lewrockwell--2020-09-11--What Will be the Foreign Policy of the Next US President?

The two programs for the Trump and Biden candidacies are not similar to those of previous candidates .
It is no longer a question of adjusting the United States to the changing world , but of defining what they will be .
The question is existential , so it is quite possible that things will degenerate and end in violence .
For some , the country must be a nation at the service of its citizens , for others it must restore its imperial status .
The U.S. 2020 presidential campaign pits two radically different visions of the United States @ @ @ @ @ @ @ one hand , Washington ’ s claim to dominate the world by “ containment ” – a strategy articulated by George Kennan in 1946 and followed by all presidents until 2016 – and on the other hand , the rejection of imperialism and the desire to facilitate the fortunes of Americans in general – a strategy articulated by President Andrew Jackson ( 1829-37 ) and taken up only by President Donald Trump ( 2017-20 ) .
Yesterday ’ s Man : ... Marcetic , Branko Best Price : $ 12.00 Buy New $ @ @ @ @ @ @ @ rhetoric that masks its true practice .
Democrats and Republicans pose as heralds of the “ free world ” in the face of “ dictatorships ” , as defenders of racial , gender and sexual orientation discrimination , and as champions of the fight against “ global warming ” .
The Jacksonians , for their part , take turns denouncing the corruption , perversity and ultimately hypocrisy of their predecessors while calling to fight for their nation and not for the empire .
The two camps have in common only the same cult @ @ @ @ @ @ @ the service of the empire ( Democrats and Republicans ) or the nation ( Jacksonians ) .
The fact that the Jacksonians unexpectedly became a majority in the country and took control of the Republican Party adds to the confusion , but should not confuse trumpism with what the Republican ideology has been since World War II .
In reality , Democrats and Republicans tend to be well-to-do people or professionals in new technologies , while Jacksonians – like the “ yellow vests ” in France – are rather poor and professionally tied @ @ @ @ @ @ @ not escape .
In my view , the main disputes are not stated , but are constantly implied .
Liberal Privilege : Joe ... Trump Jr , Donald Buy New $ 9.99 As soon as he took office , Donald Trump questioned the Rumsfeld/Cebrowsky strategy of annihilating the state structures of all the countries of the “ Broader Middle East ” without exception and announced his wish to bring home the troops lost in the “ war without end ” .
This goal remains at the top of his priorities in 2020 ( @ @ @ @ @ @ @ Troops Home ” ) .
As a result , he excluded the Director of the CIA and the Chairman of the Chiefs of Staff Committee from regular meetings of the National Security Council .
In so doing , he deprived the supporters of imperialism of their main tool of conquest .
There followed a battle for the presidency of this council with the indictment of General Michael T. Flynn , then his replacement by General H. R. McMaster , the exceptionalist John R. Bolton , and finally Robert C. O ’ Brien .
@ @ @ @ @ @ @ on U.S. allies to immediately cease their support for jihadists charged with implementing the Rumsfeld/Cebrowski strategy .
This was the Riyadh speech to the Sunni heads of state and then to NATO heads of state and government .
President Trump had declared NATO obsolete before changing his mind .
However , he obtained not the abandonment of Russia ’ s policy of containment , but the halving of the credits used for this purpose and the allocation of the funds thus preserved to the fight against jihadism .
In doing so , it @ @ @ @ @ @ @ imperialism and turned it into a defensive alliance .
It has therefore demanded that its members contribute to its budget .
Support for jihadism , however , was pursued by the supporters of imperialism with private means , notably the KKR Fund .
Trump and the American ... Gingrich , Newt Best Price : $ 15.19 Buy New $ 18.52 Hence his watchwords : “ Wipe Out Global Terrorists Who Threaten to Harm Americans ” and “ Get Allies to Pay their Fair Share .
Like the Democrats and Republicans , the Jacksonian @ @ @ @ @ @ @ capabilities of his armies ( “ Maintain and Expand America ’ s Unrivaled Military Strength ” ) .
Unlike his predecessors , he did not seek to transform the Pentagon ’ s delusional management by privatizing one department at a time , but rather developed a plan to recruit researchers to compete technologically once again with the Russian and Chinese armies .
Only Donald Trump ’ s desire to regain primacy in missile matters is supported by Democrats and Republicans , although they do not agree on how to achieve it ( “ @ @ @ @ @ @ @ Missile Defense System ” ) : the tenant of the White House wants the USA to equip itself alone with these weapons that it can eventually deploy on the territory of its allies , while its opponents want to involve the allies in order to maintain their hold on them .
From the point of view of the Democrats and Republicans , the problem is obviously not withdrawing from the Cold War disarmament treaties to build a new arsenal , but the loss of means of diplomatic pressure on Russia .
A professional @ @ @ @ @ @ @ the imperial status of the former First World Power .
Fallout : Nuclear Bribe ... Bruner , Seamus Buy New $ 25.20 The program of Democrats and non-party Republicans Joe Biden proposes to focus on three objectives : ( 1 ) reinvigorate democracy ( 2 ) train the middle class to cope with globalization ( 3 ) regain global leadership .
Reinvigorate democracy : in his words , this means basing public action on the “ informed consent ” of Americans .
In doing so , he used Walter Lipmann ’ s 1922 @ @ @ @ @ @ @ “ manufacturing consent ” .
This theory was discussed at length by Edward Herman and Noam Chomsky in 1988 .
It obviously has nothing to do with the definition formulated by President Abraham Lincoln : “ Democracy is government of the people , by the people , for the people ” .
Joe Biden believes he is achieving his goal by restoring the morality of public action through the practice of “ political correctness ” .
For example , he condemns “ the horrible practice [ of President Trump ] of separating families @ @ @ @ @ @ @ private prisons , ” without saying that President Trump was merely applying a democratic law to show its futility .
Or he announces that he wants to reaffirm the condemnation of torture that President Trump justified , without saying that the latter , like President Obama , has already banned the practice while maintaining life imprisonment without trial in Guantánamo .
He announced his intention to convene a Summit for Democracy to fight against corruption , to defend the “ Free World ” against authoritarian regimes , and to advance human rights .
@ @ @ @ @ @ @ , it is a question of uniting allied states by denouncing scapegoats for what is wrong ( the “ corrupt ” ) and promoting human rights in the Anglo-Saxon sense and especially not in the French sense .
That is to say , to stop police violence and not to help citizens to participate in decision-making .
This summit will launch an appeal to the private sector so that new technologies can not be used by authoritarian states to monitor their citizens ( but the USA and its NSA can always use them @ @ @ @ @ @ @ World ” ) .
Finally , Joe Biden concludes this chapter by highlighting his role in the Transatlantic Commission for Electoral Integrity alongside his friends , former NATO Secretary General Anders Fogh Rasmussen , who overthrew the Libyan Arab Jamahiriya , and Michael Chertoff , former US Secretary of Homeland Security , who put all US citizens under surveillance .
Not forgetting John Negroponte who organized the Contras in Nicaragua and Daesh in Iraq .
The Deep State : How an ... Chaffetz , Jason Best Price : $ 5.03 Buy New $ @ @ @ @ @ @ @ with globalization .
Joe Biden believes that the politics that have been pursued since the dissolution of the USSR have led to the rapid disappearance of the middle class , and that training the remaining middle class in the use of new technologies will prevent the relocation of their jobs .
Renewing U.S. leadership .
In the name of democracy , this means stopping the rise of “ populists , nationalists and demagogues .
This formulation helps us understand that democracy , according to Joe Biden , is not only the fabrication of @ @ @ @ @ @ @ the popular will .
If demagogues pervert democratic institutions , populists serve the popular will and nationalists serve the community .
Joe Biden then specifies that he will stop wars “ forever ” ; a formulation that seems to support the same goal as the Jacksonians , but differs in terminology .
It is in fact a question of validating the current adaptation of the system to the limits imposed by President Trump : why make US soldiers die abroad when one can pursue the Rumsfeld/Cebrowski strategy with jihadists at a lower cost @ @ @ @ @ @ @ he was only an opposition senator , Joe Biden gave his name to the plan to partition Iraq that the Pentagon was trying to impose .
A verse follows on the enlargement of NATO to include Latin American , African and Pacific allies .
Far from being obsolete , the Alliance will once again become the heart of U.S. imperialism .
Finally , Joe Biden pleads for the renewal of the 5+1 agreement with Iran and disarmament treaties with Russia .
The agreement with President Hassan Rohani aims to classically divide Muslim countries @ @ @ @ @ @ @ disarmament treaties aim to confirm that the Biden administration would not envisage a global confrontation , but the continued containment of its competitor .
The program of the Democratic Party candidate and non-party Republicans concludes with the assurance of joining the Paris Accord and taking leadership in the fight against global warming .
Joe Biden specifies that he will not give gifts to China , which is relocating its most polluting industries along the Silk Road .
On the other hand , he omits to say that his friend , Barack Obama , @ @ @ @ @ @ @ of the statutes of the Chicago Carbon Emissions Trading Exchange .
The fight against global warming is not so much an ecological issue as a matter for bankers .
The Jacksonian Promise ... Feller , Prof Daniel Best Price : $ 4.87 Buy New $ 24.49 It must be said that everything is opposed to a clarification .
Four years of upheavals by President Trump have only succeeded in replacing the “ endless wars ” with a low-intensity private war .
There are certainly far fewer deaths , but it is still war @ @ @ @ @ @ @ not ready to give up their privileges .
So it is to be feared that the U.S. will be forced to go through an internal conflict , a civil war , and break up like the Soviet Union once did .
