Category Archives: Economics

True federalism would have prevented Covid lockdowns; Americans cannot afford Russia sanctions on top of them

In one sense, the Covid-19 era revitalized American federalism. While every U.S. state except South Dakota at first followed the advice of the federal government’s various national public health agencies and their spokesman, Anthony Fauci, M.D., eventually more and more diversity began to emerge in the way individual states responded to the virus.

In September of 2020, after televising a roundtable of non-government scientists from Harvard and Stanford, Governor Ron DeSantis reopened Florida completely and banned local jurisdictions from fining people for noncompliance with mask mandates.

Observing the political gains DeSantis enjoyed from lifting restrictions and the absence of disaster predicted by all opposed to DeSantis politically, Iowa’s governor lifted all restrictions in February 2021, followed closely by Gov. Abbot of Texas the following month.

While states with Republican governors trumpet their states as “free states” due to generally less severe and shorter-lived lockdowns, and proponents of decentralization from across the political spectrum point to this as a triumph of local government, federalism completely failed in the most important respect. Every United States citizen, regardless of the decisions of their state and local elected leaders, is being forced to pay for lockdowns equally.

Although Covid relief was federally funded, it wasn’t paid for with higher taxes. It would have been impossible to collect more taxes from a society producing considerably less wealth. Instead, the money was created by the Federal Reserve and handed out through programs created by the CARES Act and subsequent legislation.

We are feeling the effects of that money creation combined with decreased production now. Although his Republican critics would like to blame President Biden for rising prices today (and he has certainly contributed to them, especially energy prices), the majority of the spending authorized and new money created occurred while Trump was still in office.

M1 showed the supply of dollars at $4 trillion in February 2020. It was $16 trillion by May 2020 and $18 trillion when Trump left office in January 2021. It was just over $20 trillion as of January 2022.

President Biden, on the other hand, has largely failed to get most of the spending he wanted beyond an early Covid relief bill similar in size to the CARES Act. However, due to the mechanics of the way money gets spent by the federal government after it is appropriated by Congress, even much of the money appropriated in 2020 wasn’t spent until 2021.

That and the general lag between new money creation and the resulting rise in consumer prices is why price inflation only began in earnest in 2021. But this is not to lay the blame at Trump’s or Biden’s doorstep. Rather, it was the very bipartisan departure from reality, including by most the American public, that a large percentage of the economy could be turned off while people went on consuming as they did before.

Many otherwise “fiscally conservative” people threw up their hands and justified Covid bailouts on the grounds that those ordered to close their businesses or stay home from their jobs weren’t “at fault,” and therefore were entitled to bailouts.

It doesn’t matter who was at fault for lockdowns. Goods that are not produced cannot be consumed. One cannot consume more than one produces unless someone else provides the difference. Scarcity does not make exceptions for assignment of blame, political theories, or feelings. Even if lockdowns significantly reduced Covid deaths, which they didn’t, one still had to face the reality that producing enough to survive takes priority over avoiding the virus.

The truly “federalist” approach to Covid-19 would have been to allow each state to decide and pay for the policies it chose to implement in response to the virus. Politicians spoke in absolutes, saying lockdowns were “necessary.” Well, producing enough to survive was more necessary. This would have been true even if the virus had turned out to be as deadly as it was originally touted.

Had governors been forced to face reality and decide how to respond to lockdowns without external bailout money, there may not have been any lockdowns at all. If there were, they would have been fewer, of less severity, and of shorter duration.

This would not have made a bit of difference overall in the number of Covid deaths, as the retrospective comparisons of “open” vs. “locked down” states so clearly show.

Like TARP in 2008 and every other bailout, profits have been privatized and costs socialized. People who elected governors who took a more realistic approach to Covid and who themselves balanced the personal risk of contracting the disease more realistically with the responsibility of supporting themselves are paying the same cost in runaway inflation as those whose governors closed their economies completely and kept them closed for much longer periods of time.

Today, Americans are being asked to again support a departure from reality. The U.S. government, the most prolific invader of foreign nations in the past seventy years, has proclaimed Russia’s invasion of Ukraine beyond the pale and imposed drastic sanctions in response. President Biden has acknowledged this will have a cost to American citizens, although he has vastly understated the cost.

The president and others have tried to shift the blame for present economic pain onto Putin. This is dishonest for two reasons. One, it is not Putin’s invasion but the sanctions in response to the that will cause economic hardship, just as it wasn’t “Covid” but the government response to the virus that caused the economic fallout we’re experiencing now.

Most importantly, the economic consequences of Biden’s Russia sanctions have not even begun to be felt by American consumers. They are just now suffering the effects of Covid lockdowns. The Russia sanctions could have far more onerous economic consequences, especially if they result in a new world economic order where a significant portion of the global population no longer uses the U.S. dollar as its reserve currency. That is a reality Americans are not ready to face.

Regardless of whether Putin’s invasion of Ukraine was justified, America may not be able to afford the combined cost of Biden’s sanctions and the Covid lockdowns. Ignoring that reality may have fatal consequences for both America’s economy its political order.

Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

China is surpassing the U.S. economically because it is freer than it was; America is less free

Outwardly, everyone condemns the Chinese government, run by the Chinese Communist Party (CCP). Their society is authoritarian and “anti-democratic” while in America, as the song goes, “at least I know I’m free.”

Yet, no one seems to believe freedom leads to greater economic prosperity or human happiness. Inherent in every political discussion about China is the idea that authoritarianism produces better results and the United States is handicapped by its devotion to freedom. Americans enviously note that when China’s central government decides to do something, they are not encumbered by adversarial processes inherent in the U.S. Constitution.

This is also the assumption underlying the trade wars. China has “taken advantage of” the United States by being more economically mercantilist while the United States has foolishly allowed its industry to migrate to China and other countries because of relatively freer trade policies.

