Free Republic

Let's go back to the beginning of the current economic crisis — yes, it is still a crisis for many millions of Americans who lost their jobs, ruined their credit, filed for bankruptcy, lost their homes, and lost their lifestyle. Shanty towns have popped up all over America, though rarely gaining media exposure. Tens of millions have been ripped from the middle class back down into the poverty from whence their parents or grandparents had climbed. Make no mistake: it is not capitalism that got us here; it is government interventionism and central banking — the Federal Reserve. The first...

On Monday, Standard and Poor's (S&P) announced that although the US government would retain its AAA debt rating, the outlook for the United States' future was being downgraded from "stable" to "negative." The move is a welcome if tepid acknowledgement of the fiscal train wreck of which Austrians have been warning for years. The S&P Announcement The formal announcement of the downgraded outlook cited the federal government's growing debt burden: Standard & Poor's on Monday downgraded the outlook for the United States to negative, saying it believes there's a risk U.S. policymakers may not reach agreement on how to address...

Depression babies learned early that "saving for a rainy day" was not something one hopes to do but a requirement. The saying originated when most people worked on the farm. And when it rained, the fields were too wet to plow, and the farmer — not to mention the hired hands — made no money. Of course, my grandfather was the diligent sort who would use rainy days to do required maintenance on his implements, noting with derision other farmers who spent rainy days at the bar in town. He believed they would surely end up with broken equipment when...

Once upon a time, I developed a theory that we have much lower expectations for public-sector performance than we do for private-sector performance.[1] We saw this in accounting standards that — when applied to Enron — resulted in market forces shutting that firm down, while the Department of Defense loses billions of dollars annually. The difference in terms of waste between the two sectors is exponential, but while Enron is held accountable for its ethics, the government gets a pass. Or consider what we tolerate from the US Postal Service (USPS) as opposed what we tolerate from firms like FedEx...

The Australian media recently featured a story of an allegation of race discrimination in the modeling industry.[1] Ms. Kema Rajandran, a beautiful young Indian model, complained to news services about a modeling agency in Perth that advised her that her work would be limited because of her race. In an email to Ms. Rajandran, the coordinator of the agency said, We think you are very photogenic and would be suitable for our Casting Division. … Please note however that as you are of non-Caucasian heritage your work opportunities in Perth would be extremely limited.[2] Now, there is no doubt that...

As YouTube and other digital media move beyond computer-savvy young people into the ranks of even stodgy businessmen, these subversive outlets become serious problems for the ruling elite. This trend is epitomized by the radical change in the Federal Reserve's image. In just a few short years, the Fed has transformed in public opinion from a mysterious, wise, and boring institution into a fascinating engine of corruption and comedy. Challenging Bernanke The chinks in the Fed's armor of legitimacy are multiplying, all made possible by the ease of producing and distributing high-quality critiques. An early example was the spoof of...

One of the immediate financial consequences of the catastrophic Japanese earthquake is that Japan needs to call on its huge cache of foreign exchange reserves to rebuild its shattered infrastructure. To pay for domestic projects, Japan will require yen - not dollars, euros or Swiss francs. As a result of these conversions, the yen rallied considerably after the quake struck. But a surging yen runs counter to the macro-economic currency plans favored by most global economists. In order to maintain Japan's position as a net-exporter of manufactured goods and net-buyer of US debt, the yen needs to stay down. So,...

Every once in a while, something comes along that perfectly encapsulates the idea of so-called "social justice" in action. For all the wonderful critiques that have been written about this wretched concept by its many detractors,[1] none quite match the elegant simplicity of a recent work by some of its advocates. I am referring here to a recent video made for the World Day of Social Justice[2] in which students and teachers complete this sentence: Everyone has the right to _____. The video is a colorful montage of possible completions to this sentence, set to some pleasant easy-listening music. It...

Whether giving public lectures or teaching at the Mises Academy, I'm often asked whether Bernanke will be able to "pull this off." Specifically, can the Fed gracefully exit from the huge hole it has dug for itself? Unfortunately my answer is no. In the present article I'll go over three possible exit options, and explain the flaws in each. The Problem Before assessing the chances of escape, let's first review what the problem is: The monetary baseThe monetary base (see here for a breakdown of the various monetary aggregates) has exploded since the onset of the financial crisis in late...

As the world confronts one of the most critical periods of economic upheaval that it has ever seen, it is clear that our most influential economic stewards have absolutely no idea what they are doing. But, like kids with a new chemistry set, they are nevertheless unwilling to let that stand in the way of their experimental fun. As they pour an ever-growing number of volatile ingredients into their test tubes, we can either hope that they magically stumble on the secret formula to cure the world's ills, or more pragmatically, we can try to prepare for the explosion that...

