Jeff Davis is running for Governor in Hawaii and has an interesting campaign strategy. Also, what motivates hackers is revealed and the findings might surprise you. Finally, Ferguson is discussed in a new light. Chris Campbell has more...
When the government pumps trillions of dollars into the economy, they’re not actually printing the money. It enters as digital entries in banks across the country. It’s made the system fast, responsive, and, unfortunately, vulnerable. Now our money is no longer something we hold in our hands, but something that exists on a very susceptible network.
The so-called recovery is only built on debt and printed cash declares our own Byron King. In the long term, the only option for the government to continue financing it's operations is to print too many dollars. Money printing has it's limits, however. It's Byron's opinion that at some point, perhaps very soon, the government will have to turn to more desperate measures. Namely, capital controls. In the following featured essay, Byron outlines 4 probably ways the government will take your cash and one play you can buy through your broker to prepare today. Read on...
Americans expatriate because they want to get out of the country. Corporations expatriate for similar reasons. Clem Chambers explains...
In a 2009 article, the Huffington Post went into considerable detail about the number of people with PhD degrees in economics employed by the Board of Governors of the Federal Reserve System. This is the government’s branch of the Federal Reserve. It is not one of the 12 regional Federal Reserve banks, all of which […]
The U.S. dollar is the dominant global reserve currency. All markets, including stocks, bonds, commodities, and foreign exchange are affected by the value of the dollar.The value of the dollar, in effect, its “price” is determined by interest rates. When the Federal Reserve manipulates interest rates, it is manipulating, and therefore distorting, every market in […]
The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance or the get-rich-quick adventurer. They will die poor.– Jesse Livermore, How to Trade in StocksThe trouble with capitalism’s guardians is that they have no […]
John Foust, a Democrat running for the 10th congressional seat in Northern Virginia, is — like Gov. Terry McAuliffe and other state Democrats — gung-ho to expand Medicaid. His wife’s position is, shall we say, a bit more nuanced.Foust has slammed his opponent, Republican Del. Barbara Comstock, for her opposition to expansion. He has spoken […]
The midterm election season is upon us, and it’s a tossup whether the Republicans will win the Senate, or if President Obama, seemingly oblivious as conflict flares up around the world, will, through his continuous campaigning, keep Harry Reid in his majority leader seat.The only thing we know for sure is that sociopaths will be […]
Alexander Hamilton was America’s first Secretary of Treasury under President George Washington. When he first entered office in 1789, America was an agricultural nation of just 4 million still broke from its financially costly victory over the British Empire in the Revolutionary War.The states had accumulated relatively massive debts to finance that war, which mostly […]
A great technology solves a problem that we didn’t know we had. It makes us aware of deprivations we didn’t know existed until we discover the new thing. Once discovered, we can’t go back.People in the 1950s, for example, never missed the smart phone. They were pleased to have a phone at all. But today, […]
Fifty years after the 1929 crash, a group of money managers and investment thinkers put together a collection of essays looking back at that experience. The result was a distillation of some pretty fine investment wisdom. Timely, I think, to review now.One of the contributors was Arthur Zeikel, then with Merrill Lynch. The title of […]
Although the mainstream media have turned its attention away from the wreckage of Obamacare, don’t think for a second that all is well.As the politicos in D.C. focus their attention on the midterm elections in November, now is a great time to study, prepare, and seek out the most affordable, accessible, and highest quality options […]
Turn on the tube and economic ignorance seems to be everywhere. There is constant shilling for more government. Business is demonized. Man is said to be trashing the environment. “Workers and women are oppressed” is the constant mantra.And members of the clueless media nod their heads in unison.Only John Stossel has provided the fresh air […]
In early July 1944, delegates from 44 countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. A three-week summit took place, at which a new system was agreed to regulate the international monetary and financial order after the Second World War.The U.S. was already the world’s commercial powerhouse, having eclipsed the British […]
In the minds of many people around the world, including in the United States, the term “capitalism” carries the idea of unfairness, exploitation, undeserved privilege and power, and immoral profit making. What is often difficult to get people to understand is that this misplaced conception of “capitalism” has nothing to do with real free markets […]
