Category Archives: Uncategorized

Mob Tactics to Fight for Freedom

The use of violence is like JRR Tolkien’s One Ring. The forces of evil seek to use it. For example, consider the looting, rioting, and arson that occurred in the wake of the death of George Floyd by Officer Derek Chauvin. Something was lost on the Left, or perhaps they know and don’t care: if jurors convict Chauvin because of their fear of mob reprisal that this is not justice. The reason matters. Justice is when jurors convict based on their reasoned conviction that the defendant committed the crime. Justice is not when jurors fear for their lives or their family. Or just want to get their lives back after being stuck in court too long. But the Left cares not, they only want to impose their preferred outcome. And it looks like they won.

And so, logically it seems, that those who would fight for good wonder “hey, if the Left can win like this, why can’t we do it too?”

Tolkien wrote extensively and articulately on why it doesn’t work this way. In the film version of The Lord of the Rings, we see Boromir lusting for the Ring. He eventually betrays the Fellowship and attacks Frodo to try to take it.

The One Ring is a good analogy for power, the capability to compel others’ obedience, to bend them to the will of the one who wields it. This power is suited to the Dark Lord Sauron, who we are told in the prologue “seeks to dominate all life.” But it is not suited to the free peoples of Middle Earth who fight against Sauron.

In other words, this power suits he who would make us slaves. But does not suit those who would not be slaves.

There is a powerful analogy between the Ring and the Freedom Convoy in Canada. The Canadian government has imposed a Covid vaccine mandate. This is absolutely a bad policy. Government should not have the power to force people to get vaccines. This essay is not in any way a defense of the policy. As Lord of the Rings was not in any way a defense of Sauron. I am not saying that people should support vaccine mandates, as Tolkien was not saying that people should bow to Sauron.

My purpose in writing this is to show why this convoy will not lead to liberty or anything good. Notwithstanding that it is a reaction to a wrongful policy.

When Frodo offers the Ring to the Lady of the Elves, Galadriel, she proclaims “In place of a Dark Lord you would have a Queen! Not dark but beautiful and terrible…”

Perhaps one day, someone will make a movie of this and, a character will cry “in place of a Covid vaccine mandate, you would have mob rule!”

Let’s start with the facts. The Canadian government has passed a law: that they will not allow truck drivers to enter the country, unless they have the Covid vaccinate. In response to this, large numbers of truckers have driven their trucks to Ottawa, and there they are blocking streets and hence the residents from going to work, food, or even the hospital. They are also making noise, including honking their horns, which interferes with the ability of the residents to sleep. More recently, they have blocked the bridges between Detroit USA and Windsor Canada, the busiest land border crossing between the two countries. This prevents goods, including components used to make cars, from moving.

In other words, their complaint is against the Canadian government, but their target is their fellow citizens. Just like with the rioters after George Floyd, whose complaint was against the government, but whose actions were against retailers and building owners.

One guy on Twitter said to me that the truckers are trying to reopen the roads and bridges. It took me a moment to grasp the Orwellian convolution of this line of thought. The truckers are blocking roads and bridges, that is forcing them closed. They do this to get the government to repeal its Covid vaccine law. My Twitter interlocutor conflates this law with “closing the roads and bridges”. And thus, twists things to the opposite of the truth, and says the truckers are not forcibly closing roads and bridges at all, but merely trying to “open” (scare quotes deliberate) them.

One sees this kind of stretching of language frequently in political debates. Those who are arguing for the wrong side desperately twist and squirm, seeking some way to avoid admitting that they know what they are doing. And often, that way is to bend the meaning of words into their opposites.

We have all seen socialists declare that “freedom” is when the government keeps the people like pets, feeding, watering, and housing them. In that spirit, blockading bridges is fighting to “open” them.

The most fundamental political principle is that it is wrong to initiate the use of physical force against innocent people. This is a full stop. There are no mitigating factors. There is no “yes, but”.

Initiating the use of force against someone is wrong, even if you have a legitimate complaint against him. This is why we have police and courts. Initiating the use of force is wrong, even if you have a legitimate complaint against the government. This is why we have the right of freedom of speech, the right to petition the government, including the right to peaceably assemble, and ultimately the right to vote politicians out of office.

There is no right to block people from going where they would. This applies to a bully who would block you on the sidewalk, by interposing his body. It applies to a trucker who blocks the end of your driveway. And it applies to ten thousand truckers who block the roads and bridges.

Many who defend this, would attempt an analogy to Ayn Rand’s novel Atlas Shrugged. They say that the truckers are “going on strike”. But this is not accurate. To go on strike would be to refuse to drive one’s truck. Any truck driver has the right to go on strike.

But that’s not what these truckers are doing. They are forcing others not to go to work (also not to go to buy food, or seek medical care, etc.)

The moment they violate the rights of other people, they cease to be “protesting”. They become a mob seeking political outcomes, by the use of force.

With a jury who convicts not based on the law or the facts but based on the fear of a mob, the result is not justice. With a government who sets policy not based on the sanction of the people but based on fear of a mob, the result is not the rule of law. It is ceding power to any mob big enough, persistent enough, and threatening enough to bring the politicians to their knees and repeal the law.

And in both cases, this is true even if the defendant did commit the crime and even if the law ought to be repealed.

This leads us to an age-old question. Do the ends justify the means? Philosophers and populists have been debating for centuries. Let me cut to the chase.


Wrongful means are not justified. Even if the ends are noble. Professor Tolkien would add, wrongful means are not suited to righteous ends. And I would add, wrongful means will always lead to bad ends. For example, the French Revolution was a reaction to the brutal feudal system. They were right to end feudalism. But the French Revolution led to a reign of terror.

And there is a simple reason for it. One act of initiating the use of force justifies another such act. What will both sides in the Canadian trucker controversy take away from this, assuming the truckers get their way? It’s obvious: “if you want something, just organize a big enough mob and extort it from the hapless citizens.”

Like the One Ring, this is not really suited to those who want to be left alone. But it is a great tool for those who really want the power to make others obey.

On Twitter, I have said several times that once the Right forcibly Occupies, then it loses the right to complain when the Left Occupies. The same retort recurred over and over. “The Left already has that right!”

In other words, Tu Quoque. “It is OK when we do it, because they do it.”

Politics has been reduced to two tribes warring against each other, each justifying its own wrongdoing by pointing to the other side for doing it. Each side still clinging to the belief that it is the side of righteousness, while descending the steps to Hell willingly and eagerly with the other side.

Both sides forfeit any claim to righteousness, as they are violating the rights of the residents of Ottawa to go about their business, and the rights of travelers across the bridge from Canada to the US (including US citizens who need to return home).

Recall the story of Little Red Riding Hood. A wolf wants to eat her. But suppose a bear came to fight the wolf for her. What is the point of the bear“winning”—if that which is won is not the freedom of Little Red Riding Hood, but merely the victory of the bear over the wolf?

In many recent cases, the Right has rightfully called “hypocrisy!” on the Left. They do this whenever the Left acts against the Left’s stated principles (which is a weak way of opposing those false principles, but that’s a whole ‘nother matter). And now we have a pugnacious defense of doing what the Left does, on grounds of Tu Quoque or whataboutism.