The Best of Thierry Meyssan

The two programs for the Trump and Biden candidacies are not similar to those of previous candidates. It is no longer a question of adjusting the United States to the changing world, but of defining what they will be. The question is existential, so it is quite possible that things will degenerate and end in violence. For some, the country must be a nation at the service of its citizens, for others it must restore its imperial status.
The U.S. 2020 presidential campaign pits two radically different visions of the United States: empire or nation?
On the one hand, Washington’s claim to dominate the world by “containment” – a strategy articulated by George Kennan in 1946 and followed by all presidents until 2016 – and on the other hand, the rejection of imperialism and the desire to facilitate the fortunes of Americans in general – a strategy articulated by President Andrew Jackson (1829-37) and taken up only by President Donald Trump (2017-20).
Yesterday’s Man:... Marcetic, Branko Best Price: $12.00 Buy New $13.46 (as of 03:45 UTC - Details) Each of these two camps wields rhetoric that masks its true practice. Democrats and Republicans pose as heralds of the “free world” in the face of “dictatorships”, as defenders of racial, gender and sexual orientation discrimination, and as champions of the fight against “global warming”. The Jacksonians, for their part, take turns denouncing the corruption, perversity and ultimately hypocrisy of their predecessors while calling to fight for their nation and not for the empire.
The two camps have in common only the same cult of force; whether it is at the service of the empire (Democrats and Republicans) or the nation (Jacksonians).
The fact that the Jacksonians unexpectedly became a majority in the country and took control of the Republican Party adds to the confusion, but should not confuse trumpism with what the Republican ideology has been since World War II.
In reality, Democrats and Republicans tend to be well-to-do people or professionals in new technologies, while Jacksonians – like the “yellow vests” in France – are rather poor and professionally tied to the land from which they cannot escape.
In my view, the main disputes are not stated, but are constantly implied. Liberal Privilege: Joe... Trump Jr, Donald Buy New $9.99 (as of 05:18 UTC - Details)
The Jacksonian agenda
As soon as he took office, Donald Trump questioned the Rumsfeld/Cebrowsky strategy of annihilating the state structures of all the countries of the “Broader Middle East” without exception and announced his wish to bring home the troops lost in the “war without end”. This goal remains at the top of his priorities in 2020 (“Stop Endless Wars and Bring Our Troops Home”).
As a result, he excluded the Director of the CIA and the Chairman of the Chiefs of Staff Committee from regular meetings of the National Security Council. In so doing, he deprived the supporters of imperialism of their main tool of conquest.
There followed a battle for the presidency of this council with the indictment of General Michael T. Flynn, then his replacement by General H. R. McMaster, the exceptionalist John R. Bolton, and finally Robert C. O’Brien.
In May 2017, Donald Trump called on U.S. allies to immediately cease their support for jihadists charged with implementing the Rumsfeld/Cebrowski strategy. This was the Riyadh speech to the Sunni heads of state and then to NATO heads of state and government. President Trump had declared NATO obsolete before changing his mind. However, he obtained not the abandonment of Russia’s policy of containment, but the halving of the credits used for this purpose and the allocation of the funds thus preserved to the fight against jihadism. In doing so, it partially stopped making NATO an instrument of imperialism and turned it into a defensive alliance. It has therefore demanded that its members contribute to its budget. Support for jihadism, however, was pursued by the supporters of imperialism with private means, notably the KKR Fund. Trump and the American... Gingrich, Newt Best Price: $15.19 Buy New $18.52 (as of 04:42 UTC - Details)
Hence his watchwords: “Wipe Out Global Terrorists Who Threaten to Harm Americans” and “Get Allies to Pay their Fair Share.
Like the Democrats and Republicans, the Jacksonian Donald Trump is committed to restoring the capabilities of his armies (“Maintain and Expand America’s Unrivaled Military Strength”). Unlike his predecessors, he did not seek to transform the Pentagon’s delusional management by privatizing one department at a time, but rather developed a plan to recruit researchers to compete technologically once again with the Russian and Chinese armies.
Only Donald Trump’s desire to regain primacy in missile matters is supported by Democrats and Republicans, although they do not agree on how to achieve it (“Build a Great Cybersecurity Defense System and Missile Defense System”) : the tenant of the White House wants the USA to equip itself alone with these weapons that it can eventually deploy on the territory of its allies, while its opponents want to involve the allies in order to maintain their hold on them. From the point of view of the Democrats and Republicans, the problem is obviously not withdrawing from the Cold War disarmament treaties to build a new arsenal, but the loss of means of diplomatic pressure on Russia.
A professional politician, Joe Biden hopes to restore the imperial status of the former First World Power. Fallout: Nuclear Bribe... Bruner, Seamus Buy New $25.20 (as of 04:53 UTC - Details)
The program of Democrats and non-party Republicans
Joe Biden proposes to focus on three objectives: (1) reinvigorate democracy (2) train the middle class to cope with globalization (3) regain global leadership.
Reinvigorate democracy: in his words, this means basing public action on the “informed consent” of Americans. In doing so, he used Walter Lipmann’s 1922 terminology, according to which democracy presupposes “manufacturing consent”. This theory was discussed at length by Edward Herman and Noam Chomsky in 1988. It obviously has nothing to do with the definition formulated by President Abraham Lincoln: “Democracy is government of the people, by the people, for the people”.
Joe Biden believes he is achieving his goal by restoring the morality of public action through the practice of “political correctness”. For example, he condemns “the horrible practice [of President Trump] of separating families and placing the children of immigrants in private prisons,” without saying that President Trump was merely applying a democratic law to show its futility. Or he announces that he wants to reaffirm the condemnation of torture that President Trump justified, without saying that the latter, like President Obama, has already banned the practice while maintaining life imprisonment without trial in Guantánamo.
He announced his intention to convene a Summit for Democracy to fight against corruption, to defend the “Free World” against authoritarian regimes, and to advance human rights. In view of his definition of democracy, it is a question of uniting allied states by denouncing scapegoats for what is wrong (the “corrupt”) and promoting human rights in the Anglo-Saxon sense and especially not in the French sense. That is to say, to stop police violence and not to help citizens to participate in decision-making. This summit will launch an appeal to the private sector so that new technologies cannot be used by authoritarian states to monitor their citizens (but the USA and its NSA can always use them in the interest of the “Free World”).
Finally, Joe Biden concludes this chapter by highlighting his role in the Transatlantic Commission for Electoral Integrity alongside his friends, former NATO Secretary General Anders Fogh Rasmussen, who overthrew the Libyan Arab Jamahiriya, and Michael Chertoff, former US Secretary of Homeland Security, who put all US citizens under surveillance. Not forgetting John Negroponte who organized the Contras in Nicaragua and Daesh in Iraq. The Deep State: How an... Chaffetz, Jason Best Price: $5.03 Buy New $17.05 (as of 02:10 UTC - Details)
Educating the middle class to cope with globalization. Joe Biden believes that the politics that have been pursued since the dissolution of the USSR have led to the rapid disappearance of the middle class, and that training the remaining middle class in the use of new technologies will prevent the relocation of their jobs.
Renewing U.S. leadership. In the name of democracy, this means stopping the rise of “populists, nationalists and demagogues. This formulation helps us understand that democracy, according to Joe Biden, is not only the fabrication of consent, but also the eradication of the popular will. If demagogues pervert democratic institutions, populists serve the popular will and nationalists serve the community.
Joe Biden then specifies that he will stop wars “forever”; a formulation that seems to support the same goal as the Jacksonians, but differs in terminology. It is in fact a question of validating the current adaptation of the system to the limits imposed by President Trump: why make US soldiers die abroad when one can pursue the Rumsfeld/Cebrowski strategy with jihadists at a lower cost? All the more so since when he was only an opposition senator, Joe Biden gave his name to the plan to partition Iraq that the Pentagon was trying to impose.
A verse follows on the enlargement of NATO to include Latin American, African and Pacific allies. Far from being obsolete, the Alliance will once again become the heart of U.S. imperialism.
Finally, Joe Biden pleads for the renewal of the 5+1 agreement with Iran and disarmament treaties with Russia. The agreement with President Hassan Rohani aims to classically divide Muslim countries into Sunni and Shia, while the disarmament treaties aim to confirm that the Biden administration would not envisage a global confrontation, but the continued containment of its competitor.
The program of the Democratic Party candidate and non-party Republicans concludes with the assurance of joining the Paris Accord and taking leadership in the fight against global warming. Joe Biden specifies that he will not give gifts to China, which is relocating its most polluting industries along the Silk Road. On the other hand, he omits to say that his friend, Barack Obama, before entering politics, was the drafter of the statutes of the Chicago Carbon Emissions Trading Exchange. The fight against global warming is not so much an ecological issue as a matter for bankers. The Jacksonian Promise... Feller, Prof Daniel Best Price: $4.87 Buy New $24.49 (as of 03:52 UTC - Details)
Conclusion
It must be said that everything is opposed to a clarification. Four years of upheavals by President Trump have only succeeded in replacing the “endless wars” with a low-intensity private war. There are certainly far fewer deaths, but it is still war.
The elites who enjoy imperialism are not ready to give up their privileges.
So it is to be feared that the U.S. will be forced to go through an internal conflict, a civil war, and break up like the Soviet Union once did.
The Best of Thierry Meyssan


What of Rights?

Regarding the seeming failure of liberalism , Fr .
Legge begins with a reference to Patrick Deneen ’ s book , Why Liberalism Failed : a major cause is the Enlightenment ’ s focus on autonomy and the rights of the individual .
“ Is the Enlightenment idea of liberty the core theoretical problem for liberalism today ?
” Regular readers here have walked with me while I have developed my views .
Fundamentally , an underlying cultural foundation ( and , in my opinion , a specific cultural foundation ) is necessary in order for liberty as promised in @ @ @ @ @ @ @ Enlightenment , while offering that promise of liberty , at the same time offered that the cultural foundation was not fundamental .
