About This Blog

Ludwig von Mises (1881-1973) was the greatest economist of my time. His greatest works can be accessed here at no charge.

Mises believed that property, freedom and peace are and should be the hallmarks of a satisfying and prosperous society. I agree. Mises proved beyond a shadow of a doubt that the prospect for general and individual prosperity is maximized, indeed, is only possible, if the principle of private property reigns supreme. What's yours is yours. What's mine is mine. When the line between yours and mine is smudged, the door to conflict opens. Without freedom (individual liberty of action) the principle of private property is neutered and the free market, which is the child of property and freedom and the mother of prosperity and satisfaction, cannot exist. Peace is the goal of a prosperous and satisfying society of free individuals, not peace which is purchased by submission to the enemies of property and freedom, but peace which results from the unyielding defense of these principles against all who challenge them.

In this blog I measure American society against the metrics of property, freedom and peace.

Friday, July 17, 2015

Foreign Relations Is Macroeconomics: The Individual Is Unwitting and Impotent

There is so much I don't know. Or so much I think I know that isn't so. How is it possible for an ordinary citizen to decipher fact from fiction in foreign relations?

All Praise To Barack Obama For Stiffing The War Party—- Peace Is Finally Being Given A Chance

So in the context of all of that history we now have a solemn international agreement that’s designed to insure that the nuclear weapons program that the CIA has never found and that the Iranians say they never had and that their Supreme Leader has forbidden—does, in fact, never happen.

And who can say he knows for sure that Stockman is not right?

When TR said "Speak softly and carry a big stick..." he was on to something. The trick is knowing what to say and when to swing the stick.

Saturday, July 11, 2015

Scott Walker For America

My money is on Scott Walker winning the Republican Party nomination for President and, eventually, the Presidency. Ten to one odds ain't bad and Walker knows how to campaign in this age of "anything goes" Progressivism.

Nick Gillespie wrote an excellent opinion piece yesterday on Hillary Clinton and how to defeat her. He ends with:

If the eventual Republican nominee—whether it’s Jeb Bush or Rand Paul or god help us all Donald Trump—wants a real chance at the crown, they’d do best to back away from Hillary and the anger-bear rhetoric that only makes her more sympathetic. The nominee would do well to outline an actually positive and inclusive message about how they plan to guide the country into the 21st century rather than constantly harp on last century’s scandals, the need for even newer and bigger wars, and protecting us from the scourge of immigrants so desperate for a better life that they’re willing to risk arrest to come to America.

A Republican employing positive rhetoric—which is exactly how Barack Obama toppled Clinton in 2008—would pull her out of her crouch and cause her to swing recklessly and wildly. In all that lunging, she’d be likely to knock herself out. But so long as the Republicans keep smacking themselves in the face, she’s smart to hold her punches.

A "Republican employing positive rhetoric?" That, my friends, is Wisconsin's own Scott Walker, a plain-spoken, positive, Reaganesque dark horse. He's an experienced, many-times winner in Wisconsin, a blueish state with more than it's share of whackadoodle Moonbats. Walker took them head on with a no nonsense, positive message that appealed to the State's rural and middle class voters.

Scott Walker, like Reagan, is capable of pulling all branches of the Republican Party together, not by bashing his rivals with negativity, but by knocking them senseless with down to earth honesty and a positive vision for the future.

Thursday, July 2, 2015

Keynes vs The Free Market

The best technical explanation of Keynes' famous multiplier remains that of Murray Rothbard here.

Thus, income = independent expenditures (private investment + government deficit) + passive consumption expenditures. Using our illustrative consumption function, income = independent expenditures + 90 percent of income. Now, by simple arithmetic, income equals ten times independent expenditures. For every increase in independent expenditures, there will be a ten-fold increase in income. Similarly, a decrease in independent expenditures will lead to a ten-fold drop in income. This "multiplier" effect on income will be achieved by any type of independent expenditure — whether private investment or government deficit. Thus, in the Keynesian model, government deficits and private investment have the same economic effect.

Please note that:
1) Rothbard is EXPLAINING the multiplier, not defending or agreeing with it;
2) Rothbard selected the 90% figure to make the math easy. That figure is a VARIABLE which is, according to Keynes, based on research. It is derived from the Keynesian consumption function which, like marginal utility, is mathematically derived from aggregate economic data.
3) Please note the last two sentences in boldface. Keynesian theory says the multiplier applies whether the expenditure is public or private.

My contention is that the entire concept of government deficit spending creating multiple increases in real income is baloney. Deficit spending merely increases economic activity in that it increases the total of money in circulation. Any increases in money income are a matter of prospective and MUST be accompanied by increases in expenses and vice versa. From the prospective of the government, deficit spending must be paid for by a corresponding amount of income, either obtained from taxes or debt financing. From the prospective of the "receivers" of government money, their new income must be accompanied by expenditures of their own before that money can become anyone else's income and so on and so on. Any difference in income and expenditures from the prospective of each individual involved becomes profit or loss in terms of money. Profits realized from this process are what benefits the economy, not an increase in the aggregate income of all concerned. However, whether these profits are "real" is also a question we must consider and this depends upon the amounts of government deficit spending and its effect on inflation. If inflation is significant, profits may appear on individual income statements, but these profits may not appear for the individual in real terms.

In sum, if any kind of "multiplier" exists in an exchange economy it is real profit.

Money can be created in our current fiat monetary system by the government and the Fed by means of deficit spending and public debt financing, or money can be created by the private fractional reserve banking system making loans to private individuals.

So, the larger question is: Which of the above two options is in the best interests of individual Americans?

Keep in mind, from the Keynesian prospective any fictional "multiplier" works equally well whether government deficit spending or private investment, so that part of the equation shouldn't come into play. The question really boils down to which political/economic system do you think best satisfies the desires (felt needs) of the American consumer: government spending directed by 535 federal politicians (and thousands of unelected bureaucrats) or the unfettered free market?