Inflation Fears Rise As Producer Prices Increase Most Ever Recorded

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The federal government released more data Tuesday that showed rising inflation, alarming economists, and casting more doubt on hopes of a post-COVID economic boom.

The Bureau of Labor Statistics reported a major spike in the cost of producer goods, which includes raw materials such as lumber or tools like machinery. The cost of producer goods rose the most since BLS began tracking the data more than a decade ago and is an indicator of inflation.

“Final demand prices rose 0.6 percent in April and 1.0 percent in March … on an unadjusted basis, the final demand index advanced 6.6 percent for the 12 months ended in May, the largest increase since 12-month data were first calculated in November 2010,” BLS said

Jobs numbers also have been disappointing in recent months, falling short of expectations. And the Census Bureau reported that retail sales fell a troubling 1.3% in May, more than double the drop experts predicted.

“U.S. retail and food services sales for May 2021 were $620.2 billion, a decrease of 1.3 percent (+/- 0.5 percent) from the previous month,” the Census Bureau said.

These reports come just days after BLS released data showing consumer prices had spiked the most since the 2008 financial crisis.

“Over the last 12 months, the all items index increased 5.0 percent before seasonal adjustment,” BLS said. “This was the largest 12-month increase since a 5.4-percent increase for the period ending August 2008.”

Those consumer goods saw a major increase in prices, with some spiking significantly in the month of May alone. Household furnishings saw “its largest monthly increase since January 1976” while new vehicle prices spiked 1.6% in May, the “largest 1-month increase since October 2009.”

Some producer goods like commercial electricity and pork fell, but that was greatly outweighed by the increase in other goods. Notably, lumber prices increased more than 15% in the last 12 months.

“A major factor in the May advance in prices for processed goods for intermediate demand was the index for lumber, which increased 15.5 percent,” BLS said. “Prices for diesel fuel; utility natural gas; structural, architectural, and pre-engineered metal products; ethanol; and beef and veal also moved higher.”

Whether prices rose or fell, and to what extent, varied across goods.

“Within the index for final demand goods in May, prices for nonferrous metals rose 6.9 percent,” BLS said. “The indexes for beef and veal; diesel fuel; gasoline; hay, hayseeds, and oilseeds; and motor vehicles also advanced. In contrast, prices for fresh fruits and melons declined 1.9 percent. The indexes for primary basic organic chemicals and for asphalt also moved lower.”

Republicans jumped on the latest economic data, laying the blame at President Joe Biden’s feet and raising the alarm over rising inflation.

“Democrats rammed through a socialist stimulus bill on a party-line vote and now we’re seeing massive inflation,” said Mike Berg of the National Republican Congressional Committee. “Voters will hold House Democrats accountable for making everything more expensive.”

Biden, though, has remained optimistic about the economy.

“Covid cases are down,” Biden said in a speech earlier this month in Rehoboth Beach, Delaware. “Covid deaths are down. Unemployment filings are down. Hunger is down, and vaccinations are up. Jobs are up. Wages are up. Manufacturing is up. Growth is up. People gaining health-care coverage is up. Small business confidence is up. America is finally on the move again.”

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This article was published on June 15, 2021 and is reproduced with permission from The Center Square.

How Many Species Have Gone Extinct?

Estimated Reading Time: 2 minutes

Editors’ Note:  Not many people keep a scorecard on the veracity of public statements.  If they did, they would find that most predictions from government and private organizations concerning “the environment” have a poor track record.  Many are based on faulty computer modeling and many tend to the hyperbolic to encourage fundraising or political action. Yet, even today, we are expected to upend our entire way of life, based on their predictions.  We offer what is below as an example.

 

In 1979, the EPA along with other federal agencies and the world’s leading environmental groups projected that “at least 500,000-600,000” species would become extinct by the year 2000. By how much did this projection overshoot reality?

What do you think?
Less than 10 times?
Less than 100 times?
More than 1000 times?

The correct answer is…more than 1000 times.

In 1977, President Jimmy Carter tasked the EPA and other federal agencies to estimate “probable changes” to the world’s environment up through the year 2000. This effort involved hundreds of people, including advisors from the world’s leading environmental groups. In 1979, this team released “The Global 2000 Report to the President of the U.S.,” which stated that under current policies and continued technological progress, “at least 500,000-600,000” species “will be extinguished during the next two decades.”

In 2004, the International Union for Conservation of Nature, the world’s leading authority on extinctions, reported: “At least 27 species are recorded as having become Extinct or Extinct in the Wild during the last 20 years (1984-2004).” The report notes that other extinctions may have occurred, such as “eight species of birds,” but more research is needed to be certain. Even if 100 species went extinct, the 1979 projection overshot the actual loss by more than 5,000 times.

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This article is adapted from Just Facts Daily, published on June 13, 2021.

Sayings About the Pandemic That Should Never Be Heard Again

Estimated Reading Time: 5 minutes

Since our overlords are telling us in California we will be unshackled as of June 15th (at least for now), it is time to examine some of the nonsense and distortions of the English language we have endured over the past 15 months.

Being part of a pandemic in 2021 is not the worst thing if you compare it to what it must have been like in 1918. You have deliveries to your door, take-out food from multiple restaurants, Netflix and Amazon Prime to stream endless movies and 57 channels with nothing on. You can take a hot shower every day and don’t have to walk outside to go to the potty. One should always look at the brighter side of life. Yet despite that, there are some sayings that we should never, ever be required to hear again.

Non-Essential Business – Let us lead with the biggest and most diabolical statement made during the time of the pandemic. We all know it and you have probably said it. There is no such thing as a “non-essential business.” At least not in the terms these fully-paid governmental employees are saying.

