On Monday of this week, September 25th, I participated in the Utah Monetary Summit in Salt Lake City, devoted to discussing the significance of the Utah Legal Tender Act of March 2011, which gave citizens of that state legal right to transact and contract in U.S. gold and silver coins instead of Federal Reserve Notes, as a stepping stone to full choice in currency for the American citizenry.

I have posted on Northwood University’s blog, “In Defense of Capitalism & Human Progress,” the talk that I gave as the closing after dinner speaker at the event, on “Government Controlled Money or Choice in Currency?”

I discuss the disastrous history with government monopoly paper money, especially during the last century, and the importance of people having the right to choose the money they wish to accept, hold and use, both to protect themselves from the government’s abuse of the monetary printing press and as a way to take power away from government to plunder society.

Richard Ebeling

I have posted today a new piece on Northwood University’s blog, “In Defense of Capitalism & Human Progress,” on ‘When Soviet Power Crumbled: The Failed Hard-Line Coup Attempt of August 1991.’

This August marks the 20th anniversary of the failed Soviet hard-line coup attempt in Moscow that was meant to restore total dictatorial power in the hands of the Communist Party of the Soviet Union.

I had the good fortune to be in Moscow at this time, working as a consultant on market reform and privatization, and witnessed the momentous events of August 19-21, 1991 that set the stage for the end of the Soviet Union in December 1991.

I recount the events and the dangers of that seventy-two hour period, and the courage of thousands of Muscovites, who faced down Soviet tanks and soldiers in the heart of the capital of the “evil empire” in the hope for freedom and the end to a terrible tyranny.

What has happened in Russia since those historic days has not matched those dreams of the Russian friends of freedom. Yet, it remains one of the great turning points in 20th century history.

Richard Ebeling

I have a new piece on Northwood University’s blog, “In Defense of Capitalism & Human Progress” today on “Debt Reduction Delusions and the Menace of Big Government.”

http://defenseofcapitalism.blogspot.com/2011/08/debt-reduction-delusions-and-menace-of.html

I explain the smoke and mirrors of the Congressional and presidential deal to supposedly “cut” government spending to reduce the government’s debt. The promised “cuts” in government spending merely represent a supposed decrease in the rate of increase in the government’s accumulated debt over the next ten years. Nor do these claimed cuts “match” or balance the agreed-upon increase in the government’s deficit spending ceiling.

This “solution” to the debt crisis, therefore, is no solution at all. The only real answer can be found in a dramatic change in the size and scope of government, and a break in the “iron triangle” of politicians, bureaucrats, and special interest groups who live of the productive efforts of those working in the private sector.

Richard Ebeling

I have a new piece today on Northwood University’s blog, “In Defense of Capitalism & Human Progress,” on “The Debt Crisis and the Fiscal Leviathan State.”

http://defenseofcapitalism.blogspot.com/2011/07/debt-crisis-and-fiscal-leviathan-state.html

I explain that virtually all that is going on in Washington about the government’s debt is really smoke and mirrors because everyone there accepts the premises of the “entitlement” society. As a result, practically no one is willing to call for the real cuts in government spending that would bring about a reduction of the government’s “slice” of the national economic pie; and put the country on a real solution to the debt problem.

I discuss that the reason for this unwillingness has origins: First, an ideological one, which takes the implicit form of the acceptance of the socialist critique of capitalism. Left to its own devices, the socialists claimed, the market economy leads to abuse of workers by employers, tends toward monopoly manipulation of consumers, and results in a failure to produce the products and services people “really” need. Hence the necessity for the paternalistic interventionist-welfare state, with its massive growth in government spending and intrusiveness in society.

The second is pragmatism of everyday politics. After Keynesian Economics undermined the rationale for an annual balanced budget, politicians soon saw that they could justify offering voters “something for nothing” – government spending, programs, and interventions with a smaller price tag they the real cost – through the “miracle” of deficit spending.

As a result, modern government has become the Fiscal Leviathan State that is absorbing more and more of the society’s wealth and productive capability.

I conclude with arguing that there are few short-term solutions given the anti-capitalist ideology of our time, and the political pull of interventionist and redistributive paternalism that serves the interests of politicians and special interest groups.

The long run solution requires a change in the climate of ideas – and that requires setting the historical record straight on the achievements of free market capitalism, and articulating and defending the moral case for the free society and its smaller role for government.

Richard Ebeling

I have posted today a new piece on Northwood University’s blog, “In Defense of Capitalism & Human Progress,” with the title “America’s Fiscal Folly and the Squandering of the ‘Reserve Fund’.”

