The Rise of the West

Throughout almost the entire span of human history, material privation and chronic insecurity were the norm. Not even those at the peaks of social status and political power could enjoy the creature comforts and consumer delights that “poor” people take for granted in the West today. At times, certain populations fared somewhat better – in ancient Greece and Rome, perhaps, and in China during the Sung Dynasty (960 – 1279) – but those cases were exceptional.
As late as the 14th century, the Chinese probably enjoyed the highest level of living of any large population. Recall the amazement with which Europeans greeted Marco Polo’s account of China in the latter part of the 13th century, even though, as Polo declared on his deathbed, he had not described the half of what he had seen.1
As the Middle Ages waned the Europeans began to make quicker economic progress, while the Chinese lapsed into economic stagnation. Even more remarkable, the economic energy of Europe began to shift away from the great commercial centers of northern Italy and toward the periphery of civilization in northwestern Europe. The barbarians, it seemed, had somehow stumbled onto the secret of economic progress. Henceforth, despite many setbacks, the western Europeans – and later their colonial cousins in North America as well – steadily pulled ahead of the human pack. By the 18th century they had far surpassed the Chinese, not to speak of the world’s more backward peoples, and until the late 20th century the gap continued to widen.
How did the West succeed in generating sustained economic progress? Historians and social scientists have offered various hypotheses, and so far no single explanation has gained general acceptance. Nevertheless, certain elements of an answer have received wide agreement. The growing individualism of Western culture, rooted in Christian doctrine, seems to have contributed significantly.2 In addition, the political fragmentation of the European peoples in the high Middle Ages and the early modern period – a political pluralism with hundreds of separate jurisdictions – fostered the institutional and technological experimentation by which entrepreneurs could discover how to make labor and capital more productive.

This post was published at Ludwig von Mises Institute on 2017/12/29.

Was John Brown Sane?

The exploits of John Brown have long fascinated historians. His actions, for better or worse, certainly had a significant effect on the country prior to Southern secession, but the fascination with Brown is largely driven by the enigma the man himself has proven to be. In trying to explain his actions and motives, historians have wrestled with questionable and biased testimonies by the people who knew him, and many of the mysteries surrounding John Brown have been explained – then and now – by mental disorders.
But was John Brown crazy? Diagnosing historical figures is an ambitious task, but the history of where the insanity claim for John Brown came from is insightful.
Psychiatry was evolving in the medical field in the beginning of the nineteenth century. For centuries, physicians in the western world acknowledged four basic psychological illnesses. The first was mania, which was exhibited through erratic behavior, irritability, and wild, racing thoughts. Second was melancholia, which was essentially depression. The third was dementia, defined much as it is today. And finally, there was delirium, which was characterized by hallucinations, delusions, and disorientation.

This post was published at Ludwig von Mises Institute on December 14, 2017.

The Fed’s Fantasy on Neutral Interest Rates

In her testimony to the Congress Economic Committee on November 29, 2017, the Fed Chair Janet Yellen said that the neutral rate appears to be quite low by historical standards. From this, she concluded that the federal funds rate would not have to increase much to reach a neutral stance.
The neutral rate currently appears to be quite low by historical standards, implying that the federal funds rate would not have to rise much further to get to a neutral policy stance. If the neutral level rises somewhat over time, as most FOMC participants expect, additional gradual rate hikes would likely be appropriate over the next few years to sustain the economic expansion.
It is widely accepted that by means of suitable monetary policies the US central bank can navigate the economy towards a growth path of economic stability and prosperity. The key ingredient in achieving this is price stability. Most experts are of the view that what prevents the attainment of price stability are the fluctuations of the federal funds rate around the neutral rate of interest.
The neutral rate, it is held, is one that is consistent with stable prices and a balanced economy. What is required is Fed policy makers successfully targeting the federal funds rate towards the neutral interest rate.
This framework of thinking, which has its origins in the 18th century writings of British economist Henry Thornton1, was articulated in late 19th century by the Swedish economist Knut Wicksell.

This post was published at Ludwig von Mises Institute on December 11, 2017.

