Immigration has raised concerns in some about America’s demographic future. Some propose that an influx of migrants with foreign worldviews will fracture American society. This argument is based on the finding that the diversity generated by immigration deters social trust.
Trust is a crucial ingredient for societies to thrive by establishing collaborative institutions. Trusting societies are more cooperative and innovative because when people trust each other, they are more likely to share information. Trust also makes it easier to do business by lowering transaction costs.
People will expedite the business process when they have confidence in the integrity of their partners. Because trust is a stimulant for social progress, concerns that immigration will corrode social relations is a legitimate worry. However, the ripple effects of immigration are more complicated than the problems posed by a low-trust society.
Individualism has been a source of America’s strength and ingenuity. Risk-tolerant and individualistic individuals migrated to America where they built the most successful society in history. Unlike in other places in Western society, change is driven by individuals rather than imposed by foreign actors.
Lawrence Mead explains in his book Burdens of Freedom that although migrants prosper in America, recent waves of immigration have been propelled by non-Europeans who are not as individualistic as European whites. Such people do succeed in America. However, on average, they fail to embrace freedom as a burden requiring obligations.
The downside is that the lack of a widespread ethos of individualism among some groups precludes them from achieving parity with the dominant white majority. East Asians do well financially in America, yet Mead opines that academics lament their conformity and inability to chart new terrains. Mead thinks that importing less-individualistic migrants from non-Western countries will sap American dynamism by reducing the propensity for individualism.
Historically, America succeeded at assimilating migrants. However, with the advent of multiculturalism, assimilation has become a dirty word. Instead, activists debase the founding fathers and European philosophers. Traits we associate with the West like individualism and analytical thinking are demeaned as products of white supremacy.
Therefore, it’s unlikely that future generations of immigrants will assimilate in large numbers. Mead’s conclusions might sound farfetched, but they are endorsed by research exploring the long-term effects of culture. Personality is heritable, so nonindividualistic immigrants are likely to birth nonindividualistic children. Individualism is a strong predictor of innovation and economic growth. Hence, a surge in less-individualistic people can limit economic growth rates.
Evidence analyzed by London School of Economics researcher Sijie Hu indicates that the reproduction of personality traits hostile to innovation stymies growth. Studying the reproductive rates of imperial China, Hu shows that elites who subscribed to the conformist tendencies of Confucianism were likely to reproduce, and this adversely affected economic growth rates during the Qing dynasty. So, Mead is not wrong to suggest that a less-individualistic America could lead to unfavorable economic outcomes.
Libertarians are wary of proposals to restrict immigration, due to economic and philosophical reasons. However, they must address the damages that immigration poses to sustaining American ingenuity. All cultures don’t lead to similar outcomes, so libertarians must account for cultural consequences when promoting immigration.

It is hard to ignore the headlines about US corporate profit margins stabilizing at their highest level in decades. This information has provided plenty of ammunition for populist commentators and politicians who blame corporate greed for the sharp increase in postcovid consumer prices and ignore the elephant in the room, which is a more than 40 percent increase in broad money supply after March of 2020 mostly due to central bank balance sheet expansion and the monetization of massive budget deficits.
That is not to say corporate greed does not exist, but one should note that corporations were also greedy in 2015 when inflation was only 0.7 percent. Why have they been rapidly raising prices and expanding their profit margins only after covid? I want to take you through a simple yet representative example that shows how inflation increases profit margins and not the other way around.
Consider a manufacturer of copper cookware that generates all its revenue from the sales of ten thousand copper pans every year. Each year the manufacturer pays $1 million to buy the raw material and pay the labor required for manufacturing those ten thousand units, then sells each unit at $120, which adds up to total sales of $1.2 million. If there is no inflation, the manufacturer can pocket $200,000 from the sales proceeds and use the remaining $1 million to buy the raw material and pay the labor needed to manufacture ten thousand pans next year. This amounts to a 20 percent pretax profit margin.
As long as the input costs do not rise, the manufacturer can do that year after year and keep its profit margin at 20 percent. However, if some input costs, such as copper prices, go up, this changes the whole equation. Imagine an inflationary environment where the manufacturer expects the cost of raw materials and the cost of labor for next year to go up on average 10 percent to $1.1 million for producing ten thousand units. The manufacturer has to increase the price of copper pans to be able to collect at least $1.3 million in sales.
After pocketing $200,000, they end up with $1.1 million which is just enough to pay the higher cost of raw material and labor for the next year’s production of ten thousand pans. However, for the purposes of profit margin calculation, the manufacturer has to report this year’s cost, which was $1 million amounting to a 30 percent profit margin. The reality is that the manufacturer is not getting wealthier. They are still only pocketing $200,000, yet the profit margins are inflated.
You may ask how the manufacturer can figure out that input costs are going to be higher next year. While manufacturers do not buy raw materials every day, they still track the real-time price of the material they need. The copper cookware manufacturer that observes the price of copper moving from around $3.50 a pound to more than $4.50 a pound in three months in 2021 has to adjust its prices even if it has enough copper for many months’ worth of production.
Failure to do so results in the manufacturer falling short when they attempt to buy more copper if prices do not come back down. The forward-looking nature of decision-making by producers and manufacturers compels them to raise prices when they see a trend of rising input costs.
Yet the profit margins are calculated using a backward-looking methodology. However, this is a transitory impact. As historical data suggests, a sharp rise in corporate profit margin is almost always followed by a sharp decline in those margins when the lagging rising costs catch up with the higher sales and the inevitable recession hits.

The United States House of Representatives’ passage of the Limit, Save, Grow Act of 2023 is a big Republican failure addressing the debt ceiling. The debt ceiling would be raised above the current limit of $31 trillion by $1.5 trillion or through March 2024, whichever comes first. Notably, “official cost estimates have not yet been released,” so the projected paltry $480 billion annual spending reductions likely will be much less. This is because this bill “does not list any specific cuts.” Fortunately, it is expected that Senate Democrats will vote down this execrable bill.
Campaigning Republicans are invariably aghast at deficits in the billions. Elected Republicans, however, are comfortable with deficits in the trillions based on last year’s appropriations passed by the most progressive Congress and administration in this country’s history.
The House bill is a “me too, but a little less” action to grow ever bigger government more slowly. Lone Rep. Tim Burchett (R-TN) stood against the farce, insisting on “true debt reduction, not rate of growth.” Declining to exercise leverage over the process, the Freedom Caucus is losing legitimacy and should rename itself the Freedom Lost Caucus.
The list is short and thin for merits to the House bill. Disqualified as a merit is the general, unspecified limit to grow spending—excluding the military—at 1 percent annually. Otherwise, the student loan forgiveness program and income-driven repayment plan would be blocked. The Internal Revenue Service appropriation of $80 billion for additional employees would be rescinded. Recipient work requirements would be added for food stamps and Medicaid. There would be a repeal of unreliable (i.e., solar and wind) energy and electric vehicle tax credits. Unused covid-19 funds would be clawed back.
Because the House initiates appropriations, no laws need to be passed if any government program, commission, office, agency, bureau, department, or administration is defunded completely. The House has authority to act unilaterally this way. Spending reductions that stop short of elimination, the path to conservative defeat, require agreement between the House, the Senate, and the White House. It won’t get easier passing a balanced budget later, and the window for this is closing quickly. We can look into the dismal future by looking at the similar past actions of Argentina, Venezuela, and the PIGS (Portugal, Italy, Greece, and Spain) with their out-of-control spending and monetary policies.
Consider the categories of individuals, groups, and issues supposedly forming the base for the perpetual political success of a realigned Republican Party. Opportunities for conservatives include parents and parental rights, the working class composed of the poor and middle class who could benefit from capitalism and its attendant prosperity, senior citizens, and citizens desiring safety and security.
Instead, parents aren’t supported. The Department of Education isn’t eliminated, which would be another step toward universal school choice. LGBTQ recruitment into sexual deviancy continues apace, with increased funding for Planned Parenthood and the medicopharmaceutical industrial complex anxious for lifetime profits from transgender transitions.
Prosperity isn’t supported for poor and middle-class workers. A balanced budget is an imperative unrecognized by elected Republicans. The Environmental Protection Agency, dedicated to antihumanism and environmental radicalism, isn’t defunded. The Department of Energy, dedicated to the Green New Deal, is still funded. Neither the Department of Commerce, dedicated to globalism, nor the Department of Health and Human Services, dedicated to the evisceration of the intact nuclear family, is defunded as well. Crony capitalist initiatives such as the funding for the Creating Helpful Incentives to Product Semiconductors (CHIPS) Act and tax credits for ethanol production should stop.
Congressional deficit spending requires the monetization of the debt by the Federal Reserve, which causes monetary inflation. Lower real wages and fewer opportunities in a more stagnant economy cause lower standards of living.
Senior citizens are under a cloud even though “cuts” would not apply to benefits programs such as Social Security and Medicare. Only a balanced budget supports senior citizens’ interests. Balancing the budget is a tougher proposition every year. The reason is that the accumulated profligate deficit spending by the uniparty, adding up to our national debt, requires interest payments. The fraction of the budget going to interest payments—currently at about 7 percent of all federal outlays—keeps climbing, increasing pressure for program cuts. If elected Republicans make hard choices now, then Social Security and Medicare won’t have to be targeted later.
Liberty isn’t advanced. Safety and security aren’t supported. At the global level, the incompetent and tyrannical World Health Organization, the United Nations, the World Economic Forum, and the socialist and crony capitalist International Monetary Fund are fully funded. Forever wars supported by the military industrial complex, the corrupt and tyrannical Volodymyr Zelenskyy, and the North Atlantic Treaty Organization are fully funded. At the national level, the corrupt and unreformable Federal Bureau of Investigation; Bureau of Alcohol, Tobacco, Firearms, and Explosives; and US Customs and Border Protection agencies are fully funded. The environmental, social, and governance; critical race theory; and diversity, equity, and inclusion frameworks are fully supported as well. The woke military is exempt from cuts.
Significantly, Congress isn’t insisting on adherence to the Constitution with respect to regulations and executive orders. The Constitution authorizes only Congress to pass laws, and this authority may not be delegated. All regulations and executive orders must be submitted to Congress as proposals for additional legislation. Elected Republicans are sanguine that the regulatory state and imperial White House make their own laws thereby directly threatening liberty and prosperity.
Neither Donald Trump nor Ron DeSantis has heartburn. Trump’s first-term legacy was a reduction in the flow of illegal immigrants, regulatory state rollback, and the recission of Barack Obama’s executive orders. However, President Trump signed every massive omnibus spending bill, each with higher deficit spending, sent to his desk. As governor, DeSantis must balance the state budget, but the virtues of doing this at the national level elude him to the extent he can’t articulate why a balanced budget is necessary for liberty and prosperity.
What recourse do voters have? Primaries are rigged by the two political parties to return incumbents to office. Nevertheless, it is within primaries that authentic conservatives can be elected. Conservatives should learn the lesson of former progressive House Speaker John Boehner, who encouraged large numbers of candidates to oppose him in his primary. There needs to be only a single authentic conservative running against the incumbents. All primaries should require a majority winner or have a runoff.
With a divided government, the legislation likely to pass would be a provision of a line-item veto by the president. Such a law would eviscerate the “take it or leave it” attitude implicit in omnibus spending bills or the huge bundled “single appropriations” bills envisioned by progressives wearing red jerseys. Congress would pass the buck to the White House to be fiscally responsible.
The House bill raising the debt ceiling is good news for the wealthy. In the face of profligate congressional spending, the Fed must eventually relent and go back to monetary easing, which will reinflate the asset bubbles in the stock and residential housing markets. The wealthy, having a higher percentage of disposable income with which to invest, will benefit disproportionately. There will be a further increase in wealth inequality between the poor and middle class versus the wealthy.
Elected Republicans are dedicated to vigorous tongue lashings, finger wagging, and foot stomping. Unfortunately, only campaigning Republicans recognize the virtues of a much smaller government. Voters should recognize the difference between campaigning and elected Republicans and know that elected Republicans are dedicated to the decline of the country. The decision to vote for an incumbent in the general election just depends how badly you want to see the progressive wear your team’s jersey color.

The character Mike Campbell in Ernest Hemingway’s 1926 novel The Sun Also Rises was asked about his money troubles and responded with a vivid description embracing self-contradiction: “‘How did you go bankrupt?’ Bill asked. ‘Two ways,’ Mike said. ‘Gradually and then suddenly.’”
Ground-hugging interest rates for more than a decade kept the inefficient and the incompetent in business. Now, the jig is up, with a Mother’s Day weekend corporate massacre that saw the bankruptcies of seven corporations, each with liabilities of nine figures or more—in four cases, with more than a billion dollars in liabilities each.
This cluster of large bankruptcies happening in less than forty-eight hours is the most since 2008. Libby Cherry writes for Bloomberg (reprinted on Time): “Firms across every sector are struggling with higher interest costs—making it more challenging to refinance loans and bonds—while corporate executives are drawing more scrutiny from investors and creditors.”
The corporate restructurings cover a wide range of businesses: Vice Media Group, KKR-backed Envision Healthcare, security company Monitronics International, chemical producer Venator Materials Plc, oil producer Cox Operating, fire protection firm Kidde-Fenwal, and biotechnology company Athenex.
The only thing these firms had in common was lots of debt that was unserviceable with today’s higher interest rates. Murray Rothbard wrote in America’s Great Depression:
The problem of the business cycle is one of general boom and depression; it is not a problem of exploring specific industries and wondering what factors make each one of them relatively prosperous or depressed. . . . What we are trying to explain are general booms and busts in business.
In considering general movements in business, then, it is immediately evident that such movements must be transmitted through the general medium of exchange—money.
If you haven’t been losing any sleep over these corporate failures or have been blissfully unaware, the weekly St. Louis Fed Financial Stress Index is with you, measuring no stress. Above zero on the index means there is stress in the market—when Silicon Valley Bank failed, the index jumped to 1.54. Zero means normal market conditions, and a negative reading signals below-average stress. The index is currently reading negative.
Corporate bankruptcies, the debt ceiling showdown, bank failures—nothing to see here. Providing context, Wolf Richter writes that “During the Financial Crisis, just after the Lehman bankruptcy, the index spiked to +9.25, so that’s about six times the value during the SVB collapse (+1.54).”
With everything so calm, it’s no wonder Fed heads claim to blindly have their noses to the inflation grindstone. Nonvoter Federal Reserve Bank of Richmond president Thomas Barkin told Bloomberg’s Michael McKee that he wants to reduce inflation. “And if more [interest rate] increases are what’s necessary to do that I’m comfortable doing that.”
Another nonvoter, but frequent talker, Federal Reserve Bank of Cleveland president Loretta Mester said the Fed can “do its part” by curbing inflation.
Of course, as Rothbard explained, the Fed actually creates inflation, instead of curbing it. However, higher interest rates will mean a bumper crop of bankruptcies.
TheStreet reports:
The most recent S&P data show 2023 corporate bankruptcies rising at an alarming clip. Data show 236 bankruptcies were recorded through the end of April 2023 (109 had been recorded over the same time period last year). UBS also found in a recent study that bankruptcies worth $10 million or more had a rolling average of about 8 per week.
There’s been much talk about the “everything bubble.” Perhaps that will now include bankruptcies, gradually, then suddenly.

