Peter Schiff: The Long and The Short of Gold Investing

THE LONG AND THE SHORT OF GOLD INVESTING
By Peter Schiff

There are two types of gold investors: those trying to make money on short-term market timing and those looking for long-term asset preservation. It was the fear-driven trading of the former that helped gold break $1900 in 2011, and for good reason - stormy markets steer investors to safe havens.

But gold's fortune has shifted in the past two years, and finishing 2013 down 28% seems to have sealed its fate - at least in the eyes of the short-term speculators. In reality, the same forces that are stabilizing stocks and suppressing gold are also the fundamental reasons long-term investors have been buying gold since the turn of the new millennium. The so-called recovery we're now experiencing is just a lull in a storm that hasn't yet abated.

Losing Touch With Reality

From the fiscal cliff at the beginning of the year to the budget stalemate and government shutdown in the fall, the US was not exactly a model of financial stability in 2013. Yet with each of these stories, the markets shrugged off any large dips and went on to reach record high after record high. The stock market exceeded most expectations - the S&P and Dow rallied 29.6% and 26.5% respectively, with the volatility index staying remarkably low.

The official explanation for this market behavior is that the economy really is improving. A growing GDP and improving jobless rate are the leading economic indicators that support this conclusion.

However, the real reason behind 2013's stability in spite of mixed economic news was the extremely accommodating Federal Reserve policy. Markets have become hyper-aware of this Bernanke Put over the course of the year.

Compare the markets' taper tantrums earlier in the year to their reaction to the Fed's December announcement of "taper-lite."

In both June and August, with the mere talk of tapering, the S&P and Dow tumbled. The assumption was that when the Fed started tapering their Quantitative Easing (QE) program, interest rates would also start to rise. Overvalued stocks plunged in preparation for a higher interest rate environment.

However, this December, when the Fed set an official January date for tapering, these indices did not drop as they had before, but immediately jumped to new highs. Why the different reaction to essentially the same news?

Because the Fed's December announcement was not the same.

Normal No Longer Means Healthy

The key element of Bernanke's "taper-lite" was not the $10 billion-per-month cut to QE, but the explicit commitment to maintain low interest rates for the foreseeable future. Bernanke basically guaranteed the fed funds rate would remain near 0% for at least a couple more years.

This commitment to artificially suppressed interest rates ruins the charade that the economy is getting healthier. Why on earth does a healthy economy need the support of free money?

The short-term data may appear good on its face, but people are waking up to the bigger picture of this so-called recovery - namely that it isn't a recovery at all.

It's well-recognized now that most new jobs are low-wage, low-skilled placements. Often these are part-time or temporary retail or restaurant positions. This may be why both median income and the percentage of the population employed remain well below pre-crisis levels. The jobless rate has only improved because people have simply given up trying to find employment.

Meanwhile, the latest data from the Bureau of Economic Analysis shows that in the last months of 2013, personal spending rose more than personal income, while the savings rate dropped. In other words, we're back to digging the hole that caused the Panic of '08.

This is one of the longest and slowest recoveries the US has ever experienced, but the mantra of Wall Street maintains that all is well because the stock market is up. We're supposedly returning to normal.

The truth is that "normal" no longer means "healthy" when it comes to the economic stability of the United States. It really means that we are back to where we were prior to the Panic of '08.

Selective Memory

Only a short-term mindset could ignore the parallels between our economy today and ten years ago. Heading into 2004, the headlines sounded almost identical to today's, with talk of an improving economy that still suffered from less-than-optimal employment numbers.

More importantly, it was in 2003 that Alan Greenspan cut the fed funds rate to 1% - the lowest it had been for more than 40 years.

We all know how that story ended. Most economists agree that the interest rate policy of Greenspan's Fed spurred the irresponsible lending practices and speculation that drove the US into a housing crash and then a financial meltdown.

Yet here we are again, with the fed funds rate at record low levels. Nothing has changed in ten years - the supposed recovery we're experiencing now is simply a product of this endless cheap money.

A Sober Analysis

In times like these, long-term gold investors feel like the designated drivers in the corner of a frat party. It might seem like we're missing the fun, but we must remember that we're playing a different game than the short-term speculators.