Hypocrisy and Tu Quoque are flip sides of the same moral relativist coin. It is based on the belief that there are no firm principles, no standards for human behavior, no rules governing the use of force. Except one. Whatever you can get away with. And the defining factor of what you can get away with is: whatever the other side got away with!

They’re angry that the Left got away with Occupy, so they righteously Occupy.

Another common retort is, “sacrifices have to be made in war.” This little doozie contains two errors.

One, you have no right to decide what sacrifices that other people should be forced to make. This is the whole problem with the vaccine mandate in the first place, as someone decided that it is a small sacrifice for you to get vaccinated (an irony lost on the defenders of this mob). And in protest to this forced sacrifice, you decide to force Ottawa residents to stop living their lives until you get your way.

The philosophy based on forcing others to sacrifice, for an alleged “greater good”, is the basis for every totalitarian regime.

The other error is that this is not a war. In war, you do not bring your expensive assets to the battle. You would not rely on the enemy to let it sit there, neither seizing it nor destroying it.

The even greater irony, is the claim that the government of Canada has become totalitarian. But the truckers rely on that very government not to behave as a totalitarian government. Recall in Tiananmen Square, the totalitarian communist regime killed peaceful protestors (who were not blocking anyone). They shot the protestors in the back, and ran over them with tanks—even while they fled.

In East Germany, people were dragged off to years of torture, on suspicion of even whispering an anti-government word. In some cases, the informant was the victim’s brother.

In Canada, they call the government “totalitarian” while openly flouting the law.

It’s not a war, it’s a circus where those who would fight for liberty, and protest a bad law, end up working towards mob rule by breaking the rightful laws required of any civil society. And they know they can rely on the government not to enforce these rightful laws, even while it continues to enforce the wrongful vaccine law. If I were a fiction writer, I doubt I could come up with something so bizarre.

Reflections Over 2021

In March, I flew for the first time since the start of Covid health theater. I was invited to speak at the Austrian Economics Research Conference in Auburn, AL. My talk covered Jimi Hendrix, and an infamous bridge collapse. In other words, I discussed my theory of interest and prices.

At the end of November, I flew to London for two weeks of business meetings. This was my first international trip since the Covid lockdown. I offer three comments. One, the UK government forces you to get a Covid test to visit the country and the US government forces you to get another test to be allowed to board a flight back home. Yes, even US citizens. No, I do not think this is constitutional (but who cares about that old document).

Two, by the way, having a stick jammed up your nose is an unpleasant experience.

Three, there is a difference in the UK and US cultures, when it comes to responding to government mandates for vaccines and masks. The US is populated by the descendants of people who risked their lives, rather than bow to kings. We still have that attitude. In the US, people break into two camps. Both are passionate, but on opposite sides.

One side is against mandates. If it helps fight mandates, they will attack the Covid vaccine, vaccines as such, pharmaceuticals in general, and even the germ theory of disease and medical science. The other side is against Covid. If it helps fight the virus, they will attack your right to control what you put in your body, your right to be on US soil, and even individual rights in general.

Both sides are vocal and tireless. And yes, I am being charitable to both sides.

In the UK, it seemed to me that the people are more accustomed to pervasive government. For example, all real controversy of their socialized medicine scheme ended decades ago. Even successful and wealthy entrepreneurs will defend the National Health Service to the death. Brits, much more than Americans, are told “stand here, don’t stand there.” So being told “wear this,” is just another rule, added to a long list of rules. Compliance, whether paying a BBC tax on your TV, or wearing a mask, is part of the bureaucracy mindset. In the UK, I saw no heated emotions about mask mandates. Not even directed towards the mask refuseniks who flouted the rule with which everyone else was complying. Compared to the Portlanders I saw, when I visited Oregon in October, it’s day and night.

The British gave us Americans many things: common law, language, and lots of great music. I hope that we Americans can give them one thing in return: the fighting spirit to push back on government overreach.


It was a great year for my company, Monetary Metals. We grew gold under management, we hired some talented and passionate people, we developed steady flow of lease deals. The first gold bond in 87 years matured, and investors were repaid their principal plus interest. As of year’s end, we are raising equity capital to scale.

My last company, DiamondWare, had a very cool technology. It was disruptive and could change communications (and now, 13 years after I sold the company, major companies are promoting 3D voice technology). But if there was a challenge, it was that it was hard to talk about in a way that people could understand. Even CTO’s of technology companies often did not get it.

What I love about Monetary Metals is that it is not hard to explain. We pay interest on gold. There, now you know what we do. We do it by leasing or lending the gold to productive businesses. There, now you know how we do it. Easier to explain means it takes less time trying to educate prospective customers. DiamondWare could have been a billion-dollar business. Monetary Metals can be many millions of ounces.

DiamondWare was making the world a better place. There was a big contrast between the low-fidelity monaural audio of conventional phone calls, vs. the popular conception of communications in the future thanks to science fiction. Or even a contrast to the rising quality of video that existed at the time. 3D allowed for new paradigms, which is why Nortel acquired it.

Monetary Metals is making the world a better place, by giving disenfranchised savers a better choice. Conventional banks offer basically zero. Or else people can speculate on whatever asset. From real estate to virtual tokens, maybe they can make big capital gains. Or maybe they lose their capital. People need to earn interest on their savings. Civilization depends on entrepreneurs borrowing to finance the production of all the goods which we now enjoy.

Today, this finance is not working for the savers. And bitcoin does not fix this, as it does not finance anything productive (even crypto companies borrow dollars when they need growth capital). So productive enterprise has no choice but to use dollars. And then they are in the position of having to work harder and harder, to produce more and more, to sell to raise dollars to service their mounting debts.

Monetary Metals is serving gold businesses, while we serve gold savers (silver too). As more people come to grips with the impossibility of saving in dollars, we look forward to serving them with their newly acquired gold savings as well.

I can’t imagine anything else I’d rather be doing.


I don’t watch much TV (other than Lord of the Rings once a year, this year in 4K HDR—wow what a difference both 4K and HDR make, the images are more detailed, more beautiful, and also much brighter and much darker!) But when I do, it’s often a documentary on science or history. One show was about an old Nazi underground airplane factory.

As the Allies gained air superiority over Germany, they could bomb anything they wanted. Such as factories making munitions. So the Nazis tried to build them underground. These projects took time to build. The Allies watched them divert massive resources away from fighting. Once the Nazis completed construction, then the Allies bombed these sites into ruin.

Hitler had to know, long before D-Day, that the war was lost. Not only could the Allies work their way through the Nazi targets, but the Nazis would never be able to build anything that required large-scale factories.

It was all over, but the dying.

And then it clicked for me. You don’t become a mass-murderous dictator out of love for the people of the country under your fist. It’s not merely that the dictator hates the ostensible enemy. He hates his own people—whom he kills in large numbers. He kills them to make them obey, to stay in power. And he kills them in making them kill the enemy.

Hitler and his generals knew that by continuing to fight past the point of hopelessness, that not only would more British military personnel get killed, and more British civilians. He also had to know that more German soldiers would die, and more German civilians. And he decided to keep fighting, knowing he would kill more of his own people, and still inevitably lose.

This is something to keep in mind, as we see populists and wannabe dictators rise today. They don’t just hate whatever group they use as a scapegoat. They will harm and kill their own people. It brings a new light to the idea of the collective, of the concept of a dictator’s own people. It’s own as in ownership. Not any kind of love, brotherhood, common interest, or solidarity.