That is demonstrably false. Manufacturing still comprises about the same percentage of real GDP as it has throughout the post-WWII period. The problem with American manufacturing isn’t the amount produced but what is produced. American manufacturing is far too skewed towards producing weapons and other items without utility, misdirected by a monetary system that allows resources to be directed towards unproductive ends.

The emergence of China as an economic power certainly provides the United States new competition, but that emergence is not a result of China’s authoritarianism. On the contrary, China’s economy has grown exponentially in the past thirty years because it is significantly less authoritarian, especially in the economic sphere, than it was previously.

Americans never seem to ask themselves why a country with four times the population didn’t have a much larger economy than the United States during the twentieth century. The answer is simple: communism. China had as authoritarian an economic system as has ever existed in human history. While they are by no means laissez faire now, they are far more “capitalist” in relative terms. This is the key to their success, not the authoritarianism that remains from the communist years.

The United States, on the other hand, is relatively less free than it was at almost any time in its history, with the exception perhaps of the 1930s and 40s. And its trajectory is towards more and more government intervention into the economy and life in general.

The United States became the most powerful economy in the world for the same reason the United Kingdom, comprised of two tiny islands with relatively small populations, was the most powerful before the United States. It had the freest markets. It was the most “capitalist,” for lack of a better single word.

The United Kingdom squandered its wealth trying to maintain a vast global empire that gave its government prestige but drained its wealth and led it to debauch its currency. Sound familiar? Empire may be made possible by capitalism, but it is not an inherent part of capitalism. Empire is anti-capitalist. Capitalism is about property rights and voluntary exchange. Empire demands taxes and misdirection of capital into production of arms and other imperial necessities that do not add to the happiness of the taxpayers.

Weapons, soldiers, and military infrastructure beyond what is needed for defense have no utility. Sooner or later, the productive part of the imperial economy can no longer afford to subsidize the unproductive part.

This has been the end of every empire in history. It is also the reason the USSR had a much more painful transition from communism to capitalism than China – it had an empire of other communist republics draining its already misdirected resources.

While the global standing army the United States maintains is a significant reason for its economic decline, it is not the only reason. In all areas of economic and social life, America has become less free with each passing year.

Americans have become accustomed to its government surveilling its phone calls, e-mails, and financial transactions. The New Deal regulatory structure, under which bureaucrats in executive branch agencies make most of the laws by fiat, rather than Congress in an adversarial process, continues to metastasize. Its entitlement programs, designed to cover the last few years of life, now demand the resources to cover decades of life beyond retirement.

The privilege of printing the world’s reserve currency has done the most damage to the dynamism of the American economy. All inflation leads to malinvestment, but the inflation made possible by the global dollar standard has led to bubbles that very well may comprise half of U.S. GDP.

Certainly, there are millions of people employed in the cartoonishly bureaucratic education and healthcare industries who are adding no value to consumers. As guaranteed student loans have redirected trillions towards the education industry, millions of administrative jobs have been added to the system that aren’t necessary to teach reading, writing, and arithmetic. Meanwhile, the education results continue to decline.

Healthcare is in much the same shape. That part of the industry on the cutting edge, where profits and losses are still available, which operates under the most capitalist circumstances, continues to produce miracles of innovation. But the rest, the heavily subsidized, increasingly bureaucratic part, is sclerotic and in decline.

In many ways, routine American medicine is still practiced the way it was in 1970. Why? Because it has no reason to improve. It’s on the dole, with half of all healthcare spending comprised of government spending. There is no reason to improve medical or business practices when your income is guaranteed by taxpayers. See the DMV.

Just ask yourself why you’re still asked to fill out multiple forms capturing your insurance information when the office already has it. In fact, they wouldn’t even give you the appointment until they not only got your insurance info but verified your eligibility with the insurer. But they still ask you to write it down on two different forms when you get to your appointment. Non-subsidized industries cannot afford inefficiencies like this.

What made America richer and more powerful in the past was being significantly freer than any other country in the world. And by “freer,” I do not mean more “democratic.” Democracy was not the key to American freedom; it was limited government. It was the fact that the vast majority of American economic and social life was not up for a vote. Rather, most decisions were left to the discretion of the private sector and the individual.

What made China destitute during the same period was its complete lack of freedom. There was nothing else keeping China from building the economy it has today. But since the late twentieth century, America has headed in one direction on the freedom scale and China in the other. It is not unreasonable to ask whether they haven’t now met at a point far lower than America’s freer past.

There is no reason for Americans to fear China eventually having a larger economy than the United States. That would be the natural result of having so much larger a population. But if America wants to regain its economic power in a post-dollar dominated world, it must stop imagining China’s success to be a product of its remaining authoritarianism and get back to what created America’s wealth in the first place: far more limited government, freer markets, and maximum individual liberty.

Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Peace in Ukraine will not end the economic world war declared by the Biden administration

Equities markets are slightly up today while gold and oil are down as investors digest news of progress in peace talks between Ukraine and Russia. While a deal between the countries would most importantly end the bloodshed and, secondarily, ease the immediate economic pressure the war is causing, it would not end the economic war I wrote about last week.

That war was declared by the United States when it banished Russia from its SWIFT system, seized its FOREX assets, and demanded the whole world boycott Russian exports (something even many NATO allies were unable to do).

Russia’s first response was to announce it would only accept rubles in payment for its natural gas exports to “unfriendly countries.” Over the weekend, it made another move. It put the ruble back on the gold standard domestically, allowing its central bank to buy gold at a fixed price of 5,000 rubles per gram (approximately 155,550 per troy ounce).

This immediately strengthened the ruble against the U.S. dollar. On Friday, RUB/USD was over 102. As of this writing, it had dropped to just under 88.

As Tom Luongo explains, this effectively sets up an opportunity for Russia to sell oil, natural gas, and its myriad other natural resource exports at a discount for gold. This will eventually bring the ruble back to its pre-war value in USD of 75.

