Donald Trump's Idiotic Energy Policy Views And What It Indicates For Overall Trump Economic Policy

By Robert Wenzel

On Thursday, Donald Trump delivered an energy policy speech at The Williston Basin Petroleum Conference in Bismarck, North Dakota.

The speech continued to show Trump's lack of respect for free markets. His view seems to be that there are various economic matters that must be directed by government and that he is the best "deal maker" to ensure that the government makes the best deals in these situations. He clearly holds a view best described as an American Führer Principle perspective.

In his speech, Trump stated:

Under my presidency, we will accomplish complete American energy independence.

This, of course, is a declaration made by most presidential candidates ever since the Arab Oil Embargo of 1973. It is total confusion and Trump joins the pack in this confusion.

What does this declaration mean? It means a perspective that advocates for taking the evaluation of the risk of another Middle East oil crisis out of the hands of independent risk takers and putting it in the hands of the government.

It ignores the fact that entrepreneurs are quite capable of evaluating the risks and opportunities on thousands of commodities on a daily basis. If the threat escalated with regard to a disruption of oil supplies out of the Middle East, oil prices would skyrocket, causing market-created conservation of supplies and entrepreneurs, in anticipation of a real threat, would stockpile supplies. No Führer needed.

Further, if there really is a threat that Middle East oil will be cut off at some point in the future, the U.S. should be eagerly using as much Middle East oil as possible now and husbanding domestic supplies.

"American energy independence" flies in face of the way to deal with a real threat of a cutoff in Middle East oil. If there really is such a threat, you absorb all the Middle East oil you can now, so that when the threat develops you have not used up the easiest to produce domestic oil.

Things got worse as Trump went on in his speech. He said:

American energy dominance will be declared a strategic economic and foreign policy goal of the United States.

This suggests once again that Trump is thinking in terms of a horrific government created  national industrial policy. It is Trump thinking again as the master leader and negotiator of the economy, seeming unaware of economic teachings that show it is impossible to successfully centrally plan an economy. (For more indications that Trump would implement various national industrial policies see: The Most Under-Reported Sentence in Donald Trump's Foreign Policy Speech).

Trump then reemphasized his desire to become independent of OPEC oil and also what he deemed "nations hostile to our interests."

We will become, and stay, totally independent of any need to import energy from the OPEC cartel or any nations hostile to our interests.

If a country is willing to sell us cheap oil, how can that possibly be hostile to out interests? As Mises and Rothbard have taught, it is trade that reduces tensions between countries.

Trump went on with an even more horrific step, indicating that the revenue generated from his "American energy independence" plan will, to some degree, belong to the federal government:

We will use the revenues from energy production to rebuild our roads, schools, bridges and public infrastructure.

This is, of course, on top of Trump's declaration that he will allow the Keystone Pipeline project to continue as long as the government participates in the profits (See: Fascist Economics Squared? Trump Will Approve Keystone Pipeline for a Cut of Profit).

As Rob Garver notes:

First of all, the federal government isn’t in the business of shaking down private businesses for a share of their profits in exchange for favorable treatment. There’s another entity with that business model, but its leaders don’t announce their plans in press conferences.

Additionally, suggesting that the government share in the profits of a business it would also be in charge of regulating for safety and compliance with environmental regulations creates some pretty dubious incentives.

Finally, the idea that the government should target a specific project as a source of extra cash, either through some sort of unprecedented profit-sharing arrangement or through another targeted assessment, which would amount to a company-specific tax, has got to be pretty terrifying to free-market Republicans in general.

Many libertarian supporters of Trump seem to hold the view that Trump will be less willing to get the United States involved in military actions overseas. This I doubt. I expect a new Trump Administration to act quickly to send US troops to the Middle East to fight ISIS and to employ some kind of military operations in Libya. And that is for starters.

But putting aside what Trump will do on the global military front, I believe the authoritarian, central planning efforts that a Trump presidency would bring domestically to the United States would be extremely oppressive and, yes, in many ways move the U.S. economy to look much more like that of a Third World economy.

Libertarian supporters of Trump fail to take into consideration Adam Smith's important observation with regard to empathy and location that he outlined in The Theory of Moral Sentiments.  In other words, if Trump is only a domestic horror, and not a militaristic global adventurer, that is a very serious problem in and of itself.

Trump's energy policy speech provides every indication that he has the instincts of a central planner and completely subscribes to the Führer Principle perspective. Not good, not good at all.

 Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics. His linked page is here. His San Francisco Review of Books essays are here.

CRIMINAL Former US State Department Official to Buy Ukraine's Largest Telecom Company

By Robert Wenzel

This is just about as insane and open of an inside look, as to how  US empire operators grab the spoils of their interventions that result in turmoil, that you are ever likely to get.

As is clear, the US played an important role in the Ukrainian revolution as revealed by the release of a recording of a phone call between Assistant US Secretary of State Victoria Nuland and U.S. Ambassador to the Ukraine Geoffrey Pyatt (SEE: An Important Second Listen to the "F--k the EU" Ukraine Recording).

But, Nuland isn't the only US State Department official playing a major role in Ukraine.

A US citizen, the Elmhurst, Illinois-born Natalie Jaresko, obtained a second citizenship (Ukrainian)  on  December 2, 2014, the day of, get this, her appointment as Minister of Finance of Ukraine.

Natalie Jaresko

Prior to Jaresko becoming Ukraine's finance minister, she, according to Wikipedia:

....held several economics-related positions at the US Department of State in Washington, D.C., and eventually coordinated activities of the State Department, the Departments of Commerce, Treasury, the United States Trade Representative, and Overseas Private Investment Corporation (OPIC) in their economic relations with the Soviet Union and its successors. As part of her work she interacted with the International Monetary Fund, World Bank, and the European Bank for Reconstruction and Development. Later from 1992 to 1995, she was the first Chief of the Economic Section of the U.S. Embassy in Ukraine, responsible for strengthening economic cooperation between the two countries.[8] In 2003 she was awarded the Ukrainian Order of Princess Olga for her contributions to the Ukrainian economy. 