There is something I had to make my peace with. Otherwise, I could not go on with what I do. And that is that I may be alone in my anger at injustice in the monetary realm. I have to able to be comfortable with being alone in this fight.

I am happy to be alone, if necessary, in being angered by the sentiment expressed in this little exchange which I shall quote from Twitter, below. The people involved in this would, no doubt, claim to support sound money. I am left thinking, “you say that word sound, I do not think that that word means what you think that it means.” (Due apologies to the Inigo Montoya).

Describing postwar inflation, someone said:

“…inflation served an important function in those circumstances. There was a huge overhang of excess cash accumulated during WW2 with few goods available to spend on. Inflation was an effective method of mopping up the excess cash.”

Let’s take this apart. By inflation, of course, he means the diminishing value of everyone’s savings. That prices go up, and in their view, this means that the value of money goes down. This inflicts harm on everyone. But not evenhandedly. Those who borrowed are beneficiaries (in the short-term way that anyone ever benefits from free goodies that he did not earn, which are taken from someone else). But those who prudently saved are robbed.

Talk about perverse incentives sorry, er, umm… by rewarding borrowing over saving, the central planners can encourage consumption and business expansion, and to make the economy grow!

Next, we get to the problematic concept of excess. Cash saved is deemed to be excess. What does that even mean? With something like eating, there is a clear definition: when you gain weight in the form of fat. And this is measured relative to the ideal amount for the long-term health of the body. But with cash savings, it is meaningless to declare it to be excess.

Also note that someone has to be empowered to Decide that you have too much cash. So this nonsense term serves to carry the baggage of a central planner. A technocrat who gets to sit there, and judge your bank balance with respect to a magic formula or political expediency. Speaking of baggage, the word overhang serves only to carry more baggage. Like your cash is some kind of Sword of Damocles, hanging over someone’s head—the head of the body economic?

Cash is, somehow, a threat. And therefore this Decider, this central planner, has to mop it up! This rubbish term smuggles the idea that your cash is their mess. Messes need to be cleaned up, do they not?

All it needs to be hammered into the mind of the victim is an appeal to the public interest. This is not your interest. It is not the interest of those who have savings that the Deciders have deemed to be excess. It is the interest of no one, just the nameless public as a faceless collective. And in the name of this alleged interest of no one in particular, the government is to mop up your cash. That is, loot your savings. And notice how the term mop up is a very vague, approximate understanding of what happened. It serves to conceal the truth.

Don’t object, this cash was excess anyways, so they Decided that you didn’t need it.

Yes, I am seriously pissed-off! And let me tell you what I really think.

I think that economic arguments need to be addressed with economic arguments. I can and do discuss capital accumulation, incentives, and the other topics relevant to this idea of deliberate devaluation. Without economic argument, one concedes to the dirigistes that central planning is practical, that it works, that it achieves—or at least in theory could achieve—its stated objective.

But in addition, one has a moral obligation to make the moral argument as I just did. We need to show a clear picture of what this is. The language offered by our would-be central planners is antiseptic, and often abstract or academic. By stripping away the mealy-mouthed phraseology, by not letting them frame the issue in terms of generic aggregate statistics, by objecting to the vague hand-waving of the public interest, we can help people see what it really means.

Mopping up the excess cash is a sloppy word soup. Each word is designed to deceive. And as a phrase, it means, can only mean, one thing. Looting. They want to loot you. Yes, even the otherwise-free-marketers who can explain what’s wrong with minimum wage laws, why we should not restrict imports, how rent control causes housing shortages, and why healthcare regulation reduces quality and increases costs. Even these folks, when they speak of mopping up your savings, mean what they say. They know what it means, even while carefully picking words that misdirect you.

What is in need of mopping up, is the central planning school and its propaganda. It is long past time to stop the central planning apologia.


I make no predictions in my annual Reflections essay (I save those for the Monetary Metals Gold Outlook, the 2022 edition is coming soon). However, I’d like to express a few hopes.

My first hope, if it wasn’t clear at the start of this essay, is that enough people get mad enough at health theater to effectively call for its end. We need to release the restrictions on social and commercial activities, and we need to do it yesterday.

I understand that zero interest rate policy forces people to speculate, as a surrogate for earning a yield on savings. Regulation cannot stop it, nor economics education, nor volatility. People seek capital gains, when they cannot attain their goals via compound interest. But my second hope, is that a certain kind of smug (pseudo) certainty that is prevalent in the bitcoin community will end. I don’t know whether the price action in 2022 will force this. But I do know that no good comes out of attacking people personally, over a disagreement. I refer to malevolent comments such as “have fun staying poor” and “you’re not gonna make it.” Come on, people. Do you really want to see all the people who didn’t buy bitcoin perish? Would you want to live in that sort of world?

I will have more to say about bitcoin in our annual Gold Outlook Report for 2022.

So called Modern Monetary Theory (which is not modern, does not describe money, and is not a theory) is on the rise. Like Keynesianism before it, it has a certain inevitability. That is, if people accept the ideas of collectivism, of need, of the public interest, and of free mana from Heaven—then MMT is a more consistent set of beliefs and policy recommendations. My third hope is that a proper intellectual opposition develops. And to be clear, advocates of various flavors of Monetarism, the otherwise-free-marketers, are not a proper opposition. They’ve already conceded on collectivism and central planning. Therefore it is inevitable that they will lose, as MMT is a more consistent version of the same basic ideas. I wrote one article to show why MMT is a cargo cult, and plan to write more as time permits.

Finally, I hope that 2022 is a better year than the last two. I hope that my friends have more reasons to be hopeful as we go forward. 2020 brought us to a dark place, with astonishing speed that I could not have imagined beforehand. I hope that we are ready to move forward, to a brighter place. Cheers!

Copyright 2022 by Keith Weiner

Socialism by Degrees

Is it a socialist law, when the government tells landlords that they may not evict tenants for nonpayment? In other words, landlords are forced to give free housing to nonpaying squatters. How about when the government taxes every landowner, to give out free education services to every child? Or when the government forces everyone to pay 16% of their income into a scheme that promises to pay them a pension in retirement? There is quite a variety of these programs.

Each may be a small part, but they all implement part of the socialist vision for society. The institution of public schools is not, in itself, full socialism. However, it is a socialist program that is a step in the direction of full socialism.

I often object to these types of wrongful government policies, on grounds that they are socialist. And many times, someone airily waves his hand, and condescendingly accuses me of hyperbole. “Public schools are not North Korea,” they say, as if patiently correcting a child who confuses the concept of horse with saw-horse. That is true, of course, but equally of course, North Korea has public schools. A society with public schools is not necessary full socialism, but a fully socialist society includes public schools among all the socialist programs.

“Anyways,” they say, “this is just caring about people, it isn’t socialism.” Yeah, right. That leads to a question that you can’t usually address in the midst of such a talking-points-past-each-other-argument. What is socialism, anyways?

Socialism is based on the idea that people cannot be trusted to determine their own affairs, by reason. And, therefore, some people must be trusted to rule the affairs of all other people by force. It is when the government controls the means of production, and directs the provision of goods and services by a political process. The government does not care about revenues, costs, or profit. The government is a non-economic actor. This is argued to be a feature, not a bug. And by ignoring such greedy concerns, the government is allegedly able to deliver superior outcomes.