Our drunken friends have had some cheap thrills in 2013, but this stock market growth rests on an unstable foundation of artificial stimulus and cheap money. We are more interested in waking up without a hangover, a wrecked car, or worse. The longer interest rates remain suppressed, the crazier markets will behave when rates rise. And if Greenspan's one year at 1% rates helped trigger the crash we saw in '08, imagine imagine what three years and counting of Bernanke's/Yellen's 0% rates portends for the next crash.

Peter Schiff is Chairman of Euro Pacific Precious Metals, a gold and silver dealer selling well-known bullion coins and bars at competitive prices. 

Another Lame and Laughingly-Desperate Attempt to Smear and Denigrate “Rothbardians”

By Thomas Dilorenzo

The old Chicago School of economics that was associated with Milton Friedman, George Stigler, Gary Becker, Arnold Harberger, Sam Peltzman, and others was famous within the economics profession for its intensely combative, argumentative, and sometimes raucous seminars.  Every speaker who gave a presentation, even Nobel prize winners, was challenged, questioned, and called out if he said something that someone thought to be incorrect.

The professed purpose of having such a rough-and-tumble seminar format was the relentless search for economic truth.  As Professor Harberger explained in an interview in the PBS series, The Commanding Heights, if someone stood in front of his students at a Chicago seminar and said something that was incorrect, Harberger believed it was his “duty” to “call him on it, right then and there.”  Otherwise, a room full of students would be misled and miseducated.  But everyone was friendly as can be in the lunch room, said Harberger.

The Nobel laureate Ronald Coase, who my colleague Peter Klein has described as one of the most influential economists of all time, and who serves as a model for much of Peter’s own research, was treated especially roughly at times by his Chicago colleagues (perhaps because he held a law degree and not an economics degree).  Yours truly recalls reading an article by Coase describing the grilling he got before his famous “Coase Theorem” paper was published in a Chicago journal (the Journal of Law and Economics). In addition to the usual torture chamber/economics department seminar experience, Coase was invited to Friedman’s home where Friedman and several other prominent Chicago economists gave him an additional grilling.

The famous University of Chicago economics department has housed about a dozen Nobel prize winners, none of whom – including Friedman – was ever exempted from intellectual challenges and questioning.  If they were to present and defend their version of free-market economics, this rigorous seminar format was useful in forcing everyone to sharpen their thinking.  Indeed, the entire economics profession is based on some (watered down!) version of this skeptical debate seminar format, which is on display at most professional meetings were research papers are presented and critiqued.

48 Non-Libertarian Positions Held By Friedrich Hayek

Murray Rothbard in  "Letter on The Constitution of Liberty by F. A. Hayek" (included in Murray N. Rothbard vs. the Philosophers, Edited by Roberta A. Modugno) identified 48 no-libertarian positions that Hayek supported in The Constitution of Liberty: The Definitive Edition.

Rothbard wrote:

It is, in fine, a tragic failure because, setting out in this big book to establish a groundwork and a system for liberty, this is precisely what Hayek fails to do and which constitutes his chief error. He has no principle for liberty. His only principle
is the “rule of law,” and this, weak anyway, is so vitiated and qualified that, by the end, there is virtually no principle remaining. 

This lack of principle can best be shown by a list I have compiled from the book, setting forth Hayek’s partisan biases, biases stemming from his odd concept of the State’s “noncoercive” activities, and from his defining “coercion”peculiarly to include “neighborhood effects” on others’ property,etc. The following is the list of Hayek’s specific partisan biases in economic applications of his theory.  