Washington obtusely seeks to prevent Russia from selling its gold while Russia has no plans to do so. It is buying gold at a discount based on the demand for its exports.

Even if a treaty is secured and the U.S. offers to readmit Russia to SWIFT, releases its frozen assets, and end the boycotts, it’s hard to imagine Russia accepting the offer. Why put itself in the same position again when it is holding all the cards as an exporter of vital resources with a positive trade balance?

Not only Russia but every country in the world is now on notice that any reserves it has in dollars could be rendered worthless at the whim of the U.S. government. This provides tremendous incentive for most of the world to find a store of wealth and medium of exchange other than the U.S. dollar.

Americans are not ready for the reality that will be imposed if the dollar loses its world reserve currency status.

This isn’t immediately apparent to them because they believe they have the world’s most productive economy, based on having the largest GDP. It is true that U.S. GDP priced in dollars was the largest in the world at approximately $22 trillion in 2021. China was second at $16 trillion.

The problem with GDP is it merely measures total money spent in the economy. It does not measure the value of things that were produced. Since value is subjective, it is a matter of how much an economy produces for which people would truly be willing to give up something of value in return. This willingness depends upon what is produced having what economists call “utility,” a product’s usefulness in fulfilling some purpose for the consumer, whether a need like food or a luxury like a fancy car.

A large percentage of what the U.S. economy produces has no real market value.

Rising prices are not the only negative consequence of monetary inflation. Inflation also misdirects capital towards nonproductive use. That is why at the end of a business cycle, when the economy crashes, there is high unemployment. All of the people misdirected into unprofitable enterprises must be let go and redirected towards productive work – towards producing products whose value to others exceeds their cost of production.

The U.S. dollar’s status as the world’s reserve currency has allowed its central bank to inflate the currency far beyond what it would be able to get away with otherwise. This has caused huge distortions in the U.S. economy. In other words, it has directed capital towards producing products whose value does not exceed their cost of production.

What value have Americans received in return for spending more on their military establishment than the next ten countries combined? How were they better off for the military spending 20 years and trillions of dollars in Afghanistan? How do they benefit from maintaining a global standing army that will never be used against a nuclear power, as was just confirmed after Russia invaded Ukraine?

What additional value have they received for paying the highest prices in the world for healthcare and education?

What these and other malinvestments have in common is they are not funded voluntarily. The military is 100 percent tax funded. Half of all healthcare spending is government spending. College education is largely underwritten by government-guaranteed loans, meaning taxpayers guarantee them whether they want to or not.

Even outside of government-funded enterprises, capital is misdirected towards nonprofitable use by monetary inflation. Houses and automobiles, for example, are bid up beyond their true market value because of the artificially low interest rates of the loans that make their inflated prices affordable.

Like taxation, monetary inflation transfers purchasing power involuntarily from holders of dollars to those receiving the loans. That means there is no market discipline acting upon the borrowers and lenders. No one was asked to voluntarily give up something of value to underwrite the loan. Therefore, capital is much more likely to be invested unprofitably.

Yes, all countries in the world have fiat currencies that they inflate, but no other country has been able to do it on the scale and with the impunity the U.S. has while enjoying reserve currency status. This has directed huge amounts of people and resources towards unproductive ends.

Foreigners have paid Americans to waste resources and collect salaries for non-value producing jobs in government, health care and education bureaucracies, finance, and other bubble industries by accepting American exports of dollars in return for imports of valuable products.

Removing this privilege will cause an enormous deflation of some economic sectors and the complete disappearance of others. Millions of people employed unproductively, as well as millions of others who sell to them, will be devastated. The result will be a sharp reduction in living standards for virtually all Americans outside of the very wealthiest strata.

While this cleansing of waste in the economy might be beneficial at some point in the future, it will be unimaginably painful for most Americans in the present. For a country already near a political boiling point, the economic reality on its way could blow the lid.

America is not ready.

Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Are the U.S. and NATO as prepared for economic war as Russia, China, and India?

In the 2005 film, Cinderella Man, James J. Braddock’s fight with contender Art Lasky reaches a turning point when Lasky hits Braddock with his best punch. Braddock’s mouthpiece flies out and he is staggered, but he doesn’t go down. He recovers, smiles at Lasky, and goes on to win the fight.

A romanticized portrayal to be sure, taken to an even more ridiculous extreme in the climactic bout between Rocky Balboa and Clubber Lang in Rocky III, but it does beg a very relevant question for the U.S. and NATO today:

What if you hit your opponent with your best shot and he doesn’t go down?

U.S.-led NATO effectively did that when it locked Russia out of the SWIFT system, seized Russia’s FOREX assets, and demanded the rest of the world cease all economic relations with Russia. Washington believed this would cripple Russia permanently, possibly leading to a coup in Russia and Putin’s ouster.

It didn’t. That’s not to say it did no damage. The ruble initially plunged in value, causing the Russian central bank to raise interest rates to 20%, effectively freezing the prospects for any investment in growth for the besieged economy. But Russia is still there, as is Putin. The war in Ukraine continues, and Putin has responded.

“A number of countries have taken illegitimate decisions on the so-called freezing of Russian assets. This collective West has actually drawn a line under the reliability of its currencies, we have already spoken about this, it crossed out the trust in these currencies. I have decided to implement a set of measures to switch over payments, as soon as possible, let’s start with our natural gas, to switch over payments for our natural gas supplied to the so-called unfriendly countries into Russian rubles.”

That punch landed, and now it’s Washington’s turn to try to smile in its opponent’s face. The reliable U.S. media ran several stories citing U.S. economists trying to minimize the effectiveness of Russia’s response. Only in this case, life will more likely imitate reality than the arts. When a boxer smiles in a real prize fight, it almost always means he has been hurt.

