Rollover IRA Mailing

Sometimes only comedy can adequately convey the true hilarity, or absurdity of a situation. The Daily Show with Jon Stewart exposed the United Food and Commercial Workers of Nevada for the joke they are.

Congratulations to “economist” Dean Baker, founder of the Center for Economic and Policy Research, for the worst remedy to our economic woes proposed thus-far — no small feat. His make-everybody-poorer job sharing plan is so outlandish and counterproductive, even the liberal arts major sleeping off a hangover in the back row of Econ 101 can recognize the absurdity. Mr. Baker’s plan is hardly new; both Hoover and Roosevelt implemented the same type of cockamamie schemes during the last Great Depression.

It is truly remarkable that this idea keeps resurfacing after its history of failure and refutation by most major schools of economics. Henry Hazlitt thoroughly refuted the idea, and all its inbred relatives, in Economics In One Lesson back in 1946, devoting an entire chapter to spread-the-work schemes and their unseen consequences. Here Hazlitt explains the ramifications of shortening the workweek from 40 to 30 hours without increasing pay (the outcome is much worse if the week is shortened and hourly pay is increased).

Though more workers will be employed, each will be working fewer hours, and there will, therefore be no net increase in man-hours. It is unlikely that there will be any significant increase in production. Total payrolls and “purchasing power” will be no larger. All that will have happened even under the most favorable assumptions (which would seldom be realized) is that the workers previously employed will subsidize, in effect, the workers previously unemployed. For in order that the new workers will individually receive three-fourths as many dollars a week as previously. It is true that the old workers will now work fewer hours but this purchase of more leisure at a high price is presumably not a decision they have made for its own sake: it is a sacrifice made to provide others with jobs.

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This drone bombing campaign of countries off stated battlefields began in 2002. The Bush administration bombed Yemen in November of 2002 targeting an alleged Al Qaeda leader. The Obama administration has dramatically increased the drone attacks around the world. In Yemen, we’ve done cruise missile strikes, drone strikes, now we’re hitting regularly in Somalia. On July 6, there were 3 U.S. strikes; June 23rd, another U.S. strike inside of Somalia. A lot of liberals used to say “the world is a battlefield” was the bush doctrine. President Obama hit harder in more countries with special ops forces from the Joint Special Operations Command and the CIA than bush did. He has made possible a continuation of these policies that I think McCain would not have been able to push through because there would have been push-back through some semblance of an anti-war movement. There’s no anti-war movement that has any voice in this country anymore. Obama has legitimized and normalized, and attempted to legalize policies a lot of people were saying were immoral and illegal under president Bush.

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Ron Paul reportedly received a standing ovation after saying ”I think we ought to vote for the right to drink raw milk!” Little issues like raw milk may seem trivial compared to Paul’s usual talking points about the Fed, inflation, sound money, and endless foreign wars but we are starting to see that these quality of life and freedom of choice issues are just as important – if not more so – to the average working stiff. Dr. Mark Thornton’s article, Legalize Milk, Real Milk, got over 25,000 reads in about 3 days and Jeffrey Tucker’s Why Everything is Dirtier was just as popular.

What does this mean? I believe that it shows that most people have trouble following the many degrees of separation from entities like the Fed to rising prices and housing booms. And this is precisely what keeps the government safe from public outcry. If consumers notice that their favorite box of cereal used to be 16 oz but is now only 12 oz, they don’t curse Bernanke under their breath, instead they rail about greedy corporations trying to cheat them. They don’t realize that the producer is missing their earnings targets because of the rapidly increasing cost of raw materials and must shrink package sizes because consumers are unwilling to tolerate price hikes.

Ron Paul and Mark Thornton have realized that people can be reached by showing them more direct links between government and a declining living standard. They can see that the regulations promulgated by unelected bureaucrats at federal agencies like the FDA and EPA have a direct impact on their ability to go about their daily lives. This insight into what really matters to people, things like clean clothes and good milk, enables them to reach new, more broad groups of people and spark an interest in the philosophy of freedom.

This morning Illinois Senator Mark Kirk appeared on CNBC’s Squawk Box to advocate new legislation which he claims would remove a dozen restrictions on private-public partnerships. I say “claims” because more often than not, legislation does the opposite of what its sponsors say it will do. I haven’t read the proposed legislation but from his description it sounds like he is advocating a state’s rights approach to infrastructure privatization.