I discuss the disastrous trends in taxing, spending and borrowing in the United States that are threatening the country’s economic future. I especially warn that current fiscal trends are seriously eating way at what Austrian Economist, Ludwig von Mises, referred to as the “reserve fund” of the market society: the productive “surplus” generated in excess of the scarce resources needed to maintain a society’s capital and existing standards of living. It is the “surplus” from which comes new investment and capital formation, technological innovation, and therefore, rising standards of living over time through the production of more, better, and new products for the consuming public.

I explain that in 1930 Mises had shown how in the interwar Austria of his time, governments in his native land had so burdened the Austrian economy with taxes, spending, deficit financing, and regulations and restrictions on Austrian private enterprise that not only was this reserve fund eaten up by government, but part of the “seed corn” as well. That is Austrian fiscal mismanagement resulted in capital consumption. Standards of living fell due to the private sector’s inability to maintain the society’s capital supply.

And if current trends are not stopped, and indeed reversed, this might be America’s dismal future, too, at some point.

I have posted testimony that I delivered earlier today, May 11th, for the House of Representatives Subcommittee on Domestic Monetary Policy and Technology, chaired by Congressman Ron Paul (R-Texas), on “Monetary Policy, the Federal Reserve, and the National Debt Problem.”

The link is:

http://defenseofcapitalism.blogspot.com/2011/05/monetary-policy-federal-reserve-and.html

I argue that our deficit spending and resulting cumulative debt of over $14.3 trillion has gotten out-of-control. It is imposing, like revenues from taxes, a huge social cost on the American economy in terms of forgone private sector investment, capital formation, consumer spending that has helped slow down our general economy recovery and improvement in our standard of living.

Deficit spending may be a “path of least resistance” because politicians can create the illusion of giving something for nothing — government largess in the present, while seeming to defer its cost under some uncertain future — but finally there is a “reality” that cannot be put off forever. Default risk premiums are not only for countries like Greece. It can happen here in American, too.

Nor is “monetizing the debt” through money creation by the Federal Reserve a workable alternative. Already America’s central bank has been doing this, first in creating the unsustainable “boom” that turned into a bust, and since 2008 creating a further huge expansion in the money supply that is already pushing the value of the dollar down on the foreign exchange markets, and threatening significant price inflation at home.

I argue that Americans need a “wake-up” call that government does not have the financial means to cover all the “entitlement” and other promised expenditures, both now and in the future — without dramatically damaging America’s economic viability in the years and decades to come.

Thus, it is better to “bit the bullet” and not increase the federal government’s debt ceiling. Washington, to preserve its international credit worthiness, can meet its debtor obligations by fulfilling interest and principle payments on debt coming due, and start cutting government spending down to a size and scope more consistent with the vision of the Founding Fathers in the Declaration of Independence and the original U.S. Constitution.

As for the Federal Reserve, its discretionary policy-making powers should be limited, if not stopped, by anchoring the American dollar on a gold basis again, as a transition to a privatized monetary system free of government control, regulation, and influence.

If we do not start following some such course, the United States is facing dangerous, destabilizing, and damaging monetary and fiscal times ahead.

Richard Ebeling

I have new article on, “The Gold Standard and Monetary Freedom.”

On March 29th, I participated in a debate on “Whether America Should Adopt the Gold Standard,” which was held at Northwood University in Midland, Michigan, and was co-sponsored by the Atlas Economic Research Foundation and the Forum for Citizenship and Enterprise.

I spoke on behalf of the”affirmative” position, of course.

I argue that governments can never be trusted to not abuse their control of the monetary printing press to fund their budget deficits and create inflation. And that central bank manipulation of paper money always carries the danger of distorting interest rates and the banking system, setting in motion the disasters of the business cycle.

The gold standard, I argue, may serve as a form of “monetary constitution,” and a way-station leading to the final goal of full monetary freedom with competitive free banking.

Richard Ebeling

At a time when many are advocating possible military intervention in Libya by U.S. and Western European Powers, I have posted a piece on, “Practicing the Principles of Non-Intervention — At Home and Abroad.

I explain and defend the principles of non-intervention in foreign affairs on both moral and practical grounds, and on the same basis that the classical liberal argues against political intervention in the affairs of one’s own countrymen at home.

Instead, I call for the de-politicization, the privatization of foreign policy, with the free individual at liberty to support foreign causes that he may consider deserving of his assistance in various ways. But the State should not be involved in such foreign affairs.

