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Category Archives: austrian econ
My piece last week on MMT for Austrians set off a bit of aflurry of comments here and across the web, aided and abetted by commentary onthe MMT event in Italy. Several followers of NEP have asked us to respond tosome of the critiques made against MMT. I think that a long response iscalled-for, something we will put on both NEP and MMP as a blog. I’m ignoringthe various Austrian comments over at Naked Capitalist—as my colleague Bill Blackalready offered thoughts. Besides, most of the commentary there is notsubstantial enough to require a response— given the constraints imposed oncommentary on blogs, there’s not a whole lot there to respond to even in theposts by “reasonable” people.
By L. Randall Wray
For most of my career—going on 30 years–I’ve been accused of advocating Big Government. That is mostly because I adopted Hyman Minsky’s views—which I won’t go through here. Of course, those claims came from the right. I’ve always been proud of it, to some extent, even if I’ve always been critical of what my government actually does with its spending. And if I don’t piss-off at least one person every day, I’ve failed.
For the past 20 years as we developed the MMT approach and the JG/ELR proposal, we’ve faced all manner of ridiculous accusations: we advocate slavery (offering a job to someone who wants to work is no different from chaining him and whipping him and forcing him to pick cotton in the hot sun from sunrise to sunset) or communism (proposing full employment as a policy goal is the same thing as forcing everyone to share their undergarments) or fascism (noting that taxes-drive-money is equated to herding Jews into gas chambers).
Of course, those claims came mostly from the left—indeed, all three were proclaimed in the same sentence by a prominent Post Keynesian, and repeated at every opportunity by him and all his followers.
And now there is a whole website devoted to an “alternative” modern money view (called MMR—which I’ve not been able to decipher; it either stands for Measles, Mumps, and Rubella, or Monetarily Mentally Retarded—neither is very PC as an identity, I must say) insisting that the MMT approach embraces Nazi authoritarianism, since as we all know, no democratic government would ever impose taxes, much less use them to drive money (nay, according to MMR everyone would sit around leaderless campfires and barter with seashells whilst singing Kumbaya).
Oh and then there is the guilt by association: some financial markets people as well as Austrians agree with some of MMT, thus, MMT has to be an evil plan developed by Goldman Sachs to take over the world. This is the view of both right and left critics.
And now we find ourselves accused of advocating Small Government. The ultimate insult!
In a bizarre twist, the critics have been able to combine the guilt-by-association (some MMTers actually are willing to discuss Austrians views! Oh my, what has the world come to?), ad hominem attacks (a hedge fund manager must be against government!), and faulty logic (explaining how a JG is an automatic stabilizer must mean you are against discretionary fiscal stimulus!) to come up with yet another attack—and, again by Progressives (obviously—since Austerians want smaller government, so presumably they welcome us to the Small Government fold!).
I don’t think either our Austerian friends or our Progressives have the foggiest notion how big the federal government now is, what it spends on, and how much greater spending would need to be to fund all the programs Progressives want (and that Austrians fear).
I don’t know if this is going to make me more of a Big Government type or enhance my newly found Small Government reputation. But let’s see what the Federal government actually spends, using 2010 data (latest more-or-less actual data from the 2012 Economic Report of the President). The total is $3.5 Trillion, which is 24% of GDP that reached $14.66 Trillion.
Note that this is unusually high compared to trends due to the “big spending Democrats in the White House”.
No, actually it is big because GDP was depressed by the deep recession while government spending rose mostly automatically to deal with unemployment, poverty, and medical problems brought on by the crash.
But let’s take 24% of GDP as a rough approximation of the size of our “Big Government”. Note I am not including state and local governments—these are users, not issuers of the currency. Their spending is “paid for” by taxes, fees, fines, and some funding from Washington. I can see arguments either way for including them in our measure of the size of “Big Government” but I think that from the MMT perspective it makes more sense to leave them to the side.
I have added in parentheses the percent of GDP for the biggest items: defense (5%), Education and so on (1%), Health (2.5%), Medicare (3%), Income Security (4%), and Social Security (5%). Nothing else really matters much individually. Note there are well-known problems with the defense number—the reported figure significantly understates actual spending because a lot of “defense” activities are secret; some of the spending is hidden in other categories. Some is probably not reported anywhere.
