Power & Market

The Fed’s Tough Year

08/30/2022Ryan McMaken

Alex Pollock explains that something is wrong with the Fed, big time. And it really shows in 2022. Pollock writes::

The powerful and prestigious Federal Reserve is having a tough year in 2022 in at least three ways:

  • It has failed with inflation forecasting and performance;
  • It has giant mark-to-market losses in its own investments and looming operating losses;
  • It is under political pressure to do things it should not be doing and that should not be done at all.

Forecasting Inflation

As everybody knows, the Fed’s overoptimistic inflation forecasts for the runaway inflation year of 2021 were deeply embarrassing. Then the Fed did it again for 2022, with another wide miss. In December 2021, it projected 2022 Personal Consumption Expenditures inflation at 2.6%, while the reality through June was 6.8%, with Consumer Price Index inflation much higher than that. It would be hard to give the Fed anything other than a failing grade in its supposed area of expertise.

The Fed’s interest rate forecast for 2022 was three federal funds target rate increases of 0.25%, so that its target rate would reach 0.9% by the end of 2022. It forecast the rate at 2% by the end of 2024. Instead, by July 2022, it already reached 2.5%.

In short, the Federal Reserve cannot reliably forecast economic outcomes, or what the results of its own actions will be, or even what its own actions will be. Of course, neither can anybody else.

It is essential to understand that we cannot expect any special economic or financial insight from the Federal Reserve. This is not because of any lack of intelligence or diligence, or not having enough computers or PhDs on the payroll, but of the fundamental and inevitable uncertainty of the economic and financial future. Like everybody else, the Fed has to make decisions in spite of this, so it will unavoidably make mistakes.

Read the full article. 

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Three Lessons From Jackson Hole

08/27/2022Robert Aro

One of the most anticipated events on the Central Banking calendar commenced this week: Jackson Hole, where “policymakers, academics and economists from around the world” gathered to discuss plans for the future. Powell gave his much-anticipated speech on Friday, quickly getting to the tough talk:

The Federal Open Market Committee's (FOMC) overarching focus right now is to bring inflation back down to our 2 percent goal. 

Sticking to script, he promised to maintain restrictive monetary policies while warning of another “unusually large increase” to interest rates next month.

The Oh No moment occurred when he cited lessons learned from over half- a century ago:

Our monetary policy deliberations and decisions build on what we have learned about inflation dynamics both from the high and volatile inflation of the 1970s and 1980s…

Of course, we know this to be false and that they learned little to nothing since 1970. If they had, the pursuit of currency debasement as monetary policy would have ceased several generations ago.

The critical knowledge Powell claims to have learned:

The first lesson is that central banks can and should take responsibility for delivering low and stable inflation… Today, we regard these questions as settled. Our responsibility to deliver price stability is unconditional.

True, the Fed should take responsibility for easy money policies, monetary inflation, interest rate suppression, the boom/bust cycle and relentless dollar depreciation. Congress could also abolish the Fed entirely, or at least stop their ability to intervene in the market, leaving the Fed with no more than an oversight role over the banking system. Unfortunately, while entirely possible, the odds of this happening at this time are still slim to none. This does not mean it will always be this way, alternative options exist, even if unlikely at the present moment.

He continued:

The second lesson is that the public's expectations about future inflation can play an important role in setting the path of inflation over time.

We can give him this. Keeping the masses calm and complacent will always be a goal of central planners. The last thing the bankers want is a public panic potentially leading to a bank run, or the widespread realization that high (price) inflation is here to stay.

Powell acknowledges that their window of opportunity closes ever so slightly with each passing day:

The longer the current bout of high inflation continues, the greater the chance that expectations of higher inflation will become entrenched.

It would require a combination of the passage of time, media persuasion, Fedspeak, and some rejigging of statistical data in order to change public perception again.

Lastly, and certainly the most detrimental, he proclaims:

That brings me to the third lesson, which is that we must keep at it until the job is done.

If the only viable solution is to ask that the Fed does nothing, clearly not on the agenda, then we accept that the interventions and new schemes will only increase with time. He cites more comparisons to the Volcker era; but as written before, it’s not 1970 nor the 1980’s. They can only compare to this period for so long and it’s well overused as is.

