Don’t Take the Bait

Estimated Reading Time: 3 minutes

Some  friendly liberal advice to  Republicans.


I want to offer my sincerest apologies for your present illiberal treatment by the Democrats, especially progressive Democrats. Your rights as Americans are being violated—in speech and in deed and in broad daylight. If present trends continue, it’s not going to end well for America.

May I offer you some advice? I know the nature of what you are up against. Progressives are bullies. They don’t like liberals either. Progressives don’t like the idea or reality of dissent. They are impatient with the democratic process and persuasion. It’s either their way or the Substack way. They are unbearable.

Heads up: they are goading you to a prime-time slaughter. A mild-mannered historian, Jon Meacham, framed a Bull Connor of a barn-burner speech for President Biden. As the race-baiting segregationist Connor once sought to do with blacks, Biden’s speech looked to put the deplorable outside our civic and social order as enemies of the people.

Meacham’s speech had a message for two groups of Republicans.

To the mainstream, populist-adjacent Republicans, the message was: It’s time to bend the knee and join the Liz Cheney, Democrat-sanctioned Republican future.

To the “ultra MAGA” Republicans, the message was an intended provocation—a poke in the chest, a double-dare to stand up and push back.

The progressives are ready and want you to show up for a fight. They want you to show yourselves as the animals that they say you are. They are provoking folks who see themselves as American patriots so that they can cast them as domestic terrorists.

Don’t take the bait. They are looking to provoke a civil war. Instead, give them a civil rights response: peaceful and nonviolent protest is the only way forward. That’s the proven way to fight the oppression of greater power with asymmetrical advantages.

It’s good to know the extent of the power behind the provocation, and the comparative strength of your arms.

With regard to voters, the United States is still evenly divided, but below the voter waterline, Democrats and Republicans are far from equals. Democrats have institutional arms that Republicans can’t match and don’t fully appreciate. The commanding heights of education, entertainment, media, Big Tech, big business, Wall Street, advertising, and the permanent state—these are all solid assets of Democrats. Even if Republicans win, and win, and win again, the Democrats are in a different weight and fight class. In their own heads and in reality, they are Leviathan.

One would think, looking at politics through this lens, that Democrats would calm down and ride the arc of history to eventual victory. The Republican frog is being slowly boiled. Why spike the heat and have them jump out? Just give it time. Instead, they are raising the heat to encourage the frog to jump.

Why would they do that? Because they can. They have the collective power to pull it off.

Parties and politicians rise and fall, but Washington has a permanent administrative class that defends its own interests, which appear completely aligned with Democrats and against Republicans.

Once upon a time, Republicans could think that the CIA and FBI, the Justice Department, and the military were balanced, even favorable to their interests. No longer. Once upon a time, the media and the Democratic Party were deeply suspicious of these institutions; now they are the cheerleaders and apologists for them and regard their personnel as trusted experts whose patriotism is beyond reproach.

Maybe Al Gore did create the Internet. Before tech was Big Tech, it presented itself as a rival to all the Davos hierarchies; now it is their tool. Business rivals work in concert with one another against those they find deplorable, looking to erase them in a world that otherwise catalogs everything.

All these institutions—and their tectonic, aggregated influence—are in Democrat’s hands. They and their commanding partners understand their asymmetrical superiority, and they think it’s in their short- and long-term interest to demonstrate it now.

Why? The biggest threat that progressive politics faces are the consequences of progressive legislation. Progressivism comes on the scene as a luxury good. The immorality of “poverty in the midst of plenty” is their platform to re-imagine society. But in the end, they always drive out prosperity and make poverty more pathological. Look at New York City, Chicago, Los Angeles, San Francisco—this is the logic of progressive government made real. It doesn’t poll well or perform well at the ballot box.

Democrats should take a hit this November—so they are flexing their muscles across the commanding-heights marketplace to solicit an advantageous response. Their prospects improve with political violence. Preceding Biden’s speech was the legally sanctioned raid of former President Donald Trump, who is widely expected to pursue one more presidential campaign. After the speech, the FBI legally served and netted all the president’s men, with no blowback at all from the mainstream press. Poke, poke.

Don’t take the bait. If you do, you’ll be playing into the trap set for you.

If you find yourself mad as hell and you don’t want to take it anymore—for the sake of what you hold dear, stand down. You should be suspicious of anyone calling for kinetic action. There is good reason to think that that person is an FBI agent. Big Tech and the FBI are watching, waiting, and enabling. They want a super-sized Ruby Ridge. Don’t give it to them.

An eyes-wide-open understanding of this asymmetrical distribution of power calls for a civil disobedience response—peaceful, nonviolent resistance. Let them show their illiberal nature. Don’t give them a diversion that distracts from the consequences of their horrible policies.

This is the path to short- and long-term Republican gains. For all that we have at stake, please commit to this path. We rise and fall together.


This article was published by The American Mind and is reproduced with permission.

Weekend Read: Democracy and Liberty

Estimated Reading Time: 9 minutes

Editors’ Note: This article was originally penned in 1949.  Yet, it has amazing applicability today.  Democrats are making quite a plea right now, that they support “democracy”. It is the buzzword of the 2022 Mid-term election cycle. Adrian Fontes has a promotional sign saying to vote Democrat to “support democracy.” Without a real definition of what they mean, it is hard to know what they are talking about but it sure sounds good. But is it good and is it what you think democracy means? Does forcing you to agree with them on how you wash your dishes, your clothes, how much water to use in your toilet, how you heat your house, what kind of car you drive, what you can eat, and what your children are taught, and even what you think about sex, down even to the words you are permitted to use, sound like democracy to you? Does taking half of your income and tracking closely how you spend what is left sound like democracy to you? Does conducting elections where illegal aliens can vote, thus canceling your vote, sound like democracy to you? Does conducting elections where voter rolls are not clean, where the custody of ballots is not secure, and where the tally is not accurate, sound like proper procedures for democracy to function? Does sending the FBI after parents who dare to question school officials sound like democracy? Moreover, to hand over state and police power to determine the aforementioned life-controlling decisions to unelected judges and unelected bureaucrats, sound like democracy?  It should be obvious, in the “democracy” constructed by Democrats, most of the government decisions that govern minute parts of your life are enforced by a permanent bureaucracy: people who were never voted into office and who cannot be removed by voters from office. Beyond that, do humans have some unalienable rights determined by either their inherent nature or God, that cannot be taken from them, even if by majority vote? If the majority of 51% of your neighbors vote that you may not practice your religion, is that right? In short, are there limits to democracy that cannot transgress your personal liberty? It is clear that “democracy” is now a term to be used to club Republicans, even while the “democracy” constructed by Democrats, in reality, looks closer to rule by the unelected elites in a model of American socialism.