Chalk City Sidewalk Ch ... Best Price : $ 8.79 Buy New $ 9.99 Fr .
Legge offers his perspective , well-preceding the Enlightenment : we must grasp the true nature between law , justice , and individual rights and the common good .
He begins with Thomas Aquinas and the reality that man is born into a social environment .
We have the possibility of conflicts horizontally ( between individuals @ @ @ @ @ @ @ individual and the common good ) .
I know the phrase “ common good ” is troubling for many libertarians ; just sit tight .
Beginning with Aquinas , he offers that justice is according to God ’ s plan ; God ’ s will is secondary to this – He acts according to the order He conceived .
Therefore , law is not an expression of God ’ s will , but of God ’ s reasoned plan .
Hence , law is an expression of reason – even for God .
@ @ @ @ @ @ @ can God act contrary to this reason ?
For Aquinas the answer is no , and anyway , why would He – or , more specifically , why would He have to do so ?
God was quite capable of creating an order that would not require Him to act in a manner that was contradictory or arbitrary when compared to this order .
An ordination of reason for the common good , made by one with authority and promulgated .
Proper human justice takes this into account , along with the right @ @ @ @ @ @ @ and vertically .
For this , there are three key elements : first , an ordering ; second , according to reason , third , to the good .
The key issue when it comes to the downfall of the liberal order since the is this question of “ good.
” What is the “ good ” ?
This will come later .
With this , Fr .
Legge is ready to take up the question of rights : does Aquinas have a theory of individual rights ?
It is often thought , @ @ @ @ @ @ @ But it is through Thomas where an issue often raised against the Enlightenment – the explosion of individual so-called rights – can be addressed .
Aquinas does speak of objective rights , ius , that an individual can assert .
The Latin word can translate into rights , the just thing , fair , or what is right .
The ius is the object , or measure , of justice .
Have I rendered what is due to you ?
Conversely , I am due something from you – this ius .
And @ @ @ @ @ @ @ of a right – a right that can be enforced against others .
Echo Dot ( 3rd Gen ) - S ... Best Price : $ 34.08 Buy New $ 49.99 Aquinas does not conceive of these rights as an abstraction from the teleological order .
I take this to mean ( and it is consistent with my earlier work on this ) , that just because natural law dictates an act , it does not mean that another person can require me , by law , to perform that act .
So @ @ @ @ @ @ @ abstraction from the teleological order , then where are these from ?
Rights are a function of justice , directed toward the common good .
And it is here where things went wrong – accelerated in the Enlightenment , but not born there .
To examine this , he starts with two other Catholics : one a Franciscan and one a Jesuit , who offer very different accounts of individual rights – “ because they lost sight of the truth… ” ( after which the room erupts in laughter at this inside-Catholic-baseball humor @ @ @ @ @ @ @ , law , and ius all depend on , or are facts of , a wise and reasoned order of individuals to the good.
” He points to William of Occam , the fourteenth century Franciscan nominalist , as the primary culprit on this score .
Occam rooted law , not in God ’ s reason or intellect , but in God ’ s will .
Law ceased to be something that ordered us to the good , but became nothing more than God ’ s command .
He then points to Francisco @ @ @ @ @ @ @ While an opponent of Occam and often praising Aquinas , he would change definitions to the extent that the concepts presented by Aquinas were lost .
I will admit , this portion was a bit way too far inside-Catholic-baseball for me – the nuance of agreement vs. disagreement with Aquinas was not drawn out in a manner that I could well comprehend .
So how does this lead to the crisis of liberalism today ?
The shift in the law and common good , beginning in Occam and completed in Suarez , left @ @ @ @ @ @ @ than Aquinas ’ s in two ways : first , a loss of the recognition that law is an ordination of reason to the common good , instead becoming an imposition of an obligation by the will of a superior ; second , a loss of the sense that rights are a feature of the over-arching teleological order to the good in which the rational creature is placed , instead dependent on the moral power of the creature without reference to that order .
Wyze Cam Pan 1080p Pan ... Best Price : @ @ @ @ @ @ @ other words : law has become a function of will – and this , with the death of God , became the will of the strong man ; second , the larger context in which I live can in no way be allowed to infringe on my individual rights .
For example , looting is just me expressing my rights .
( Four months ago , I would have written that walking into any restroom I like is just me expressing my rights .
Oh , what happened to those good old days… @ @ @ @ @ @ @ but this change wasn ’ t born in the Enlightenment .
Instead of an objective good , we now have the good as defined by the strongest earthly superior .
We now claim rights without a firm foundation of what is good , allowing for a never-ending proliferation of rights-claims .
Even God is not free to make such arbitrary choices .
He created the ordered world , subject to reason – His reason , therefore why would He ever contradict this ?
This is an ordering to the good – an objective @ @ @ @ @ @ @ a good subject to reason , not to the possibility of an ever-changing will .
So much for the past .
Now what ?
What should be done ?
There is no going back to an idealized past .
Yet , we must understand what we need to recover .
In my own words : we don ’ t go back to the past ; we must return to the center .
There is a center , relative to which we are sometimes closer and sometimes farther .
It isn ’ t going @ @ @ @ @ @ @ to the center .
What is due to another , the ius , depends on the over-arching teleological order ; this order regards persons , living in communities .
There is no autonomous individual : we come into the world as a child of a mother and father , in a community , with relationships with many others along many spectrums .
This is the natural condition of the individual .
Hence , rights are not arbitrarily chosen .
Rights affirm what is required if persons are to be properly ordered to each @ @ @ @ @ @ @ the issue of the common good .
Does the common good infringe on the rights of the individual ?
Not in a Thomistic understanding .
Donald Trump Coin 2020 ... Buy New $ 5.35 The common good is the good which can be shared by many without diminishment to any individual .
A simple example offered by Fr .
Legge is the joy that many can take at the victory of a sports team .
A broader example I offer is that of a well-functioning market .
It is difficult to deny that @ @ @ @ @ @ @ and certain rights are required to protect and defend this common good – for example , rights in person and property .
Well-functioning markets clearly do not infringe on the rights of any individual ; in fact , such markets are a good for the individual .
The idea of ius , what is right , will defend this common good .
Fr .
Legge offers other common goods : justice , truth , and peace .
Here again , the achievement of these does not diminish any individual ’ s liberty .
@ @ @ @ @ @ @ : the city exists not merely that men might live , but that they might live well .
All of these rights , born from a teleological understanding of the good , are ignored or even crushed today .
The common good rights of person , property , justice , truth and peace are all attacked daily , both by government and by many that the government enables .
Further , law that defends the just right of the citizen is quite different than pork-barrel spending .
There is no common good in @ @ @ @ @ @ @ be shared without diminishment toward some at the favor of others .
One can think of many of the so-called rights claimed by those majoring in grievance studies in university in the same way : these claims are not for the common good , as they can not be shared without diminishment to some individuals .
Keep America Great Bas ... Buy New $ 11.99 At its foundation , the disagreement is about what is good .
It is this disagreement that results in varying rights claims , and much of this discussion @ @ @ @ @ @ @ common good but at the cost of the common good .
I know that the idea of natural law causes grief for many , ranging from those who find the idea of an objective good abhorrent , to those who claim to find no basis for it in the Bible .
To the former , I suggest that there is no other path to liberty ; to the latter , I offer this .
To have properly ordered rights , there must be a shared understanding of what is good .
It still @ @ @ @ @ @ @ that the foundation of natural law offers the only means by which such questions can be answered , therefore it is only through a foundation of natural law that we can defend individual liberty .
The Best of Bionic Mosquito

When Rights Go Wrong, Fr. Dominic Legge, O.P. (audio)
Regarding the seeming failure of liberalism, Fr. Legge begins with a reference to Patrick Deneen’s book, Why Liberalism Failed: a major cause is the Enlightenment’s focus on autonomy and the rights of the individual. “Is the Enlightenment idea of liberty the core theoretical problem for liberalism today?”
Regular readers here have walked with me while I have developed my views. Fundamentally, an underlying cultural foundation (and, in my opinion, a specific cultural foundation) is necessary in order for liberty as promised in the Enlightenment to hold. Yet the Enlightenment, while offering that promise of liberty, at the same time offered that the cultural foundation was not fundamental.
Chalk City Sidewalk Ch... Best Price: $8.79 Buy New $9.99 (as of 03:53 UTC - Details) Fr. Legge offers his perspective, well-preceding the Enlightenment: we must grasp the true nature between law, justice, and individual rights and the common good. He begins with Thomas Aquinas and the reality that man is born into a social environment. We have the possibility of conflicts horizontally (between individuals), and vertically (between an individual and the common good). I know the phrase “common good” is troubling for many libertarians; just sit tight.
Beginning with Aquinas, he offers that justice is according to God’s plan; God’s will is secondary to this – He acts according to the order He conceived. Therefore, law is not an expression of God’s will, but of God’s reasoned plan. Hence, law is an expression of reason – even for God.
I know there is this question: can God act contrary to this reason? For Aquinas the answer is no, and anyway, why would He – or, more specifically, why would He have to do so? God was quite capable of creating an order that would not require Him to act in a manner that was contradictory or arbitrary when compared to this order.
Aquinas’s definition of law is offered:
An ordination of reason for the common good, made by one with authority and promulgated.
Proper human justice takes this into account, along with the right ordering in human acts – both horizontally and vertically. For this, there are three key elements: first, an ordering; second, according to reason, third, to the good. The key issue when it comes to the downfall of the liberal order since the is this question of “good.” What is the “good”? This will come later.