2010 FEDERAL GOVERNMENT OUTLAYS BY FUNCTION ($Millions)
Total: On-budget and off-budget …………………………………. 3,456,213 (24%)
National defense …………………………………………………………….. 693,586 (5%)
International affairs ……………………………………………………….. …45,195
General science, space and technology ………………………… ….31,047
Energy ………………………………………………………………………. ……..11,613
Natural resources and environment ……………………………… ….43,662
Agriculture ………………………………………………………………… …….21,356
Commerce and housing credit …………………………………… ….–82,298
Transportation ………………………………………………………………… 91,972
Community and regional development …………………………. …23,804
Education, training, employment, and social services ……..127,710 (1%)
Health ………………………………………………………………………. ……369,054 (2.5%)
Medicare ………………………………………………………………….. ……451,636 (3%)
Income security ……………………………………………………………….622,210 (4%)
Social security …………………………………………………………… …..706,737 (5%)
Veterans benefits and services …………………………………….. .108,384
Administration of justice …………………………………………….. ….53,436
General government …………………………………………………… ……23,031
Net interest ………………………………………………………………….. ..196,194
Undistributed offsetting receipts ……………………………………–82,116
OK for our conservative and Austrian Austerians, a government that is almost 25% of our economy is far too big. For our progressive friends it is far too small. Let’s focus on the big things.
At least a fifth of all government spending goes to “defense”—and the actual figure is probably double that (say, 10% of GDP). Judging from libertarian support for Ron Paul and from the traditional progressive opposition to US imperialism abroad, I suspect we can agree that “defense” spending is far too big. Personally, I have opposed all US invasions of other nations with the exception of our participation in WWII. I’d bring all troops home, close all foreign bases, and prohibit further military adventures abroad; as our Republican friends say, “starve the beast” by cutting all military spending down to what is necessary to maintain a purely defensive force within our borders. The only foreign intervention I would support would be to air drop food and medical supplies wherever they are needed.
I know I won’t get my way. I would not call this a Big Government or Small Government preference—it is anti-war. But let us presume we scale back “defense” spending to a scale that makes it hard to mount sustained invasions abroad—to, say, 2% of GDP. (That should be sufficient to put a tank into the hands of every gun-loving and motherland-protecting patriot to ward-off attack.) We’ve thereby reduced the reported size of government by 3% of GDP (and perhaps actual size by 8% of GDP—but we will ignore that in calculations below). So, a 3% reduction of Big Government.
MMTers want a universal Job Guarantee program at a living wage. Various calculations have put that at about 1% of GDP, with net cost close to zero (due to savings on anti-poverty programs, unemployment compensation, and so on). Let’s say that is off by an order of a three hundred percent—true cost turns out to be 3% of GDP. That just replaces the reduction of defense spending, getting us back to 24% of GDP.
Now it is unreasonable to presume there is absolutely no reduction of “welfare” spending—in the form of “income security” that is 4% of GDP. We’ll offer a job to all who want to work, creating somewhere between 10 million and 30 million new jobs at a living wage (note that not all of the new jobs will be in the JG program—that depends on “multiplier” job creation in the private sector, but those jobs will also pay living wages or otherwise workers cannot be recruited out of the JG). Unemployment compensation, food stamps, and even some “tax expenditures” on the earned income tax credit will all decline.
Stephanie Kelton and I have replicated earlier work done by Hyman Minsky showing that a JG program will eliminate most poverty (defined as those below the official poverty line) just by providing one minimum wage job per household. At a higher wage, and by offering more than one job to households that want more work, the JG would raise most families well above the poverty line. Let us say that income security spending falls by a couple of percentage points (2% reduction). That offsets two-thirds of the JG program spending.
Note also there will be a bit of saving in the “education, training, employment, and social services” category that currently prepares workers for jobs that do not exist. But let’s keep the 1% devoted to that spending but instead prepare workers for jobs that will exist. So I won’t count any reduction here.