For all the hoopla surrounding this Jackson Hole Symposium, the three lessons learned by Powell are nothing we haven’t heard before. If there is anything to learn from Jackson Hole, it’s that the best time to end the Fed was a little over 100 years ago; the second-best time is now. 

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The Misery Index Is at Recession Levels

08/02/2022Ryan McMaken

In spite of the fact that real wages are going down, the cost of living is soaring, and new jobless claims are heading up at a rapid pace, and the savings rate has collapsed, what really matters to the White House, it seems, is the "technical definition" of recession. 

Never mind the fact that the US economy has contracted for the past two quarters, according to the federal government's own numbers. Apparently, as long as the NBER has not yet issued its opinion on whether or not the US economy is in recession, the White House is going to double down on the assertion that the economy is in fine shape and people should really stop complaining. After all, as one White House spokesman put it, it's not like there's a famine or anything. So quiet down, rubes. 


Although the White House seems to believe that things are pretty OK, the US's misery index suggests they're not. 

June's misery index (a composite of unemployment and CPI inflation) has risen to 12.5. That's the highest since September 2011 when the US economy was experiencing a time of very weak job growth and economic growth following the Great Recession. At the time, the yield curve almost inverted, and there were fears of a new recession. 

June's misery index is also above the index from the 2007-2009 recession when the index peaked at 11.4 percent. The index is also about equal to where it was in the run-up the 1990-91 recession:


So while the NBER may not have yet opined on whether to apply the word "recession" to the current economy, the economy is clearly not in good shape. Call it a recession, or don't. 

While the White House may be trying to convince the voters that all is well, consumer sentiment suggests ordinary people aren't buying it. Moreover, if we're looking for an indication as to whether or not unemployment and inflation affect consumer sentiment, we need look no further than the fact the misery index tracks rather closely with consumer sentiment. If we invert the Michigan Consumer Sentiment trend and match it up with the misery index, we get this: 

con sent

Consumer sentiment has plummeted alongside the increasing misery index, and this has often been the case in recent decades. Of course, economists and White House spokesmen could always just come back and claim that consumer sentiment is "wrong" and that people don't understand how good things are. It's worth noting that politicians, central bankers, and economists have done exactly that during months preceding previous recession. Ben Bernanke, for example, repeatedly noted in 2008 that the Federal Reserve was not predicting recession at all—this was after the recession had already begun (according to the NBER.) Of course, as Bernanke was insisting "all is well," both consumer sentiment and the misery index were trending in recessionary directions. 

Now we may be in a similar situation with Fed chair Jerome Powell talking up the economy's alleged strengths while consumer sentiment goes into a nosedive, and the misery index repeatedly rises. 

Yet, the bad news continues to pile up. The Fed has long clung to the job openings data in the JOLTS report, claiming that the economy must be find because employment (a lagging indicator) suggests strength. Well, this morning's JOLTS report shows a clear downward turn from its upward thrust with job openings falling month-over-month by the most since the 2020 recession. Job openings have fallen 9.8 percent from the March peak. 

But hey, at least there's no famine! 

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The Fed's Favorite Price Index Just Hit the Highest Level Since January 1982

07/29/2022Ryan McMaken

Fed officials like Jerome Powell have long downplayed CPI as a price inflation measure in favor of the PCE index. But, much like CPI, the PCE measure is now also hitting 40-year highs. In new data released today for June, the personal consumption expenditures price index rose 6.8%, the biggest 12-month move since the 6.9% increase in January 1982. Excluding food and energy, the "core PCE" increased 4.8% from a year ago, up one-tenth of a percentage point from May.


The core PCE's month-over-month change was 0.6%, its biggest monthly gain since April 2021. 

This number comes in the wake of July 13's release showing 9.1% CPI inflation for June, which was the biggest increase since November 1981, when the price growth measure hit 9.6 percent year over year. For several reasons (explained here) the PCE shows lower price growth than CPI in many cases. Yet, in the case of PCE, as with CPI, the Fed's target policy interest rate remains remarkably low for today's 40-year highs in price inflation:


In recent months, the FOMC has repeatedly raised the target rate, with the rate now reaching 2.5% as of the July meeting. Wednesday's 75 basis point hike puts the target rate at the highest since 2008, and equal to the rate reached in 2019 before the Fed reversed course as began to push easy money again as the economy softened late that year. 