A “civil society” is a community of individuals who are linked together by common interests and activities. Common interests include being able to walk the streets safely (peace) and to exercise such rights as freedom of speech (individual freedom). These shared interests allow common activities to flourish, including commerce and the education of children.
Civil society is possible only because most people want to live securely, protect their loved ones, and prosper. This laissez-faire attitude used to be a defining characteristic of Americans, but an engineered and well-financed cultural war is destroying America’s renowned tolerance. If the common interests of society break down and peace and freedom are replaced by violence and privilege, then common activities like free-market commerce and education cannot function.
One movement captures the raw destruction of this culture war against civil society—a demand for “Trans rights!” blasts across America. But a sharp backlash against it has also developed, epitomized by the boycott of Bud Light beer over the company’s use of trans activist Dylan Mulvaney as a new “woman” ambassador for its brand.
The media characterizes this backlash as antitrans hatred by conservatives, Christians, and other troglodytes. But few people care about the sexual or gender orientation of their neighbors. Critics of the trans movement are rebelling against the forced redefinition of biology, the destruction of women’s sports by trans athletes, the hijacking of children’s education, the medical experiment of gender-transitioning children, and the intrusion of penises in women-only spaces like bathrooms, locker rooms, prisons, and shelters. Critics don’t want to oppress anyone; they want a return to civil society of peace and individual rights.
To understand why the “trans rights” movement has caused such damage, it is necessary to ask three questions. What is a “transgendered” person? What are “rights”? What is produced by the actions the movement takes?
What is a transgendered person? Already we’re in trouble. Many prominent intellectuals today can’t even answer the simpler question, What is a woman? This article uses a common definition: “Transgender describes people whose gender identity does not match their assigned gender at birth.” It is one of many gender categories being advanced by social justice. There are as many as eighty-one distinct categories, all of which are said to be fluid or constructed over time.
Politically speaking, transgenderism and the other gender categories are a continuation of identity politics. This is a fairly standard definition of identity politics: “The politics of group-based movements claiming to represent the interests and identity of a particular group, rather than policy issues relating to all members of the community. The group identity may be based on ethnicity, class, religion, sex, sexuality, or other criteria” (emphasis added). It is an attempt to splinter society into groups and categories, all of which are at war with each other because their interests are said to conflict. What does this war look like?
Consider a controversial example: gender transitioning. This is when a person uses reassignment therapy, hormone replacement, and sex reassignment surgery to change their birth sex. Few argue against the gender transition of adults who pay for the process themselves. But the trans movement demands the gender transitioning of children, often at taxpayer expense; that is, a tomboy might become a “boy” through methods that include irreversible surgery.
There are at least two flash points here. One is the minimum age at which a person should transition. The World Professional Association for Transgender Health claims hormones can start at age fourteen and some surgeries at fifteen—in other words, at the height of a teenager’s sexual confusion. Recently, a licensed social worker at a children’s medical center in Austin, Texas, was reportedly recorded as saying the center provided gender modification to children as young as eight. On April 25, Senator Ted Cruz and Representative Chip Roy submitted a formal request to the center for information on how gender dysphoria is diagnosed, how federal dollars are spent in the process, and whether patients under eighteen underwent “experimental medical procedures.”
The group war here is between a child’s right against physical abuse and trans activists’ demands for children’s access to transition. The other flash point is that transitions are often performed without parental consent or despite parental objections. The rights war here—trans activists are usurping traditional parental rights, and parents are outraged.
The idea that the rights of one group conflict with those of another is perverse because it destroys the very basis of human rights. Human rights are universal because they are rooted in human nature. All human beings possess the same rights to the same degree. Rights are not based on secondary characteristics such as gender; they rest on a shared humanity. In other words, a trans person has the same rights to the same degree as every other person in society. No more, no less.
The “rights” demanded by trans activists are actually entitlements or group privileges. This is made clear by the claim of historical oppression, which is used to justify many demands. What is really being claimed is victimhood, upon which their entitlements are based. For trans activists to sustain their victimhood status, however, those who oppose them must be cast as oppressors and endless haters. Conveniently, this characterization removes the need to deal with any argument the “haters” present, such as the need for real human rights.
Again, this trans stance is a perversion. If the trans movement has been historically oppressed—and I do not argue against this—then the movement should value individual rights more than the average person. These freedoms are how an aggrieved individual rises to his or her feet. But trans activists do not want to be treated as equal individuals; they want to be a privileged group that imposes huge costs on the majority of society to their great benefit. Individual rights are an obstacle.
Gender transition is one area in which civil society is being replaced with civil warfare, but there are many others:
Trans “women” housed in women-only venues, like prisons and shelters, put biological women there at risk of sexual assault. Rapes are already happening.Trans curricula in American public schools indoctrinate children at the expense of teaching basic life skills, like math and literacy.A prominent doctor on Fox News warned, “First-year medical students [are] exposed to woke ‘sex and gender primer’ lesson.” This shifts the focus away from medical problems; it could also damage relationships with patients who do not share woke ideology or are not in a privileged group. The same is happening in law schools.The trans agenda violates constitutionally guaranteed freedom of speech in myriad ways, from forcing schools to use pronouns like “xe” and “hir” to shouting down speakers or violently attacking them.Draconian hate speech laws are destroying meaningful public discourse. A new bill passing through the Irish parliament, for example, outlaws communication or the possession of material that might incite hatred against “protected” classes, including gender. This is punishable by up to five years in prison.The demand to include trans athletes in women’s sports is destroying the entire field.Transitioned children who deeply regret transitioning are generally silenced or dismissed.
One way detransitioners are dismissed is through studies and statistics into which little trust can be invested. An article in the Associated Press claims, “In a review of 27 studies” of transgender surgeries, “1 percent on average expressed regret.” If this is true, it is good news. But is it true? The incessant ideology pumped through academia and the airwaves is yet another cost to civil society. Academics, journalists, and so-called experts have earned the public’s scorn. Studies and research have become just one more front in this war of all against all.
The media and authorities richly deserve this summary judgment from the public. Consider how they handle acts of violence. Every act of violence against a trans person seems to be widely reported and condemned, as it should be. But trans violence against biological women or other outsiders seems to be ignored or excused. Even the trans shooter in Nashville who killed three nine-year-old school children and three adults is protected by authorities who refuse to release the shooter’s manifesto. And media reports often expressed more concern about a backlash against trans people than about the dead children. SAVE Services, an agency that works to assure due process and fairness in schools, has an interesting page called “Stop the Wave of Transgender Violence” where many cases of trans violence are documented. In this environment, it is simply not possible to know what’s true about the levels of violence and against whom.
I would end by asking, can a more general violence—a savage civil unrest—be far behind? I believe it is already here.

Once again, the economic system is trying to adjust to political and monetary interventions. The year 2023 marks the end of a historical period characterized by zero-cost credit.
The monetary expansion that began in the early 2000s led to the great financial crisis of 2008 and the emerging markets boom. Exaggerated demand expectations and easy access to capital caused an overexpansion of production capacity and the subsequent industrial restructuring between 2015 and 2018.
Later came covid, with a further reduction in production capacity while demand was sustained with new money. The result was the highest inflation since the 1980s and a drastic rise in interest rates in response, which precipitated the current recession.
The possible duration and intensity of this difficult period is unknown. Although some believe it is a classic stock liquidation process that is bottoming out, it is highly probable that the adjustment could extend well into 2024. We could even be entering a long period of deleveraging and austerity.
This recession has shown that new money does not create wealth, but rather misallocates resources. There is no wealth without capital, and there is no creation of capital without savings. And there is no saving without reduced consumption. In addition, new money creates the economic inequality that often precedes social disorder.
Normally in a recession, there is an abundance of malinvested capital. But for the moment, it seems to be the opposite: there is a shortage of labor, cars, roads, energy, batteries, semiconductors, food, and water. When governments take control of our domestic economies, the result is chaos, discoordination, and poverty. To all this chaos is added a global struggle for resources, with even military confrontation between countries.
It is evident that, in the absence of an unlikely radical technological transformation, we will have to prioritize things and give up others, and the rosy picture of a thirty-five-hour workweek, two electric cars, vacations abroad, disposable clothing, and eating healthy, cheap, and outside the home will not be possible.
However, there is a limit to intervention, and people together—businesses—have enormous adaptability. This has consisted in recent years of flexibility, efficiency, consolidation, and rationalization.
The producer who has been able to adapt is better positioned than ever and, in many cases, enjoys unprecedented market power. From a chemical company that has consolidated the market we hear:
Our pricing is a ratchet. Our pricing only turns one way and does not reverse. If necessary, we will sell zero volume into the freely negotiated market to preserve our ratchet principle and the value of our broad downstream chains based on those linchpin products. (Scott McDougald Sutton Olin Corporation—President, CEO & Chairman in Q2 2021 results, conference call July 28, 2021)
The owner of a shipping group made the following comment a few weeks ago:
Our time has come; the market owes us a lot of money. And for us to be able to go to our stakeholders—to our shareholders to build new ships, these are the rates that we require. We’re not being arrogant; we should never be arrogant. We never say take it or leave it. We are always willing to provide you the service and the reliability that we are known for, but we need higher rates. (Niels G. Stolt-Nielsen Stolt-Nielsen Limited—CEO & Director Q1 2023 results, conference call March 30, 2023)
Economic, political, and climate-change uncertainty, along with financing difficulties and pressure from shareholders asking for dividends suggest that this position of strength will not change in the short term.

Every year on April 25, Anzac Day is observed in Australia and New Zealand. It originally commemorated Australians and New Zealanders who served and died during the First World War. It has since become a day of remembrance for all Australians and New Zealanders who have served and died in military conflicts.
One can understand the desire to mourn the dead. However, the loyalist nature of the commemorations—military and government figures are prominent, and there is social pressure to wear a red poppy—symbolizes a lack of critical thinking about the First World War. Many, if not most, Australians and New Zealanders treat the war as a tragedy that was largely unforeseen and ultimately futile. A significant number still affirm the pro-Allied view that German imperialism was to blame and that the British Empire—of which Australia and New Zealand were an important part—was fighting for world peace and liberty.
There is almost no support in these countries for revisionist scholarship. Revisionism contends that the Allies helped precipitate the war and that their militaristic and imperialistic tendencies were equal to, or more decisive than, Germany’s. Revisionism blasts apart the myth that Allied nations were altruistic vehicles of justice and liberty whose interventions have safeguarded democracy through the ages. Above all, the myth challenges Anglophone self-righteousness, exemplified by figures like Woodrow Wilson and Winston S. Churchill, which has helped justify military interventions up to the present day.
The weakness of revisionist scholarship in Australia and New Zealand means that many people in these countries still affirm the myth of Anglophone righteousness. For example, New Zealand’s only revisionist text of any note, the leftist Stevan Eldred-Grigg’s The Great Wrong War, has been heavily criticized by academics with close establishment ties.
This lack of attention to revisionism is unfortunate since Australia and New Zealand contributed to the outbreak and escalation of the war—even more than Eldred-Grigg suggests. Isolated from Britain, Australia and New Zealand had long feared invasion by rival powers. To offset the possibility, they advocated seizing wide swathes of the Pacific as buffer zones; the most ambitious wanted to transform the ocean into a British lake. Before the war, New Zealand had already begun executing this plan, successfully annexing Niue and the Cook Islands. This kind of behavior alarmed other powers with vested interests in the region, notably Germany, whose colonies of New Guinea and Samoa were among those coveted by the Anglophone countries.
At first, Australia and New Zealand had relied on the Royal Navy for protection, which was funded by the British taxpayer. However, when rival nations began to challenge Britain’s naval dominance over the world’s oceans—not least to protect their commerce from British interference—Australia and New Zealand leaped into action. Between 1902 and 1914, the Australian defense budget increased by a factor of six, accounting for over 30 percent of government spending by 1914. Between 1902 and 1912, New Zealand’s defense budget doubled. Both countries instituted compulsory military service to augment their ground forces. They also upgraded their naval assets: New Zealand funded a new battlecruiser for the Royal Navy, HMS New Zealand, to help with Pacific defense, and Australia established its own navy, whose leading warship was the battlecruiser HMAS Australia.
This surge of militarism contributed to prewar tensions. Isolated and underfunded, Germany’s Pacific colonies were virtually devoid of army personnel. There was a cruiser squadron based in Tsingtao, China, but its vessels were easily outclassed by British and Australian naval forces in the Asia-Pacific region. This situation distressed Germany’s colonial leaders because it put them at the mercy of belligerent British forces. For example, when the Second Moroccan Crisis of 1911 sparked saber rattling between Britain and Germany, HMS Challenger of the Australia Station slunk into German Samoa’s main harbor in a covert night operation. Recognizing that the ship would attack if war were declared, many Germans fled into the hinterland for protection—and all this before a formal declaration of war.
Upon Britain’s entry into the First World War in 1914, Australia and New Zealand lost little time realizing their imperialist ambitions. New Zealand swiftly dispatched approximately fourteen hundred men to capture Samoa. Given that it was virtually undefended, the German authorities surrendered without a fight. Australia launched a similar expedition against New Guinea. Here, a handful of German and Melanesian soldiers resisted. However, they could not hold back the Australian juggernaut—approximately two thousand men and the Royal Australian Navy’s most powerful warships—for very long.
The Australians and New Zealanders subjected their newly won territories to a potent mixture of racism, economic exploitation, and martial law. Especially in the months after the capture of New Guinea, drunken Australian soldiers looted indiscriminately and assaulted Melanesian and Chinese residents. New Zealand instituted martial law in Samoa, interning many Germans in appalling conditions and literally beating the large Chinese labor population into submission. The colony was stripped of its wealth; deported Chinese laborers even had their earnings confiscated. These actions scandalized the Germans who learned about them. For example, it has been suggested that a desire to revenge the brutalization of Samoa partly motivated Admiral Maximilian Graf von Spee’s audacious attack on the Falkland Islands in December 1914. Although the Germans ultimately lost—von Spee did not expect to find capital ships in the harbor—the raid put an entire British squadron at risk. The attack might even have succeeded if it had been pressed home, which would have been catastrophic for the British war effort.
Another way that Australians and New Zealanders escalated the war was by the participation of HMAS Australia and HMS New Zealand in the starvation blockade of Germany and Austria-Hungary. One of the greatest war crimes of the twentieth century, this blockade cost the lives of nearly one million German and Austro-Hungarian civilians. As battlecruisers, the Australia and New Zealand were essential for preventing the German High Seas fleet from breaking this blockade.
With all this in mind, the need for a critical attitude toward the war in Australia and New Zealand becomes evident. Their imperialistic and militaristic tendencies fueled prewar tensions and intensified the conflict. To point this out is to highlight the strength of the revisionist perspective and, ultimately, to expose the foul underbelly of the British Empire.