Hayek favors the following:
 requiring “monopolist” not to discriminate in price
among his customers
 government sanitation
 government roads
 compulsory jury service (which he considers
“noncoercive”)
 compulsory deputizing of constables (also, as I’ve
said, conscription is “noncoercive”)
 government enforcement of religious conformity in
an age when people believe that the collective community
is responsible for everyone’s actions against
God (e.g., if people believe that homosexuals would
bring down the wrath of Sodom and Gomorrah upon
them, homosexuality should be outlawed)
 government enforcement of “rules of conduct” in
public places (a vague endorsement)
 suspension of liberty in “emergencies” (e.g., the right
of habeas corpus), in the “public interest”
 the “clear and present danger” invasion of free speech
 government subsidies in the “public interest” (e.g.,
for “defense”)
 government supplying of a monetary system
 government supplying of standards weights and
measures
 government supplying of statistics
 government surveying
 government sanitary services
 government health services
 municipal services
 government public works—which individuals would
not pay for
 many government enterprises, so long as they are not
compulsorily “monopolistic”
 “factory” acts, and other government regulations of
production
 interference with absolute private property in land
 failure of government to enforce gambling contracts
 government aid to the indigent, up to a “minimum of
subsistence” for everyone; and this “minimum” keeps
rising along with the general standard of living(!)
 government subsidies for scientific research, other
“experiments”
 municipal government parks
 municipal government museums
 municipal government theaters
 municipal government sports facilities
 outlawing of peaceful secondary strikes and boycotts
 collective bargaining, on work rules—which Hayek
fails completely to realize are hindrances on production
and on management’s private property, and
which he identifies as extensions of the rule of law to
industry(!?)
 collective bargaining on wage differentials (Note: collective
bargaining should not be outlawed, but an
economist should realize its economic evils and its
lack of advantages)
 outlawing of voluntary closed-shop “yellow-dog”
contracts
 compulsory old-age insurance
 compulsory unemployment insurance; 

Hayek favors Federal compulsion on everyone to take out insurance,
rather than for the government to “insure” everyone directly itself; however, he would supplement this with “temporary” federal aid and subsidy to private insurance
companies for such insurance (all this he would do along the lines of existing compulsory automobile insurance, which he also favors)

Further, while opposed to the existing federal social security program, Hayek is against scrapping it entirely, now that it is set up, and only favors a gradual transformation of
the present system into his proposed system.

Hayek is also against a monetary policy so “tight” as to lead to protracted unemployment (even though he sees that unions would be responsible for this unemployment).
 an odd maximum limit on proportional taxation which would only be the percentage of national income extracted by the government; thus, if the government decides to extract 50 percent of the national income, his proposed maximum would be 50 percent

Hayek favors central banking and is opposed to a freemarket
money. 

He is against the return to a gold standard; instead he favors governmental stabilization of the price level, including in such measures a “commodity reserve standard.”

Hayek also believes that absolute private-property rights are invalid in cities, and advocates larger municipal ownership.

He favors the following:

 town planning by government, to coordinate neighborhoods, etc.
 town planners
a. taxing property owners who “gain” by their measures even though the individual property owner may be opposed to the measure b. subsidizing the “losers”

 the right of expropriation of private property by government (right of eminent domain, etc.) provided it is at “fair compensation”—the “fair compensation,”
of course to be determined by . . . government

He concedes that the Henry George single-tax plan would
be fine if only there could be clearly separated in practice
the site value from the improvement value of land;

He favors

 governmental building codes, and minimum safety regulation
 compulsory expropriation of land
 federal government parks, and “nature reservations”
 federal government spreading of agricultural knowledge to farmers
 compulsory minimum education for children, with government of course setting the minimum standards
 government aid for education of the poor; he seems to adopt the Friedman plan for government financing of every parent, who can choose his own private school, thus eliminating the need for public schools (of course, the private schools would have to meet governmental “minimum standards”); however, hedoesn’t go as far as the Friedman plan, because Hayek

a. wants to retain public schools in isolated districts where private schools would not pay
b. in retrospect, favors public schools for nineteenth- century America, when transportation was poorer, and where public schools were needed to “Americanize” the immigrants compulsorily
 “academic freedom” and “tenure” in colleges
 government, federal aid to higher education
especially of general scientists and scholars
 government special taxation of slum property

Bill Gates Told That His Charity Pledge is ‘Worthless’

Bill Gates and Warren Buffett have been running around the country trying to get the super-wealthy to sign a pledge where they supposedly give half their wealth to charity. It turns out the pledge has a huge loophole. The money can be donated to family-controlled foundations.

The late Robert Wilson, who was a super smart trader apparently warned Gates about the shaky nature of the pledge.

NyPo reports:

Bill Gates is the richest person in the world — but one retired New York hedge-fund mogul thought the software pioneer’s Giving Pledge was “practically worthless.”

