The economic and financial events of the last few weeks indicate that the economies of the United States and most of Europe remain quite weak, if not in outright recession. This situation exists despite unprecedented fiscal and monetary “stimuli” by many governments that were strongly supported and recommended by the large majority of economists, media commentators, and politicians. And of course, with economic conditions showing renewed weakness, the mainstream calls for additional stimuli of even larger magnitudes. The mainstream economics profession is unable or unwilling to abandon its Keynesian foundation, a system that has been shown by many individuals associated with the Austrian School to be one of the great retrogressions in scientific economic thought in modern times.

Given current economic conditions, it is especially worthwhile to reexamine “The Causes of the Economic Crisis,” the title of which comes from an address delivered by Ludwig von Mises in February 1931 in central Europe. The cogency and logic of Mises’s argument is in stark contrast to the Keynesian analysis supported by almost the entire mainstream economics profession. How far the mainstream has to travel to reach the level of understanding that Mises possessed in 1931 is amazing and deeply troubling, and indicative of a profession approaching intellectual bankruptcy. And the vast majority of politicians remain what they have generally always been: liars, thieves, and murderers, driven by a desire to control other individuals and their property through coercion. Reproduced below are a few of the last paragraphs of Mises’s 1931 address.

The severe convulsions of the economy are the inevitable result of policies which hamper market activity, the regulator of capitalistic production. If everything possible is done to prevent the market from fulfilling its function of bringing supply and demand into balance, it should come as no surprise that a serious disproportionality between supply and demand persists, that commodities remain unsold, factories stand idle, many millions are unemployed, destitution and misery are growing and that finally, in the wake of all these, destructive radicalism is rampant in politics.

The periodically returning crises of cyclical changes in business conditions are the effect of attempts, undertaken repeatedly, to underbid the interest rates which develop on the unhampered market. These attempts to underbid unhampered market interest rates are made through the intervention of banking policy—by credit expansion through the additional creation of uncovered notes and checking deposits—in order to bring about a boom. The crisis under which we are now suffering is of this type, too. However, it goes beyond the typical business cycle depression, not only in scale but also in character—because the interventions with market processes which evoked the crisis were not limited only to influencing the rate of interest. The interventions have directly affected wage rates and commodity prices, too.

And

All attempts to emerge from the crisis by new interventionist measures are completely misguided. There is only one way out of the crisis: Forgo every attempt to prevent the impact of market prices on production. Give up the pursuit of policies which seek to establish interest rates, wage rates and commodity prices different from those the market indicates. This may contradict the prevailing view. It certainly is not popular. Today all governments and political parties have full confidence in interventionism and it is not likely that they will abandon their program. However, it is perhaps not too optimistic to assume that those governments and parties whose policies have led to this crisis will some day disappear from the stage and make way for men whose economic program leads, not to destruction and chaos, but to economic development and progress.

Given recent events in the Middle East, some general observations regarding the foreign policy of the American Right and Left seem warranted.

The foreign policy of the large majority of those on the American Right is statist and putrid at its core. It is based on American dominance through the use and the threat of the use of violence, and has little foundation in respect for the civil and economic liberties of other peoples and nations. Respect for the principle of self-determination is close to absent.

The foreign policy of the mainstream Right not only (justifiably) seeks to defend America from the violent aggression of foreigners, but is fundamentally driven by the amorphous concept of defending “American interests” abroad. For over a century, the overriding goals of American foreign policy have been to open foreign markets to our exports and to secure foreign sources of raw materials on terms favorable to us. Also important in more recent years has been the goal of maintaining the U.S. dollar as the world reserve currency. To achieve these goals, America has interfered in the internal affairs of other nations and used military violence. When you treat other peoples and nations in this manner, is it surprising that they resent it? Should it be surprising that many in the world do not have a favorable opinion of U.S. foreign policy?

Unfortunately, although the rhetoric may be slightly less confrontational in tone, the foreign policy of the large majority of those on the Left is not fundamentally different from the Right’s. In fact, important aspects of modern U.S. foreign policy were established by icons of the Left, i.e., Wilson, F.D. Roosevelt, and Truman. For many, many years, U.S. foreign policy has been molded and implemented by a consensus of the Right and the Left.