A century ago, the US coal industry was at its peak employing 883,000, and today, coal employs fewer than 41,000. Is that a bad thing? Is the US worse off because of this? Though it’s remarkable––that 95 percent fewer coal miners are needed to power a population that’s now 2.9 times larger––can you name someone who cares? Is declining employment in the coal industry a threat to “national security”? Do the majority bemoan the rapidly declining prevalence of black lung? I’m sure there are some who’ve been personally harmed by the coal industry’s decimation––I’m not making light of that––but those who voluntarily chose another profession vivify what’s been disregarded for the past three years: trade-offs.
Those who toiled beneath the soil weighed the benefits of compensation against the downsides of a dangerous office, and they chose to accept the risks. Though there are many reasons for the coal industry’s decline, surely miner preferences for risk should be included. With different energy sources developed over the past century, and with technology enabling fewer and fewer people to produce more and more energy, Americans have been able to specialize––to give more weight to their skills and desires than to the risks and benefits of less-desirable jobs.
When human capital is able to migrate to where it’s treated best––to its highest use––everyone benefits. To illustrate this point, you’ve likely seen videos of children in poor countries scrounging around in the mud for precious metals. But what if they were able to devote their time to something much more productive, something that enabled the capital accumulation known as “prosperity”? If given an opportunity that pays more or is less dangerous, would most dawdle in the dirt? When people no longer need to put their health in jeopardy in order to feed themselves, when they’re instead able to develop and devote their skills to more safe and efficient uses, we all get more for less. This is not entirely dissimilar from what’s been oddly perceived as the “crisis” in military recruitment.
For nearly a quarter millennium, patriotic Americans have weighed the benefits of “serving” their country against the inherent risks, and they’ve readily enlisted. But as risk declined in other industries, along with risk tolerances, exponentially advancing technology gave rise to safer and better-paying jobs. In the mind of the paternalists, however, technology somehow meant that more and more high schoolers were needed to produce greater national security.
But doesn’t that fly in the face of rudimentary reason? Since when did the technology that enables specialization require bloated overhead? The only way for this bizarre equation to make any sense is if the parasites’ policies––imposed preferences––invalidate the technological gains. This blunder was easy to cover up for most of the past 250 years, but with the Internet age now in its fourth decade, the charade is not nearly as easy to conceal. Adding insult to injury, the past three years have been more than enough to dissuade the country’s youth from risking their lives for “our democracy.”
At least with the coal industry, the mission is straightforward: “You’re gonna go in this hole and mine for coal.” But with the military, its mission is ripe for debate: “You’re gonna go to this place to protect America the Great.” Oh really? What did they do to us? How is this abjectly poor country a threat to me and mine? Do my fellow Americans want me to fight for their freedom, or have the past three years proven that “freedom” is wildly overrated in the “land of the free”?
Which governor said the following in March 2020? “Everyone is free to go about their business and activities.” Answer: Hassan Rouhani, president of Iran. If the US regime were as benevolent as its sycophants believe, would it need to bribe eighteen year olds with $50,000 to join the military? The past three years have revealed the gerontocracy’s true nature: “Though we’ve exceeded the average life expectancy, we’ll sacrifice your kids if it means lording it over you longer.” Are those in the military serving our country or these geriatric parasites?
The game is up, and with youth choosing to prosper and produce rather than parasitize and destroy, there’s a greater chance that, due to specialization, real problems will be solved rather than manufactured problems being “reformed.” Fewer in the military means more Americans minding their own business, and that will benefit the entire planet. The hand-wringing over recruitment rates being under target distracts from this happy fact: if the troops come home, our government might finally fear the people it allegedly serves, and the rest of the world would breathe easy. Human capital diverted to production means more capital to go around.
The whining over declining rates of military enlistment emanates almost exclusively from the political Right, but the Right also laments the jobs that were sent overseas or “taken” by immigrants. If the troops come home, and if the youth no longer deem killing the world’s poorest to be serving their country, at the very least, wouldn’t their priorities shift? Wouldn’t their trade-off scale be zeroed? And the political Left, aren’t they both antipoverty and antiwar? Hey, I can dream. Less interest in the military means more interest in civilization’s capital accumulation.

As evidenced by a number of recent policy changes in China, Russia, Saudi Arabia, and Brazil, the status of the US dollar as the world’s reserve currency is under coordinated attack. Efforts to dethrone the dollar, however, will require time and luck in favor of antidollar forces. For now, however, the US dollar is the most preferred currency for foreign reserves and for settling international transactions.
The fact that the dollar is the most popular currency right now is no guarantee it will be so into the medium or long run. No currency remains the reserve currency forever, and the US dollar has only been the world’s reserve currency since the 1930s. Before then, the global reserve currency was the pound sterling. But thanks to the World Wars, the costs of a colonial empire, and an increasingly socialistic economy, the British currency was replaced by the dollar.
Understanding what turns an ordinary currency into a global reserve currency can help us understand how the dollar could go into decline and give way to competing currencies. That this will happen at some point is inevitable, and it will happen due to a combination of economics, geopolitics, and domestic political concerns.
What Makes a Good Global Reserve Currency?
We can identify some basic conditions that make it a currency desired by banks, investors, and central banks. Here are the most important ones:
The currency is used frequently in international trade.The currency has a high degree of convertibility.The domestic economy has large and open financial markets.The domestic economy is large.Domestic macroeconomic policies are generally stable and allow economic openness.
Different currencies have met these conditions over time. Sometimes, as Barry Eichengreen and Marc Flandreau have shown, these conditions can be met by more than one currency at once, leading to a period of ongoing competition among two or more currencies. This was the case before World War I, when the German mark, the French franc, and the pound sterling were all in competition. This was later replaced by a decade or more of interwar competition between sterling and the dollar.
The dollar eventually won out, but not only because the US economy became larger than the British economy. Investors and central banks switched to the dollar because the British state was nearly bankrupted by two world wars and because Britain finally abandoned the gold standard in 1931. The United States also abandoned the gold standard, of course—in 1933—but continued growth in the US economy kept the dollar in the running for global reserve currency. Macroeconomic policies were looking worse in the United Kingdom as well. The British state increasingly turned toward an economy based on subsidies, price controls, and other regulations. The US economy also became more regulated, but it remained relatively free. In 1944, the Bretton Woods agreement finally sealed the deal: the dollar had replaced sterling. Under Bretton Woods, the dollar would remain tied to gold for international transactions among sovereign states, and other currencies were only pegged to gold via the dollar.
Bretton Woods did not make the dollar the global reserve currency by decree, however. The new agreement simply “made official” what was already clear about the dollar’s new status as the dominant reserve currency. Decades of war, instability, and monetary inflation had finally done in the currencies of Western Europe. This, coupled with the US’s new status as global industrial powerhouse, set the stage for decades of dollar dominance.
How much longer will this last? It’s true that no currency will hold its position as global reserve currency forever. Yet for now, it appears the dollar continues to fare well. Indeed, when we look at the five key qualifications for reserve currencies listed above, the dollar still has the advantage. This is true even when we compare the dollar to the euro and to the Chinese yuan.
Why Hasn’t the Euro Replaced the Dollar?
The rise of the dollar did not reduce all other currencies to irrelevance. As late as 1995, the Japanese yen still made up nearly 7 percent of foreign exchange reserves. The Deutsche mark was at nearly 16 percent.
Moreover, when the euro—a new currency built largely on the strength of the Deutsche mark—was introduced in 1999, it was thought that the euro would soon compete seriously with the dollar to become the global reserve currency. Yet the euro has continued to lag, although the eurozone includes many of the world’s largest economies and has some of the most sophisticated financial centers. Even more than twenty years since the creation of the euro, the dollar is used in 51 percent of international currency transactions, and the euro is used in only 36 percent. Moreover, the euro makes up only 20 percent of all foreign exchange reserves, while the dollar makes up 58 percent.
If the choice of a reserve currency were based merely on the size of the economy and total use in international trade, one would expect the euro to be much more competitive.
In a 2009 study, however, the US Treasury suggested a reason why the US dollar continues to surpass the euro:
The key factor that may explain the smaller share of the euro as a reserve currency is the size and depth of government bond markets. Although total sovereign debt outstanding in the euro area rivals that of the United States, there is no common euro area sovereign debt market. This reduces the ease with which holders of euro-denominated securities can buy and sell them, compared with U.S. Treasury securities.
The US government bond market is huge and allows a great deal of ease in buying and selling Treasurys, which remain extremely liquid and which are considered by many to be near dollar substitutes.
Moreover, the eurozone does not present much of an alternative to the US in terms of its macroeconomic policies. Deficit spending in the eurozone is enormous, and even though the US dollar is continually subject to monetary inflation, the euro easily rivals the dollar in this respect too. Finally, sovereign debt in Europe doesn’t appear any more secure than sovereign debt in the US.
Why Hasn’t the Chinese Yuan Replaced the Dollar?
The Chinese yuan presents another example of why having a large economy on its own isn’t enough for a country’s currency to seize global reserve status. China in recent years has overtaken the US economy in terms of sheer size. Yet the yuan remains in fifth place in terms of global foreign exchange reserves. As of late 2021, the yuan still ranked fourth in terms of its share of international transactions.
Although the yuan is certainly experiencing a high growth in international trade, it still has a lot of ground to cover. Recent deals with Russia, Saudi Arabia, Iran, and an increasing number of states in the developing world will further this trend, but this will only help China meet some of the requirements for becoming a global reserve currency. The size and scope factors are moving in China’s favor, but problems of openness and convertibility remain. China still employs capital controls, meaning its economy is relatively less open than Western ones. Yes, Western states have long used a variety of quasi controls of their own, but we’re still talking about relative openness here. China has only to be relatively less open than its competitors to fail the “reserve currency test.” Moreover, Chinese government debt markets aren’t nearly as liquid or sophisticated as those of the US. The world is in many ways awash in US government bonds—bought with dollars and still considered extremely “safe”—and this is not the case with Chinese debt. Finally, macroeconomic policies in China present a high degree of potential geopolitical risk. China’s track record of not expropriating foreign capital is not well established or reliable. The long covid lockdowns of recent years in China don’t exactly instill confidence either.
The US Dollar Benefits from Other Currencies’ “Bad Behavior”
In short, the dollar continues to benefit from the fact that no matter how inflationary it becomes, or how hobbled by regulation the US economy remains, the eurozone and China—not to mention Japan and Britain—present trends that often look at least as bad.
Yet the US insists on shooting itself in the foot. In spite of the dollar’s many economic advantages as a reserve currency, the US regime continues to provide many political reasons for other regimes and economies to abandon the dollar. If the US doubles down on economic sanctions and weaponization of the dollar economy, the dollar’s liquidity and widespread usage may not save it.

[April 5 is the 90th Anniversary of Franklin Roosevelt’s executive order banning private ownership of gold. In this selection from Part III of America’s Money Machine: The Story of the Federal Reserve, economist Elgin Groseclose shows how FDR’s executive order was part of a larger effort to deliberately debase the dollar, drive up prices, nationalize gold markets, and default on gold-based bonds. All the while, he claimed the dollar “a generation hence” would “have the same purchasing and debt-paying power.”]
Public sentiment for inflationary remedies and direct monetary management continued to outpace the Administration thinking and during the 73rd Congress numerous bills to this end were introduced. Among them was another bill, by Representative T. Alan Goldsborough, that would have established an independent monetary authority. Roosevelt managed to have this buried on the necessity for further study. Several Senate bills would also have abolished the Federal Reserve Board and created a new monetary authority.
Meantime Roosevelt was coming round to the views of George Warren that the quickest way to restore prices was by raising the price of gold, which would cause a similar movement in the prices of all other commodities. Warren calculated and promised that a 75 per cent increase in the price of gold from $20.67 to $36.17 an ounce would restore prices to the 1926 leve1. He was supported by the influential Committee for the Nation, which was urging a $41.34 price for gold, that is, a 50 cent dollar.
The chronology of the development of the gold policy is of interest. On March 10, the day following the signing of the Emergency Banking Act, Roosevelt had issued an Executive Order prohibiting the export of gold except under license. This had been followed by an Order on April 5, that forbade the private holding of gold and gave the Secretary of the Treasury authority to regulate by license all transactions in gold, both domestic and foreign. On April 20, a further Order terminated the export of gold and took the U. S. off the gold standard. Following the April 20 Order, the dollar began to depreciate abroad; that is, the price of gold began to rise, with the premium going to 23.2 per cent by June 10. At the same time the prices of basic commodities began to move upward, and this was taken as confirmation of the Warren gold-price theory.
On May 12 the Thomas amendment was enacted, which gave the President authority to devalue the dollar by as much as 50 per cent, with corresponding authority to revalue silver.
On June 5, by Public Resolution, all “gold clauses” contained in dollar obligations, excepting currency, were declared to be against public policy; and such obligations, whether or not they contained a “gold clause,” were declared to be discharged upon payment, dollar for dollar, in any coin or currency that was legal tender at the time of payment. The Resolution also declared all coins and currency of the United States to be legal tender.
The gold clause abrogation was pushed through the House in three days (from May 26 when the Resolution was introduced to May 29) and a little longer in the Senate. It represented a profound break in U. S. banking practices. Since the Civil War currency depreciation it had been customary in bond indentures to specify payment of principal and interest in gold coin of “the present weight and fineness.” It had become federal practice by the Act of February 4, 1910, which provided that “any bonds and certificates of indebtedness of the United States, hereafter issued, shall be payable, principal and interest, in United States gold coin of the present standard of value.”
As an estimated amount Of $100 billion of public and private obligations bearing the gold clause were outstanding, it was argued that the clause was meaningless since there was not enough gold in the world for the purpose. That the argument equally applied to all the monetary obligations outstanding in relation to the available money stock carried little weight. The constitutionality of the Resolution was subsequently challenged in the courts and in a series of famous “gold clause” cases the abrogation was sustained.
On July 22, Roosevelt sent his message to the London Economic Conference which practically foreshadowed a competitive debasement of currencies, in his declaration that “the United States seeks the kind of a dollar which a generation hence will have the same purchasing and debt-paying power as the dollar we hope to attain in the near future.”
On October 22, in a radio address to the country, Roosevelt formally launched his famous experiment in lifting the price level by purchasing gold in accordance with the Warren theory. In his address he reiterated that the definite policy of the Government “has been to restore commodity price levels.” He stated that when the price level had been restored, “we shall seek to establish and maintain a dollar which will not change its purchasing and debt-paying power during the succeeding generation.” Stating that “it becomes increasingly important to develop and apply the further measures which may be necessary from time to time to control the gold value of our own dollar at home,” and that “the United States must take firmly in its own hands the control of the gold value of our dollar,” the President announced the establishment of a Government market for gold in the United States. He stated that he was authorizing the Reconstruction Finance Corporation to buy gold newly mined in the United States at prices to be determined from time to time after consultation with the Secretary of the Treasury and the President. “Whenever necessary to the end in view,” the President added, “we shall also buy or sell gold in the world market. ” He continued, “Government credit will be maintained and a sound currency will accompany a rise in the American commodity price level.”
The operations of the program were formalized by an Executive Order on October 25 and were carried out by a special committee consisting of Jesse H. Jones, chairman of the Reconstruction Finance Corporation; Dean Acheson, Under Secretary of the Treasury; and Henry Morgenthau, Jr., then governor of the Farm Credit Administration. Roosevelt, however, took personal charge of the program and he seems to have done so with the enthusiasm of a sports car fan with a new model.
The first offer was set at $31.36, the equivalent of a 66 cent dollar, and the idea was to raise the offer by degrees. The committee met daily at the White House to fix the prices for the day and the amount of the increase seems to have been a matter of caprice. Morgenthau, in his Diary, reports that Roosevelt one morning suggested a 21 cent increase: “It’s, a lucky number, because it’s three times seven.”
On January 17, 1934, the price of gold had been advanced to $34.45 plus handling charges, at which price it was held. Roosevelt now concluded that he needed a stronger legislative mandate for his proposed reform of the currency system and in a message to Congress on January 15 he outlined in comprehensive form the objectives of the new monetary policy. Repeating language he had used to the London Economic Conference, he declared his purpose to be that “of arriving eventually at a less variable purchasing power for the dollar.” Although extensive hearings had been scheduled by the House Committee on Coinage, Weights and Measures, the leadership pushed the bill through the House by 360 to 40, with only one day of debate.
Roosevelt’s gold buying program in many ways marked the divide between his earlier policy of fiscal conservatism and the outright acceptance of managed money, fiscal manipulation and government intervention. It caused the first major shift in his staff of advisers. Dean Acheson resigned as Under Secretary of the Treasury and was replaced by Henry Morgenthau, Jr. on November 17. William H. Woodin pleaded his illness to resign the Secretaryship of the Treasury and was replaced by Morgenthau on January 1. James P. Warburg and O. M. W. Sprague also retired from the scene.

