A Few Thoughts…

…on the Pope’s visit to Philadelphia. 

The pope was…

Introduced by Aaron Copland’s “Fanfare for the Common Man,”…

I almost skipped over this, but it piqued my interest:

Fanfare for the Common Man is a musical work by American composer Aaron Copland. The piece was written in 1942 for the Cincinnati Symphony Orchestra under conductor Eugene Goossens. It was inspired in part by a famous speech made earlier in the same year where vice president Henry A. Wallace proclaimed the dawning of the "Century of the Common Man".

What about the symphony-inspiring speech?

Vice President Henry Wallace gave this speech in 1942, a time when Americans were debating wartime strategy and America’s role in the post-World War II order. Wallace’s speech, also known as “The Price of Free World Victory,” reiterated support for Franklin Roosevelt’s “Four Freedoms” and criticized Henry Luce’s concept of the “American Century.” Wallace declared that the United States had an obligation to contribute to the war and to the post-war settlement. He described a liberal world system in which freedom, fairness, and opportunity would promote global peace.

It is a speech lauding the rise of the common man and labor movements, among other themes.  Some highlights lowlights from the speech (PDF):

This is a fight between the slave world and the free world. 

The Soviet Union being part of the “free world.”

Just as the United States in 1862…

Continuing from his speech to the US Congress, a reflection of more Lincoln worship by the pope (if you think I am making too large a leap – connecting the pope to this line in the speech – well, you ain’t seen nothin’ yet).

Democracy is the only true political expression of Christianity.

The New Testament speaks of governance in the Church, but not in the broader body politic.  The Old Testament offered judges for the people of Israel, nothing more.  Well, nothing more until the Israelites begged God for a king.  God concluded that this was a rejection of His authority.

Wallace notes the value of universal public education in bringing the masses toward the goal of self-government (democracy).  He lauds the United States and many countries of Western Europe in this regard, but also notes one other state (emphasis added):

In many nations, a generation ago, nine out of ten of the people could not read or write.  Russia, for example, was changed from an illiterate to a literate nation within one generation and, in the process Russia’s appreciation of freedom was enormously enhanced. 

You have to break a few eggs to make an omelet: during this one generation the Russia, via Stalin’s freedom enhancing program, experienced the famine and the terror.  Yet no crime of Stalin is mentioned in the speech while Hitler is the “Satan…turned loose upon the world…the Supreme Devil operating through a human form…”  “No compromise with Satan is possible.”

Wallace includes in “this Great Revolution of the people” the American, French, Latin American (Bolivarian), German (1848), and Russian revolutions.  “Each spoke for the common man….”  A meaningless statement and unsupported by the history.  “Some went to excess.”  An understatement.

It was a speech of peace through war, as told via “the four duties of the people’s revolution”:

The duty to produce the limit.

The duty to transport as rapidly as possible to the field of battle.

The duty to fight with all that is in us.

The duty to build a peace – just charitable and enduring.

The fourth duty is that which inspires the other three.

War as a means to peace.  Nothing in the New Testament supports this; nothing in the early Christian Church supports this either.

Finally, in a blasphemous attempt to add moral authority to the call to war: “…on the side of the people is the Lord.”

This is the backstory of the pope’s introductory music.  Introductory music for the pope was not selected by chance.

Returning to the pope’s day in Philadelphia:

…the pope stood at a wooden lectern used by Abraham Lincoln for the Gettysburg Address in November 1863….

I told you that more Lincoln worship was coming.  The president singularly responsible for initiating the bloodiest war in US history – his wooden lectern is used as a symbol.

Finally, a statement that requires no further comment from me:

The birthplace of American liberty was on virtual lockdown to greet Francis.

Speaking Lies to Power

Isaiah 41:10 So do not fear, for I am with you; do not be dismayed, for I am your God.  I will strengthen you and help you; I will uphold you with my righteous right hand.

Psalm 23:4 Yea, though I walk through the valley of the shadow of death, I will fear no evil: for thou art with me; thy rod and thy staff they comfort me.