That’s what prompted Biden to hurry to Brussels for an emergency meeting following Putin’s announcement. Strategies expected to be discussed include redirecting non-Russian supplies of natural gas towards Europe in hopes to lessen its dependency on Russian exports. Currently, Russia supplies about 45% of Europe’s natural gas imports.

Apart from the fact this will still make life more costly for Europeans – if it were not more expensive to purchase natural gas this way, Europe would have already been doing so – it is only one commodity. Russia and Ukraine also supply about 30 percent of the world supply of wheat. Russia is a major source of steel, palladium, and neon gas needed to make computer chips. It supplies 35 percent of the world’s uranium.

Together with Belarus, Russia supplies 40 percent of the world’s potash and large percentages of ammonia and monoammonium phosphate exports. Fertilizer prices had already risen 17 percent in 2021 and are expected to rise an additional 12 percent in 2022.

As it did for decades militarily before invading Ukraine, Russia has so far shown restraint in its economic response to NATO’s sanctions. It has by no means thrown its haymaker, such as simply cutting off Europe’s natural gas completely rather than merely demanding payment in rubles. Neither has it cut off exports of uranium to the United States, although it is publicly considering it.

Of course, these economic “nuclear options” would hurt Russia as much or more as it would the U.S. and Europe. But Russia is a relatively poor country that has been living within its means. It has low debt and a population accustomed to a lower standard of living than those in NATO countries. The U.S. and NATO are quite the opposite.

While the U.S. is still a highly productive country, it has been living well beyond its means, largely made possible by the U.S. dollar’s reserve currency status, which is now in jeopardy as Russia, China, and India – whose populations alone represent 37 percent of the world’s population – take steps to get off the dollar completely. Much of the “Global South” may choose to join them.

This economic world war will harm every country in the world. Mass starvation in poor countries is a real possibility. So is economic collapse in Europe.

President Biden has admitted it will have “a cost” to Americans as well. But his portrayal and average Americans’ understanding of that cost is grossly underestimated.

Russia, China, and India are all formerly socialist countries that have experienced exponential growth since pivoting to market economies. The living standards of most of their people have grown significantly but are still low compared to those of Americans or Europeans. Their older generations remember the grinding poverty they experienced under socialism.

In The Matrix Reloaded, Neo tells the architect he doesn’t believe the machines will destroy all of humanity, because their existence relies upon human energy supplies. The architect replies, “There are levels of survival we are prepared to accept.”

Russia, China, India, and much of the world may be similarly prepared. Is the United States?

Over the past seventy years, the United States has attempted to use economic sanctions to remove world leaders it deemed unworthy in Cuba, Venezuela, Iran, Russia, and other countries. Populations in the target countries, perceiving aggression by an outside threat, have instead rallied around those leaders, preferring even despotic rule by one of their own to the U.S. empire’s meddling in their politics.

Fat, dumb, happy, and untouched by the foreign wars its government has prosecuted all over the world, the U.S. population may not be so willing to accept the “levels of survival” necessary to survive this economic war. And unlike Cuba, Iran, Russia, etc., it will not be a foreign government imposing the sanctions but its own.

How will the U.S. population react when economic reality finally comes to its door?

Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Blaming elites is childish; It’s time to put aside childish things

First, let’s debunk a loudly trumpeted fiction: “corporate power.” There is no such thing. Power is the ability to use force and violence with impunity. No corporation has that. Only the government has power and only as much as the citizenry will allow it.

Yes, very wealthy people have more influence over the government than everyone else. You should have known that before you built a government with such enormous power to begin with.

And it was you, who identify yourselves with the deceptively innocuous name, “We the People,” who constructed the monstrosity that now demands you take any injection it decrees and refrain from speaking any word or even thinking any thought that threatens it.

You didn’t build it all in one day. It took decades. But every brick in this edifice of evil was made of the same clay: invading the property of your neighbors to obtain what you believed was additional safety. Before each brick was laid, voices of reason warned you of the danger. You not only refused to listen but derided all who appealed to your common sense.

It’s one thing to disregard the morality of respecting the life, liberty, and possessions of your fellows. It’s another to refuse to recognize the obvious results.

You told healthcare providers they could charge anything they wished, regardless of their customers’ ability to pay, and taxpayers would pay the difference. Then, you were outraged by how quickly healthcare prices rose.

You told colleges and universities they, too, could charge whatever they wished, financed by loans guaranteed by taxpayers. You were again outraged not only at the artificially high prices, but the students inability to pay back the loans. What did you expect?

It doesn’t take an advanced degree in economics to recognize these obvious cause and effect relationships. Anyone with a sixth-grade education and control over his emotions could spot them a mile away. Unfortunately, people meeting both criteria are in the minority.

One can trace the beginning of the problem as far back as one wishes. The Constitution itself was an enormous expansion of government power, passed much like the infamous Patriot Act. But even its powers didn’t satisfy you.

Throughout the following century you participated with your banks in the fraudulent practice of fractional reserve banking, resulting in periodic “panics.” You didn’t need government to protect you from these. Arrangements wherein you earned interest by foregoing use of your money while the banks lent it out were available to you. But you wanted to “have your cake and eat it, too.” When the inevitable result occurred, you screamed for the government to protect you.

You had been warned as early as the first Congress against allowing the government to incorporate a bank. You were told it was unconstitutional and economically destructive by none other than Thomas Jefferson himself. You ignored the warning and supported the bank. Ditto the second version.

You were again provided loud and vociferous warnings against the Federal Reserve System, a scheme that transfers wealth from everyone in society straight to those “elites” you are always complaining about. But you supported it overwhelmingly because it promised you safety from the aforementioned panics caused by your own refusal to accept reality.

When the bank caused the Depression you were also warned it would cause, you demanded the government save you from that, too. Your so-called “greatest generation” elected a fascist who transferred the legislative power from Congress to the executive branch and built the modern administrative state. The New Deal regulatory structure is a barrier to new competition for the established corporations that write its rules.