Earlier this month, Senator Mark Warner (D-VA) introduced the Restricting the Emergence of Security Threats that Risk Information and Communications Technology Act, or the RESTRICT Act. The bill is being floated as a possible means for the federal government to ban TikTok over its connection to the Chinese government. However, the RESTRICT Act’s vague language and broad scope has many voicing concerns about the bill’s threat to free speech and freedom of expression.
But, as Murray Rothbard has pointed out, “human rights, when not put in terms of property rights, turn out to be vague and contradictory.” Your freedom to have an opinion does not grant you the right to express that opinion in venues or on media outlets you do not own. But if you pay to give a speech at a lecture hall and the government blocks it, this violation of free speech could be better understood as a violation of property rights. So how would property rights fare under the RESTRICT Act? Not well. The bill would not only block private companies from engaging in legitimate business practices but would further violate the property rights of American citizens and companies through an open-ended digital surveillance regime.
The RESTRICT Act seeks to give the Commerce Department broad new authorities to “identify, deter, disrupt, prevent, prohibit, investigate, and mitigate” information and communications technology products “in which any foreign adversary has an interest, and that pose an undue or unacceptable risk to U.S. national security or the safety of U.S. persons.” The bill defines foreign adversaries as China, Russia, Iran, Cuba, Venezuela, and North Korea, but it allows the Executive to add and drop foreign regimes from the list without oversight from Congress.
The information and communications technology products highlighted in the act are expansive and unspecific. They range from desktop applications, mobile apps, web-based applications, payment platforms, and gaming systems to webcams, Wi-Fi networks, drone cameras, home surveillance systems, and even biotechnology.
It’s worth mentioning that the only real threat the alleged adversarial regimes pose is to Washington’s ability to exert military control over the entire globe. The root of this issue lies in America’s overzealous foreign policy aspirations—not in some irrational wish by these regimes to see American people harmed. The proper way to address these threats is to bring American foreign policy back in line with reality as Washington’s unipolar moment slips away. The RESTRICT Act ignores the root of the problem and instead attacks the rights of the American people.
Our right to property stems first from our right to self-ownership. We alone own our bodies. Any property claim made on our bodies is unethical and impossible. From self-ownership, property can be attained justly through homesteading—mixing one’s labor with unowned land resources. After property has been homesteaded, it can be justly transferred through gifts or voluntary exchange. That is how most property is justly acquired in modern societies.
Unfortunately, we do not live in a perfectly libertarian world. But property rights are still important and, to the extent they exist, must be defended. As such, if a someone wishes to read, watch, or listen to a foreign government—maybe they want to hear both sides of a geopolitical dispute to be better informed—and a website owner is willing to deliver that piece of media to them, it is completely within the rights of both the consumer and website owner to engage in that transaction.
Further, it is the right of those who own the internet service provider, data center, and optical fiber cables to make part of their infrastructure available for the information transfer if they find the price to be worth it. Even if the information originated from or encountered a foreign regime, any third party stepping in to stop this transaction would be violating the right of the individuals involved to control their own property.
The conduct that the RESTRICT Act seeks to prohibit is not a real crime. And beyond that, the state surveillance of private activity necessary to identify the relevant transactions is where the majority of property rights violations will occur. The bill makes numerous references to the use of information gathered by the director of national intelligence. Although we’re told US intelligence agencies focus on gathering information and conducting operations outside of the United States, whistleblower Edward Snowden revealed that agencies such as the National Security Agency conduct mass surveillance of American’s communications. The RESTRICT Act could ratchet this up by extending the surveillance beyond communications to include digital information of any kind. By accessing devices without express permission, the federal government would further violate our property rights.
There is even more of concern. With its vague language, the bill gives the government much leeway in defining what qualifies as illegal information. We’ve already seen government officials and their friends in media conflate antiestablishment arguments with foreign disinformation. They’ve even falsely labelled accurate news stories as foreign disinformation. It’s not hard to see these same people using the powers granted to them by the RESTRICT Act to criminalize certain dissenting views under the guise of counterintelligence.
This awful bill seeks to prop up Washington’s disappearing global military dominance by making certain pieces of digital information illegal. The implementation of the RESTRICT Act would violate the American people’s basic right to control their property—all in the name of thwarting a fake crime. The bill isn’t protecting you from a threat. It is the threat. Don’t fall for it.

Last week, Fox News aired a segment discussing the possibility that the US dollar will cease to be the global reserve currency and what that would mean for Americans. The tone of the piece suggested that a “catastrophic” decline of the US dollar was not only possible, but perhaps even imminent. CNN last week also aired its own segment suggesting the US will face “a reckoning like none before” if the “dollar’s dominance” in the global economy falls significantly.
Much of the analysis was framed to stoke the public’s fears of Chinese geopolitical power, and the Fox segment was especially hyperbolic in its predictions of near-total economic devastation resulting from any movement away from the dollar in international trade and reserves.
Yet both segments are correct that events are piling up that point to at least a gradual decline in the dollar’s preeminence in the global economy and that this could lead to serious economic trouble for Washington. Events are not moving as quickly as the pundits are predicting, but they are moving, and if current trends continue, the United States will find itself facing a new and enduring era of stubborn price inflation and weakening US geopolitical power.
The Beginning of a Trend?
Much of the discussion around the decline of the dollar is framed as a matter of the Chinese renminbi (RMB, or yuan) becoming the global reserve currency. This purported imminent replacement of the dollar with the RMB, however, is not going to happen any time soon. There are many reasons for this. China still uses capital controls, its economy is not nearly as open as the US economy, and US government debt still looks less risky than Chinese debt. Yet we are witnessing a growing trend in the world’s regimes of moving away from the dollar as the overwhelming favorite among currencies used for international trade.
First, there is the recent agreement at the Russia-China summit to carry out trade transactions “between Russia and the countries of Asia, Africa, and Latin America,” as Vladimir Putin put it. This would be quite a change from the status quo in which nondollar transactions make up a tiny portion of international trade settlements. This trend is catching on elsewhere as well. Last month, China and Brazil reportedly “struck a deal to allow companies to settle their trade transactions in the two countries’ own currencies, ditching the United States dollar as an intermediary.” Meanwhile, a French company bought sixty-five thousand tons of liquified natural gas (LNG), meaning “Chinese national oil company CNOOC and France’s TotalEnergies have completed China’s first yuan-settled LNG trade.” Oil giant Saudi Arabia has also repeatedly stated that it’s amenable to opening up its oil trade to currencies other than the US dollar, with an eye toward accepting RMB.
None of this threatens to immediately send the dollar into a tailspin or “collapse.” The dollar’s role in the world economy is still huge, and the dollar remains the most used currency by far. This becomes all the more obvious when we look at how much the US dollar still dominates foreign exchange reserves—which are assets in foreign currencies held on reserve by central banks. These reserves are partly an indication of just how much central banks anticipate dollars will be needed to engage in international trade.
Dollars still make up 58 percent of foreign exchange reserves. That’s far above even the second-place currency, the euro, which is at a mere 20 percent. All other currencies are far behind that. The Japanese yen makes up about 5.5 percent of all reserves, and the pound sterling makes up under 5 percent. The RMB is in fifth place at about 2.7 percent.

Source: International Monetary Fund.
While the RMB is not about to replace the dollar, general movement away from the dollar—in favor of a mixture of other currencies—is indeed in place. In fact, as of the fourth quarter of last year, the dollar made up the lowest percentage of foreign reserves since 1995, falling from 66 percent of reserves in 2014.
Why Does Reserve Currency Status Matter?
Being the country whose currency enjoys global reserve status brings both domestic and international advantages to the US regime.
Domestically, reserve currency status brings a greater global demand for dollars. This means more of a global willingness to absorb dollars into foreign central banks and foreign bank accounts even as the dollar inflates and loses purchasing power. Ultimately, this means the US regime can get away with more monetary inflation, more financial repression, and more debt before domestic price inflation gets out of hand. After all, even if the US central bank (the Federal Reserve) creates $8 trillion in new dollars in order to prop up US asset prices, much of the world will take those dollars out of US domestic markets, and this will reduce price inflation in the US—at least in the short term. Moreover, the fact the dollar dominates in global trade transactions means more global demand for US debt. Or, as Reuters put it in 2019, the dollar is used “for at least half of international trade invoices—five times more than the United States’ share of world goods imports—fuelling demand for U.S. assets.”
Those assets include US government debt, and this pushes down the interest rate at which the US government must pay on its enormous $30 trillion debt. This also decreases the likelihood of a US sovereign debt crisis. Domestically in the US, reserve status for the dollar mutes inflation, lowers interest rates, and enables more government spending.
Internationally, the US government enjoys many benefits from reserve status. For example, the US regime is much more easily able to impose economic sanctions on rival states, thanks to the role of dollars in international trade and banking. Dollars are central to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, which is the main messaging network through which international trade transactions are initiated. In recent years, this control of SWIFT has enabled the US to largely exclude both Iran and Russia from much of the international banking system. The US has also frequently threatened sanctions on a number of countries that have not been quick to accept US primacy in all regions of the world. This power is further enhanced due to a longstanding agreement in which oil-producing Arab states—primarily Saudi Arabia—use dollars for oil transactions in exchange for certain US military commitments. These so-called petrodollars further secure US dominance in the geopolitical realm.
[Read More: “Why the End of the Petrodollar Spells Trouble for the US Regime” by Ryan McMaken]
Weakening Reserve Status Means a Weakening US Regime
Often, discussion about the dollar’s reserve status creates a false dichotomy between total domination of the global monetary system on one hand and complete abandonment of the dollar on the other.
A more likely scenario is that the dollar will weaken considerably but will remain among the most often used currencies. After all, even after the pound sterling lost its status as reserve currency in the 1930s, it did not disappear.
For example, let’s say the US dollar sinks to 40 percent of all foreign reserves and is only used in one-third of all international trade invoices—instead of one-half, as is now the case. This would not necessarily destroy the dollar or the US economy, but it would certainly weaken the US regime’s geopolitical position. As global infrastructure around other currencies grows, it will become easier for regimes and private firms to circumvent US sanctions. Perhaps more importantly, a world less awash in dollars will mean a world with less demand for US assets such as US government debt. That means higher interest rates for the US government and less of an ability to finance elective wars by inflating the currency.
In other words, even a weakening of the dollar’s global demand will limit the US regime’s ability to throw its weight around internationally. This is why in a recent interview with Fox News, US senator Marco Rubio worried that if other countries are using their own currencies in trade, “we won’t be talking about sanctions in 5 years . . . because we won’t have the ability to sanction them.”
This doesn’t require the full collapse of the dollar. It just requires a framework for other currencies. It will take a while, and some attempts will fail. But those frameworks are being built now, and not all of them will fail.
How to Stop the Slide Away from the Reserve Currency
For obvious reasons, then, the US regime wants to maintain the US dollar’s status. If the US regime were motivated to ensure economic prosperity and security for Americans, however, it could easily do so. All that is required is to end the US central bank’s easy-money policies, reduce monetary inflation, and rein in deficit spending. This would immediately buttress both the real and perceived value of the dollar and make the dollar far more attractive as a currency that holds its value. Moreover, the US regime could ensure continued widespread use of the dollar if it stops using the dollar to bully other regimes and wage economic war on every regime that annoys the foreign-policy establishment. Without the dollar’s weaponization—especially with reduced monetary inflation—there is very little motivation to abandon the dollar in favor of other currencies. After all, most other regimes inflate their own currencies at least as much as the dollar and engage in widespread deficit spending. Economically, the dollar remains less turbulent than both the euro and yen.
It’s difficult to see how the US regime will abandon this status quo any time soon, however. Washington is addicted to deficit spending, monetary inflation, and international meddling in the name of US primacy and war. It won’t stop until domestic inflation becomes politically unbearable and foreign states finish building off-ramps from the dollar system.