Daniel 3: King Nebuchadnezzar made an image of gold, sixty cubits high and six cubits wide, and set it up on the plain of Dura in the province of Babylon. 2 He then summoned the satraps, prefects, governors, advisers, treasurers, judges, magistrates and all the other provincial officials to come to the dedication of the image he had set up. 3 So the satraps, prefects, governors, advisers, treasurers, judges, magistrates and all the other provincial officials assembled for the dedication of the image that King Nebuchadnezzar had set up, and they stood before it.

4 Then the herald loudly proclaimed, “Nations and peoples of every language, this is what you are commanded to do: 5 As soon as you hear the sound of the horn, flute, zither, lyre, harp, pipe and all kinds of music, you must fall down and worship the image of gold that King Nebuchadnezzar has set up. 6 Whoever does not fall down and worship will immediately be thrown into a blazing furnace.”

12 “…there are some Jews whom you have set over the affairs of the province of Babylon—Shadrach, Meshach and Abednego—who pay no attention to you, Your Majesty. They neither serve your gods nor worship the image of gold you have set up.”

13 Furious with rage, Nebuchadnezzar summoned Shadrach, Meshach and Abednego. So these men were brought before the king, 14 and Nebuchadnezzar said to them, “Is it true, Shadrach, Meshach and Abednego, that you do not serve my gods or worship the image of gold I have set up?

16 Shadrach, Meshach and Abednego replied to him, “King Nebuchadnezzar, we do not need to defend ourselves before you in this matter. 17 If we are thrown into the blazing furnace, the God we serve is able to deliver us from it, and he will deliver us from Your Majesty’s hand. 18 But even if he does not, we want you to know, Your Majesty, that we will not serve your gods or worship the image of gold you have set up.”

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Psalm 52:3 You love evil rather than good, falsehood rather than speaking the truth.

The Pope gave a speech to a joint session of the US congress.  It is worth examining the lies of commission and the lies of omission.  I will not comment on his statements that are contrary to the NAP – or even violations to the US Constitution; this post will already be long enough without having to comment on virtually every line of the speech.  For clarification, the Pope’s words will be in italics.

I am most grateful for your invitation to address this Joint Session of Congress in “the land of the free and the home of the brave”.

He isn’t able to get beyond the opening sentence.  What “home of the brave”? 

The US military will drastically increase drone flights over the next four years, in a bid to boost intelligence and strike capabilities across a growing number of conflict zones, the Wall Street Journal reported.

Not very brave, murdering thousands from the comfort of an air-conditioned office.

You [congress] are called to defend and preserve the dignity of your fellow citizens in the tireless and demanding pursuit of the common good, for this is the chief aim of all politics….Legislative activity is always based on care for the people.

There was a time when this “care for the people” was the function of the Church body.  Never did Peter – the rock on whom the Church is built, and from whom the Pope derives his authority – or Paul call for the Roman government to shepherd and guide the faithful.

Yours is a work which makes me reflect in two ways on the figure of Moses. On the one hand, the patriarch and lawgiver of the people of Israel symbolizes the need of peoples to keep alive their sense of unity by means of just legislation.

It was God who gave the Law, not Moses.  Moses was a messenger.  Likewise, Congress cannot give or create law.  (I need not explain that I do not expect all people live under Mosaic or God’s Law; the NAP is enough, given its broad applicability.)

On the other, the figure of Moses leads us directly to God and thus to the transcendent dignity of the human being.

The Pope is saying flatly that, like Moses, Congress leads us directly to God.

The Failure of Government Regulation

Chapter 8,356,471,307: Volkswagen diesel engines.

No link, you know the story.  A quick summary: Volkswagen apparently manipulated engine management software to trick US EPA emissions tests.  This began with the model year 2009 – almost seven years ago.  In the last few days, the EPA got their man, so to speak.

So why is this a failure of government regulation?  You mean, besides it took seven years?

Daniel Carder, an unassuming 45-year-old engineer with gray hair and blue jeans, appears an unlikely type to take down one of the world's most powerful companies.

But he and his small research team at West Virginia University may have done exactly that, with a $50,000 study which produced early evidence that Volkswagen AG (VOWG_p.DE) was cheating on U.S. vehicle emissions tests, setting off a scandal that threatens the German automaker's leadership, reputation and finances.