So we are down to 22% of GDP. Now let’s replace our failing US healthcare system with a universal and free, federally paid-for program that offers the range of services that are provided in the average rich nation. That will run about 7-8% of GDP. We already devote an amount equal to 5.5% of GDP to “health” and “Medicare”. Then there’s another 10% of GDP spent by consumers either out-of-pocket, through their state and local governments (“taxpayers”) and through private insurers. So we can cut total spending if we ramped up federal spending by a couple of percentage points. We’ll presume that extraordinary health spending (vanity nose jobs, anatomical augmentation, hair transplants from hairy backs to shiny scalps, etc) is taken care of by the private sector, while all the important stuff is covered by the federal government.
Let’s leave the savings to the nongovernment sector spending to the side and focus on the government’s portion: we go from 5.5% of GDP to, say, 8% of GDP for an increase of federal spending equal to 2.5% of GDP.
The remaining big category is Social Security—about three-quarters of which goes to retirees. That is the main income support for the majority of our seniors. Progressives believe benefits are too small—especially for retirees who had low earnings, and also for many who receive disabilities as well as for dependents and spouses of workers who die. Let’s ramp that up by 2% of GDP.
Note that with the JG program discussed above, that offers a living wage to all who want to work, seniors and their dependents will already have the option of earning more income from work. We should let them “double dip”—no reduction in work opportunity due to retirement onto Social Security benefits, nor in Social Security benefits should they choose to work. Living standards should be significantly higher with the boost to benefits plus the enhanced jobs prospects.
Our net impact on federal government spending so far: net increase of 2.5% of GDP. We’ve gone from a Big Government of 24% to 26.5%.
But we aren’t done yet. Let’s look to our progressive wish list for more. Public infrastructure is deficient—a point made by President Obama, and by our society of engineers that finds a deficit in our public infrastructure amounting to trillions of dollars. Yes we need bullet trains, cleaner water, better airports, bridges and hiways, and more dependable sewage treatment. And we need to join the developed world in getting our darned electrical wires safely underground so that power isn’t knocked out in every ice storm.
How much? Let’s look to the estimates provided by the progressive PERI report. They found that the rate of growth of public infrastructure spending fell by about half over the past decades; they project a needed “baseline” annual increase of $87 billion to make up for the shortfall, of which $54 billion would come from all levels of government.
Their “wish list” high end estimate would be for the public sector to spend even more, an additional $93 billion annually. However our state and local governments are broke—so let’s put the full burden on the federal government, and ramp up its spending by 1% of GDP (make it a nice round $150 billion per year). That is well above the PERI dreams—which will go beyond traditional projects and make a dent in our sustainability problems with insulation retrofitting and so on. (There is a nice synergy here as our JG workers will be doing these sorts of projects.)
So we add another percentage point to government spending.
Our Big Government is now 27.5% of GDP. We’ve got true full employment at a living wage. We’ve got universal and free healthcare. We’ve got a more generous retirement system, and better care for survivors and those with disabilities. We’ve got bullet trains and bridges that don’t fall into rivers. And we’re reducing our foreign entanglements.
All for 3.5% of GDP additional spending.
And we’ve avoided “dynamic budgeting”—we have not counted potential savings in terms of reduced incarceration for the young jobless males who turn to a life of crime. We haven’t counted health benefits; we didn’t reduce spending very significantly on income support that will face fewer demands. We didn’t count multiplier effects on private sector spending—that would reduce government spending in some areas. And so on.
All of us, progressives and Austrians alike, know we can “afford it” because a sovereign government cannot run out of its own currency. Three point five percent.
I do not know if that will comfort our Austerians, who think 24% is already far too big. Nor do I know if it will comfort our Progressives, who are now sure that MMTers have become advocates for Small Government.
To be sure, I can add some more items to the list above: more federal funding for education, federal support for sustainable agriculture (but less support for corporate farming—so that probably balances), more foreign aid, and good wine flowing from every water fountain in America.
All that might add one or two or three more percent—and get us to a 30% government. Will that horrify our Austrians, and still dissatisfy our Progressives?
What should government do?
I think reasonable people can disagree when it comes to what government ought to do. I think it is worth discussing. Lay it out on the table. Forget the silly arguments about deficits and hyperinflations and taxation by dictatorships and JG slavery and bankrupting our grandkids and associating with Austerians and Hedge Fundarians.
And about arbitrary government-to-GDP ratios. We don’t need to argue about whose is bigger. What matters is what you do with government.
