Power & Market
I'm not a fan of Marvin Goodfriend. His views are dangerous, and he has been blatantly dishonest in order to hide them. Ron Paul even personally introduced a bill back in 2000 targeted directly at his idea of taxing cash.
Today, Goodfriend received the endorsement of the Senate Banking Committee with a 13 to 12 vote down partisan lines. While it's not surprising to see a nominee driven purely by party preference, it is worth noting that Jay Powell managed to get Democratic support when he went through the nomination process. Multiple reports from Washington indicate that Democrats will stand opposed to Goodfriend when his vote comes before the full Senate.
That is when things could get interesting. John McCain has yet to make a Senate appearance yet due to his health, meaning a single Republican dissenter could stop Goodfriend's nomination. Today, following the Committee's approval, Rand Paul has said he will oppose Marvin Goodfriend's nomination.
Of course, bad ideas have a way of never truly going away. It is likely that Senator Paul will be tempted with a deal - perhaps another vote on Audit the Fed - to turn his no to a yes. Of course, since a majority of Senators still cling to the absurd notion that a Fed audit would erode the Fed's mythical "independence", this vote would be purely symbolic and end in defeat. Considering the very real danger Mr. Goodfriend poses, particularly with tremors rumbling in US and global markets, this would be a terrible deal.
There is also the risk that John McCain could be rolled back to Washington in order to push the nomination through. Hopefully the handful of other Senators who occasionally talk a good game about the Fed, including Ted Cruz and Mike Lee, can be convinced that the last thing America needs is an economist more radical than Ben Bernanke on the Fed.
The Senate Banking Committee today is hosting the head of the SEC and CFTC to discuss cryptocurrency. Since many Senators are disinterested in using email, it’s interesting watching legislators attempt to articulate the benefits, and potential risks, involved with cryptocurrency and blockchain technology.
One particular highlight came when CFTC Chairman Christopher Giancarlo discussed one particular initiative the Federal government is considering in their war on crypto-mania.
According to Mr. Giancarlo mentioned that, according to government reports, a lot of people use public libraries to research crypto. Because of this, the CFTC and CFPB are looking at a program to educate librarians on the “risks” involved with investing in Bitcoin.
It is unclear at this time whether librarians will have to become registered financial advisers, but it is comforting to see that US financial markets are under the watchful eye of regulators who clearly have such a firm grasp on the industries they’re evaluating.
“Democracy Dies in the Darkness” is the proud motto of the Washington Post. But, considering the past week’s frenzy, the new motto for much of the media and many Democrats is, “Disclosure is the Death of Democracy.” Unfortunately, the uproar around the release of the Nunes memo totally missed the deadly political peril posed by pervasive federal secrecy.
Shortly before the memo became public, President Trump tweeted that “the top Leadership and Investigators of the FBI and the Justice Department have politicized the sacred investigative process.” But any “sacred investigative process” exists only in the imaginations of pro-government pundits and high school civics textbooks. The FBI and Justice Department have a century-long history of skewering targets to gratify their political masters, while the FISA court routinely heaves buckets of judicial hogwash to countenance the wholesale destruction of Americans’ constitutional rights.
Former FBI agent Asha Rangappa, writing in the New York Times, labeled the Nunes memo a “shame” and urged Americans to presume that “most government servants are ultimately acting in good faith and within the constraints of the law.” But blindly relying on positive thinking is a recipe for political servitude. The FISA court has been a fount of outrages because it is an American Star Chamber: the court meets in secret, only hears the government’s side, and approves 99 percent+ of all the search warrants requested.
Much of the backlash against the memo’s release portrayed the FBI as a FISA Vestal Virgin. The FBI issued with a grim statement: “We are committed to working with the appropriate oversight entities to ensure the continuing integrity of the FISA process." Former FBI chief James Comey tweeted that the Nunes memo “wrecked the House intel committee, destroyed trust with Intelligence Community, damaged relationship with FISA court.”
But for more than a decade, the FISA court has repeatedly complained about deceptive FBI agents seeking turbo-charged secret FISA warrants. In 2002, the court revealed that FBI agents had false or misleading claims in 75 cases. In 2005, FISA chief judge Colleen Kollar-Kotelly proposed requiring FBI agents to swear to the accuracy of the information they presented; that never happened because it could have “slowed such investigations drastically,” the Washington Post reported. So FBI agents continued to have a license to exploit FISA secrecy to lie to the judges.