In practice, socialism means either that the government outright owns the means of production, or that it points a gun at the owners of the means of production. The former is the communist flavor of socialism, and the latter is the fascist flavor.

Note that, in fascism, the owners are allowed to make a profit. At least, if they are favored. So they lobby the government constantly. This does not alter the fact that the government is in control, or the fact that its means of control is brute force.

It is impossible for the government to deliver superior outcomes (as I proved in my dissertation). At best, it can squander (much) more resources than people would spend in a free market, to deliver goods that people want. Since it is far easier for most people to understand Bastiat’s “seen” phenomena than his “unseen”, they will say that it works. An example of this is the US Covid vaccination effort. It took a year and a half, and cost uncounted billions more, but the US government vaccinated about as many people for this virus, as get themselves vaccinated for influenza in a typical year.

Often, the government spends (or forces people to spend) resources delivering things that people don’t want. An example of this is the Turtle Tunnel, to let turtles cross Highway 27 in Tallahassee, Florida. More commonly, some people are happy to get a free benefit that other people must pay for, and the latter do not want it. Obamacare comes to mind as an example of this.

Finally, we should not ignore the fact that the government often does not deliver sufficient goods that people do want. Roads and bridges in most major cities come to mind.

The result of socialist policies is that people are impoverished. And the degree of impoverishment is proportional to the degree that socialist policies are imposed. North Korea is the most consistently socialist, and therefore the most miserable (and would be even more so, if not for subsidies from China).

A society can slide towards socialism by degrees. It is not capitalism all the way and only socialism when it finally arrives at North Korea.

Central Planning Covid Vaccinations

I just had a long argument about central planning of the Covid vaccine.

The occasion for this argument is that I drove someone to the other side of Phoenix for a 5:30am appointment. Why 5:30? Because the government is doling out doses ‘round the clock.

I marshalled all the facts. We’re nearly three months in to this exercise in central planning. And even people classified in the first priority group, due to age or medical condition, must wait a month or longer and take whatever time slot may be open such as 5:30. Oh yeah be there 15 minutes ahead of time. Did I mention it’s nearly an hour drive even without traffic at Oh Dark Thirty?

I showed him that we don’t have this problem with flu vaccines. I described how companies like Nintendo can manufacture and distribute tens of millions of units in a short time window for Christmas.

He said that Israel has given the vaccine to over 90% of its population. I said it’s absolutely true that central planners can deliver great outcomes, if you look only at the “seen”. What you must overlook is the “unseen”—the obscene cost. Government bureaucracies can deliver what appears to be the outcome of a free market. But the cost is a hundred times higher. They can squander the wealth that would be enriching the Israel people in 99 other ways—in order to deliver vaccines.

He said now that Biden is in charge, of course it’s not efficient. I said government cannot do what he wants, no matter who is in charge. This is because government does not have any of the incentives, systems, processes, management culture, or other characteristics that make it possible for Pfizer or Nintendo to distribute something quickly and inexpensively.

In Glendale, the government has quite an operation going. There were hundreds of people (maybe more) waving flashlights to each car to direct them to their respective lanes. Then when one lane would move a bit faster, they directed some cars to switch lanes. This was repeated in between each stage, where workers would ask for the appointment-card-holder’s name, date of birth, etc. They’d write something on the windshield, but who knows why because the next station would ask the same questions. With more flashlight wavers directing cars to switch lanes.

I asked if I could get a shot. For a while, people in the same car with an appointment-card-holder were getting vaccinated. But the Coalition of the Concerned or whatever this group calls itself, was outraged—Outraged—that anyone could get vaccinated prior to being assigned a number. So no joy.

The waste of everyone’s time, not to mention the labor of what must be thousands of people working 5 shifts a week, was staggering. Stupefying. But no worries, it’s all free.

I explained to this vaccine-card-holder that the purpose of central planning of vaccine distribution is not efficiency. He could not disagree, having seen a small bit of the inefficiency for himself. I said the purpose is to keep Pfizer from making too much money, and to keep the rich from getting vaccinated too quickly.

After he got his shot, there was more zigzagging in lanes, like the line for Immigration Control at an airport, only with cars and trucks. And more flashlight-waving workers. We then were told that this was intentional, because after the shot they want to make sure the newly-vaccinated have 15 minutes to verify there is no anaphylactic shock. Snaking back and forth in cars, because waiting for shock! A solution only a government planner could concoct.

After that, another worker washed off the numbers on the windshield. And we were free to go.

The newly-vaccinated person in the passenger seat said he was sorry I couldn’t get it too. I said no bread today, comrade. Government rationing turns everyone into supplicants, begging for their supper (and resenting those ahead of them in line, especially when the store runs out).

He saw all of this. And agreed. So it his next reaction was particularly disappointing.

I said we should have a free market in vaccines, and Pfizer (and Moderna and Johnson and Johnson) could produce and sell as much as they want, set their own prices, distribute through whatever channels they want. He reacted to this, “I don’t know about that. We have to make sure that everyone, even the poor, get vaccinated or else this public health problem will persist. If the drug companies made it very expensive, then the poor couldn’t afford it…”

The issue here is not economic. No one thinks that the free market in food has made food so expensive that the poor starve. This guy pointed out that drugs are expensive. But he did not want to hear that the government makes them expensive by its licensing and regulation. He defended that by saying, “well, we have to prevent pharmaceutical companies from selling bad drugs.”

The government controls everyone in the Covid vaccine game. From Pfizer to the medical professionals to the people, everyone is acting under government orders. Pfizer is commanded how much to produce, and when and where to ship how many doses. Providers are directed who to vaccinate (if they get any doses at all, which many aren’t, which is why everyone drives to Glendale to a stadium parking lot to get vaccinates—those lucky few who get a number). People are eventually given a number, a permission slip to get vaccinated, and everyone else is not allowed to get it, even if they could pay. Pfizer is not allowed to sell it to them.

I am told that Pfizer is being allowed to make some money. I don’t know if $20 a dose makes or loses money for them. Maybe. I do know that the rich, the middle class, and the poor are being kept from being vaccinated. Which I am told is to ensure that everyone gets vaccinated.

I just could not get him to question his idea that, well, the government has to step in to ensure the right outcome. At least in certain important things, like the Covid vaccine. Sure, we could risk something unimportant like Mario Bros. to the capabilities of free people in a free market. But not something important like a vaccine!

The issue is not efficiency or economics. It’s not for the sake of convenience or cost. He could see that the government was making a dog’s dinner out of it.

It was just an ineffable feeling, a pre-moral sense that this is Right. And besides, there is a genuine shortage of vaccines, so how else could we get it to those who most need it?

Reflections Over 2020

Wow, it has been a heckuva year! One thought leads to another on this sunny-but-cool January 1.

Having watched a few seasons of Forged in Fire, I’ve gained an appreciation of how difficult it is to pound and grind a lump of steel into a blade, even with power tools. There are many ways for it to go wrong. And “wrong” generally means catastrophic failure—a crack in the metal that will cause it to break into pieces when hit.

That led to thoughts regarding an advantage, in Medieval warfare, to using an axe compared to a sword.

 If you could swing your axe against a sword blade, you’d have a good chance to break it and thus disarm your foe. Then I thought about rapiers and foils, which were much lighter and springier. Then I had the first “a-ha” moment.

