Fed have been comparatively few.

Superficial as it is, is this not enough evidence to convict?

Certainly, the Fed has made many mistakes, but the current era of big government precludes any near-term possibility of abolishing it, as some would hope.

I guess not.

However, it can be improved. At a minimum, the Fed needs to be much more rule-bound. Targeting nominal GDP (the dollar value of all goods and services produced in the United States, not adjusted for inflation) would be one such rule.

I think I am going to be sick.

The above originally appeared at Bionic Mosquito.

Don’t Speed Near Federal Buildings

By Bionic Mosquito

This seems to be the lesson from the murder of Miriam Carey in Washington DC, the woman who unfortunately did not heed such advice this week.

The woman who was shot to death after a high-speed car chase through the streets between the White House and Capitol Hill was still in her car, snagged on the curb of a grass-covered median, when the police fired at her, a Senate official said Friday.

Well, let me modify my advice: don’t speed and don’t stop near federal buildings.

Questions were also being raised about whether she posed enough of a threat during the fast-moving sequence of events that the police needed to shoot her.

I don’t understand why such questions are being raised.  She was speeding and stopping near federal buildings.

Initially, law enforcement officials said Carey had gotten out of the car when she was shot Thursday afternoon.

At least Ms. Carey didn’t get out of her car near federal buildings – on top of speeding and stopping near federal buildings.  Of course, her murderers already had two reasons to kill her, so the third was not really necessary.

Early accounts of such events are often inaccurate, however…

Of course, especially anywhere near any federal buildings.

Most police departments discourage or prohibit opening fire on vehicles.

I guess most police departments don’t have to worry about speeding or stopping near federal buildings.

With responsibility for safeguarding two of the county’s most significant landmarks, however, the Capitol Police and the Secret Service are particularly attuned to potential terrorist threats.

And you thought I was just being silly about the speeding and stopping near federal buildings stuff.

Car bombs are one concern, as evidenced by the restrictions on vehicles around the Capitol complex, and officials said that by remaining in the car, Carey might have heightened fears that the car was an explosive threat.

Wait a minute.  I must modify my advice once again.  Don’t speed or stop or get out of your car or stay in your car near federal buildings.

Investigators were looking into reports from her boyfriend that she had been delusional and believed she was a prophet and under electronic surveillance by President Barack Obama.

They probably don’t need to spend a lot of government resources during the government shutdown on looking into that “electronic surveillance by President Barack Obama” thing. That one is known by the entire world to be a fact.

Another man who knew her, Majestic Steele, who is a neighbor of Carey’s mother, Idella Carey, said that a few years ago he saw Carey poised outside her mother’s Brooklyn apartment, clutching a Bible and wailing at the sky. “She was saying, ‘Help me,’ and ‘I need you,’ and she was quoting Scripture,” Steele said.

So don’t speed or stop or get out of your car or stay in your car or quote Scripture, and you should be safe from federal murder…maybe.

Law enforcement experts outside of Washington said the shooting raised significant issues about the use of deadly force to stop Carey’s car as it traveled along one of the nation’s best-known routes, Pennsylvania Avenue between the White House and the Capitol.

This is because these doubting-Thomas law enforcement officials don’t have any federal buildings within their respective jurisdictions.

The episode occurred just weeks after a mass shooting at the Washington Navy Yard and in the midst of a partial government shutdown.

This is getting difficult: don’t speed or stop or get out of your car or stay in your car near federal buildings; don’t quote Scripture; finally don’t do anything whatsoever within weeks of any mass shooting.

“The question should be, what was the threat that justified deadly force?” said Geoffrey Alpert, a criminologist at the University of South Carolina.

Yes.  And the answer lies in the proximity to federal buildings.

Others who study law enforcement said the rules might legitimately be different for officials in Washington.

Of course, just as I have been saying – it is because there are countless federal buildings there.

Sen. Richard J. Durbin, D-Ill., defended the officers in a speech on the Senate floor Friday. He said the decision to shoot Carey was “understandable” because the Capitol and the White House were often targets of attacks.

See!  It is the federal buildings. 

The above originally appeared at Bionic Mosquito.