It is generally accepted that a government can enslave the citizens. Enough kings and emperors and generalissimos and führers have done so to establish that fact quite conclusively.

But the belief prevails that “It is impossible for liberty to be lost under a democratic form of government. Democracy assures that the will of the people shall prevail, and that is liberty. So long as democracy is preserved we can rest assured that liberty will be continued to the full.”

The more a person leans on an unsure support, the more certain he is to fall. Edmund Burke observed that people never give up their liberties except under some delusion. Probably no other belief is now so much a threat to liberty in the United States and in much of the rest of the world as the one that democracy, by itself alone, guarantees liberty.

Willis Ballinger’s study of eight great democracies of the past—ancient Athens, Rome, Venice, Florence, the First and Third Republics of France, Weimar Germany, and Italy—reveals how unreliable is this hope. He reports that liberty perished peacefully by vote of the people in five of the eight countries; that in two of them it was lost by violence; that in one of them a dictatorship was established through the buying of the legislature by a fraudulent clique. One who would understand the problem of liberty must understand why it is possible for liberty to be lost even in a democracy, and how to guard against it.

The “democratic” form of government refers to one of the mechanisms by which the scope of government—the things to be done by government—is to be determined and how its management is to be selected. This may be done directly by decisions of the people themselves (in a “direct” or “absolute” democracy), as when a direct vote is taken on an amendment; or it may be done by delegating the power of decision in these matters to certain “elected” representatives (in a “representative” democracy or “republic”). There is an important difference between these two types of democracy but that distinction is not the object of our present concern.

In both instances, the plan rests on widespread sovereignty at its base. Decisions as to either the issues or the delegations of power are rendered according to the majority—or some other predominant proportion—of the opinions expressed.

The features that distinguish a democracy from any other form of government have to do with the mechanical design of the government, as distinguished from the composition of the load of authority that it carries. This is the same sort of difference as that of the design of a truck as distinguished from its load, or the shape of a cup as distinguished from its contents. In speaking of liberty, what we are really concerned about is what government does—the nature of the load—rather than the style of wheels on which it rides, or some other feature in the design of the vehicle; we are concerned, for instance, with whether or not the government should control prices rather than the department which shall do the job or the name of the person who is to head the department.

If an act of government in any country violates the liberty of the people, it is of little importance who did it or how he came to have the power to do it; it is of little importance whether a dictator gained his power by accident of birth, by force, or by the vote of the people.

Liberty has been defined as the right of a person to do whatever he desires, according to his wisdom and conscience. It specifies the right to do what he desires, rather than the obligation to bow to the force of others in doing what they desire him to do; otherwise slavery becomes “liberty,” and true liberty is lost. It makes no difference whether the transgressor of liberty carries the title of slave master, or king, or führer, or president, or chairman of the county committee, or whatnot.

Historical enterprises that violate liberty are not restricted to instances of complete dictatorship, nor are they all political. The only difference between the aggressive bully under anarchy and the similar acts of the dictator is its formalization into governmental authority. That may make the acts of the dictator legal, in a technical sense, but it does not make them proper or wise in any other sense.

Small dictatorships precede large ones, and destroy liberty to whatever extent they exist. “Power,” which replaces liberty, is the irrevocable authority over others. One person’s opinions, decisions or actions become substituted for those of another, for a long or short time, for a wide or narrow scope. This is the material of which dictatorships, either large or small, are made. The means by which power is acquired, whether by the “democratic” process or by conquest, does not change its status as power. It is true that under persuasion or demonstration, one person may influence the ideas or actions of another, but, as mentioned before, if there is no irrevocable grant of authority—even temporarily or for one single instance—it is not power.

Suppose, as illustration of encroachment on liberty, that I desire to produce some wheat on my land, with which to feed my family. I shall have lost my liberty in that connection whenever I am prohibited from doing so. The loss of liberty would be the same whether the prohibition was by taking my land, or by prohibiting me from growing wheat on it, or by taking the wheat away from me after it was grown. Nor would it make any difference what official title happened to be attached to the person who enforced the edict, nor how he gained his throne of authority. Further, and most important to the subject now under discussion, it makes no difference whether or not some of my neighbors approved of that act, or how many of them approved of it. It makes no difference because, in any event, my liberty in this respect would be gone.

It should be clear from what has been said that the citizens of a democracy have in their hands the tools by which to enslave themselves.

This is a far cry from the common belief that democracy offers any definite and automatic protection of liberty. This illusion, that the democratic process is the same as liberty, is an ideal weapon for those few who may desire to destroy liberty and to replace it with some form of authoritarian society; innocent but ignorant persons are thereby made their dupes.

Under the spell of this illusion, liberty is most likely to be lost and its loss not discovered until too late. Liberty can easily be taken from the individual citizen, piece by piece and always more and more, as more and more persons under the spell of the same illusion join in the Pied Piper proceedings. Finally, all liberty is gone and can be recovered only by a bloody revolution.

Liberty does not mean the right to do anything that is the product of a democratic form of government. The right to vote, which is the sovereignty feature of democracy, assures only the liberty to participate in that process. It does not assure that everything done by that process shall automatically be in the interests of liberty. A populace may commit both political and economic suicide under a democracy.

Anyone who will defend his liberty must guard against the argument that access to the ballot, “by which people get whatever they want,” is liberty. It would be as logical to assert that liberty in the choice of a wife is assured to a person if he will put it to the vote of the community and accept their plurality decision, or that liberty in religion is assured if the state enforces participation in the one religion that receives the most votes in the nation.

There is no certainty whatever that liberty in a country with the democratic form of government is at a level higher than in a country having some other mechanism of government. There is no certainty that liberty will be maintained where the founders of a democracy may have hoped that it would be preserved.