Robert W. Wilson, a well-known philanthropist who had given away $600 million of his fortune as of 2013, abruptly turned aside Gate’s 2010 request that he sign the Giving Pledge.

The pledge pushes billionaires to give away a bulk of their fortune while they are alive, or in their will.

Wilson found especially problematic the pledge’s loophole that allowed signers to gift their wealth to a family-controlled foundation.

“And these foundations become, more often than not, bureaucracy-ridden sluggards,” Wilson wrote to Gates in a June 2010 e-mail, a copy of which was obtained by the website BuzzFeed.

“I’m going to stay far away from your effort,” Wilson told Gates in the same e-mail[...]

Wilson. who made his fortune after founding Wilson & Associates, a hedge fund whose specialty was short-selling, was a champion of Catholic schools and environmental causes.

Gates, who has been famously joined in his Giving Pledge effort by Warren Buffett, was undeterred by the brushoff.

The Microsoft co-founder, worth $78.5 billion, admitted to Wilson in a reply e-mail three days later that “some people set up a foundation without a strong focus or leadership and with high overhead.”

He told Wilson the group of pledge signers “would benefit from your joining in.”

Wilson, by signing the pledge, could inspire younger people to increase their giving, Gates wrote.

Wilson, in a second e-mail to Gates, was a bit more testy.

“You, being a liberal, think you can change people more than I think,” he wrote.

Wilson zeroed in on Gates’ “younger” people focus.

“When I talk to young people who seem destined for great success, I tell them to forget about charities and giving,” Wilson replied to Gates. “Concentrate on your families and getting rich — which I found very hard work.”

“When people reach 50 and are beginning to slow down is the time to begin engaging them in philanthropy,” added Wilson.

Appearing weary of the give-and-take, Wilson signed off simply: “I’d greatly appreciate just leaving it at that.”

On Mises as a Public Policy Wonk

Zach Tatum emails:

I wonder how you would respond to this charge?

Will LutherDecember 31, 2013 at 6:05 PM

@Zach:

Mises occasionally "played cricket" as well.

***
From Richard Ebeling:
"For almost a quarter of a century, from 1909 to 1934 (except during the First World War), Mises worked as an economic-policy analyst and advisor to the Vienna Chamber of Commerce. From the ages of 28 to 53 (when he moved to Geneva, Switzerland to accept his first full-time academic position, at the Graduate Institute of International Studies) he spent his working day as a "policy wonk." And I mean a "policy wonk" — someone immersed in the factual details and economic policy specifics of, first, the old Austro-Hungarian Empire and, then, the Austrian Republic between the two World Wars. His statistical knowledge of "the facts" relating to Austrian fiscal policy, regulatory legislation, and monetary institutions and policy was precise and minute."

"What comes out from reading Mises's policy writings from this period of his European career is that if you had asked him a fiscal, or monetary, or regulatory-policy question in the context of his role as analyst at the Chamber of Commerce, he would not have said, and did not simply say, "laissez-faire" — abolish the central bank, deregulate the economy, and eliminate taxes."

"In the give-and-take of everyday Austrian politics and policy decision-making, Mises accepts that there are certain institutional "givens" that must be taken for granted, and in the context of which policy options and decisions must be worked out."

http://mises.org/daily/4189/The-Other-Ludwig-von-Mises-EconomicPolicy-Advocate-in-an-Interventionist-World
***

I don't think this is any different from the approach I've taken. Sure, I'd love to abolish the central bank. I'd much prefer free banking with a commodity base. And I've written academic articles about alternative currencies. But within the context of current US monetary policy, I think it is foolish to say that those working in the Austrian tradition have nothing relevant to contribute. It is OK to offer second-best policy advice when first-best solutions are not on the table. Given that we have a central bank, and it is highly unlikely to be abolished, the best we can hope for to avoid (or, at the very least, dampen) monetary disturbance and the boom-bust cycle articulated by Mises and Hayek is the strict adherence to a nominal income level rule, with a free market in nominal income futures contracts.

WENZEL RESPONSE:

Zach,

You have to ask what Mises thought about his work as a policy wonk and what he really accomplished in that role.

