Power & Market
The media is railing about Trump for fearmongering ahead of the midterm elections. Like this never happened before? Like this is not the job description of modern politicians? Like Obama, George W. Bush, and Clinton did not fearmonger whenever they could profit by spooking Americans? Trump is continuing a tradition that was firmly established by Woodrow Wilson. Fearmongering is simply another proof of the rascality of the political class – and another reason why their power should be minimized. Here’s a 2011 piece I wrote on the topic, excerpted in part from Attention Deficit Democracy.
Fear-Mongering and Servitude
In his 1776 essay, “Thoughts on Government,” John Adams observed, “Fear is the foundation of most governments; but it is so sordid and brutal a passion, and renders men in whose breasts it predominates so stupid and miserable, that Americans will not be likely to approve of any political institution which is founded on it.” The Founding Fathers hoped the American people would possess the virtues and strength to perpetuate liberty. Unfortunately, politicians over the past century have used trick after trick to send Americans scurrying to politicians to protect them.
President Woodrow Wilson pulled America into World War I based on bogus idealism and real fear-mongering. Evocations of fighting for universal freedom were quickly followed by bans on sauerkraut, beer, and teaching German in government schools. H. L. Mencken observed in 1918: “The whole aim of practical politics is to keep the populace alarmed and hence, clamorous to be led to safety—by menacing it with an endless series of hobgoblins, all of them imaginary.” In Mencken’s time he was often considered cynical. Subsequent developments have proven Mencken to be a prophet.
The Democratic Party relied heavily on the fear card in the 1920 presidential race. On the eve of the November vote that year Democratic presidential candidate James Cox declared: “Every traitor in America will vote tomorrow for Warren G. Harding!” Cox’s warning sought to stir memories of the “red raids” conducted in 1919 and 1920 by Attorney General A. Mitchell Palmer, during which thousands of anarchists, communists, and suspect foreigners were summarily jailed and in many cases deported. The American people rejected Cox and embraced Warren Harding’s promise of a “return to normalcy.”
President Franklin Roosevelt put “freedom from fear” atop the American political agenda in his 1941 State of the Union address. But FDR’s political legacy—especially Social Security—has institutionalized fear-mongering in presidential and congressional races. Democrats perennially portray Republicans as planning to yank life support from struggling seniors.
For almost 50 years American politicians have used television ads to spur dread, most famously in the 1964 “Daisy” ad for Lyndon Johnson’s campaign. The ad showed a young girl, in the words of Jim Rutenberg in the New York Times, “picking the petals off a daisy before the screen was overwhelmed by a nuclear explosion and then a mushroom cloud and Mr. Johnson declared, ‘These are the stakes.’” The ad did not specifically claim that Barry Goldwater, the Republican nominee, would annihilate the human race, but the subtle hint wafted through. Though this ad only aired once, it instantly became a legend.
Whipping up fear was the flipside of President Bill Clinton’s “feeling your pain” political style. Clinton fanned people’s fear of guns, militias, and life without medical insurance. At the same time, the Clinton administration stretched the power of government on all fronts—from concocting new prerogatives to confiscate private property to championing FBI agents’ right to shoot innocent Americans to bankrolling the militarization of local police forces. Clinton was the Nanny State champion incarnate, teaching Americans to look to government for relief from every peril of daily life—from unpasteurized cider to leaky basements. As long as the President seemed to care about average Americans, his abuses were largely forgotten. (The 1996 Republican presidential candidate, Sen. Bob Dole, also promised to provide voters with “freedom from fear” via untying “the hands of the police.”)
Fear and Bush
The 2004 race was the most fear-mongering presidential campaign in modern American history. In his acceptance speech at the Republican National Convention, George W. Bush referred to terror or terrorism 16 times. Bush reelection campaign television ads showed firemen carrying a flag-draped corpse from the rubble at Ground Zero in New York and a pack of wolves coming to attack home viewers as an announcer warned that “weakness attracts those who are waiting to do America harm.” (One commentator suggested that the ad’s message was that voters would be eaten by wolves if John Kerry won.) Just before Election Day a senior GOP strategist told the New York Daily News that “anything that makes people nervous about their personal safety helps Bush.” People who saw terrorism as the biggest issue in the 2004 election voted for Bush by a 6 to 1 margin. Moises Naim, editor of Foreign Policy, observed that the Bush campaign was “using the fear factor almost exclusively. This is a highly researched decision with all the tools of public opinion management. It’s nothing but a reflection that it works.”