Dr. Robert Murphy recently interviewed me for the “Lara-Murphy Report” (February 2011).

I have posted the text of the interview on Northwood University’s blog, “In Defense of Capitalism & Human Progress,” under the title, “Adventures in Economics: An Interview with Richard M. Ebeling.”

Bob, who I am very proud to say, is one of my former students from when I was teaching at Hillsdale College, asked me a variety of interesting questions.

I explain the great change in the fortunes of Austrian Economics today, compared to forty years ago; the importance of Austrian Economics in the current political climate of fiscal and monetary crisis; the reasons for optimism if good men will stand up and be counted; and provide a brief account of how I discovered Ludwig von Mises’ “lost papers” and their importance for today.

Much of the current budgetary and related debt crisis confronting the United States has its origin in Lyndon Johnson’s Great Society programs of the 1960s. Many of these supposedly “untouchable” entitlement programs that are at the core of the fiscal conflicts going on right now in Washington, D.C. and in the state capitals around the country were created or were greatly expanded in the Great Society era.

Earlier this week I delivered a lecture on, “Lyndon Johnson’s “Great Society’: A Free Market Critique” at John Jay College of Criminal Justice in New York City. My text of my talk may be accessed at Northwood University’s blog site, “In Defense of Capitalism & Human Progress”:

http://defenseofcapitalism.blogspot.com/2011/03/lyndon-johnsons-great-society-free.html

I explain the paternalistic and social engineering mentalities that guided the Great Society agenda, and the perverse and unintended consequences of the policies implemented. I also discuss the Keynesian mismanagement of the monetary system, and the inflation it generated.

I conclude with a discussion of the difference between the true liberalism of individual liberty and free markets vs. the false liberalism of control and coercion that was the underpinning of the Great Society mentality.

It is the ideological and policy legacy that we are still attempting to overcome.

Richard Ebeling

Over at Northwood University’s ‘s blog, “In Defense of Capitalism & Human Progress,” I have posted, “Austrian Economics versus the Mainstream: An Interview with Richard M. Ebeling.”

It is the text of an interview that I have done with Adrian Ravier, professor of economics at Universidad Francisco Marroquin in Guatemala. It will appear in Spanish in a volume that he is editing called, “The Austrian Economists: Personal Histories and Ideas,” which will be published in Madrid, Spain in 2011.

I try to explain the meaning and premises of Austrian Economics, while also comparing the Austrians to the Chicago School and the Keynesians, and James Buchanan’s Public Choice approach. As well as a little bit of personal biography about how I came to Austrian Economics and found it to be better than the mainstream.

Richard Ebeling

World Bank president, Robert Zoellick, has caused a bit of a fire storm with his endorsement of anchoring the international monetary system to gold once again.

And Martin Wolf, of the “Financial Times,” has joined in, but to attack the idea of any return to a gold-connected monetary system.

I have a new post on the Northwood University blog, “In Defense of Capitalism & Human Progress,” on the theme of “Return to the Gold Standard?”

I argue that not only is it necessary and worth the cost to restore a market-based commodity such as gold as an anchor to the monetary order, but that it would be desirable to do so in the wider context of ending monetary central planning and replacing it with private, competitive free banking.

Indeed, the heavy and manipulative hand of government will never be removed from the handle of the money printing press until there is a total separation of money from the State.

Richard Ebeling

The London “Daily Telegraph” columnist, Ambrose Evan-Pritchard reported in an article on July 7,that the Dutch financial company, ING, has done a study that the possible collapse of the Euro currency would be a catastrophe for the European and world Economies.

In a new piece that I’ve written on “Currency Competition Instead of the Euro Monopoly,” I suggest that the Euro had been a mistake from the beginning, and has been driven more by political goals to create a United States of Europe that would be centrally regulated and controlled from Brussels and highly influenced by the French and the Germans, and has less to do with the economic rationales for a single currency in a single European market.

Instead, drawing upon F. A. Hayek’s case for “Choice in Currency,” I propose that the current fiscal and monetary crisis in Europe should be viewed as an opportunity to reverse course — to do away with the Euro, and return to national currencies in a setting in which the citizens of all the European countries would have the freedom to choose and use which ever currency in which they have the most confidence.

Of course, the final ideal is the “denationalization” of money, and ending all governmental control and central planning of the creation and quantity of money is society. But at least Hayek’s proposal from 1975 decentralizes that unfortunate and misplaced monopoly control, and breaks the hold of total centralized monetary central planning power over the length of the European continent.