Last year, a FISA court decision included a 10-page litany of FBI violations, which “ranged from illegally sharing raw intelligence with unauthorized third parties to accessing intercepted attorney-client privileged communications without proper oversight.” How many times did FBI agents make false claims to FISA judges while Comey was boss? It’s a secret. The FISA court also complained that the National Security Agency was guilty of “an institutional lack of candor” connected to “a very serious Fourth Amendment issue” — i.e, ravaging Americans’ constitutional right to privacy.
Syracuse University law school professor William Banks asserted, “I can't recall any instance in 40 years when there's been a partisan leaning of a FISA court judge when their opinions have been released." But this is only because, inside the Beltway, being pro-Leviathan is pragmatic, not partisan. The FISA court has repeatedly presumed that if the feds violate everyone’s privacy, they violate no one’s privacy -— so there is no constitutional problem.
In 2006, the FISA court signed off on effectively treating all Americans as terrorist suspects. The court swallowed the Bush administration’s lawyers’ bizarre interpretation of the Patriot Act, claiming that the telephone records of all Americans were “relevant” to a terrorist investigation.
In 2009, the FISA court upheld surveillance based on a 2007 law that effectively decreed that any American who exchanged emails or phone calls with foreigners forfeited their right to privacy. A FISA Appeals Court decision dismissed concerns because the government had “instituted several layers of serviceable safeguards to protect individuals against unwarranted harms” — so anyone whose privacy was zapped had no right to complain.
Read the rest at The Hill
"Could Bill Belichick’s grasp of economics be the key to the Patriots’ success?" asks Paul Solman at PBS's Making Sen$e. He gives examples of Belichick seemingly understanding the concepts of opportunity cost and diminishing returns (from the perspective of neoclassical economics). I much prefer Carl Menger's way of formulating these concepts (more technical discussion here). And Tho Bishop's excellent discussion of Belichick as entrepreneur provides a more comprehensive explanation of how the Patriot coach operates. But it's always nice to have some economics included with your Super Bowl enjoyment.
Today on The Tom Woods Show, Chris Calton joined Tom to discuss one of the most fascinating characters in American history, Lysander Spooner.
Chris and Tom look at how Spooner evolved as a thinker, and in particular his view on the Constitution. They also talk about the podcast Historical Controversies and the war on drugs.
The long anticipated memo from House Intelligence Committee Chairman Devn Nunes has finally been released, confirming some of the allegations that have been waged at the investigation into the Trump campaign for month. The document outlines how the Obama Justice Department used the controversial "Steele Dossier" as a vital component of the warrant they presented to the FISA courts justifying their surveillance of members of the Trump presidential campaign. While Democrats in Washington have argued that the memo paints an incomplete picture of the investigation, it would require key components of the memo to be outright lies in order to change the narrative it depicts.
Unfortunately, while outrage from the Trump Administration and Republicans appears justified, it is difficult to have much sympathy considering the very same people just voted to give the FISA courts more power. As Judge Andrew Napolitano wrote at the time:
Even in the fresh aftermath of 9/11, when the government’s respect for constitutional norms was at a lamentably low point, the government interpreted the Fourth Amendment as requiring the government to separate its intelligence functions from its law enforcement work. The government recognized that its trigger for mass surveillance — namely, looking for a foreign agent among the populace — was a far lower standard than probable cause of crime, which is what the Fourth Amendment requires.
Today, the federal government’s computers are permanently connected to the mainframes of all telecoms and computer service providers in America, so the spying is in real time. Today, the federal government employs more than 60,000 domestic spies — one spy for every 5,500 Americans. Today, if any of them come across evidence of crimes while listening to your telephone calls or reading your texts or emails ostensibly for intelligence purposes, there is little they can do about it.
Now, hidden beneath the “Fire and Fury” controversy is the muffled sound of the Trump administration and Republican congressional leaders plotting the enactment of an addition to FISA that would permit the use of evidence of crimes in federal court even when it is discovered during mass surveillance authorized by general warrants.