Between 2005 and 2010 Jaresko was a member of President Viktor Yushchenko's Foreign Investors Advisory Council and the Advisory Board of the Ukrainian Center for Promotion of Foreign Investment under the auspices of the Cabinet of Ministers of Ukraine.

So what is Jaresko up to as finance minister of Ukraine?

She is about to take control, for herself, of Datagroup, the Ukraine telecom company that controls 85% of the Ukranian telecom market.

Datagroup is owned by Oleksandr Kardakov but his personal empire has collapsed due to foreign currency loan debt.

Foreign loan debt is an old muscle trick of economic hit men (SEE John Perkins, Confessions of an Economic Hit Man). Banksters and international global financial organizations (think the World Bank) load up third-world governments with debt that can't possibly be repaid and they go in to pick off the juicy meat when the third-world governments can't make the debt payments.

The loans to Kardakov were a spin-off on the basic maneuver. With Nuland fomenting revolution and turmoil in Ukraine, the Ukranian currency, the hryvnia, has collapsed on foreign exchange markets.

This has made it impossible for Kardakov to pay off his US dollar-denominated loans.

Enter Jaresko.

Ukraine Today reports:

In late February, the company began its liquidation procedure. The company's other major asset - 'Datagroup' telecom operator - may soon be sold out to pay off debts. It may be purchased by its current minority shareholder - investment company 'Horizon Capital', co-founded by Ukraine's current Finance Minister Natalie Jaresko.

 Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

How #Bitcoin Will Destroy @RealDonaldTrump's Plan to Build a Wall and "Get Mexico to Pay For It"

By Robert Wenzel

Long-time readers of EconomicPolicyJournal.com know that I have been a severe critic of the idea that bitcoin will be a libertarian answer to government money.

The nature of the blockchain is such that bitcoin becomes a very trackable currency if bitcoins are used for regular transactions.

However, I have also been careful to point out that for single transactions, bitcoin could be quite useful in making an anonymous transfer.

Enter Donald Trump and his wall along the Mexican border that he will "get Mexico to pay for."

He has just supplied a memo to the Washington Post  explaining how he plans to force Mexico to pay for the wall.

From WaPo:

Donald Trump says he will force Mexico to pay for a border wall as president by threatening to cut off the flow of billions of dollars in payments that immigrants send home to the country, an idea that could decimate the Mexican economy and set up an unprecedented showdown between the United States and a key diplomatic ally.

In a two-page memo to The Washington Post, Trump outlined for the first time how he would seek to force Mexico to pay for his 1,000-mile border fence, which Trump has made a cornerstone of his presidential campaign and which has been repeatedly scoffed at by cureent and former Mexican leaders...

In the memo, Trump said he would threaten to change a rule under the USA Patriot Act antiterrorism law to cut off a portion of the funds sent to Mexico through money transfers, commonly known as remittances. The threat would be withdrawn if Mexico made “a one-time payment of $5-10 billion” to pay for the border wall, he wrote.

“It’s an easy decision for Mexico,” Trump said in the memo, which was written on campaign stationery emblazoned with “TRUMP Make America Great Again.”


After the wall is funded, Trump wrote, transfer payments could continue “to flow into their country year after year.” He gave the memo to The Post in response to a written question provided to him before an interview last week.

Nearly $25 billion was sent home by Mexicans living abroad in 2015, mostly in the form of money transfers, according to the Mexican central bank. In his memo, Trump said that “the majority of that amount comes from illegal aliens.”...

“We have the moral high ground here, and all the leverage,” Trump concludes.

Trump's memo reveals the remarkable naivete, lack of understanding of the nature of a complex world and his bizarre notion that he as the great leader can micromanage the entire world.

Trump, as president, may full well be able to limit Western Union and banks from transferring money to Mexico, but it would do nothing to stop the transfer of funds from nonregistered foreign-born workers (NFBW).

It is not difficult to see how an NFBW could, on the black market, transfer his US earnings into bitcoin and pay it out to his family in Mexico. He simply buys, with his US dollars, bitcoins on the Mexcian-community black market that would emerge in the US and pay the bitcoins out electronically to his family in Mexico, who would sell them for pesos in Mexico.

Indeed, I suspect on the Mexican side of the border Mexico would encourage bitcoin exchange shops and hawala (another method funds could be transferred across the border to Mexico without physical movement and extremely difficult for governments to detect) shops, as a way to defeat Trump's plan.

A further note: Although, Trump claims he wants to stop illegals who are murderers and rapists, by attempting to block money transfers, he is really attempting to harm those who come to this country to work.

And it should not go unnoticed that Trump's first detailed policy statement includes plans for the expansion of the horrific Patriot Act.

Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

Confusion about Fractional Reserve Banking

By Robert Wenzel

I note excitement in a number of Austrian school economics quarters over news that Switzerland will hold a referendum on the Vollgeld initiative.

The initiative, promoted by the Swiss Sovereign Money movement, calls for private banks to hold 100 percent reserves against their deposits.

Some see this as an important battle against fiat currency. I would argue it is not such and is simply misdirection that will accomplish nothing good.

How far has this confusion spread? I suspect very far. When discussing another topic with an Austrian fellow traveler, he responded to me in an email:

I did not say anything about the central bank. I don’t think that the [Austrian Business Cycle] theory requires a central bank, it requires fractional reserve banks. 

But is fractional reserve  banking really the key to money distortions that result in misdirected funds into the capital sector? I think not.

Murray Rothbard in The Mystery of Banking writes:

In short, under free banking, banks are totally free, even to engage in fractional reserve banking...Propagandists for central banking have managed to convince most people that free banking would be banking out of control, subject to wild inflationary bursts in which the supply of money would soar almost to infinity.

To be sure, there are plenty of debates around fractional reserve banking and whether it would be allowed in a truly free market society, given that it is possible that it could be viewed as a broken contract, but that is not the question here. The question here is: "Is fractional reserve banking fundamental to the cause of the business cycle?"

Admittedly, at present, central banks do use fractional reserve banking in their calculations of how much money they are pumping into the banking system. But this is because we do have a fractional reserve banking system and it is a method by which money can be pumped into the economy, especially when coordinated by a central bank, but it is only a method. Take fractional reserve banking away and central banks can still pump funds into the commercial bank sector all day long.