Bogus terror alerts might have made the difference in the 2004 election. Robb Willer of the Sociology and Small Groups Laboratory at Cornell University examined the relationship between 26 government-issued terror warnings reported in the Washington Post and Bush’s approval ratings. “Each terror warning from the previous week corresponded to a 2.75 point increase in the percentage of Americans expressing approval for President Bush,” Willer concluded. Bush beat Kerry by 2.4 percentage points in the popular vote. Former Homeland Security chief Tom Ridge later admitted that many of the 2004 alerts were unjustified. The Cornell study also found a “halo effect”: Americans’ approval of Bush’s handling of the economy also rose immediately after the announcement of new terror warnings, Willer reported. Apparently the more terrorists were allegedly poised to attack America, the better job Bush was doing.
Voters in 2004 could choose whether they would be killed by terrorists if they voted for Kerry or whether they would be left destitute and tossed out in the street if they voted for Bush. Boston University professor Tobe Berkovitz commented to the Washington Post: “It’s not surprising that both campaigns are looking for the leverage point: scaring the hell out of the American public about what would happen if the other guy wins.” But the more an election is about fear, the more the winner will presume to be entitled to all the power he claims to need to combat the threat.
In his 2005 State of the Union address Bush declared: “We will pass along to our children all the freedoms we enjoy. And chief among them is freedom from fear.” The Founding Fathers would have derided the notion of politicians giving citizens “freedom from fear.” And they would have denounced the notion that this new-fangled freedom is superior to the freedoms the U.S. government had pledged to respect for more than 200 years.
After promising freedom from fear, a politician can always invoke polls showing widespread fears to justify seizing new power. The natural result of making freedom from fear the highest freedom is that any policy that reduces fear can be portrayed as pro-freedom. Bush claimed that to keep Americans safe he had to suspend habeas corpus and detain any suspected terrorist in perpetuity based solely on his unproven assertions. Bush authorized the CIA to use waterboarding and other methods of torture on detainees. He ordered the National Security Agency to launch a massive illegal wiretapping program that eavesdropped on thousands of Americans’ phone calls and emails without warrants. Yet Bush remained a great champion of freedom—at least in the eyes of his supporters.
The political mass production of insecurity is a dominant trait of our age. The easiest way for rulers to destroy the leashes the Constitution imposed on them is to make voters think they must choose: “We can obey the Constitution or we can prevent you from all being killed. What is it going to be?”
Rising fear can also undermine the freedom of speech that is a bulwark against government abuse. To the extent people desperately cling to faith in the leader to save them from all perils, they develop an intolerance to anyone who points out government follies or falsehoods. The Bush 2004 reelection campaign did all it could to fan such intolerance. Stumping around the nation for Bush, former New York City police commissioner Bernie Kerik told audiences in the final months of the campaign: “Political criticism is our enemy’s best friend.” As criticism is suppressed government becomes more incorrigible. Eventually the mistakes that could have been corrected cheaply early on become catastrophic national failures.
Fear and Obama
President Obama has picked up the fear-mongering relay baton with his attempts to frighten Americans about health care, global warming, economic collapse, and government shutdowns. Obama has also invoked the fear card to sanctify bombing bad guys anywhere and everywhere.
Government fear-mongering creates a downward politico-psychological spiral. The more fearful people become, the more gullible they will be. British philosopher John Stuart Mill warned in 1842: “Persons of timid character are the more predisposed to believe any statement, the more it is calculated to alarm them.” It is almost irrelevant whether 10 or 20 or 30 percent of the citizenry can see through government’s fraudulent warnings. In a democracy, as long as enough people can be frightened, all people can be ruled.
In the same way that some battered wives cling to their abusive husbands, the more debacles the government causes, the more some voters cling to rulers. The craving for a protector drops an iron curtain around the mind, preventing a person from accepting evidence that would shred his political security blanket. In the days after the 9/11 attacks polls showed a doubling in the number of people who trusted government to “do the right thing.” The media fanned this blind faith—as if trust in government was the high road to public safety. The Bush administration exploited the trust to unleash itself at home and abroad, and the nation is still paying the costs of its post-9/11 infatuation with government.