The overall story here is that there is still no sign that "peak inflation" has been reached, as wages continue to fall behind price inflation.

PCE remains "the Federal Reserve’s preferred measure of inflation." According to the Bureau of Economic Analysis,

The Personal Consumption Expenditures Price Index is a measure of the prices that people living in the United States, or those buying on their behalf, pay for goods and services. The change in the PCE price index is known for capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior. For example, if the price of beef rises, shoppers may buy less beef and more chicken. The PCE Price Index is produced by the Bureau of Economic Analysis (BEA), which revises previously published PCE data to reflect updated information or new methodology, providing consistency across decades of data that's valuable for researchers. They also offer the series as a Chain-Type index, as above. The PCE price index is used primarily for macroeconomic analysis and forecasting. The PCE Price index is the Federal Reserve’s preferred measure of inflation. The PCE Price Index is similar to the Bureau of Labor Statistics' consumer price index for urban consumers. The two indexes, which have their own purposes and uses, are constructed differently, resulting in different inflation rates.

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The Real Battle is Between the Market and State Control

There already exists literature dealing with common objections to anarcho-capitalism (a society with private ownership of everything) such as who will build the roads, how security and national defense would be produced, etc. (see specially the works of Hans-Hermann Hoppe on security/defense and Walter Block on privatization of everything).

In my view, however, what hasn’t been emphasized enough are the errors of minarchists (people who believe in a minimal state with only security and national defense) when defending their minimal state position. Since the state is clearly an organization different than other enterprises, minarchists, classical liberals and regular libertarians should have the burden of proof of explaining their positions.

Many of those errors are also shared with more prominent state worshippers such as socialists and communists. Minarchists share many of those errors in small scale which they probably don’t realize. In this essay I will point out some of those errors and defend the free society from some objections.

Redistribution and knowledge

Most classical liberals, libertarians and minarchists declare that they’re against redistribution of wealth, yet they still offer redistribution, in a reduced form, in a night-watch state wealth is still being redistributed from the private sector to the public sector. This means that wealth is being taken from their optimal destination (that means what people want to do with that) to uses decided by government bureaucrats.

What if a minarchist state is providing more national defense or courts than necessary? How would they possibly know what’s the right amount of any of those that has to be provided? That takes us to the second point, which is knowledge. The right amount and form of anything is discovered by the function of profit and loss, not from bureaucratic plans.


This point is similar to the last one. Classical liberals and minarchists although believing otherwise, think themselves as above society, in the sense that they think they can decide better than people doing voluntary transactions, what to do with their money. Again, what if people don’t want a road where the classical liberal government has decided to construct it, what if a neighborhood needs more security than other? Markets provide the optimal amount of everything through the process of profit and loss.

In defense of that state of affairs, proponents of a small state will spin out an arrange of arguments (public goods for example), all with the basic premise that regular people could not possibly manage any of those services or plan ahead of time. What makes them think that government officials could? Aren’t they just regular people too? The only answer proponents can give is that bureaucrats are special, above society. Frederic Bastiat in The Law already pointed out this problem when refuting socialism:

If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind?

The non-problem of evil

Many proponents of the state apparatus claim that in a private security society, people that do not commit crimes but who are capable of wrongdoing, necessitate regulations to stop them. This is a misunderstanding of libertarian theory; first, libertarianism is a political theory, not a mechanism to discover what is morally good or bad. Thus, it does not apply good or evil to social choices when judging them from a libertarian point of view.

In a free society people, that are “evil” would suffer losses if people regard their activities as such, but what if the “evil” people don’t care about losses? If that is the situation, they will have the living standard that such valuations confer.

Again, knowledge

As Jesus Huerta de Soto has pointed out, economic science has already proven that the state is not necessary for a functioning and prosperous society. For those who believe otherwise, I refer them to the scholarship of Ludwig Von Mises, Murray Rothbard, Hans Hermann Hoppe, Walter Block and the entire of works of the Austrian School of economics. (Even some mainstream economists such as David Friedman agree that the state is not necessary.)