The illusion that liberty is assured so long as a democratic government is preserved is well illustrated by an event recently reported in the newspaper. Items to illustrate the same point can be found in the newspapers daily. A news dispatch reports that an increase in rent ceilings has been “turned down” by “top administration officials.” The mere fact that some officials have acquired the power to deny this liberty to those who own this particular form of property is evidence of the fact that liberty in this respect is already gone; no process of selecting the officials who made the decision can make it not gone.

But let us pursue the matter further. It is argued that, since this act occurred in a “democracy,” the “will of the people” has prevailed and liberty has thereby been assured. Did you participate in this decision of “top officials”? Did anyone ever ask your opinion about whether this increase should be granted? Was the person who made the decision elected by the voters, or appointed by someone—perhaps by someone who was himself appointed by someone? And finally, coming to the elected official, did you vote for him or for the other fellow? Did you approve of his advisers, or were they perhaps defeated candidates for office of former years?

Actually all these considerations are beside the point anyhow, so far as liberty is concerned. Even if there had been approval all along the line, it is a violation of economic liberty and of liberty in general for me, a nonowner, to be able to control the rent charged by a neighbor to a third party.

Being able to review a decision or to request its review, under the democratic design of government, does not assure that liberty will be protected. Reinstatement of lost liberty can be requested and refused time and time again, without end. A slave, similarly, might ask his master for his freedom time and time again; he is not considered to be free by reason of the fact that he is allowed to ask for liberty.

Consider in detail all the acts of all the units of government for one day. How many among them were the proper functions of a liberal government as you would judge it; of those that were, in how many instances did you have any opportunity or right to participate in the decision; if you disagreed with the decision, in how many instances was there anything that you could do about it?

Strange indeed is this concept of “democratic liberty,” which has gained such widespread approval! Strange is a concept of “liberty” which allows you to be forced to pay the costs of promoting acts of which you disapprove or ideas with which you disagree, or which forces you to subsidize that which you consider to be slothfulness and negligence. Your “liberty” in the process is that you enjoy the right to be forced to bow to the dictates of others, against your wisdom and conscience!

Being forced to support things directly in conflict with one’s wisdom and conscience is the direct opposite of liberty, and should under no circumstances be allowed to parade under the esteemed banner of liberty. It should be labeled for what it is.

The people of the United States now live under a president who was elected to that office by the expressed preference of only one person out of six in the land; by only one person out of four who were eligible to vote; by less than half of those who voted. And many of those who voted for this candidate will certainly disapprove of many of his official acts. This illustrates how the democratic process is a far cry from guaranteeing the liberty of the people.

Professor F.A. “Baldy” Harper was the founder of the Foundation for Economic Education.


This article was published by the Ludwig von Mises Institute and is reproduced with permission.

Blake Masters: Democrat Mark Kelly’s Voting Record Will Expose Him to Independents

Estimated Reading Time: < 1 minute

Trump-endorsed Arizona Senate candidate Blake Masters said Democrat Sen. Mark Kelly’s (D-AZ) voting record will expose him to independents.

Kelly’s voting record is a radical one despite the candidate trying to appear moderate. He has backed President Joe Biden’s legislative initiatives 94 percent of the time.

Regarding the open southern border, Kelly has voted in 2021 three times to defund border wall construction. He has also voted against Title 42 three times and voted against hiring 18,000 Border Patrol agents before any new IRS agents are hired.

“When independents learn about Mark Kelly’s voting record — he pretends to be independent but actually he votes in lockstep for Joe Biden’s failed agenda — well, that’s pretty much all they need to know to come over to our side and vote Republican for a change,” Masters told KTAR on Wednesday

“So, I think we’re going to continue to peel away, and ultimately I think most independents will break our way in November,” he added.

Independent voters, who amount to 1.4 million in Arizona, make up about one-third of Arizona’s population. According to a recent Emerson College poll, independents are siding  with Kelly over Masters by nine points…..


Continue reading this article at Breitbart.


House GOP: Venezuela Deliberately Releasing Violent Criminals, Sending Them to U.S. Border

Estimated Reading Time: 3 minutes

A coalition of House Republicans led by U.S. Rep. Troy Nehls, R-Texas, is “demanding answers about Venezuela releasing violent prisoners early and pushing them to join caravans heading towards our southern border” in a letter sent to Department of Homeland Security Secretary Alejandro Mayorkas.

“We need transparency and accountability from this administration,” Nehls tweeted when publishing a letter he and his colleagues sent late last week.

In their letter, the group expressed “serious concern” about a recent DHS intelligence report “received by Border Patrol that instructs agents to look for violent criminals from Venezuela among the migrant caravans heading towards the U.S.-Mexico border.

“It has been widely reported that the murderous narco-terrorist Maduro regime in Venezuela is deliberately releasing violent prisoners early, including inmates convicted of ‘murder, rape, and extortion,’ and pushing them to join caravans heading to the United States. Some of the released prisoners have already been spotted within migrant caravans traveling from Tapachula, Mexico, toward our southern border as recently as July of this year, meaning they could already be in our interior.”

According to U.S. Customs and Border Protection data, between October 2021 and July 2022, more than 130,000 Venezuelans were encountered illegally entering the U.S. across the southern border.

“DHS confirms that Venezuela empties prisons and sends violent criminals to our southern border,” Nehls previously argued. “President [Donald] Trump warned us about this years ago.”

Trump reiterated his claims last June at an event in the Rio Grande Valley with Texas Gov. Greg Abbott. He said federal security officials in his administration thwarted drug dealers and smugglers and halted much illegal activity across the border as a result of deals he made with Mexico, Honduras, Guatemala and El Salvador.

As a result of these agreements, criminals from these countries weren’t allowed to enter the U.S. or these countries would stop receiving financial aid from the U.S. government.

Under the Obama administration, when MS13 gang members and other criminal foreign nationals were deported, their home countries wouldn’t take them back, Trump said.

“For years, these countries wouldn’t take them back,” Trump said, which is one reason why he halted financial aid to these countries. Then he got calls from their leaders, he said, who told him, “Sir, you’re not paying us anymore.’ And I said, ‘That’s right.’