Bogus fears can produce real servitude. The Founding Fathers expected the American people to bravely stand up for their rights if their rulers trampled the law. Citizens cannot cower on cue without forfeiting any possibility of keeping government on a leash. If America is to have a rebirth of liberty, it must begin with a rebirth of courage.
The distinguished entrepreneur Robert Luddy, a friend and benefactor for many years of the Mises Institute, has extended his innovations in education from elementary and high schools to universities. His Thales Academy has had great success, and he now proposes a Thales College as well. This college will not seek accreditation, in that way cutting through oceans of bureaucratic red tape. Students will pay only $4000 per term for tuition, enabling them to avoid the long-term burden of repaying student debt. The college, located in Wake Forest, North Carolina, will use innovative techniques such as the “flipped classroom,” in which students read the material at home and meet in class only for discussions. You can be sure that students in a program run by Bob Luddy will get a sound education in free market economics and the values of Western civilization.
Damian Thompson, writing in the UK’s Telegraph, recently noted that "This is the only time of year when I become seriously anti-American." The reason? He hates Halloween.
Apparently, Halloween is one of "America’s worst exports" according to Thompson, and he is at least the second British writer just this year that I’ve noticed going on a tirade against this venerable American holiday.
Now, I don’t fault Thompson (who is one of my favorite religion writers) and his fellow Brits for hating Halloween at all. The dreary streets of London suburbs simply don’t mesh with the spirit of Halloween, and I’m reminded of the one Halloween I spent in Rome where tiny children wandered through the streets (all dressed in identical witch or ghost costumes) and begged shopkeepers and restaurateurs for some kind of treat that I couldn’t identify.
So no, Europeans don’t know a good Halloween any more than they know a decent hot dog, so I don’t begrudge Thompson or his brethren on the continent who also apparently have their own reservations about Halloween.
But what a magnificent American festival it is. The smell of candles burning inside pumpkins, the sound of crunching leaves beneath our feet, and the chance to dress up and beg for free candy are all a recipe for childhood memories that easily rival the fun of even Christmas.
It’s the trick-or-treating that the Brits seem to hate the most, but in America, the act of going door to door to beg for treats is as American as candied apples and pumpkin pie. Indeed, going door to door for treats was once considered the thing to do on numerous holidays. Thanksgiving especially was once considered a day for treat-hunting throughout the neighborhood, and for impromptu and raucous parades of strangely dressed citizens looking for a fun time.
Over time, these door-to-door parades were quashed by the guardians of the respectable middle classes who thought such activities too working-class and too un-bourgeois to be tolerated. Thus, they invented the Thanksgiving turkey dinner and the Thanksgiving football game rituals out of nothing in the late 19th and early 20th centuries in an attempt to replace the more spontaneous celebrations of the common folk.
But Thanksgiving was a cynical creation of government, and Halloween has never been a government-sanctioned holiday, so it is all the more encouraging that trick-or-treating thankfully survives in spite of all the efforts of fear-mongering suburbanites and crazed religious devil-fighters who do their best to ruin the holiday every year.
And what a testament to the inherent goodness of humankind that trick-or-treating survives. Every year, millions of Americans go out and drop quite a bit of money on treats for children, and then give it away for free. And, in all these years of trick-or-treating there are no documented cases of poisonings of children by strangers. Yes, some sick people have poisoned the Halloween candy of their own children, but the risk of being poisoned by some nut in your neighborhood is just about zero.
In spite of what the guardians of decency may have us believe, most people simply aren’t interested in poisoning children. Instead, we Americans take great joy in handing out free stuff to people who ring our doorbells and demand candy.
If foreigners can’t appreciate the sheer fun and exhilaration of such a festival, so be it. I can’t stand it when Americans act like there’s no such thing as a uniquely American culture. Maybe the average American has become too ignorant and classless to know it, but American civilization is simply among the best in both music and in English-language literature. And it’s been that way for well over a century.
And it’s some of that excellent literature that informs what we think of our best secular holiday. The entire mise-en-scène of Halloween comes to us from Americans.