What should government do? It’s a mostly political question. A 24% government (US) can do most of what most people seem to want government to do. And more than what others want. And so can a 50% government (France). The jury is still out on a 15% government (Mexico)—it would be hard to point to Mexico as either a case of a successful government doing what people want it to do, or as an Austrian Austerian utopian Small Government.
What do you want government to do?
Someone has created a fabulous, richly detailedparody of Austrian economics. They callit The Daily Bell and claim that itsperspective reflects Austrian economics. In reality, it satirizes faux Austrian economics’ sycophancy towardelite white-collar criminals.
I was delighted to learn that they used my recentcolumn: The Virgin Crisis: SystematicallyIgnoring Fraud as a Systemic Risk as the vehicle for their send-up.
The send-up captures precisely faux Austrianeconomists’ disdainful response to adverse data – they ignore it.
The article hits its peak in capturing the servileapologies that Austrian economists offer in defense of the elite white-collarcriminals who make a mockery of Austrian claims of “free markets.” The satirist emphasizes the Austrians’hypocrisy (they love police enforcing a “rule of law” and “property rights”against blue-collar folks), by calling the FBI the “Stasi” (the East German’ssecret police) when they enforce the rule of law and property rights againstelite white-collar criminals. Thesatirist then mocks the Austrians by picturing them as eager to prevent theimprisonment of elite white-collar felons. Faux Austrian economists’ heroes have always been elite felons. The author of the satire ridicules theJustice Department’s (DOJ) abject failure to investigate, much less prosecute,the elite felons of finance that drove our ongoing crisis. He skewers DOJ for going AWOL during thiscrisis by employing over-the-top mockery. The author states that DOJ is so effective in prosecuting the elite white-collarcriminals that drove this crisis and sanctions them so viciously that they havecreated an “ever-expandinggulag of slave-laborers.” One man’s“Club Fed” is a faux Austrian’s “gulag.” The reality, of course, is that no Wall Street bankster inhabits thisnon-existent white-collar gulag. Thatgap between reality and the hysterical claims of tortured banksters is whatmakes the passage hilarious.
The authorof the satire of Austrian economics uses the nom de plume of Anthony Wile, which is a fabulous insiderjoke. The real Anthony Wile was theinfamous subject of an SEC action for securities fraud. What a brilliant conceit – assuming the nameof a man identified by the SEC as one of the perpetrators of a crudewhite-collar fraud to advance the proposition that only fascists wouldprosecute elite white-collar frauds. Here are the lowlights of what the SEC investigation of the real AnthonyWile and his colleagues found:
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21696 / October 15, 2010
Securities and Exchange Commission v. Brian N. Lines, Scott G.S. Lines, LOM (Holdings) Ltd., Lines Overseas Management Ltd., LOM Capital Ltd., LOM Securities (Bermuda) Ltd., LOM Securities (Cayman) Ltd., LOM Securities (Bahamas) Ltd., Anthony W. Wile, Wayne E. Wile, Robert J. Chapman, William Todd Peever, Phillip James Curtis, and Ryan G. Leeds, 1:07-CV-11387 (DLC) (S.D.N.Y., filed Dec. 19, 2007)
Court Enters Final Judgments against Brian N. Lines, Scott G.S. Lines, Anthony W. Wile, Wayne E. Wew (formerly Wayne E. Wile), Lines Overseas Management Ltd., LOM Securities (Bermuda) Ltd., LOM Securities (Bahamas) Ltd., LOM Securities (Cayman) Ltd., and LOM Capital Ltd. in Market Manipulation Case
The Securities and Exchange Commission today announced that the Honorable Denise Cote of the United States District Court for the Southern District of New York entered judgments of permanent injunction and other relief against Brian N. Lines, Scott G.S. Lines, Anthony W. Wile, Wayne E. Wew, Lines Overseas Management Ltd., LOM Securities (Bermuda) Ltd., LOM Securities (Bahamas) Ltd., LOM Securities (Cayman) Ltd., and LOM Capital Ltd. on October 15, 2010. (The LOM companies collectively are referred to hereinafter as the “LOM Entities”). All of the foregoing defendants, with the exception of LOM Securities (Bahamas) Ltd. and LOM Securities (Cayman) Ltd., were enjoined by the Court from violating certain of the antifraud provisions of the federal securities laws, as described below. The Court also ordered broad ancillary relief against the defendants, including as to certain defendants, disgorgement, civil money penalties, and compliance with undertakings to not trade in penny stocks quoted on certain U.S.-based electronic quotation services and, for the LOM Entities, to not maintain accounts for U.S.-resident customers. Brian and Scott Lines and the LOM Entities were ordered to disgorge over $1.9 million in profits and prejudgment interest and pay civil penalties totalling $600,000.