When guns first came to the battlefield, they weren’t very accurate. However, when a bullet did hit someone, it punched right through his armor. There was no point (pun intended) in wearing heavy steel anymore. And once soldiers were unarmored, there was no point (pun intended again) in carrying big, heavy swords.

So swords evolved into the lightweight poking weapons everyone is familiar with from Princess Bride (and The Three Musketeers). Those weapons could easily put a hole in a man that would take him out of the fight, if not kill.

Battlefield Weapons & The Gold Standard?

And this leads to an interesting thought experiment. Suppose you went to a post-gunpowder battlefield and counted up all the deaths that were caused by thin stabbing weapons vs by bullets, you might find that 90% of them (I am rough-guessing here) were the former. If one tried to interpret this statistic the conventional way, one might conclude that guns and gunpowder were not a significant factor in those battles.

One would be wrong.

Guns may not have dealt the mortal wound in most cases. But the presence of guns caused the absence of steel armor. The absence of steel armor caused the sword to become much lighter, and increasingly specialized for stabbing rather than hacking.

Where would one see this exact sort of error in economics? It comes up in the question of how important is redeemability in the gold standard (to the extent that the gold standard comes up at all, which isn’t often). If one counted up all the holders of gold-redeemable bank notes, one would find a (far) lower percentage of those who redeemed them, than of battlefield casualties caused by gunshot wounds.

Does this mean that redeemability does not matter? Absolutely not.

As the gun caused everyone to change their behavior, so does redeemability. Not everyone redeems his paper for gold. But the fact that everyone has the right to do so, causes the banks to conduct their affairs more conservatively.

The rare bank which gets too greedy and operates without due caution finds that there is a run on its paper. It goes bankrupt. Its shareholders lose everything. Its bondholders may lose something (but if the accounting is honest, it is shut down before the depositors lose a penny).

Economists should take great care in forming conclusions from statistics.

Goodbye, 2020

Wow, it has been a heckuva year, I must say it again!

At the beginning, we scheduled a date for Monetary Metals annual shareholders meeting held in Scottsdale, AZ. I booked travel to Australia and Southeast Asia in February, visiting four countries and returning February 29.

At the time I set these dates, I had not heard of Covid. When I flew out in early February, I thought Covid was a thing only in China. Airports in the US and in Australia were operating normally, and the crowds were normal. Also, in hotels and restaurants in Sydney and Perth. Not so in Asia. Changi airport in Singapore was a ghost town, and the restaurants in the attached mall, Jewell, were devoid of any customers but me.

The airplanes I flew between Singapore, Thailand, and Malaysia were 80% empty. The airports all had temperature scanners that they made everyone walk through. As did the hotels in Singapore and Malaysia.

When I got home, I focused on the shareholders meeting. Other than one investor who lives in China and who could obviously not travel to the US, only one person cancelled. We had about 50% of our investors attend a face-to-face meeting. A good turnout, even without a developing pandemic.

The event was March 7. Saturday.

The following Thursday, March 12, I believe it was, began the first lockdown order in Arizona. If our meeting had been scheduled one week later, it would have been cancelled. And we would have had to scramble to do something on Zoom, lose the money for the restaurant where we had a great dinner party for the investors.


Impact on Business

Later that month, two things occurred. First, we experienced a big increase in client accounts and client investment. While we had been growing at a good rate prior, the lockdown served as an accelerator.  Secondly, a key member of our team contracted the virus and was down for almost two months. We held it together—thanks to everyone on the team stepping up!—but it was a tough period.

Since lockdown, I have not travelled. In 2018 and 2019, I was on the road (mostly overseas) more than 50% of the time. I made Executive Platinum on American Airlines and Emerald on Oneworld. In 2020, other than a two-day trip to meet a client in Las Vegas, I’ve at home here in Arizona. Let me just say that Las Vegas is no fun in its current half-lockdown state. There is absolutely no reason to go, unless you’re desperate for a chance to lose some dollars.

I will get the Covid vaccine as soon as our central planners allocate a shot for me (which will be much slower than when companies in a free market would have sold it to me). I will get whatever “vaccine passport” they give out. But I sure hope that international travel does not mean 12-hour or 17-hour flights wearing a mask the whole time!

In August, Monetary Metals raised $1.3 million in an equity capital raise. We grew our existing gold and silver (and platinum) leases, we added new leases, and we introduced a product that will pivot the monetary system: the first gold bond in 87 years.

Pivoting the Monetary System

And that is a simple way to understand what we are doing: pivoting the monetary system. Our whole approach is based on a simple idea. Pay interest on gold, in gold. And there’s a simple idea behind that. People will prefer gold interest on gold, over paper interest on paper (not to mention the Fed has all but won its War on Interest, and there is not much interest to be earned on paper anyway).

If you had a choice to be paid $190,000 in ten years, or 100 ounces of fine gold, which would you choose? The Fed is promising 2% debasement per year. Assuming they deliver exactly what they promise, that $190,000 would be worth about 81 ounces (admittedly this is an oversimplification). We think most people would make the same choice.

A yield on gold, paid in gold® is our registered trademark, and brand promise. It is a disruptive innovation, not an incremental change.

What Is a Disruptive Innovation?

An ordinary innovation, called by Clayton Christiansen in The Innovator’s Dilemma a “sustaining innovation” is like most product improvements you see in the market every day. For example, flat screens have higher resolution, higher contrast between dark and bright, and higher frame rates. And lower prices. Cars have more features like backup cameras and warnings for lane departure, following too closely, etc.

Sustaining innovations are what the mainstream customer wants more of. And will sometimes pay more to get, such as a bigger screen or more horsepower.

Christiansen defines a “disruptive innovation” as one that incumbent companies in the industry cannot respond to. If an upstart simply cuts cost, the established vendors will cut their cost too. A price war is not a way that a new entrant can win.

A Disruptive Example

Disruption is like judo. It uses the established company’s strength against them. For example, take our business. Clients place their gold in a Monetary Metals account, and we present them with opportunities to lease their gold and earn interest on it, paid in more gold.

Clients have the choice to invest in a particular deal, if they find the return suitable. Or they may choose not to invest their gold, in which case it stays in their account (with no storage cost). Our account statements show balances in ounces, with interest earned in ounces.

Could a mainstream bank do any of this? A few hold gold for select ultra-high net worth clients, but this is not a service they advertise. They want to encourage their clients to invest in equities, bonds, and properties. They don’t encourage clients to question the dollar itself, which gold—especially when it pays a yield—does. They prefer to think of gold as, at best, a volatile commodity. “Sir, would you like to open a futures account? You can bet on the gold price with more than 10:1 leverage.”

Every conventional financial firm denominates its account statement in dollars. To use gold as the unit of account is a paradigm-shift, which is typical of disruptive innovation. And of course, it encourages clients to think of their gold, not in terms of its dollar price but simply how much they’ve accumulated.

Established companies have such a hard time with disruptive innovations, because they perceive them as cannibalizing their existing businesses. It is not just that gold earning 2.5% more gold in a one-year lease competes against a one-year bank CD, in which dollars earn 0.3% more dollars.

It is that thinking of one’s wealth in ounces brings a different perspective than thinking of everything in dollars. Even if one knows that the dollar is designed to lose value, the dollar financial institutions are invested in keeping everyone invested in dollar thinking.