The Corrupt Origins of Central Banking

Central banking has been a corrupt, mercantilist scheme and an engine of corporate welfare from its very beginning in the late 18th century. The first central bank, the Bank of North America, was “driven through the Continental Congress by [congressman and financier] Robert Morris in the Spring of 1781,” wrote Murray Rothbard in The Mystery of Banking (p. 191). The Philadelphia businessman Morris had been a defense contractor during the Revolutionary War who “siphoned off millions from the public treasury into contracts to his own … firm and to those of his associates.” He was also “leader of the powerful Nationalist forces” in the new country.
The main objective of the Nationalists, who were also known as Federalists, was essentially to establish an American version of the British mercantilist system, the very system that the Revolution had been fought against. Indeed, it was this system that the ancestors of the Revolutionaries had fled from when they came to America. As Rothbard explained, their aim was
To reimpose in the new United States a system of mercantilism and big government similar to that in Great Britain, against which the colonists had rebelled. The object was to have a strong central government, particularly a strong president or king as chief executive, built up by high taxes and heavy public debt. The strong government was to impose high tariffs to subsidize domestic manufacturers, develop a big navy to open up and subsidize foreign markets for American exports, and launch a massive system of internal public works. In short, the United States was to have a British system without Great Britain. (p. 192)

This post was published at Ludwig von Mises Institute on Dec 4, 2017.

Plunder Capitalism

I deplore the tax cut that has passed Congress. It is not an economic policy tax cut, and it has nothing whatsoever to do with supply-side economics. The entire purpose is to raise equity prices by providing equity owners with more capital gains and dividends. In other words, it is legislation that makes equity owners richer, thus further polarizing society into a vast arena of poverty and near-poverty and the One Percent, or more precisely a fraction of the One Percent wallowing in billions of dollars. Unless our rulers can continue to control the explanations, the tax cut edges us closer to revolution resulting from complete distrust of government.
The current tax legislation drops the corporate tax rate to 20%. This means that global corporations registered in the US will be taxed at a lower income tax rate than a licensed practical nurse making $50,000 per year. The nurse, if single, faces in 2017 a 25% marginal tax rate on all income over $37,950.
A single person is taxed at a rate of 33% on all income above $191,651. 33% was the top tax rate extracted from medieval serfs, and approaches the tax rate on US 19th century slaves. Such an upper middle class income as $191,651 sounds extraordinary to most Americans, but it is so far from the multi-million dollar annual incomes of the rich as to be invisible. In America, it is the shrinking middle and upper middle class incomes that bear the burden of income taxation. The rich with their capital gains from their equity holdings are taxed at 15%.

This post was published at Paul Craig Roberts on December 4, 2017.

Trump’s Tax Cut – FDR Would Be Envious

Authored by Tom Luongo,
The first rule of politics is feather your own nest. President Trump’s tax cut proposal always had this in mind.
Congress has passed a bill which tinkers at the edges but leaves most of Trump’s core proposal intact. It’s obvious to me that Trump has the political acumen of another brilliant U. S. politician, the loathsome Franklin Delano Roosevelt.
Yeah, I’m not a fan of FDR. But I do respect his political skill in the same way I respect the way sharks hunt their prey.
FDR repackaged Herbert Hoover’s Works Progress Administration as ‘The New Deal’ which set him on a course of near perpetual re-election thanks to the wealth redistribution it engendered.
Am I saying the New Deal was nothing more than a vote-buying scheme? Yeah, pretty much. FDR knew that politicizing the Supreme Court and pushing the New Deal, even if he did it for the right reasons, would reshape the Federal election landscape for generations.
Trump’s tax plan will have similar effects. And it’s why there was such staunch opposition to it in Congress.
Democratic leadership understand that the triple-whammy of eliminating the State and Local Tax exemption, lowering corporate tax rate to 20% and incentivizing the on-shoring of corporate profits held overseas will gut their support at the electoral college level.

This post was published at Zero Hedge on Dec 3, 2017.

The Dow Peaked At 14,000 Before The Last Stock Market Crash, And Now Dow 24,000 Is Here

The absurdity that we are witnessing in the financial markets is absolutely breathtaking. Just recently, a good friend reminded me that the Dow peaked at just above 14,000 before the last stock market crash, and stock prices were definitely over-inflated at that time. Subsequently the Dow crashed below 7,000 before rebounding, and now thanks to this week’s rally we on the threshold of Dow 24,000. When you look at a chart of the Dow Jones Industrial Average, you would be tempted to think that we must be in the greatest economic boom in American history, but the truth is that our economy has only grown by an average of just 1.33 percent over the last 10 years. Every crazy stock market bubble throughout our history has always ended badly, and this one will be no exception.
And even though the Dow showed a nice gain on Wednesday, the Nasdaq got absolutely hammered. In fact, almost every major tech stock was down big. The following comes from CNN…

This post was published at The Economic Collapse Blog on November 29th, 2017.

