According to the Fed's Other Inflation Measure, Inflation's at an 11-year High

According to the Fed's Other Inflation Measure, Inflation's at an 11-year High

02/08/2018Ryan McMaken

According to the Federal Reserve's Underlying Inflation Gauge, the 12-month inflation growth in December was at 2.98 percent. That's the highest rate recorded in 136 months, or about 11 years. The last time the UIG measure was as high was in September 2006, when it was at 3 percent. 

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The Fed began publicly reporting on new measure in December of last year, and takes into account a broader measure of inflation than the more-often used CPI measure.

Not shockingly, the UIG shows a higher rate of inflation than the CPI, and also shows a different trend. the UIG has been increasing in recent years while consumer price trends have been falling.

In December, while the UIG was 2.98 percent, the CPI came in at a mere 2.1 percent, which is a four-month low. 

As we reported earlier today, central banks continue to remain reticent as far as raising interest rate targets and scaling back QE. The excuse is often that the economy is not hitting the "two-percent target." Two-percent, of course, indicates inflation levels that are "just right" according to the arbitrary goal set by central banks. 

Politically speaking, it is also assumed that a two-percent inflation rate is palatable since it is though to offer a reasonable amount of price stability. 

But what if inflation as experienced by real people — and as indicated by the broader UIG measure — is closer to three percent, and is more like the inflation rate encountered during the days of the super-heated housing bubble in 2006? That would seem to suggest more urgency in raising rates in order to put a lid on price inflation while lessen malinvestment. 

According to the CPI, though, current price inflation is no where near where it was prior to the last financial crisis. 

So according to the CPI at least, everything looks well under control. The UIG tells a different story, but that's not used as the basis for monetary policy. 

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Building a Market for Private Education in Romania

In Liberalism (p.115), Mises argued that "the state, the government, the laws must not in any way concern themselves with schooling or education, [which] must be left entirely to parents and to private associations and institutions."

The Private Academy project, founded under the umbrella of the Romanian Mises Institute in 2015, started out to do just this: to offer an alternative to the decades of nationalized higher education from which learning needed to be reclaimed and repaired. 

The purely private endeavor started small, with seminars on Austrian economics, and is now growing to encompass philosophy, literature, politics, religion, and the arts, in an effort to recover the "lost tools of learning". You can find out more about the project here, and visit the website here

This a great undertaking, and a difficult one. But I hope to see many more like it in all the corners of the world. 

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Rand Paul May Stop Marvin Goodfriend's Nomination

02/08/2018Tho Bishop

I'm not a fan of Marvin Goodfriend. His views are dangerous, and he has been blatantly dishonest in order to hide them. Ron Paul even personally introduced a bill back in 2000 targeted directly at his idea of taxing cash

Today, Goodfriend received the endorsement of the Senate Banking Committee with a 13 to 12 vote down partisan lines. While it's not surprising to see a nominee driven purely by party preference, it is worth noting that Jay Powell managed to get Democratic support when he went through the nomination process. Multiple reports from Washington indicate that Democrats will stand opposed to Goodfriend when his vote comes before the full Senate.

That is when things could get interesting. John McCain has yet to make a Senate appearance yet due to his health, meaning a single Republican dissenter could stop Goodfriend's nomination. Today, following the Committee's approval, Rand Paul has said he will oppose Marvin Goodfriend's nomination.

Of course, bad ideas have a way of never truly going away. It is likely that Senator Paul will be tempted with a deal - perhaps another vote on Audit the Fed - to turn his no to a yes. Of course, since a majority of Senators still cling to the absurd notion that a Fed audit would erode the Fed's mythical "independence", this vote would be purely symbolic and end in defeat. Considering the very real danger Mr. Goodfriend poses, particularly with tremors rumbling in US and global markets, this would be a terrible deal. 

There is also the risk that John McCain could be rolled back to Washington in order to push the nomination through. Hopefully the handful of other Senators who occasionally talk a good game about the Fed, including Ted Cruz and Mike Lee, can be convinced that the last thing America needs is an economist more radical than Ben Bernanke on the Fed. 

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Leftists Now Rushing to Defend CIA Torture Advocates

02/07/2018Ryan McMaken

In the early 1960s, Ronald Hamowy criticized the American conservative movement for degenerating into a movement defending "the rack, the thumbscrew, the whip, and the firing squad." The movement had become, Hamowy concluded, a party of knee-jerk allegiance to the American state in the name of fighting foreign threats, both real and imagined. 

