Quote of the Day: “The worst evils which mankind has ever had to endure were inflicted by bad governments.” – Ludwig von Mises
This is the essence of a free market – it is voluntary – it is not the government making you (or the government empowering some other entity to make you) buy or sell or determine the price at which you must buy or sell or punishing you if you do not do what the government (or a government sanctioned entity) wishes for you to do.
This is called freedom and this is called a free market.
All other economic/political/social systems in which the government requires you to buy, sell or determines at what price you will buy or sell, or punishes you for not engaging in commerce which the government sanctions is not a free market.
The adherents of Bernie Sanders and Elizabeth Warren are not going to come out in their campaign propaganda and say “We will use the force and power of the government to make you buy, make you sell and control the price at which you buy and sell and punish you if you do not do what we wish” but that is exactly what their policies will do.
Using the power of government to make you buy, make you sell, determine the price at which you must buy or sell and punish you if you decline to participate is what their entire political platforms are based on. They hire very bright people to decorate this idea of using government force to compel you to enrich the private entities that donate to their campaigns – using words such as ‘fair’ and ‘justice’ – but at the end of the day it is simply using government force to transfer your wealth to their supporters. End of story.
You have two choices here – you can choose a free market in which each individual is equal, no one can compel you to engage in commerce which you do not wish to engage in, and no one will use government force to take your wealth and transfer it to their cronies – or you can choose a system in which some politician will decide what is equal, the government will compel you to engage in commerce, the government will determine what commerce at what price and in what quantity you must engage, the government will use force to take your wealth and give it to their supporters, and freedom continues to die.
Other Side Quote of the Day: “I don’t fully understand movements in the gold price” – Ben Bernanke
Quote of the Day: “Freedom granted only when it is known beforehand that its effects will be beneficial is not freedom.” – Friedrich August von Hayek
Over the last twenty years businesses have increasingly relied on metrics in order to evaluate performance. Metrics are usually objective measurements which people perceive to be critical to their business success.
Here is what tends to happen when companies use metrics to evaluate their performance: people tend to excel at the items they are being measured on and slack off or ignore the things they are not being measured on. I have been part of those conversations when companies say “Why did we fail, our metrics were excellent…” and of course the reason is human nature. If people are being measured on a certain thing then that is where the time and effort goes, things they are not being measured on not so much even though those other things are also critically important to business success.
Let us look at that same dynamic in regard to the Federal Reserve. Humphrey-Hawkins requires the Federal Reserve to be measured on two criteria: inflation and unemployment.
Right now we have inflation at a sub-2% rate and less than 5% unemployment. Success right? The metrics are outstanding, right?
Now lets look at the success of the entire enterprise, i.e. the United States.
· Real year over year wages have declined for nine straight years
· We have lost about 9 million full time private sector jobs the last nine years
· Labor participation rate is at its lowest since 1975
· Home ownership rate is at the lowest rate ever
· The last nine years the average middle class family has lost 29% of their net wealth
· The last nine years the average poor family has lost 45% of their net wealth
· The last nine years the middle class and poor have lost $15trillion in net wealth while about $15trillion in net wealth has been added to the top 7%
· Billionaires the last nine years have, on average, doubled their net wealth
· The bottom 93% have lost 9% of their wages the last nine years
· The bottom 90% have lost 37% of their net wealth the last nine years
In order to accomplish this miserable result we have increased debt at a rate three and a half times that of actual economic growth., debt which either has to be paid back or defaulted on.
Is there any serious argument against rethinking the Federal Reserve and their mandates? I would hope not, yet the politicians we repeatedly re-elect seem just fine with the mandates as they are.