(i) Brian Lines is permanently enjoined from violating the antifraud, securities offering registration, and securities ownership disclosure provisions of the federal securities laws, Sections 5 and 17(a) of the Securities Act of 1933 (“Securities Act”) and Sections 13(d) and 16(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 13d-1, 13d-2, and 16a-3 thereunder; (2) ordered to pay disgorgement, jointly and severally with Scott Lines and the LOM Entities, in the amount of $1,277,403, plus prejudgment interest thereon in the amount of $654,918; (3) ordered to pay a civil penalty in the amount of $100,000; and (4) ordered to comply with an undertaking to not trade for a period of three years in penny stocks that are quoted or displayed on the OTC Bulletin Board Montage, Pink Sheets, or the ArcaEdge Electronic Limit Order File;
(ii) Scott Lines is permanently enjoined from violating the antifraud, broker-dealer registration, securities offering registration, and securities ownership disclosure provisions, Sections 5 and 17(a)(2) and (3) of the Securities Act and Sections 13(d), 15(a), and 16(a) of the Exchange Act and Rules 13d-1, 13d-2, and 16a-3 thereunder; (2) ordered to pay disgorgement, jointly and severally with Brian Lines and the LOM Entities, in the amount of $1,277,403, plus prejudgment interest thereon in the amount of $654,918; (3) ordered to pay a civil penalty in the amount of $50,000; and (4) ordered to comply with an undertaking not to trade for a period of two years in penny stocks that are quoted or displayed on the OTC Bulletin Board Montage, Pink Sheets, or the ArcaEdge Electronic Limit Order File;
(iii) Lines Overseas Management Ltd. is permanently enjoined from violating the antifraud, securities offering registration, and securities ownership disclosure provisions, Sections 5 and 17(a)(2) and (3) of the Securities Act, and Section 13(d) of the Exchange Act and Rules 13d-1, 13d-2, and 16a-3 thereunder; (2) ordered to pay disgorgement, jointly and severally with Brian Lines, Scott Lines and the other settling LOM Entities, in the amount of $1,277,403, plus prejudgment interest thereon in the amount of $654,918; (3) ordered to pay a civil penalty in the amount of $450,000, jointly and severally with the other settling LOM Entities; and (4) ordered to comply with an undertaking to: (a) not trade for a period of two years in penny stocks that are quoted or displayed on the OTC Bulletin Board Montage, Pink Sheets, or the ArcaEdge Electronic Limit Order File; (b) not accept or maintain any account for or on behalf of any United States customer for a period of two years; and (c) hire an independent consultant for two years to monitor compliance with these undertakings;
(iv) LOM Capital Ltd. and LOM Securities (Bermuda) Ltd. are permanently enjoined from violating the antifraud and securities offering registration provisions, Sections 5 and 17(a)(2) and (3) of the Securities Act and, in addition, LOM Securities (Bermuda) is permanently enjoined from violating the broker-dealer registration provision, Section 15(a) of the Exchange Act; (2) ordered to pay disgorgement, jointly and severally with Brian Lines, Scott Lines and the other settling LOM Entities, in the amount of $1,277,403, plus prejudgment interest thereon in the amount of $654,918; (3) ordered to pay a civil penalty in the amount of $450,000, jointly and severally with the other settling LOM Entities; and (4) ordered to comply with an undertaking to: (a) not trade for a period of two years in penny stocks that are quoted or displayed on the OTC Bulletin Board Montage, Pink Sheets, or the ArcaEdge Electronic Limit Order File; (b) not accept or maintain any account for or on behalf of any United States customer for a period of two years; and (c) hire an independent consultant for two years to monitor compliance with these undertakings;
(v) LOM Securities (Bahamas) Ltd. and LOM Securities (Cayman) Ltd. are permanently enjoined from violating the securities offering registration provision, Section 5 of the Securities Act; (2) ordered to pay disgorgement, jointly and severally with Brian Lines, Scott Lines and the other settling LOM Entities, in the amount of $1,277,403, plus prejudgment interest thereon in the amount of $654,918; (3) ordered to pay a civil penalty in the amount of $450,000, jointly and severally among the settling LOM Entities; and (4) ordered to comply with an undertaking to: (a) not trade for a period of two years in penny stocks that are quoted or displayed on the OTC Bulletin Board Montage, Pink Sheets, or the ArcaEdge Electronic Limit Order File; (b) not accept or maintain any account for or on behalf of any United States customer for a period of two years; and (c) hire an independent consultant for two years to monitor compliance with these undertakings;