Having demanded this structure be built, you now complain corporations are too big and don’t have enough competition.

The same dictator also granted your demand to be released from responsibility to save for your retirement. He and his accomplices in Congress created a program that takes 15 percent of your income – money you could otherwise save – and spends it immediately, promising to tax others in the future for a monthly pension doled out to you.

For running similar schemes, you imprisoned Charles Ponzi and Bernie Madoff. But the architect of this criminal scheme was rewarded with four terms as president.

The history of rewarding tyrants and vilifying benefactors is long. The Federal Reserve was conceived in secret by a cabal of corrupt government officials and representatives of the Rockefeller and Morgan financial empires.

Rockefeller had built his fortune honestly, foregoing larger dividends to reinvest profits in his oil company, resulting in growth for the company and decades of falling oil prices for consumers. When his competitors appealed to the government for help, you overwhelmingly supported breaking up Standard Oil, resulting in higher oil prices for you, unearned wealth for Standard Oil’s competitors, and enormous new powers for the government.

Considering how his honest effort was rewarded by those it benefited, it’s hard to blame Rockefeller for throwing in with the government in a scheme to make dishonest money at the same peoples’ expense.

Several decades later, Bill Gates built a software company that refused to send money to Washington. You rewarded that with full-throated support for the government’s antitrust suit against Microsoft, based upon the ridiculous premise that Microsoft had an obligation to design its product for the convenience of its competitors.

Gates learned the same lesson Rockefeller did. That mob self-styled “We the People” can’t be trusted with freedom. Better to collude with the government and try and control them. Who knows what they might do next?

Yes, very wealthy people with names like Schwab, Gates, Bezos, and Benioff get together with government officials at meetings like the World Economic Forum and the Bilderberg Group, where they make all sorts of nefarious plans for running your life. Guess what? That’s just talk, something they have every right to do. Only power you gave the government gives it any teeth.

Like Frankenstein, only you can destroy the monster you created. The Canadian truckers are showing you how. Even if the government physically removes the truckers (which may not be as easy as it sounds), the truckers still have the power. By simply refusing to drive they can bring the global elites’ managed economy to its knees. If they remain resolved and people support them, they will win.

It’s much the same with social media censorship. Facebook’s stock recently lost almost 30 percent of its value in a single day after its total user base declined for the first time in its history. Imagine tens of millions of American Facebook users making a coordinated effort to delete their accounts on the same day and join Gettr, Gab, or MeWe.

That would be game over for Facebook. And it would be both morally superior and vastly more effective than trying to regulate Facebook through the political process. It could be done with a fraction of the time, effort, and organization it took to get Trump or the “Freedom Caucus” elected, which accomplished nothing.

Here’s an inconvenient truth: People like Gates, Bezos, and Benioff would be far richer than most people in any political system, whether capitalist, socialist, fascist, or our present combination of all of the above. If thousands of years of history hasn’t taught you that yet, then you’ll just have to take my word for it. But they only have power over you because they can collude with a government that has that power.

If you want your life and your freedom back, you’re going to have to change your behavior. Stop electing demagogues who promise to protect you from elites by making the government even more powerful. Start electing representatives who will do the opposite.

Stop demanding more “taxes on the rich” and instead demand repeal of capital gains taxes, especially on gold, silver, cryptos, and other competition for the Federal Reserve’s currency. Stop demanding more regulation of corporations and start using your economic power as consumers to support their competition. Elect people who will outlaw executive branch agencies usurping the legislative and judicial powers.

These suggestions share two things in common: 1) they are realistically attainable and 2) they are less emotionally satisfying than trying to “stick it to the elites.”

Children make decisions based on their emotions. Adults make them based on reason. For over one hundred years, you’ve demanded society be run based on the childish notion that anything about reality that displeases you can be rectified by giving the government the power to prohibit it, mandate it, or subsidize it. Playing this sucker’s game has resulted in people like Klaus Schwab and Bill Gates being poised to literally rule the world.

It’s time to put aside childish things.

Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Did Omicron Really Kill the Economy or Was It Something Else?

I canceled cable in June 2020. I made that decision for two reasons:

1. It no longer provided value to me. Until Coronasteria, I was able to watch the so-called news programming, filter out the spin and propaganda, and obtain some knowledge of things happening in the world. As of the beginning of the Covid Regime, that was no longer possible.

2. I didn’t want to subsidize evil. That may sound like hyperbole, but it isn’t. And I don’t want a single dollar of mine helping to perpetuate it.

But I still need to know what they’re telling everyone else. So, virtually every morning, I dutifully visit the websites of CNN, ABC, NBC, Fox, etc. and see what today’s menu of falsehoods has to offer.

I’ve noticed what hasn’t been on the menu the past few days: Covid. At least not the screaming headlines we’ve grown accustomed to over the past two years. Instead, most are leading with the news that Old Man Biden killed a BIG TERRORIST (it turns out he blew himself and his family up during a raid by US special forces).

But the most interesting story featured near the top of a mainstream news site was on CNN, which said, “America’s economic recovery is about to go into reverse.”

The White House is preparing for a dismal jobs report on Friday following ADP’s report earlier this week that the economy lost 301,000 jobs in January. The booming Biden economy seems to have hit a speed bump.

The media want to blame the Omicron virus, but that doesn’t make much sense. No businesses were closed because of Omicron. If you want to blame the knock-on effects of the 2020 lockdowns, or perhaps the disruption caused by Biden’s attempted vaccine mandates, that might be more plausible.

Or maybe it’s because the Federal Reserve is so far keeping its promise to slow down quantitative easing (QE) by $30 billion per month through March and end it completely by March 31.

If Jay Powell doesn’t blink first, we may be about to see how much of the post-lockdown recovery was real and how much was merely malinvestment caused by monetary inflation. The answer might be frightening.

If you want to know who really runs the economy (hint: it ain’t presidents or the free market), download a free e-book copy of It’s the Fed, Stupid here.