The panopticon is a hypothetical surveillance and control system first imagined by philosopher Jeremy Bentham in the eighteenth century. It’s envisioned as a tool to control the behavior of a large number of people with as little effort as possible. Here is one description: “The panopticon is a disciplinary concept brought to life in the form of a central observation tower placed within a circle of prison cells. From the tower, a guard can see every cell and inmate but the inmates can’t see into the tower. Prisoners will never know whether or not they are being watched.”
Essentially, the panopticon would function in a similar way to the two-way television sets in George Orwell’s 1984. Orwell described the function of the television sets this way: “There was of course no way of knowing whether you were being watched at any given moment . . . you had to live . . . in the assumption that every sound you made was overheard, and, except in darkness, every movement scrutinized.”
In the past few years, we’ve created a live panopticon–and the Far Left are the ones running it. The panopticon is cancel culture. The guards are the cancelers, an online mob that exacts brutal punishment on those whose sins they can see. You can find story after story of decent people losing their livelihoods for the sin of deviating from Far Left orthodoxy.
Here are a few examples:
In 2020, trans writer Isabel Fall was outed and forced offline after she wrote a short story that critics said was transphobic (Fall published under a pseudonym).Recent college graduate Griffin Green was fired from his software company for the crime of making fun of bodegas (no, really).Bestselling children’s author Gillian Philip was fired from her publisher for changing her Twitter handle to include #IStandWithJKRowling.
These punishments function in part to cow other people who might otherwise be inclined to deviate from approved opinion in similar ways.
The prisoners in this panopticon are ordinary Americans, whose online activity can be viewed at any time by pretty much anyone (including the guards) and who self-regulate in order to protect themselves. A New York Times poll found that “Fifty-five percent of respondents said that they had held their tongue over the past year because they were concerned about retaliation or harsh criticism.”
On a college campus, it’s even worse. Emma Camp noted that “According to a 2021 survey administered by College Pulse of over 37,000 students at 159 colleges, 80 percent of students self-censor at least some of the time.” Socialist writer Freddy DoBoer summed up the whole system: “Correct thoughts are enforced through a system of mutual surveillance, one which takes advantage of the affordances of internet technology to surveil and then punish.”
It’s true that cancel culture isn’t as perfectly widespread as the panopticon that Bentham imagined, in which no prisoner can ever deviate from the guards’ desires. But that’s not for lack of vision. Prominent targets of cancel culture like Jordan Peterson and J.K. Rowling still have careers, but this is in spite of the best efforts of a certain strain of social justice warriors who tried to get them removed from public life.
These folks tried to stop the publication of Jordan Peterson’s book, Beyond Order: 12 More Rules for Life, tried to stop the publication of Rowling’s children’s book, The Ickabog, and launched boycott campaigns against both. In one sense, every time a cancelee rebounds and continues to have a career despite the best efforts of these Far Left activists, it is a failure of cancel culture. It is a sign that the panopticon they’ve built doesn’t operate perfectly.
But we should never let the imperfection of the apparatus distract us from the totality of its end goal. For the most die-hard proponents of this new culture, the goal is a culture in which no one is allowed to deviate from Far Left orthodoxy without suffering punishment.
When we understand that those activists who engage in cancel culture are the guards of the panopticon, we see through one of the central myths of cancel culture. Proponents of this culture are keen to paint themselves as the underdogs: marginalized voices punching up against powerful actors.
Anne Charity Hudley, the previous chair of linguistics of African America at the University of California, Santa Barbara, argued that cancel culture is just about giving marginalized people a voice. “For black culture and cultures of people who are lower income and disenfranchised,” she says, “this is the first time you do have a voice in those types of conversation.” According to procon.org, one argument in favor of this new culture is that it “gives a voice to disenfranchised or less powerful people.” This argument, however, is mistaken.
Cancelers are not disadvantaged people punching up to hold the powerful to account; in many cases, they are themselves the powerful ones. When an online mob gets a recent college grad fired from his first real job for not understanding what a bodega is, it takes a lot of mental gymnastics to say that the mob are the ones who are being marginalized. When professors speak privately about their fear of being canceled for not toeing the ideological line, it’s clear that the Far Left activists they are afraid of do in fact wield substantial power. Cancelers need to reckon with this reality and come to terms with the fact that in many cases, they’re the enforcers of this new system.
The good news is that, unlike a physical panopticon, there are no walls keeping us in our cells. The guards lack guns and bullets. The only tool they have to make us conform is fear, built on past examples of what happened to people who did not conform. When we find the courage to refuse to self-regulate, to say that 2 + 2 = 4 and dare the cancelers to do what they will, the fundamental weakness of the cancelers will be revealed.
We can call their bluff by virtue of the fact that we are many, and they are very few. Faced with a culture that refuses to bend the knee, the cancelers will be revealed for who they are: simply a few regressive souls, stripped of power, who need to accept that disagreement isn’t a sin.

Conservatives have been pressuring “the Liberal government to address what they term a violent crime wave, citing the killings of five police officers in five months and a surge of violence in cities across Canada.” Conservative leader Pierre Poilievre said that violent crime is up 32 percent, gang killings are up 92 percent, and “Police tell us that often they have to arrest the same people multiple times in the very same day because they are released again and again on bail.” Liberal justice minister David Lametti said that “there is a need to restore trust in Canada’s justice system and address Canadians’ worries about recent violence.”
The pathetic performance of Canada’s justice system has been evident for many decades, regardless of which party is in power. While there has been much recent concern about violent crimes committed by individuals released on bail, it has been a standard feature of Canada’s so-called justice system:
During a 33-year period from 1975 to 2008, some 508 criminals who, after extensive psychological testing and interviewing were judged no danger to public safety by the NPB [National Parole Board], were released from prison and in that period killed 557 perfectly innocent Canadians.
Of the 508 killers mentioned, 10 percent were on day parole—they walked out and on the same day killed 49 Canadians. (emphasis original)
This high level of incompetency also infects the other two components of Canada’s justice system, the police and courts. If we define the solving of a crime as the capture and conviction of the perpetrator, regardless of sentence imposed, we discover that roughly 81 percent of homicides are NOT solved by the government, and their track record is even worse with crimes of rape, attempted murder, and robbery.
Democracy Rewards Failure
When we shop for food, clothes, cars, haircuts, electronics, etc., service is linked to payment. If we do not like the product or service that we expect to receive in return for our payment, we are not obligated to complete the transaction because all transactions are voluntary. We can shop elsewhere because competition exists. Therefore, if they want to be profitable, businesses are forced to accommodate our preferences because that is the only way to persuade us to part with our money. Consumers are in control.
In contrast, within the realm of government, consumers are ignored, competition is forbidden, transactions are compulsory, coercion replaces persuasion, and service is severed from payment. The government is in control, and it arbitrarily determines (a) the price to be charged (taxes) for a particular service and (b) the level of service to be provided. Accountability disappears, and perverse incentives arise.
Having stacked the deck in its favor, the government has little incentive to prevent crimes, solve crimes, or rehabilitate criminals because less money allocated to these tasks means more money is available for exorbitant bureaucratic salaries. Likewise, government inefficiency is a magnet that attracts power-hungry politicians and bureaucrats, who promise—yet again—that higher taxes are the solution to reducing crime. Power and money flows to politicians and bureaucrats, while taxpayers continue to pay for third-rate services.
To sum up, the modus operandi of the justice system is a forced extraction of large sums of money in return for various services, without being legally obligated to actually provide these services. Thus, the justice system does not embody sufficient incentives to prevent crimes, solve crimes, or reform criminals with any reasonable degree of efficacy.
However, when someone suggests that these services could be handled more efficiently in the private sector, politicians and bureaucrats claim that essential services will quickly deteriorate if they are subjected to the whims of private entities, who care only about profits. But, as we have seen, private entities can be profitable only if they provide services valued by consumers. So, the real government mantra is this: “We will forbid private entities from earning profits so that we may steal profits from taxpayers.” In other words, it is the politicians and bureaucrats, not private entities, who care only about profits. As Bruce Benson wrote, “The fact that government law has taken over as much as it has is not a reflection of the superior efficiency of representative government . . . It is, rather, a reflection of government’s general purpose of transferring wealth to those with political power.”
Selling Victims Down the River
Contrary to what politicians claim, a criminal does not owe a debt to society, but rather to a specific member of society—the victim. The debt must be paid to the victim by the person who incurred the debt. A system that forcibly extracts resources from other members of society to support government bureaucracies and convicted criminals in government prisons is, as Benson wrote, “a reflection of government’s general purpose of transferring wealth to those with political power.”
Moreover, drugs, rape, and other acts of violence are common in government prisons. This encourages recidivism, not rehabilitation, which guarantees a continual transfer of wealth to these so-called correctional bureaucracies. Meanwhile, victims are rarely compensated.
Before kings and governments monopolized the justice system for their own benefit, the law was in the hands of the people, for their benefit. This was known as customary law (law established in recognition of evolving customs). Under customary law, when an offense was committed, victim restitution, not imprisonment, was expected. The offender must compensate his victim. To facilitate this, most people voluntarily joined mutually beneficial legal institutions based on the concept of reciprocity. This was an effective arrangement that achieved a high degree of restitution.
In stark contrast to the government’s pathetic record of preventing and solving crimes, “victim justice” under customary law actually discouraged individuals from committing offenses in the first place: “If I kill, rape, or steal, I know for certain that a protection agency will be hot on my trail.” Moreover, it was unlikely that dangerous offenders would be released into the community, contrary to what the government does today. Instead, these offenders would likely face capital punishment or permanent incarceration if they work hard enough to compensate their victims and cover the cost of their own confinement.
Customary law is the enemy of democracy. In a democracy, it is illegal for private entities to produce services that would compete with government bureaucracies. In other words, the legality of a specific action is not determined by the nature of the action itself but by whether or not the person initiating the action is a member of the political class.
Thus, equality under the law disappears, political accountability disappears, and politicians routinely make campaign promises that they have no intention of keeping because democracy encourages them to lie. Special interest groups dictate government policy, while regular voters are ignored. The result is high taxation, uncontrolled spending, burgeoning bureaucracies, and massive government debt, all of which falls on the backs of the people whose opinions are routinely dismissed.
The government also enriches its bureaucracies by redefining numerous peaceful activities as crimes, even though there are no victims. Whereas the people, if consulted, might reject these laws because, from their perspective, the cost of enforcement cannot be justified. Wasteful spending is a prominent feature of most democratic governments, where bankruptcy is a foreign concept.
In contrast, firms in the private sector have a strong incentive to control costs because the alternative is bankruptcy. Competition ensures that entrepreneurs are motivated to offer high-quality services that the people want at a price that the people are willing to pay.
Do we want services to be provided by people operating within democratic institutions that extract profits by granting politicians legal authority to steal money from consumers’ pockets without satisfying their preferences?
Or do we want services to be provided by people in an unhampered market, in an environment of open competition, where consumer satisfaction is the only path to profits?

On March 13th, the Pentagon rolled out its proposed budget for Fiscal Year 2024. The results were—or at least should have been—stunning, even by the standards of a department that’s used to getting what it wants when it wants it.
The new Pentagon budget would come in at $842 billion. That’s the highest level requested since World War II, except for the peak moment of the Afghan and Iraq wars, when the United States had nearly 200,000 troops deployed in those two countries.
$1 Trillion for the Pentagon?
It’s important to note that the $842 billion proposed price tag for the Pentagon next year will only be the beginning of what taxpayers will be asked to shell out in the name of “defense.” If you add in nuclear weapons work at the Department of Energy and small amounts of military spending spread across other agencies, you’re already at a total military budget of $886 billion. And if last year is any guide, Congress will add tens of billions of dollars extra to that sum, while yet more billions will go for emergency aid to Ukraine to help it fend off Russia’s brutal invasion. In short, we’re talking about possible total spending of well over $950 billion on war and preparations for more of it—within striking distance, in other words, of the $1 trillion mark that hawkish officials and pundits could only dream about a few short years ago.
The ultimate driver of that enormous spending spree is a seldom-commented-upon strategy of global military overreach, including 750 U.S. military bases scattered on every continent except Antarctica, 170,000 troops stationed overseas, and counterterror operations in at least 85—no, that is not a typo—countries (a count offered by Brown University’s Costs of War Project). Worse yet, the Biden administration only seems to be preparing for more of the same. Its National Defense Strategy, released late last year, manages to find the potential for conflict virtually everywhere on the planet and calls for preparations to win a war with Russia and/or China, fight Iran and North Korea, and continue to wage a global war on terror, which, in recent times, has been redubbed “countering violent extremism.” Think of such a strategic view of the world as the exact opposite of the “diplomacy first” approach touted by President Joe Biden and his team during his early months in office. Worse yet, it’s more likely to serve as a recipe for conflict than a blueprint for peace and security.
In an ideal world, Congress would carefully scrutinize that Pentagon budget request and rein in the department’s overly ambitious, counterproductive plans. But the past two years suggest that, at least in the short term, exactly the opposite approach lies ahead. After all, lawmakers added $25 billion and $45 billion, respectively, to the Pentagon’s budget requests for 2022 and 2023, mostly for special-interest projects based in the states or districts of key members of Congress. And count on it, hawks on Capitol Hill will push for similar increases this year, too.
How the Arms Industry Captures Congress
The $45 billion by which Congress increased the Pentagon’s budget request last year was among the highest levels on record. Add-ons included five extra F-35 jet fighters and a $4.7 billion boost to the shipbuilding budget. Other congressional additions included 10 HH-60W helicopters, four EC-37 aircraft, and 16 additional C-130J aircraft (at a cost of $1.7 billion). There were also provisions that prevented the Pentagon from retiring a wide array of older aircraft and ships—including B-1 bombers, F-22 and F-15 combat aircraft, aerial refueling planes, C-130 and C-40 transport aircraft, E-3 electronic warfare planes, HH-60W helicopters, and the relatively new but disastrous Littoral Combat Ships (LCS), referred to by detractors as “little crappy ships.”
The lobbying effort to prevent the Navy from retiring those problem-plagued ships is a case study of all that’s wrong with the Pentagon budget process as it works its way through Congress. As the New York Times noted in a detailed analysis of the checkered history of the LCS, it was originally imagined as a multi-mission vessel capable of detecting submarines, destroying anti-ship mines, and doing battle with the kinds of small craft used by countries like Iran. Once produced, however, it proved inept at every one of those tasks, while experiencing repeated engine problems that made it hard even to deploy. Add to that the Navy’s view that the LCS would be useless in a potential naval clash with China and it was decided to retire nine of them, even though some had only served four to six years of a potential 25-year lifetime.
Contractors and public officials with a stake in the LCS, however, quickly mobilized to block the Navy from shelving the ships and ultimately saved five of the nine slated for retirement. Major players included a trade association representing companies that had received contracts worth $3 billion to repair and maintain those vessels at a shipyard in Jacksonville, Florida, as well as other sites in the U.S. and overseas.
The key congressional players in saving the ship were Representative John Rutherford (R-FL), whose district includes that Jacksonville shipyard, and Representative Rob Wittman (R-VA), whose district includes a major naval facility at Hampton Roads where maintenance and repair work on the LCS is also done. I’m sure you won’t be surprised to learn that, in 2022, Wittman received hundreds of thousands of dollars in arms-industry campaign contributions, including substantial donations from companies like Lockheed Martin, Raytheon, and General Dynamics with a role in the LCS program. When asked if the lobbying campaign for the LCS influenced his actions, he said bluntly enough, “I can’t tell you it was the predominant factor . . . but I can tell you it was a factor.”
Former Representative Jackie Speier (D-CA), who tried to make the decision to retire the ships stick, had a harsh view of the campaign to save them:
“If the LCS was a car sold in America today, they would be deemed lemons, and the automakers would be sued into oblivion . . . The only winners have been the contractors on which the Navy relies for sustaining these ships.”
Not all members of Congress are wedded to the idea of endlessly increasing Pentagon spending. On the progressive side, Representatives Barbara Lee (D-CA) and Mark Pocan (D-WI) have introduced a bill that would cut $100 billion a year from the department’s budget. That figure aligns with a 2021 Congressional Budget Office report outlining three paths toward Pentagon budget reductions that would leave the U.S. with a significantly more than adequate defense system.
Meanwhile, members of the right-wing Freedom Caucus and their allies have promised to push for a freeze on federal discretionary spending at Fiscal Year 2022 levels. If implemented across the board, that would mean a $75 to $100 billion cut in Pentagon spending. But proponents of the freeze have been unclear about the degree to which such cuts (if any) would affect the Department of Defense.
A number of Republican House members, including Speaker Kevin McCarthy, have indeed said that the Pentagon will be “on the table” in any discussion of future budget cuts, but the only specific items mentioned have involved curbing the Pentagon’s “woke agenda”—that is, defunding things like alternative fuel research—along with initiatives aimed at closing unnecessary military bases or reducing the size of the officer corps. Such moves could indeed save a few billion dollars, while leaving the vast bulk of the Pentagon’s budget intact. No matter where they stand on the political spectrum, proponents of trimming the military budget will have to face a congressional majority of Pentagon boosters and the arms industry’s daunting influence machine.
Greasing the Wheels: Lobbying, Campaign Contributions, and the Job Card
As with the LCS, major arms contractors have routinely greased the wheels of access and influence in Congress with campaign contributions to the tune of $83 million over the past two election cycles. Such donations go mainly to the members with the most power to help the major weapons producers. And the arms industry is fast on the draw. Typically, for instance, those corporations have already expanded their collaboration with the Republicans who, since the 2022 election, now head the House Armed Services Committee and the House Appropriations Committee’s defense subcommittee.
The latest figures from OpenSecrets, an organization that closely tracks campaign and lobbying expenditures, show that new House Armed Services Committee chief Mike Rogers (R-AL) received more than $511,000 from weapons makers in the most recent election cycle, while Ken Calvert (R-CA), the new head of the defense appropriations subcommittee, followed close behind at $445,000. Rogers has been one of the most aggressive members of Congress when it comes to pushing for higher Pentagon spending. He’s a longstanding booster of the Department of Defense and has more than ample incentives to advocate for its agenda, given not just his own beliefs but the presence of major defense contractors like Boeing and Lockheed Martin in his state.
Contractors and members of Congress with arms plants or military bases in their jurisdictions routinely use the jobs argument as a tool of last resort in pushing the funding of relevant facilities and weapons systems. It matters little that the actual economic impact of Pentagon spending has been greatly exaggerated and more efficient sources of job creation could, with the right funding, be developed.
At the national level, direct employment in the weapons sector has dropped dramatically in the past four decades, from 3.2 million Americans in the mid-1980s to one million today, according to figures compiled by the National Defense Industrial Association, the arms industry’s largest trade group. And those one million jobs in the defense sector represent just six-tenths of one percent of the U.S. civilian labor force of more than 160 million people. In short, weapons spending is a distinct niche sector in the larger economy rather than an essential driver of overall economic activity.
Arms-related employment will certainly rise as Pentagon budgets do and as ongoing expenditures aimed at arming Ukraine continue to do so as well. Still, total employment in the defense sector will remain at modest levels relative to those during the Cold War, even though the current military budget is far higher than spending in the peak years of that era.
Reductions in defense-related employment are masked by the tendency of major contractors like Lockheed Martin to exaggerate the number of jobs associated with their most significant weapons-making programs. For example, Lockheed Martin claims that the F-35 program creates 298,000 jobs in 48 states, though the real figure is closer to half that number (based on average annual expenditures on the program and estimates by the Costs of War Project that military spending creates about 11,200 jobs per billion dollars spent).
It’s true, however, that the jobs that do exist generate considerable political clout because they tend to be in the states and districts of the members of Congress with the most sway over spending on weapons research, development, and production. Addressing that problem would require a new investment strategy aimed at easing the transition of defense-dependent communities and workers to other jobs (as outlined in Miriam Pemberton’s new book Six Stops on the National Security Tour: Rethinking Warfare Economies).
Unfortunately, the major contractors are ever better positioned to shape future debates on Pentagon spending and strategy. For example, a newly formed congressional commission charged with evaluating the Pentagon’s National Defense Strategy mostly consists of experts and ex-government officials with close ties to those weapons makers. They are either executives, consultants, board members, or staffers at think tanks with substantial industry funding.
And sadly, this should shock no one. The last time Congress created a commission on strategy, its membership was also heavily slanted towards individuals with defense-industry ties and it recommended a 3% to 5% annual increase in Pentagon spending, adjusted for inflation, for years to come. That was well more than what the department was then projected to spend. The figure that the commission recommended immediately became a rallying cry for Pentagon boosters like Mike Rogers and former ranking member of the Senate Armed Services Committee James Inhofe (R-OK) in their efforts to push spending even higher. Inhofe typically treated that document as gospel, at one point waving a copy of it at a congressional hearing on the Pentagon budget.
“An Alert and Knowledgeable Citizenry”
The power and influence of the arms industry are daunting obstacles to a change in national priorities. But there is historical precedent for a different approach. After all, given enough public pressure, Pentagon spending did drop in the wake of the Vietnam War, again at the end of the Cold War, and even during the deficit reduction debates of the early 2010s. It could happen again.
[Adapted from a longer article at TomDispatch. Reprinted with permission of the author.]

