Free Republic

The main reason why so many state and local governments are bankrupt, or on the verge of bankruptcy, is the combination of government-run monopolies and government-employee unions. Government-employee unions have vastly more power than do private-sector unions because the entities they work for are typically monopolies. When the employees of a grocery store, for example, go on strike and shut down the store, consumers can simply shop elsewhere, and the grocery-store management is perfectly free to hire replacement workers. In contrast, when a city teachers' or garbage-truck drivers' union goes on strike, there is no school and no garbage collection...

At current rates of spending, the federal government may bump up against its debt limit as early as March. Treasury Secretary Timothy Geithner warns that it will be "catastrophic to the economy" if Congress doesn't increase Uncle Sam's credit limit. Writers in conservative outlets call for Republicans to use this opportunity to extract significant spending cuts before extending the limit. And some extreme libertarians argue that the debt ceiling shouldn't be raised, because a government default would be a good thing for the American people. In this article I'll explain the basic situation and comment on each of these views....

With gold selling for around $1,400 per ounce, it seems like everyone has jumped on the yellow-metal bandwagon. Resource-investment guru Rick Rule said about gold investing recently, "we're no longer lonely in the gold trade. You couldn't describe this as a contrarian activity, and you couldn't describe this as a low-risk activity." But while Rule and the likes of David Einhorn aren't alone keeping some, or a lot of, money in gold, the Wall Street Journal ran a profile of a more typical investment guide who claims, "There's no utility of gold." Investment advisor Tim Medley says people only trade...

On October 15, Ben Bernanke spoke at the Boston Fed's conference, "Monetary Policy in a Low-Inflation Environment." His remarks were long and ponderous and consisted mostly of "Fedspeak" along with seeming excerpts from a typical intermediate-macroeconomics textbook. He rehashed the Fed's statutory mandate of maximum employment and price stability — which comes from the Keynes-inspired Full Employment Act of 1946. He explained that the two goals compete for the Fed's attention, which means that neither goal can be pursued singlemindedly. In the short run, advancing on one front may entail retreating on the other. In the long run, the Fed...

In The Federalist No. 51, arguably the most important one of all, James Madison wrote in defense of a proposed national constitution that would establish a structure of "checks and balances between the different departments" of the government and, as a result, constrain the government's oppression of the public. In making his argument, Madison penned the following paragraph, which comes close to being a short course in political science: The great security against a gradual concentration of the several powers in the same department, consists in giving to those who administer each department the necessary constitutional means and personal motives...

Foreword Most of us have at least a general idea of what we think inflation is. Inflation is the state of affairs in which prices go up. Inflation is an old, old story. Inflation is almost as ancient as money is, and money is almost as ancient as man himself. It was probably not long after the earliest cave man of the Stone Age fashioned his first stone spearhead to kill boars with, perhaps thirty or forty thousand years ago, that he began to use boar’s teeth or something of the sort as counters for trading spearheads and caves with...

This year's Nobel Memorial Prize in Economics goes to Peter Diamond, Dale Mortensen, and Christopher Pissarides, for their work on "search theory," especially as applied to labor markets. In the present article I'll explain the basics of their contribution but then point out the crisis in mainstream economics: even though these economists — especially Diamond — are very smart and productive, they and their colleagues have hardly helped the plight of the unemployed, as we stumble ever deeper into depression. Search Theory in the Labor Market According to the official press release, This year's three Laureates have formulated a theoretical...

French economist Jacques Rueff once said "Tomorrow, to save man, we will give him a real currency." For a world that has suffered nearly 40 years of economy-retarding currency instability, that tomorrow is very near. If history is any kind of indicator, by 2013 we'll return to money defined in terms of something real. No currency in history has lasted longer than 42 years after its intrinsic backing has been abandoned, and it was 39 years ago that President Nixon severed the dollar's link to gold. Over the ensuing decades the U.S. economy alone has suffered three dollar-driven oil "shocks,"...

U.S. Monetary System Is In Serious Trouble Interest-Rates / US Bonds Sep 11, 2010 - 01:20 PM By: Bob Chapman There is no question the US monetary system is in serious trouble and the situation continues to deteriorate. The smug elitist owners of the system are not getting the desired results and there is great consternation among the players. Since 1913 in running US monetary policy the Fed has had one recession after another and two depressions. The second one is the one we are now in. The Fed’s creation was mainly to end recessions and depressions, something obviously they...