With this, Fr. Legge is ready to take up the question of rights: does Aquinas have a theory of individual rights? It is often thought, incorrectly, that he does not. But it is through Thomas where an issue often raised against the Enlightenment – the explosion of individual so-called rights – can be addressed.
Aquinas does speak of objective rights, ius, that an individual can assert. The Latin word can translate into rights, the just thing, fair, or what is right. The ius is the object, or measure, of justice. Have I rendered what is due to you? Conversely, I am due something from you – this ius. And here, we can find a conception of a right – a right that can be enforced against others. Echo Dot (3rd Gen) - S... Best Price: $34.08 Buy New $49.99 (as of 03:53 UTC - Details)
Aquinas does not conceive of these rights as an abstraction from the teleological order. I take this to mean (and it is consistent with my earlier work on this), that just because natural law dictates an act, it does not mean that another person can require me, by law, to perform that act.
So, if these rights are not an abstraction from the teleological order, then where are these from? Rights are a function of justice, directed toward the common good. And it is here where things went wrong – accelerated in the Enlightenment, but not born there.
To examine this, he starts with two other Catholics: one a Franciscan and one a Jesuit, who offer very different accounts of individual rights – “because they lost sight of the truth…” (after which the room erupts in laughter at this inside-Catholic-baseball humor from this Dominican) “…that justice, law, and ius all depend on, or are facts of, a wise and reasoned order of individuals to the good.”
He points to William of Occam, the fourteenth century Franciscan nominalist, as the primary culprit on this score. Occam rooted law, not in God’s reason or intellect, but in God’s will. Law ceased to be something that ordered us to the good, but became nothing more than God’s command.
He then points to Francisco Suárez, a seventeenth century Jesuit. While an opponent of Occam and often praising Aquinas, he would change definitions to the extent that the concepts presented by Aquinas were lost. I will admit, this portion was a bit way too far inside-Catholic-baseball for me – the nuance of agreement vs. disagreement with Aquinas was not drawn out in a manner that I could well comprehend.
So how does this lead to the crisis of liberalism today? The shift in the law and common good, beginning in Occam and completed in Suarez, left us a theory of law fundamentally different than Aquinas’s in two ways: first, a loss of the recognition that law is an ordination of reason to the common good, instead becoming an imposition of an obligation by the will of a superior; second, a loss of the sense that rights are a feature of the over-arching teleological order to the good in which the rational creature is placed, instead dependent on the moral power of the creature without reference to that order. Wyze Cam Pan 1080p Pan... Best Price: $37.96 Buy New $32.30 (as of 05:05 UTC - Details)
In other words: law has become a function of will – and this, with the death of God, became the will of the strong man; second, the larger context in which I live can in no way be allowed to infringe on my individual rights. For example, looting is just me expressing my rights. (Four months ago, I would have written that walking into any restroom I like is just me expressing my rights. Oh, what happened to those good old days….)
The Enlightenment magnified this, but this change wasn’t born in the Enlightenment. Instead of an objective good, we now have the good as defined by the strongest earthly superior. We now claim rights without a firm foundation of what is good, allowing for a never-ending proliferation of rights-claims.
Even God is not free to make such arbitrary choices. He created the ordered world, subject to reason – His reason, therefore why would He ever contradict this? This is an ordering to the good – an objective, not arbitrary good; it is a good subject to reason, not to the possibility of an ever-changing will.
So much for the past. Now what? What should be done? There is no going back to an idealized past. Yet, we must understand what we need to recover. In my own words: we don’t go back to the past; we must return to the center. There is a center, relative to which we are sometimes closer and sometimes farther. It isn’t going back to the past, but returning to the center.
What is due to another, the ius, depends on the over-arching teleological order; this order regards persons, living in communities. There is no autonomous individual: we come into the world as a child of a mother and father, in a community, with relationships with many others along many spectrums. This is the natural condition of the individual.
Hence, rights are not arbitrarily chosen. Rights affirm what is required if persons are to be properly ordered to each other. Which brings us back to the issue of the common good. Does the common good infringe on the rights of the individual? Not in a Thomistic understanding. Donald Trump Coin 2020... Buy New $5.35 (as of 05:19 UTC - Details)
The common good is the good which can be shared by many without diminishment to any individual. A simple example offered by Fr. Legge is the joy that many can take at the victory of a sports team. A broader example I offer is that of a well-functioning market. It is difficult to deny that such markets are a common good, and certain rights are required to protect and defend this common good – for example, rights in person and property. Well-functioning markets clearly do not infringe on the rights of any individual; in fact, such markets are a good for the individual. The idea of ius, what is right, will defend this common good.
Fr. Legge offers other common goods: justice, truth, and peace. Here again, the achievement of these does not diminish any individual’s liberty. These enhance individual liberty. Paraphrasing Aristotle: the city exists not merely that men might live, but that they might live well.
All of these rights, born from a teleological understanding of the good, are ignored or even crushed today. The common good rights of person, property, justice, truth and peace are all attacked daily, both by government and by many that the government enables.
Further, law that defends the just right of the citizen is quite different than pork-barrel spending. There is no common good in this, as such actions cannot be shared without diminishment toward some at the favor of others. One can think of many of the so-called rights claimed by those majoring in grievance studies in university in the same way: these claims are not for the common good, as they cannot be shared without diminishment to some individuals.
Conclusion
Keep America Great Bas... Buy New $11.99 (as of 03:53 UTC - Details) At its foundation, the disagreement is about what is good. It is this disagreement that results in varying rights claims, and much of this discussion centers on rights claims not for the common good but at the cost of the common good.
I know that the idea of natural law causes grief for many, ranging from those who find the idea of an objective good abhorrent, to those who claim to find no basis for it in the Bible. To the former, I suggest that there is no other path to liberty; to the latter, I offer this.
To have properly ordered rights, there must be a shared understanding of what is good. It still remains, as Murray Rothbard offered, that the foundation of natural law offers the only means by which such questions can be answered, therefore it is only through a foundation of natural law that we can defend individual liberty.
Reprinted with permission from Bionic Mosquito.
The Best of Bionic Mosquito


lewrockwell--2020-09-11--Inflation, Deflation, and Other Fallacies

There can be little doubt that macroeconomic policies are failing around the world .
The fallacies being exposed are so entrenched that there are bound to be twists and turns yet to come .
This article explains the fallacies behind inflation , deflation , economic performance and interest rates .
They arise from the modern states ’ overriding determination to access the wealth of its electorate instead of being driven by a genuine and considered concern for its welfare .
Monetary inflation , which has become runaway , transfers wealth to the state from producers and consumers , and is @ @ @ @ @ @ @ is now with that single economically destructive objective in mind .
Falling prices , the outcome of commercial competition and sound money are more aligned with the interests of ordinary people , but that is so derided by neo-Keynesians that today almost without exception everyone believes in inflationism .
The Price of Tomorrow : ... Booth , Jeff Best Price : $ 21.14 Buy New $ 18.95 And finally , we conclude that the escape from failing fiat will lead to rising nominal interest rates , with all the consequences which that entails @ @ @ @ @ @ @ to commodities , including gold and silver , despite rising interest rates for fiat money .
In a macroeconomics-driven world , economic fallacies abound .
They are periodically trashed when disproved , only to arise again as received wisdom for a new generation of macroeconomists determined to justify their statist beliefs .
The most egregious of these is that inflation can only occur as the handmaiden of economic growth , while deflation is similarly linked to a recession spinning out of control into the maelstrom of a slump .
This error is the @ @ @ @ @ @ @ macroeconomists split into two groups .
There are the Keynesians who believe in stimulating demand to ensure there will always be markets for goods and services , which they attempt to achieve through additional spending by governments and by discouraging saving , because it is consumption deferred .
And there are the supply-siders , who believe in stimulating production through lower corporate taxes and lighter regulation .
Both demand and supply-siders advocate monetary inflation in the belief that their methods stimulate an economy so that government spending need not be cut .
The @ @ @ @ @ @ @ of both approaches , not the welfare of economic actors , who are always regarded as the state ’ s milch cows .
While supply-side reforms have proved more attractive to free traders than Keynesian demand stimulus , the end result is the same : the combination of taxes and monetary seigniorage from the productive economy transferred to the state is the objective either way .
The smoke and mirrors to get people to part with their wealth are the misuse of statistics .
The price consequences of monetary inflation are suppressed by @ @ @ @ @ @ @ substituted for economic progress , the combination leading to confusion for nearly all economists .
But the facts behind the measure of growth , gross domestic product , are easily explained .
The Sovereign Individu ... William Rees-Mogg Best Price : $ 10.50 Buy New $ 16.58 First , the modelling assumptions .
As a starting point we must assume there is no inflation of money and credit and the quantity of money is fixed .
That being the case , and assuming no change in the statistical make-up of GDP , nor @ @ @ @ @ @ @ and assuming no change in the balance of external trade , there can be no increase in nominal GDP , because whatever people make , sell and consume amounts to the same total expressed in money terms compared with the previous period .
It is an accounting identity .
Whether savings increase or decrease is immaterial , because GDP is the total of final goods and intermediate goods , so if an economy evolves from being consumer to savings driven or vice-versa , GDP must remain unchanged .
The split between profit and @ @ @ @ @ @ @ sum of the two being contained within the GDP total .
But variations in the rate of economic progress will always be reflected in the individual prices and quantities of goods and services produced without the total monetary value of all transactions changing .
A progressive economy will see more and better goods and services at lower prices , while for a failing economy the opposite is be true .
The next step should not be beyond the understanding of anyone .
If a fairy godmother magically created some extra money for the @ @ @ @ @ @ @ it must simply be added to the GDP total , whether they spend it or save it — as long as they don ’ t hoard it .
Saving circulates , because it is money made available for investment .