At the end of February 2023, the price of oil (WTI and Brent), Henry Hub and ICE natural gas, aluminum, copper, steel, corn, wheat, and the Baltic Dry Index are below the February 2022 levels.
The Supply Chain Index and the global supply-demand balance, published by Morgan Stanley, have declined to September 2022 levels. However, the latest inflation readings are hugely concerning.
Considering the previously mentioned prices of commodities and freight, if price inflation were a “cost-push” phenomenon, it would have collapsed to 2 percent levels already. However, both headline and core inflation measures, from the Consumer Price Index (CPI) to Personal Consumer Expenditure Prices (PCE) show extremely elevated levels and rising core inflationary pressures.
We have mentioned numerous times that there is no such thing as “cost-push” price inflation. It is only more units of currency going toward relatively scarce goods and services.
The monetary aspect of inflation has been proven on the way up and in the commodity correction. The Federal Reserve’s rate hikes have deflated the price of commodities despite rising geopolitical tensions, supply challenges, and robust demand growth. Rate hikes make it more expensive to store, take long positions, and finance margin calls. Powell offset the entire supply-demand tightness impact on prices.
Governments cannot blame price inflation on Putin’s war or the so-called “supply chain disruptions” anymore. Printing money above demand is the only thing that makes prices rise in unison. If a price rises due to an exogenous reason but the quantity of currency remains equal, all other prices do not rise. A PCE index of 4.5 percent in January 2023 with all the main commodities below the January 2022 level shows how high inflationary pressures are.
Price inflation is accumulated, and the narrative is trying to convince us that bringing down inflation from 8 percent to 5 percent in 2024 will be a success. No. It will be a massive destruction of more than 20 percent of purchasing power of citizens from inflation in the period.
However, rate hikes are not enough. Broad-based money growth needs to come down rapidly. So far, in the United States, broad money growth is flat and has declined to more reasonable levels in December 2022. However, the latest European Central Bank reading of broad money growth in the euro area points to a 4.1 percent increase, which is very high compared to modest gross domestic product (GDP) growth and certainly very high compared with the estimates for 2023.
Broad money growth was too aggressive in 2022 and it may take some time to ease the inflationary pressures to a level that does not make citizens even poorer.
Two recent papers published by the Bank of International Settlements remind us that money growth was the main culprit for the price inflation surge. Claudio Borio, Boris Hoffmann, and Egon Zakrajšek conclude that
a link can also be seen in the recent possible transition from a low- to a high-inflation regime. An upsurge in money growth preceded the price inflation flare-up, and countries with stronger money growth saw markedly higher price inflation. Looking at money growth would have helped to improve post-pandemic inflation forecasts, suggesting that its information value may have been neglected.
(Does money growth help explain the recent inflation surge?). Reis explains that “Inflation rose because central banks allowed it to rise. Rather than highlighting isolated mistakes in judgment, this paper points instead to underlying forces that created a tolerance for inflation that persisted even after the deviation from target became large” (The burst of high inflation in 2021–22: how and why did we get here?)
The supply chain and Ukraine war excuse has vanished, but inflation remains too high. Many market participants want rate cuts and money supply growth to see higher markets, with multiple and valuation expansion. However, rate cuts are very unlikely in this scenario and central banks know they have caused a problem that will take more time than expected to correct.
Governments cannot expect price inflation to correct when public spending is rising, which means higher consumption of new monetary units via deficit and debt.
Citizens are suffering these inflationary pressures via weakening real wage growth added to much higher cost of living as the prices of nonreplaceable goods and services—education, healthcare, rents, and essential purchases—are rising much faster than the headline CPI suggests.
We are all poorer, even if headline price inflation is slightly lower. Slowing inflation growth does not mean lower prices, just a slower pace of destruction of the purchasing power of currencies.
Someone will invent another excuse to blame price inflation on anything except the only thing that causes prices to rise at the same time: printing currency well above demand.

Modern secular society embraces a new religion complete with prophets, crusaders, commandments, contrition, and even a holy land: East Anglia, United Kingdom. These congregants will behave idiosyncratically in the economy. The activist green movement increasingly parallels Western religious structure, even generating a modern version of the medieval Children’s Crusade.
Motivated by hope, the first Children’s Crusade assembled in 1212 under the preteen leadership of two boys countries apart—Stephen of Cloyes (France) and Nicholas of Cologne. One claimed a vision and the other a letter from Christ, sparking a movement to retake Jerusalem from the city’s Muslim conquerors. The boys’ preaching and zealous piety created what some historians have called mass hysteria.
Greta Thunberg of Norway has become a leader of the second Children’s Crusade. “How dare you?” she scolds as she issues press releases and speaks globally, seemingly without adult manipulation, speechwriters, coaches, press managers, or stylists. Into this publicity storm steps a second leader, charismatic young Representative Alexandria Ocasio-Cortez of Brooklyn, New York. A “cool” older sister who galvanizes children’s fear of imminent death, she claimed in early 2019 that “we have 12 years left.” These two figures have many willing acolytes.
The first Children’s Crusade was spontaneous; it carried no papal blessing or church authentication. However, the current movement has Pope John Kerry, resident envoy on climate, who commends the crusade.
Official records and accounts are open to contrasting interpretations, but historians converge on a size for the thirteenth-century Children’s Crusade of between 15,000 and 30,000 participants. Many of these were marginalized people who had neither skill, nor money, nor weapons to recapture Jerusalem. Children had the largest representation.
The populace during the first Children’s Crusade was ripe for naïve solutions. Prior crusades had gained Jerusalem but failed to hold it. Believers wanted blessings from the relic of the true cross; pleasing God, Jerusalem would be wrested from the infidels. The citizenry had been taught from the crib that crusaders were heroes and that anyone losing their life on crusade would be rewarded in heaven. Lacking prospects in the nasty, brutish, and short life of the underclass, these crusaders may have been desperate.
In 1212 thousands were led across the Alps to Italy, with many dying along the way. Those surviving the trek expected the Mediterranean to part like the Red Sea. Some marched on to French Mediterranean ports to embark for the Holy Land; many were lost at sea or sold into slavery.
The second Children’s Crusade officially dawned in Senator Diane Feinstein’s office on February 23, 2019. Children as young as seven years old from the Sunrise Movement pleaded with Feinstein to immediately adopt new, green ideas, so they would still be alive twelve years later. They demanded that Feinstein look at their faces as future victims (not you, Diane, you’re old) of climate/global change/warming. She responded, “You didn’t vote for me.”
Today’s climate prophets preach inconvenient truths. There is a doctrinal revelation (via science) that must influence daily life. There is a dogma of procedural remedies, with wind and solar as its catechism. And there are traditional struggles for virtue against the omnipresent and seductive sin of Oil.
With no hope for the future, believers adopt tribal behavior rules. Zealously embracing the new tenets allows virtuous scolding of outsiders. Outrageous acts against culture and history are praised: soup poured on priceless art, hands glued to museum walls, “die-ins” staged to block traffic, and milk poured out in resistance to global warming. Student walkouts solidify tribal status.
In June 1989, a “senior” United Nations environmental official predicted that if the trend were not reversed by 2000, entire nations could disappear. In 2006 Nobel Prize–winner Al Gore predicted that in ten years the Earth could be a “frying pan.” Alexandria Ocasio-Cortez thinks humans could be extinct in twelve years.
The second Children’s Crusade mirrors the first in many ways. Environmental fears have been taught in twenty-first-century schools since kindergarten. There is frustration with the lack of progress in addressing climate change. There is fear, leading to desperation; the children are considering how short their lives will be. Covid isolation has made socialization difficult and the future unappealing. Long-term goals of education and family formation are dissipating. There is only now for this generation’s spending.
Meanwhile, as the ice disappears in Greenland we find Viking bones and artifacts. Polar bear populations have increased in some places and are stable in others. Hunting artifacts are being exposed in melting Alaskan and Norwegian glaciers. Are we heading toward a cooling period, yes or no? Will solar minima slow the arrival of our doom?
This panicked rush to the doors focuses on elimination of carbon emissions without the help of the three largest developing economies; we will not reach the heaven of Carbon Zero. We are ignoring geoengineering efforts to mitigate suspected warming. Efforts like no-till farming, open-field grazing, feldspar applications to fields, and planting trees to rebuild the carbon sink could contribute toward a planned, cost-effective mitigation.
Parents in 1212 locked their children at home to prevent them from being swept up—in a Pied Piper moment—in the Crusade and its speciousness. In 2023, especially after the early covid predictions, parents need to take their children aside and teach them to be suspicious of these precise predictions of climate doom.
Generation Z citizens need to take a flinty look at the climate debate. From Robert Malthus 225 years ago to global cooling alarmists of the early ’70s to doomsayers of the twenty-first century’s global climate change panic, predictions have not been challenged adequately. The current dialogue labels disagreement with the new green religion precepts as heretical.
Today’s crusade is drawing from a pool of distressed teens. Psychologists are alarmed at the rate of suicidal ideation and attempts in this generation. Among adolescents aged twelve to seventeen in 2020, 17 percent (or 4.1 million people) had had a major depressive episode in the past year. Twelve percent of that same age group had had serious thoughts of suicide. Fifty-five percent of the female high school population had reported feelings of hopelessness.
Jonathan Haidt of the New York University Stern School of Business commented to the Wall Street Journal on Gen Z’s high anxiety profile, concluding that they are “‘less likely to swing for the fences, . . . start [their] own company. . . . I hear from a lot of managers . . . that it’s very difficult to supervise their Gen-Z employees, that it’s very difficult to give them feedback.’ That makes it hard for them to advance professionally by learning to do their jobs better.”
The threat of incineration interrupts the American Dream and may underlie “quiet quitting” trends. This fear will affect education, the economy, and family formation.