$50,000.  A small research team.  Does this sound like a federal government operation?

But, you say, the EPA must have funded the research.

The results of that study, which was paid for by the nonprofit International Council on Clean Transportation (ICCT) in late 2012 and completed in May 2013….

ICCT is a European-based organization.

I know, I know – a research team at a state university, a European non-profit; not exactly the free market in action (although both entities secure funding from private corporations and other private entities).  But whatever they are, they aren’t the EPA; they don’t come with a monopoly of enforcement; they don’t receive 100% of their funding through coercion.

As an aside, it still isn’t clear why the story explodes only now – more than a year after the results of the study were published and also presented to the EPA and the California Air Resources Board:

Carder said he's surprised to see such a hullabaloo now, because his team's findings were made public nearly a year and a half ago.

"We actually presented this data in a public forum and were actually questioned by Volkswagen," said Carder.

There seems little doubt that VW legitimately stepped into one – no one is suggesting that the NSA placed a bug in the software…mmmm….

For now, I think it is reasonable enough to accept that VW did this to themselves.  But why would the EPA and media break the story now?

Maybe happenstance.  Or maybe leverage over Germany.  As I don’t believe such things happen in politics by happenstance, I will vote for the latter.

This story cuts at the heart of engineering excellence and Volkswagen – both as German as beer and sausages this month (well, every month, but especially this month).

Why would the US want leverage over Germany?  Russia, China, refugees, placing nukes on German soil, financial support for the failing southern countries.  Who knows?

But there are plenty of possibilities.

Tucker’s Apologia II

Jeffrey Tucker is making a habit of defending individuals who water down the liberty message.  I have written about this in the past regarding Tucker’s defense of Mark Skousen and his FreedomFest that has little to do with actual freedom.

Today Tucker offers his case for the failed (yes, it is appropriate to write in the past tense) Rand Paul campaign for president.  From Tucker:

I’m not ruling out a sudden surge, but, as for this writing, it seems very likely that Rand Paul will not get the Republican nomination, at least not this time. Maybe the future will be different.

While Tucker reads many who suggest Rand has failed because “he departed too much from the script” and instead “should have been more upfront about his libertarianism,” Tucker has a different view:

As much as that would have delighted me, and as much as I long for truth in public life, it is very reasonable to assume that doing so would not have helped him politically.

Now, before you jump on Tucker’s statement with a shout – “Rand should have been about education and not about politics and winning,” calm down.  That isn’t for you to say.  Rand is the one who invested time and energy. 

Now let’s presume that his goal at the outset was to get the nomination.

OK, let’s presume this.

On the contrary, all available evidence is that taking this [libertarian] position would have made his loss a sure thing.

Maybe, yet Tucker goes on to present a series of three charts that demonstrate exactly the opposite of what he is suggesting (and demonstrate that Rand took the wrong strategy from the beginning).

He offers charts from the current and previous two Republican primary runs.  He points to Ron Paul’s success (or lack thereof) in the previous two cycles.  First the facts, as presented by Tucker:

In 2008, Ron Paul regularly polled at about 6% - 7%.

In 2012, Ron Paul polled as high as 10% early on, but as the campaign wore on – and other contenders fell by the wayside – his support grew to 15%.

In the current cycle, Rand peaked at 17% in November of 2014, but since then has fallen to the low single digits.

Let’s agree that Rand wanted to win and not to teach.  What do these numbers suggest?  They suggest to me the following:

Ron was slowly building a base (to add a data point, I remember well in 1988 when he received something less than 1% as the Libertarian Party nominee): from 6% in 2008 to 10% early in the 2012 cycle. 

Given the very dedicated support that Ron’s consistency generated, Ron had staying power (a key point that would have served Rand well in this election cycle, had Rand not flushed this dedicated support down the toilet).  Ron was able to outlast all candidates but Romney, and eventually reached 15%.

In late 2014, when many still believed that Rand was close enough to the second coming of Ron, that dedicated support was still there and growing – Rand was at 17% at the beginning of this election cycle.