Whether or not the American right is on the road to rehabilitation on this matter remains an open question. 

Meanwhile, the American left appears to have traveled far down this same road in recent decades. 

Back in 2013, this trend was already being examined by Sean Scallon at The American Conservative who noted the rise of the "nationalist left" which was becoming increasingly militaristic and deferential toward the American security state. 

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The trend has only accelerated more recently, and now, thanks to anti-Russian hysteria on the left, even former 60's "counter culture" leftists are coming to the defense of the CIA and the military establishment. 

Caitlin Johnstone writes:

In the hit 1970s sitcom All in the Family, Rob Reiner played Michael Stivic, whose progressive countercultural 1960s sensibilities made him a perfect foil for his bigoted, conservative father-in-law Archie Bunker's struggles to adapt to a rapidly changing world.

Now a celebrated advocate of the Democratic party, Reiner's great artistic achievement in 2017 was collaborating with neoconservatives and intelligence community insiders to produce a jarring propaganda videofeaturing Morgan Freeman warning that "we are at war" with Russia. So far his masterpiece of 2018 is a tweet declaring that if you "libel" Russophobic eugenicist James Clapper and CIA torture facilitator-turned-MSNBC pundit John Brennan you are libeling America.

We never set out to become our parents. A counterculture never sets out to become the thing it rebelled against. An actor never sets out to become a twisted mockery of the character he once played. But it happens.

That video Johnstone mentions, by the way, is a sight to behold. It's right up there with the rightwing propaganda of the immediate post-9/11 world which presented George W. Bush as some sort of savior of Western civilization. But at least that stuff was in line with the American right's openly-stated militaristic tendencies.

While Reiner and friends rush to the defense of America's primary advocates for torture, spying, and endless war, they also claim to be part of "the resistance" and the defenders of the little guy. In truth, the American left has become yet another party of "the rack and the thumbscrew." 

It all just illustrates yet again that American politics is now nearly impossible to parody. 

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The Us Government Is Worried About Crypto so They Want To... Educate Librarians About It

02/06/2018Tho Bishop

The Senate Banking Committee today is hosting the head of the SEC and CFTC to discuss cryptocurrency. Since many Senators are disinterested in using email, it’s interesting watching legislators attempt to articulate the benefits, and potential risks, involved with cryptocurrency and blockchain technology.

One particular highlight came when CFTC Chairman Christopher Giancarlo discussed one particular initiative the Federal government is considering in their war on crypto-mania.

According to Mr. Giancarlo mentioned that, according to government reports, a lot of people use public libraries to research crypto. Because of this, the CFTC and CFPB are looking at a program to educate librarians on the “risks” involved with investing in Bitcoin.

It is unclear at this time whether librarians will have to become registered financial advisers, but it is comforting to see that US financial markets are under the watchful eye of regulators who clearly have such a firm grasp on the industries they’re evaluating. 

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Bovard in The Hill: Will FISA secrecy doom democracy?

02/05/2018James Bovard

“Democracy Dies in the Darkness” is the proud motto of the Washington Post. But, considering the past week’s frenzy, the new motto for much of the media and many Democrats is, “Disclosure is the Death of Democracy.” Unfortunately, the uproar around the release of the Nunes memo totally missed the deadly political peril posed by pervasive federal secrecy.

Shortly before the memo became public, President Trump tweeted that “the top Leadership and Investigators of the FBI and the Justice Department have politicized the sacred investigative process.” But any “sacred investigative process” exists only in the imaginations of pro-government pundits and high school civics textbooks. The FBI and Justice Department have a century-long history of skewering targets to gratify their political masters, while the FISA court routinely heaves buckets of judicial hogwash to countenance the wholesale destruction of Americans’ constitutional rights.

Former FBI agent Asha Rangappa, writing in the New York Times, labeled the Nunes memo a “shame” and urged Americans to presume that “most government servants are ultimately acting in good faith and within the constraints of the law.” But blindly relying on positive thinking is a recipe for political servitude. The FISA court has been a fount of outrages because it is an American Star Chamber: the court meets in secret, only hears the government’s side, and approves 99 percent+ of all the search warrants requested.