I was at a pro-immigration rally where I live, and I got to see the protest - the type I saw on TV, right up close. This protest was not spontaneous, it was highly organized. In the protest were a few people with some signs that offended me, saying some things about white people, the kind of thing Rush and FOX would pick up on. The designated organizers, with bullshorns and an orange vest, told these people with these racist signs in no uncertain terms that they would not be a part of the main group. The “tea party” movement,...

Voters support the idea of "free enterprise" significantly more than they do the concept of "capitalism," according to a poll released Tuesday. The survey, conducted by Republican pollster Steve Lombardo’s consulting group, showed that 78 percent of voters have a very positive or somewhat positive view of “free enterprise” but that only 57 percent have the same thoughts about “capitalism.” Nineteen percent of respondents viewed “capitalism” very negatively or somewhat negatively while only four percent had the same views of “free enterprise.” The poll was commissioned by the U.S. Chamber of Commerce, one of the nation’s most influential business groups....

Former Mitt Romney supporter realizes Ron Paul is more in-line with Constitutionalism, American values and individualist freedom. What say other Freepers?

Who agrees and who disagrees with Dr. Paul? I would like to see income tax abolished (it is socialism light) but what say other Freepers? Watch the video of course.

Question: Hello Paul! Do you ever plan to present the ideas of economists that adhere to the Austrian School of Economics (Students of Von Hayek or Von Mises)? Their understanding of the nature and causes of the business cyle enabled them to foresee much of what has happened in the last few years. (Peter Schiff and Marc Faber are successful examples.) Thanks for your friendly commentary!Paul Solman: Yes, the resurgence of the Austrian School is worth a look, and was suggested to me by none other than Robert MacNeil a few weeks ago after Rand Paul's victory in Kentucky. Look...

Investors need to always remember to separate their economic and political ideals from the act of making money in the market. We're reminded of this after seeing Robert Ebeling at Mises deliver the same old radical free markets argument about how we should end the fed: 1) Fed funds rate manipulation leads to a fake price of money in the market, which 2) leads to unsustainable asset bubbles. Thus 3) we should end the fed and let the market show us the real price money. Robert Ebeling from Mises: What is being ignored is the more fundamental question of whether...

There are three things everybody knows when we talk trash: 1.We know we're running out of landfill space; 2.we know we're saving resources and protecting the environment by recycling; and 3.we know no one would recycle if they weren't forced to. Let's look at these three things we think we know. Are they real or are they rubbish? 1. Are We Running Out of Landfill Space? Two events created the perfect garbage storm in the late 1980s. One barge and one bureaucrat created this overhyped myth. The garbage barge was the Mobro 4000. The bureaucrat was J. Winston Porter. The...

Ludwig von Mises was snubbed by economists world-wide as he warned of a credit crisis in the 1920s. We ignore the great Austrian at our peril today. Mises's ideas on business cycles were spelled out in his 1912 tome "Theorie des Geldes und der Umlaufsmittel" ("The Theory of Money and Credit"). Not surprisingly few people noticed, as it was published only in German and wasn't exactly a beach read at that. Taking his cue from David Hume and David Ricardo, Mises explained how the banking system was endowed with the singular ability to expand credit and with it the money...

Despite a potentially crippling patent injunction against selling Word that Microsoft is battling on appeal, Microsoft, via a senior lawyer, is nevertheless calling for a global patent system "to make it easier and faster for corporations to enforce their intellectual property rights around the world". Yep--despite the big hit they just took due to i4i's patent, Microsoft is concerned about the "unmanageable backlogs and interminable pendency periods" of national patent systems, which have 3.5 million patents pending. You hear that right--Microsoft things more is "needed to be done to allow corporations to protect their intellectual property." What, do they want...

The Cause of the Disaster: Are governments doing enough to fight this financial and economic crisis? Is it a good thing that central banks have cut interest rates essentially to zero and have increased the base money supply dramatically to support the financial sector? Will depression be prevented if governments across the world run up huge deficits in an attempt to strengthen demand, production, and employment? To answer these questions truthfully, we need to diagnose the causes of the debacle and then formulate the proper way out of it. The diagnosis can be stated in just one sentence: Governments have...

Paul Krugman is an eminent economist, but he here reveals a woefully inadequate understanding of Austrian business-cycle theory. The rudiments of the theory are easy; one might have thought that even a Keynesian could grasp them. According to Mises and Hayek, an expansion in bank credit pushes the money rate of interest below the "natural" rate. People prefer goods in the present to the same goods in the future, a matter obvious to anyone except for a few philosophers. The rate at which people favor the present, in the Austrian view, chiefly determines the rate of interest.