Hoarding is taking money out of circulation , which is why in our model we must assume the quantity of money hoarded does not change .
Macroeconomists confuse the additional money injected into the economy with growth .
It is growth in the money total only , because it is impossible to judge @ @ @ @ @ @ @ to economic advantage .
Economic growth has become confused with economic progress .
Economists today appear unaware of this distinction , which Ludwig von Mises separated out into what he called an evenly rotating economy .
He defined it as follows : “ An imaginary economy in which all transactions and physical conditions are repeated without change in each similar cycle of time .
Everything is imagined to continue exactly as before , including all human ideas and goals .
Under such fictitious constant repetitive conditions there can be no net change in @ @ @ @ @ @ @ can not be any change in prices.
” [ i ] The inconvenient truth for statists is that with GDP they can only measure the quantity of money in total transactions , not how it is used .
This fits von Mises ’ s description of an imaginary economy that evenly rotates and it is vital for any student of economics to understand this point .
It matters not whether he or she is a demand or supply-sider ; both categories of macroeconomic emphasis wrongly believe in targets for GDP outcomes , which @ @ @ @ @ @ @ maintaining government revenue .
And that is the key to their interest .
The Age of Surveillanc ... Zuboff , Shoshana Best Price : $ 18.59 Buy New $ 19.06 It is with this perspective that we must understand the role of monetary inflation in an economy , and the reason for underlying , statist-driven beliefs that inflation is good , and deflation is bad .
For the state the absence of monetary inflation is a loss of a growing and important source of revenue at a time of escalating welfare and other @ @ @ @ @ @ @ problems facing government finances into sharp relief .
Keynesians are yet again losing the practical argument as all nations see government finances spinning out of control .
Instead , the policies behind governments ’ finances have been forced to drift into a default version of supply-side economics to help businesses survive .
Taxes on businesses have been deferred or cut , employment subsidised , and the rich left alone .
If anything , the rich are being subsidised through asset price inflation , which is the initial consequence of accelerating monetary inflation .
@ @ @ @ @ @ @ manipulated , the one objective behind it all is the satisfaction of government finances over the business cycle .
Economic progress is reflected by falling , not rising prices Now that hopefully we have put the GDP fallacy in its proper context , we are in a better position to understand why , contrary to modern economic doctrines , the natural state for an economy that progresses is not one that sees continual and planned inflation , which are monetary policy objectives , but gradually falling prices .
This was the experience under @ @ @ @ @ @ @ and is easily explained : within a confined money total such as that of monetary gold , an increase in the quantity of goods and services taking place can only be accommodated by a decline in the general level of prices .
Put another way , the purchasing power of sound money , a money whose quantity is not inflated , always rises over time .
Not that the quantity of gold and gold substitutes was ever fixed .
In the nineteenth century , the quantity of monetary gold was inflated by new @ @ @ @ @ @ @ Africa , and we must also mention the fluctuations in bank credit which masqueraded as gold substitutes .
But the expansion in the money quantity was insufficient to prevent the general level of prices falling over time between the introduction of the gold standard in Britain in 1821 and the First World War .
And it should go without saying that it was this period that saw the bulk of the British population move from bare subsistence living to immensely improved conditions .
Today ’ s macroeconomic beliefs defy all the historical evidence @ @ @ @ @ @ @ presence of the state at the expense of the productive private sector .
Free markets and sound money benefit savers and workers by increasing the purchasing power of their savings and wages over time .
They encourage the accumulation of personal wealth .
They displace the speculation predominant in financial assets today .
They discourage profligacy , indolence and needless borrowing .
With the exception of the destitute and others who can be more effectively supported by voluntary institutions , they allow the vast majority of people to provide for their own personal @ @ @ @ @ @ @ from onerous welfare obligations .
The Zero Interest Trap Hochreiter , Gregor Best Price : $ 12.16 Buy New $ 19.00 In other words , the mild but continuous deflation of prices , which is the principal feature of sound money , removes a financial burden from the state , leaving it with minimal negative economic impact .
And the smaller the government is , the less its tax depredations are on economic actors and the more effectively the free market economy becomes in improving standards of living for all .
By comparison @ @ @ @ @ @ @ are inherently destructive .
Monetary inflation indiscriminately robs both savers and wage earners .
Not only is the accumulation of personal wealth by the masses taxed away or discouraged , speculation in financial assets is encouraged in order to create a replacement wealth effect .
Profligacy , indolence and needless borrowing are hallmarks of the inflationary regime .
Companies lobby for subsidies and for government protection from competition by creating anti-competitive regulatory burdens to discourage upstart innovators .
Nearly everyone can freeload on state-provided welfare , the provision of health and mandated minimum @ @ @ @ @ @ @ on the economy inevitably grows to the point of economic strangulation .
It follows that the progressive wealth transfer from its citizens into the government ’ s hands through monetary inflation reduces not only the value of wealth left to be transferred but as noted above it becomes an increasing burden on the economy .
Insofar as the government has mandated to itself future liabilities , in inflationary times those liabilities also rise in their estimated net present value making them unaffordable , even though it is naively claimed that inflation benefits government @ @ @ @ @ @ @ existing debt .
The final outcome of inflationary financing is always the same : the destruction of the productive economy through increasing wealth transfer and therefore of the currency itself .
Due in part to the coronavirus , now that economies are visibly sliding into an economic abyss the end is in sight for macroeconomic fallacies .
But in the coming months we will have to endure a doubling down of destructive monetary policies as Keynesians and supply siders battle it out over how to access and deploy the citizens ’ remaining wealth @ @ @ @ @ @ @ will only be revealed in a final crisis and the end of fiat currencies .
Part of the Keynesian myth is that businesses are forced to pay unnecessarily high interest rates by avaricious savers .
Keynes argued that by replacing savers with the state as the provider of monetary capital , a far lower rate of interest can be applied , encouraging production .
Keynes ’ s dream of euthanising the rentier class was to be accompanied by the state limiting the entrepreneur ’ s profits : those “ …who are so fond @ @ @ @ @ @ @ be obtained far cheaper than at present ” .
[ ii ] Unleashing Usury : How ... Westra , Richard Best Price : $ 12.61 Buy New $ 24.95 From these objectives we learn that Keynes ’ s misunderstanding of the economic role of interest rates and of borrowers and lenders are derived from his socialist bias .
The truth is that interest rates reflect the difference between possession of goods and their possession at a later date — their time preference .
Savers view the matter differently from borrowers .
To a @ @ @ @ @ @ @ money , which represents the range of goods and services he might otherwise acquire with it , is purely a matter of time preference incorporating factors to reflect the specific risk of lending to a particular borrower and of the purpose to which the loan is put .
For the businessman it is less a matter of time preference and more a matter of business calculation .
It is also a common error to think it is greedy savers who set interest rates higher than they need otherwise be .
In a free @ @ @ @ @ @ @ economic calculations which establish the level of interest rates , bidding up for savers ’ savings to a commercially feasible level ; savers generally being reluctant to defer their consumption without good reason .
This , at least , is the lesson from the resolution of Gibson ’ s paradox , the explanation of which defied macroeconomists from Fisher to Keynes .
[ iii ] Ignoring Gibson ’ s paradox , simply because it could not be explained , turns out to be a mistake of the greatest magnitude , because its resolution @ @ @ @ @ @ @ that there is no correlation between short-term interest rates and the general level of prices .
Consequently , interest rate policies can not achieve their stated objectives .
This lack of correlation is shown in Figure 1 , when over 245 years , even violent swings between inflation and deflation in Britain through wars and slumps failed to disrupt the relationship between wholesale borrowing costs and the general level of prices .
The only exception in all that time was in the run up to the gold pool failure in the late sixties @ @ @ @ @ @ @ vestiges of sound money by ending the Bretton Woods agreement in 1970 .
That period saw the increasing dominance of unsound money , which in subsequent decades increasingly subverted the relationship through a combination of statist suppression of both interest rates and the general level of prices .
In other words , the evidence became buried .
Instead , wholesale borrowing costs correlated with the general level of prices , as shown in Figure 2 .
Note how the correlation remained intact in the early days of purely fiat money , both rising @ @ @ @ @ @ @ The explanation is that in a market-driven economy business calculation is tied to prices for final products , and it is therefore those expectations that set borrowing costs .
We have more to say about the implications of Gibson ’ s paradox later in this article .
That does not stop macroeconomists from pursuing their cherished interest rate myth .
The unanimous opinion today is that interest rates must not be permitted to rise .
For example , the currently strong euro is taken to threaten intensifying deflation in the Eurozone which , @ @ @ @ @ @ @ by deeper negative interest rates .
But as we have seen , deflation is not the problem the inflationists would have us believe .
They are confusing their macroeconomic theories with the economic distortions accumulated over the decades due to their erroneous monetary policies .
With macroeconomic policies proceeding in the wrong direction those distortions will finally unwind of their own accord — most likely in dramatic fashion .
The obvious breaking point is between the time preference of current possession relative to future ownership , and its tension with official interest rate @ @ @ @ @ @ @ We must comment briefly on how this will be resolved .
Ordinary people in countries like America and Britain are no longer the major depositors at the banks or owners of fixed-interest bonds .
Bank liabilities are dominated by business entities , much of it purely financial , which have accumulated the bulk of deposits in the banking system as well as in short-term money instruments .
And in the US , over $ 6 trillion of bills and bank deposits are owned by and due to foot-loose foreign governments and corporations through @ @ @ @ @ @ @ ] These depositors are more sophisticated than small savers and will not hesitate to reduce their balances if the currency ’ s purchasing power declines .
For the moment there is an uneasiness , with interest rates at the zero bound , and negative in the Eurozone , Japan , Switzerland and Denmark , all in defiance of time preference .