If this legislation really does what he claims, it could be a step closer to true infrastructure privatization.

If you are interested in this stuff, pick up a copy of Walter Block’s brilliant new book The Privatization of Roads and Highways. You can read it here for free – and even print it out if you want – but at under 4 cents a page, it is hard to beat the deal the Mises Store offers on the paperback.

Germany will likely give Greece a second bailout in the very near future. Simon Hobbs tries to explain the incredibly tangled web from which the European Central Bank dangles above disaster. Hobbes suggests that a Greek default could lead to Ireland defaulting, which could lead to the collapse of the ECB.

Hobbs concludes, “Importantly, provided that greece keeps paying its bills the house of cards still stands.”

Last month 164 lucky Misesians sat together in a room in Chicago, Illinois and listened to Walter Block, Doug French, Jacob Huebert, Roderick Long and Yuri Maltsev speak on the topic of “Strategies for Changing Minds Towards Liberty.” I consider Doug French’s talk on Freedom Through Technology to be his personal best (admittedly, topic may have made me a bit biased). He did a brilliant job of demonstrating that technology has obliterated many of the obstacles to the spread of ideas and  is by far the greatest benefactor of liberty.

One of Doug’s central points was that the market forces that bring us technological marvels enable the ideas and philosophy of political and economic freedom to spread faster than at any point in human history.

Six years ago, there was no YouTube – hard to believe right? – the ideas and insights from those 5 speakers would have been heard only by the 164 people fortunate enough to live near Chicago and afford the registration cost. One month ago, when the talks were given, 164 Chicagoans got to hear the ideas; 10 days later all 5 talks were available for free on YouTube for anyone on the planet to watch and share with their friends. Four days from now, the Mises Institute will tear down another wall between the philosophy of freedom and the world’s population.

On Saturday, 14 May, the Mises Institute will broadcast the entire Mises Circle in Indianapolis live in HD! It will be the first time a Mises Circle has ever been broadcast live, much less in HD. Chad Parish, the genius behind virtually all of the Mises media, will have three separate video cameras transmitting to the new TriCaster TCXD300. Then by some super-advanced process, unknown to me but surely involving incantations or tiny fairies, the video will stream live in HD to the Mises Institute’s Ustream channel. The techno magic doesn’t stop there; we have added a special Ustream tab to the LvMI facebook page. Users can click on our Ustream tab to watch all the videos, in real time directly from facebook! But wait there’s more, – channeling the ghost of Billy Mays here – viewers can use facebook chat to discuss the live talk with other viewers across the globe. They can click the “Join Crowd” button to receive email reminders about all of the Institutes’s live events. Viewers can even use the “Invite friends to watch” button to share the live broadcast with their facebook friends.

Here is a preview of the LvMI Ustream tab on facebook:

There are tens of thousands of miles of streams and rivers in the United States that have been “dewatered,” largely from excessive siphoning for agriculture. Regulations have had at best, no effect. Fortunately, Rob Harmon helped develop a free market solution that is returning water to stream beds that have been dry for 100 years.

News that credit rating agency Standard & Poor’s has changed its outlook on U.S. long-term debt to “negative” has sent the Dow down over 200 points this morning. The U.S. still maintains its AAA rating for now but the negative outlook means that S&P feels there is a 1 in 3 chance that the rating will be cut in the next 2 years. In their official release, the S&P said,

“We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.”

To anyone familiar with Austrian Economics, this news is akin to hearing that the Earth is round but it is significant none the less. This change in outlook signals that mainstream economists are starting to wake up. Many of these are the same folks who championed the Fed’s quantitative easing programs and congressional bailouts not too long ago. This is a good sign, some seasoned pros like Mark Rubino are calling this a “great party” that will result in a “hangover of epic porportions” and laying responsibility at the feet of Bernanke and Obama – though we might like to add Greenspan, Bush, Congress, etc. to that list.

Politicians are the masters of spin. We see them on TV giving rousing orations full of sound and furry, we see them standing proudly at podiums in imposing, elegantly designed government buildings commanding the respect of generals, judges, reporters and everyone in attendance as they recite the words carefully crafted by teams of speech writers. This pageantry is designed to convince the public that they are honest, trustworthy and wise so that we will compliantly accept the latest tax increase, regulation or war. They are the personification of stately–a word which has its origins in the late 1300s and meant “noble, splendid,” in a sense of ”costlyand imposing display.”