(vi) Anthony Wile is permanently enjoined from violating the antifraud and securities offering registration provisions, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 5 and 17(a) of the Securities Act; (2) ordered to pay a civil penalty in the amount of $35,000; (3) barred from serving as an officer or director of a public company for a period of five years; and (4) barred from participating in an offering of penny stock for a period of three years;
(vii) Wayne Wew (formerly Wayne E. Wile) is permanently enjoined from violating the antifraud provisions, Sections 17(a)(2) and (3) of the Securities Act; (2) ordered to pay disgorgement in the amount of $5,422, plus prejudgment interest thereon in the amount of $2,608; and (3) ordered to pay a civil penalty in the amount of $10,000.
As part of a global settlement with the LOM Entities, Brian Lines, and Scott Lines, the Commission agreed to dismiss with prejudice the pending civil enforcement action against LOM Holdings Ltd., which is the parent holding company for the LOM Entities.
The faux Austrian satirical web site uses thispathetic episode as another opportunity for humor when it presents a faux bioof the not-as-wily-as-he-thought Wile:
“He has put thisknowledge to good use, working with top mining executives and ventureentrepreneurs to generate some of the most successful business efforts of the2000s.”
There is a similar gem prominently featured on theweb site: the admonition that the key to a successful society is “personalaccountability.” What a perfectaccompaniment to an article demanding that the elites who grew wealthy throughfraud not be prosecuted. The satiristhas a great gift for irony.
Prior variants of Wile’s website contained thisdefense of Wile.
“In 2000, Wile experienced a brief role as the CEO of astart-up junior mining company that became the subject of a civil attack by theSEC. Wile and others fought for more than seven years at greatpersonal and financial expense before eventually settling the case withoutadmitting any wrongdoing. The assets of the company in question weresubsequently purchased by a New York Stock Exchange listed company and theproperties have now produced more gold than was initially suggested. Hundredsof investors lost literally tens of millions in deserved future profits becausethe SEC accused the company of over-promising a merger that was actually takingplace. Perhaps this experience adds to Wile’s fervor to expose the power eliteand their societal manipulations.”
[Perhaps? This is supposed to be Wile’s web site. Why is Wile guessing at the source of Wile’s “fervor?” For that matter, why is Wile referring tohimself as “Wile” rather than “I?” Whyaren’t Wile’s actions (as found by the SEC staff’s investigation) nasty“societal manipulations?” Why isn’t Wilepart of the “power elite?” Note that theSEC’s characteristic failure to actually litigate its cases or get admissionsof the facts means that Wile gets to pose as the victim of some kind of evilconspiracy. The Department of Justice,equally characteristically, failed to prosecute despite SEC staff investigationfindings that should have led to felony charges. Some gulag!]
It is time for a word about real Austrianeconomists. They hate elite frauds andwant them prosecuted vigorously. Ludwigvon Mises and Friederich Hayek are the two most famous Austrian economists.
Hayek, F.A. The Road to Serfdom
“To create conditionsin which competition will be as effective as possible, to prevent fraud anddeception, to break up monopolies— these tasks provide a wide and unquestionedfield for state activity.”
The Constitution of Liberty
“There remains,however, one other kind of harmful action that is generally thought desirableto prevent and which at first might seem distinct. This is fraud and deception. Yet, though it would be straining the meaningof words to call them ‘coercion,’ on examination it appears that the reasonswhy we want to prevent them are the same as those applying to coercion. Deception, like coercion, is a form ofmanipulating the data on which a person counts, in order to make him do whatdeceiver wants him to do. Where it issuccessful, the deceived becomes in the same manner the unwilling tool, servinganother man’s ends without advancing his own. Though we have no single word to cover both, all we have said ofcoercion applies equally to fraud and deception.