These are everywhere suppressed interest rates , failing to stimulate a recovery , Keynesian or otherwise .
But when the gaol-sought inflation rate of 2 % is no longer believed , the @ @ @ @ @ @ @ rates or face a rapid collapse in their currencies ’ purchasing power .
And it is here that an additional muddle needs to be resolved .
In macroeconomic theory , there are only two conditions .
There is one of inflationary prices , driven by demand , a condition that leads to full employment .
The second is one of deflationary prices and rising unemployment .
Rising prices and unemployment together are deemed an oddity by macroeconomists .
But in formulating their beliefs they ignore the evidence .
Every inflation impoverishes ordinary people @ @ @ @ @ @ @ article , and instead , falling prices are a boon to them .
Furthermore , other than a temporary boost to an economy from inflation , if it transpires at all , the normal condition is for inflation and rising unemployment to go together , unemployment being the consequence of wealth transfer .
Mises on Money Gary North Best Price : $ 7.90 Buy New $ 9.00 Furthermore , we can easily explain what has become to be described as stagflation — the combination of a stagnating economy and rising prices .
Humans @ @ @ @ @ @ @ output so that they can satisfy their needs and wants .
Money is just the intermediary commodity which facilitates turning their production into their consumption .
It follows that if producers are not buying , it is because they are not producing , so we can dismiss the idea that falling consumption leads to excess supply and lower prices .
Therefore , the contraction of demand broadly matches the contraction of supply in a stagnating economy .
That leads us to consider the price effect of increasing the quantity of money in a @ @ @ @ @ @ @ in terms of goods and services exchanged .
We now have a condition of more money chasing fewer goods with a predictable result .
It compares starkly with a condition of economic progress , whereby expanding activity is driven by market competition .
This is because the falling prices for products that are the consequence of competitive markets counters the price inflation effect from increases in money and credit .
As we sink therefore into a production and consumption crisis , the general level of prices will rise sharply on the continuation of @ @ @ @ @ @ @ on prices diminishes .
In the next few months , when monetary planners find this out for themselves , further monetary inflation will be increasingly untenable policy .
Furthermore , interest rate reductions as the Keynesian solution to rising unemployment can be ruled out .
Monetary authorities will be forced to navigate between two objectives : will it be more monetary inflation to finance the government ’ s rocketing deficit , contain unemployment and let the currency go hang , or higher interest rates in an attempt to protect the currency , whatever @ @ @ @ @ @ @ rates must rise but gold and silver will be unstoppable While monetary authorities are contemplating their options , the decision will not be in their hands .
With some $ 27 trillion in foreign securities and the aforementioned dollar deposits , the dollar is particularly vulnerable to liquidation by foreigners , and as foreigners start repatriating funds to their home currencies — a process that ’ s hardly started — it won ’ t be long before markets begin to discount rising dollar interest rates , thereby undermining financial asset values around the @ @ @ @ @ @ @ resisted strongly by the authorities , but once they are on the run from market forces there will be no macroeconomic option between raising interest rates and seeing the currency collapse .
This will lead to the last test of macroeconomic fallacies , and that is the gold price , hovering in the wings ready to replace fiat money , always falls when interest rates rise .
The logic is that when interest rates rise it is more expensive to hold gold , which just sits there not earning anything .
And since @ @ @ @ @ @ @ even fall when a rise in interest rates is only expected .
The conditions where this has been a predictable outcome have been during recent decades , characterised by central banks having control over interest rates while government statisticians manipulate the statistics upon which mathematical macroeconomists rely for their analysis .
Otherwise , at times of accelerating monetary inflation and of the state losing control over markets , it is a myth , disproved by empirical evidence which can be fully explained .
Figure 3 below is of a time when the opposite @ @ @ @ @ @ @ .
From 1971 to 1979 the directional trends in both interest rates and the gold price rose and fell at almost the same time .
It is worth noting that this occurred over more than one business cycle , so it is not a relationship which was cycle-dependant .
Central banks in the post-Bretton Woods environment had lost control of interest rates to markets .
Based on empirical evidence the myth is therefore satisfactorily addressed .
To understand why this relationship between interest rates and gold is not as simple as commonly believed @ @ @ @ @ @ @ to bring in commodities generally and revisit the tricky subject of Gibson ’ s paradox .
This paradox ( see Figure 2 ) is based on long-run historical evidence , when silver or gold were transaction money ( except for the last decade ) , covering the 245 years between 1730 and 1975 .
It observes that the level of wholesale prices and interest rates are positively correlated .
The common view in markets today about the relationship between interest rates and price inflation is therefore wholly at odds with the longer-run evidence @ @ @ @ @ @ @ with the more fashionable theory that interest rates can regulate the quantity of money and therefore the rate of price inflation instead .
Those who centrally plan our money and markets appear unaware of the challenge the paradox poses to their preconceptions .
Keynes , no less , described Gibson ’ s Paradox in 1930 as “ one of the most completely established empirical facts in the whole field of quantitative economics ” , and Irving Fisher also wrote in 1930 that “ no problem in economics has been more hotly debated ” @ @ @ @ @ @ @ that “ The Gibson Paradox remains an empirical phenomenon without a theoretical explanation ” .
[ v ] But there is only one way for interest rates to go from the zero bound , it being only a matter of time .
Commodity prices in their role as raw materials for production therefore seem set to rise with interest rates , if the paradox is still valid .
And we have explained why the loss of a fiat currency ’ s purchasing power can be significantly greater in a stagnant , or even @ @ @ @ @ @ @ rising producer prices for commodity inputs .
Furthermore , there is some evidence that producer prices are suppressed even more than the price of gold has been , as shown in the FRED chart below .
Since the turn of the millennium there had been a reasonable directional correlation between the price of gold and PPI prices until October 2018 .
At that point , PPI prices began to decline while the gold price turned higher from under $ 1200 .
It was clear that global trade was likely to decline , due @ @ @ @ @ @ @ and China , with consequences for raw material demand .
In late March this year , the outlook changed from deflationary concerns to unlimited monetary inflation , driven by the Fed cutting its funds rate to zero on 16 March and the FOMC issuing a “ whatever it takes ” statement on 23 March .
These events also marked the end of the PPI decline , and we can expect the corelation with gold prices to return , in which case the PPI index has some significant catching up to do .
This @ @ @ @ @ @ @ rate cycle turns the potential for higher raw material prices measured in dollars could be truly spectacular , even more so in the event that the gold price rises at the same time , which seems even more certain in the event that financial markets become destabilised by higher interest rates .
It is an outcome consistent with a loss of purchasing power for fiat currencies to the extent it encourages economic actors to reduce and then abandon their currency balances entirely .
It is worth repeating at this point that the economic @ @ @ @ @ @ @ a diametrically opposite view to that indicated by Gibson ’ s paradox .
If they expect a turn in the interest rate cycle , macroeconomists would complacently argue the dollar ’ s exchange rate would be driven higher , weakening commodity prices and gold .
Gibson ’ s Paradox says it will turn out otherwise , and it could be central to cementing the true relationship between interest rates , securities markets , and commodity prices .
As a secondary issue , rising interest rates will be accompanied by a large fall in @ @ @ @ @ @ @ positions are unwound , even undermining bank solvency ratios .
The flight of speculative capital from falling markets which is not lost has to go somewhere , particularly if cash balances held in the banks are at a growing risk from systemic default .
Gibson ’ s paradox strongly suggests to us that these are the conditions for commodities to become the safe haven of choice for the highest levels of speculative money ever recorded since fiat currencies dispensed with their golden anchor .
It is in this context perhaps we should note @ @ @ @ @ @ @ while selling US Treasuries : wittingly or unwittingly , they are acting correctly ahead of complacent macroeconomic western investors .
The views and opinions expressed in this article are those of the author ( s ) and do not reflect those of Goldmoney , unless expressly stated .
[ i ] See the Glossary to Human Action .
[ v ] All three quotes are taken from Barsky & Summers , National Bureau of Economic Research Working Paper No .
1680 , ( August 1985 ) .
The Best of Alasdair Macleod

There can be little doubt that macroeconomic policies are failing around the world. The fallacies being exposed are so entrenched that there are bound to be twists and turns yet to come.
This article explains the fallacies behind inflation, deflation, economic performance and interest rates. They arise from the modern states’ overriding determination to access the wealth of its electorate instead of being driven by a genuine and considered concern for its welfare. Monetary inflation, which has become runaway, transfers wealth to the state from producers and consumers, and is about to accelerate. Everything about macroeconomics is now with that single economically destructive objective in mind.
Falling prices, the outcome of commercial competition and sound money are more aligned with the interests of ordinary people, but that is so derided by neo-Keynesians that today almost without exception everyone believes in inflationism. The Price of Tomorrow:... Booth, Jeff Best Price: $21.14 Buy New $18.95 (as of 03:36 UTC - Details)
And finally, we conclude that the escape from failing fiat will lead to rising nominal interest rates, with all the consequences which that entails. The inevitable outcome is a flight to commodities, including gold and silver, despite rising interest rates for fiat money.
Demand-siders and supply-siders
In a macroeconomics-driven world, economic fallacies abound. They are periodically trashed when disproved, only to arise again as received wisdom for a new generation of macroeconomists determined to justify their statist beliefs. The most egregious of these is that inflation can only occur as the handmaiden of economic growth, while deflation is similarly linked to a recession spinning out of control into the maelstrom of a slump.
This error is the opposite of the facts.
Conventionally, macroeconomists split into two groups. There are the Keynesians who believe in stimulating demand to ensure there will always be markets for goods and services, which they attempt to achieve through additional spending by governments and by discouraging saving, because it is consumption deferred. And there are the supply-siders, who believe in stimulating production through lower corporate taxes and lighter regulation. Both demand and supply-siders advocate monetary inflation in the belief that their methods stimulate an economy so that government spending need not be cut.