It’s also available in paperback here. It’s priced at a pre-hyperinflation level so grab a few copies for friends if you can.

It makes a great introduction to the government’s most economically damaging institution for liberals, conservatives, libertarians, socialists, and independents alike.

Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

It’s a Wonderful Life and A Christmas Carol Aren’t Just Stupid; They’re Evil

If you’ve read my book, An Anti-State Christmas, you’re familiar with my critiques of It’s a Wonderful Life and A Christmas Carol. If you haven’t, you can download a free copy at

One may have walked away thinking the writers of both stories were merely misguided, lacking understanding of elementary economic concepts. That’s true, but their stories aren’t just stupid. They’re evil. They instill in people, at a deep, emotional level, an idea that has led to more human suffering in the world than any other.

This is the perennial belief that a person acting in his or her own self interest not only doesn’t benefit others but harms them. This really is the basis for every slander hurled at Potter and Scrooge, respectively.

It contradicts one of the very first economic principles, which Adam Smith famously called, “the invisible hand.” He observed that in an environment where property rights are protected and exchanges of property are voluntary, people pursuing their own self-interest through peaceful market transactions will do more good for others than people supposedly sacrificing their self-interest.

The truth of this maxim has been proven so many times it’s astounding the lesson remains unlearned. As just one example, it is commonly known extreme poverty fell by 90 percent in the thirty years between 1990-2020. What’s less commonly acknowledged is that 100 percent of the progress occurred in countries that “reformed” their economies.

Let me translate “reformed” so you understand what the academics prefer you didn’t: they became less socialist and more capitalist.

China is the largest example, but the trend is consistent in economies large and small. Wherever a country privatized government-owned industries and allowed market forces to operate, poverty fell dramatically.

Yet another way to say this is poverty fell in countries where people were no longer forced to sacrifice their self-interest for some mythical “common good,” but were instead allowed to pursue their self interest in the only peaceful economic system yet discovered: the market economy.

The communists who wrote It’s a Wonderful Life take great pains to make the hero someone who does not pursue his self-interest. In addition to unsuccessful, this also makes George Bailey very unhappy.

We are supposed to admire him because he is selflessly miserable, which begs several questions:

Is the only “moral” system one in which everyone is miserable?

Or are some people morally required to be miserable so others may be happy?

How can the latter be true if “all men are created equal?”

The claptrap pedaled by these writers is absurd but effective because it appeals to people’s emotions – and not noble ones. When Potter tries to recruit George Bailey to work for him, the truth is told, although most viewers believe the truth is false, and falsehood is the truth.

“Now, take during the Depression for instance,” says Potter. “You and I were the only ones that kept our heads. You saved the Building and Loan and I saved all the rest.”

“Yes, well, most people say you stole all the rest,” answers George

“The envious ones say that, George, the suckers,” replies Potter.

Potter is telling the truth in this exchange and George Bailey is lying. Potter did not steal anything during the Depression. He acquired assets in voluntary exchanges with their owners, the very opposite of stealing.

Potter didn’t make those he bought the assets from worse off. He made them better off. If that weren’t true, the transactions wouldn’t have occurred. That Potter was acting purely in his self-interest doesn’t change that.

As he has all his life, Potter helped others during the Depression. While exchanging much needed cash for hard assets, Potter likely saved lives and certainly preserved the existence of Bedford Falls, all while acting entirely in his own self-interest.

Meanwhile, the “selfless” George Bailey doesn’t help his customers during the crisis. They are forced to help him.

Regardless of how people feel about it, this is the way the world works. And speaking of feelings, this supposed admiration of selflessness and condemnation of selfishness does not proceed from any noble place in the human heart. Rather, Potter speaks the truth when he says the proponents of this nonsense are “the envious.”

The poisonous idea of self-sacrifice to some illusory “common good” led to hundreds of millions of deaths in the 20th century, with starvation alone killing tens of millions in the midst of plenty. It appeals to the basest of human emotions and inspires a disregard of reason and observable reality.

In a society morphing into a pure democracy as constitutional limits designed to prevent that are whittled away, everyone who watches this supposedly heartwarming holiday film or reads any of Charles Dickens’ socialist propaganda and believes it becomes a threat to us all.

It is not a new threat. The central lie of both stories is what led to the revolutions in 1789 France, 1917 Russia, and 1949 China, just to name a few. If you’re wondering how to see it coming, consider a few common characteristics of those disasters: the tearing down of statues and other symbols of the past, the public shaming (and sometimes assault) of “politically incorrect” dissidents, the politicization of science (see “Lysenkoism”), and weaponization of the media by the state.

Surely that can’t happen here.

Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

It’s Not the Elites’ Fault; It’s Yours

My fellow liberty broadcaster Alan Mosely put out a humorous tweet that read, “Who knew Omicron would be such a hero?” He was retweeting an announcement that the World Economic Forum in Davos had been called off due to the Omicron variant.

Certainly, no good ever comes from a bunch of billionaires hobnobbing with the heads of national governments. Ditto the Bilderberg Group, The Council on Foreign Relations or any of several other such elitist gatherings.

But here’s the part most people miss: No bad really comes from them either. Sure, the Federal Reserve was cooked up at a secret meeting of elites on Jekyll Island. But it only became reality because of overwhelming support from the public after it was pitched as a way to protect them from the “elites.”

There was plenty of opportunity to hear opposition to the Act from the minority of Congressmen and Senators who voted against it. But the public ignored their warnings and supported the Act anyway.

Ditto the 16th Amendment. This was also pitched as a way to shift the burden of taxation away from the middle and poorer classes to the rich, the “elites.” The public swallowed this bait and switch hook, line, and sinker, and today clamor for the so-called elites to pay even more income taxes.