The viral video of the day features Czech President Vaclav Klaus ”stealing” the ceremonial pen used to ink a new deal with Chile. The sticky fingered leader’s spokesman was quick to point out that his boss had a right to the pen based on international customs but that did nothing to curb people’s fascination with the footage.

This video amuses us because it offers a glimpse behind the meticulously crafted and usually impeccably maintained facade. In it we see the true nature of all politicians; they see something they want and when they think everyone is distracted, they take it and hide it under the table, out of sight as they pass it from hand to hand waiting to see if anyone notices. Then, they tuck it away in their pockets. In this video, the facade crumbles and we see something reminiscent of a school boy trying to  lift a piece of candy from the teacher’s desk with all the grace and cunning of Wile E. Coyote. We like this video for the same reasons we are captivated by Charlie Sheen’s tailspin or whatever is the latest thing on E! News. This is the beauty of the market in the digital age; long gone are the days in which bureaucrats can control when, where and how they are seen. There will always be someone around with an iPhone or Droid or whatever, ready to record their every gaff and misdeed in brilliant 1080p HD and share it with the entire world in minutes.

Matt Taibbi at Rolling Stone may not be schooled in the Austrian tradition of economics but he has a better understanding of the Fed than most of the American political left. Taibbi consistently brings to light the surreptitious, anti-capitalistic exploits of the seemingly omnipotent Ben Bernanke and his Federal Reserve.  The shroud under which the Fed operates, free from the prying eyes of both government and citizens lends verisimilitude to its legitimacy. When the obfuscating shroud is lifted, granting even the slightest peek into what Bernanke is really doing with the trillions he is printing, the unacceptable reality of its disastrous use of unchecked monopoly power is revealed.

The most recent Fed atrocity to be revealed is the $26 billion “loan” Qaddafi received at interest rates that Warren Buffett cold only dream of. Fortunately, Matt Taibbi is bringing it to the attention of the left with his recent Rolling Stone blog post.  Writes Taibbi,

Barack Obama recently issued an executive order imposing a wave of sanctions against Libya, not only freezing Libyan assets, but barring Americans from having business dealings with Libyan banks.

So raise your hand if you knew that the United States has been extending billions of dollars in aid to Qaddafi and to the Central Bank of Libya, through a Libyan-owned subsidiary bank operating out of Bahrain. And raise your hand if you knew that, just a week or so after Obama’s executive order, the U.S. Treasury Department quietly issuedan order exempting this and other Libyan-owned banks to continue operating without sanction.

rollingstone.com

I came across the curious case of the Arab Banking Corporation, better known as ABC, while researching a story about the results of the audit of the Federal Reserve. That story, which will be coming out in Rolling Stone in two weeks, will examine in detail some of the many lunacies uncovered by Senate investigators amid the recently-released list of bailout and emergency aid recipients – a list that includes many extremely shocking names, from foreign industrial competitors to hedge funds in tax-haven nations to various Wall Street figures of note (and some of their relatives). You will want to see this amazing list when it comes out, so please make sure to check the newsstands in two weeks’ time.

This list became public as a result of an amendment added to the Dodd-Frank financial reform bill that was sponsored by Senator Bernie Sanders of Vermont. The amendment forced the Federal Reserve to open its books for the first time and make public the names of those individuals and corporations who received emergency loans and bailout monies during the roughly two year period between the crash of 2008 and the passage of the Dodd-Frank bill.

As Bernie’s staff was going through this list, it found, among other things, some $26 billion in extremely cheap loans (as low as one quarter of one percent!) extended to this ABC bank over a period of years, beginning in December of 2007 and continuing through as recently as February of 2010. The senator sent a letter to Ben Bernanke over the winter demanding more information about this loan (among others) but the response he got was completely unhelpful.

READ THE REST OF THIS BLOG AT ROLLINGSTONE.COM

 

CNBC brought its usual A-game this morning when its in-studio guest Constance Hunter, Chief Economist for Aladdin Capital Holdings, was called upon to comment on the CPI data released. Immediately after the government reported “headline” CPI increase of .5% and “core” (everything but food and fuel) CPI increase of .2%, market maven Hunter was asked whether the Federal Reserve should be reacting to the headline numbers. Ms. Hunter replied,

“You know, even though people feel that, I mean, you go buy gas a couple times a week, you go buy groceries a couple times a week. People feel that in their psychology but that doesn’t really mean that inflation is higher because of course you are not buying a car, you know, every month unless you are Jay Leno and so, you know, those prices have come down over the years.”