Much of the backlash against the memo’s release portrayed the FBI as a FISA Vestal Virgin. The FBI issued with a grim statement: “We are committed to working with the appropriate oversight entities to ensure the continuing integrity of the FISA process." Former FBI chief James Comey tweeted that the Nunes memo “wrecked the House intel committee, destroyed trust with Intelligence Community, damaged relationship with FISA court.”

But for more than a decade, the FISA court has repeatedly complained about deceptive FBI agents seeking turbo-charged secret FISA warrants. In 2002, the court revealed that FBI agents had false or misleading claims in 75 cases. In 2005, FISA chief judge Colleen Kollar-Kotelly proposed requiring FBI agents to swear to the accuracy of the information they presented; that never happened because it could have “slowed such investigations drastically,” the Washington Post reported. So FBI agents continued to have a license to exploit FISA secrecy to lie to the judges.

Last year, a FISA court decision included a 10-page litany of FBI violations, which “ranged from illegally sharing raw intelligence with unauthorized third parties to accessing intercepted attorney-client privileged communications without proper oversight.” How many times did FBI agents make false claims to FISA judges while Comey was boss? It’s a secret. The FISA court also complained that the National Security Agency was guilty of “an institutional lack of candor” connected to “a very serious Fourth Amendment issue” — i.e, ravaging Americans’ constitutional right to privacy.

Syracuse University law school professor William Banks asserted, “I can't recall any instance in 40 years when there's been a partisan leaning of a FISA court judge when their opinions have been released."  But this is only because, inside the Beltway, being pro-Leviathan is pragmatic, not partisan. The FISA court has repeatedly presumed that if the feds violate everyone’s privacy, they violate no one’s privacy -— so there is no constitutional problem.

In 2006, the FISA court signed off on effectively treating all Americans as terrorist suspects. The court swallowed the Bush administration’s lawyers’ bizarre interpretation of the Patriot Act, claiming that the telephone records of all Americans were “relevant” to a terrorist investigation.

In 2009, the FISA court upheld surveillance based on a 2007 law that effectively decreed that any American who exchanged emails or phone calls with foreigners forfeited their right to privacy.  A FISA Appeals Court decision dismissed concerns because the government had “instituted several layers of serviceable safeguards to protect individuals against unwarranted harms” — so anyone whose privacy was zapped had no right to complain.

Read the rest at The Hill
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Orwell's Meaningless Words, Redux

02/05/2018Jeff Deist

George Orwell's wonderful essay Politics and the English Language reads as true today as it must have in 1946, just a few years before smoking and tuberculosis would cut short his life.

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His exhortations against "meaningless words," in particular, sound fresh today:

Many political words are similarly abused. The word fascism now no meaning except in so far as it signifies ‘something not desirable’. The words democracy, socialism, freedom, patriotic, realistic, justice have each of them several different meanings which cannot be reconciled with one another. In the case of a word like democracy, not only is there no agreed definition, but the attempt to make one is resisted from all sides. It is almost universally felt that when we call a country democratic we are praising it: consequently the defenders of every kind of regime claim that it is a democracy, and fear that they might have to stop using that word if it were tied down to any one meaning. Words of this kind are often used in a consciously dishonest way. That is, the person who uses them has his own private definition, but allows his hearer to think he means something quite different. 

Words like social justice, bigot, xenophobe, racist, fascist, misogynist, socialist, Dreamer, snowflake, liberal, conservative, and democracy are the meaningless words of our day. Nobody knows what they mean anymore. They are used as bullets in a form of verbal warfare, not as honest descriptions. In fact they are used quite dishonestly, with the “intent to deceive” as Orwell put it. In other words, they are used to serve the speaker’s or writer’s agenda rather than to create understanding. Political jargon is abused until it loses all value, either to describe, praise, or insult.

It's ironic that the great anti-authoritarian Orwell remained an ardent socialist, even after witnessing what Stalin brought to the former USSR. And of course 1984 is thought to be Orwell's metaphor for life under Stalin. But at least one biographer contends that Orwell didn’t see the USSR as truly socialist despite its name, and maybe that’s fair enough: consider that nobody considers the Democratic People’s Republic of Korea to be democratic. But one wonders how he missed the association between collectivism and murder, between central planning and the authoritarian hellscape it produced following the Russian revolution.