If enacted, this radical, unconstitutional hole in the Fourth Amendment would bring the country full circle back to the government’s use of general warrants to harass and prosecute — general warrants so odious to our forebears that they took up arms against the king’s soldiers to be rid of them.
I am surprised that President Donald Trump supports this. He has himself been the target of unlawful foreign surveillance and unconstitutional FISC-authorized domestic surveillance. “Fire and Fury” even quotes former British Prime Minister Tony Blair warning a newly elected Trump about this. And now he wants to unleash upon us all the voracious appetite for surveillance that was unleashed upon him and prosecute us for what is found, the Constitution be damned.
Just another example of how the Federal government is able to grow, regardless of who is nominally in power.
One of the topics discussed is the debate over dehomogenizing the work of Hayek and his mentor Ludwig von Mises on the impracticality of socialism. Since this is the 30th anniversary of this debate, we will have a panel dedicated to it at this year's AERC.
The theater of the State of the Union Address is always the hardest part to stomach. The endless outbursts of applause, the parading up of guests with allegedly inspiring stories, and the calculated pauses all make me wish we could return to the days when Thomas Jefferson submitted his addresses to Congress in writing.
Nevertheless, the SOTU speeches do often provide some good fodder for evaluating just how bad an administration's plans are for the next year.
One characteristic of Trump's speech, however, is what appears to be an unusually high level of non-specificity. That is, Trump apparently has some big plans, but for the most part, he didn't provide any details as to how big.
Once he got past a long list of guests and introductions, and past a few vague government statistics on job growth, Trump went into the best part of the speech, which was naming the good policies that the administration has so far supported: deregulation, tax cuts, non-activist federal judges, gun-ownership rights, and religious freedom.
To the extent that the administration has pushed policy in support of these items, these developments have been good.
Once he moves beyond these issues, Trump begins to hit shakier ground.
Trump quickly moves on to trade issues, including claims that it's best if automobiles and other goods are manufactured in the United States.
Based on his earlier speeches, of course, one can only assume that Trump is pushing higher tariffs aimed at raising the prices of imports, and thus punishing consumers. He doesn't state it that way, of course — and he didn't state it that way tonight — but that has been Trump's stated policy.
Tonight though, Trump remained sufficiently vague on these topics to make it difficult to determine just how committed he is to a protectionist trade policy. His rhetoric was significantly scaled back, and there was no mention of specific penalties or tariffs or efforts designed to punish companies considering moving out of the country.
Moreover, when he mentioned how "unfair" trade deals with foreign countries are, he didn't actually offer any specific actions that would make them "fair."
Thus, if we want to gauge his level of enthusiasm for such policies off tonight's speech, we don't have much to go on.
Politically, of course, this is a good strategy. It means Trump's opponents can't do much in terms of condemning policy prescriptions. We just know that Trump wants "fair" trade, and that will sound good to a lot of voters.
The economics behind Trump's trade policies are all terrible. It is not necessarily true that goods built within the borders of the US benefit Americans more than do low-cost imported goods. Only markets can work that out.
But, politically, talking about new factories being opened in Alabama makes for great politics, and economists arguing against national policy designed to punish or reward certain industries won't win many friends.
The worst part of Trump's talk, not surprisingly, was foreign policy.
The foreign policy section was a long list of threatened interventions in foreign countries. Trump mostly ignored the many interventions the US is already involved in — possibly because those interventions provide him with little to brag about.
A lack of a US invasion in Korea was seemingly defined down as a "concession" to the North Koreans, and the presence of the US's enormous nuclear arsenal was conveniently ignored when Trump attempted to portray North Korea as a real existential threat to the United States.
Other possible interventions were lauded as well, including in Iran.
These theatrics were coupled with alarming claims of the need to "rebuild the nuclear arsenal" — which is already enormous, and to "fully fund" the military — which is already funded above Cold War levels.
We can clearly expect a lot more government spending on these issues in the future.
But again, there were few specifics mentioned.
One of the few specific numbers mentioned was the "at least $1.5 trillion for the new infrastructure investment that our country so desperately needs."
Coupled with the military spending, this detail reminds us that this administration will be firmly committed to a guns-and-butter policy going forward.
We can expect to see far more spending on everything from Medicare to the Pentagon to infrastructure.
Not surprisingly, there was no mention of government deficits.