Despite the massive intellectual feat that Marx’s Capital represents, the Marxian contribution to economics can be readily summarized as virtually zero. Professional economics as it exists today reflects no indication that Karl Marx ever existed.
—Thomas Sowell
If socialists understood economics they wouldn’t be socialists.
—F.A. Hayek
Karl Marx is a very popular name in social sciences. As a scholar of the nineteenth century, he is still a part of political discussions today. He was born in Germany and later shifted to London where he lived with his family in exile. Marx was a sociologist and philosopher, but some also see him as an economist. This article is a rebuttal to such thoughts.
Economics simply deals with the problem of the allocation of resources. As resources are scarce, they need to be allocated efficiently to the people in society who are involved in such activities. Economics is the science that deals with the problem of resource allocation in society, which makes it a social science. Nobody has the capability to allocate these resources; thus, it is best done by the market mechanism, the so-called invisible hand.
Most economists believe that the market mechanism allocates resources, and the works of Ludwig von Mises and F.A. Hayek in the calculation and knowledge problem play a big role in understanding that point. But Marx strictly didn’t believe in the market mechanism. His major problem was with capital, but ever since Adam Smith’s era or even before, the fundamental terms of economics include capital, saving, investment, prices, money, supply, demand, consumer, entrepreneurship, profit, etc., which Marx either criticized or ignored.
While Marx’s ideas would have been discussed in economics in an earlier era, today they are nowhere to be found. An economy needs profit and capital as these factors establish consumer sovereignty and enhance productivity. Marx saw profit as a rate of exploitation. According to Marx and his followers, the workers’ work and the profit are mostly taken by the capitalist just because he is the capital owner.
Marx clearly ignored the risk involved in a competitive market, as capital accumulation is uncertain and not all investments are converted into capital. It requires risk-taking and skill to be an investor in a competitive market.
Marx also says that an increase in technological advancements replaces the workers and increases the rate of profit for capitalists. This belief originated when computers were newly introduced in India, which led to mass protests by communists who went on to destroy the computers. Today, the service sector is a major contributor to the Indian economy, and the IT sector is booming and creating more employment opportunities. The IT sector contributes to the service sector both directly and indirectly. The computer that would once take away jobs is now a major hope for employment in India. Not only does it provide jobs, but it also provides better and more skilled jobs than were available earlier.
Technological advancement also increases productivity. When output increases, employment increases, not the other way around. Marx used a static model, and in such models, one can easily form equations or make predictions. But in reality, people aren’t static. Marx ignored the essence of entrepreneurship and consumers in the market. His focus was only on workers and the evil bourgeoisie, and he didn’t realize how consumer choice directs market processes.
What a person deserves to earn can’t be decided by anyone—certainly not a politician or an intellectual. It is assumed that a capital owner isn’t working, but their decisions need local knowledge of time and place which cannot be formed easily. Marx only saw one side of the coin, ignoring the fact that the owner of capital has a possibility of losses too.
But Marx’s complaint is only against profit. If an owner faces loss, then the worker would still be receiving his wages and can also change his workplace. Profit is uncertain, but the wages and salaries are certain; therefore, for the owner there is more risk and more gain. Hence, the subjectivity of these matters needs to be respected. The profits don’t come easily and when they do, a share of them is invested, which opens more job opportunities.
It is true that in the case of cronyism, there is unfairness. Despite being a capitalist system, the essence of competition and consumer sovereignty is lost. Marxists have been opponents to this, but unlike free-marketers, they prefer more regulation of the market. Their approach is unrealistic, which has already been proven by economists like Mises and Hayek.
The argument against socialism has developed from an incentive problem to a calculation and knowledge problem, as well as a self-interest problem. Not surprisingly, socialists have still not been able to deal with these arguments and rather try to escape them in name of “morality.”
Also, socialists haven’t developed their arguments from beyond the aesthetic feature of socialism, which, unfortunately, deceives laymen from looking at the big dark hole inside the ideology. It is sad that with more failures of socialism in history, there have been increasingly more followers of a figure like Marx. Marx’s theories might be part of discussions in political science or sociology, but his contributions to economics are next to none.
Economics deals with how things are, not how things should be. Karl Marx was a thinker, for which he is respected, and the fact that he was able to articulate his thoughts is commendable. After that, however, his conclusions were not true, and putting them into practice brought misery and death. Let nobody deceive you: Karl Marx cannot be considered an economist in this or any other era.

The Federal Reserve’s Federal Open Market Committee (FOMC) on Wednesday raised the target policy interest rate (the federal funds rate) to 5.00 percent, an increase of 25 basis points. With this latest increase, the target has increased 4.75 percent since February 2022.
However, with an increase of only 25 basis points, the March meeting is the second month in a row during which the Fed has pulled back from its more substantial rate hikes of 2022. After four 75-basis-point increases in 2022, the committee approved a 50-point increase in December, followed by a 25-point increase in February, and another on Wednesday. 

Although CPI inflation remains at or above six percent, the FOMC has slowed down in its monetary tightening over the past two months. At Wednesday’s press conference, Fed chairman Jerome Powell moved further into dovish territory.
We should expect more of this as the year wears on. Although CPI inflation remains well above the Fed’s two-percent target, recent bank failures will put the Fed under pressure to force interest rates back down so as to give banks better access to cheap liquidity. In other words, the Fed will have to choose between helping bankers on the one hand and reducing inflation for regular people on the other. Experience suggests the Fed will side with bankers and will thus move back in the direction of easy money even as inflation continues to drive up the cost of living. 
The Fed Can’t Keep Tightening and Also Protect Banks 
The FOMC’s retreat to 25 basis points was expected in light of this month’s bank failures and nascent financial crisis which became obvious with the failure of Silicon Valley Bank on March 10. This was the largest bank failure since the 2008 financial crisis, and is the second-largest bank to fail in the United States. On March 12, Signature Bank failed as well. 
In order to prop up the banking sector in the wake of these failures, the Fed is unlikely to continue with much more than token monetary tightening. Here’s why: 
As SVB and Signature Bank failed, depositors who exceeded the $250,000 maximum for FDIC deposit insurance were poised to lose the entirety of their deposits above the maximum. In the case of both banks, this was the lopsided majority of depositors. Many policymakers became fearful that system-wide concerns over bank failures among depositors would cause mass withdrawals from the banking system—especially among smaller banks. 
This would have pushed even more banks toward insolvency, and would have been highly deflationary. In what has become nearly normal since the 2008 bailouts, both the Treasury Dept and the Federal Reserve sought to intervene in markets to backstop banks and provide a de facto bailout. This came in the form of a March 12 joint announcement from both Treasury and the Federal Reserve that virtually all deposits—regardless of the $250,000 legal limit—would now be guaranteed. Federal policymakers claimed that this would be financed by FDIC fees, but this is clearly wishful thinking since total deposits at US banks exceed FDIC funds by about $18 trillion. Moreover, the Fed has promised to further prop up bank portfolios by allowing banks to receive loans against collateral at fancifully high par values, rather than at market value. 
[Read More: “Yes, the Latest Bank Bailout Is Really a Bailout, and You Are Paying for It.” by Ryan McMaken]
Yet, even with these new special favors doled out to bankers and wealthy depositors, banks will continue to head toward even more precarious positions if the Fed continues to allow market interest rates to head upward. 
The Fed’s Low-Interest Bubble
Thanks to more than a decade of negative and near-negative real interest rates, the banking sector has become extremely reliant on business models that assume extremely low interest rates. If interest rates continue to head upward, banks will increasingly find themselves in a position of having to pay out interest at higher rates than they can collect on the older low-interest assets on teh banks’ balance sheets. In other words, banks will find themselves with negative cash flow and will become insolvent. 
[Read More: “How Easy Money Killed Silicon Valley Bank” by Daniel Lacalle]
Moreover, even if the Fed pivots back toward easy money, many banks will continue on the road to failure anyway, and this will necessitate new bailouts via the sorts of quantitative easing we saw after 2008. That too will require lowering interest rates to be sustainable beyond the very short term. 
Considering the fragility of the financial system, and the potential need for more bailouts, it’s hard to see how the Fed can really continue with the ongoing quantitative tightening that Powell has repeatedly claimed he will support.
How the Fed Got More Dovish on Wednesday 
We can already see how the Fed is backing off from Powell’s relatively hawkish talk over earlier months. For example, in February’s press release, the FOMC noted:
The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.
In contrast, this is what Wednesday’s statement reads: 
The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.
We see that “increases” has become “firming”—i.e., holding steady on increases—while “will be” has become “may be.” “Ongoing” has become “some.” In the press conference, Powell explicitly noted that readers should focus on “some” and “may” as the key part of this sentence. 
As has been the case since the Fed abandoned forward guidance and any attempts to claim it has a long-term plan, the FOMC was sure to state “the Committee will continue to monitor the implications of incoming information for the economic outlook.”
In other words, FOMC policy and outlook could change at any time. 
In spite of the FOMC’s clear lack of commitment on any particular policy, many will continue to look the FOMC’s “dot plot” (in the Summary of Economic Projections or SEP) as indicators of future Fed policy. In Wednesday’s new SEP, the dot plot suggested that all but one member of the FOMC say they expect the target interest rate to remain above five percent this year. All but four members say they expect the target rate to remain above four percent through next year. 
For those looking for reliable information on the future, however, they’ll find little of it in the SEP. Experience makes it clear there is very little correlation between what Fed officials say will happen, and what actually does happen. After record breaking amounts of monetary inflation in 2020 and 2021, Fed economists were still insisting that price inflation would be no problem and would be “transitory.” Numerous Fed economists from Neel Kashkari to Jerome Powell continued to state that the Fed should keep interest rates low well into 2022, or even into 2023.
They were wrong about both inflation and Fed policy. There’s no reason to assume that FOMC members provide a reliable gauge of future policy.
Moreover, the SEP’s predictions of future economic conditions read more like an attempt at calming fears over recession and inflation. For example, the SEP predicts the US economy will grow by 0.4 percent in 2023, and 1.2 percent in 2024. In other words, the SEP is clear that if there is any recession in 2023, it will be neither long nor deep. The SEP also takes it as a given that inflation will come down substantially in 2023, predicting a median rate of 3.3 percent in PCE inflation. It’s hard to not read this as wishful thinking, and it would be very much in character for the Fed which tends to paint a rosy picture of the economy until recessions become undeniable. 
Not surprisingly then, Powell at Wednesday’s press conference continued the Fed’s policy of fixating only on the relatively innocuous employment data while ignoring a number of other economic indicators that point to recession. Moreover, when asked about the likelihood of a “soft landing,” Powell insisted it is still possible, and concluded it is “too early to say whether these events [i.e., bank failures] have had much of an effect.”
Unfortunately for ordinary people who are seeing real wages fall, the Fed is being careful to keep the door open for more bailouts and financial repression in the interest of bailing out Wall Street and the financial sector yet again.
What remains unclear is whether the Fed will favor bankers by forcing interest rates back down, or simply by turning to bailouts once a financial crisis is obvious. Or, it could be a mixture of both. In none of these cases, though, is the Fed committed to any real efforts to bring inflation under control. Unless the Fed does more to rein in inflation soon, a likely outcome will be recession plus price inflation. This sort of stagflation would be devastating to American households. I have no doubt, however, that bailed-out bankers and wealthy depositors will weather the economic storm much more easily.

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A key principle in understanding Austrian economics is seeing the inefficiency of government spending. In an era of overbearing states and reckless fiscal policy, this principle must be emphasized repeatedly. Politicians might claim the best of intentions when dishing out funds for military defense, social welfare, and public works. Their civil servants might try to realize these plans efficiently and thriftily.
However, the very nature of government spending goes against sound economics because government does not subject itself to the rigors of the free market. The latter operates according to a system of profit and loss, which enables entrepreneurs to use market prices as a guide to invest their limited capital rationally. Those who do this satisfy their consumers and earn a profit; those who do not suffer losses that force them to overhaul their business model or close down.
Governments escape this efficiency test because of their ability to draw money from taxes, a seemingly bottomless well of capital. Knowing that they can always fall back on tariffs and the taxpayer, politicians are liable to mandate outlandish policies that bureaucrats carry out with appalling wastefulness. As the great economist Murray N. Rothbard notes, this phenomenon makes inefficiency “inherent in all government enterprise” (emphasis in original).
Among the starkest examples of government inefficiency in modern times is Joseph R. “Joey” Smallwood’s premiership of the Canadian province of Newfoundland (now officially known as Newfoundland and Labrador). Premier from 1949 to 1972, Smallwood was the most consequential statesman Newfoundland has ever produced, having been the driving force behind its joining Canada in 1949. A considerable influence in federal and provincial politics, he also built a substantial international reputation.
Smallwood’s chief goal was to modernize Newfoundland. The province was heavily reliant on its fisheries, whose outports often used antiquated technology and whose saltfish export trade was bringing in poor returns. Chronic unemployment had stalked Newfoundland for years. Most fishermen struggled to make ends meet, and there were few alternative means of employment. Ambitious young people, seeking a better life, were emigrating in droves.
Smallwood sought to overcome these difficulties through audacious government programs. The Canadian federal government had given the new province a cash surplus of approximately $45 million. Proclaiming that Newfoundland must “develop or perish,” Smallwood invested this money in new industries. In the 1950s, over a dozen manufacturing plants were established in Newfoundland, some built directly by the government and others having received loans.
At first, it all seemed quite promising. But as the commentator Harold Horwood remarks, Smallwood was ill versed in mathematics and had previously failed as a small businessman. He was therefore reckless with his finances even by the standards of government leaders.
As the Newfoundland and Labrador Heritage Website notes, some of Smallwood’s manufacturing plants relied on expensive imported raw materials, which virtually doomed them to economic loss. Even those that utilized local materials frequently struggled to find a secure market for their products since the province’s market was rather small and the Canadian and international markets were extremely competitive. Despite handsome government support, many of the industries folded quickly, taking with them much of Newfoundland’s cash surplus. Those that survived could provide employment only for a select few.
If a commercial company wished to stay in business after such setbacks, it would urgently have to rethink its commercial strategy. But Smallwood’s government could rely on taxpayer money for assistance. Thus, he continued to endorse poorly conceived development projects. In the late 1960s, for example, Smallwood supported the building of an oil refinery at Come By Chance. The result, the Heritage Website notes, was an economic disaster.
Although he cannot be blamed for the international 1973 oil crisis, the fact that there were already refineries in eastern Canada by this time prevented the Newfoundland refinery from becoming the economic miracle that Smallwood expected. It closed in 1976, having run up around $500 million in debt.
Another example is Smallwood’s establishment of a paper mill in Newfoundland. Because the island already boasted two paper mills, it was decided to base this third one on the mainland in Labrador. Labrador had the requisite forests, but as the Heritage Website points out, its territory was underdeveloped and key waterways were frozen for much of the year. These factors, which any half-decent entrepreneur would have spotted, made its construction ridiculously expensive—approximately $155 million. As one might expect, the venture proved to be economically unsustainable.
Smallwood’s modernization of the fisheries was also dogged with incompetence. For instance, in December 1949, Smallwood was conned by Icelandic fishermen (or men pretending to be Icelanders) who promised to breathe new life into Newfoundland’s fisheries if the government gave them money to purchase some modern herring boats.
Without properly checking their identities, Smallwood enthusiastically gave them a sizable $412,000. The Icelanders (or pretenders) acquired some obviously old vessels, caught a few token fish, and then disappeared—taking the government’s money with them. Smallwood never got these funds back. Indeed, as Smallwood’s biographer states, he lost even more money trying to recuperate part of his loss by selling the old boats. They remained unsold for three years until “a buyer . . . paid $55,000 for them—a sum he was able to afford by way of a government loan.”
Much more could be said about the failed policies of Smallwood’s government. Nevertheless, the evidence already provided illustrates well enough the incisiveness of the Austrian critique of government spending. Smallwood had good intentions, but as a government leader directed by political goals, he pursued projects recklessly and inefficiently. When they failed, he simply moved on, knowing that greater taxes could be levied to cover the debts.
Supporters of Austrian economics have protested the fallaciousness and injustice of this behavior for years. The fact that governments around the globe continue to act like this makes it imperative to continue such protests.