In the Wisconsin labor dispute, now increasingly spreading nationwide, I have lost count of the times union defenders have justified their position based on little more than the assertion that some union benefitted them or some member of their family — followed by the conclusion that all Americans must therefore gain. Unfortunately, that "logic" is invalid. A policy that gives me more does not mean the result is better for us. And the primary effect of unions and union-backed policies is to harm the vast majority of Americans. Unions succeed by leveraging special government-granted powers to eliminate competition from other...

Jimmy John Liautaud, founder of the Jimmy John's sub chain, just applied to move his residence from Illinois to Florida — and his company's headquarters could soon follow. "All they do is stick it to us," he says of the state legislature's move to jack up the personal income tax from 3 percent to 5 percent — and the corporate income tax from 7.3 percent to 9.5 percent. "I could absorb this and adapt," Liautaud tells his hometown paper, the Champaign-Urbana News-Gazette, "but it doesn't feel good in my soul to make it happen," he says. Where the sub business...

The main reason why so many state and local governments are bankrupt, or on the verge of bankruptcy, is the combination of government-run monopolies and government-employee unions. Government-employee unions have vastly more power than do private-sector unions because the entities they work for are typically monopolies. When the employees of a grocery store, for example, go on strike and shut down the store, consumers can simply shop elsewhere, and the grocery-store management is perfectly free to hire replacement workers. In contrast, when a city teachers' or garbage-truck drivers' union goes on strike, there is no school and no garbage collection...

A confidential new report prepared by Goldman Sachs for its clients says spending cuts passed by the House of Representatives last week would be a drag on the economy, cutting economic growth by about two percent of GDP. “Under the House passed spending bill [which cut spending by $61 billion],” says the report, which was obtained by ABC News, “the drag on GDP growth from federal fiscal policy would increase by 1.5pp to 2pp in Q2 and Q3 compared with current law.” The report, which is signed by Goldman economist Alec Phillips, goes on to predict that the House-passed bill...

The Food Crisis Is A Dollar Crisis By Dan Amoss 02/18/11 Jacobus, Pennsylvania – At this week’s hearing on Capitol Hill, Fed Chairman Ben Bernanke demonstrated a lack of understanding about what causes inflation. His comments reflected a belief that GDP growth causes inflation. But true economic growth is production-driven, and adds to the supply of goods and services in the economy. True economic growth is not inflationary. Rather, inflation is driven by runaway government deficits and bloated central bank balance sheets. And right now, we have plenty of both. So we have every reason to expect the CPI, even...

Would you like your college education to be free? Sure, who wouldn't? Well, the people of Tunisia and Egypt are learning that whenever the government supplies something, it is never really "free." In Tunisia, "free" university education is guaranteed to anyone who passes the government's exams at the end of high school. Largely as a result of this, the number of Tunisians who graduated college more than tripled in the last ten years. This may sound like a good thing, but it has produced a glut of graduates. Fifty-Seven percent of young Tunisians entering the labor market are college educated....

Well it's about time. The headline on Monday's CNBC article announces: "Investors Starting to Believe That Inflation Threat is Real." For some time, I have been a proud member of the fuddy duddies who have been predicting the return of serious stagflation. Thus far, our prognostications have clearly been half-right — the "real economy" is indeed caught in a terrible rut, far worse than most of the Keynesian economists recognized even in late 2008. However, on the (price) inflation front, things are not as clear-cut. Although asset prices and producer prices have surged in response to Bernanke's monetary pumping, retail...

Based on his recent public comments, Fed Chairman Bernanke seems determined to give the U.S. dollar the reputation of Egypt's Hosni Mubarak: an unwanted relic of the past that everyone agrees must go, but stubbornly clings to a privileged position. The dollar is currently the world's ruling currency, but, as with Mubarak, I believe that growing public discontent will spur regime change quicker than most pundits expect. Clearly, the most significant problem facing central bankers around the world is the recent eruption of inflation, which is sparking unrest in Asia and the Middle East. With respect to this issue, Bernanke...

At current rates of spending, the federal government may bump up against its debt limit as early as March. Treasury Secretary Timothy Geithner warns that it will be "catastrophic to the economy" if Congress doesn't increase Uncle Sam's credit limit. Writers in conservative outlets call for Republicans to use this opportunity to extract significant spending cuts before extending the limit. And some extreme libertarians argue that the debt ceiling shouldn't be raised, because a government default would be a good thing for the American people. In this article I'll explain the basic situation and comment on each of these views....

Back in October of 2009, when Congress first announced the formation of a commission to investigate the cause of the 2008 financial crisis, I knew immediately that their ultimate conclusions would support the agendas of their respective political parties. (Watch the video blog I recorded that day) Particularly, I knew that the commission's Democrat majority would use the crisis to justify more government involvement in the financial markets. These concerns have now been fully validated. Given that I was one of the few people who had accurately predicted the magnitude of the housing bubble, and had laid out in my...