Even the tepid post-2008 recovery has not been what it was cracked up to be, especially with respect to the Wall Street presumption that the American consumer would once again function as the engine of GDP growth. It goes without saying, in fact, that the precarious plight of the Main Street consumer has been obfuscated by the manner in which the state’s unprecedented fiscal and monetary medications have distorted the incoming data and economic narrative. These distortions implicate all rungs of the economic ladder, but are especially egregious with respect to the prosperous classes. In fact, a wealth-effects driven mini-boom in upper-end consumption has contributed immensely to the impression that average consumers are clawing their way back to pre-crisis spending habits. This is not remotely true.
~ Excerpt from The Great Deformation: The Corruption of Capitalism in America by David A. Stockman posted at Mises.org.
Dominant Social Theme: The US recovery is well underway and the pessimists are wrong. Keynes was correct, as always.
Free-Market Analysis: No … the greatest of all modern, libertarian thinkers, Ludwig von Mises, has won. The reputation of sycophantic socialist John Maynard Keynes lies in ruins (among those who understand, anyway) and the long debate that began back in the 1930s is likely settled, at least from a historical standpoint.
At the time, in the later 1930s, the controlled, Western mainstream press gave the garland to Keynes, who was said to have swept the field. His main opponent, Mises’s student F.A. Hayek, was later given the faux “Nobel” prize in economics as a consolation for waging a good but failing fight. Hayek was no Mises, unfortunately, though a brilliant man nonetheless.
Mises never compromised, or hardly, anyway. For an academic he was remarkably staunch. He believed in freedom. His book Socialism makes the case that once society starts down the road of wealth distribution via government force the conclusion is inevitably disaster. At the time it was not well received but history has borne him out.
Disaster has overtaken the world. One can argue whether it is by design, to generate the implacable necessity for world currency, or merely merciless entropy. The result is unarguable: poverty, authoritarianism, war and increasing chaos.
The old order no longer stands, or at least not nearly so erectly as in the recent past. The verities – what we call dominant social themes – that have been peddled with such great success for the past century are increasingly questioned. People are scared but they often recognize their manipulation.
The Internet itself, like the Gutenberg Press before it, has created a social upheaval that is only going to grow over time. The Internet Reformation, as we often point out, is a process not an episode. The old order (whether one remains nostalgic or not) cannot easily oppose it.
Today comes more evidence (as if more was needed) with the recent publication of an excerpt of David Stockman’s book, The Great Deformation, in the New York Times. This is the punctuation to a sentence that has been composed for over a decade; it began with the tech bubble and crash, continued with the gradual rise of the housing bubble and its crash and was completed by the resultant worldwide financial crisis.
It is no coincidence that a further excerpt of his book appears over at the famous Mises Institute itself. Whether intentional or not, this publication in this place reminds us of how the world has changed.
Only 20 years ago, as one opponent famously put it, free-market thinkers led by Llewellyn Rockwell fit into a space the size of a “phone booth.” Today, thanks to the Internet, Mises is cited in various media nearly as often – or even more often than – Keynes.
Mises is still not taught in mainstream universities that cannot in aggregate abide the notion that forecasting is inevitably doomed to failure thanks to “human action” and that mathematical economics (econometrics) is bunk.
Those who yet oppose these clear and factual verities launch salvo after salvo against freedom and free-market thinking but with less and less effect. The most recent and devious of all has been the resurgence of Greenbackerism with its notion that if government redistributes monopoly fiat currency then “the people” will be in control and benefit accordingly.
This quack-ism, buttressed by the quasi-fascist/redistributionist notions of Silvio Gesell and Major Douglas, has been desperately deployed throughout the web in an effort to blunt the progress of free-market economics. United Nations functionaries like Margrit Kennedy and her husband have been deployed to create an upsurge of support for various kinds of LETS money – sophistic systems that are not only inefficient but demand documentation of each transaction, a government agent’s dream. Bitcoin has some of the same defects.
Thanks to the notable work of Gary North and others (including ourselves) who have raised their voices against such promotions – pointing out such monetary philosophies came briefly to fruition in Hitler’s Germany – the benefits of government monopoly money have been debunked; the resurgent argument may already have seen its high-water mark.
Of course, this is not to the satisfaction of those who promote such fictions, often wrapping them in faux religiosity and surreptitious neo-Nazism. Yet deservedly, these evidently-paid apologists of globalism, without conscience or remorse, are seemingly in retreat now. We note the apparent creation of bought-and-paid-for websites has diminished along with the eruption of fury against those who have the presumption to discuss freedom.
No doubt, the effort will continue to be made. Paid agents work for a paycheck. Their paymasters must maintain the centralization of money creation, knowing that they can control it whether it is a “private” or “public” facility. There is, unfortunately, only one way to create an effective money, one supporting a prosperous society; that is via monetary competition, a competition that likely includes previous winners, including gold and silver.
That is not what we have now. In fact, what has surely played out in this past century is in a sense “directed history” establishing first a central banking network and then a plague of worldwide fiat currencies. It is a system that is ruinous, indefensible and ultimately unsustainable.
And that is why Stockman is getting a hearing. One hundred years ago, the powers-that-be could claim that economic management – fixing the price and value of money – was a workable and even hopeful concept. Today they cannot.
The rationale for monopoly central banking has died. Price fixing once again provides clear evidence that it does not work. Mises knew it. Stockman knows it and because he is an important voice and a political figure, his apostasy is generating a great deal of rage and indignation. We have documented one such counterattack here: The Most Incredible Sophistry.
The publication of Stockman’s work first in the New York Times and then at Mises is a notable event. These “bookend” a culture war that is now tipping in the direction of freedom.
The forces of monetary repression are in retreat and have evidently decided that the best way to deal with the failing meme of central banking is to emphasize the rise of Asia and the nascent imposition of a state-run gold standard. We are on record as indicating our skepticism regarding these gambits.
Conclusion: Enough people simply don’t believe the hype anymore and US exceptionalism, despite many attacks over more than two centuries, still stands. The 21st century is not the 20th and more and more people will realize this as the next decades unfold.