Note what the  Swiss Sovereign Money movement says:

Banks won’t be able to create money for themselves any more, they’ll only be able to lend money that they have from savers or other banks.

But what prevents a central bank from being one of these "savers"? That is, why can't a central bank buy term paper from banks, the funds of which the banks could then lend out since it isn't part of demand deposits (where 100% reserves would be required)?

Indeed, in a Telegraph report, it appears clear that it is understood that the central bank would still be in  charge of money printing, with input from the government:

If successful, the sovereign money bill would give the Swiss National Bank a monopoly on physical and electronic money creation, "while the decision concerning how new money is introduced into the economy would reside with the government," says Vollgeld.

In other words, it is entirely possible that the  Swiss National Bank could fund the credit sector even without fractional reserve banking. or it could be instructed to print money for other sectors.

But there is nothing here fundamentally that puts fractional reserve banking at the center of capital-consumption structure distortions. It can occur without fractional reserve banking if a central bank is involved and it would be extremely difficult to pull off in a free banking system even if fractional reserve banking were allowed.

It is the central bank that is the problem Rothbard again:

Free banking, then, will inevitably be a regime of hard money and virtually no inflation. In contrast, the essential purpose of central banking is to use government privilege to remove the limitations placed by free banking on monetary and credit inflation.

There is nothing in the Vollgeld initiative that should be exciting for those who want government out of the money printing business. Ending fractional reserve banking won't do it, ending central bank operations will.

End the Fed!

Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

Ben Bernanke Visits San Francisco to Lie About Gold

By Robert Wenzel

Former Federal Reserve chairmen Ben Bernanke was in San Francisco last night.

In conjunction with the promotion of his book, The Courage to Act: A Memoir of a Crisis and Its Aftermath, he appeared at the Commonwealth Club of California in a Q&A format where he was questioned by Michael Moritz, Managing Partner, Sequoia Capital.

I was stunned by the way the Q&A began. Stunned.

If there is a clue as to what government officials are concerned about by what they go out of their way to lie about, then it is clear that they are very concerned that American citizens may not believe the US government has the gold it claims to have in its vaults. That is, gold that is listed on the financial books of the US Treasury and via Treasury certificates on the books of the Federal Reserve.

The first question Moritz asked was a total softball, "So what did you do as Fed chairman, go around to all the banks in the country and see if they had cash in their vaults?"

The crowd of approximately 1,200 at Nourse Theatre laughed. But it is noteworthy how Bernanke answered the question and where he took it.

He replied, "No, but I did visit the vaults at the New York Fed where the gold is stored." And then he looked at the crowd and said, "I checked, it's all there, so you can relax."

The problem with this answer is that US Treasury gold is not held at the New York Fed, it is supposedly held at Fort Knox, in Fort Knox, Kentucky, just south of Louisville (with smaller amounts at West Point and Denver and an even smaller amount at the NY Fed)

Moritz's follow up question provided Bernanke the opportunity to correct his statement if it was just a slip. Moritz asked, "Isn't gold for foreigners also held at the NY Fed?"

Bernanke did not at that point attempt to clarify his earlier statement, which implied that US gold was held at the New York Fed. Instead, he went on to make another misstatement.

He said that there were many scare stories that there was no gold being held at the New York Fed and that in fact Germany had decided to withdrew all its gold. "They just came and carried it back," he said.

But although, Germany has withdrawn some gold, it has far from withdrawn all its gold. Of some 300 tons of gold originally held at the New York Fed by the German central bank, approx. 200 tons has yet to be withdrawn. Indeed, they have launched a new program to audit the gold they are still holding at the New York Fed.

Bernanke then went on to mislead on the Fed money creation role. He said that it was an error to think that the Fed prints money. He said that it was the Bureau of Engraving which does the printing . While this is correct in a technical physical printing sense, it misdirects from the more important fact that it is Fed monetary policy which plays a major role in determining how much money is actually printed--and when you go beyond physical money and include money in checking accounts (and more) as do all economists, then it most certainly is well beyond what is going on at the Bureau of Engraving.

Bernanke concluded his amazing performance by absolving himself of any role in the recent financial crisis.

He said that the financial crisis was not the result of failed monetary policy but occurred because of regulatory problems.

 Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

How a Few Men on Wall Street End Up Setting National Economic and Monetary Policy

By Robert Wenzel

I have already posted that I met on Friday evening with Pippa Malmgren. Her father, Harold, worked under four presidents. She has under two, Ronald Reagan and George W. Bush. She was also a member of the President's Working Group on Financial Markets, aka, the Plunge Protection Team.

We talked of many things when we met and as I left I told her I had enough material from her for months of posts. I will be posting much here at EPJ and also, in Monday's EPJ Daily Alert, I will report on her views on the future of interest rates and price inflation.

In this post, I want to focus on one of the most important things we discussed, how Wall Street ends up influencing top Washington D.C. officials and, therefore, policy.

It started when I questioned her about the Plunge Protection Team. "Tell me, what are they up to and do they really manipulate markets?" I asked.

She laughed and said, " I don't know why all the focus is on them. They are mostly middle managers, who don't understand economics or the markets.

"It's a large group and they have trouble getting out a statement, never mind directing policy."

She took a sip of her white wine, but I didn't interrupt. I could tell she wanted to say more.

"But there is a much smaller group. That group is very powerful and they do make policy decisions. It is called the Plus One," she continued.

"It's composed of roughly 10 people. The heads of the SEC, the Federal Reserve, the Treasury, the CFTC and the National Economic Council. The actual agency heads who attend a given meeting may vary a bit depending on the crisis, but these five agencies are the core.

"It is just the heads of these agencies and each head is allowed to bring one additional person along. That's where the name for the group, Plus One, comes from. When I was at the National Economic Council, I was the plus one," she said.

Now I took a sip of my sapphire tonic. "Go on," I said,

"They are the decision makers. They make the big policy decisions, but they don't necessarily understand economics or the markets. They either have political backgrounds, academic backgrounds or business backgrounds, but they don't have market backgrounds,

"When they enter this world, they are way over their heads and they know it. So each one finds one or two people that they trust and who they feel comfortable saying to, 'Explain what this means.' It is those doing the explaining that control policy. It's a very small group."