A funny thing happened to this (once) crazy idea. I no longer spend most of my time and energy thinking about how it would work, how to reach people with the idea, and developing abstract theories.

Now, it’s just business execution. Now, we just have to deliver the product, publish the press releases, conduct due diligence, meet investors, etc. And launch a podcast (The Gold Exchange). As any growing business at this stage does. And speaking of which, if you will excuse me, I need to get back to work. Here’s to a fantastic 2021!

Open Letter to Mercatus Center

Patrick Horan
Program Manager for Monetary Policy
Mercatus Center
Via Internet

Dear Mr. Horan and Mercatus:

It just came to my attention that on 20 July you wrote an article prompted by the then-upcoming Senate Banking Committee vote on Judy Shelton for a seat on the Board of Governors of the Federal Reserve. You ask the question: Is a Gold Standard Practical Today? The question is more urgent than ever. But your answer does not really answer the question.

The lede of your article asserts without evidence, “Despite the strengths of a gold standard system, there are better alternatives.” And in the first paragraph, you commit a logical fallacy that you reuse later in the article, “…it would be immensely difficult to implement in today’s world of modern central banks.”

You have reversed the cart and the horse. You take central banks as a fact of nature, and ask if the gold standard would fit. Instead, you should ask if central banks fit the needs of market participants in a free society.

The Soviet Union (also Mao’s China, North Korea, Cuba, and Venezuela) have proved that central planning is impossible. Even something as simple as corn. To grow corn, you just plant seeds in fertile soil, and wait. Yet every country that attempted to centrally plan it, has starved.

Economists all know this. Mercatus is articulate when it comes to price-fixing schemes for agricultural commodities, wages, rents, etc. Yet when it comes to money, you say that “there are better alternatives” to a free market.

Here is your next error. “Under a gold standard, a country sets the price of a fixed unit of gold in terms of its own currency…” Actually, in a gold standard, gold is money. Prices are specified in money terms. Money itself does not have a price. To grasp this, think of any of the fundamental units in physics. For example, how many meters long is a meter? To ask what is the price of money, is similarly invalid.

In a free market, there is no doubt that when you deposit money (i.e. gold) in a bank, you have a right to the return of the same amount of money (gold). And it is useful to have a standardized unit of account, so everyone can trade based on the knowledge that a “dollar” is the same amount of gold at Bank A vs at Bank B. This is not a price-fixing scheme, any more than an Internet standard that says long messages should be broken into 256-byte packets is a scheme to limit how much you can say.

Next you object that “exchange rates between countries are fixed.” Let’s drill into this. Suppose one country defines its dollar as 0.05oz gold. And another defines its franc as 0.29g of gold. It is true that people must convert from ounces to grams, to calculate how many francs to a dollar. But this is no problem.

“Most economists, however…” Is appeal to consensus supposed to be a scientific approach? How about appeal to reason?! When the government doles out money to academics, a curious coincidence develops. Most academics promote the party line. I will bet an ounce of fine gold against a soggy dollar bill, that Mercatus has a paper or two in its archive which looks at this kind of bias.

You continue “[economists] are critical of a gold standard precisely because it constrains a central bank’s discretion…” Discretion to do what? To rule. One term for what central banks have done to retirees is “financial repression.” Just ask anyone who is trying to live on his savings, what he thinks of zero interest rate policy.

The government and its cronies love it. Those who speculate on assets, and those whose pay is tied to asset prices such as CEOs and bankers, love it. But there is a lender for every borrower. Those who depend on interest hate it. Keynes called for their euthanasia, and that is what central banks have inflicted.

You continue “…gold standard advocates may believe deflation brought on by a gold standard is desirable…” Speaking of bias, the term brought on carries the baggage of its connotation of being the cause of something bad. Like an illness.

Of course, industry is always becoming more efficient. So if we had a money that was not being debased, prices would fall with the cost of production. In my article for Forbes, I showed that the real resources required to produce a gallon of milk were reduced by about 90% between 1965 and 2012. Isn’t it logical that the price of milk would fall about that same amount?

Yet you use another pejorative term—deflation—to describe this. Improved efficiency and hence prices is not to be feared. Of course, deflation is scary, not because of efficiency improvements, but financial crises. When the banking system is collapsing, and unemployment is skyrocketing, prices fall. The phenomenon of mass credit default should not be confused with the phenomenon of improving productivity. To avoid this confusion, they should not be given the same word.

I wrote for Forbes about the nomination of Janet Yellen as Fed Chair, and outlined her theory of labor:

  1. Disgruntled employees don’t work hard, and may even sabotage machinery.
  2. So companies must overpay to keep them from slacking.
  3. Higher pay per worker means fewer workers, because companies have a finite budget. Yellen concludes—you guessed it:
  4. inflation provides corporations with more money to hire more people.

I characterized this as frivolous. But your article follows the same logic, “Since employers generally tend to avoid cutting workers’ wages because wage cuts can hurt worker morale, companies nevertheless will lay off workers…” Yellen and you both use this to support an inflationary central plan imposed by central banks.

I must say something now, not as economist to economist, but as businessman to economist. Before you publish how businesses behave in your imagination, I encourage you to go out and ask a few how they behave in reality. What you said is not just wrong, but obviously wrong. In the economic lockdown following COVID, I’ve lost count of how many businesses I’ve spoken to, or read about, which cut salaries.

You double down on this error, and illustrate the contradiction in Yellen’s and your argument with, “vicious cycle where prices continue to fall as employment levels and demand for goods and services fall.” In the previous sentence, you said this outcome occurs because businesses were reluctant to cut wages. Now you say that employment is falling, glossing over the fact that when joblessness is up, wages on offer go down. Rising unemployment is the same thing as falling wages (at least if there are not laws that attempt to prevent it).

In economics terms, the marginal employer is the employer who hires more workers on a downtick in wages. In business language, every company wants to hire more people, but price matters.

Next you say, “…former Federal Reserve economist David Wilcox argues that a gold standard prevents a central bank from cutting interest rates to make borrowing easier in order to provide stimulus…” This, sir, is a feature not a bug. And how does David Wilcox know what the right price of borrowing is? The same way that Gosplan knew the right price of corn in the Soviet Union.

I am glad you mentioned that there were different kinds of systems, all of which are referred to by the same term “gold standard” (kind of like referring to credit collapse and efficiency gains by the same term “deflation”).

Unfortunately, you add to the confusion by saying that the “purest” gold standard, prior to 1914, “…required no coordination on the part of central banks.” That is an odd way to put it. As well, one might say that “a seller and buyer of corn require no coordination on the part of Gosplan.”

Instead of calling these various different systems, “classical”, “interwar”, and “Bretton Woods” systems, it is more helpful to call them by names that denote their essential characteristics.

Prior to the creation of the Fed in 1913, the US had a gold coin standard (as did much of the world). This means that people had the right to withdraw their gold coin, if they did not like the rate of interest on offer at the banks (or the risk). This is a vital feature! Imagine a restaurant where you had no choice. You must keep paying every day, no matter what kind of slop they slapped onto your tray. I recall the student dining hall back when I was in college. They were exactly like that. Even the cheapest restaurant has to do better, because its customers have a choice.

