To Wish Impossible Things

it was the sweetness of your skin

it was the hope of all we might have been

that fills me with the hope to wish

impossible things

-        The Cure

Fix the Fed.  This is the wish of John Mauldin, advocating the advice to be found in the book authored by Danielle DiMartino Booth, Fed Up: An Insider’s Take on Why the Federal Reserve Is Bad for America.

Booth worked for several years for Dallas Federal Reserve President Richard Fisher; she left the Fed when he resigned.  With this experience she offers her advice for reform.  And Mauldin offers that her advice should be heeded.  According to Booth, the Fed should be reorganized; according to Mauldin:

This is a powerful to-do list that I hope every Congressman and Senator will read.

Mauldin offers the final chapter of the book – in this chapter will be found the key takeaways and advice about reorganization.  Let’s take a peek:

First things first. Congress should release the Fed from the bondage of its dual mandate.

Per Booth, the Fed should focus only on price stability (whatever that means).  Resolving unemployment should be the business of congress. 

The benefit of this?

The added bonus: shedding the dual mandate will discourage future forays into unconventional monetary policy.

Wait a minute.  Let’s ignore the unemployment picture of the last ten years and focus on the situation of “price stability.”  “Price stability” (aka price inflation as measured by the CPI) has been unacceptably low to those at the Fed since 2009.  It is only now moving into something approaching acceptable territory.

So…again…ignoring the whole unemployment part of the mandate and let’s just say the Fed was only focused on price stability for the last ten years…explain to me when and how the Fed would have stopped implementing its “forays into unconventional monetary policy” given that they have only now reached something approaching (their definition of) price stability?

Ok, what’s next?

The floor on overnight rates must be permanently raised to at least 2 percent and Fed officials should pledge to never again breach that floor.

Pledge?  To whom?

Perhaps those congressmen and senators who read this book could pass a law to this effect.  I am quite certain that they will not rescind it when the next Paulson and Bernanke come whining to them about how the world is coming to an end.

Anyway, who says 2 percent is a floor that should never be breached?  Why not 1 percent or 4 percent?  Is there a law of economics on this matter of which I am not aware, or is this just Booth’s version of central planning?

Moving on:

Limit the number of academic PhDs at the Fed, not just among the leadership but on the staffs of the Board and District Banks.

I can agree with this, as long as the limit is zero.  Otherwise, you tell me: will the thinking of 100 academic PhDs result in better central planning than the thinking of 1000?

Bring in more actual practitioners – businesspeople who have been on the receiving end of Fed policy, CEOs and CFOs, people who have been on the hot seat…

Oh, please no.  Is this advice offered because the CEO and CFO of General Motors, JPMorgan Bank, General Electric, and Boeing have no vested interest in artificially abundant and inexpensive credit?  To ask the question is to answer it.

Then we have term limits for the governors; all district presidents with a permanent vote on the FOMC; redraw the districts to reflect today’s economy; better focus on regulation.  You know, deck-chairs-on-the-Titanic kind of stuff.

And then this whopper:

Send most of the PhD economists back to academia where they belong.

…who will then be lavished with grants from the Fed to produce research that supports evermore intervention.

Booth ends with a statement that makes me wonder why she believes reorganizing the Fed is even an objective worth considering (emphasis added):

Finally, let nature take its course. Reengage creative destruction. Markets by their nature are supposed to be volatile. Zero interest rates prevent the natural failures of weak companies, weighing down the economy with overcapacity for generations.

Recessions might have been more frequent, the financial losses greater for some, but if the Fed had let the economy heal on its own, America would have been stronger in the end and the bedrock of our nation, capitalism, would not have been corrupted.

“…let nature take its course.”

If this is the mandate for the Fed, why have a Fed?  Why have a lender of last resort? 

Letting “nature taking its course” in the economy means that price discovery happens without influence by anyone other than market actors trading in their own property; letting “nature take its course” in the economy means profit and loss – and with enough loss for an individual firm, bankruptcy.

I agree: let nature take its course.  And there is only one way to do this in an economy if you do not want to corrupt “the bedrock of our nation,” capitalism:

End the Fed.

Apparently Some Confusion?

A question was asked of Walter Block; the bulk of the question regards something written by me!

He [that would be me!] makes the following claim: A common culture – and a culture beyond merely the NAP – is necessary if we are ever to move closer to a libertarian society. Asks the rhetorical: What is aggression? What is proper punishment? How is it determined when the age of minority ends and majority begins? What is property? Then answers by saying there would actually be many different answers to these questions that could be compatible with the NAP.

This seems contradictory to his original statement about a common culture…

Now, I don’t know why I am not asked directly to clarify this seeming contradiction; I will do so here.