With this correction,it seems that freedom demands no more than that coercion and violence, fraudand deception, be prevented, except for the use of coercion by government forthe sole purpose of enforcing known rules intended to ensure the bestconditions under which the individual may give his activities a coherent, rationalpattern.”
“Liberty not only means that the individual has boththe opportunity and the burden of choice; it also means that he must bear theconsequences of his actions…. Libertyand responsibility are inseparable.”
“Governmentought to protect the individuals within the country against the violent andfraudulent attacks of gangsters, and it should defend the country againstforeign enemies.”
The faux Austrian website and the faux (or real, whocan tell) Wile piles layer upon layer of satire. The website contains articles that make theterm “bizarre” deeply inadequate. One ofthe site’s favorite motifs is that an international conspiracy of the topbankers that caused the ongoing global crisis is using the Occupy Wall Street(OWS) movement to demand that the fraudulent bop bankers that caused the crisisbe prosecuted. The dastardly OWS personcarrying the water for this conspiracy of international bank elites is DavidDeGraw.
“[T]hereis an Anglo-American power elite trying to establish a world government. Wecannot necessarily explain WHY anyone would want to do such a thing. Butapparently someone does. Actually more than a “someone” – a handfulof impossibly wealth banking families, located mainly in the one-square-mileCity of London.
These families – and one family in particular – apparentlyhave control of a worldwide central banking apparatus. With the ability toprint money-from-nothing around the world, the Rothschilds have amassed afortune that may be in excess of US$300 trillion. (Nobody really knows.)”
This too is a wonderful satiric technique. I particularly like the “Nobody really knows”parenthetical as a modifier for a (gigantic) number that has already been madea non-number by the use of the word “may” (with a lead-in sentence renderedimpotent by the use of “apparently”). Atrue Austrian-school economist, however, would never admit that central bankscould create over $300 trillion in money (over 15 times the GDP of the U.S.)without producing even material inflation over the last 30 years. So, where do the Rothschilds invest ordeposit their over $300 trillion? Giventhe fact that the Austrian school considers even massive income disparities irrelevant,it must be a very good thing for the world (from an Austrian perspective) thatthe Rothschilds have created such a massive increase in societal wealth withoutproducing anything that even approached hyper-inflation.
David DeGraw must be the most skilled operative inthe world if the Rothschilds have chosen him to run their “false flag”operation that recruited the OWS as their secret ally. Indeed, the Rothschilds are so clever thatthey doubtless picked DeGraw as their operative because he has been apersistent critic of central banks (the devils incarnate in this satire), thenpicked me because I am a persistent critic of central banks and want us toprosecute the elite banksters that drove the crisis. Why? Wecan’t explain WHY.
I learned that the Rothschilds hate and wish todestroy the largest banks. The largestbanks, however, are the central banks leading supporters. Why? We can’t explain WHY. All of thiswould be confusing if the blog had any pretense to rationality or reality.
The web site and interviews on the web with whoeverplays Mr. Wile are so loopy, with such vibrant excursions into multipleTwilight Zones that it is hard to pick a favorite satirical delusion. In an hour of bemused perusing I learned thatOsama bin Laden had been dead for years (the raid on his compound in Pakistanwas a fake), it is likely that we used military force in Libya because theywere about to mint a gold coin that would become their national currency, theWorld Trade Center towers were blown up by the U.S., and hyper-inflation isabout to go global any minute.
I grew up largely in Dearborn, Michigan (home ofFord Motor Company). Henry Ford wasinfamous for distributing The Protocolsof the Learned Elders of Zion (the Czarist forgery exposing the Jewishconspiracy to rule the world), so I found that reading the Rothschild rant waslike noshing on comfort food.
Sorry, have to cut this short, but I just received acall from the City of London. Mr.Rothschild may be calling (nobody really knows). And if nobody really knows, it could be true. Why? We don’t know WHY.
Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.
Bill writes a column for Benzinga every Monday. His other academic articles, congressional testimony, and musings about the financial crisis can be found at his Social Science Research Network author page and at the blog New Economic Perspectives.Follow him on Twitter: @WilliamKBlack