“And we were bringing them in by the thousands getting them out. And now they’re sending them back because what they are doing is they are opening their prisons and prisoners, murderers, human traffickers, all of these people, drug dealers, they’re coming in through the caravans, not everybody, but are coming in illegally,” he added.

The members of Congress asked Mayorkas to provide information about what precautions DHS was taking to prevent criminals from Venezuela from entering the U.S., if DHS was aware of the current location or final destination of released prisoners, how many Venezuelan nationals have already entered the U.S. at the southern border since President Joe Biden took office and how many of them have criminal records.

The letter comes after Mayorkas in July extended by 18 months Temporary Protected Status for eligible Venezuelans.

He said doing so was “one of many ways the Biden administration is providing humanitarian support to Venezuelans at home and abroad, together with our regional partners. We will continue to work with our international partners to address the challenges of regional migration while ensuring our borders remain secure.”

The 18-month TPS extension became effective Sep. 10 and lasts through March 10, 2024. Only beneficiaries under Venezuela’s existing designation, and who were already residing in the U.S. as of March 8, 2021, are eligible to re-register for TPS under the extension. Venezuelans who arrived in the U.S. after March 8, 2021, are not eligible for TPS. Approximately 343,000 individuals are estimated to be eligible for TPS under the existing designation of Venezuela, DHS says.


This article was published by The Center Square and is reproduced with permission.

Gays Against Groomers Get Financially Deplatformed

Estimated Reading Time: 15 minutes

Editors’ Note: A long article but very much worth the read to alert and warn all citizens of the growing surveillance state and increasing control of Americans by the collusion of state, corporate, and big tech power in every aspect of the lives of ‘We the People’.


Dissident group  forbidden by PayPal and Venmo from using their services. This is how the social credit system will be used against us all

Just like that:

This is how soft totalitarianism works: no gulags, no jail time, just being excluded from the marketplace. We are rapidly approaching the point where one may not buy or sell without permission of the Regime.

This is also how soft totalitarianism works: the “Regime” is not the State alone, as in the earlier iteration of totalitarianism. It is rather the informal coalition of elites in government, media, finance, academia, and private industry (Yarvin’s term “the Cathedral” is also good) who share the same illiberal left-wing convictions, and act in concert. It is Venmo’s and PayPal’s right to do what they’re doing. But the effect is bad for democracy.

It’s like with Amazon, when it decided not to sell Ryan T. Anderson’s book critical of transgender ideology, and similarly-themed books. It’s Amazon’s right –– but if Amazon, with its dominant market share of the book market, decides that it will not sell a certain kind of book, then that kind of book will not be published.

It’s entirely legal. Do you want a system in which a bookseller is forced to sell books he finds immoral? I don’t. But in Amazon’s case, making a fully legal decision has dramatic consequences of freedom of speech and debate.

I don’t know how this should work, in terms of legislation to solve the problem of financial deplatforming. But this is an issue conservative, libertarian, and authentically liberal politicians should start talking about –– and, when workable policies and laws present themselves, then acting on them. If not, people who dissent from the Regime’s ideology will find themselves more and more driven to the margins, and forced through non-violent means to comply.

I’m on my way to Canada now to give a couple of LNBL-themed speeches. I have more to talk about now. I do every day.


This article was published by The American Conservative and is reproduced with permission.


To Our Conservative and Moderate Friends

Estimated Reading Time: 2 minutes

Are you considering voting for a Democrat, or not voting for a Republican because you think they’re crazy?

If you’re someone who votes according to the “candidate I like,” rather than the political party, consider what RESULTS your vote will bring to America, Arizona, and your family. A candidate’s likability and respectfulness mean nothing if their actions bring destruction.

You may like a Democrat as a person, and they may seem “reasonable” compared to the Republican alternative, but gone are the days when you could assume both parties have the same goals for America with different ideas to achieve them. Today’s Democrats have the opposite vision for America than Constitutional Republicans.

What is your vision for America, for your everyday life, for your family’s well-being? Don’t give your vote to a politician who will dismantle and eventually destroy your vision. Check the voting record and statements of ANY Democrat. (I’m not saying every Republican is wonderful; only that they will at least do far less damage than any Democrat.) Think I’m exaggerating? Look at what Democrat ideas have done to your daily reality:

THIS is what EVERY Democrat represents—no matter how “reasonable” a person they seem to be. Just look at the results of President Biden, Chuck Schumer, Nancy Pelosi, and virtually every Democrat in power—including every Congressperson. And don’t forget about Mark Kelly who ran as a moderate but votes 94% of the time with Democrats. Mark Kelly = Joe Biden. Katie Hobbs = woke insanity.

This is a different America than we had 20, 10, or even 1 year ago. And the main reason is a Leftist long march through the institutions,(Christopher Rufo) and a long strategy grounded in communism and socialism which has overtaken the Democrat party, big business, education, culture, law, and even medicine. Think about it. This is not the America we could have imagined even a few years ago.

Conrad Black sums up the RESULTS of Leftist Democrat policies:

“A disastrous and shaming flight from Afghanistan is described by President Joe Biden as ‘a triumphant success,’ while Dr. Anthony Fauci retires with dignity after doing terrible damage to the country with his nonsense about shutting schools, ‘droplets,’ the ups and downs of masking, the ‘abolition of hand-shakes’—almost all of it now thoroughly discredited.

Six years ago, no one could have imagined that these outrages would have occurred, much less that they would be accepted by a bedraggled, degraded, demoralized United States, its federal government in the hands of lawless and authoritarian myth-makers, applauded by the complicit national political media. Can this be America?”

What will your kids and grandkids experience if we keep putting Democrats in power?

It will only get worse.

That’s why a return to Constitutional Americanism is the only way to restore sanity, dignity, productivity, and hope to America.

And the surest way there is to elect Republicans (no matter how flawed one may be) to replace the destructive RESULTS of Democrats (no matter how nice one may seem).


This article was published at AZ Free News, and is reproduced with permission.