My point is simple: for example, what is “aggression”?  We debate libertarian theory to the nth degree with the hope of precisely defining what is meant by “aggression.” Is it only physical acts?  Is it the threat of a physical act?  Does it include libel?

Theoreticians pretend that they will be able to definitively answer these questions using libertarian theory – and come to one definitive answer. 

I will suggest: In a given society, as long as all individuals generally accept the same definition – say…physical acts only – there is a better chance to maintain peace and therefore avoid calls for “someone to do something about it” (aka “government”).

Now, individuals in another society – somewhere way over there – might generally accept that threats are “aggression.” 

Who is the purist to say this is not acceptable?  As long as those in the society generally accept such a definition, they will live in something approaching their version of a libertarian world.

My point about “common culture” isn’t one definition for all, everywhere – as the questioner implies.  My point is different societies will come up with different answers to these questions – and each can be compatible with a libertarian society populated with imperfect humans.

Let’s take this one step further: a common culture, generally libertarian, which does not morally accept the libertine libertarian.  Perhaps a society that generally accepts what is known as a traditional lifestyle – a male husband, a female wife, 2.5 children and a white picket fence.  Acts of procreation happen in the bedroom.

Then one day, a new neighbor comes in; he decides his front yard can pass for the set of a XXX movie.  Plenty of oil and whipped cream are involved.  Now – it is his property – he is not violating the NAP as far as I can tell.  Where he came from, this was…normal.

Look, we can say “look at the contract” all we want.  The nudist will say “I see no restrictions on the CC&Rs.”  Is this a situation where peace can easily be maintained?

So…even if the nudist is correct within the thinnest of thin libertarian theory, he is creating a situation where the traditional libertarian community will transform into one that demands “someone do something about it” (aka “government”).

And there goes the previously generally libertarian community.

A generally accepted culture “around here” (based on more than property rights) is necessary to develop and maintain a libertarian community.

BTW, Walter answered the question perfectly – and I agree with his answer:

As far as I’m concerned, some cultures might well be more compatible with libertarianism than others. I’m not enough of a sociologist or historian to say which is which though, although I have my guesses. The point I would leave you with it that this is an entirely different issue than what does libertarianism consist of? As far as this latter issue goes, I’m a thinnist: that is, this issue is entirely outside the realm of what is libertarianism.

My one slight difference – I have my guesses about which type of culture is more compatible with libertarianism, and have written about this often.

The Sooner We are Rid of Him, the Better

My own view is that this planet is used as a penal colony, lunatic asylum and dumping ground by a superior civilisation, to get rid of the undesirable and unfit. I can't prove it, but you can't disprove it either.

-        Christopher Hitchens*

I will suggest this is certainly true for much of official Washington.  I can prove it.

John McCain gave a speech at the Munich Security Conference (I can rest my case now, I think).  What is the Munich Security Conference?

The Munich Security Conference is an annual conference on international security policy and has been taking place since 1963. …Each year it brings together about 350 senior figures from more than 70 countries around the world to engage in an intensive debate on current and future security challenges.

Nothing fishy going on here…

Since 2009, the conference awards the Ewald von Kleist Award:

The award will be given to prominent individuals who have made an outstanding contribution to peace and conflict resolution.

The theme of the conference is peace through dialogue.  At least that’s what they claim.  Instead, everything you need to know about the true purpose of this conference is wrapped up in the name of the first recipient of this annual award: Henry Kissinger.

Now, returning to McCain’s speech:

My friends: In the four decades I have attended the Munich Security Conference, I cannot recall a year where its purpose was more necessary or more important.

So, it wasn’t more important when US blockades starved 500,000 Iraqi children?  It wasn’t more important before the US invaded Iraq and Afghanistan?  It wasn’t more important when the western attendees of this conference made rubble out of several North African, Middle Eastern and Central Asian countries?  It wasn’t more important when McCain and his cohorts decided to turn Ukraine into a war zone?

Referring to the end of World War II and the time McCain describes as the birthing of the West (what a historical ignoramus):

[Came] a new, and different, and better kind of world order … one based not on blood-and-soil nationalism, or spheres of influence, or conquest of the weak by the strong, but rather on universal values, rule of law, open commerce, and respect for national sovereignty and independence.

There are no “universal values”; to insist on such a thing requires ignoring (or destroying) the different values held by different cultures.  There is no “respect for national sovereignty” or “independence”; otherwise why would you want to ignore a world order based on “blood-and-soil”?  There is plenty of “conquest of the weak by the strong”; McCain leads the charge.

Indeed, the entire idea of the West is that it [is] open to any person or any nation that honors and upholds these values.