I believe Mises answered this himself in Memoirs (p.60) [my highlights]

I was sometimes accused of representing my viewpoint in a manner too abrupt and intransigent. It was also claimed that I could have accomplished more had I displayed a greater willingness to compromise. Gustav Weiss von Wellenstein, an old friend and the secretary general of the Central Association for Austrian Industry often lectured me on the same. The criticism was unwarranted; I could only be effective if I could present things as they appeared to me. When I look back at my work with the Handelskammer today, my only regret is my willingness to compromise, and not my intransigence.

And (p. 98)

From time to time I entertained the hope that my writings would bear practical fruit and point policy in the right direction. I have always looked for evidence of a change in ideology. But I never actually deceived myself; my theories explain, but cannot slow the decline of a great civilization. I set out to be a reformer, but only became the historian of decline.

What can be done at the policy wonk level is very limited. Yes, maybe an increase in a minimum wage can be stopped somewhere or a plan for price controls can be derailed, but for the most part, as Mises experienced, it's not much and to compromise makes matters even worse. Things have to change at a much more fundamental level among the general public for the significant advancement of liberty. Effort spent in moving society in that direction, in the long run, will result in much greater rewards than wasting time developing compromises on most minor issues. And on bigger issues, it mostly makes zero sense.

Luther writes:

 I think it is foolish to say that those working in the Austrian tradition have nothing relevant to contribute. It is OK to offer second-best policy advice when first-best solutions are not on the table. Given that we have a central bank, and it is highly unlikely to be abolished, the best we can hope for to avoid (or, at the very least, dampen) monetary disturbance and the boom-bust cycle articulated by Mises and Hayek is the strict adherence to a nominal income level rule, with a free market in nominal income futures contracts.

I don't see this as compromise but surrender. I believe he distorts Austrian economics with his focus on " a nominal income level rule," which is about money printing. Rothbard, Mises AND Hayek all dismissed this on a theoretical level. If it is launched based on the advocacy of supposed Austrians and the inevitable business cycle distortions occur, then what? I'll tell you what. Statists will blame Austrians for the "failed results" of their policy prescription. From an Austrian perspective, in my view, Luther's proposed nominal income level rule,"within the context of current US monetary policy," makes no sense. In fact, it is downright dangerous-- as money printing always is, but beyond that it would dirty the Austrian school name for no good reason.

Hayek's Tactical Error

In my recent post, The Inconsistency and Non-Libertarian and Non-Austrian Positions of Hayek, I quoted Murray Rothbard:

In my letter of October 23, 1956, I criticized Hayek’s Claremont lectures, which summarized this book [The Constitution of Liberty], and reference to the letter would be helpful. However, there I wrote  that Hayek is a “composite of brilliant things, and very wrong things . . . a mosaic of confusion.”

Indeed, Rothbard in "Letter on The Constitution of Liberty by F. A. Hayek" (p 73 of Murray N. Rothbard vs. The Philosophers: Unpublished Writings on Hayek, Mises, Strauss, and Polanyi, Edited by Roberta A. Modugno) lists 34 specific deviations from libertarian principles.

Rothbard writes in the letter:

It is, in fine, a tragic failure because, setting out in this big book to establish a groundwork and a system for liberty,this is precisely what Hayek fails to do and which constitutes his chief error. He has no principle for liberty. His only principle is the “rule of law,” and this, weak anyway, is so vitiated and qualified that, by the end, there is virtually no principle remaining.

This lack of principle can best be shown by a list I have compiled from the book, setting forth Hayek’s partisan biases, biases stemming from his odd concept of the State’s “noncoercive” activities, and from his defining “coercion”peculiarly to include “neighborhood effects” on others’ property, etc.

But in addition to Hayek's lack of a "principle for liberty," I believe Hayek made a serious tactical political error with regard to business cycle theory, which has resulted in yet another case of the "even Hayek admits" problem, that is, citations can be made to show Hayek retreating from his opposition to money printing by a central bank under all conditions. See Larry White on this, as well as Will Luther.

First, let us look at Hayek's original discussion on the business cycle. In Prices and Production (1930) he wrote (my highlight)

And so, at the end of our analysis, we arrive at results which only confirm the old truth that we may perhaps prevent a crisis by checking expansion in time, but that we can do nothing to get out of it before its natural end, once it has come.