While the idea of the jack-o-lantern may come from an Irish version made from turnips, the modern jack-o-lantern, made from pumpkins, which are native to the Americas, is as American as they come.
And when we think of the elements of Halloween with its dark forests and headless horsemen and gothic freaks and menacing ravens, we are taking a page from the works of writers like Washington Irving and the inimitable Edgar Allen Poe who is the undisputed father of the American horror movie, the ghost story, and the American folklore behind haunted houses and masquerade balls.
Yes, tales of werewolves and monsters, and even Dracula and Frankenstein’s monster come to us from Europeans, but that unique feel of Poe-ish gothic creepiness within a chilly North American autumn is what we all strive to re-create every 31st of October.
What Halloween is complete without a recitation of "The Raven?" And who would let a Halloween go by without carving a jack-o-lantern? Hopefully few of us would be so thankless as to let such a great American opportunity pass.
Socialism has killed more than 100 million people worldwide. Socialism came to Venezuela 60 years ago and has proven to be the worst form of government under which to improve the quality of life. Ludwig von Mises once said that every socialist is a potential dictator, and the history in Venezuela supports his statement. My country is now ruled by one of the most tyrannical, vicious, and corrupt regimes in the world and — as a dedicated socialist regime — it could not be anything else.
On October 5, a leader of the political party Primero Justicia, Fernando Alban, was murdered by these enemies of freedom. He was held and tortured by the SEBIN (the Venezuelan intelligence agency) and his injuries were so severe that he ultimately died from them. After his death his body was thrown from a 10-story building and immediately, and officially, ruled a suicide. This was a blatant attempt to direct blame elsewhere. Venezuela's “Chief Prosecutor” has declared there will be consequences to anyone who publicly says or insinuates that the SEBIN assassinated Alban.
Alban is just the most recent victim of this regime. The opposition party is of no help and is part of the problem because they don't do anything to stop what is going on and only want political power and control of the economy. In 2017, the security forces murdered more than 150 people that had protested against the regime, the majority of those people were young students that wanted a country where they could live in freedom.
The classic socialist tactic of eliminating ones adversaries — no matter the price — is common and repeated constantly.
On October 12, retired Air Force Lieutenant Colonel Rafael Ernesto Díaz Cuello was jailed. The reason given by Jorge Rodriguez — one of the Regime's Capos — was that Diaz Cuello is guilty of treason to the homeland. Díaz Cuello is not a traitor. I know because I have had the opportunity to talk and share the stage with him as a speaker. He is just a retired military officer who speaks out against the regime and the crisis looming currently in Venezuela. Of course, he is a military man and comes from that background, but one of his proposals makes the government very uncomfortable. He advocates a transitional government to steer Venezuela out of its current crisis by adopting a Swiss-like government structure with the support of international security forces or the replication of Singapore’s experience.
However, Díaz Cuello is not the only military man in jail or accused of treason. In June, the Venezuelan newspaper El Nacional reported more than 99 military officers and personnel were in jail or discharged from their duties because of treasonous activity and conspiracies against the regime, two generals are among the incarcerated. In addition, there is the case of Oscar Pérez, an ex-police officer who was leading a group of rebels that was massacred — despite the fact that they had already surrendered. This sort of thing is without precedent in Venezuela.
So, when people analyze the real history of socialism, it is important to understand the many systems that are swathed in blood. People, especially the young idealists, must recognize that "social democracy," "progressivism," or "social Christianism" often ends in the destruction of life and liberty for untold numbers of people. To open one's political and economic system to such a threat is like opening one's house to a serial killer.
Paul Volcker, the cigar smoking former Chairman of the Federal Reserve Bank, literally and figuratively towers over his successors (he is reportedly 6'7"). Mr. Volcker is the the last Chair under whose tenure American savers could earn a decent rate of interest, the last Chair who demonstrated any meaningful political independence (clashing with presidents Carter and Reagan), the last Chair who really hated inflation, and the last Chair who eschewed the technocratic management of monetary policy. He's the last of the old-guard central bankers who saw monetary policy as a regulator and not a stimulus machine. As bad as he was on gold—as an undersecretary in Nixon's Treasury department he advocated the suspension of gold convertibility— Volcker was a gut-level banker who understood complex markets but also the concerns of average people. He was never a policy wonk with his head in the clouds.