Some people are saying it is just what the doctor ordered. Others are saying that the cure is worse than the disease.The Affordable Care Act? Reengagement in Iraq? Tea Party bullying in the GOP?Not this time. Just as protracted in the corridors of Congress and the White House is the debate over the proposed reform […]
In 2012, money mandarins running the European Union chose stagnation over restructuring. Here’s a consequence of that choice: expectations for a self-sustaining economic recovery keep getting crushed.Two years ago, European Central Bank (ECB) chief Mario Draghi promised to do “whatever it takes” to hold the eurozone together. He bluffed nervous investors into believing in a […]
People jacked up about income inequality can find a new hobby. The 1% are victims of a doomsday machine, and the countdown is ticking. Machine, thy name is “family.”This came to mind as I was reading a preview of Columbia Professor Andrew Ang’s forthcoming, must-read book on Asset Management. Ang is that oxymoron, an exciting […]
It might sound like the latest new product from Apple, but IPAB is actually the newest major legal challenge to Obamacare.Recently, a three-judge panel in the 9th Circuit Court of Appeals in San Francisco heard arguments about the Independent Payment Advisory Board, or IPAB, a 15-member panel created by the Affordable Care Act and empowered […]
Americans have come to believe that the IRS and the income tax are inevitable parts of our lives. After all, most everyone alive today has lived his entire life under federal income taxation.It wasn’t always that way. For some 125 years, the American people lived without having any tax imposed upon their income.The obvious question […]
Here’s a fun fact: Although we all hate the U.S. dollar, as it continues to hemorrhage wealth, its foothold as the world’s reserve currency isn’t going to disappear overnight.A Russian gas deal with China won’t change that — as we’ll highlight below.But before we get to the nitty-gritty, let’s dive into a story that’s right […]
Franklin Delano Roosevelt famously used the term “forgotten man” in a 1932 speech to describe those at the bottom of the economic pyramid who, he felt, government should aid.But the originator of the phrase “forgotten man” had a whole different meaning in mind. He aimed to expose the seeming good intentions of government to reveal […]
The Keynesian disaster recovery plan has been to lower rates, force people to take more risk in search of yield, and entice others to borrow and spend and, magically, more jobs will be created. If people won’t buy stocks, central banks will.Back in 2011, Ben Bernanke, when asked if QE2 was driving up stock prices, […]
I want to share some insight and give you a front-row seat to America’s next big shale play.Let’s get to it…Over the past 10 years, the U.S. has turned the ship around, quite literally.We’ve gone from a country that was expecting to import massive amounts of oil and gas — to a country that’s sitting […]
Whatever your views on the role of government, one thing is clear: There will be no way to pay for it if the economy doesn’t grow. And I’m not talking by a measly percentage point or two. If we can’t find our way back to 5% annual economic growth or above soon, America’s accumulated federal […]
According to the Bureau of Labor Statistics, consumer prices are rising at a 2.1% annual rate. This suggests to us that the current stock market boom will die with a bang, rather than a whimper.Fed economists say they don’t think inflation rates are rising. They think the most recent reading is a fluke. But why […]
What if we had the following economic system?
This system would shower the globe with free goods day and night, asking nothing and giving nearly everything. Most of what it generated would be free goods, and every living person would have access.
Anyone who amassed a private profit would do so only because he or she served others, and the system would require this person to cough up communally owned information: Everyone on the planet would know the reason for anyone’s success.
It would serve all races and classes this way. It would serve the common man slavishly and knock the elites when they become proud and arrogant. It would make it beneficial to everyone to include ever more people in its productive potential and give everyone who wants it a stake in the outcome.
That system has a name. It’s called the free market. This is more obvious in the digital age, but the proliferation of free goods has always been a major feature of capitalism. It’s just that people haven’t really talked about it, though Robert Murphy’s outstanding Lessons for the Young Economist does an excellent job.
In fact, the free market is the most misunderstood idea out there, by its detractors and, just as often, by its proponents as well. As for the characterization of the market as a utopia for profiteers, moguls and scamsters, one doubts that people who think this way have ever really tried to make a buck in a competitive system. It’s hard as heck. The whole process is seriously tilted against private gain at public expense.
Now, I could go on with a theoretical argument here, but sometimes personal examples get the point across better. To be sure, we do not live in a free market now; instead, the world’s largest and most intrusive apparatus of intervention interferes with ours. But there is enough of a market remaining in this world to clue us in to how it works, and sometimes the simplest retail example suffices.