In other words, Hayek saw no place for money printing in his thinking in 1930.

This view changed later. Here is one quote that those who advance the "Hayek was in favor of money printing under certain circumstances" point to (From New Studies in Philosophy, Politics, Economics, and the History of Ideas [1978])

… a ‘secondary depression’ caused by an induced deflation should of course be prevented by appropriate monetary counter-measures. Though I am sometimes accused of having represented the deflationary cause of the business cycles as part of the curative process, I do not think that was ever what I argued.

BUT, there's more to the story. Hayek goes on to say (My highlight):

 What I did believe at one time was that a deflation might be necessary to break the developing downward rigidity of all particular wages which has of course become one of the main causes of inflation. I no longer think this is a politically possible method and we shall have to find other means to restore the flexibility of the wage structure than the present method of raising all wages except those which must fall relatively to all others. 

Thus, Hayek never really changed his view on Austrian Business Cycle Theory (ABCT) from a theoretical perspective, but rather thought for political reasons that money printing during the "secondary depression" could be justified.

Here's Hayek being even clearer about this point [1978] (My highlight)

Although I do not regard deflation as the original cause of a decline in business activity, such a reaction has unquestionably the tendency to induce a process of deflation – to cause what more than 40 years ago I called a ‘secondary deflation’ – the effect of which may be worse, and in the 1930s certainly was worse, than what the original cause of the reaction made necessary, and which has no steering function to perform. I must confess that forty years ago I argued differently. I have since altered my opinion – not about the theoretical explanation of the events, but about the practical possibility of removing the obstacles to the functioning of the system in a particular way.

This has to be classified as a major tactical blunder by Hayek. He has admittedly thrown overboard correct theory to advocate incorrect measures because of the "practical" problems of advocating correct theory!

This leads, as I suggest above, to promoters of the idea of Hayek as an unabashed advocate of money printing under certain circumstances, without making clear that Hayek called for this, not because his thoughts on ABCT changed on a theoretical level, but because of his view of what could be accomplished politically.

Here's White promoting just such an idea. There is no mention of Hayek's references to doing so because of what he thought politically possible:

In the 2008 article I point out that Hayek enunciated a monetary policy norm of stabilizing nominal income (aka nominal aggregate demand, or MV in the equation of exchange) in the face of a declining money multiplier or declining velocity of money. Under a gold standard, a high price level driven unsustainably high (by the boom-creating inflationary policies that Friedman references) needs to return to the sustainable level, but there is no virtue in “secondary” deflation going beyond that point. Thus, according to Hayek, the central bank should expand its liabilities H to offset an increased bank reserve ratio or public hoarding that reduces M/H or V. In yet other words, it is better to remedy an unsatisfied excess demand for money balances by supplying the called-for money balances than by putting a burden of downward price adjustment on the economy.

Bottom line: We can see why Hayek took this position and Austrian theorists Ludwig von Mises and Murray Rothbard did not. Quite simply, Mises and Rothbard were made of tougher stock. They would never bend correct theory to political winds. M and R occasionally made policy prescriptions that could be viewed as stop gap measures on the road to freer markets, but they never came close to the switch/political-type advocacy on a theoretical level that Hayek did with regard to ABCT.

Because of their tougher stock, we can easily grasp correct ABCT via the teachings of Mises and Rothbard, while Hayek's bending to "practicality" has resulted in his thinking on ABCT being twisted and abused.

An Austrian A Day Keeps The Keynesians Away

By, Chris Rossini

A fresh new set of 365 has arrived.

The battle of Power vs. Market continues.

As the opposition tries to cram their idea of a "sharing economy" down everyone's gullet, we know that true sharing occurs voluntarily. True charity does not involve robbing one to give to another, or of threatening (and using) aggressive violence against one, for the benefit of another.

As the opposition tries to push "sustainability" at the point of a gun, we know that the only things that are really sustainable are liberty, sound money, free markets, and peace. Every cockeyed scheme that seeks to oppose them, may live for awhile, but is eventually washed away.

As the opposition hovers its drones and cries for "social responsibility," we know that the only true way path to harmony is through voluntary interactions, and respect for everyone's own person & property.

2013 was a fantastic year for liberty! Lew Rockwell summarized it beautifully. However, it is now in the past. It must now act as a springboard to much higher benchmarks.