A Brave New Financial World

Estimated Reading Time: 7 minutes

The nation likely will drift into a situation in which its central bank will be expanding its regulatory and safety-net coverage, vainly trying to protect everything in the interest of protecting ‘banks.’ The tremendous power it will come to wield not only will be harmful to the structure of the financial system but also will make the Fed an even more formidable foe to those inside and outside the government who believe that it is too powerful already.
 James L. Pierce, “The Federal Reserve as a Political Power,” 1990


How can the Federal Reserve help you today? A few years ago, such a question would have been rather odd. The Federal Reserve was created a little over a century ago as an independent government agency with a rather small mandate: manage the money supply. It was an important, but limited, role. In normal times, the Fed existed to ensure the money supply grew at a reasonable rate. In times of crisis, the Fed would become the Lender of Last Resort, lending funds to solvent banks to get them through a crisis. But, times have changed. The Fed, no longer tied to the mast, is here to take your order.

This new world is magnificently described in Lev Menand’s The Fed Unbound: Central Banking in a Time of Crisis. With impeccable brevity and precision, Menand details how the Fed has abandoned its historical mission, appropriating to itself a new mandate and powers of dubious legality. None of this has been done in secret. Its actions have been front page news, Congress has aided and abetted the unbinding, and as the quotation at the outset notes, it was all predictable in 1990. 

Monetary Policy before 2020

“The American Monetary Settlement” is Menand’s term for the world in which we used to live. Private commercial banks provided deposit accounts (both checking and savings) which constituted the bulk of what we used for money. The Federal Reserve System provides currency (also a form of money) and supervises the commercial banking system. The Fed also provides reserve accounts for commercial banks, which are used to transfer funds from one bank to another. By changing the volume of reserves in banks’ accounts, the Fed is able to exercise indirect control over the amount of money in the economy. The system has a remarkable simplicity, easily explained in any first-year economics class.

There have long been cracks in the money creation system. Over time, other types of accounts developed which also functioned as money, but were easily ignored when discussing the money supply. These other accounts were not provided by domestic commercial banks and thus existed in what became known as the Shadow Banking system. Menand points to three types of accounts (dealer repo accounts, Eurodollar accounts, and money market funds) which are all highly liquid and reasonably stable, and thus provide something that functions as money but pays a higher interest rate than a traditional deposit account at a commercial bank. Because none of these types of accounts are at commercial banks, the Fed has no regulatory authority over them and there are no precise measures of their size.

After the financial crisis of 2008, Congress passed the Dodd-Frank bill, which did nothing to alter the state of affairs that precipitated the financial crisis.

The shadow banking system suddenly found itself in the sun in 2008. Once a small part of the financial infrastructure, the shadow banking accounts had grown to be about twice as large as the measured money supply. When an old-fashioned bank run hit the shadow banking industry, there was a grave danger of the entire system falling apart, which would have generated a collapse in the money supply equivalent to that which caused the Great Depression. The Bernanke Fed exercised an enormous array of powers designed to shore up the shadow banking system to prevent such a collapse. It was a moment of genuine monetary peril, and the resulting recession was much milder than it would have been had the Fed done nothing.

In the wake of previous financial crises, Congress inevitably passed a bill creating a new set of regulations to prevent the same thing from happening again. After the financial crisis of 2008, Congress passed the Dodd-Frank bill, which did nothing to alter the state of affairs that precipitated the financial crisis. 

The 2020 Financial Crisis

The same crisis hit again in March 2020. With the arrival of Covid and the government lockdowns, the shadow banking system once again found itself reeling. This time, the Powell Fed acted promptly, using the same bag of tricks which the Bernanke Fed had stumbled into discovering. It wasn’t enough, so the Fed’s range of actions expanded. The panic ended and the shadow banking system stayed intact. But, as Menand describes in detail, the American Monetary Settlement was destroyed.

The result has been nothing short of a transformation in the Fed’s role in our society. Not only have its unprecedented actions helped once again to avert economic collapse, but they have also changed what members of Congress and members of the public expect of the country’s central bankers. Today, the Fed is no longer just managing the money supply by administering the banking system. It is fighting persistent economic and financial crises by using its balance sheet like an emergency government credit bureau or national investment authority…

In 2008, the Fed invoked an obscure provision in its charter which allowed it to become the lender of last resort to financial firms other than the commercial banking system. In 2020, when that proved to be insufficient to stem the panic, the Fed tried something new: it started directly buying massive volumes of assets in order to prop up their prices. The Chair of the Fed announced that the Fed would not “run out of ammunition”—that they had unlimited resources to buy as many assets as needed. The rhetoric suggesting financial crises are the equivalent of war is revealing; in wartime, even democratically elected governments appropriate seemingly limitless powers over the economy.

That promise opened the floodgates. With unlimited access to the printing press, there seemed to be no limit to what the Fed could do. The financial panic of March 2020 subsided, but the economic problems were only beginning. Those problems extended far beyond the financial sector, so Congress passed the CARES Act, one provision of which was to allow the Fed to lend directly to businesses, both for-profit and non-profit. Suddenly the Fed found itself with the power to lend funds to whatever firm or industry it deemed worthy.

Beyond the nebulous legal problems, there is also the question of whether the society really wants this much power concentrated in an insulated, unelected group that operates with very limited congressional oversight.

The Fed did not stop there, however. Being the Lender of Last Resort by definition means the Fed is imposing an obligation to have the loans repaid at some point. That creates burdens on firms to whom the Fed has lent funds. To stimulate economic activity, and not incidentally to keep the interest rates low on government debt, the Fed began what commentators quickly dubbed QE Infinity. In effect, this was an open-ended commitment to keep buying as many financial assets as necessary to maintain low-interest rates.

What exactly now sets a limit on the Fed’s activity? With literally an unlimited amount of money at its disposal, and a mandate which has seemingly broadened to “do good things for the economy,” what should be its priorities? Now that the Fed has crossed the Rubicon by purchasing bonds from AT&T, Verizon, CVS, Comcast, GE, Apple, Microsoft, and so on, why not also your place of work or your favorite non-profit? Now that the Fed has lent to local municipalities, why not get free Fed money for your local school or community center? Is it any wonder that people are now seriously talking about what the Fed can do on the Climate Change agenda?

The world of the Unbound Fed is rife with peril. Menand barely scratches the surface of a world in which an unelected independent agency seemingly can create money to accomplish any goal it wants. We have entered a strange regulatory world in which it is no longer clear which rules the Fed must follow. Obviously, the Fed no longer is restrained to its traditional role of managing the money supply. What else is it now able to do, either legally or with Congress looking the other way?