She said a lot of financial executives and experts visit these heads and show off using all kinds of lingo and technical jargon, but the heads don't understand what they are talking about. "It's the guys that know how to explain things in a simple manner without being condescending that are going to be relied on," she said.

"Each head of every agency has these 'go to' people.

"Look at the meeting logs and phone logs of the agency heads and you will see who these 'go to'  people are. They talk to them all the time. And, of course, the 'go to' person's explanations are always given in a way that suggest policy moves that will benefit the 'go to' person's firm," she went on.

Pippa wouldn't go on record with me with who these "go to" people are, but a quick check of the records indicates that Lloyd Blankfein, CEO of Goldman Sachs, must be a master explainer and the ultimate "go to" guy.

Here is HuffPo on Timothy Geithner meetings with Blankfein, when Geithner was Treasury Secretary:

Treasury Secretary Timothy Geithner has met more often with Goldman Sachs CEO Lloyd Blankfein than Congressional leaders, including the Speaker of the House and the Senate Majority Leader, according to his official calendar.

Goldman CEO Lloyd Blankfein has shown up on Geithner's calendar at least 38 times through March 2010 since the Treasury Secretary took office in January 2009, three more entries than Senate Majority Leader Harry Reid, 13 more than House Speaker Nancy Pelosi, and nearly four times as many as Senate Minority Leader Mitch McConnell and House Minority Leader John Boehner combined, according to a copy of Geithner's daily log recently published online by the Treasury Department. The imbalance is striking, considering that Geithner was heavily involved in financial regulatory reform legislation, which Congress was grappling with during the period covered by the calendar.

It is also instructive to see how often former Goldman head Hank Paulson, when he was Treasury Secretary, talked to Blankfein, including at a secret meeting with Goldman's board in Moscow.

It should be remembered that Paulson came from the investment banking side of Goldman. He may have been very good at taking people out to lunch, but it does not mean he understood, markets and trading. Did Blankfein play the role of great explainer even to a former Goldman head?

Bottom line, these "go to" guys, such as Blankfein, don't have to be in the Plus One meetings, their policy recommendations will be.

This may help shed light, also, on how people are selected to head these type agencies, possibly bright people, but people who are unfamiliar with the ins and outs of the sector they are ruling over, who will need the guidance of the "go to" guys .

It is noteworthy that the current head of the Federal Reserve, Janet Yellen, comes from an academic and government background and the Treasury Secretary, Jack Lew, is a government number-cruncher guy. Just perfect for what the great explainers are looking for, to advance their policy agenda at future Plus One meetings.

 Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

Understanding the Labor Participation Rate

By Robert Wenzel

There is much excitement, by many. over the decline in the labor participation rate. They see it as some kind of signal that the economy is crashing. But why would the participation rate crash in this phase of the business cycle (the up phase), rather than for non-cyclical structural reasons? Is there some kind of new magical downward economic force that is preventing workers from finding jobs?  Is it somehow causing the Fed to "run out of bullets"?

Markets clear. thus, it is only when we are moving from the bull phase of the business cycle to the bear phase,that we see sudden cyclical jumps in unemployment. So what is going on now? Let's take a look at the data.

The participation rate in August 2015 (62.4 percent) is the lowest since October 1977. But the rate was lower than that every month between 1948 and 1978. The low point came in December 1954, when the rate was 58.1 percent.

The period 1948-1978 was a generally strong period for the economy, so a low participation rate does not necessarily mean a troubled economy. During the period real GDP climbed by more than 300%. (It even climbed during periods of steep downturns in participation, see for example the 1960 to 1965 period and the greater 1956 to 1965 period)

So if a "bad" economy isn't driving workers from the labor force, what is?

A report from the Bureau of Labor Statistics issued in November 2006 studied those in the non-participation category and found they generally fell into these categories:

1) The aging of baby boomers. A lower percentage of older Americans choose to work than those who are middle-aged. And so as baby boomers approach retirement age, it lowers the labor force participation rate.

2) A decline in working women. The labor force participation rate for men has been declining since the 1950s. But for a couple decades, a rapid rise in working women more than offset that dip. Women’s labor force participation exploded from nearly 34 percent in 1950 to its peak of 60 percent in 1999. But since then, women’s participation rate has been “displaying a pattern of slow decline.”

3) More young people are going to college. As BLS noted, “Because students are less likely to participate in the labor force, increases in school attendance at the secondary and college levels and, especially, increases in school attendance during the summer, significantly reduce the labor force participation rate of youths.”In In 

In a report from Shigeru Fujita at the Federal Reserve Bank of Philadelphia on Feb. 6, 2014, Fujita concluded:

Almost all of the decline (80 percent) in the participation rate since the first quarter of 2012 is accounted for by the increase in nonparticipation due to retirement. This implies that the decline in the unemployment rate since 2012 is not due to more discouraged workers dropping out of the labor force.

These studies fit with theory. Markets clear. In a boom cycle employment improves, if there is a climb in non-participation, it is for reasons outside the business cycle.

If you don't believe this, you don't believe Austrian school business cycle theory.

 Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

New Evidence The Federal Reserve Vote is Rigged and Controlled by the Banksters

By Robert Wenzel

The Federal Reserve Bank of St Louis has published a fascinating chart detailing the history of dissents to monetary policy moves by the Federal Reserve Open Market Committee (see above).

The FOMC is the interest rate and general monetary policy setting body of the Federal Reserve. If the Fed decides to raise rates in September, it will very likely be done at the September 16-17 meeting of the FOMC.

Here's the thing. The FOMC consists of twelve members--the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis.

The Board of Governors, all work out of the The Marriner S. Eccles Federal Reserve Board Building in Washington D.C. If they vote in unison, they wipe out any influence of the Federal Reserve branch bank presidents, who are less tied to the Washington D.C./New York City bankster power corridor.

Prior to 1996, dissents were common by both the Federal Reserve bank branch presidents and Fed board governors. But this came to pretty much to a halt in the middle of the Alan Greenspan Fed chairmanship. In the 19 years since 1996, there have been only 2 dissents by Fed governors. During the same period, despite the fact that there are far fewer voting Fed branch presidents on the FOMC, they have dissented more than 50 times.