To embrace secession is to accept anarcho-capitalism, since secession helps to bring about a free society. Minarchists and classical liberals reject secession or simply ignore it as a talking point. Secession is a right, since people own their bodies and property, and they are able to exercise to full extent their use of them as long as they don’t infringe on anyone else’s property. Secession does not infringe on anybody; therefore, it should be permitted.

Even from a consequentialist (a philosophy that regards good consequences as ultimate goals) point of view, it should be legal since it would lead to less government bureaucracy. The common objection to this is that if it is highly impractical to secede, what if then? It is highly impractical to do many things but still these things are done and accomplished, and in any case, it is a problem of the person or region who secedes.

No, ancaps (anarcho-capitalists) are not communists

This point should be obvious but there are still libertarians that anarcho-capitalists are one step below communists. People that think so fundamentally misunderstand or simply don’t know what anarcho-capitalism or what communism is. I will just say that communists are proponents of government ownership of everything, while ancaps offer private ownership of everything – a total contrast to communism. Communists worship the state, ancaps reject it entirely.

The Market vs the State

It is a matter of who decides what, either the market or the state, even though many believe that it actually is the state vs chaos. However, they forget that the market is an institution that can and does manage and protect itself. That’s why the state uses coercion to seize private assets in order to exist. Böhm-Bawerk’s essay could not have had a better name to describe this issue “Control or economic law.” We must never forget is that there is an underlying order in human cooperation, which we discover by studying economics and through understanding economic laws.

It might sound radical, but within the libertarian movement there is a struggle of capitalism vs socialism. A free society is a world of capitalism, while a minarchist or classical liberal one is world of minimal socialism. We have to decide whether we defend capitalism or socialism in a small scale? In any case we must not forget that liberty (or private property) is what orders society. The state, on the other hand, creates disorder.

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The Fed Loves Friedman! Hayek? Not So Much

06/28/2022Robert Aro

It’s rare to see a central banker discuss Austrian economics. Yet, the Federal Reserve Bank of Richmond did exactly that in a recently published paper called: A Historical Perspective on Digital Currencies where they give their opinion on past literature as it pertains to the use of private currency.

The three authors, all PhD holders, one from the University of Chicago, compare the views of a Hayek (Austrian School) to Friedman (Chicago School) to conclude that market intervention is preferred to a free market choice in currency. Here’s part of the abstract:

This perspective suggests that government interventions have a critical role in creating a well-functioning money and payments system.

Government intervention and a well-functioning anything are hardly compatible. But let’s see how they arrived at this idea, and why a currency monopoly (managed by seven people) is their preferred choice.

They give credit where it’s due, admitting private currency has been debated “in the economics literature for a long time.” Noting:

In fact, the intellectual roots of cryptocurrencies such as bitcoin can be traced back to the Austrian school of economics and its criticism of the government monopoly over fiat money.

So far so good.

They then cite Hayek’s 1976 book Denationalisation of Money: The Argument Refined where he explained:

…instead of a national government issuing a unique currency and imposing legal tender laws, private businesses should be allowed to issue their own forms of currencies. That is, currency issuance should be open to competition.

No refutations of Hayek’s ideas are mentioned. This continues a long standing tradition of ignoring free market principles since forming a coherent argument against capitalism in favor of socialism is no easy task. Therefore, rather than explaining the problem of Hayek’s ideas, they appeal to popularity by citing a book written by Friedman 16 years prior to Hayek’s, which unapologetically championed interventionism. The authors write:

Hayek's ideas, however, have not been broadly adopted. Rather, in his 1960 book "A Program for Monetary Stability," Milton Friedman pointed out that "monetary arrangements have seldom been left entirely to the market, even in societies following a thoroughly liberal policy in other respects, and there are good reasons why this should have been the case." 

The quote fails to explain the alleged shortcomings of the market. But they follow with ideas on how society benefits through central bank/government support:

According to Friedman, those good reasons are:

  • The high resource costs of issuing currency
  • The difficulty of enforcing contracts and preventing fraud
  • The difficulty with limiting the amount issued
  • Possible externalities on other parties

The four points are hollow, relying on a simple opinion as to how difficult something is, rather than using any form of reasoning or a priori knowledge. However reading Hayek’s book noted above, or his aptly titled book: Choice in Currency: A Way To Stop Inflation should convince anyone that a voluntary system is superior to an involuntary one. As the saying goes: “Good ideas don’t require force.”  