In addition, as many Libertarians and Classical Liberals over the years have noted, there is a nexus between foreign policy and domestic policy; the two compliment and reinforce each other. Putting principle aside for a moment for the sake of argument, it may be illustrative from a practical standpoint to examine the fate of Great Britain in the 20th century. Arguably, three intertwined factors most contributed to its significant decline: unnecessary wars; increased socialization of its economy; and, inflation. Does this pattern sound familiar?

In his excellent work, The Ethics of Money Production, which was published by the Mises Institute in October 2008, Jörg Guido Hülsmann presents (pages 238-239) the below summary analysis regarding the current international monetary framework and its evolution (or rather devolution). Given the framework’s instability, the continued and reckless increase in debt and in debt monetization, and the inability of the large majority of governments to significantly control spending, Professor Hülsmann’s analysis is illuminating.

“There is no tenable economic, legal, moral, or spiritual rationale that could be adduced in justification of paper money and fractional-reserve banking. The prevailing ways of money production, relying as they do on a panoply of legal privileges, are alien elements in the capitalist [i.e., true free market] economy. They provide illicit incomes, encourage irresponsibility and dependence, stimulate the artificial centralization of political and economic decision-making, and constantly create fundamental disequilibria that threaten the life and welfare of millions of people. In short, paper money and fractional-reserve banking go a long way toward accounting for the excesses for which the capitalist economy is widely chided.

“We have argued that these monetary institutions have not come into existence out of any economic necessity. They have been created because they allow an alliance of politicians and bankers to enrich themselves at the expense of all other strata of society. This alliance emerged rather spontaneously in the seventeenth century; it developed in multifarious ways up to the present day, and in the course of its development it created the current monetary institutions.

“…The driving force that propelled the development of central banks and paper money was the reckless determination of governments, both aristocratic and democratic, to increase their revenue, if necessary in violation of good faith and of all established rules of commerce.”

The following is an elaboration of Jeremiah Dyke’s informative September 4, 2010 posting, “Keynes, The Intellectual Lightweight.”

I am certainly not qualified to assess Keynes’s overall learning and intellectual capabilities. However, his education in and knowledge of economics was rudimentary and insular, hence the collection of errors that comprise his General Theory and earlier Treatise on Money. As Ludwig von Mises observed, the great success of Keynes’s General Theory was due to it providing a pseudo-scientific justification for the policies that virtually all governments of major countries had been pursuing for several years prior to its publication in 1936.

As for what Keynes was like as an individual, Murray Rothbard’s essay “Keynes, the Man” is an illuminating and critical assessment. The following are the opening and concluding paragraphs of Rothbard’s essay:

“John Maynard Keynes, the man—his character, his writings, and his actions throughout life—was composed of three guiding and interacting elements. The first was his overweening egotism, which assured him that he could handle all intellectual problems quickly and accurately and led him to scorn any general principles that might curb his unbridled ego. The second was his strong sense that he was born into, and destined to be a leader of, Great Britain’s ruling elite. Both of these traits led Keynes to deal with people as well as nations from a self-perceived position of power and dominance. The third element was his deep hatred and contempt for the values and virtues of the bourgeoisie, for conventional morality, for savings and thrift, and for the basic institutions of family life.”

“Later economists continued to hew a revisionist line, maintaining absurdly that Keynes was merely a benign pioneer of uncertainty theory (Shackle and Lachmann), or that he was a prophet of the idea that search costs were highly important in the labor market (Clower and Leijonhufvud). None of this is true. That Keynes was a Keynesian—of that much derided Keynesian system provided by Hicks, Hansen, Samuelson, and Modigliani—is the only explanation that makes any sense of Keynesian economics. Yet Keynes was much more than a Keynesian. Above all, he was the extraordinarily pernicious and malignant figure that we have examined in this chapter: a charming but power-driven statist Machiavelli, who embodied some of the most malevolent trends and institutions of the twentieth century.”