Still active and robust at 91, he's written a new memoir documenting his long tenure at the central bank. If his comments (excerpted from the book) in this recent Bloomberg opinion piece are any indication, it should be a welcome refutation of technocratic monetary policy by his successors—particularly when it comes to the current bizarro-world understanding of inflation and deflation:
More recently, a remarkable consensus has developed among central bankers that there’s a new “red line” for policy: A 2 percent rate of increase in some carefully designed consumer price index is acceptable, even desirable, and at the same time provides a limit.
I puzzle about the rationale. A 2 percent target, or limit, was not in my textbooks years ago. I know of no theoretical justification. It’s difficult to be both a target and a limit at the same time. And a 2 percent inflation rate, successfully maintained, would mean the price level doubles in little more than a generation.
Who else in the world of central banking even mentions inflation these days, other than to tell us it's not a problem? Do any Fed or ECB economists think doubling prices on consumer goods every couple of decades is a good thing? Why do today's policy makers think prices are rising too slowly, a position totally at odds with the public? Volcker points out the absurdity of their thinking:
Yet, as I write, with economic growth rising and the unemployment rate near historic lows, concerns are being voiced that consumer prices are growing too slowly — just because they’re a quarter percent or so below the 2 percent target! Could that be a signal to “ease” monetary policy, or at least to delay restraint, even with the economy at full employment?
Certainly, that would be nonsense. How did central bankers fall into the trap of assigning such weight to tiny changes in a single statistic, with all of its inherent weakness?
Perhaps an increase to 3 percent to provide a slight stimulus if the economy seems too sluggish? And, if 3 percent isn’t enough, why not 4 percent?
I’m not making this up. I read such ideas voiced occasionally by Fed officials or economists at the International Monetary Fund, and more frequently from economics professors. In Japan, it seems to be the new gospel. I have yet to hear, in the midst of a strong economy, that maybe the inflation target should be reduced!
He also provides some very clear thinking about the bogeyman known as deflation. Systemic crises, in the form of deep recessions, are the danger—not falling prices. Of course deep recessions are deflationary, as banks, businesses, and households shed debt and lower consumption. But loose monetary policy, not Volckerian rate hiking, creates the biggest risk of a future systemic crises:
The lesson, to me, is crystal clear. Deflation is a threat posed by a critical breakdown of the financial system. Slow growth and recurrent recessions without systemic financial disturbances, even the big recessions of 1975 and 1982, have not posed such a risk.
The real danger comes from encouraging or inadvertently tolerating rising inflation and its close cousin of extreme speculation and risk taking, in effect standing by while bubbles and excesses threaten financial markets. Ironically, the “easy money,” striving for a “little inflation” as a means of forestalling deflation, could, in the end, be what brings it about.
Mr. Volcker's memoirs hopefully will serve as a much-needed corrective against the inanity of monetary policy today and a warning against the folly of what Nomi Prins calls "financial alchemy," the false belief that central bankers can conjure up prosperity using technical wizardry. Production, productivity increases, profit, and investment are the only way to create a truly prosperous and sustainable economy, and no amount of policy tinkering can change this. Volcker is not an Austrian, but he is someone who understands the threat to America's economic future posed by disconnected central bank policies. Fed officials, current and former, would be well-served to worry less about Donald Trump's tweets and more about their own reputations. As R. Christopher Whalen reminds us in this excellent analysis, "the greatest threat to the central bank’s existence is the tendency of Fed governors and economists to pursue abstract economic theories that make no sense in real world terms and often do more harm than good."
Let's hope Jay Powell reads Mr. Volcker's book.
Released to not much fanfare, Reuters has posted some very interesting interactive poll data on surveys showing the level of support for "the idea of your state peacefully withdrawing from the USA and the federal government."
Nationwide, overall opinion is heavily against with, among all people polled, 58 percent in opposition, and only 22 percent supporting. (Back in 2014, a poll showed 23.9 percent of Americans supporting secession.)
Results vary by region, however, with more than 60 percent opposing secession in the Southeast, Rocky Mountain, Great Plains, Great Lakes, and New England regions.
In the Far West (which includes California) and in the Southwest only 51 percent and 49 percent oppose secession, respectively.