Something clearly happened under the Greenspan chairmanship. The Fed governors do not now stray, at all, from what is essentially chairmanship policy.

There, of course, has always been strong bankster influence at the Washington D.C. and New York offices of the Federal Reserve, but in the last two decades that influence appears to be absolute. The branch presidents in the hinterlands, don't have a chance at influence. The NYC banksters, who fly in private jets between NYC and Washington D.C., the way every day New Yorkers take the subway. appear to be in absolute charge. They certainly can target the Fed chairman, when they want to influence, and be very comfortable that dissent from the chairman by the governors will be near zero.

As I say, the absoluteness of the control started under the Fed chairmanship of Greenspan, who just so happened to have worked early in his career at the powerful Wall Street investment bank Brown Brothers Harriman (Prescott Bush was a general partner), and he sat on the board of directors of the bankster firm JPMorgan, just before he became Fed chairman.

 Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

A Tale of Two Smiths (and Austrian Economics)

By Robert Wenzel

Two Smiths have dabbled in economics. One some time ago, the other does so now.

The earlier dabbler was Adam Smith (1723-1790), the current dabbler is Noah Smith. Aside from both having first names with deep biblical origins, they have little in common besides their economic scribblings.

Adam. no doubt, wrote with feather in hand, Noah, likely, pounds away at a keyboard. The great Austrian school economist Murray Rothbard (1926-1995) examined the work of Adam and found his contributions to economics dubious.

Since Rothbard has passed, we will never know first hand what he thinks of the writings on Austrian economics of Smith, Noah. However, it may be fun to guess what Rothbard and other serious Austrians might have to say about Noah's take.

Noah, in a short essay. discusses Austrian school economics and tells us:

The Austrian school, for the uninitiated, is a hodgepodge of beliefs, usually holding that fiat currencies are doomed to fail, that a return to the gold standard is inevitable and that central banks are responsible for bubbles, market crashes and recessions. But this group has grown relatively quiet of late, and it isn't hard to see why.    

First, there was the dramatic failure of the Federal Reserve's program of quantitative easing to cause even a hint, even the slightest whiff, of inflation. For a few years, the fears of inflation were kept on life support by Austrian claims that inflation was being hidden from the public eye, that asset price increases were actually a form of inflation, or -- my personal favorite -- that QE itself is inflation. Eventually, even the most diehard supporters of these silly backup arguments were forced to quiet down; reality can only be denied for so long. 

Here Noah confuses Austrian school theory with Chicago school theory. It is the Chicago school theory, not the Austrian school theory, that holds there is a direct correlation between increases in the money supply and price inflation.

If Noah believes that this isn't so, then he is not reading the great Austrian theorists, Ludwig von Mises, F.A.  Hayek and Rothbard. Not one of them argued that there was a direct correlation between increasing money supply and price inflation. Indeed, they went out of their way to distance themselves from that view

Here is the Nobel Prize winner Hayek distancing himself on this point from Milton Friedman, a key member of the Chicago school :




Rothbard wrote the damn definitive book, from an Austrian perspective, on America's Great Depression, and wrote in that book (in 1963!)

We can  not prove [monetary] inflation by pointing to price increases...Suffice to say here that the stability of wholesale prices in the 1920s was the result of monetary inflation offset by increased productivity, which lowered costs of production and increased the supply of goods...The economists who emphasized the importance of a stable price level were thus especially deceived, for they should have concentrated on what was happening to the supply of money. 

And Ludwig von Mises said in a speech:(In Paris in 1938!)

What is fundamental for economic theory is that there is no constant relation between changes in the quantity of money and prices.

Thus, there is no surprise, to hardcore Austrians,that immediate price inflation has not developed as a result of an increase in the money supply. Mises, Hayek and Rothbard taught us that there is no direct correlation, a long time ago. Decades before the current cycle!

That said, Noah is highlighting an important problem. There are a lot of quacks out there, who pretend to be Austrians, but who are really doom and gloomers, who forecast doom tomorrow, the next day and everyday. I have objected particularity with regard to their perspective on unemployment and the booming capital goods sector, to them it is not occurring. We are always going down, down, down. This is nonsense. The Austrian business cycle theory is just that, a theory of a cycle that includes periods of boom and bust.

I do not cheer the mad manipulations of the Federal Reserve and I made that clear to their face, But at the same time, we need to be grounded relative to where the economy is. And since the 2008 financial crisis, which I called here at EPJ in real time, the stock market has been in a boom phase.

What occurs from here, though, could be very different. A serious price inflation threat does hang over the economy, likewise, the boom phase might be over for the stock market. These are topics I am discussing in the EPJ Daily Alert. It is, right now, a very complex period and we are on the edge with things potentially developing in many different ways.In other words, the doom and gloomers could soon be right on many things, though they are far from correct most of the time.

As for Noah printing a 5 year chart of gold and declaring gold investors wrong because gold has declined over that period. I ask, did he short gold 5 years ago? To paraphrase Warren Buffett in a way which should have extra meaning to someone named Noah, predicting rain after the fact doesn't count building an ark in advance does.

Noah does then go on to provide something of a thumbs up to Austrian school business cycle theory,when it comes to China. He writes:

That brings us to another interesting Austrian notion -- the instability of financial markets. Mainstream macroeconomics is only just barely starting to deal with the idea that financial markets may have a natural tendency to boom and bust. Austrians have been saying this for almost a century. The seeming inevitability of the reversal in Chinese real estate and stock prices looks like one more slap in the face for bubble skeptics.

But Austrians must accept this praise only by adding a cautionary comment.

Austrian business cycle theory is not about a natural tendency to boom and bust. Austrians view the boom-bust cycle as caused by central bank manipulations of the money supply. In the Austrian school view, if you remove the money manipulations, you remove the cycles.Rothbard made this clear and recognized the importance of the general understanding of this perspective.