This right gives teeth to the savers’ time preference. If the interest rate goes below it, they withdraw their gold coins. Which forces the banks to sell assets, causing a drop in the bond price. Which is the same thing as a rise in the interest rate. Free markets have negative feedback loops (the same as I described in the labor market above). But when a central planner takes over, it is like putting a penny in the fusebox. Sure, it may seem convenient that the TV does not shut off when your daughter uses her hair dryer while your son is cutting wood in the garage—until the house catches on fire.

After WWI, the rest of the world switched to a gold bullion standard. This is a very different animal. Sure, the banks still had gold backing. But the people lost the right to redeem their deposits and take gold coins home. Only if one had enough money to withdraw a 400-ounce bar, could one take the gold home. But 400 ounces then, as now, is a large sum of money. Very few individuals had the cash balance to do it. So the system changed character in a number of obvious ways, and many more not so obvious (for example, in Europe they stopped trading in Real Bills).

In the US, we kept to a gold coin standard but after 1913 we had a centrally banked gold standard. The Fed quickly turned to buying government bonds. In so doing, it destabilized the interest rate.

This so-called gold standard was unsustainable. One by one, each country abandoned it. In 1933, President Roosevelt forced US citizens to turn in their gold and made it a crime to own gold. The dollar became irredeemable to Americans, though it was still redeemable to foreign central banks.

At the end of WWII, the US told its allies how the monetary system would work. Other countries were to treat the US dollar as if it were gold. And their own irredeemable currencies would be pegged to the dollar. This was not at all the same as the gold coin standard, where a currency unit was not a price but a standardized deposit. After WWII, there were no gold deposits, only a price-fixing scheme. Like all price-fixing schemes, this one failed.

In 1971, on the advice of Milton Friedman, President Nixon defaulted on the obligation of the US government to redeem dollars presented by foreign governments. Even Keynesian economist Paul Samuelson thought Nixon would just set a higher price of gold. But Friedman urged Nixon to plunge the world into the regime of irredeemable currency, “in which central banks have full control over the stock of money…”

You say that, “Unless we abolish central banks (an unrealistic proposition)…” and then right after that “it seems unlikely that a current-day version of a gold standard would work well.” I think you need to pick which horse you want to ride. Are you saying that it is realpolitik to advocate for central planning because, hey, go with the flow? Or are you saying it is impractical to have a free market, because it won’t work?

You then assert that nominal GDP targeting will work well. I have written before about some of the frivolous ideas behind this idea.

You conclude with, “…nominal GDP targeting is one realistic way to do the sort of rules-based monetary policy that gold standard advocates want…” But earlier you said, “[economists] are critical of a gold standard precisely because it constrains a central bank’s discretion…”

Pick one. Is a central bank better than the gold standard because it gives central planners the discretion which you assert “is important, especially during times of crisis”? Or is a central bank doing nominal GDP targeting just like a gold standard—i.e. constraining the discretion of the central bank, only it’s just more realistic?

This is a pivot. Two mutually-contradictory arguments offered because both seemingly lead to the desired conclusion.

And a central bank that centrally plans based on rules is a false alternative to a central bank that centrally plans based on discretion is a false alternative. The way cherry-flavored cyanide solution is a false alternative to strawberry-flavored cyanide solution.

Martin Luther King said something important:

“Cowardice asks the question – is it safe? Expediency asks the question – is it politic? Vanity asks the question – is it popular? But conscience asks the question – is it right? And there comes a time when one must take a position that is neither safe, nor politic, nor popular; but one must take it BECAUSE it is right.”

You argue that “it would be better for gold standard supporters to avoid ‘making the perfect the enemy of the good’ and pursue more achievable options such as nominal GDP targeting.” This is what Dr. King characterized as expediency.

Your article ended with a call to action. I, the gold standard advocate, should join you in advocacy of a GDP-targeting central bank because it’s politic.

So I end my letter with my own call to action. You, the advocate of a GDP-targeting central bank, should join me in advocacy of a free market in money and credit, because it’s right.

Keith Weiner, PhD

What’s Behind the Mask?

The response to COVID-19 has been breathtaking. Both sides of the political spectrum quickly agreed to shut down and suffocate the economy. And even before that, countless homeowner’s associations, condominium boards, retailers, and corporate employers beat the rush and shut down their facilities voluntarily.

We quickly ended up in a world that no one has thought much about, and few would want. People were forced into isolation. They were not allowed to go to work, or to bars and restaurants, much less sporting events or concerts. They were discouraged from even going to backyard barbeques.

When we are allowed/required to go out in public, we are told to maintain social distancing. This is a NewSpeak word if ever there was one. There is nothing social about maintaining the kind of fear of others that forces one to keep one’s distance at all costs. For example, people now walk the long way around aisles in grocery stores. And notable where I live in the hot desert, they stand in the blazing Arizona summer sun, waiting for permission to enter a store.

We have also done away with handshakes, much less hugs, and kissing on the cheek.

So called social distancing is un-social, anti-social. It is further isolating people. Isolation is lonely, depressing, and alienating.

People were encouraged to think of their friends as potentially lethal threats (if they aren’t, then why must we avoid them at all costs?) But this causes a psychological dilemma. How can anyone simultaneously look at his neighbors as a threat, and at the same time turn to his neighbor for help or collaboration? These two views are almost impossible to hold in one brain.

If others are deadly threats… then they are bad. We saw this with each time one state had a rising count of COVID cases. There was a palpable sense of fear-and-loathing of New Yorkers. Some states talked of prohibiting New Yorkers from entering. An otherwise-peaceful person I know recently lamented the fact that the US did not have a mechanism for checking where someone came from, when they drove across “the border” into another state. I said yeah, well, that mechanism is characteristic of the Soviet Union and Mao’s China. This person was a bit uncomfortable, but did not back away from wishing for it to come here.

It’s a lethal but compelling thought progression. It encourages everyone to regard everyone else they meet as a threat. Which leads to distrust. Which leads to fear.

Of course, not all businesses were locked down. Some were defined by government order as essential. This, in effect, tells everyone that owns or works in other kinds of businesses, “We don’t need you.” Such non-essential people (or non-people for short) could ponder their own uselessness while they were forced to watch their businesses and livelihoods ruined, their savings wiped out. While they drowned, held under by a government posturing as doing good to the health of the people.

Most governments have unlocked to varying degrees, though many are regressing back towards lockdown again.

And they have held out wearing masks as the one thing we can do, if not to avoid getting sick with COVID, to avoid more lockdown. There are problems with masks, such as they are uncomfortable, they make people touch their faces more (which they should not do, if they are concerned about catching a disease), and for some people make it hard to breathe.

Interestingly, I had a conversation with someone I know. He is a doctor and extremely physically fit. He said he wears an N95 mask in his practice all day. I asked if was professionally fitted. He said no, that one makes it too hard to breathe to wear all day. The one he (and everyone else) is using, even if N95, is easy enough to breathe in because of the huge gaps, especially on the sides of the nose. It’s easier to breathe because the air is moving through the path of least resistance—around the filter, and not through it.

More to my point today, masks have a universal negative. Wearing them makes people less recognizable, less relatable. Less human.

So we are isolated from most human contact, and when we are forced to be with other people we are given reason to fear them. And we cannot see their faces. They are literally masked.