Beyond the nebulous legal problems, there is also the question of whether the society really wants this much power concentrated in an insulated, unelected group that operates with very limited congressional oversight. The now implied promise always to backstop the shadow banking system operating outside of the normal regulatory framework is a recipe for disaster. Using the money supply to finance whatever initiatives Congress wants to accomplish has already resulted in unprecedented growth in the money supply and the inevitable inflationary consequences.

Favoritism is inevitable. In the old days, the Fed avoided favoritism by lending to any commercial bank with good collateral. The only asset it purchased when it wanted to create more bank reserves was US government debt. In 2008, the Fed had to decide which parts of the shadow banking system it wanted to aid in order to prevent a collapse of the money supply (Lehman Brothers: no; AIG: yes). After 2020, the Fed no longer has to restrict itself to financial firms or concerns about the money supply. It will inevitably play favorites.

What Next?

Having laid out the reasons for, and the problem with, the Fed Unbound, Menand naturally enough turns to solutions. Alas, this is where the book founders. We should not fault Menand too much, though; it is not at all clear that there is an easy solution.

He offers two routes forward. First, he asserts the need for “a healthier macroeconomic policy mix.” It is hard to argue with that. After all, the most important reason to have an independent central bank is to prevent the legislature from having access to the printing press to fund every spending idea which comes along. Menand himself illustrates the problem. This discussion is one of the places for Menand’s periodic odd and inexplicable intrusion of his own vaguely leftist political agenda into the book. If the author of a book warning against the dangers of an unbound Fed cannot resist introducing his own legislative agenda into the argument, why should we expect members of Congress to keep their own legislative ambitions separate from a seemingly easy way to finance them?

Secondly, Menand suggests reining in the new financial world. Looking back to the world before 2008, it seems like we could return to those halcyon days gone by “enforcing the regulatory perimeter.” If the problem is types of accounts that function as money but are created outside the traditional commercial banking system, then why not either eliminate the possibility of such accounts or bring them under Fed supervision? Theoretically, that is possible. But, given that the shadow banking system is twice as large as the currently supervised banking system, this is not a small disruption to the monetary system. There is simply no way to predict the economic impact of trying to rewrite the rules on what types of accounts can be offered by what types of financial firms.

The problem with reining in the financial world is complicated by technological developments which have made it easier to create new types of accounts, using new types of assets (e.g. cryptocurrency), which may or may not end up functioning like money in limited sets of markets. No matter where you set the regulatory perimeter, there will be enormous financial incentives to set up shop right on the other side of that border.

These sorts of questions compound the longer you think about this new world of money. Unfortunately, the government does not have a good record when it comes to thinking through the monetary implications of the shadow banking industry. Will they sort this out before the next crisis, as they failed to do in 2008 and 2020? It’s hard to be optimistic, but, if you are not yet troubled by this new world, get a copy of The Fed Unbound.


This article was published by Law & Liberty and is reproduced with permission.

Arizona GOP Governor Candidate on Migrant Surge: Declare Invasion, Send Guard to Border

Estimated Reading Time: 2 minutes

If elected governor of Arizona, how would Kari Lake handle illegal immigration?

Sending illegal immigrants to Martha’s Vineyard in Massachusetts is not a part of her plan.

Making an appearance on Tucker Carlson Tonight on Fox News on Wednesday night, the Republican said she disagreed with Florida Gov. Ron DeSantis’s decision to send two planes of illegal immigrants to Martha’s Vineyard.

“You know, I actually get a kick out of it watching these liberal mayors just, you know, throw their hands up and say ‘we can’t handle it,’ because it’s life every day for us in these border states. However, I’m not a fan of it, Tucker. I mean, we’re just taking people here illegally who shouldn’t be here, we’re moving them further inland.”

Florida unexpectedly dropped off 50 Venezuelan illegal immigrants on the small Massachusetts island on Wednesday. The people spent the night at St. Andrew’s Episcopal Church in Edgartown, Massachusetts, according to The Cape Cod Times.

So while Lake disagrees with this plan to handle illegal immigration, she laid out some of what she wanted to do on the issue.

“My plan is the most bold, aggressive plan on the border,” Lake told Tucker Carlson. “We’re going to secure the border. We’re going to call it what it is, issue a declaration of invasion on day one, get troops on the border in the form of our national guard. We’re going to stop people from coming over. And we’re going to stop the cartels from having control of our border.”

Lake also said there is another reason why border security is vital: preventing fentanyl from entering the country.

“I don’t like it as a mother and I know no Arizonan likes it that we’re the pipeline for the most dangerous deadly drug this country has ever seen called fentanyl,” she said. “Number one killer of young people. It’s all coming through Arizona because [President] Joe Biden gave control of our border to the cartels.”

As a result, Lake said she wants Arizona to take back control of its sector of the U.S.-Mexico border from the federal government. She thinks the federal government has failed to do its job on this issue under Biden.

“On day one we’re going to invoke our Article 1 Section 10 authority and take back control of our border away from the federal government,” she said. “It’s a dereliction of duty what they’ve done and we’re not going to let Joe Biden drag the state of Arizona down while he’s trying to destroy this country.”

Lake is running for governor against Democratic Secretary of State Katie Hobbs. It’s an open-seat race as incumbent Republican governor Doug Ducey is not seeking re-election.


This article is published at The Center Square and is reproduced with permission.

China’s Hidden Debt Crisis

Estimated Reading Time: 5 minutes

Editors’ Note: It is estimated that 70% of the household worth of the Chinese people is invested in the property market. This market is largely run by the government, the Communist Party, and its state-owned banks. We have covered this ongoing story for some time but indications are the situation is getting worse and has spread well beyond the collapse of Evergrande. In part, this is because of the global economic slowdown, and it further has been aggravated by draconian Covid-related lockdown policies in China. The most recent Economist suggests the problem is now political, with widespread unrest. President Xi is up for”reelection” at what could be a very difficult time. Furthermore, the crisis has taken the form of banks freezing accounts, which has created riots, as well as property owners going on strike and refusing to make their payments. As the article below indicates, China is not only highly centralized, which creates concentrated economic error on a vast scale, it is incredibly over-leveraged. Falling asset prices endanger the loans used to support the particular asset in question, which runs the risk of a cascading scramble to get out and get liquid. This, in turn, runs the risk of a deflationary bust, and then particularly in authoritarian governments, a response by governments to try to stem deflationary pressures. Knowing the timing of such events is largely impossible, but history certainly provides ample examples of the general process. What is very clear is that you can’t have the world’s second-largest economy get into such trouble, Europe lurch into trouble because of energy mistakes, and Japan experience a currency crisis (Yen is down nearly 30%); without raising the risk of global economic trauma. Meanwhile here in the US, the FED is raising rates against our own asset bubble, increasing the risk of recession here as well.