Without bank credit expansion, supply and demand tend to be equilibrated through the free price system, and no cumulative booms or busts can then develop...The time is ripe — for a rediscovery, a renaissance, of the Mises theory of the business cycle. It can come none too soon; if it ever does, the whole concept of a Council of Economic Advisors would be swept away, and we would see a massive retreat of government from the economic sphere. But for all this to happen, the world of economics, and the public at large, must be made aware of the existence of an explanation of the business cycle that has lain neglected on the shelf for all too many tragic years.

  Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

The Truth about Negative Interest Rates:The Originary Interest Rate vs. the Nominal Market Interest Rate (wonkish)

By Robert Wenzel

In an article at Institutional Investor, Vineer Bhansali, a managing director and portfolio manager at PIMCO, recently quoted Loyola University Professor Walter Block on negative interest rates and contrasted his view with that of Harvard University Professor Greg Mankiw.

Dr. Block has emailed to EPJ this response:

I thank this author:

Bhansali, Vineer. 2015. “Look at Negative-Yielding Bonds as Insurance.” May 20;
http://www.institutionalinvestor.com/gmtl/3455422/Asset-Management-Regulation/Look-at-Negative-Yielding-Bonds-as-Insurance.html#.VVztg03bLct;

for mentioning an old publication of mine:

Block, Walter E. 1978. "The Negative Rate of Interest: Toward a Taxonomic Critique," The Journal of Libertarian Studies: An Interdisciplinary Review, Vol. II, No. 2, summer, pp. 121-124; http://www.mises.org/journals/jls/2_2/2_2_4.pdf

Bhansali begins by quoting me as saying that a negative originary interest rate is impossible. I based this on the following statement from Mises:

Taking a Long Shower and Thinking About the Water "Shortage"

By Robert Wenzel

As I have written in the past, water is just like any other commodity, if you price it below market clearing levels, you will have shortages,

If you allow market prices, shortages disappear. When you have market prices, incentive is provided for development of new sources of water and the price acts as a disciplinary force against "waste."

Most officials in government jurisdictions through out the globe fail to get this and will attempt to impose rationing when their below market price schemes on various commodities result in major shortages. (SEE:  Venezuela Turns Into a Socialist Nightmare and Toilet Paper: The US vs. Venezuela)

But I live in California, where the very unpredictable Jerry Brown is governor. And I do mean unpredictable.

Cleveland Fed (Accidentally?) Links to Paper Extremely Critical of US Monetary Exchange Interventions During the Bretton Woods Era; Pulls Paper

By Robert Wenzel

The Federal Reserve Bank of  Cleveland earlier this week tweeted out a notice of a working paper by economists, Michael D. Bordo, Owen F. Humpage and Anna J. Schwartz.

The paper was tiltled: U.S. Intervention during the Bretton Wood [sic] Era:1962-1973

At the time the paper was written in 2011, Bordo taught in the Department of Economics, Rutgers University, Humpage was an economist at the Federal Reserve Bank of Cleveland and Schwartz worked at the National Bureau of Economic Research.

The web page containing the paper is now empty. From the Google search:

US Intervention during the Bretton Wood Era: 1962-1973www.clevelandfed.org/.../wp1108.pdf?...

Federal Reserve Bank of Cleveland

Apr 8, 2011 - U.S. Intervention during the Bretton Wood Era: 1962–1973 by Michael D. Bordo, Owen F. Humpage, and Anna J. Schwartz. By the early 1960s, ..

And  the tweet about the paper has been deleted. I downloaded a hard copy of the paper,with the Federal Reserve of Cleveland logo on the front page, before it was taken down,

There appears to be a very similar version of the paper at the National Bureau of Economic Research, but it, for one, does not have the typo in the title, Wood instead of Woods.

It is probably no surprise that the paper is no longer featured at the Cleveland Fed. The paper is a detailed 87 page report on the massive interventions in currency markets that the Treasury and the Federal Reserve conducted during the era of the Bretton Woods exchange rate system. The paper is exceptionally critical of the market manipulations that took place during that period.

This is from the introduction (my bold):

In an attempt to neutralize speculative activity, the U.S. Treasury began intervening in the foreign exchange market in March 1961, after a 30 year hiatus. A year later, the Federal Reserve began intervening for its own account with a primary focus on providing foreign central banks with temporary cover for their unwanted dollar exposures. 

 These operations were stop-gap. In the early 1960s, U.S. administrations believed that
much of the pressure on the balance of payments was transitional and largely related to the postwar global recovery, so finding a mechanism to buy time for an inevitable adjustment seemed appropriate. By the late 1960s, however, Bretton Woods’ severe structural problems, which a rising U.S. inflation rate severely aggravated, were apparent. The maintenance of Bretton Woods required elected officials in the United States and abroad to sacrifice domestic economic goals for international objectives, a trade-off they would not make. The U.S. closed its gold window in August 1971, and generalized floating commenced in March 1973. 

 As a delaying tactic, U.S. foreign exchange operations were often successful. They
raised the potential costs of speculation and provided cover for unwanted, temporary, and ultimately reversible dollar flows. They delayed the drain of the U.S. gold stock. But to the extent that these devises substituted for more fundamental and necessary adjustments and postponed the inevitable collapse of Bretton Woods, they were a failure. In addition, the institutional arrangement underlying U.S. intervention operations raised important, long-lasting issues about Federal Reserve independence. 

In addition to the paper's exceptional critique of the exchange manipulations, the paper offers a valuable insight into how the Federal Reserve operates during periods of  crisis. Here is what the Fed did, according to the paper, immediately after the assassination of President Kennedy and what it did at the height of the Cuban Missile Crisis:

 U.S. authorities occasionally intervened to calm developments that, if left unchecked, might grow to threaten the existing parity structure. The most notable occasion occurred immediately following President Kennedy’s assassination on 22 November 1963. At this time, trading in the New York market essentially stopped. To prevent panic selling, which seemed to afflict the stock market at the time, the Foreign Exchange Desk of the Federal Reserve Bank of New York (FRBNY) placed large orders to sell all major currencies at the exchange rates that existed just prior to the assassination. By the close of business, the Desk had sold $23.5 million equivalent German marks, British pounds, Netherlands guilders, Canadian dollars, and Swiss francs. On that same day, the Bank of Canada bought $24.5 million to support the dollar against its Canadian counterpart. (The System then acquired $14 million from the Bank of Canada through its swap  rrangement.) The European markets were closed at the time of theassassination. When they reopened, foreign central banks intervened in their spot markets, but by then, markets had settled down.