Human betterment, civilization’s advancement, and scientific truth and progress are significantly hindered as a result of Keynes’s General Theory and its numerous fallacies continuing to occupy a dominant place in the economics profession and to form the foundation of government “macroeconomic” policy.

With the unfortunate continuing expansion of economic interventionism, if not outright socialism, revisiting the writings of the outstanding Austrian School economist, Eugen von Böhm-Bawerk, is illuminating. In 1914, Böhm-Bawerk published an essay, “Control or Economic Law”, in which he analyzed whether political dictate could invalidate economic law. Of course, as one of the foremost economists of his time, Böhm-Bawerk knew that attempts to annul economic law by political fiat are futile. Below are comments from the beginning of Böhm-Bawerk’s essay:

“…the fact that, just as natural phenomena are governed by immutable eternal laws, quite independent of human will and human laws, so in the sphere of economics there exist certain laws against which the will of man, and even the powerful will of the state, remain impotent; and that the flow of economic forces cannot, by artificial interference of societal control, be driven out of certain channels into which it is inevitably pressed by the force of economic laws. Such a law, among others, was considered to be that of supply and demand, which again and again had been observed to triumph over the attempts of powerful governments to render bread cheap in lean years by means of ‘unnatural’ price regulations, or to confer upon bad money the purchasing power of good money.”

Despite the warnings of Böhm-Bawerk (and other economic scientists), politicians and bureaucrats, as well as their kept technical advisors and media propagandists and apologists, continue to ignore economic law. Their overriding concern is with power and with forcibly establishing a society that conforms to their wishes, no matter how irrational (and immoral). As a result of the political class’ deliberate disregard of the teachings of economics, the standard of living of most members of society continues to be negatively impacted. In addition, interaction between individuals is increasingly governed by the point of a gun, by violence, by the law of the jungle, as opposed to voluntary and peaceful cooperation. Economic interventionism and socialism are both characteristics and drivers of the ongoing decay of civilization.

The health care legislation passed by Congress today is a disgusting socialist and fascist bill, and a monstrous assault on human liberty and sound and truthful economic/financial analysis. Particularly disgusting is the underhanded procedural method used to pass the legislation, especially given the apparent significant, actually majority public opposition to the bill.

If he runs for president in 2012, Congressman Ron Paul, or whoever carries his standard, should make this legislation a major issue. Congressman Paul should campaign that he will act with all the power of the presidency to attempt to repeal this legislation in its entirety, no qualifications, no questions asked. I believe that this would be another principled manner in which he could strongly differentiate himself from the liars, hypocrites, and statists that comprise the other potential Republican and Democratic presidential candidates.

What other potential Republican or Democratic presidential candidate would support this total repeal and have the integrity to attempt to implement it? I believe none.

On October 9, 2009, the announcement was made that President Barack Obama is to be awarded the Nobel Peace Prize. Below are some preliminary observations.

The awarding of the Nobel Peace Prize to President Obama is further confirmation, along with 2007′s award to Al Gore, that the prize has degenerated into politically motivated rubbish. The great and noble concept of peace has again been perverted.

The prize is awarded by a group of European socialists and ethical relativists or nihilists that are using it to promote a political agenda that has very little to do with peace. The award of the peace prize to Obama is indicative of the intellectual and moral decay of these representatives of European civilization and those around the world that seek to emulate them.

Aside from his decision not to place missiles in Central and Eastern Europe, Obama has changed little, if anything, of substance in the United States’ imperialistic and militaristic foreign policy. Yes, Obama’s rhetoric has been less belligerent and more inclusive of the European countries than Bush’s, but again, there has been little substantive change in U.S. foreign policy under Obama. What is the purpose of the prize, to acknowledge someone who has been more inclusive of European political interests or someone who has worked significantly to promote peace? I wonder how Pakistanis whose civilian relatives or friends have been killed or injured by U.S. drones during 2009 view Obama’s commitment to peace.

The awarding of the Nobel Peace Prize to Obama and 2007′s award to Al Gore should disgust any true supporter of peace, and cause any principled individual to seriously question the integrity of the prize and those who award it.