This brings us to the communist view of man: people are faceless, interchangeable automatons. They are stripped of their individual identity. And they know it. They cannot turn to their neighbors as they did for centuries. They can turn only to the government.

Is this the world you want to live in? Even if masks could prevent people from ever catching the disease (and not merely slowing down the rate of spread) it would be better to risk the complications of COVID than to live in the kind of society that this kind of fear is leading us towards.

Postmodernism Corrupts Everything

According to Encyclopaedia Britannica:

“Postmodernism, … a late 20th-century movement characterized by broad skepticism, subjectivism, or relativism; a general suspicion of reason; and an acute sensitivity to the role of ideology in asserting and maintaining political and economic power.”

Its roots go back long before the late 20th century phenomenon. Consider quantum physics. The Copenhagen interpretation (developed in the 1920’s) holds that, “physical systems generally do not have definite properties prior to being measured.” The most infamous and absurd example of this is Schrodinger’s Cat: it is neither alive nor dead until a human consciousness observes the radiation detector. This is obviously “broad skepticism and subjectivism”. And a general suspicion of reason (perhaps less obvious).

Next, consider the historical revisionism of Howard Zinn. His People’s History of the United States began with the belief that there is something wrong with America, going back to prior to its Founding. His scholarship was shoddy, but that is rather the point. He puts the history profession at the service of the Marxist class warfare narrative. History can jettison the fact of what happened, in service to socialist political ends.

Zinn’s effort bore its ultimate fruit in the New York Times so called 1619 Project, which–with rotten scholarship–asserts that slavery is essential to capitalism. Yeah, and war is peace and ignorance is bliss, too.

What other field comes to mind, at the mention of disregarding the facts in service to the goal of political power?

“Each of us has to decide what the right balance is between being effective and being honest,” said global warming activist Stephen Schneider

Yes, I am aware of the supposed nuance of his comments and his stance. But no amount of nuance can defend the false alternative of effectiveness vs. honesty. And no one would dare defend this view (or claim nuance), if not for the pervasive poison of postmodernism.

Postmodernism has also had its impact on the law. In the 17th century, John Locke and others were developing the idea that law does not simply mean whatever the government forces you to do.  Locke said that people have rights such as their life, liberty, and property. Law is supposed to be written to protect these rights, not to give a veneer of respectability to the so called “divine right of kings”, otherwise known as Might Makes Right.

But starting in the late 19th century, this understanding was abandoned. The Sherman Antitrust Act stands as an awful example of a postmodern approach to law. Loosely worded, it makes a crime out of restraint of trade. A proper law written to protect individual rights must be clear, so that everyone can know in advance what is legal and what is illegal. A postmodern law is not intended to protect rights, but to give the government the power to violate someone’s rights.

Unfortunately, the trend accelerated after 1890. People (and the Supreme Court, see the opinions written by Justice Oliver Wendell Holmes) moved away from the principle that the government has enumerated powers, and the concept of individual rights. The Constitution, they said, was a “living, breathing” document. In other words, it means precisely what they want it to mean, subject to change based on convenience.

Today, virtually every productive enterprise is subject to regulation. This means, in practice, that a government agency writes, judges, and enforces a set of broad but not clear laws. Businesses are under a presumption of guilt, and have the burden of proof to show that they are innocent.

Next, let’s look at money. The postmodernists attempt to get away with adulterating and perverting money, to the point where people are forced to use debt as if it were money. This is no random economists’ confusion. It’s done in service to the leviathan state. In the words of Benito Mussolini, “Everything within the state, nothing outside the state, nothing against the state.”

Today, the government has seemingly unlimited capacity to dole out free goodies. The cargo cult of so called “Modern Monetary Theory” pugnaciously asserts that the limit is only when the “bathroom sink overflows”—i.e. when they create too much of this debt-money. So far in response to the coronavirus, the government has bestowed on us $2.8 trillion of loot. This was on top of a baseline budget deficit of $1.7 trillion in the 12 months ending March 21. The US government will likely run a deficit over $6 trillion.

There is a limit to this. There is a point in any postmodernist deviation from reality, when the consequences hit at high velocity. It’s just that the US government’s capacity to consume our accumulated capital is higher than anyone thought.

And this brings us to epidemiology. What had been an obscure field that studies disease vectors, how now catapulted onto center stage with its call to lockdown the people and shutdown the economy.  So far, in America, over 33 million people have filed for unemployment. And that understates the reality because state unemployment offices are unable to keep up, because some companies keep making payroll out of accumulated capital, because of the 2-month payroll subsidy in the so called CARES Act, etc, and because the self-employed and business owners are generally not eligible to collect an unemployment check.

This stupefying ruin occurred because postmodern epidemiology attempted to find the “balance is between being effective and being honest”. Professor Neil Ferguson published his projections of mass death, based on a pathetic buggy computer model. And, because an early paper claimed that the virus can be transmitted by asymptomatic people. This claim was based on a since-retracted story of a Chinese woman in Germany. She did indeed transmit the virus to a German colleague, but it turns out that she had symptoms. They just did not bother to call her to ask, before going to print with a story that fueled the momentum to lockdown everyone worldwide. They were highly “effective”, if not balanced with honesty.

The government laid waste to the economy and people’s lives because postmodern lawmaking puts the power to lockdown 300 million innocent Americans into the hands of the governors (and postmodern ethics sets up the false alternative of saving lives vs. the economy), who listen to postmodern epidemiologists who rely on postmodern software.

Unfortunately, the people will respond with even more “broad skepticism, subjectivism, or relativism.” All scientists will be lumped together, under a “a general suspicion of reason.” If a proper scientist develops something real (e.g. a vaccine for COVID-19), millions will not avail themselves of it, out of belief in conspiracy theories. This trend, of skepticism towards science as such, began with the postmodern global warming scare (which also featured bogus computer code that the developer refused to publish so the scientific community could review it).

Staggering Job Losses

So far, about 20% of the people who had jobs 6 weeks ago, are unemployed. This is in addition to the 96,000,000 who had no job even before the lockdown, but who aren’t counted as being in the workforce.

And the reality is worse than even this, for three reasons. One, unemployment offices are not able to keep up. More people are being added to the rolls who already lost their jobs.

Two, government at all levels has not begun laying off yet (if they ever will). So these people were laid off almost entirely from the productive sector.

Three, many businesses are still paying salaries hoping for a quick resolution. But every day, they drop, depleted of capital. No one knows how many there are, or how many workers still receive paychecks from such businesses.

This is really bad. Really really bad. Worse than 1930’s bad. And it comes at a time of record high leverage. Deleveraging has hardly even begun.

How Wide is the Margin?

Economics discusses the margin, and the concept of marginal all the time. For example, the marginal worker is the one who loses his job, at a downtick in revenue.

Well, since the government response to the virus, over 26,000,000 people have lost their job.

It is not just one worker who occupied the role of marginal worker. It was over 26M workers (and counting).

The concept of margin also implies the concept of width: how wide is the margin? All those included within this finite space are at risk of loss of their job, business, etc.

And due to a number of factors, including decades of falling interest and margins, with rising net present value of all liabilities including debt and wages, the margin has grown quite wide indeed. And of course a months-long shutdown widens the margin much more than a week-long shutdown.

Perhaps 30% of the US economy (we shall see how big it is) was included in this wide margin. The fallout will be felt for many decades.