The Southwest's numbers are bolstered significantly by the presence of Hispanics who apparently are much more sympathetic toward secession than the "white" (presumably "non-Hispanic white," since half of Hispanics consider themselves to be white) population.
Nationwide, 36 percent of Hispanics support secession while 42 percent oppose.
Looking just at Hispanics in the southwestern part of the country that have 20% or more Hispanic population (which therefore includes California, Arizona, New Mexico, Texas, Colorado, and Nevada, support is 35 percent and opposition is 42 percent.
But, in spite of the "Calexit" effort, it appears California Hispanics are more inclined to oppose secession than Hispanics in other states of the region.
If we exclude California (and thus measure Arizona, New Mexico, Texas, Colorado, and Nevada), 35 percent of Hispanics support secession, while only 38 percent oppose.
Of course, the data doesn't tell us the reason that Hispanics support secession more in this data. It's likely that the reasons vary.
Pew data has shown that among Hispanics polled, nearly as many self-identify as "libertarian" (11 percent) than is the case for Anglos (12 percent). Assuming that someone who self-identifies as libertarian is more likely to support decentralization and secession (something that isn't always true) then there's nothing shocking about these numbers.
Moreover, support for secession is higher among Hispanics regardless of whom they supported in 2016. Among those Hispanics who supported Clinton in 2016, support for secession is 33 percent in support of secession and 47 percent in opposition. Among everyone else, 22 percent support, and 63 percent oppose.
Nor is that all being driven by California Hispanics. Excluding California from these numbers, support for secession among Clinton-supporting Hispanics is even higher: 36 percent support, and 45 percent oppose.
And, among Trump-supporting Hispanics (which was 28 percent of voting Hispanics in 2016), secession almost wins a plurality: 45 percent support, and 47 percent oppose. But among non-Hispanic Trump supporters, support for secession is abysmal: only 19 percent support and 69 percent oppose.
It's hard to see any unifying theory here, although I'm old enough to remember the days when panicked Anglos spread the theory that most Mexican-Americans were plotting to secede and "rejoin Mexico" or found the new country of "Aztlan" which would be a ethno-state of Hispanics. (The fact that Mexican-Americans have an extremely varied racial make-up, however, is usually ignored.)
Given that all my maternal relatives are Mexican-Americans, though, I always found this little theory to be laughably tone-deaf. For the most part, the only Mexican-Americans who have interest in some sort of Mexican ethno-state or Mexican re-unification are University ideologues in Latino Studies departments. Among man-on-the-street Mexican-Americans, the level of support for a plot to "rejoin" Mexico is likely a tiny minority.
On the other hand, it is entirely possible that More Mexican-Americans (most of which are native-born, of course) simply have a more international view of things, and haven't quite imbibed the mythology of the US as "indispensable nation" (whether viewed through a left- or right-wing prism) to the same degree that the Anglo population has. It could be the idea of a future in an independent country or something independent from Washington, DC doesn't fill Mexican-Americans with the same terror it apparently fills Americans in the Southeast or New England.
In any case, I've just focused here on the Hispanic numbers in this Reuters survey because it interests me. Check it out, as you can also filter the results by a number of other variables, including religion, income, and more.
"Right wing" Jair Bolsonaro has been elected president of Brazil, which extends a significant shift rightward from the days of Lula da Silva and Dilma Rousseff. In Latin America — and especially Brazil, which is itself distinct from Hispanophone Latin America — "right wing" can mean many things, and it certainly isn't the same thing as we mean in the US. Laissez-faire economics — even in rhetoric — isn't necessarily part of the equation.
There does seem to be a distinct lean in favor of the income-and-wealth-producing middle classes with Bolsonaro, and that may be a good thing.
Not surprisingly, then, the media is telling me that Bolsonaro is pretty much the modern incarnation of Hitler, just as they did with Trump. And while I'm hardly a Trump booster, the guy obviously ain't Hitler, either — or even Mussolini. (Never mind that both those guys heavily pushed their countries in the direction of socialism and central planning...)
In any case, the electorate of Brazil has apparently tired of the status quo which is one of terrible crime and sky-high homicide rates, rampant corruption, and a steady drumbeat for more and more economic regulation and intervention.