 Similarly, news of the Cuban missile crisis on 22 October 1962 generated large financial flows out of dollars and into Continental currencies, especially Swiss francs. If left unchecked, the Desk feared, these financial flows might raise doubts about the structure of the exchange rates. Moreover, by placing unwanted dollars in the Swiss National Bank, they contribute to a potential drain on the U.S. gold stock. The Federal Reserve System responded by selling $8 million equivalent francs into the Swiss spot market through the Swiss National Bank and $2.3 million equivalent francs into the New York spot market. (The Swiss National Bank acquired $50 million through intervention, and the System drew $20 million equivalent Swiss francs through its swap line with the BIS on 31 October 1962 and bought dollars from the Swiss National Bank.) The System also sold $700 thousand equivalent Dutch guilder in the New York spot market at the onset of the Cuban missile crisis.

Take this as an object lesson. The Fed does intervene in markets during crisis periods and it is very likely that the definition of "crisis" has broadened, since the 1960s, to cover a lot more than assassinations of US presidents.

There are many other lessons to be learned from the paper, including the Fed's perspective on price inflation, which in my view is eerily similar to the present day situation. (I discuss this in much greater detail in the  EPJ Daily Alert). Suffice to say for this post, my view is that the Fed will eventually be in a position similar to the early 1970s, when they ignored signs of growing price inflation to help continue to boost employment and the economy.

Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

Uber's Great Strategic Error

By Robert Wenzel

There really are a lot of dumb people in the world.

One of the areas where cluelessness abounds is in the area of economics. Even at a very basic level when it comes to economics, the brain pistons just aren't firing for most.

The best evidence of this is

Say No to 'Audit the Fed'

By Robert Wenzel

I have never been a big fan of "Audit the Fed." In May 2009, I wrote:

I Smell A Trap

Ron Paul's House bill calling for an audit of the Fed is getting support from the strangest places.

Lew Rockwell today links to a column by Dean Baker who now supports an audit of the Fed.

The problem with Baker's column is that he doesn't quote Ron Paul. He doesn't even mention that Paul introduced the bill. He does, however, mention Elizabeth Warren, who heads a congressional oversight panel, dealing with bailout money.

I've discussed Warren before, her oversight committee went so out of bounds that two members of the five member panel dissented. She is a big time Obama operative. You don't want columnists using Warren as a signal flag to support Paul's bill.

Why?

This what Baker would like to see come from an audit:

The proposal for a GAO audit of the Fed is a first step towards reasserting democratic control over this institution...In a democracy, it is difficult to justify a situation in which the most important economic policy making body is, by design, more answerable to the banking industry than democratically elected officials.

I hope Congressman Paul knows what he is doing, to me it sounds like this may evolve into a power play over who controls Fed money rather than an investigation into whether the Fed should be printing money in the first place. If Democrats start signing on to the bill in heavier numbers, it may be a sign that an audit may come, but it will end with a restructured Fed controlled by left wing radicals, who believe money is for handing out and who have no fear of inflation.

In August 2009, I wrote:

One of the group's supporting Ron Paul's legislation to audit the Federal Reserve is the National People's Action Network (NAPAN). Their top target right now is the Fed. Their executive director, George Goehl, recently told me in a private conversation, when I asked him what he thought of Paul's bill to audit the Fed, without hesitating he said, "I think it's great."

Don't take his anti-Federal Reserve stance as an anti-big government stance, though. He is a big supporter of government nationalized healthcare, intervention to stop mortgage foreclosures and government heavy handed control interest rates. He is protesting the Fed because he wants more representation "by the people" at the Fed...[Ron] Paul better be very careful on his audit the Fed legislation as it is very vulnerable to being hijacked by the radical left. This needs to be shifted to an End the Fed program real fast.

I am certainly am no fan of the Fed (SEE: The Fed Flunks: My Speech at the New York Federal Reserve Bank), but I think to believe that the focus should be, as I wrote in 2009, on ending the Fed rather than who is controlling the Fed.

If it comes between the banksters continuing to control the Fed or Congress, there may actually be something to be said for letting control stay in the hands of the banksters. They most assuredly will use the Fed to line their own pockets, but there is no advantage for them to see  hyperinflation hit the economy. Remember, when inflation started to get somewhat out of control in the late 1970s-early 1980s, it was the banksters who brought Paul Volcker in at the Fed to slow the money printing and battle the price inflation.

It is not at all clear that the same thing would have occurred if Congress would have been in control, of the Fed at that time. There are a lot of very clueless and dangerous members of Congress, who have no idea how the economy works and would never call for a slow down in money printing. Whether these fools are in the majority in Congress, I have no idea.  But the thought that these nut jobs could control the money supply is very scary, and that's exactly where an audit the Fed bill would go.

I have talked this over with a serious bankster, who knows many of the members of Congress a lot better than I ever will, and the idea that such a group would control Fed policy scares him. I have to agree.

Thus, I have to oppose Rand Paul's re-launch of the Audit the Fed bill. I can't see any good coming from it.

I am not in favor of the special privileges that banksters get, but I am much more scared of the Elizabeth Warrens in Congress running Fed policy.

The focus should be on educating the public about the evils of the Fed and why it should be shutdown, rather than wasting time focusing on what criminal group should be running that great economic manipulating money manipulating machine called The Fed.

Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

An Historical Look at Price Inflation and the Future Price Inflation Prognosis

By Robert Wenzel

Most members and staff economists of the Federal Reserve Open Market Committee, the body that sets monetary policy, appear to be working under the assumption that because price inflation at the present time is, as measured by government statistics, under 2% that this trend is likely to continue.

From the minutes released of the December 16-17, 2014 FOMC meeting:

The staff's forecast for inflation in the near term was revised down to reflect the further large energy price declines since the October FOMC meeting, which were anticipated to lead to a temporary decrease in the total PCE price index late this year and early next year. The staff's inflation projection for the next few years was essentially unchanged; the staff continued to project that inflation would move up gradually toward, but run somewhat below, the Committee's longer-run objective of 2 percent.