There are seas of people who have been born into a "system". Sadly, that system waved goodbye to the concept of liberty. As daunting as the task ahead may seem, we are fortunate that liberty is not a complicated physical object that must be designed, funded, manufactured, boxed, shipped, and delivered by the pony express. Instead, liberty consists of a set of very simple ideas.

You can't physically point to an idea. You can't place it into someone's open hand. But you can share it by the simple act of speaking. And in our modern technologically-connected world, what you say has the ability to circle the Earth at the speed of light!

When the power-hungry create their "systems," a major element for their success relies upon keeping people walled-off from one another, keeping them segregated and (preferably) at war with one another. Success lies in keeping the seas of people completely in the dark to the ideas of free markets & liberty. Yesterday's column on Paul Krugman provides a great example of how it works.

The good news is this: the power-hungry have never had to do so with "their subjects" having the communication technologies like those that we have today.

Let's capitalize on that! Let's be more creative than we were in 2013, and use the tools that are available to their full capacity.

On Jan. 1, 2015 let's make it so Lew Rockwell can write: "I thought 2013 was great; but boy did 2014 bury it!"

Happy New Year!

---

Chris Rossini on Twitter, Facebook & Google+

NSA Can Hack WiFi Devices From Eight Miles Away

What's In Store for Ron Paul Inc. in 2014?

Is Lee Stranahan providing a clue?

I'm afraid it's not going to be a very happy new year for some Republican staffers, operatives and politicians. Developing…
— Lee Stranahan (@Stranahan) January 1, 2014

Did Greg Mankiw Miss His Calling?

Maybe he should have been a "quick movie review" writer. He got American Hustle right:

Quick Movie Review
I just saw American Hustle. Great movie, loosely based on the Abscam investigation. Much better than Gravity, the other movie I have seen recently that got rave reviews.

He seems much better at it, than as head of Harvard's economics department. See: What Greg Mankiw Is Teaching Our Kids

Bitcoin Is a High-Tech Dinosaur Soon to Be Extinct

By Stephen Mihm

For all the regulatory crackdowns on Bitcoin in recent weeks, the cryptocurrency’s advocates remain unfailingly optimistic. Bitcoin is the future, they tell us; it heralds a future where private, stateless currencies will dethrone the dollar and other monetary dinosaurs.

Sorry, but Bitcoin isn’t the future. If anything, it’s a throwback to an earlier era, when private currencies circulated alongside government-sponsored money. In fact, if you strip away its technological trappings -- the encryption, the peer-to-peer networks -- and Bitcoin closely resembles these earlier private efforts.

This isn't a comforting historical parallel. The alternative currencies of the past are long gone, thanks to a decades-long campaign by governments aimed at monopolizing the money supply. The lesson of their rise and fall is one that Bitcoin’s boosters would be foolish not to heed.

Read the rest here.

Samsung Will Sell Ultra HD Television for $150,000 in 2014

NyPo reports:

Samsung said a 110-inch TV that has four times the resolution of standard high-definition TVs is going on sale for about $150,000 in South Korea.

The launch Monday of the giant television set reflects global TV makers’ move toward ultra HD TVs, as manufacturing bigger TVs using OLED proves too costly.[...]

Samsung said it received 10 orders for the latest premium TVs from the Middle East. Previously, the largest U-HD TV made by Samsung was 85-inch measured diagonally.
The ultra-HD TVs are also known as “4K” because they contain four times more pixels than an HD TV.

How Walter Block Met Murray Rothbard

From the Hayek List Email Series, I discussed earlier. At one point, Walter Block wrote to the list:

Two quick relevant stories about my experience as a phd student at Columbia U in the 1960s.

Hayek, in the intro to Road to Serfdom, says something to the effect that he hated to take time out from his technical economic research to write this political screed, but he feels he must. I asked a very famous Columbia economist, Should I be reading Hayek's technical works? He grimaced, and said, "Certainly not." Were it not for the fortuitous occurence that Larry Moss was a classmate of mine at Columbia, and sensed in me from the questions I asked in class that I might benefit from meeting Murray Rothbard, I might never has strayed from the neoclassical reservation.

