We’ve been watching the progress of the Chinese offer for Smithfield Foods, Inc., with great interest. It does seem, after all, that it would be a perfect test case for a leveraged worker buyout financed by a consortium of banks with the loans rediscounted at the Richmond Federal Reserve. Ownership of the company would remain in American hands, and what amounts to an economic stimulus of billions of new dollars backed with private sector hard assets instead of government debt would show the way to finance growth and pay down the debt at the same time.
Friday, June 28, 2013
Thursday, June 27, 2013
Response to Professor Shakespeare, II: Analyzing Shakespeare
As Jonathan Swift explained in the sixth number of his “Drapier’s Letters,” commenting on what he believed to be the fraud of William Wood’s State-granted monopoly for the coinage of copper halfpence and farthings for Ireland, “I foolishly disdained to have Recourse to Whining, Lamenting, and Crying for Mercy, but rather chose to appeal to Law and Liberty and the common Rights of Mankind, without considering the Climate I was in.”
Wednesday, June 26, 2013
Response to Professor Shakespeare, I: CESJ’s Position
A few months ago, Mr. Chris Dorf, an occasional participant in the “Kelso Binary Economics Discussion Group” and on this blog who supports Keynesian theory, published some vague accusations against Dr. Norman G. Kurland, president of CESJ. Mr. Dorf refused to support his accusations with either evidence or logic. This encouraged a number of other critics of CESJ to join with Mr. Dorf in making further unsubstantiated accusations, particularly after he falsely accused CESJ of “banning” him.
Tuesday, June 25, 2013
Three Principles of Banking, II: The Solution
Yesterday we described the current financial situation in the world in very broad terms, along with what governments have been doing to try and fix things. In general, the solution is to print more money backed solely by increases in government debt. In effect, this is trying to get out of a hole by digging it deeper.
Monday, June 24, 2013
Three Principles of Banking, I: The Situation
A serious problem in the world today is that the people in charge of the world’s central banks have no idea what a central bank is supposed to do. Their guiding assumption is that central banks were invented to finance government. They also believe (erroneously) that “money is peculiarly a creation of the State” (Keynes, Treatise on Money).
Friday, June 21, 2013
News from the Network, Vol. 6, No. 25
As of this writing, the Dow is up slightly from the “plunge” of the last few days. This writer’s opinion is that this is a result of the short sellers locking in their profits by buying back what they sold off over the last couple of days. It could also be that the speculators are counting on some action by the Federal Reserve to pump more worthless cash into the system to stimulate the bubble and raise prices artificially.
Thursday, June 20, 2013
Fighting the Last War
During the Great War (a.k.a., World War I), both sides insisted on running head-on against the other, despite the fact that military technology had advanced far beyond tactics. Nevertheless, the leaders kept on using tactics that were at least half a century out of date. Yards of territory were gained or lost at the cost of hundreds of thousands of lives.
Wednesday, June 19, 2013
The Dictatorship of Money, IX: Catholicism and America
Contrary to popular belief among some Catholic groups that there is something inherently wrong in the American system as designed by the Founding Fathers, there is every indication that Leo XIII and other popes saw something special about the United States — in a good way.
Tuesday, June 18, 2013
The Dictatorship of Money, VIII: “New Things”
As we noted in our last episode in this series, socialism was growing by leaps and bounds in the latter half of the 19th century, particularly in America, which had seemed immune. This was largely due to the fact that prior to the Civil War the issue had been between the industrial and commercial capitalism of the North that ran on wage slavery, and the agrarian capitalism of the South that ran on chattel slavery.
Monday, June 17, 2013
Private Sector Money, V: A Final Question
We had one more question come in on this brief series. This involved the duty of a private issuer of money to disclose how much he or she was issuing and in what form. As our correspondent asked,
Friday, June 14, 2013
News from the Network, Vol. 6, No. 24
As of this writing (a little after 2:00 pm EDST), the Dow is down more than a hundred points. It’s up, it’s down. Don’t even try to second guess it. Just take your cash to Las Vegas and play the slots or Keno. You probably won’t come out any better, but you can catch the shows and get free drinks.
Thursday, June 13, 2013
Private Sector Money, IV: The Rest of the Story
Now, to get back to the original question that started this series — we don’t think that such private money creation will allow multinationals (or anyone else) to escape taxation or accountability.
Wednesday, June 12, 2013
Private Sector Money, III: The Same Story
We’ve already seen how in the American Civil War and World War I, the politicians decided to finance the war effort using debt instead of taxes. In the 19th and early 20th centuries following the wars, however, the government made a concerted effort to pay down the war debt. This put the economy and the money supply back on a more or less sound basis.
Tuesday, June 11, 2013
Private Sector Money, II: After the Faux
Maintenance of a national debt by the U.S. government began in earnest after the Civil War. This was in the mistaken belief that the currency had to be backed with government debt, and that if the government paid down its debt, there would be no money. Reliance on government debt, however, ensured that the people who most needed access to credit were denied that access.
Monday, June 10, 2013
Private Sector Money, I: Antebellum Bucks
Last week we got a (nother) question about money creation. Given the fact that the more money the government seems to be printing up the less we have, this is a question on everyone’s lips — or, at least, in everyone’s pocketbook. As our correspondent said,
Friday, June 7, 2013
News from the Network, Vol. 6, No. 23
Despite the evident bafflement and lack of vision exhibited by the powers-that-be on both sides of the aisle, we are making progress in presenting and even implementing the Just Third Way. This appears to be making people nervous who think — erroneously — that their jobs, reputations, careers, and so on, are somehow threatened by the Just Third Way.
Thursday, June 6, 2013
The Non-Essential National Debt
On May 22, 2013, the Wall Street Journal published an op-ed piece by Phil Gramm and Steve McMillin, “The Debt Problem Hasn’t Vanished.” We thought it was pretty good — except that the authors assumed as a given that the currency had to be backed by government debt.
Wednesday, June 5, 2013
The Dictatorship of Money, VII: “A Theory of Human Society Peculiar to Itself”
As we saw in yesterday’s posting, the U.S. Supreme Court’s opinion in the Slaughterhouse Cases effectively shifted the source of all rights, especially life, liberty and property, from human beings, to the State. This, to all intents and purposes, abolished the natural law as the basis for the government of the United States.
Tuesday, June 4, 2013
The Dictatorship of Money, VI: The Turning Point.2, Continued
As we saw yesterday, in the notorious Dred Scott decision, the United States Supreme Court ruled that, to all intents and purposes, rights come from the State and are vested in the people at the discretion of the State. Under traditional natural law theory, of course, rights are inherent in each human being, and are vested in the State at the discretion of the people. As Pius XI pointed out,
Monday, June 3, 2013
The Dictatorship of Money, V: The Turning Point.2
Last week we examined the first “turning point” in people’s understanding of money. That was the idea that seems to have popped up around the time of the Reformation that rights are not inherent in human beings, but in the State. By a somewhat circuitous route, this new concept of where rights come from found its way into political economy. This provided the foundation for the rapid expansion of State power and totalitarianism in the 20th century.
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