While much of Latin America (not Venezuela, of course) is seeing dropping violence coupled with steady economic growth (see Peru, for example, where homicide rates are a small fraction of Brazil's and where economic growth is far more steady than in Brazil) Brazil appears to spinning its wheels.
For a good take on Bolsonaro from one of our writers, see Brazil-born Alice Salles on "Understanding Brazil's Donald Trump."
Perhaps Neel Kashkari is angling for the Fed Chair job, should Donald Trump attempt an Eccles palace coup and oust Jerome Powell for his tightening ways. General Mattis may be sending troops to the border to head off the “caravan” enroute from Guatemala (or was it the middle east?), but he can certainly redirect them to Federal Reserve HQ to suppress President Trump’s “biggest risk.”
Mr. Kashkari, the president of the Minneapolis Federal Reserve Bank, has hopscotched through various positions after being hired by then Secretary of the Treasury Henry Paulson. He’s worked at PIMCO, he’s run for governor of California, and he administered the much beloved TARP program during the financial crisis.
Today his op-ed appears in the Wall Street Journal urging the Fed’s home office to lighten up on the interest rate hikes already. The President must be pleased. The 2 percent inflation target, which tall-Paul Volker writes in his new book, “I puzzle at the rationale. A 2 percent target, or limit, was not in my textbook years ago. I know of no theoretical justification,” is, according to Kashkari, “symmetric” not a “ceiling.”
The Minnesota Fed man writes, “In 2015 the FOMC estimated unemployment could not go below 5.1% without triggering inflation. Its current estimate is 4.5%; the actual unemployment rate is down to 3.7%, and wage growth and inflation are still muted.”
Inflation is muted, except if you calculate it the way it used to be calculated. John Williams does that for us at shadowstats.com and he says CPI is 6 percent using the 1990 method or 10 percent using the 1980 approach.
Courtesy of ShadowStats.com
“Every time we do something great, he raises the interest rates,” Mr. Trump told reporters from the Wall Street Journal, adding that Mr. Powell “almost looks like he’s happy raising interest rates.”
During his meeting with the WSJ reporters, Trump, “pushed a red button on his desk, summoning an iced cola delivered to him on a silver platter.”
I can imagine Idi Amin did that.
He also talked like Amin or other dictator. The reporting crew from the WSJ write,
He referred to economic gains during his time in office as “my numbers,” saying, “I have a hot economy going.” He described his push for growth as a competition with former President Obama’s record, saying that increases under his Democratic predecessor were skewed because of low-interest rates.
Mr. Kashkari, himself, questions the government’s numbers to make the case to stop the interest rate music from being turned up too loud.
And the formal unemployment rate only counts people actively looking for work. By another measure—the percentage of prime-age Americans who are employed—nearly a million adults are still missing from the job market relative to 2006, and more than 2.5 million fewer are working relative to 1999. How many more of those missing workers would re-enter the labor force if wages picked up? We don’t know.
All of that is true, but typically not uttered by government employees of any sort of rank. Evidently, it doesn’t matter what you write from the distant Minneapolis Fed outpost.
And, how about this from Kashkari,
Critics argue the tax cut is delivering a Keynesian sugar high, that modest growth rates will return once the high has worn off, and that taxpayers will be left holding $1.8 trillion in additional outstanding debt. Who’s right? It will take time to find out.
“Keynesian sugar high? Did he really take the Lord Keynes’ name in vain?
The former TARPmaster closes with,
But until inflation or inflation expectations get meaningfully higher, the Fed should allow the economy to continue to strengthen, so as to allow as many Americans as possible to participate in the recovery.
That sentence, even grammatically, sounds Trumpian.
Trump feels as if Powell lied to him. “He was supposed to be a low-interest-rate guy. It’s turned out that he’s not.”
Of course, it’s all about Trump v. Obama. Michael C. Bender, Rebecca Ballhaus, Peter Nicholas and Alex Leary write,
Mr. Trump demurred when asked under what circumstances he’d remove Mr. Powell, whom he selected for a four-year term that started in February. “I don’t know,” he said. “I’m just saying this: I’m very unhappy with the Fed because Obama had zero interest rates.”
Wah, wah, wah. Mr. Kashkari, your next office may be in the Eccles Building.