In Orwell's words, "a real Socialist is one who wishes – not merely conceives it as desirable, but actively wishes – to see tyranny overthrown." He recognized Stalin as a tyrant, but failed to draw the connection between the system and its inevitable rulers.

 

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Belichick the Economist?

02/03/2018Peter G. Klein

"Could Bill Belichick’s grasp of economics be the key to the Patriots’ success?" asks Paul Solman at PBS's Making Sen$e. He gives examples of Belichick seemingly understanding the concepts of opportunity cost and diminishing returns (from the perspective of neoclassical economics). I much prefer Carl Menger's way of formulating these concepts (more technical discussion here). And Tho Bishop's excellent discussion of Belichick as entrepreneur provides a more comprehensive explanation of how the Patriot coach operates. But it's always nice to have some economics included with your Super Bowl enjoyment. 

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Chris Calton talks Lysander Spooner and Historical Controversies on The Tom Woods Show

02/02/2018Mises Institute

Today on The Tom Woods Show, Chris Calton joined Tom to discuss one of the most fascinating characters in American history, Lysander Spooner. 

Chris and Tom look at how Spooner evolved as a thinker, and in particular his view on the Constitution. They also talk about the podcast Historical Controversies and the war on drugs. 

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Trump and GOP Gave More Power to the FISA Courts They are Outraged Over Today

02/02/2018Tho Bishop

The long anticipated memo from House Intelligence Committee Chairman Devn Nunes has finally been released, confirming some of the allegations that have been waged at the investigation into the Trump campaign for month. The document outlines how the Obama Justice Department used the controversial "Steele Dossier" as a vital component of the warrant they presented to the FISA courts justifying their surveillance of members of the Trump presidential campaign. While Democrats in Washington have argued that the memo paints an incomplete picture of the investigation, it would require key components of the memo to be outright lies in order to change the narrative it depicts. 

Unfortunately, while outrage from the Trump Administration and Republicans appears justified, it is difficult to have much sympathy considering the very same people just voted to give the FISA courts more power. As Judge Andrew Napolitano wrote at the time:

Even in the fresh aftermath of 9/11, when the government’s respect for constitutional norms was at a lamentably low point, the government interpreted the Fourth Amendment as requiring the government to separate its intelligence functions from its law enforcement work. The government recognized that its trigger for mass surveillance — namely, looking for a foreign agent among the populace — was a far lower standard than probable cause of crime, which is what the Fourth Amendment requires.

Today, the federal government’s computers are permanently connected to the mainframes of all telecoms and computer service providers in America, so the spying is in real time. Today, the federal government employs more than 60,000 domestic spies — one spy for every 5,500 Americans. Today, if any of them come across evidence of crimes while listening to your telephone calls or reading your texts or emails ostensibly for intelligence purposes, there is little they can do about it.

Until now.

Now, hidden beneath the “Fire and Fury” controversy is the muffled sound of the Trump administration and Republican congressional leaders plotting the enactment of an addition to FISA that would permit the use of evidence of crimes in federal court even when it is discovered during mass surveillance authorized by general warrants.

If enacted, this radical, unconstitutional hole in the Fourth Amendment would bring the country full circle back to the government’s use of general warrants to harass and prosecute — general warrants so odious to our forebears that they took up arms against the king’s soldiers to be rid of them.

I am surprised that President Donald Trump supports this. He has himself been the target of unlawful foreign surveillance and unconstitutional FISC-authorized domestic surveillance. “Fire and Fury” even quotes former British Prime Minister Tony Blair warning a newly elected Trump about this. And now he wants to unleash upon us all the voracious appetite for surveillance that was unleashed upon him and prosecute us for what is found, the Constitution be damned.

Just another example of how the Federal government is able to grow, regardless of who is nominally in power. 

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Salerno on the Tom Woods Show: The Truth About F.A. Hayek

01/31/2018Mises Institute

Joe Salerno joined The Tom Woods Show this week to discuss the works of F.A. Hayek and why he has been a source of controversy within some libertarian circles.

One of the topics discussed is the debate over dehomogenizing the work of Hayek and his mentor Ludwig von Mises on the impracticality of socialism. Since this is the 30th anniversary of this debate, we will have a panel dedicated to it at this year's AERC. 

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