So because the average working stiff keeps buying groceries and gas twice a week, he or she gets it into their non-chief-economist head that there is inflation and that it is a bad thing. Clearly they should quit wasting so much of their money on those things and should be buying new cars every month, then they would “feel in their psychology” that there isn’t really any inflation.

But wait, according to the data, new car prices rose 1% this month while food went up .6% and gasoline jumped 3.4%. So why is Mr. Leno supposed to be feeling so great about inflation again?

Source: http://www.bls.gov/news.release/pdf/cpi.pdf

Here is the full train wreck from this morning:

Hopefully Aladdin has started taking applications for a new chief economist.

Wired.com ran a story today about a great new innovation over at speedtest.net. The site has jumped on the social networking bandwagon and is enabling nerds around the world to engage in the age-old tradition of measuring themselves against their peers. Now anyone can test their internet connection speed and post the results to facebook and even earn “badges” to show off their uber-fast connection to the digital universe.

What does any of this have to do with economics? Registered users can create groups for their office or even their city and compare their results to others around them in real time. This is pretty valuable information for internet service providers wishing to evaluate their service’s performance and that of their competitors.

The federal government decided this information would be useful for central planners too. The theory is that sage bureaucrats will be able to use the information to provide high-speed access to those overlooked by corporations. So the FTC created the Consumer Broadband Test which is essentially supposed to collect the same data as speedtest.net. It just so happens that speedtest.net offered to give the FTC all of its data for free but the government turned them down.

To summarize, we have a private company which entices people to use their free service with innovative social networking tools. The private company collects valuable information that will help private internet service providers improve the services they offer to consumers. Meanwhile, the federal government takes money out of peoples pockets to create a program that is designed to collect the same information (only without incentivizing users to participate) while refusing to accept the very data it seeks when it is offered by the private company free of charge.

Such is the nature of government and markets.

Some know him as Grayson Lilburne, others as Daniel Sanchez and still others as Danny Sanchez, regardless of what you call him, I hope that you will join me in wishing him a happy birthday and extending a heartfelt thank-you. Few people fully appreciate and realize all that this man has done to make the Mises Academy the wild success that it is. The Mises Academy launched in the spring of 2010 and already has over 3,000 users and has hosted nearly 20 courses, thanks in large part to Danny Sanchez.

Danny has been the driving force behind many of the great innovations within the Mises Academy. He came up with, and implemented, the live class lectures and Q&A sessions. He also works very closely with all of the students troubleshooting problems and even answering academic questions. This close relationship he has with the students allows him to be acutely aware of what subjects are in demand; as a result, he has been able to create some of the most popular courses and find the perfect professor to teach them. Coming up with ideas for new courses that will be in demand is no small task, one must have a finger on the pulse of the market to know what will succeed and what will be a flop – fortunately, the Academy has yet to have a course that was a flop.

Danny is also an indispensable resource for the professors, who all have busy careers outside of the classes they teach within the Academy. He works very closely with each professor, emailing or calling them on a near-daily basis to ensure that everything will be perfect for the students. Tom Woods wrote that, “The Mises Institute is extremely lucky to have Danny,” and he couldn’t be more right. David Gordon has even suggested that Danny’s depth and breadth of knowledge is such that he needs to be teaching a course of his own.

Danny is absolutely critical to the success of the Mises Academy. So I hope that everyone who has been lucky enough to take a class and benefited from his tireless labors will join me in wishing him a very happy birthday and thank him for everything he does to keep the Academy perpetually marching forward. Comment below or send him a quick email.

I was just catching up on some of Matt Taibbi’s Rolling Stone blog posts when I read, with great disappointment, the following paragraph.

The audit of the Fed was undertaken because Bernie and a few other members of congress fought very hard during the Dodd-Frank regulatory reform debate to force open Ben Bernanke’s books, and as a result we now know the staggering details of the secret bailout era. We know that Citigroup received $1.6 trillion in loans, and Morgan Stanley $2 trillion, and Goldman Sachs – the same Goldman Sachs that bragged about how quickly it paid back its $10 billion TARP bailout – over $600 billion. We know that hedge fund billionaires who moved their corporate addresses to the Cayman Islands to avoid U.S. taxes were rewarded by their buddies in government with huge Fed loans; we know that the U.S. government likewise has been extending massive loans to a variety of Japanese car companies at a time when many American auto workers in Detroit have seen their wages cut in half, to $14 an hour. There’s that and there’s more on the outrage front, and we know it all because Sanders kicked and screamed and stamped his feet about Fed secrecy until just enough other members of the Senate decided to go along with him.