Richard Ebeling

Best,
Richard Ebeling

The popular media and the monetary central planners frequently warn of the threatened dangers of “deflation” and the need for “activist” monetary policy to ward off its claimed harmful effects.

In a piece of mine on, “The Hubris of the Central Banker and the Ghosts of Deflation Past,” I explain the different meanings of “deflation” and their significance in the market from an “Austrian” point-of-view.

I then critically analyze how the monetary central planners — including Ben Bernanke — define “deflation,” and how their understanding is fundamentally wrong and their “”solutions” to any supposed deflationary “problem” would only lead to renewed instability, imbalance, and distortion of markets and prices.

The only real cure for the instabilities and imbalances generated during the boom-bust cycle is to eliminate the core cause. And that means abolishing central banking and returning to a free market-based monetary system no longer susceptible to the manipulations of the monetary central planners.

Richard Ebeling

President Obama delivered his State of the Union address on Thursday, January 27th, and promised more of the same type of “change” — bigger and more intrusive government. He is defiantly pushed for national health care, a stranglehold of environment regulations over the private sector, more government oversight and control over the financial sector, and illusionary “freeze” on government spending.

But what if the president discovered the writings of people like Henry Hazlitt, Friedrich Hayek, Ludwig von Mises, Milton Friedman, and Ayn Rand? What might such such an address have been like, and how might those in the audience have reacted?

In a new piece I’ve written called, “The Address Obama Should Have Given – For a Change to Freedom,” I imagine such a State of the Union address for a change to greater freedom, and suggest what it would have said.

Richard Ebeling

President Obama announced on Thursday, January 21 his intention to push for banking reform and new legislation to limit the size of banks to prevent the existence of banks that are “too big to fail,” and to have new regulations instituted that control the type and degree of risks banks can undertake in their investment decisions.

In a new article of mine on, “Real Banking Reform? End the Federal Reserve,” I argue that what is “too big to fail” and what is a reasonable investment risk will now be determined by the same politicians and bureaucrats whose misguided monetary and regulatory policies in the past got us into the financial and economic crisis through which we are passing.

The only real banking reform that can reduce the likelihood of a future cycle of investment and housing booms followed by busted bubbles is real monetary reform. And this requires abolishing central banking and the establishment in its place of free market competitive banking.

And I suggest a six-point plan to move in that direction.

The type of banking reform proposed by the president means only more of the same failed government interventionist policy.

Richard Ebeling

The terrible earthquake disaster in Haiti is resulting in the start of a huge government and private relief effort.

But there are already voices like former president Bill Clinton’s who are calling for a longer-term recovery plan for the Haitian economy through government-business-private “partnerships.” Unfortunately for the people of Haiti this is likely to generate more of the same that has kept them in poverty, rather than the more market-oriented path that other poor countries have been following, and which has been lifting them out of poverty.

I discuss this wrong-headed approach to more of the same type of intervention policy that will prevent Haiti from finally escaping from poverty in a new piece I’ve written on, “Real Economic Reform for a Hurting Haiti.”

The people of Haiti do not need a continuation of government regulation, control, and coerced redistribution. They need what Adam Smith called a “system of natural liberty” in his book, The Wealth of Nations. They need individual liberty, private property rights, impartial rule of law, open, competitive markets, limited government, low taxes, free trade, a non-inflationary monetary system, and a political and economic environment friendly to entrepreneurship and capital formation.

That is the road to real economic recovery to left Haiti out of poverty in the aftermath of this terrible human tragedy.

Richard Ebeling

Routledge has just published a new book of mine with the title, Political Economy, Public Policy and Monetary Economics: Ludwig von Mises and the Austrian Tradition.

It is available from Amazon in Great Britain.

And it may be pre-ordered from Amazon in the United States for February delivery.

Ludwig von Mises, was one of the most original and controversial economists of the 20th century, both as a defender of free-market liberalism and a leading opponent of socialism and the interventionist-welfare state. He was both the grant designer of a political economy of freedom and a trenchant, detailed critic of government regulatory and monetary policies in the first half of the 20th century.

I offer an exposition and analysis of Mises’ ideas on political economy, public policy and monetary economics in the historical context of his time, particularly during the interwar period when he was a senior economic analyst for the Vienna Chamber of Commerce, and after his arrive in the United States in the 1940s during the Second World War.