So let me tell you about the barbershop I stumbled into yesterday. The people there cut hair. But they also have pingpong tables, darts, pool and free beer that you can drink at a bar.
I walked in with a friend and stood marveling at the pingpong table and asked: “Can we play?” They said, “Oh, sure.” So we played and played.
Finally, after a while, I asked, “Pardon me, but can I have a haircut?” They were pleased but surprised since they thought I was just another person who wanted to only play pingpong! They were perfectly happy to let me play for free.
The haircut happened; I hung around for a beer, continued to be dazzled by this extraordinary entrepreneurial venture and finally asked if they had a Facebook page. “Of course,” came the answer. I took a picture, posted it on my page, liked their page and, within minutes, people all over the world were talking about this little place. “Salon de barbier avec tables de pool et pingpong, dards et bière gratuite,” said one share in France that swirled around that network.
Now, consider this: Did I do the place a favor? The owners probably think so. It is a new business just starting out. It needs advertising and promotion. On the other hand, look what I did: I immediately alerted every other potential competitor to a great idea to get customers in the door. Now every barbershop in town can “steal” the idea. They can buy a pingpong table, grab a case of beer, put up a dartboard and off they go.
The barbershop would absolutely love to find a way to reach possible customers without also giving away its tricks to its competitors. But you know what? This is not possible. One comes with the other. Information is a free good; once it is released, it can be consumed and used by anyone who runs across it.
What then happens to the competitive advantage enjoyed by the new and struggling place? It is seriously threatened. It faces wicked competition, even from big chains that can implement these suggestions in a few days at very little cost. The thing that made the new place cool and great is now copied by everyone else. If this happens, the new place will face new pressure on its bottom line. It will be forced to innovate again.
To be sure, every other barbershop in town is unclear whether this pool-and-darts thing really is the magic bullet to achieve success. So rather than emulate that strategy right away, others might wait to see how it works for the first adopter. It might flop. Or it might be amazing. If it is amazing, others will adopt the practices, but there’s a problem: The first mover has the advantage. It already has a loyal clientele and a fan base.
Billions of bits of information (free goods!) hit business owners every day that allow them to copy the successes (and failures) of others. Knowing which to implement and which not to is an essential part of the job. It might even be the hardest part of the job.
But here’s the point I’m making: It is not possible to succeed in this market without giving away the “secret recipe” to success. Fortunately, there is no patent or copyright on things like putting a pool table in a barbershop, so the government can’t stop learning from taking place. And this is the way it would be in a pure free market in every industry. To succeed means first to give — giving goods and services to customers (this is the key to profitability) and then giving away the method by which you succeed (or the reason for your failure) to everyone in the world who cares. The very act of doing commercial enterprise — which always tends toward being an open-source undertaking — make your methods an object of study.
The information you give away is the price you pay for the prospect of profits. But those profits are always being threatened by competitors who emulate your successes. This means that you can never rest, you can never be satisfied with the status quo. You must innovate and revamp on an ongoing basis — and you have to do this with an eye to bringing the public what it wants in the most-efficient possible way. This is what gives the market such dynamism, such forward motion, such an innovative spirit.
Chances are that you are reading this article in a venue that is perfectly free to you. Maybe you saw it on a website you did not pay for or saw it linked on a social network that you do not pay to use. These are free goods, the means that capitalists use to entice your interest in what they are doing.
But these free goods are only the start of what the market offers. The most-valuable free good that that market is cranking out by the minute is the ocean of information about success and failure, about what people want and don’t want, about what works and what doesn’t work. This vast reserve of information is being poured out globally and constantly, and it is like a relentless shower of blessings on civilization. Digital networks have increased the blessing by degrees no one ever imagined possible.
The example of the barbershop might not seem like much, but if you understand it — really understand it, and the underlying dynamic it reveals — you understand the thing that has lifted the entire world out of the state of nature into the glorious prosperity that is currently spreading all over the world. This is the market at work — that network of exchange, cooperation, service, innovation, emulation and competition that makes the world tick, all in the service of human well-being. The more market we have, the more progress we will see.
So let’s ask the question: Why is it that so many people think they are against the free market? It must be because they don’t really understand it. I would first suggest Robert Murphy’s book. Then I would invite them to join me for a beer and a game of pingpong and ask what they think made this little slice of heaven possible?