Beijing’s centralized planning has created a massive bubble of obligations.

China’s ongoing debt crisis has experienced yet another twist of fortune. Some Chinese, fearful that their savings are in jeopardy, have protested so actively in front of banks that the Peoples’ Liberation Army has intervened. Others who had bought apartments before now-troubled developers could construct them—what the Chinese refer to as presales—have threatened to withhold payments on their mortgages. These latest aspects of China’s financial troubles have captured the media’s immediate attention, but they change nothing substantive in China’s underlying problem. Significant debt overhang points to fundamental, even systemic flaws in the Chinese Communist Party’s approach to economic organization.

China’s rolling debt crisis broke in 2021, when the huge property developer, Evergrande, announced that it could no longer support some $300 billion in liabilities. Evergrande, and other developers who have since made similar if less grand announcements have left bondholders and lending banks—both private and state-owned—with assets that are now worthless, causing some to try to lock down deposits, and bringing on protests from anxious savers. Would-be homeowners who paid for and floated mortgages for apartments that do not exist have been left holding the bag. In a pattern common to financial crises everywhere, these mortgagees and lenders may now fail on other obligations, imposing losses on others who had nothing to do with the initial failure.

The government in Beijing, as well as media outlets—both Chinese and western—have so far laid the blame for these debt problems on the profligacy of Chinese developers. There can be little doubt that many of these firms had flamboyant managements that borrowed too heavily and spent too freely. But if imprudent management can take some of the blame, the lion’s share belongs to policymakers in Beijing. It was, after all, they who gave property development pride of place in the nation’s growth model. Beijing used special bonds to encourage provincial governments to work with private developers to raise whole cities from what were previously farmers’ fields.

Early on, these rapid developments formed the basis of glowing western media reports. Property development became a huge part of China’s gross domestic product (GDP). But Beijing’s planners, insensitive to facts on the ground, as central planners frequently are, went far beyond the nation’s needs. Today, Beijing estimates that some 20 percent of China’s housing stock is unoccupied and paying no return on the huge debt load incurred to produce these units. It should be no mystery, then, that the developers cannot service those obligations.

If the real estate problem were the whole story, it would be dangerous enough, but the problem is more fundamental. Beijing’s top-down, centrally planned approach to economics has multiplied these kinds of mistakes across the economy. True, this centrally planned system once worked well, but China has changed since those halcyon days, making the centralized approach increasingly wasteful and debt-prone.

When China began its decades-long growth surge, its underdeveloped state made central planning easy. All Beijing needed to do was look at the developed world and see that China lacked roads, ports, rail links, housing, and other such obvious essentials. That emphasis paid off handsomely as the nation filled in its blanks. But as China’s economy has developed and, in many ways, caught up to the developed west and Japan, future avenues for sustained growth have become harder and harder to identify. China’s planners have accordingly begun to make more and more mistakes, setting priorities that, like residential development, have increasingly missed the economy’s needs—bridges, rail links, roads to nowhere, and impressive transit systems in cities with relatively few residents. Even as such fundamentally wasteful projects are abandoned or razed, the debt incurred to build them remains.

Of course, unplanned, market-based systems also make mistakes about future needs.  No one can see the future. But the mistakes of market systems are seldom as massive or pharaonic as in China’s centrally planned system. Market-based participants, typically more sensitive than are central planners to signals from buyers, adjust more quickly before going too far down the wrong road. Because the decentralization in market-based approaches implicitly creates a great diversity of efforts to capture the future, each mistake happens on a smaller scale than when central planners marshal national economic and financial resources toward relatively few priorities. The same diversity of market-based systems means that one of the many efforts to capture the uncertain future will likely be right, thereby generating great returns for the firms and individuals involved, but also crucially for the economy at large. Central planners, on the other hand, place relatively few but very large bets, and suffer commensurately when they fail to pay off. It is noteworthy that America’s market-based system has suffered its worst collapses when government intervenes, as for instance when Washington pressured banks to lend mortgage money to lesser credits, fostered dubious financial practices, and encouraged the overbuilding that culminated in the 2008 and 2009 financial crisis.

A comparison of relative debt loads in China and the United States can quantify this crucial difference and assay China’s essential problem. To be sure, Beijing has kept a lid on government debt issuance—certainly much better than Washington has. But central government debt is an inadequate measure of this effect. The financial legacy of failed projects lies with China’s provincial and local governments and the state-owned enterprises (SOEs) that control the bulk of the nation’s industry. To see the errors wrought by China’s system and make a valid comparison to the United States, the debt to track is a combination of central government obligations, provincial (or state) and local obligations, and the debt of the corporate sector.

During the ten years from 2009 to 2019, aggregate debt in China grew at a 23 percent annual rate, far in excess of the nominal economy’s otherwise impressive 8 percent growth rate. This difference offers a rough (admittedly very rough) estimate of the burden of waste left by the mistakes of the top-down planners. The equivalent debt aggregate for the United States shows a legacy of error, but on a much less grand scale. In America, this measure of debt has grown at about 5.6 percent a year over the ten years ended in 2019, faster to be sure than the 4 percent average growth of the nominal economy, but a much narrower gap than in China. The relative burden of these legacies is apparent in debt levels relative to the overall economy. In the United States, this composite of debt outstanding amounts to just over 190 percent of GDP. In China, aggregate debt verges on 270 percent.