Consider Friedman’s “difficulty with limiting the amount issued” bullet point. 62 years after his book, the Fed has a $9 trillion balance sheet and created almost $5 trillion of US dollars in the last two years. US debt is still at $30.5 trillion, and despite the Fed finally shrinking the balance sheet, it’s only a matter of time until Quantitative Easing returns. Naturally, a central bank creates way too much power to be left in the hands of a few individuals. 

The quantity of hamburgers, running shoes or cell phones in America are not regulated by a planning committee. However, we live in a society where billions of dollars in salaries supports a system that decides the national interest rate and quantity of money. History shows central banks and unbacked fiat currency inevitably lead to hyperinflation, while the military industrial complex and many more evils are supported by this system. Concluding that money is too important to be left in the hands of hundreds of millions of people blatantly denies human history, current reality, and Austrian economics.

With the advent of central bank digital currencies, anyone who champions liberty, freedom, privacy, and purchasing power should be concerned. Fedcoin will be another way central bankers can inflate the money supply. Whether the new money is sent to big banks or the poorest members of society first, it will cause currency debasement. They do not want digital currency for the purpose of stopping money creation; the whole purpose is to streamline money creation, on their terms.

If you think prices are high now, wait until the Fed sends money directly to your digital wallet! We can only guess what Hayek and Friedman would say to that.

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There’s No Guarantee (Gas) Tax Cut Savings Will Be Passed on To Consumers

06/24/2022Connor Mortell

On June 22, President Joe Biden called for a tax holiday for the next three months. As of this writing, it still has to be approved by congress. Many critics have come out in response to this. Among them, Nancy Pelosi has called it nothing more than “showbiz” as she doesn’t expect the 18 cents per gallon savings to be meaningful, Reason magazine has argued that it is taking away a tax for roads that was levied somewhat proportionally on individuals based on how much they drove, but perhaps most interestingly of all - at least from an economics standpoint - was this criticism brought by NPR:

Biden also called on state governments to take similar actions with their gas taxes. He wants oil refiners to boost their capacity so there’s more gasoline on the market - another way to bring down prices. But there’s no way to force those tax cuts to be passed through to the consumers.

In October 2021, I wrote almost the exact inverse of this point: Why Business Owners Can’t Just “Pass on'' Tax Costs to Consumers. Then White House press secretary Jen Psaki had claimed that American consumers would not stand for large companies passing on tax costs to consumers. I claimed that - while probably for the wrong reasons - she was right. The logic stemmed from Murray Rothbard’s Power and Market:

The most popular example of a tax supposedly shifted forward is the general sales tax. Surely, for example, if the government imposes a uniform 20-percent tax on all retail sales, and if we can make the simplifying assumption that the taxes can be equally well enforced everywhere, then business will simply “pass on” the 20 percent increase in all prices to consumers. In fact, however, there is no way for prices to increase at all! As in the case of one particular industry, prices were previously set, or approximately so, at the points of maximum net revenue for the firms. Stocks of goods or factors have not yet changed, and neither have demand schedules. How then could prices rise?

We now find ourselves in the opposite position. Can the removal of a tax drive down a price? The answer is a little more complicated. Rothbard explains above that taxes cannot be shifted forward to the consumer and goes on to explain that instead taxes are shifted backwards to the original factors of production. Less can be spent on them and thus - as Per Bylund has explained:

Entrepreneurs are forced to abandon some of their efforts to generate new value by satisfying customers, or to redirect their efforts into less value-producing channels. The potential output of their creativity goes Unrealized.

It is here that a tax holiday is able to help. Because less cost will be shifted backwards to original factors, original factors will be able to be better allocated to projects that will actually generate new value by satisfying customers.

As a result, to a very large extent, this specific criticism of the gas holiday is right. There is no guarantee that the savings from the holiday will be passed on to the consumers. This, however, does not ultimately discredit the tax holiday itself as the savings will still benefit consumers. Original factors could be better allocated in such a way that does in fact make gas prices cheaper as market competition drives prices down in the absence of these taxes in a very happy go lucky solution that ties this all up in a nice little bow as we look back on it.