The maintenance of government spending is the objective of both approaches, not the welfare of economic actors, who are always regarded as the state’s milch cows. While supply-side reforms have proved more attractive to free traders than Keynesian demand stimulus, the end result is the same: the combination of taxes and monetary seigniorage from the productive economy transferred to the state is the objective either way.
The smoke and mirrors to get people to part with their wealth are the misuse of statistics. The price consequences of monetary inflation are suppressed by statistical method, and economic growth is substituted for economic progress, the combination leading to confusion for nearly all economists. But the facts behind the measure of growth, gross domestic product, are easily explained. The Sovereign Individu... William Rees-Mogg Best Price: $10.50 Buy New $16.58 (as of 03:55 UTC - Details)
First, the modelling assumptions. As a starting point we must assume there is no inflation of money and credit and the quantity of money is fixed. That being the case, and assuming no change in the statistical make-up of GDP, nor in the quantity of hoarded cash, and assuming no change in the balance of external trade, there can be no increase in nominal GDP, because whatever people make, sell and consume amounts to the same total expressed in money terms compared with the previous period. It is an accounting identity. Whether savings increase or decrease is immaterial, because GDP is the total of final goods and intermediate goods, so if an economy evolves from being consumer to savings driven or vice-versa, GDP must remain unchanged. The split between profit and costs is immaterial as well, the sum of the two being contained within the GDP total. But variations in the rate of economic progress will always be reflected in the individual prices and quantities of goods and services produced without the total monetary value of all transactions changing. A progressive economy will see more and better goods and services at lower prices, while for a failing economy the opposite is be true.
The next step should not be beyond the understanding of anyone. If a fairy godmother magically created some extra money for the people in an economy to spend, it must simply be added to the GDP total, whether they spend it or save it — as long as they don’t hoard it. Saving circulates, because it is money made available for investment. Hoarding is taking money out of circulation, which is why in our model we must assume the quantity of money hoarded does not change.
Macroeconomists confuse the additional money injected into the economy with growth. It is growth in the money total only, because it is impossible to judge the degree to which it is used to economic advantage. Economic growth has become confused with economic progress. Economists today appear unaware of this distinction, which Ludwig von Mises separated out into what he called an evenly rotating economy. He defined it as follows:
“An imaginary economy in which all transactions and physical conditions are repeated without change in each similar cycle of time. Everything is imagined to continue exactly as before, including all human ideas and goals. Under such fictitious constant repetitive conditions there can be no net change in any supply of demand and therefore there cannot be any change in prices.” [i]
The inconvenient truth for statists is that with GDP they can only measure the quantity of money in total transactions, not how it is used. This fits von Mises’s description of an imaginary economy that evenly rotates and it is vital for any student of economics to understand this point. It matters not whether he or she is a demand or supply-sider; both categories of macroeconomic emphasis wrongly believe in targets for GDP outcomes, which are meaningless except for the purpose of maintaining government revenue. And that is the key to their interest. The Age of Surveillanc... Zuboff, Shoshana Best Price: $18.59 Buy New $19.06 (as of 03:11 UTC - Details)
It is with this perspective that we must understand the role of monetary inflation in an economy, and the reason for underlying, statist-driven beliefs that inflation is good, and deflation is bad. For the state the absence of monetary inflation is a loss of a growing and important source of revenue at a time of escalating welfare and other costs.
Coronavirus shutdowns have thrown the problems facing government finances into sharp relief. Keynesians are yet again losing the practical argument as all nations see government finances spinning out of control. Instead, the policies behind governments’ finances have been forced to drift into a default version of supply-side economics to help businesses survive. Taxes on businesses have been deferred or cut, employment subsidised, and the rich left alone. If anything, the rich are being subsidised through asset price inflation, which is the initial consequence of accelerating monetary inflation.
Whether it is demand or supply being manipulated, the one objective behind it all is the satisfaction of government finances over the business cycle.
Economic progress is reflected by falling, not rising prices
Now that hopefully we have put the GDP fallacy in its proper context, we are in a better position to understand why, contrary to modern economic doctrines, the natural state for an economy that progresses is not one that sees continual and planned inflation, which are monetary policy objectives, but gradually falling prices. This was the experience under the gold standard of the nineteenth century and is easily explained: within a confined money total such as that of monetary gold, an increase in the quantity of goods and services taking place can only be accommodated by a decline in the general level of prices. Put another way, the purchasing power of sound money, a money whose quantity is not inflated, always rises over time.
Not that the quantity of gold and gold substitutes was ever fixed. In the nineteenth century, the quantity of monetary gold was inflated by new discoveries in California, Australia and South Africa, and we must also mention the fluctuations in bank credit which masqueraded as gold substitutes. But the expansion in the money quantity was insufficient to prevent the general level of prices falling over time between the introduction of the gold standard in Britain in 1821 and the First World War. And it should go without saying that it was this period that saw the bulk of the British population move from bare subsistence living to immensely improved conditions.
Today’s macroeconomic beliefs defy all the historical evidence with its focus on increasing the economic presence of the state at the expense of the productive private sector. Free markets and sound money benefit savers and workers by increasing the purchasing power of their savings and wages over time. They encourage the accumulation of personal wealth. They displace the speculation predominant in financial assets today. They discourage profligacy, indolence and needless borrowing. With the exception of the destitute and others who can be more effectively supported by voluntary institutions, they allow the vast majority of people to provide for their own personal health and retirement, freeing their governments from onerous welfare obligations. The Zero Interest Trap Hochreiter, Gregor Best Price: $12.16 Buy New $19.00 (as of 05:13 UTC - Details)
In other words, the mild but continuous deflation of prices, which is the principal feature of sound money, removes a financial burden from the state, leaving it with minimal negative economic impact. And the smaller the government is, the less its tax depredations are on economic actors and the more effectively the free market economy becomes in improving standards of living for all.
By comparison, today’s unsound money conditions are inherently destructive. Monetary inflation indiscriminately robs both savers and wage earners. Not only is the accumulation of personal wealth by the masses taxed away or discouraged, speculation in financial assets is encouraged in order to create a replacement wealth effect. Profligacy, indolence and needless borrowing are hallmarks of the inflationary regime. Companies lobby for subsidies and for government protection from competition by creating anti-competitive regulatory burdens to discourage upstart innovators. Nearly everyone can freeload on state-provided welfare, the provision of health and mandated minimum wages. Government’s non-productive burden on the economy inevitably grows to the point of economic strangulation.
It follows that the progressive wealth transfer from its citizens into the government’s hands through monetary inflation reduces not only the value of wealth left to be transferred but as noted above it becomes an increasing burden on the economy. Insofar as the government has mandated to itself future liabilities, in inflationary times those liabilities also rise in their estimated net present value making them unaffordable, even though it is naively claimed that inflation benefits government finances by reducing the value of its existing debt. The final outcome of inflationary financing is always the same: the destruction of the productive economy through increasing wealth transfer and therefore of the currency itself.
Due in part to the coronavirus, now that economies are visibly sliding into an economic abyss the end is in sight for macroeconomic fallacies. But in the coming months we will have to endure a doubling down of destructive monetary policies as Keynesians and supply siders battle it out over how to access and deploy the citizens’ remaining wealth. The true scale of their mistakes will only be revealed in a final crisis and the end of fiat currencies.
Interest rates
Part of the Keynesian myth is that businesses are forced to pay unnecessarily high interest rates by avaricious savers. Keynes argued that by replacing savers with the state as the provider of monetary capital, a far lower rate of interest can be applied, encouraging production. Keynes’s dream of euthanising the rentier class was to be accompanied by the state limiting the entrepreneur’s profits: those “…who are so fond of their craft that their labour could be obtained far cheaper than at present”.[ii]
Unleashing Usury: How ... Westra, Richard Best Price: $12.61 Buy New $24.95 (as of 03:15 UTC - Details) From these objectives we learn that Keynes’s misunderstanding of the economic role of interest rates and of borrowers and lenders are derived from his socialist bias. The truth is that interest rates reflect the difference between possession of goods and their possession at a later date — their time preference. Savers view the matter differently from borrowers. To a saver, departing with possession of his money, which represents the range of goods and services he might otherwise acquire with it, is purely a matter of time preference incorporating factors to reflect the specific risk of lending to a particular borrower and of the purpose to which the loan is put. For the businessman it is less a matter of time preference and more a matter of business calculation.
It is also a common error to think it is greedy savers who set interest rates higher than they need otherwise be. In a free market, it is businesses in their economic calculations which establish the level of interest rates, bidding up for savers’ savings to a commercially feasible level; savers generally being reluctant to defer their consumption without good reason.
This, at least, is the lesson from the resolution of Gibson’s paradox, the explanation of which defied macroeconomists from Fisher to Keynes.[iii] Ignoring Gibson’s paradox, simply because it could not be explained, turns out to be a mistake of the greatest magnitude, because its resolution confirms empirical evidence of the paradox, that there is no correlation between short-term interest rates and the general level of prices. Consequently, interest rate policies cannot achieve their stated objectives. This lack of correlation is shown in Figure 1, when over 245 years, even violent swings between inflation and deflation in Britain through wars and slumps failed to disrupt the relationship between wholesale borrowing costs and the general level of prices. The only exception in all that time was in the run up to the gold pool failure in the late sixties and after President Nixon discarded the last vestiges of sound money by ending the Bretton Woods agreement in 1970. That period saw the increasing dominance of unsound money, which in subsequent decades increasingly subverted the relationship through a combination of statist suppression of both interest rates and the general level of prices. In other words, the evidence became buried.