None of this is to forecast a collapse in China or eventual American triumph. To paraphrase Adam Smith, counties can withstand a lot of ruin. What it does say is that China’s underlying economic system will for the foreseeable future create an ever-larger debt overhang. The planners may still get lucky from time to time, but the odds point in the direction of more mistakes, raise questions about easy and popular forecasts of eternal Chinese dominance and should take the edge off equally popular fear-mongering over China.


This article was published by The American Mind and is reproduced with permission.

House Candidate Slams Biden as “Constitutional Disaster”

Estimated Reading Time: 4 minutes

Editors’ Note: There is a long list of things that we can debate with Democrats: the border, energy, inflation, subsidizing transgenderism, Afghanistan, Ukraine, abortion, educational policy, and racial discrimination, the behavior of the DOJ,  court packing; just to name a few. But behind most of these issues, is the stark reality of unconstitutional overreach by the executive branch and a failure to enforce the law. This election is about stopping the unequal application of the law, and the failure to enforce the law.  It is about blunting a move by Democrats to upend our system by simply ignoring the equal application of the law.  If you feel the arrogance of this Administration needs to be corrected, that is reason enough to vote Republican.

The Biden administration has become a “constitutional disaster” and the Constitution now is “under serious assault,” one of the most-watched Republican congressional candidates warns.

“The Biden administration is a constitutional disaster the likes of which we have not seen before,” Harriet Hageman, the GOP candidate running for Wyoming’s only congressional district, said Wednesday at a Heritage Foundation event marking Constitution Day. (The Daily Signal is Heritage’s multimedia news organization.)

Constitution Day, which fell on Saturday, this year marked the 235th anniversary of the signing of the U.S. Constitution in Philadelphia. Hageman’s speech also was streamed by the think tank Monday evening.

“It’s an administration that at this point makes no effort to adhere to even the most rudimentary constructs of what we call the rule of law,” Hageman told her Heritage audience, adding:

An administration that believes it can—by presidential fiat and executive order—take 30% of our real property out of production in an effort to fight what they describe as ‘global warming’ with no explanation as to how destroying our ability to grow our own food and to produce energy will do anything other than further government-imposed poverty.

Hageman overwhelmingly defeated Rep. Liz Cheney, R-Wyo., an outspoken critic of former President Donald Trump, in the Aug. 16 GOP primary in Wyoming. She now faces Democrat candidate Lynnette Grey Bull in the Nov. 8 general election.

Trump won Wyoming’s sole congressional district, which has been red historically, in a landslide in 2020, receiving 70.4% of the vote to Democrat Joe Biden’s 26.7%, Ballotpedia reported. Biden, of course, went on to defeat Trump in his reelection bid.

Hageman, an attorney, was a law clerk for federal appeals Judge James E. Barrett after graduating from the University of Wyoming College of Law. She ran for Wyoming governor in 2018, but lost in the primary, according to Ballotpedia.

As examples of unconstitutional moves, Hageman listed Biden’s COVID-19 vaccine mandates, his plan to “forgive” student loan debt, support for suppressing free speech and freedom of religion, and disregard for the Second Amendment right to bear arms.

“The fact is that the Constitution has been under serious assault from the Left and from those who not only seek to rewrite history, but are incapable of understanding why the United States is the greatest country in the history of the world,” she said.

“Very simply, America is built on the foundation of freedom, of liberty, of individual autonomy and responsibility, and the concept of limited government—one that is of, by, and for the people,” Hageman added.

Hageman also said Congress has had a role in what she called the “demise of our republic” by “taking away our republican form of government [that is] guaranteed to us in the United States Constitution.”

She said:

Congress has largely abdicated its legislative responsibilities and empowered unelected bureaucrats and hundreds of federal agencies to deny our right. And what has this wrought?

An [Environmental Protection Agency] declaring an irrigation ditch as a ‘navigable water of the United States,’ and thereby preventing farmers from maintaining the irrigation infrastructure on the property that they own, so that they can grow food to feed us all.

A war on our domestic energy producers by individuals who have never produced anything except words on a page.

And a United States Forest Service that no longer measures production in terms of board feet of lumber produced, but in the number of trees burned to the ground or destroyed by the pine beetle.

Hageman also highlighted the Agriculture Department’s threats to withhold school lunch money if “radical gender ideology” isn’t adopted by schools and the U.S. Securities and Exchange Commission’s prioritizing of companies’ efforts toward achieving environmental, social, and governance policies rather than sound investment practices.

“We have, in short, a government run by the so-called experts—experts that are in the process of and intentionally destroying our prosperity and our greatness,” Hageman said, adding:

Experts who have intentionally adopted policies that are designed to increase the cost of putting food on your table, gas in your car, and a roof over your head. Experts who believe that human suffering is a virtue—for all of us, but not for them.

Hageman said Congress should “take back its rightful responsibility as the legislative branch of government” and “pass legislation to rein in the out-of-control, unelected, and unaccountable bureaucrats.” 

“Congress must return power to the states—where it belongs and as guaranteed by the 10th Amendment to the United States Constitution,” she said.

Hageman also called on Congress to “exercise its power of the purse,” saying:

[S]top running scared every time that we have yet another agency, [a nongovernmental organization], the national press, or politician tell us that if we don’t fund them to the tune of billions of dollars the world is going to explode, our children are going to suffer terrible tragedy beyond anything we’ve ever seen before, and that life on Earth as we know it will end.

Hageman concluded her remarks by emphasizing that she is optimistic despite what she described as her “dour” speech.

“I am an optimist because of our Constitution. It’s the greatest governing document that has ever been written because it is based upon one pretty simple concept—it’s based on the concept of the individual,” she said. “It’s based on the concept of freedom. It’s based on the concept of liberty.”

Tommy Binion, vice president of government relations at The Heritage Foundation, acted as host for the event, described as addressing “the gravest threats to the Constitution” and helping to “prepare the conservative movement for the fight to protect it.”

“We believe, of course, as Americans, and as conservatives, in the original text of the Constitution and the original meaning of that text,” Binion said in opening remarks before Hageman spoke. “We believe and we know that throughout our history, the U.S. Constitution has stood the test of time and protected our freedoms.”

“But today—yes, it is the job of the U.S. Constitution, but it is equally our job to protect the U.S. Constitution as it comes under fire,” he said.


This article was published by Daily Signal and is reproduced with permission.