All The Old World Systems Are Being Deliberately Torn Down

As we approach the holiday season many people turn to thoughts on tradition, heritage, principles, duty, honor and family. They consider the accomplishments and even the failures of the past and where we are headed in the future. For most of the year, the average American will keep their heads in the sands of monotony and decadence and distraction. But during this time, even in the midst of the consumption frenzy it has been molded into, people tend to reflect, and they find joy, and they find worry.
What perhaps does not come to mind very often though are the institutions and structures that provide the “stability” by which our society is able to continue in a predictable manner. While many of these institutions are not built with the good of the public in mind, they often indirectly secure a foundation that can be relied upon, for two or three generations, while securing power for the establishment. The problem is, the establishment is never satisfied with a static or semi-peaceful system for very long. They are not satisfied by being MOSTLY in control, they seek total control. Thus, they are often willing to create chaos and crisis and even tear down old structures that previously benefited them in order to gain something even greater (and more oppressive for the rest of us).
The official Thanksgiving holiday, for example, did not really begin as a homage to the colonial settlers and pilgrims of America’s birth and their struggles to build a new life. While George Washington did proclaim a “Day of Thanks” in 1789, the model for Thanksgiving began far later, in 1863 as the Civil War was raging. It was the Civil War that upset the traditional balance of power between the states and the federal government, nearly annihilating the nation and asserting federal power as unquestionable for decades to come. A moment of great chaos which destroyed old institutions (like the 10th Amendment) but gave establishment elitists even more control in the end.

This post was published at Alt-Market on Wednesday, 22 November 2017.

Taxes: here’s what’s going to stay the SAME

On October 3, 1913, US President Woodrow Wilson signed the Underwood-Simmons Act into law, creating what would become the first modern US income tax.
The legislation (at least, the income tax portion) was only 16 pages and imposed a base tax rate of just 1%.
The highest tax rate was set at 7% – and it only applied to individuals earning more than $500,000 per year, which is about $12.6 million today according to the Bureau of Labor Statistics.
And individuals earning less than $3,000 (about $75,000 today) were exempt from paying tax.
Tax rates moved up and down over the years – the government raised rates to fund World War I, then lowered them in peacetime.

This post was published at Sovereign Man on November 21, 2017.

Want Widespread Prosperity? Radically Lower Costs

As long as this is business as usual, it’s impossible to slash costs and boost widespread prosperity.
It’s easy to go down the wormhole of complexity when it comes to figuring out why our economy is stagnating for the bottom 80% of households. But it’s actually not that complicated: the primary driver of stagnation, decline of small business start-ups, etc. is costs are skyrocketing to the point of unaffordability.
As I have pointed out many times, history is unambiguous regarding the economic foundations of widespread prosperity: the core ingredients are:
1. Low inflation, a.k.a. stable, sound money
2. Social mobility (a meritocracy that enables achievers and entrepreneurs to climb out of impoverished beginnings)
3. Relatively free trade in products, currencies, ideas and innovations
4. A state (government) that competently manages tax collection, maintains roadways and harbors, secures borders and trade routes, etc.
Simply put, When costs are cheap and trade is abundant, prosperity is widely distributed. Once costs rise, trade declines and living standards stagnate. Poverty and unrest rise.
These foundations characterize stable economies with widely distributed prosperity across time and geography, from China’s Tang Dynasty to the Roman Republic to the Byzantine Empire to 19th century Great Britain.

This post was published at Charles Hugh Smith on NOVEMBER 19, 2017.

Russia’s Alleged Meddling In Catalan Vote: Playing The Blame Game

Marine Corps veteran Tommy Waller, director of special projects at the Center for Security Policy, has warned President Trump about the EMP threat facing the United States.
“Winston Churchill once said, ‘History will be kind to me for I intend to write it’…
The surest way for history to be kind to President Trump is for him to write it, by being the first leader to truly address the existential threat of EMP.
The first and foremost thing he must write is an Executive Order establishing his own EMP Commission in the White House – a task force that draws from the experience of the previous EMP Commission.”
The grim warning is directed at North Korea and their ambitions to unleash a devastating atmospheric nuclear explosion above the United States that would collapse the nation’s power grid.

This post was published at Zero Hedge on Nov 15, 2017.

The White House Is Being Warned: North Korea Is Planning A “Devatstaing EMP Attack” On America

Marine Corps veteran Tommy Waller, director of special projects at the Center for Security Policy, has warned President Trump about the EMP threat facing the United States.
“Winston Churchill once said, ‘History will be kind to me for I intend to write it’…
The surest way for history to be kind to President Trump is for him to write it, by being the first leader to truly address the existential threat of EMP.
The first and foremost thing he must write is an Executive Order establishing his own EMP Commission in the White House – a task force that draws from the experience of the previous EMP Commission.”
The grim warning is directed at North Korea and their ambitions to unleash a devastating atmospheric nuclear explosion above the United States that would collapse the nation’s power grid.