Instead, wholesale borrowing costs correlated with the general level of prices, as shown in Figure 2. Note how the correlation remained intact in the early days of purely fiat money, both rising together with important implications for today. The explanation is that in a market-driven economy business calculation is tied to prices for final products, and it is therefore those expectations that set borrowing costs. We have more to say about the implications of Gibson’s paradox later in this article.
That does not stop macroeconomists from pursuing their cherished interest rate myth. The unanimous opinion today is that interest rates must not be permitted to rise. For example, the currently strong euro is taken to threaten intensifying deflation in the Eurozone which, they say, can only be cured by deeper negative interest rates. But as we have seen, deflation is not the problem the inflationists would have us believe. They are confusing their macroeconomic theories with the economic distortions accumulated over the decades due to their erroneous monetary policies.
With macroeconomic policies proceeding in the wrong direction those distortions will finally unwind of their own accord — most likely in dramatic fashion. The obvious breaking point is between the time preference of current possession relative to future ownership, and its tension with official interest rate policy in a rapidly inflating currency. We must comment briefly on how this will be resolved.
Ordinary people in countries like America and Britain are no longer the major depositors at the banks or owners of fixed-interest bonds. Bank liabilities are dominated by business entities, much of it purely financial, which have accumulated the bulk of deposits in the banking system as well as in short-term money instruments. And in the US, over $6 trillion of bills and bank deposits are owned by and due to foot-loose foreign governments and corporations through the correspondent banking system.[iv]
These depositors are more sophisticated than small savers and will not hesitate to reduce their balances if the currency’s purchasing power declines. For the moment there is an uneasiness, with interest rates at the zero bound, and negative in the Eurozone, Japan, Switzerland and Denmark, all in defiance of time preference. These are everywhere suppressed interest rates, failing to stimulate a recovery, Keynesian or otherwise. But when the gaol-sought inflation rate of 2% is no longer believed, the central banks will have to raise interest rates or face a rapid collapse in their currencies’ purchasing power. And it is here that an additional muddle needs to be resolved.
Why price inflation increases in a failing economy
In macroeconomic theory, there are only two conditions. There is one of inflationary prices, driven by demand, a condition that leads to full employment. The second is one of deflationary prices and rising unemployment. Rising prices and unemployment together are deemed an oddity by macroeconomists. But in formulating their beliefs they ignore the evidence. Every inflation impoverishes ordinary people, as pointed out earlier in this article, and instead, falling prices are a boon to them. Furthermore, other than a temporary boost to an economy from inflation, if it transpires at all, the normal condition is for inflation and rising unemployment to go together, unemployment being the consequence of wealth transfer. Mises on Money Gary North Best Price: $7.90 Buy New $9.00 (as of 05:45 UTC - Details)
Furthermore, we can easily explain what has become to be described as stagflation — the combination of a stagnating economy and rising prices. Humans specialise in their production to maximise their output so that they can satisfy their needs and wants. Money is just the intermediary commodity which facilitates turning their production into their consumption. It follows that if producers are not buying, it is because they are not producing, so we can dismiss the idea that falling consumption leads to excess supply and lower prices. Therefore, the contraction of demand broadly matches the contraction of supply in a stagnating economy.
That leads us to consider the price effect of increasing the quantity of money in a stagnant economy, or one that contracts in terms of goods and services exchanged. We now have a condition of more money chasing fewer goods with a predictable result.
It compares starkly with a condition of economic progress, whereby expanding activity is driven by market competition. This is because the falling prices for products that are the consequence of competitive markets counters the price inflation effect from increases in money and credit. As we sink therefore into a production and consumption crisis, the general level of prices will rise sharply on the continuation of current monetary policies as the competitive effect on prices diminishes.
In the next few months, when monetary planners find this out for themselves, further monetary inflation will be increasingly untenable policy. Furthermore, interest rate reductions as the Keynesian solution to rising unemployment can be ruled out. Monetary authorities will be forced to navigate between two objectives: will it be more monetary inflation to finance the government’s rocketing deficit, contain unemployment and let the currency go hang, or higher interest rates in an attempt to protect the currency, whatever the cost to government finances?
Interest rates must rise but gold and silver will be unstoppable
While monetary authorities are contemplating their options, the decision will not be in their hands. With some $27 trillion in foreign securities and the aforementioned dollar deposits, the dollar is particularly vulnerable to liquidation by foreigners, and as foreigners start repatriating funds to their home currencies — a process that’s hardly started — it won’t be long before markets begin to discount rising dollar interest rates, thereby undermining financial asset values around the world. It will be a trend resisted strongly by the authorities, but once they are on the run from market forces there will be no macroeconomic option between raising interest rates and seeing the currency collapse.
This will lead to the last test of macroeconomic fallacies, and that is the gold price, hovering in the wings ready to replace fiat money, always falls when interest rates rise. The logic is that when interest rates rise it is more expensive to hold gold, which just sits there not earning anything. And since markets discount future expectations, gold will even fall when a rise in interest rates is only expected.
The conditions where this has been a predictable outcome have been during recent decades, characterised by central banks having control over interest rates while government statisticians manipulate the statistics upon which mathematical macroeconomists rely for their analysis. Otherwise, at times of accelerating monetary inflation and of the state losing control over markets, it is a myth, disproved by empirical evidence which can be fully explained.
Figure 3 below is of a time when the opposite of the current understanding was demonstrably true. From 1971 to 1979 the directional trends in both interest rates and the gold price rose and fell at almost the same time. It is worth noting that this occurred over more than one business cycle, so it is not a relationship which was cycle-dependant.
Central banks in the post-Bretton Woods environment had lost control of interest rates to markets. Based on empirical evidence the myth is therefore satisfactorily addressed. To understand why this relationship between interest rates and gold is not as simple as commonly believed, we must take the argument further to bring in commodities generally and revisit the tricky subject of Gibson’s paradox. This paradox (see Figure 2) is based on long-run historical evidence, when silver or gold were transaction money (except for the last decade), covering the 245 years between 1730 and 1975. It observes that the level of wholesale prices and interest rates are positively correlated. The common view in markets today about the relationship between interest rates and price inflation is therefore wholly at odds with the longer-run evidence of Gibson’s Paradox and accords with the more fashionable theory that interest rates can regulate the quantity of money and therefore the rate of price inflation instead.
Those who centrally plan our money and markets appear unaware of the challenge the paradox poses to their preconceptions. Keynes, no less, described Gibson’s Paradox in 1930 as “one of the most completely established empirical facts in the whole field of quantitative economics”, and Irving Fisher also wrote in 1930 that “no problem in economics has been more hotly debated”. Even Milton Friedman agreed in 1976 that “The Gibson Paradox remains an empirical phenomenon without a theoretical explanation”.[v]
But there is only one way for interest rates to go from the zero bound, it being only a matter of time. Commodity prices in their role as raw materials for production therefore seem set to rise with interest rates, if the paradox is still valid. And we have explained why the loss of a fiat currency’s purchasing power can be significantly greater in a stagnant, or even contracting economy, lending further support to rising producer prices for commodity inputs.
Furthermore, there is some evidence that producer prices are suppressed even more than the price of gold has been, as shown in the FRED chart below.
Since the turn of the millennium there had been a reasonable directional correlation between the price of gold and PPI prices until October 2018. At that point, PPI prices began to decline while the gold price turned higher from under $1200. It was clear that global trade was likely to decline, due to the tariff war between the US and China, with consequences for raw material demand.
In late March this year, the outlook changed from deflationary concerns to unlimited monetary inflation, driven by the Fed cutting its funds rate to zero on 16 March and the FOMC issuing a “whatever it takes” statement on 23 March. These events also marked the end of the PPI decline, and we can expect the corelation with gold prices to return, in which case the PPI index has some significant catching up to do.
This being the case, when the interest rate cycle turns the potential for higher raw material prices measured in dollars could be truly spectacular, even more so in the event that the gold price rises at the same time, which seems even more certain in the event that financial markets become destabilised by higher interest rates. It is an outcome consistent with a loss of purchasing power for fiat currencies to the extent it encourages economic actors to reduce and then abandon their currency balances entirely.
It is worth repeating at this point that the economic consensus on money and interest rates takes a diametrically opposite view to that indicated by Gibson’s paradox. If they expect a turn in the interest rate cycle, macroeconomists would complacently argue the dollar’s exchange rate would be driven higher, weakening commodity prices and gold.
Gibson’s Paradox says it will turn out otherwise, and it could be central to cementing the true relationship between interest rates, securities markets, and commodity prices. As a secondary issue, rising interest rates will be accompanied by a large fall in overpriced bond and stock markets as speculative positions are unwound, even undermining bank solvency ratios.
The flight of speculative capital from falling markets which is not lost has to go somewhere, particularly if cash balances held in the banks are at a growing risk from systemic default. Gibson’s paradox strongly suggests to us that these are the conditions for commodities to become the safe haven of choice for the highest levels of speculative money ever recorded since fiat currencies dispensed with their golden anchor. It is in this context perhaps we should note China’s aggressive buying of copper while selling US Treasuries: wittingly or unwittingly, they are acting correctly ahead of complacent macroeconomic western investors.
The views and opinions expressed in this article are those of the author(s) and do not reflect those of Goldmoney, unless expressly stated.
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[i] See the Glossary to Human Action.
[ii] Concluding notes, p377 General Theory
[iii] See https://www.goldmoney.com/research/goldmoney-insights/gibson-s-paradox
[iv] See Line 2: https://ticdata.treasury.gov/Publish/bltype.txt
[v] All three quotes are taken from Barsky & Summers, National Bureau of Economic Research Working Paper No. 1680, (August 1985).
Reprinted with permission from Goldmoney.
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