During the past few weeks, Donald Trump has been releasing some of his proposals if he were to win the election in 2024. While many of his positions pose great danger to personal liberty, such as his plan to “end crime and keep Americans safe,” his proposals on tariffs are up there in terms of ignorance.
In a video posted on February 27, Donald Trump released his plan to “end our reliance on China.” In the short video, Trump claims that his plan would increase American jobs by the millions and remove our dependence on China. The Trump War Room twitter account proclaimed he would “revive Mercantilism for the 21st Century.”
Trump’s promoting of tariffs is disastrous for the economy. The increase in the costs of production manipulates competition as it leads to people spending more money on a product than they otherwise would have. People would be better off buying products in their self-interest at the cheapest cost.
Let us say America were to propose a tariff on a sweater company from Britain to incentivize American made sweaters. Since the tariff can be altered so high that if forces Americans to buy domestically, the prices of the American sweaters would be expensive since the demand for American made sweaters skyrocket. The extra money a consumer lost due to the tariff could have gone somewhere else in the economy.
If the tariff were to be exponentially higher and the hypothetical industry were to be started, it would need workers. If this new company needed 30,000 workers, it would need to come out of another sector of the economy. Therefore, no net gain is achieved.
Sadly, Trump did not understand this economic concept when he came into office in 2017 and still does not. Trump wasted no time and increase tariffs to boost domestic growth. His tariffs did not accomplish this.
In a report conducted economist Erica York of the Tax Foundation, the tariffs imposed nearly $80 billion worth of new taxes on Americans, equivalent to one of the largest increases in decades. They also reported that his tariffs reduced long-rung GDP growth by 22 percent, wages by 14 percent, and full-time equivalent jobs by 173,000.
The tariffs implemented in 2018 and 2019 have led to direct burden and deadweight loss, according to numerous economists from academia. In fact, the amount of burden costed was roughly $800 per household
Industries also took big hits as well. Aaron Flaaen and Justin Pierce found that the tariffs were associated with “relative increases in producer prices via raising input costs.” Between February 2018 through January 2020, the tariffs were estimated to cost American companies $46 billion, and exports of goods hit have fallen sharply.
The claim that Trump would bring mercantilism to the 21st century clearly shows Trump’s lack of economic history. Mercantilism, as defined by Murray N. Rothbard, is “a system of statism which employed economic fallacy to build up a structure of imperial state power, as well as special subsidy and monopolistic privilege to individuals or groups favored by the state.”
Thanks to this policy, monopolies such as the East India Company and the French East India Company were formed. Countries such as Great Britain adopted these policies, and it cost them economic growth and freedom of colonial business.
Further consequences were seen in the tax revenue used to build the power of the English government, along with the” multiplying of the royal bureaucracy needed to administer and enforce the regulations and tax decreed,” according to Thomas J. DiLorenzo. The consumers lost out on the government restrictions on production on top of hampering the division of labor imposed by the bureaucrats.
It was only after Britain extended the trading market that economic growth could be achieved. According to Professor Robert Allen, the expansion of international trade led to Britain’s “high wage, cheap energy economy, and it was the springboard for the Industrial Revolution.”
Eventually, free trade began to flourish as countries saw high economic growth and reductions in poverty. Countries such China embraced free trade after decades of failing communism, including with America. Both sides benefited from free trade, benefits that gives American an extra $260 of extra spending a year, according to economists Xavier Jaravel and Erick Sager.
America has seen great benefits from free trade over the last several decades. According to a report published by the Peterson Institute for International Economics, the payoff for American trade between 1950 and 2016 was at $2.1 trillion. This increased the GDP per capita by around $7,000 and GDP per household to $18,000.
Companies also see great benefits as well. Almost 11 million jobs are depended upon the export of American goods and services, as well as foreign direct investments.
Despite all the great benefits from free trade, people like Donald Trump continue to ignore basic economics and instead implement disastrous economic ideals.

It’s the weekend, but our fresh Financial Crisis does not sleep. And a recent study says we’ve only seen the tip of the iceberg.
The Washington Post yesterday wrote: “If banks were suddenly forced to liquidate their bond and loan portfolios, the losses would erase up to 91 percent of their combined capital cushion.” In other words, we were already right up against the edge.
The Post cites two studies that total unrealized losses in the system are between $1.7 trillion and $2 trillion. Total capital buffer in the US banking system: $2.2 trillion. That’s about a 10 percent to 20 percent buffer. And now running into a market crisis where bank stocks have declined by about a third in the past few weeks, and are now at a P/E ratio of 7.35.

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Meanwhile, the Wall Street Journal last week wrote about a brand new study from Stanford and Columbia finding 186 banks are in distress — possibly to the point of seeking a bailout. The study estimates that hundreds of banks are in worse shape than SVB: hundreds have larger losses than Silicon Valley Bank, and hundreds have lower capitalization buffers in case of distress than Silicon Valley Bank.

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How did it Happen?
In short, while tech bros and loose bankers hog the headlines, what drives hundreds of banks to the edge is our crony banking system.
In this case, rapid Fed rate hikes crashed into a banking system that fractional reserve banking and the Fed’s “Lender of Last Resort” (LOLR) permanent bailout have driven to permanently drive as fast as possible, as close to the edge of the cliff as possible.
Together, the moral hazard has given a green light to those reckless tech bros, to those loose bankers who hand out millions — it turns out hundreds of billions. And it drives the entire banking industry to use opaque accounting tricks to hustle sleepy regulators and innocent taxpayers and dollar-holders who get stuck with the bill. The bankers themselves sleep like babies because they know you’ll cover their losses, but they keep their wins.
What turned this rigged casino into a crisis is in the past year the Fed hiked rates at the fastest pace in 50 years, from 0 percent last March to 4.5 percent to 4.75 percent today. They did this in a desperate bid to cancel the inflation they caused by financing $7 trillion in deficit spending and Covid lockdowns. Indeed, those of us who wondered why voters stood by meekly had only to look at the flood of money going out the door.
These reckless hikes savaged long bond prices, by far the most popular asset in bank vaults: Across the board, long bonds fell 20 percent, feeding an estimated 10 percent plunge in all bank asset values. In essence, the bank thought it had a dollar in the vault, but turns out it only had 90 or 80 cents. In the case of high-flyers like Silicon Valley and potentially hundreds more, it was more like 60 cents. Few banks can survive that.

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What’s Next
This slow-motion train-crash is now making contact: Last week $152 billion in loans went out the Fed’s discount window — the discount window is where desperate banks go when nobody else will lend, like a junkie selling the TV.
That dwarfs even the worst of the 2008 crisis at $111 billion. Keep in mind back then was months into the alleged financial crisis of the century. Here we passed it at week one.
What’s next? Probably a lot of pain and a lot of inflation. We the People will survive — after all, the real assets don’t vanish: the food, cars, and electricity are all there. It’s a paper crisis, but unfortunately that paper crisis has sucked real Americans in, suckered them into putting their life savings into the care of a bunch of degenerate gamblers in expensive suits. And it can bring enormous collateral damage to the wider economy that, yes, provides that food, cars, and electricity if government steps in, as it usually does.
Concretely, I’d expect trillions of dollars in bailouts, driving inflation back towards last year’s highs, perhaps even into double digits. This while the economy careens into recession, indeed into stagflation. The Fed will abandon the inflation fight it started, opting instead to bailout the bankers who it serves. And We the People, as always, will pay the tab: for the bailouts, for the inflation, for the stagflationary crisis that’s looking increasingly likely.
How to protect yourself? If we’re headed for a crash, you want hard assets — Bitcoin if you understand it enough to hold in a storm, gold if you don’t. Periods of chaos drive big swings in markets and prices, so you’ll be tempted along the way into equities and bonds. But going by the principle that the first goal of investing is being able to sleep at night, I’d probably keep the powder dry until the smoke clears.
What do you guys think — how will this pan out? Does it get to the cat food stage or just down-budgeting from Beyond Meat to dog food? And let me know what you’d like to hear in future posts and future videos.
See you next time!
This article first appeared on Peter’s Substack page.

How should Congress assess the Federal Reserve’s track record as an investor in residential mortgage-backed securities (MBS)? Regardless of Fed spin, it merits a failing grade.
The Fed’s COVID-era intervention in the mortgage markets fueled the second real estate bubble of the 21st century. The bubble ended when the Fed stopped purchasing MBS and raised rates to fight inflation. While time will tell whether recent increases in home prices are reversed, the end of the bubble has already cost the Fed over $400 billion in losses on its MBS investments.
From 1913 until 2008, the Fed owned precisely zero mortgage-backed securities. While the Fed’s monetary policy decisions still impacted conditions in the housing and mortgage markets, they did so indirectly through the influence the Fed’s purchases and sales of Treasury securities had on market interest rates.
In a radical “temporary” policy response to the 2008 financial crisis, the Fed began intervening directly in the mortgage market. Through a series of MBS purchases, the Fed’s MBS portfolio ballooned from $0 to $1.77 trillion by August 2017. The Fed subsequently altered policy and slowly reduced its MBS holdings. By March 2020, it held about $1.4 trillion in MBS.
When the COVID crisis hit in March 2020, the Fed decided to reinstate its 2008 financial crisis rescue plan. It resumed purchasing MBS as well as Treasury notes and bonds. By the time it stopped its purchases in the spring of 2022, it owned $2.7 trillion in MBS. The Fed had become the largest investor in MBS in the world. By spring 2022, it owned nearly 22 percent of all 1-to-4 family residential mortgages in the U.S. By Sept. 30, the date of the last available quarterly Fed consolidated financial statement, the Fed had lost $438 billion on its MBS investments. These losses will increase if the fight to subdue inflation requires still higher interest rates.
Because most buyers borrow 80 percent or more of the purchase price of a home, house prices are sensitive to the level of mortgage interest rates. Low mortgage rates increase the pool of potential buyers, stimulating housing demand. If the interest rate stimulus is overdone, excess demand will push up home prices. High mortgage interest rates have the opposite effect. They dampen demand, dissipate upward pressure on home prices, and in some cases, lead to home price declines.
As one might predict, the Fed’s massive MBS purchases coincided with large reductions in mortgage interest rates. During the Fed’s COVID MBS purchase campaign, the national average 30-year mortgage interest rate fell to a low of 2.65 percent in January of 2021. Today, with the Fed’s campaign of higher interest rates to battle inflation, 30-year mortgage interest rates are hovering around 7 percent. This change in the mortgage interest rate alone would cause monthly principal and interest payments on a same-sized mortgage loan to increase by 65 percent.
Predictably, the decline in mortgage interest rates stimulated housing demand and pushed up home prices. Government statistics report that, from January 2018 to this January, the median new home price in the United States rose from $331,800 to $467,700—an increase of 41 percent. Interestingly, from January 2018 through March 2020, before the Fed renewed its MBS purchases, the median price of a new house actually declined to $322,600. From April onwards, the national median house price rose steadily, reaching a peak of $468,700 by the end of June 2022.
In 2018, purchasing a new median-price home with 20 percent down and the then prevailing average 30-year mortgage rate of 3.95 percent required $1,259 in monthly principal and interest payments. In January, purchasing the $467,700 median-priced new home with 20 percent down required monthly payments of $2,360 given the 6.48 percent rate on a 30-year mortgage. In only 5 years, because of house price inflation and higher mortgage interest rates, the monthly principal and interest payment needed to purchase a median-priced new house increased by 87 percent!
The Fed’s foray into the MBS market will have a long-lasting impact on real estate markets. Not only has demand for homes been softened by home price inflation and 7 percent mortgage rates, but current homeowners with favorable mortgage interest rates are reluctant to sell, reducing the inventory of homes available for sale in a market that is already starved for listings. This unfavorable balance is clearly reflected in the National Association of Realtors housing affordability index which has fallen from a cyclic high of 180 in July 2021, to recent readings below 100, indicating affordability challenges not seen since the double-digit mortgage interest rates of the 1980s.
The end of Fed MBS purchases and the increase in Fed policy rates have put an end to the COVID housing bubble. While home prices are showing declines in some areas, prices in other areas remain elevated due to historically low inventories of homes for sale and strong job markets.
Any realistic review of the impact of the Federal Reserve’s experiment investing in MBS would conclude that the Fed should stop buying mortgages. Its decision to invest trillions of dollars in MBS has helped to push the cost of home ownership beyond the reach of many. Others will find themselves locked into homes they cannot afford to sell because of the artificially low rates on their current mortgages.
From either perspective, the Fed’s MBS experiment has whipsawed housing markets and cost the Fed over $400 billion in MBS losses. It’s hard to see how this experiment merits anything but a failing grade.
[First published in The Hill with Paul H. Kupiec.]

In 2022, investments into the creator economy surged to $5 billion. The term creator refers to people who generate value from intellectual output or artistic work. However, a new form of creative has emerged known as the “influencer.” Influencers are online personalities who, through their charisma, cultivate a loyal fanbase. Due to their reach, brands employ influencers to market their products and services.
Influencer marketing has proven to be a lucrative venture, and estimates suggest that the industry totaled $16.4 billion in 2022. Brands fork out huge sums to capitalize on the reach of megacelebrities who sway millions to buy their products. Football superstar Cristiano Ronaldo earns $2,397,000 million per Instagram post, and the doyen of American influencers Kim Kardashian collects $1,689,000 million per post.
The business of influencing is so profitable that several youngsters are seriously considering it as a future profession. In 2021, a YouGov survey reported that more young people aspire to become professional influencers rather than doctors or lawyers. Unfortunately, many perceive this development as a worrying trend because they view influencing as mindless banter. Some personalities do peddle pointless banter, but their ability to inspire and motivate followers cements their credibility as influencers.
The relevant point is that influencers create value by enhancing the well-being of their followers. Naysayers accuse the Kardashians of promoting trashy entertainment; however, their work has been determined as useful by the market. If the Kardashians were not creating value for viewers and brands, then they would have been relegated to the dustbin of history years ago.
The success of influencers is the best reinforcement of the subjective theory of value. People like the Kardashians and MrBeast are only popular because they have been rewarded by the market for responding to the subjective demands of consumers. Influencers also demonstrate the anti-elitist nature of markets since most influencers garner prestige by responding to the preferences of ordinary people.
Further, thinking that influencing is an illegitimate career choice is misguided. Influencing, like other professions, mandates years of hard work and self-development. Stars like MrBeast and Logan Paul did not become millionaires overnight. Quite often, successful influencers started their journey as teenagers and spent years honing their skills. Many had to master the art of video editing, graphic designing, and public speaking before launching successful platforms.
Critics think that influencers don’t work hard because their job seems fun, but when they invest hours into making videos, editing, and planning future projects they forego leisure time. Others argue that being an influencer is not physically or cognitively demanding; hence, influencers don’t deserve to earn millions, but such critics are missing the point. Influencers possess entrepreneurial insight, so many are either responding to new demands or establishing new markets. People gain affluence by pursuing socially and economically useful projects, so one’s job as a plumber is important, but it could be more profitable for a plumber to document his worst experiences and turn his job into a reality show.
If some people choose to pursue important but unprofitable careers that is their choice, and they should respect influencers for selecting another option. Influencers are doing what they love with intense passion, and many exhibit an unmatched work ethic. MrBeast described his own work ethic as “crazy” in an interview with Lex Fridman:
There are just some nights where I don’t wanna sleep, and for whatever reason, I feel compelled to go all night. . . . And when I’m really in grind mode it’ll be seven or eight days just non-stop going, going, and then I’ll realize, “Oh, I need some recharge time,” and then go . . . binge a season of anime.
Also, influencers teach us a great deal about negotiating and monetizing brands. Successful influencers invest in managers who help them to scale and deliver better products for consumers. MrBeast can lavish his audience with gifts due to strategic partnerships with advertisers who understand his reach. Likewise, Jeffree Star turned beauty influencing into a multimillion-dollar business, and Addison Rae leveraged her dancing skills to build an empire.
Those who dismiss the business of influencing will fail to capitalize on lucrative opportunities. Although I won’t divulge the details, this writer is building a start-up and is on course to raise an additional $100,000. Influencing is the business of the future, and we must not hesitate to seize the opportunities offered by this new paradigm.