But even if that is not the case, the original factors would still be put to a preferable use on the market when they are not hampered by the restrictions on their prices by the government. So, while it is correct that we may or may not see these savings passed on to the consumer, it is also undoubtedly correct that the removal of this tax would in face benefit the people.

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The Latest Predictions

06/20/2022Robert Aro

After the 75-bps rate hike last week, Powell took to the stage, saying in just his third sentence:

We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so.

The public can hardly feel confident in this. When taking the Fed’s latest median projection of Personal Consumption Expenditure (PCE) inflation, they don’t project seeing 2% inflation until some time after 2024, in the longer run, per below:

They even provide different perspectives of their data, like the one offered on this chart:

The expectation is that PCE inflation will peak this year and will level off back to 2% in the long run… of course, why they believe this and what data, if any data, they are using to arrive at these projections is beyond the knowledge of anyone outside of their top experts.

Future inflation is not all they predict. There is also the Fed’s dot plot chart, used to guide future interest rates:

According to participants, rates still have a long way to go, possibly reaching over 3.5% this year. That’s not even the expected height of it, as, in 2023 rates may well be into the low 4% range. It's only after 2024 rates are expected to be back around 2%.

As far as future outcomes for GDP and employment, the Fed predicts things will be quite all right for the foreseeable future:

No negative GDP is forecasted from 2022 and into the long run, while the unemployment rate is expected to persist around its current levels, from now and also past 2024.

Something eerily absent from all these predictions is any sense of a market downturn, or a recession. Even without employing lessons from the Austrians, or using ideas about the boom-bust cycle, one would think that the Fed’s shrinking of the balance sheet should give some cause for concern.

To go from a $5 trillion increase in the balance sheet in two years, to monthly decreases is no easy task. Even in my previous article I showed a visualization of the Fed’s holdings of US treasuries and how the last two times the Fed reduced holdings corresponded with a market crash and recession. Given the state of the world, the already high prices we’re seeing, and the Fed tightening to come, one would think a less than optimistic outlook would be reflected in their projections.

The problem with projections is that anyone can make them; however, there is a reason why the Fed’s projections are so detrimental. In the private sector, the entrepreneur must make predictions, forecasts and estimates all the time. They must anticipate future costs, sale prices, quantity demanded, consumer appetite, and countless other factors. They perpetually navigate a world of uncertainty. When the entrepreneur fails, the loss is borne by the entrepreneur first and foremost.

This is the opposite of how the Federal Reserve operates. When their predictions, forecasts, and policies are wrong, the errors, mistakes and failures are borne by society as a whole.

Should PCE inflation be twice, three times, or even five times higher than 2.6% in 2023, the Fed will explain why their forecast was wrong and revise accordingly. Unlike the entrepreneur who risks their own livelihood brining a product to market, weighed against the risk of going bankrupt due to potential failures, the Fed will not go bankrupt no matter the failure. In fact, not only will the Fed not go bankrupt, they’ll use any crisis as justification for more money printing endeavors, enriching themselves and those closely connected first and foremost.

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The Theme of Failure

06/07/2022Robert Aro

Last week Biden sat down with Powell in a rare, but not uncommon, meeting between the Commander-in-chief and the head of America’s central bank.

Per Whitehouse transcript, Biden says:

It starts with a simple proposition: Respect the Fed and respect the Fed’s independence, which I have done and will continue to do.

The problem is that the Fed’s independence was compromised a long time ago. Both the Fed and Congress worked together during the pandemic to incorporate new companies for the purpose of skirting legislation, forming inflationary lending programs, as well as direct stimulus programs, spending trillions of dollars in the last two years.

The primary reason prices have drastically risen, or the dollar weakened, is due to the expansion of the money supply created by these programs, exacerbated by forcing businesses across the country to shut down. Of course, they will never rightfully acknowledge the current inflation problem being the result of government and central bank intervention.

After the proposition, he talks about the plan on tackling inflation:

Chair Powell and other leaders of the Fed have noted, at this moment, they have a laser-focus on addressing inflation, just like I am. 