Open to those who “uphold these values.”  Sounds very Trumpian; of course, it seems clear that Trump actually means this when he says it; it is obvious McCain does not.

Referring to the post-war generation:

They would be alarmed by an increasing turn away from universal values and toward old ties of blood, and race, and sectarianism.

In this one sentence, McCain reveals the inherent flaw in everything he advocates.  If there is one “universal value” known to man since the beginning of recorded history, it is the “old ties of blood, and race, and sectarianism.”  McCain’s vision of man is the aberration.

And it is precisely this – the ties of blood – which the leaders of the west want to destroy; it is because these ties represent a threat to a consolidated, universal authority.

They would be alarmed by the growing inability, and even unwillingness, to separate truth from lies.

Mmmm.

Why did you lie and pretend?

This has come to an end

I'll never trust you again

It's time you made your amends

Look in the mirror my friend.

-        Dream Theater

OK, John, you can come away from the mirror now; return to the speech, please:

Clinton Interferes in Russian Elections

From an academic paper published by Hamilton College (located, interestingly enough, in Clinton, New York):

Immediately after coming to power, the Clinton administration declared the consolidation of market and democratic institutions in Russia to be a vital American interest. The administration’s central tactic for promoting this outcome was to help Boris Yeltsin remain in power….

…Strobe Talbott, his chief adviser on the former Soviet Union, observes in his memoirs, the president himself quickly became “the U.S. government’s principal Russia hand, and so he remained for the duration of his presidency.”

Pot, meet kettle (translation: Hillary, meet Bill):

President Bill Clinton meddled in Russian affairs in the 1990s and helped Boris Yeltsin get elected to a second term, political analyst Dick Morris told Newsmax TV.

"When I worked for Clinton, Clinton called me and said, 'I want to get Yeltsin elected as president of Russia against Gennady Zyuganov, who was the communist who was running against him. Putin was Zyuganov's major backer.

This was not a passive attempt by Clinton; “Dick, can you go do something about this Yeltsin guy; I have some work to do at my desk.”  No, Clinton was completely immersed in Yeltsin’s political future:

"It became public that Clinton would meet with me every week. We would review the polling that was being done for Yeltsin that was being done by a colleague of mine, who was sending it to me every week. We, Clinton and I, would go through it and Bill would pick up the hotline and talk to Yeltsin and tell him what commercials to run, where to campaign, what positions to take. He basically became Yeltsin's political consultant.

Bill was more successful advising Boris that he was at advising Hillary, it seems.

Of course, given that Yeltsin was a very popular figure in Russia, while the meddling might be ethically questionable it really had little influence…

… Yeltsin faced growing opposition at home to his efforts to liberalize the economy and enact democratic reforms in Russia.

What? Yeltsin faced opposition at home?  Would a Clinton – any Clinton – disallow democracy from running its course?  From the academic paper cited above:

[We find]…that the U.S. government during Clinton’s years as president lent support, both material and moral, to Boris Yeltsin for the purpose of keeping him in power—is not open to dispute. …much of this aid was explicitly justified as necessary to help Russia’s president prevail in his intractable power struggle with a hostile legislature.

That doesn’t seem very respectful of representative government, does it?

In the meantime, Clinton initiates a modification to Mt. Rushmore:

…a year and a half into the [Chechnya] conflict, after tens of thousands of civilians had been killed but also just two months before the Russian presidential elections of 1996, Clinton publicly defended Yeltsin by comparing the war to Abraham Lincoln’s efforts to preserve the union.

This is a laugh-riot.  Yeltsin killed a few thousand; Lincoln killed over 700,000.  There is no comparison.  How does this paltry effort get Yeltsin into the club?  It seems a very cavalier attitude for Clinton to have taken. 

Anyway, whatever happened to “When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another…”?  (Oh, never mind…)

In his autobiography, Clinton openly acknowledges that strengthening Yeltsin against his domestic opponents was one of his central concerns throughout his presidency.

Clinton is all for democracy except when he is against it, I guess.  A characteristic shared by others in his family.

Not everyone viewed Clinton’s efforts favorably:

An even more strident critique is offered by Peter Reddaway and Dmitri Glinski, who castigate President Yeltsin for “illegally suspending the constitution and dissolving the Russian parliament,” as well as more generally introducing “an authoritarian police regime.”

Authoritarian police regime?  Bill Clinton supported police-state autocrat who suspended the constitution and dissolved parliament?

Moreover, they bemoan [Yeltsin’s] victory in the presidential election of 1996 and suggest that his opponent, the leader of the Communist Party of the Russian Federation (KPRF) Gennady Zyuganov, would have formed a more representative government.