What conclusion would you draw from this?  My conclusion, from the numbers: Ron spent a lifetime generating a very dedicated base.  He further spent two election cycles greatly expanding that very dedicated base.  Rand began with the luxury of having perhaps the most dedicated political base of any candidate in my lifetime.

Libertarian strategy was winning, not losing.  The numbers were increasing, not decreasing.  Tucker’s numbers demonstrate this, yet Tucker draws the opposite conclusion.

What’s striking about these polls is the complete absence of any evidence of breaking from the pack. …the libertarian occupied a stable but relatively small niche and never got beyond it.

From below 1% to 6% to 19% to 15% to 17%.  These were the numbers.  This is not small, this is not stable, this is not a niche.

The Fed and Interest Rates

For many years – and certainly more so since 2007 – all financial markets have been fixated on the Fed.  There has also always been discussion regarding the Fed in the circle of economists and economics and, more to the point of this post, Austrian economists and economics

I am no economist of any stripe, and I have freely written that I am not a student (in a meaningful academic sense) of Austrian economics; just a tremendously sympathetic layperson.  To the extent I comment on economic topics, I do so from a foundation of two perspectives: first, my support for free markets; second, no two humans are wired the same. 

It just so happens that Austrian economic thought hews most closely to these two points.  I guess you could say that this makes me a “so-called” Austrian!

Robert Wenzel has published a few posts regarding the Fed’s latest (in)decision on interest rates.  His most recent post on the topic is what has prompted me to write this one.  His post got me to thinking on several topics around this issue – all topics that have been swirling around in my mind for several years, yet topics about which I have written little if anything.

What rates can the Fed directly influence?

First is the rate charged by the Fed for a member bank to borrow at the discount window:

The discount window is an instrument of monetary policy (usually controlled by central banks) that allows eligible institutions to borrow money from the central bank, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions. The term originated with the practice of sending a bank representative to a reserve bank teller window when a bank needed to borrow money.

In the United States, there are actually several different rates charged to institutions borrowing at the Discount Window.

Then there is the rate paid on excess reserves:

In banking, excess reserves are bank reserves in excess of a reserve requirement set by a central bank. They are reserves of cash more than the required amounts.

In the United States, bank reserves are held as FRB (Federal Reserve Bank) credit in FRB accounts; they are not separated into separate "minimum reserves" and "excess reserves" accounts.

On October 3, 2008, Section 128 of the Emergency Economic Stabilization Act of 2008 allowed the Fed to begin paying interest on excess reserve balances ("IOER") as well as required reserves. They began doing so three days later.

As far as I see, that’s it for direct influence – two rates.  If I am missing something, don’t be shy about letting me know.

Two rates – that isn’t much

It gets worse.

The rate charged at the discount window is almost meaningless when banks are sitting on something close to $2.5 trillion of excess reserves (my discussion regarding excess reserves throughout this post assumes that all major money-center banks are well endowed in this regard; minor banks are reasonably irrelevant.  If such a breakdown by bank exists, I haven’t seen it).  Why would banks, flush with such liquidity, have to borrow at the discount window to resolve issues of liquidity?

In fact, after a significant spike in 2008 / 2009, borrowings at the discount window have been negligible, in the $100MM - $200MM range on average, and often below even this.  Compared to $2.5 trillion of excess reserves available, hardly noticeable; 0.006%, more or less.

This leaves me with the conclusion that the only meaningful rate that the Fed can directly control in today’s world is the rate paid on excess reserves.  The Fed could raise this rate.  As all financial returns in reasonably robust markets are derived one from another, this would likely have the indirect effect of increasing the return banks require for lending to third parties.

The Bell Tolls

Preface

Europe – still not having properly dealt with issues raised by the common currency, debt, free-market-unfriendly regulatory regimes, and the like – is now also confronted with a continuous and seemingly unending stream of refugees (and also very likely migrants) from the Middle East, North Africa and southeastern Europe.

Both issues are causing divisions: between national governments and the EU, between national governments and other national governments, and between the people and their national governments.  On both issues – the economy and the refugees – Germany is playing a key role.