Bernie Sanders? Really? I don’t recall Sanders writing End the Fed or spending the last three decades fighting tooth and nail to turn over the boulder of Fed secrecy to bring the creepy, slimy insects residing under it into the cleansing sunlight. I do remember Congressman Ron Paul doing those things and more. To be sure, I am happy that Sanders finally woke up and joined Dr. Paul in his crusade. Mr. Taibbi truly has a very good understanding of the Fed, as evidenced by his The Fed’s Magic Money-Printing Machine post, but gives Sanders far too much credit.

This is one of the most extraordinary interviews I have seen on CNBC in a very long time.  David Einhorn founded hedge fund Greenlight Capital which has $7 billion under management. This guy really knows his stuff. He shorted Allied Capital in 2002 and made a fortune shorting Lehman Bros. in 2007. His largest position is in gold and he warns that the Federal Reserve is engaging in a “very dangerous long-term policy.”

When asked about BRIC and other foreign markets, Einhorn repeatedly gave an answer almost no one is willing to give on TV; “I don’t know much about that.” It is rare that we see someone confidant enough in what they do know to admit that there are things about which they do not. Perhaps self-awareness of our knowledge deficiencies is the most useful measure of intelligence.

Doug French and Deanna Forbush recently took their matching mises.org Roaming Hats to the gun range.

Austrians are everywhere and doing all sorts of fun activities; show us where you took your black mises.org cap by posting it to the Roaming Hat wiki or facebook page!

No obituary will ever read, “He was a good and ethical man. He died broke, his family suffered, but he never missed a payment to Fannie Mae.”

When I arrived at the Mises Institute this morning I found Willard Sitz and Jeffrey Tucker hovering over several large brown boxes – I felt like I was 10 years old and all the days on the calendar except for December 25th had been marked off. We have been anxiously awaiting the arrival of, what I consider, one of the most important works the Mises Institute has ever published and I was sure that was what the boxes contained. I am a little embarrassed to admit how disappointed I was upon peering into the boxes to see the Human Action Pocket Edition. Make no mistake, transforming Mises’s 44 oz. magnum opus into something that can fit in a pocket is even more amazing than Jeff says. But it wasn’t the book; I wanted the book!

click to enlarge

I was suffering from a major case of what Gary North terms Picard Syndrome; I had already read the book twice. Weeks ago I managed to badger the author into sending me a draft before it went to the editor and typesetter; I later got my hands on the final version in PDF. As you can see from the picture, my printout has seen its share of abuse – not to mention an obscene amount of highlighting.

Moments ago, it finally arrived; Walk Away: The Rise and Fall of the Home-Ownership Myth was in my hands at last. Now I can toss my ridiculous stack of stapled together copier paper.

If you have managed to make it this far through my gushing ramblings, you are surely wondering just what makes this 77 page monograph so important. To put it simply,

this book can and will improve people’s lives in a very real, non-abstract sense. Every other book the Institute has published resides solely in the world of ideas and philosophy; they teach us about economics, liberty, how things are, how things could be. They shape the very way in which we view the world in which we live. This is a vitally important undertaking if we are to ever truly gain widespread economic and personal freedom. But Walk Away builds a bridge between the philosophy that can improve the world and the actions that can improve individuals lives.

In his monograph, Doug French makes the case that, in a world where big banks receive bailout money forcibly taken from the American public and Government Sponsored Entities (Fannie & Freddie) use taxpayer money to buy 97% of all mortgages, “under water” homeowners are not morally or ethically bound to continue to make mortgage payments to Uncle Sam. I am over-simplifying the complex case made by French, a former bank executive who studied under Murray Rothbard. You will have to read the book to really appreciate the libertarian defense he makes for walking away from one’s home and this unique contractual obligation.

This short book is essential for anyone who owns or is thinking of owning a home; it can be read in a single evening and, at a minimum, will change the way you think about strategic defaults.

The full pdf is available here. Or, if you are like me and demand a “real” book, you can purchase it in here for $8.