Since both Biden and Powell fail to understand the nature of inflation, they create narratives for the public, hence sometimes inflation is caused by Putin, sometimes it's bottlenecks, and sometimes just a transitory phenomenon. We can't believe they have a “laser-focus on addressing inflation” now considering they’ve never shown this before. The public hears narratives and finger pointing rather than credible discussion over why our currency is debasing.

In time, each new narrative is proven false. Just this week on CNN, Treasury Secretary Janet Yellen admitted:

I think I was wrong then about the path that inflation would take.

Consider the gross negligence perpetrated by one of the most decorated economists of our generation when Janet Yellen weaved a tale about “transitory inflation,” which really did turn out to be just a story more than economic theory.

The theme of failure continues. It’s important for the public to realize how central planning an economy ends; and it always ends the same, with mistakes, errors, oversight, falling behind the curve, et cetera, et cetera. When their follies, or worse, flat out lies are eventually exposed, the burden of failures by the planners falls on society to pay the cost.

It’s important to understand the system as a whole, how it’s designed for failure and how we allow this to happen. Rather than ask the same officials to do a better job of planning the economy, we must somehow rid ourselves of these planners entirely; especially considering “we the people” don’t need the planners. The planners need us.

Perhaps it was their recent failures in understanding inflation, coupled with month after month of high inflation readings that prompted the Biden-Powell meeting?

The day before the meeting, Biden had an op-ed statement in the Wall Street Journal, where he wrote:

First, the Federal Reserve has a primary responsibility to control inflation. My predecessor demeaned the Fed, and past presidents have sought to influence its decisions inappropriately during periods of elevated inflation.  I won’t do this.

His message says nothing regarding the path forward and instills no confidence that the future looks promising. If they're trying to convince us that all will be well, or that they’ve somehow learned from the past, they’re not doing a very good job. We should be concerned with Biden’s message to trust the process since it appears their short-run goal is to bring on a recession, crash the stock, bond, and housing market, and in the long run destroy the purchasing power of the US dollar. Should they accomplish this, the current system ensures none of the people who brought us to economic ruin will ever face any form of recourse.

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The War Against Porn Can Be Rothbardian

06/05/2022Aaron Cummings

With social issues defining more and more political campaigns, Rothbard’s pitch for the GOP became a relevant playbook for future candidates. If the motto “Culture is downstream from law,” has taught us anything, it's that the relationship between legislation and behavior has been consistent. Murray Rothbard was hesitant to place pornography as a viable subject for private property rights. However, many political figures have been using the populist strategy to outcompete its statist foes.

When Rothbard addressed the feminist critique of pornography, the argument was fought on idealistic grounds (Rothbard, pg. 199). By this logic, the sexual revolution could’ve only became a slippery slope if the alarmists transformed into militant activists. Unfortunately, this was the exact evolution that dictated second wave feminism. What started as a breach of the Hays Code evolved into an online phenomenon where exploitation has been kept from mainstream coverage. He described the slippery slope that has consumed the 60’s counterculture rally cry:

In today’s increasingly degenerate intellectual climate no simple truths can any longer be taken for granted (Rothbard, pg. 200).

This was the state of society in the 70’s that experienced abandoned families and egalitarianism. By contrast, the progression of 21st century pornography as an industry conflicts with its previous status as a recreational private property concern. He doubled down on the condemnation by establishing the key dichotomy in Rothbardian ethics:

A man's right and the morality or immorality of his exercise of that right.

As a topic, pornography was addressed on moral terms and that determined its verdict among libertarians. Conservatives continue to seal its fate in the political space, while others watch the public reaction to this unfashionable perspective on porn.

The populist wing of the GOP has made quiet progress, yet their efforts were proving to be more daring. Whereas bills were often reduced to flukes and shuffled away due to bureaucracy, it’s easier to announce the problems head on. This strategy was not often the first choice for Rothbard since it often reaffirmed the status quo. However, it speaks to the relevancy of right wing populism that isn't bogged down in academic language.