First, a brief history of the ramrodding that has been – and is – the European project, from Ambrose Evans-Pritchard:

Perhaps it would be churlish to point out that the cause of this near existential breakdown is a series of moves that have [head of the European Commission Jean-Claude Juncker’s] fingerprints all over them:

The fateful decision to launch the euro at Maastricht in 1991 without first establishing an EU political union to make it viable, and to do this despite crystal-clear warnings from experts within the Commission and the Bundesbank that it would inevitably lead to a crisis - the "beneficial crisis" as the EMU enthusiasts mischievously supposed.

The escalating treaties of Amsterdam, Nice and Lisbon, each concentrating power further in the hands of a deformed institutional system, sapping at the parliamentary lifeblood of the ancient nation-states that can alone be the fora of authentic democracy in Europe.

Above all, to destroy trust by overruling the categorical "No" of French and Dutch voters to the European Constitution in 2005, and bringing back the same treaty by executive Putsch, with a disgusted but complicit British prime minister signing the document in a side-room in Lisbon safely screened from the cameras.

Read the last paragraph again and let me know if you think there is not a powerful elite above the visible rulers.  If the British Prime Minister was actually in charge of anything, there would be little reason to be disgusted – simply don’t sign and thereby avoid disgust; if he was feigning disgust for the sake of the constituency back home – why?  To demonstrate he was a puppet?  Disgust and signing could only simultaneously occur if someone else was pulling the strings.

In any case, as long as local economic activity was generally moving in a good direction, the people remained relatively compliant.  This all changed significantly in 2008, with the financial calamity brought about by government control over the monetary and financial sectors.

Conflict

From Mehreen Khan, at The Telegraph (emphasis added):

…Mr Juncker said Europe could not continue in its "business as usual" fashion in the face of a refugee crisis and a stagnant economy.

"We have got to be frank: the bell tolls. Our European Union it is not in a good situation. There is a lack of Europe in the European Union, and lack of union in the EU."

The bell tolls for Europe.  From John Donne (1572-1631), Devotions Upon Emergent Occasions, Meditation XVII: Nunc Lento Sonitu Dicunt, Morieris:

Now this bell tolling softly for another,

says to me, Thou must die.

Perchance he for whom this bell tolls may be so ill as that he knows not it tolls for him…therefore never send to know for whom the bell tolls; It tolls for thee....

George Friedman sees this as well (as relayed by John Mauldin, emphasis added):

This is not simply about migrants. It is one more thing that shows Europe does not work and cannot make decisions.… What we are seeing before our eyes is the collapse of the European project. There is nothing meaningful when we say “EU.” It was an institution that functioned for a while, but countries are no longer paying any attention to Brussels.

Internet Austrians

The Fed didn’t raise rates.

Ambrose Evans-Pritchard was bound to comment on this (along with offering his obligatory derogatory comment about Austrians), and he has not disappointed.  I will keep this short, as only yesterday I commented on his post in which he approves of governments issuing greenbacks (apparently Macquarie is calling for a similar elixir).  So I don’t want to spend too much of my energy and your time on dissecting another AEP paean to the gods of central banking.

The argument that zero rates are unhealthy and impure is to let Calvinist psychology intrude on the hard science of monetary management.

Capital at zero cost is certainly unhealthy.  I don’t believe Calvin had anything to say about this, though.  Anyway, who knew monetary management was a hard science?  Does AEP mean hard science?

Any of the natural or physical sciences, as chemistry, biology, physics, or astronomy, in which aspects of the universe are investigated by means of hypotheses and experiments.

He must not mean this.  There is no testing via experiments – there is no testing!  It is just an experiment, sans testing.  He must mean hard, as in difficult.  Of this, there is no doubt.  But I wouldn’t call it a science – more like voodoo, or divining.

The chorus of demands – and just from ‘internet-Austrians’ – that rates should be raised in order to build up reserve ammunition in case they need to be cut later, is a line of reasoning that borders on insanity.

First, I think he must be missing the word “not” in the above, as in “and not just from ‘internet Austrians.’”  Because many people not associated directly with Austrian economics have said such things.

On the other hand, any Austrian worthy of the name (internet or otherwise) would not advise what a central bank should do.  If asked for an opinion, they would say that there should be no central bank.