Originally published at DouglasInVegas.com
A European court has ruled that people can be fined and prosecuted in criminal court for saying things about religious figures. Specifically, saying things about the Muslim prophet Mohammad is verboten, and state punishment is appropriate:
The European Court of Human Rights has ruled a woman convicted by an Austrian court of calling the Prophet Mohammed a paedophile did not have her freedom of speech rights infringed.
The woman, named only as Mrs. S, 47, from Vienna, was said to have held two seminars in which she discussed the marriage between the Prophet Mohammad and a six-year old girl, Aisha....Mrs S. was later convicted in February 2011 by the Vienna Regional Criminal Court for disparaging religious doctrines and ordered her to pay a fine of 480 euros plus legal fees.
The court's primary reasoning, it appears, is that the woman's comments ought to condemned because they might "stir up prejudice and threaten religious peace..." Notably, however, Mrs. S is not accused of saying anything that encourages violence either generally or in any specific way.
In other words, human rights go right out the window if the exercise of those rights might cause other people to feel bad.
Just some examples include:
- A candidate in the European elections was arrested in Britain for quoting a passage from Winston Churchill about Islam.
- Gert Wilders, a politician in the Netherlands, was tried on five counts including “criminally insulting Muslims because of their religion.”
- Both Mark Steyn and Ezra Levant were dragged in front of the Canadian Human Rights Commission on charges of being “Islamophobic.”
Moreover, it reflects a larger disdain for private property that is so widespread in Europe. Consider, that the comments made by the woman in question were apparently made at "two seminars." Presumably, no one who didn't wish to listen to the ideas of Mrs. S was forced to do so. And there is no claim that Mrs.S trespassed on anyone's property to express these ideas.
As noted by Murray Rothbard, the right to free speech is not a special right, but is intimately connected to property rights. If Mrs. S was expressing her ideas in a place and in a way that did not violate anyone else's property rights, then she was acting peacefully and in a way that respects the rights of others.
In other words, it appears that there was no coercion or violence of any sort involved in Mrs S's expression of her ideas.
The Court, however, has decided that the proper response to her peaceful activities is to use violence — by imposing fines.
Moreover, the court appears to be unconcerned as to whether the facts relayed by Mrs S, relating to Mohammad's marriage to a young girl, are accurate or not. This would appear to be important to most reasonable people, but presuming that Mrs S comments about Muhammad's child bride are accurate — which they appear to be — the court is basically taking the position that stating well-known historical facts constitutes some sort of hate speech.
The larger goal, it appears is to pander to certain interest groups at the expense of basic freedoms. One is left wondering, however, if the Court would react with equal enthusiasm to equally disparaging remarks about Christianity or Christians.
State-directed punishments of this sort, of course, ought not be confused with non-governmental efforts at silencing critics. While Americans certainly are fond of launching campaigns to get people fired or ostracized when they say unpopular things, these actions are nonetheless qualitatively different from being hauled into civil or criminal court by government officials, and then threatening the accused with thousands of dollars in fines, or even a jail term.
As an addendum to yesterday's post in civility in government, and the Era of Consensus, take a look at new data released from Pew on faith in government .
The percentage of those polled who say they trust the government in Washington hasn't exceeded 25 percent in ten years.
On the other hand, the amount of trust in government as shown in the 50s and early 60s is astounding. According to this data, at least, nearly 80 percent of the population said it trusted the government in Washington.
It's little wonder then, that the US government had a free hand to carry out thinks like The Great Society, the Vietnam War, price controls, and a variety of massive spending programs. And all the while, the population droned on with "we're the greatest country in the world!"
Conversely, its unclear how long a regime can continue when only one-fifth of the population says it trusts the national government.
But, it's also clear that the government doesn't like it. This is why politicians so regularly lecture the population to vote, and tell us that "cynicism" about the government is a terrible thing — as Obama insisted the other day .
What the regime wants is enthusiastic support, and political participation — i.e., voting and little else — that can be used to claim various "mandates" for more government action.
Naturally, what the regime wants is a repeat of the 50s and early 60s, when a supermajority of the population trusted DC. The pretended posturing toward radicalism is really just a get-out-the-vote strategy. No one in DC wants turbulence. The want to re-create the calm and deferential trust Americans had in the mid-20th century.