If legislation was impractical, that seemed to motivate libertarian thinkers prior to Rothbard. By the 90’s, culture wasn’t a bridge too far in American discourse. When Pat Buchanan cited morality as the main pitch for the 1992 election, Rothbard shifted the libertarian line from economic grievances to social ones. Whereas previously libertarians would not be receptive to this change, there was an answer that united them alongside conservatives.

The next few years saw similar topics emerge into mainstream politics. Referendums on affirmative action, questions about a national language, and other wedges were no longer fought between liberals and conservatives only. Libertarians started entering the arena and the culture war was a new outlet waiting to be seized upon. In a period of about 15 years, the majority of voters showed support against these inflection points.

Despite this populist momentum, the candidates never changed their tune after the Republican Revolution of the 90’s. That allowed libertarian rhetoric to gain legitimacy. Not only were voters aware of the elitist attitude of the party, they were also receptive to culture in a direct way. What was once deemed a recreational activity has been more appropriately described as a corporate industry. Pornography has existed as a political establishment rather than a competitor in the free market. This distinction allowed Rothbardian philosophy to flourish against the tide of hyper liberalism.

When the Hustler Magazine v. Falwell verdict went in favor of Larry Flynt; it interfered with a deeper principle beyond the first amendment. The expansion of pornography since the 1988 court case was a clear and present threat to the same demographic that libertarians were reaching out to.

There has been a lack of outrage when other topics like federal spending have affected those voters, although the troubling social trends have animated them like no other. The intrusive pattern of widespread pornography has stepped beyond the parameters of consent. Moreover, these conditions allowed an entire population to be isolated and vulnerable to progressive trends. Without a proper way to compete against it, the restrictions of freedom have increased dramatically.

Both libertarians and conservatives shared enough overlap and a common enemy to combat the statist aspects of society. In a modern setting where men and women have been driven apart by economic limitations and social barriers, libertarians have had room to critique the changing customs. Rothbard adjusted his focus from the economic plight that was generally confusing to a wide audience and narrowed the message to familiar territory.

Tuning into the social issues over the state itself have earned libertarians a voting bloc and winning issues to retaliate against the establishment with. As the 1964 presidential election proved, Barry Goldwater was able to outmaneuver Nelson Rockefeller with a platform of small government and free trade. The success didn’t result in an electoral victory, yet the influence never left the GOP.

These ideas were pushing boundaries during a climate surrounded by New Deal era policies. Modernity has evolved into more intimate spaces that even the liberals of a bygone era never fully capitalized on. Populists in the future have an opportunity to continue the legacy neglected in the 90’s and truly repeal the pornography industry as .

When Hawley addressed the trafficking side of the industry, there was exclusive attention given to sites that were guilty of criminal accounts and pursued with the full weight of the law. Moreover, the main obstacle for Rothbard was within the bounds of private property rights while most of the videos in question are anything but. His comments from Egalitarianism As A Revolt Against Nature presented the industry in a limited state and only began to expand past the level of a private magazine distributor. Despite this, a dichotomy was prefaced to determine the utility of sex in relation to virtue ethics.

What made this a concern for Rothbardian libertarians was his definition of moral right. Whereas Stanley v. Georgia established the one way to face the topic, resolutions like VA HJ549 reduced the spread of distribution and were a practical way to give people a psychological break from consumption. As a result of House and Senate declarations, pornography shifted into the realm of a health crisis. That allowed the momentum to reach the New York Times and created avenues for legislation. A reasonable model would be the Section 230 strategy, despite its focus on Silicon Valley. Where conservatives have been misguided is they were unaware of the resources available to them.

With Section 230 being an expansion of the 1996 Communications Act, government regulation reduced the publishing rights of multibillion dollar platforms and held them legally accountable for violations. Conservatives have used this issue exclusively for transparency on social media. However, it also widened the scope towards monopolies in general and could be directed at pornography as past court decisions have done. In terms of practicality, most of the top sites in the industry haven’t been passing the Miller test. This would address pornography in a way that doesn’t affect companies who aren’t receiving government subsidies. The private companies called into question were those dealing with regulatory capture or other protections and therein lies the distinction.

This places pornography in a unique category. If it is viewed as a mental phenomenon, this conflicts with the autonomy that is meant to be bestowed upon human action. A libertarian answer to the industry does not equate it with other competitors among the marketplace.

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