This post was published at Zero Hedge on Nov 15, 2017.

Cradles of Capitalism: the City-States of Greece and Italy

There long has been a persistent academic debate as to whether an “ancient economy,’ referring mainly to Greece, even existed at all. In a field dominated by Marx, Marxists, the 19th century sociologist Max Weber, and such scholars of renown as Sir Moses Finley, the lingering image of the economic world of the Greek polis is that of something very static. We imagine a leisure class lounging at the sandaled foot of an orator while slaves tended to the fields, flogging cows harnessed to ploughs stuck in the mud. It is the notion of a “primitive” economy: money made for status, not investment; credit extended for the purchase of slaves, war waged for the capture of booty, elites in control of craft guilds and tyrant-kings keeping the peace by randomly doling out the goods.
Then there is ancient epic itself, with the noble Odysseus disdaining seafaring for profit (though he did take all the pay-offs he could collect) and the great Achilles pondering a discovery of precious treasure only so far as it might estimate his aristocratic worth. From this rudimentary foundation, an entire field of Socialist-Keynesian views on the Greek economy has prevailed, with occasional libertarian scholars such as Murray Rothbard and Jess Huerta de Soto getting a word in edgewise. In recent time, however, academia has found much more evidence of technological advances and market-driven considerations on the part of the classical polis than previously thought.
Keeping in mind that in both ancient Greece (and Renaissance Italy) that democracy was not incompatible with aristocracy, and that oligarchies and tyrants were not necessarily illiberal, several points may be made in defense of the economic model of the city-state: 1) that the stronger the city-state, the greater the industrial and economic expansion; 2) that private property was considered a fundamental economic principle; 3) that banking standards were relatively conservative; 4) that the wealthiest city-states were of the most socially dynamic; 5) that city-state competition spearheaded the modern entrepreneurial Europe; and 6) that the visionary tyrant was almost always business-first in his rule.

This post was published at Ludwig von Mises Institute on 11/14/2017.

The Federal Reserve Has Just Given Financial Markets The Greatest Sell Signal In Modern American History

Why have stock prices risen so dramatically since the last financial crisis? There are certainly many factors involved, but the primary one is the fact that the Federal Reserve has been creating trillions of dollars out of thin air and has been injecting all of that hot money into the financial markets. But now the Federal Reserve is starting to reverse course, and this has got to be the greatest sell signal for financial markets in modern American history. Without the artificial support of the Federal Reserve and other global central banks, there is no possible way that the massively inflated asset prices that we are witnessing right now can continue.
The chart below comes from Sven Henrich, and it does a great job of demonstrating the relationship between the Fed’s quantitative easing program and the rise in stock prices. During the last financial crisis the Fed began to dramatically increase the size of our money supply, and they kept on doing it all the way through the end of October 2017…

This post was published at The Economic Collapse Blog on November 5th, 2017.

George Fitzhugh, the Honest Socialist

In the mid-nineteenth century debates over the virtues and evils of slavery, the arguments from the pro-slavery southerners evolved from a claim that slavery was a ‘necessary evil’ to arguments that it was a ‘positive moral good.’ A large part of this evolution in perspective was a reaction to the growing moral antipathy toward slavery by the North, breeding the need – from the southern perspective – to find a defense of slavery that they could counter on moral grounds.
But George Fitzhugh’s defense of slavery was unique. He accepted the paternalist argument that the southerners were increasingly adopting – specifically, that slavery bettered the position of the slave – but he rejected the racial division that they necessarily included in their argument. In his infamous 1954 publication, Sociology of the South, he wrote:
We abhor the doctrine of the ‘Types of Mankind;’ first, because it is at war with scripture, which teaches us that the whole human race is descended from a common parentage; and, secondly, because it encourages and incites brutal masters to treat negroes, not as weak, ignorant and dependent brethren, but as wicked beasts, without the pale of humanity.
True to the racist views of the day, Fitzhugh did believe that blacks were ‘weak, ignorant and dependent’ on the superior class of whites, but his racism was part of a class analysis common to socialists. In other words, the benefits that he believed blacks gained from slavery should also be applied to poor, less capable whites.

This post was published at Ludwig von Mises Institute on November 4, 2017.