There was also an equity crash on the Shanghai and Shenzhen casinos, though this is of no relevance beyond puncturing the illusion that the Chinese authorities known what they are doing. Self-evidently they do not.

Ambrose offers that Chinese authorities don’t know what they are doing, yet…

…the immediate implication is that data from China will soon start looking a great deal better, lifting the whole world out of its summer sulk.

Consider what he is saying: idiots can run monetary policy and regulate the banks and it makes no difference – the economy will perform just fine; fine enough to save the world!  The gods of Ambrose = idiots.

…the Fed is damned if it does, and damned if it does not, for by recoiling yet again it may well be storing up a different kind of crisis next year.

Finally, something we can agree on – may the Fed be damned.

Nobody said central banking was easy.

Austrians certainly never said it was easy.  Austrians never even said it was hard.  It is impossible.  It is central planning.  And to expect good outcomes from central planning is to worship false gods.

And may those who worship false gods be damned.

The Last Days of Life

According to one study (Banarto, McClellan, Kagy and Garber, 2004), 30% of all Medicare expenditures are attributed to the 5% of beneficiaries that die each year, with 1/3 of that cost occurring in the last month of life.

There are various studies that come to more or less the same conclusion.  Of course, virtually nobody knows beforehand that the upcoming year will be their last – and even if they did, they would likely want to fight it all the way.

Going into that last year?  Who knows?  Is this my last year of life?  Is it yours?  In hindsight it is easy to make such a statement, to perform this calculation.  Beforehand, not so much.

Of course, we can see the signs, the factors that correlate with the proximity of the end.  Age isn’t necessarily a good one – some people at 80 are much healthier than others at 60.  But chronic illness, recurring medical emergencies, obesity, limited mobility, the visible effects of too many years of alcohol abuse and tobacco use, a sedentary lifestyle.

In other words, we can see the signs; yet, do we know that the appearance of such signs means it is the last year?  No, of course we do not.

Now, before you look back up at the header to confirm if you are at the right blog…”why is bionic writing about this?  What does he know about the last days of life?  Is he dying?”

Well, for the last question…yes, eventually.  But no in the context of this post, at least not to my knowledge (but that is kind of my point, isn’t it).

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The new Labour leader, Jeremy Corbyn, has said that a Labour government would introduce “people’s QE”, that is to say, increased government spending, perhaps on infrastructure, financed with printed money.

What is “people’s QE”?

Labour leadership candidate, Jeremy Corbyn MP, will this morning outline his vision for a modern, more productive, fairer economy for all.

He will call for the establishment of an National Investment Bank to promote infrastructure upgrades and support for innovation.

This isn’t plain enough (leave it to a political party to obfuscate their true intent). Which takes me to “Jeremy Corbyn's QE for the people is exactly what the world may soon need,” by Ambrose Evans-Pritchard:

There are many good reasons to gasp at Jeremy's Corbyn's planned assault on capital, but his enthusiasm for "People's QE" is not one of them.

What a relief; according to Ambrose we need not fear this “people’s QE.”

Overt monetary financing of deficits - the technical term - is exactly what the world will need if the global economy tips into another recession with interest rates already at zero and debt ratios stretched to historic extremes.

Wait a minute…haven’t they been doing this for a while now?  I guess what has gone on for the last 8 years (and in less dramatic fashion for decades and centuries before this) has been “covert” not “overt.”

But what Ambrose says we should not fear is outright money printing – literally and directly fund spending via the creation of currency and its digital equivalents – no national debt, just greenbacks.  I don’t think he is serious; can he be?

Jeremy Lawson, from Standard Life, gave his blessing to radical action this week, arguing central banks should be willing to fund fiscal stimulus directly, and even inject money "directly into household bank accounts" if need be.

Yes, he is serious.

Mr Corbyn's ideas are a variant of "helicopter money", the term coined by Milton Friedman, the doyen of monetary orthodoxy, lest we forget.

And some people consider Friedman the 20^th century’s greatest champion of liberty.  Joke’s on them (actually the joke is on us, but they don’t care).