It is difficult to understand what the Fed is basing this on other than simply projecting out the current trend. How sound of a method is this? One need only look at the 1960s and 1970s to understand the problems with this type of projection.

From 1960 to 1965, prices climbed at an annual rate below 2.0 percent Starting the period with a climb of only 1.4 percent in 1960. By 1969 the inflation rate was at  5.9 percent and by 1979 it hit 13.3 percent.



It is simply very dangerous and sloppy to think that because inflation has not been strong for a number of years that it won't be strong in the future, especially given the amount of new money that has been pumped into the economy, and that the pre-2008 financial crisis already showed a period of significant price inflation acceleration.

Clearly, the financial crisis and recession suffocated the price inflation, but as I have pointed out that recession is now long gone and we are in the midst of a new Fed manipulated boom. This boom will eventually result in consumers loosening the wallets that they have been holding on to ever so tightly since the 2008 crisis, when that loosening of the wallets accelerates, the price inflation will return.



Consumer confidence is climbing. It's a sign that the wallets are starting to open up. The accelerating price inflation is likely not very far away.




 Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

DOMESTIC BLOWBACK: Two NYPD Coppers Down

By Robert Wenzel

We are all familiar with blowback as the Empire attempts to assert its dominance around the world, that's what most terrorism aimed at the US is about.

Now, a new form of  blowback may be emerging: Domestic Blowback.

I have long chronicled the government rules and regulations that have made success difficult for many, particularly young black men.

Minimum wage laws prevent them from getting that first job. Drug laws have created an "opportunity" in the underground world for them, but if they get caught by the government operating in this world, they face long periods of incarceration.

Government education is a joke. And on top of that they have few role models to show them how to live and succeed in the modern world, as LBJ's Great Society programs removed adult males from black family settings.

Instead, front and center are hustlers like Al Sharpton, who use the caged-like environment faced by many young black men to instigate racial strife. An instigation that has now been advanced further by the President and his wife (SEE: Michelle Obama's Experience at Target Wasn't Racist Back in 2012).

The anger is real, though generally misdirected. The problem is not racial but government oppression. Curiously, this anger is now being directed, though a bit in a confused manner, at the first line enforcers of government regulations, the police. It is, for all practical purposes, blowback against the government rules and regulations that have created a toxic brew of failure and anger among many black youth.

They experience the first line enforcers on a regular basis. They don't understand the deep nature of the rules and regulations that are causing their plight, but they do know the police are on the opposite side of the plight, pushing them, stopping them, frisking them and arresting them. And thus the anger at the police.

The anger among black youth probably can be charted in the form of some kind of bell curve, with few actually wanting to kill coppers and willing to execute the killings, But there probably are a few--the exact number unknown.

The executions yesterday of two NYPD officers by Ismaaiyl Brinsley shows us that the tail end of the curve is not empty. It turns out that cop killer Brinsley is something of a wordsmith so he left it clear why he launched the executions:

"I'm Putting Wings on Pigs Today" and "They Take 1 Of Ours...Let's Take 2 of Theirs" will certainly juice up those on the tail of the curve even more.

Politicians, Al Sharpton and many more will have all kinds of comments in the days ahead for sure.

NYC Mayor Bill de Blasio has already made the absurd comment:

It is an attack on all of us, on everything we hold dear … Therefore every New Yorker should feel they too were attacked, our entire city was attacked, by this heinous individual.

It's not an attack on an "entire city." It is an attack by one black man against the first line of government enforcement, the police. There will be all kinds of talk about the community coming together and how race relations need to be improved, But this is all touchy feely nonsense.

What needs to be done is that black men, and others in the same predicament, must be freed from the shackles of minimum wage laws, drug laws etc. Compulsory useless government public school "education" must be stopped. And the government needs to stop shoveling support to women who have children without fathers in the home. Until such measures are taken to diffuse the situation and provide new avenues and direction, especially for angry young black men, the anger will continue and others on the tail of the bell curve are likely to take up the cry of  Ismaaiyl Brinsley, "They Take 1 Of Ours...Let's Take 2 of Theirs."

Let's hope the rest of us don't get caught up as collateral damage in the crossfire in this new domestic blowback.

 Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

Paul Krugman, Trickle Down Price Inflation and the Ultimate Death of Krugmanization

By Robert Wenzel

Paul Krugman is flipping out over a recent commentary by hedge fund operator Paul Singer:

Sometimes the absurdity of what passes for economic wisdom surpasses even my highly adapted expectations. I really, truly expected that even Wall Street would consider PeterPaul Singer’s hyperinflation in the Hamptons rant embarrassing, and try to pretend that it never happened. But no; apparently it’s being passed around eagerly by traders and big shots who think it’s the greatest thing since sliced foie gras.

Singer actually nailed it. He writes:

Krugman Admits Keynesians Failed to See the Financial Crisis Coming

By Robert Wenzel

Paul Krugman recently commented on Martin Wolf's new book, The Shifts and the Shocks: What We’ve Learned—and Have Still to Learn—from the Financial Crisis, at The New York Review of Books (October 23,2014).

The review itself, overall, is rather uninteresting. What I found interesting is Krugman's admission that the economic mainstream had no clue the financial crisis was developing.

Janet Yellen Admits the Fed is Clueless When It Comes to Correct Economic Theory and Other Stunning Admissions

By Robert Wenzel

On Thursday, Federal Reserve chair Janet Yellen delivered a speech at the  International Symposium of the Banque de France in Paris, France.

The speech is quite noteworthy since she pretty much admitted in the speech that the economic data that the Fed watches did not offer any clue that the 2008 financial crisis was developing:

Paul Krugman: "Obama has emerged as one of the most consequential and, yes, successful presidents in American history."

By Robert Wenzel

Paul Krugman is out with an essay at Rolling Stone on President Obama. It is only one note short of being a full hagiography.

If one were to show the essay to any well-read person, without any indication that the piece was published by Rolling Stone and written by Krugman, the person shown such piece would most certainly guess the paper was a rushed work by an over enthusiastic high school freshman, with above average potential to become an eventual high school geography teacher.

There is no indication that the author of the paper has any