Trump Will Own The Next Fed But “All Their Models Are In Ruins”

President Trump is expected to nominate the next Federal Reserve chair within a matter of days.
As I’ve explained before, Donald Trump has the opportunity to appoint a higher percentage of the Board of Governors of the Federal Reserve system at one time than any president since Woodrow Wilson.
President Wilson signed the Federal Reserve Act during the creation of the Fed in 1913 when they had a vacant board. At that time, the law said the secretary of the Treasury and the comptroller of the currency were automatically on the Fed’s board of governors. But besides that, President Wilson selected all of the other participating members.
Due to vacancies he inherited and key resignations, Trump now has the opportunity to fill more seats on the Fed’s Board of Governors than any president since then.
That’s pretty amazing when you think about it.
To review, the Federal Reserve’s Board of Governors is made up of seven appointees. That means that they can make a majority decision with four votes. If you’re reading about the Fed, you might also see reference to ‘regional reserve bank presidents.’ These are roles within the Federal Reserve System, but the real power is found on seven-member Board of Governors.
Trump will own the Fed.
Meaning, whatever the president wants monetary policy to be, he’ll get. In other words, Donald Trump will be able to shape the Fed’s majority. But the tricky part is figuring out how he plans to shape it…

This post was published at Zero Hedge on Oct 28, 2017.

Is Europe Repeating the 1930s?

Europe is now replicating the 1930s and the mistakes it made with austerity back then as well outside of Germany. Of course, Merkel has imposed the German view of austerity based on their experience but has ignored the opposite experience of the rest of Europe that led to the 1931 Sovereign Debt Crisis and mass defaults.
It was the year of 1925 when then chancellor of the Exchequer, Winston Churchill, returned Britain to the gold standard. Britain was trying desperately to reestablish itself as the financial capital of the world as if nothing had taken place. Returning to the gold standard resulted in wages being forced down to compete with America. John Maynard Keynes at the time pleaded that this was madness. The pound was overvalued against the dollar by 10% trying to reestablish confidence in Britain but the net result crippled exports and unemployment began to rise and workers engaged in strikes for having wages reduced even though the pound was worth more officially.

This post was published at Armstrong Economics on Oct 24, 2017.

“Carnival Barker” Krugman & The Inevitable Weimar Endgame

Authored by Jeffrey Snider via Alhambra Investment Partners,
Who President Trump ultimately picks as the next Federal Reserve Chairman doesn’t really matter. Unless he goes really far afield to someone totally unexpected, whoever that person will be will be largely more of the same. It won’t be a categorical change, a different philosophical direction that is badly needed.
Still, politically, it does matter to some significant degree. It’s just that the political division isn’t the usual R vs. D, left vs. right. That’s how many are making it out to be, and in doing so exposing what’s really going on.
As usual, the perfect example for these divisions is provided by Paul Krugman. The Nobel Prize Winner ceased being an economist a long time ago, and has become largely a partisan carnival barker. He opines about economic issues, but framed always from that perspective.
To the very idea of a next Fed Chair beyond Yellen, he wrote a few weeks ago, ‘we’re living in the age of Trump, which means that we should actually expect the worst.’ Dr. Krugman wants more of the same, and Candidate Trump campaigned directly against that. As such, there is the non-trivial chance that President Trump lives up to that promise.
Again, it sounds like a left vs. right issue, but it isn’t. The political winds are changing, and the parties themselves are being realigned in different directions (which is not something new; there have been several re-alignments throughout American history even though the two major parties have been entrenched since the 1850’s when Republicans first appeared). Who the next Fed Chair is could tell us something about how far along we are in this evolution.
What Krugman wants, meaning, it is safe to assume, what all those like him want, is simple: success. He believes that the central bank has given us exactly that, therefore it is stupid to upset what works.

This post was published at Zero Hedge on Oct 21, 2017.

Liberals Love Trump’s Tax Plan (When Told It’s Bernie’s)

President Donald Trump’s proposal for comprehensive tax reform was almost immediately dismissed as heartless and impractical by his political opponents.
But Campus Reform wondered what would some of those opponents think if they were told the same plan was being proposed by someone they adore – Senator Bernie Sanders?
To find out, we headed to George Washington University to ask students their opinions on Trump’s new tax plan. WIthout much explanation, the students immediately made clear their distaste for the plan.
‘It’s not the most efficient, nor beneficial to the general populus,’ said one student when asked her opinion of Trump’s plan.
‘It’s better for the upper class than anyone else,’ added another.
After watching student after student express their disapproval of the plan, we then asked those same students what they thought of Senator Bernie Sanders’ new tax plan.
Immediately, they expressed excitement and support after hearing the details of the plan.
The only problem for them? There was no tax plan for Senator Sanders. The plan they loved was actually President Trump’s.
How did they react?
Enjoy…


This post was published at Zero Hedge on Oct 21, 2017.