But whom do income taxes really hurt the most? The super-rich, making millions or billions in income? No. It’s those middle-income earners, especially those who work the hardest to get ahead, for whom that extra $10,000 – $20,000 paid in income taxes could represent significant capital accumulation over a period of years.

Maybe it’s just a coincidence that this provides a barrier to competition for those above. Does it really matter if it’s intentional or not, since it does?

Right down the line, the public overwhelmingly supports policies that harm them when pitched as protection from the elites. The god-awful Teddy Roosevelt styled himself the “Trust Buster.” His even more awful cousin sold the New Deal to protect the public from the “greed” of the rich.

Everyone was outraged by the EpiPen scandal a few years ago. This was the direct result of the FDA having legislative power, acquired during the New Deal without any amendment to the Constitution, and using it to keep competitors of the EpiPen off the market.

That’s just one little product protected by just one of scores of federal agencies but it’s representative of how the entire New Deal regulatory structure works. And the public not only approves of it but constantly clamors for more.

I don’t care how many private jets Elon Musk or Bill Gates owns. Their getting richer doesn’t make me poorer. Quite the opposite, in fact. But here’s what does make me poorer: government intervention that purports to protect me from “the elites.” That the elites overwhelmingly support it should tell you something.

No system in the past has ever resulted in economic equality; nor will any system in the future. But here is one thing history should have taught you by now: If you set up a system where the property of the elites and yours is subject to disposition by majority vote, you shouldn’t be surprised when the elites end up with all of yours.

Most people on my e-mail list get this. For all those who don’t, I offer these thoughts as some you can pass on to counter so-called “populist” arguments for further “regulating” or plundering the elites. It’s a sucker’s game.

Don’t forget my new e-book, It’s the Fed, Stupid, is also available in paperback here. It’ll cost you less than a sawbuck and is great for introducing friends to our ideas.

Like the music on Tom Mullen Talks Freedom? You can hear more at!

The disastrous anti-capitalist mindset of the early 20th century is back

The 20th century was a period of startling technological advancement. Compared to the lifestyle of average people in 1925, most of human history before that time amounted to what we’d now call “camping.”

Just 30 years earlier, most people traveled on foot or by animal power, except when taking trains. They lit their homes with candles and provided themselves heat mostly by burning wood, just as their prehistoric ancestors had. They went outside to use the bathroom. They died from diseases we brush off today with a 10-day regimen of pills.

The technological explosion in the early 20th century had its roots in the 19th, when what used to be called liberal values informed the western world. By “liberal,” I mean individual liberty, free markets, and limited government. Today, we call that worldview “classical liberal” or “libertarian” (really the same philosophy at different stages of development) because “liberal” no longer means anything of the sort.

Many people believe the cataclysmic world wars were an inevitable price the world had to pay for too much freedom. That’s the opposite of the truth. The early 20th century saw a violent reaction against the tidal wave of freedom that had swept the world during the previous century. At the center of this anti-liberal sentiment was resentment against free markets.

“Laissez faire is dead,” politicians routinely said. It was a self-fulfilling prophecy.

The anti-capitalist mindset was international and, within America, bipartisan. The Progressive Era became mainstream with Republican president Teddy Roosevelt in the White House. It was under Roosevelt that the seeds of the modern, omnipotent executive branch were planted. Those seeds were given tender-loving care by Woodrow Wilson as he attempted to militarize the economy, hoping wartime anti-capitalist policies would become permanent.

There was a brief pause in America during the 1920s, but overseas the anti-capitalist mindset ran rampant. People have forgotten – or perhaps were never taught – how central anti-capitalist thinking was to Italian fascism and Naziism. That’s why during the 1930s even Hitler had admirers here in the United States. He was seen as a “man who could get things done” in terms of overriding the voluntary relationships of the free market to achieve government-promulgated economic outcomes.

It is also the reason both Hitler and Mussolini praised FDR’s New Deal. No, the New Deal wasn’t quite as totalitarian as what Mussolini or Hitler were doing in Europe. FDR never legally prohibited people from quitting their jobs, as Hitler had done, in order to maintain “full employment.” But as Vincent Vega would say, “it’s the same ballpark.” The New Deal brought the economy under the arbitrary orders of executive branch bureaucrats, where it remains to this day.

WWII is widely believed to be a glorious event. Supposedly, the forces of totalitarianism were defeated by the champions of “democracy,” establishing a New World Order (novus ordo seclorum) under which the United States would lead the world in stamping out tyranny forever.

It’s a nice story that is somewhat undermined by the facts. In truth, both world wars were disasters for Western civilization. Yes, Hitler was defeated, but it’s hard to argue in retrospect that bringing half of Europe under the brutal rule of the Soviets, who killed ten times more people than the Nazis and were at least as totalitarian was a slam dunk win.

Worse yet, the relatively freer societies among the Allies became significantly less free. The United States became a garrison state, first ostensibly to oppose the Soviets, and then terrorism, and now…a virus. The European allies descended into socialism from which they only marginally retreated during the late 20th century. The U.S. now seems eager to repeat their mistakes.

The progentior of the world wars and everything that followed was the anti-capitalist mindset that swept the world in the first half of the 20th century. It was belief political power could improve economic outcomes that led to the rise of dictators like Hitler and Mussolini in Europe and dictators-lite like Wilson and the Roosevelts here in America.

Like a bad sequel, the anti-capitalist mindset is back. While the Republican Party may never have delivered the laissez faire market they campaigned on, they understood the need to at least give it lip service. Why? Because a large segment of their constituents wanted to hear it. And that sentiment among a large segment of the public – even if not a majority – is the only thing that can check further destruction of our liberty.

Now, with “economic nationalism” on the right and “democratic socialism” on the left dominating the thinking of close to 100 percent of the population, we are back to the near-unanimous contempt for laissez faire markets that defined the 1930s. And this time, the nation states are armed with nuclear and biological weapons.

How will this latest epidemic of anti-capitalist thinking end?

Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Anti-Trust Laws Are Not the Answer

Austrian economist Bob Murphy recently appeared on Timcast IRL. Among the topics discussed, there was a brief discussion of anti-trust laws that was left with a dissatisfying “I-guess-there’s-nothing-we-can-do-about-it” answer.

The argument host Tim Pool made for anti-trust laws rests upon the assumption that in a free market, successful market actors can accumulate so much wealth that they exercise “power” just as oppressive as a tyrannical government’s. Pool cited as an example Blackrock buying up houses and using its vast accumulated resources to effectively outbid any smaller or individual bidders.

Pool said that companies like Blackrock will acquire assets by offering “insane sums of money,” i.e., paying well over the market price. Eventually, the large company or a few of the largest companies “own everything” and the common folk “own nothing.” Pool asks Murphy if he would support anti-trust laws to address such a situation.

Murphy gave all the correct answers but didn’t elaborate upon them. He pointed out we aren’t operating in a free market, specifically mentioning bailouts, and that it never helps to give the government more power. Pool agreed empowering the government doesn’t work but concluded there is nothing anyone can do about undesirable economic outcomes. Anyone watching would assume this is a defect of the free market one must live with or tolerate government intervention.

That’s the opposite of the truth.

First, as Murphy said, the U.S. economy is not remotely a free market. I would add that it hasn’t been since at least the New Deal, when a fundamental, constitutional change took place.

No longer is economic activity regulated solely by laws passed by Congress and signed by the president. Instead, a plethora of executive branch bureaucrats write enforceable regulations which are at most overseen by a Congressional committee, but which largely bypass the adversarial process of passing a law per the Constitution.

These agencies don’t merely protect property rights but instead micromanage the way businesses are run for all sorts of ends, legitimate and otherwise. This adds cost, stifles innovation, and inevitably succumbs to regulatory capture. All of these effects tilt the playing field towards larger firms and away from smaller or new competitors.

Monetary inflation and bailouts also contribute to the problem. Pool says that large firms like Blackrock pay far more than the market price “because they can.” But how can Blackrock afford to give away its wealth?

If Blackrock pays $230,000 for a house worth only $200,000 (Pool’s example), they have transferred $30,000 in wealth from themselves to the seller of the house. The seller has gained $230,000 in cash while Blackrock has gained only $200,000 in real estate.

That the property in question may appreciate enough to overcome such a loss is completely the result of monetary inflation. Houses are depreciable goods. They wear out and are eventually torn down and replaced. In a free market, the price of a house should go down over time (all other things being equal*), just like the price of an automobile.

Conversely, honest money appreciates over time. It is the natural tendency for prices to fall as society produces more output with the same or less inputs. That’s why prices fell over the course of the 19th century under various iterations of the gold standard. It is only monetary inflation that causes prices to rise even as society becomes more productive.

With an honest monetary system, it would not be profitable for any firm, no matter how big, to buy houses at prices well above their market value. Doing so would make the firm poorer over time and those it bought the house from richer – precisely the opposite result of the big firm “owning everything” and the common folk “owning nothing.”

But even with our present monetary system, under which real estate prices are bid up to absurd levels during inflation-infused bubbles, there are inevitable busts. When those occur, any firm that acquired substantial real estate holdings at inflated prices should go bankrupt, its assets turned over to new owners in bankruptcy court. However, for the past several decades, this market result has increasingly been overridden by “too big to fail” bailouts. It didn’t start with the 2008 financial crisis; the 1979 Chrysler bailout and 1998 Long Term Capital Management bailouts are notable previous examples.

Bailouts don’t just encourage reckless behavior; they reverse natural market outcomes. If not for the 2008-9 TARP bailouts, the country’s largest firms, including Goldman Sachs, Citibank, Bank of America, and others would either have gone bankrupt or been significantly downsized. Smaller firms that didn’t engage in irresponsible behavior would have acquired their assets, their market share, or both. That would have been the free market result.

Incidentally, while Blackrock itself was already a big player in financial markets before the 2008 crisis, it only became the behemoth it is today by first encouraging its clients to purchase the toxic mortgage-back securities at the center of the meltdown and then becoming the Federal Reserve’s partner in bailing out those same firms. That cosey relationship has continued right through the current “Covid-19” economic crisis.

In other words, nothing about Pool’s scenario represents a market result and anti-trust laws attempting to counteract it are the epitome of the government “breaking your leg and handing you a crutch.” Just as the welfare crutch brings with it little relief and all sorts of unintended, negative consequences, anti-trust laws typically result in consumers paying more for the same products and society becoming less productive overall.

Even more important, supporting the use of anti-trust laws against dominant corporations is a strategic blunder for anyone who believes in private property and free markets. Yes, they might be used to temporarily hinder large corporations whose behavior we don’t like. But getting the remnant who support freedom on board with this state intervention will forever set the precedent that even the most ardent supporters of laissez faire recognize the need for intervention under some circumstances.

The enemies of freedom think strategically. That’s why they’ve been winning for the past century or more. When the TARP bailouts occurred, there was a loud minority on the pro-market side saying, “let these corporations go bankrupt. Let the market work.” That those statements are a matter of record is a thorn in the side of the interventionists that they’d rather didn’t exist.

This time around, they would like nothing better than to have even the most uncompromising advocates for laissez faire on the record supporting anti-trust laws or other government interventions. That would take laissez faire off the table forever in terms of future debate regarding private property and freedom vs. central planning and state intervention.

Don’t give the central planners that win.

The answer to grotesque economic outcomes is not more government intervention. The answer is to allow for a market-based monetary system (repeal capital gains taxes on competing currencies like precious metals and crypto), prohibit future bailouts, and repeal the New Deal root and branch.

*A property far from convenient shopping, recreation, schools, and other amenities which later development provides nearby may appreciate in value overall even as the house itself depreciates, but this is the exception rather than the rule.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.