A more representative government?  Sounds more like Putin than Yeltsin.

MOSCOW — Russian President Vladimir Putin has an 83 percent approval rating. …[Some] claim that the poll numbers are manipulated, although most Western polling firms arrive at similar figures.

Obviously those polling firms – both Russian and western – haven’t included in their sampling the Russians living and working within the Washington beltway.

Where Are We Headed? (Part II)

I have given further thought to this topic, first explored here.  I will first offer a few points from the earlier post:

Codevilla: We have stepped over the threshold of a revolution. It is difficult to imagine how we might step back, and futile to speculate where it will end.

Zman: If what it takes to break the stranglehold this cult has on society is a dictator willing to toss a few judges from a helicopter, then sign me up for dictatorship.

Bionic: It would be nice to have a Gorbachev.

My reference to Gorbachev is in reference to a political leader who led through a relatively peaceful dissolution of empire; it would be nice if the US had such an individual.

I wrote and published the above on Saturday the 11^th.  Since then, events have transpired that bring much more clarity…and make evident the level of risk.  Let’s just say a Gorbachev isn’t enough.

Trump was already facing a congress in which all the democrats and half or more of the republicans were seething that he won, were seething at what he represents, and were seething at many of the policies for which he advocated – and high on that list was rapprochement with Russia.

Now we have this:

President Donald Trump asked his national security adviser to resign after White House lawyers reviewed a warning from the Justice Department that Michael Flynn had misled officials about his conversations with a Russian envoy and could be vulnerable to blackmail.

Flynn, bad on many things, was reasonably good on the issue of peaceful relations with Russia and on reforming the many three letter covert agencies.

The White House counsel, Don McGahn, "determined that there was not a legal issue but a trust issue," Trump’s press secretary, Sean Spicer, told reporters on Tuesday.

Whatever the truth and however this is spun by the White House, it is blood in the water for the sharks circling Trump.

The Saker says it better than I could (emphasis in original):

THIS IS ABOUT POWER.  As in, who is boss?  Who is number one?  Who is the alpha dog?  The President or the ‘deep state’?  That is what this is all about – showing everybody who is in charge.

FLYNN’S DOWNFALL IS A MESSAGE.  A message to all those who hate Trump and what Trump represents.  And that message is simple: we are back in control and the party is on!

It does not matter what the reasons were behind Flynn’s departure; all that matters is how the opposition views this event – and how it will embolden the opposition.  For example, ask Dan Rather (from Zero Hedge):

This Russia scandal is…cascading in intensity seemingly by the hour. And we may look back and see, in the end, that it is at least as big as Watergate. It may become the measure by which all future scandals are judged.

We need an independent investigation. Damn the lies, full throttle forward on the truth.

So…where are we headed? 

There is blood in the water.  Trump has turned over a key staff member in record time.  It may be too late to do anything to repair the damage, let alone take the offensive (as I have suggested before; making a long story short, with Trump coming clean on JFK as a start).

Those opposed to Trump (in congress pretty much all democrats and probably most republicans; large swaths of the deep state; the mainstream media; academicians; actors and musicians; rioters like those at Berkeley – in other words, most anyone with power or supporting Power) will not stop until either a) Trump is out, or b) Trump cuts them off at the knees.

I won’t pretend to understand the possible steps through this minefield as well as I assume Trump does.  He has done plenty of swimming with sharks; maybe not this many sharks and not all this deadly all at the same time, but he has experience in this game. 

My one thought: playing mean may not win, but playing nice is certain to lose.  Change the rules of the game and put them on the defensive – this is the most likely path to victory.

The phenomenon that is Trump is the first opportunity since the maturity of the deep state to call into question the deep state.  There is and will be nothing peaceful about this.

So what happens to the rest of us while this drama plays itself out?

I don’t know.

If Trump is forced out of office using such means (or even if the pestering never ends), will his supporters stand still and take it?  If riots such as at Berkeley continue and expand, will the shotguns (whether held by law enforcement or civilian) stay in the closet?

Whatever happens (and much of it will be very bad), there are two absolute goods that will come from all of this:

First, the battle lines are becoming ever clearer.  The deep state is exposing itself as never before; the media has already been fully exposed as the deep state’s Pravda; most democrats and republicans are on the same team – and opposed to humanity.

Second, the international standing of the US government is becoming ever weaker.  It is one thing to be political during an election; what happened before this election it was laughable – in our era, new lows were set in so many ways.  Globally, the standing of US politics took as big a hit as imaginable…

…or so most people thought.  Most people believed that come election night, the drama would be over.  Hahahahahahaha; the joke is on them. 

This is about as third-world-banana-republic as it gets.