I discuss the cultural currents of anti-Semitism in Austria before and after the First World War that Mises confronted as an Austrian Jew; his analysis of Austria-Hungary’s establishment and management of a gold standard before World War I; Mises’ multi-sided activities in the years after the World War I in stemming a hyperinflation, opposing government fiscal mismanagement, and resisting misguided policies during the Great Depression; and his analysis of how Europe plunged into World War II and the policies to restore freedom and prosperity in the post-World War II period. I also discuss the confrontation between the Austrian Economists and the Keynesians over the causes and cures for the Great Depression, as well as how Mises’ “Austrian” approach to money and the business cycle contrasted with both the ideas of Joseph A. Schumpeter and the Swedish Economists of the interwar period.

Table of Contents
Inroduction
1. Austrian Economics and the Political Economy of Freedom
2. Ludwig von Mises: Political Economist of Liberty
3. Ludwig von Mises and the Vienna of His Time
4. Austria-Hungary’s Economic Policies in the Twilight of the “Liberal” Era: Ludwig von Mises’ Writings on Monetary and Fiscal Policy Before World War I
5. The Economist as the Historian of Decline: Ludwig von Mises and Austria Between the Two World Wars
6. Planning for Freedom: Ludwig von Mises as Political Economist and Policy Analyst
7. The Austrian Economists and the Keynesian Revolution: The Great Depression and the Economics of the Short Run
8. Two Variations on the Austrian Monetary Theme: Ludwig von Mises and Joseph A. Schumpeter on the Business Cycle
9. Money, Economic Fluctuations, Expectations, and Period Analysis: the Austrian and Swedish Economists in the Interwar Period
10. Human Action, Ideal Types, and the Market Process: Alfred Schutz and the Austrian Economists

I know the book is a bit “expensive,” but I would suggest not waiting for the “movie version.” For some reason Hollywood has not contacted me, yet. Go figure!

Richard Ebeling

Once again, the Federal Reserve Open Market Committee has announced its intention to continue to artificially keeping interest rates “exceptionally low” for a “extended period.”

Missed in virtually all the commentaries is the key question: Should a central bank try to manipulate interest rates? Lost in all the debate over monetary policy is the fact that interest rates are market prices that are supposed to tell the truth: the truth about actual supply and demand conditions in financial markets.

I discuss the importance of interest rates — and prices in general — reflecting the reality of market supply and demand conditions in a new article of mine on, “Market Interest Rates Need to Tell the Truth, or Why Federal Reserve Policy Tells Lies.”

By preventing interest rates from telling the truth central bank policy inevitably sends out wrong signals about the real relationships between available savings and desired investment. The results are malinvestments, unsustainable bubbles and general economic harm.

Misguided monetary policy got us into the current business cycle, and the Federal Reserve is continuing the same mismanagement in the post-bubble era. Unfortunately, as long as we have central banks we will suffer from the ill affects of monetary central planning — distortions, imbalances, and inescapable “corrections” known as recessions.

As Ludwig von Mises once pointed out,

The essence of the market economy is that the economic actions of the individuals are not performed by order of the government but spontaneously by the individuals. This requires also that the money, the medium of exchange, be independent of political influence. if not, the coming years will be nothing but a series of failures of various government monetary and credit policies. To prevent this, it is necessary to make everybody realize that there are no Keynesian miracles possible, and that you cannot improve the situation of the people by credit expansion.

Richard Ebeling

We are living in a time when government is growing by leaps and bounds, and increasingly intruding into our lives.

The dangers from growing government may be encapsulated under a variety of headings that I discuss in an article of mine that appears today in the Christrian Science Monitor online, under the title, “Obama, Health Care, and the New Road to Serfdom.”

Central to the growth of government is the ideology of paternalism by those who claim the right to tell the rest of us how to live our lives.

The desire for political power is also strongly motivated by the desire for plunder, that is, the use of the coercive authority of the State to rob Peter to transfer income and wealth to Paul.

Part of the rationale for bigger government is what Hayek called “the mirage of social justice,” under which those in power will decide who is deserving of what portion of the economic wealth of the society that is produced by the productive private citizens of the country.

Among the side effects of these policies is the creation of the perverse incentives that economists sometimes refer to as “moral hazard,” under which anti-productive and excessively risk-taking behavior is artificially subsidized through the interventionist and welfare statist programs of the government.

A huge burden from all that growing government is doing are the massive deficits that are expanding the Federal debt burden, which will be a heavy stone on future generations to come, as government taxes and inflates the currency to meet its financial obligations.

All of this is leading to diminished individual liberty and radically reduced economic freedom. In other words, down that “road to serfdom” about which Hayek warned us so many years ago.

Richard Ebeling