One more. I once got into a slight disagreement with another very, very famous Columbia economist, who later was awarded the Nobel prize. I said to him after class, we ought to repeal the minimum wage law. He replied, "No, no, let's just keep it where it is, and allow inflation to reduce the real value of it." My reply, we gotta get rid of it, and inprison the people responsible for passing it in the first place." He looked at me with real dismay, as if I had taken total leave of my senses. (You can see why Larry thought I was ready to meet Murray).

Those guys are DIFFERENT from us.

Bad Guys Trained By Jesuits

Walter Block sends along to a link to famous people who attended Jesuit schools. I don't think they are all bad guys, but alot are.

 Jonah Jordan lists these people as people who attended Jesuit schools:

Joseph Goebbels (Head of Nazi Propaganda Ministry) -- Trained at a Jesuit College

Joseph Stalin (Communist Dictator) -- Trained by Jesuit monks at Tiflis Seminary

Fidel Castro (Communist Dictator) -- Trained by Jesuits at Colegio Belen

Bill Clinton (Former US President) -- Trained by Jesuits at Georgetown University

George Tenet (Former CIA director) -- Trained by Jesuits at Georgetown University

William Casey (Former CIA director) -- Trained by Jesuits at Fordham University

Juan Carlos I (King of Spain) -- Trained by Jesuits at the Instituto de San Isidro

Timothy Leary (Leading Proponent of LSD) -- Trained by Jesuits at Holy Cross College

Denzel Washington (Famous Actor) -- Trained by Jesuits at Fordham University

Patrick Buchanan (Conservative politician) -- Trained by Jesuits at Gonzaga College High School and Georgetown University

John Kerry (US Senator) -- Trained by Jesuits at Boston College

Robert Gates (Secretary of Defense) -- Trained by Jesuits at Georgetown University

Robert Baer (Former CIA case officer) -- Trained by Jesuits at Georgetown University

King Abdullah II (King of Jordan) -- Trained by Jesuits at Georgetown University

Jose Barroso (President of the European Commission) -- Trained by Jesuits at Georgetown University

Alexander Haig (White House Chief of Staff, Iran-Contra General) -- Trained by Jesuits at St. Joseph's Preparatory School and Georgetown University

John Gannon (Former Head of the Homeland Security Department's Intelligence Unit) -- Trained by Jesuits at Holy Cross College

Vernon Walters (Former Deputy Director of the CIA) - Trained by Jesuits at Stonyhurst College

Prescott Bush (Former Co-Director of Union Banking Corporation, Dubya's grandfather) -- Trained by Jesuits at Stonyhurst College

William J. McDonough (Former Chairman of the Federal Reserve Bank of New York) -- Trained by Jesuits at Holy Cross College

James E. Burke (Former CEO of Johnson & Johnson) -- Trained by Jesuits at Holy Cross College

Tom Clancy (Writer) -- Trained by Jesuits at Loyola College

Arthur Conan Doyle (Writer) -- Trained by Jesuits at Stonyhurst College

E. Gerald Corrigan (Former Chairman of the Federal Reserve Bank of New York) -- Trained by Jesuits at Fairfield University and Fordham University

Yes, It Is Time to Go Back to Using Cash!

The SF Chronicle reports:

On the heels of Target’s security breach that resulted in the country’s second-largest theft of card accounts, a New York-based sandwich shop says customers who dined at its San Francisco location may also need to call their credit card companies.

The sandwich shop ‘wichcraft, located on Mission Street near Fifth Street in San Francisco’s South of Market neighborhood, was hit by hackers who accessed the credit card information of customers who purchased items between Aug. 11 and Oct. 2, ‘wichcraft Operating LLC said Monday.

Company officials say the accessed information included customers’ names and credit card numbers, security codes and expiration dates. ‘Wichcraft said it was working with federal law enforcement authorities and had hired experts to review the security of the company’s systems.

In the meantime, it encouraged customers who dined at ‘wichcraft during that time period to monitor their accounts. The company’s 15 New York locations may also be affected, officials said.

The Power of Free Markets: An American Maid Earns More Than an Indian Lawyer and Accountant Combined

US markets are a lot less regulated than markets in India (For the time being) and it shows. From WSJ:

Happy New Year!