Yes, making buggy whips is a non-essential business … today. So is Woolworth and some other retailers in the current environment. Creative destruction is a part of capitalism. With advancements in technology and customer desires, jobs and businesses become obsolete. People don’t think of how many folks had to shovel the manure off the streets of New York City before automobiles made horse and carriage transportation non-essential.

We made those decisions, not government bureaucrats. To tell people who own a gym that their business is non-essential, the business they built through sweat and sacrifice, is disgusting. To tell barbers, hairstylists, and nail salons they are non-essential is just idiotic because you can see how people flocked to those businesses once allowed to by their overlords.

Only a heartless elected official or one of their inept consultants could have come up with this term. It should go the way of the N-word and the C-word.

Stay Safe – This was obviously developed and used by people who never actually faced true danger in their life. The overwhelming majority of people were never threatened by this disease; or, if they were, would have a mild illness. You might say this to people in a nursing home, but they don’t have smartphones to be annoyed by this.

“Stay safe” has its place. If a hurricane is bearing down on where you live, then that would be a good time to use the phrase. If you were a Jew, Gay, or Gypsy in Europe in the ’30s or ’40s, that would be a good time. If you were fighting in the jungles of Viet Nam, that was appropriate then. Or if you lived in Mao Tse-Tung’s China, you really needed that saying. People probably never used it in these examples because they were in real danger of losing their lives.

This statement is being used by people who never actually faced a challenge in their lives, never entered the military, or had to police a drug-invested neighborhood. It makes them feel better and gives them a false sense that they are caring people.

Saying “be well” or “take care of yourself” is fine, but this statement crosses the line into the vapid.

The truth is we have no choice – The truth is we always have a choice. This is America. We never have to live without a choice. We can move states. We can do what we want. There is no more offensive statement to be conveyed to a free American by an elected leader or one of their bureaucratic wonks than “We have no choice.”

We’re all in this together – No, we are not. We were never in this together and the people who said that were particularly not in this with us. They never lost their jobs. They were never locked down in their homes. They were never told don’t worry about your business, it will be there when you come back.

On top of it, they never sacrificed as we have. The mayor of Chicago, Lori Lightfoot, told people she needed a haircut because she is the public face of Chicago and is on national TV. The Governor of Illinois, J.B. Pritzker, shipped his family to Florida by private plane while residents of his state could not leave their homes. Then he told the press he remembered a time when comments about family were off-limits and they dropped the subject. It is a wonder that anyone still lives in Illinois with leadership like this. The smart ones have left. And the state remained on lockdown long after neighboring states were moving toward freedom.

Long after more than 30 million were filing for unemployment — truly the only non-essential workers in America – many government employees were still drawing full pay and benefits. Nancy Pelosi right on cue proposed a $3 trillion-dollar bill that funds billions of dollars to governments and says it is to protect our firefighters and police. Governor Newsom, trying to fill his bloated government budget with monies from better operating states, said if he does not get federal funds that first responders would be laid off. No mention of cutting government employees who are of no use but to harass hard-working people trying to run a business. Then his coffers got filled with tax bounty from IPO offerings. He never turned down the federal dough.

No, we are most definitely not all in this together and we never were.

We must listen to the Scientists – That is technically correct, but it leaves out the second part of the equation. We don’t have to do what they say we should do.

Scientists provide information. They are not equipped to make public policy. Usually, when someone makes this inane statement it is because they are a political hack trying to scare people into doing something they tell us we should be doing, but common sense says we should not.

The CDC and Dr. Fauci have changed the gospel so many times one could get whiplash. The scientific models have been so frequently off that most times they should not be offered.

This may be the most dangerous statement repeated over and over again during the pandemic. The scientists were so frequently wrong it is scary. Sometimes it brought visions of those old Hollywood movies where the tribal meeting was called and the witch doctor in a silly outfit was brought in to tell people what they should do.

Words I hope I never hear againSocial Distancing. Face Mask. Super Spreader.

Ideas I never want to hear againMaybe we should continue wearing face masks. Maybe we will never shake hands again. Both senseless ideas courtesy of Dr. Fauci. Why don’t you suggest we stop hugging also?

Stay Positive – This is actually a good saying, unfortunately being used by pathetic public figures in such a milquetoast way and repeated over and over to minimize its effect.

Here is something positive. Taking back our country from some people who want to control our activities and lives. We live in the greatest country ever created on this planet. People come to the United States to experience our freedom and the manifest existence that leads to life superior to anywhere else. This is because of the unique freedoms that were delivered to us through God and documented by our country’s founders, particularly in the Bill of Rights. We shall continue that actualization through the strength of our people and their willingness to demand those freedoms be maintained.

The most indelible image of the pandemic will always be the magnificent Brian Stokes Mitchell standing on his balcony singing may be my favorite song ever (of 1,000s I love) The Impossible Dream to New Yorkers and all Americans. That is what this country is about.

Have faith in the everyday Americans; they will deliver us from this moment back to the life we have all worked to achieve and the country that we so richly deserve.

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This article was published on June 13, 2021 at Flash Report and is reproduced with permission from the author.

 

Climate Alarmists Flip-Flop Again: Cancel their Monsoon Drought Crisis, Now Claim Too Much Rain

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Among its top results today under the search term “climate change,” Google News is highlighting articles claiming new research shows global warming will cause stronger Indian and South Asian monsoons and rainfall, which will wreak climate havoc in future decades. Yet, just a few years ago climate alarmists and their media allies claimed global warming will cause weakening monsoons and weakening rainfall, which will wreak climate havoc. The alarmists’ embarrassing self-contradiction begs the question – precisely what among the contradictory alarmist climate narratives is the “settled science”?

On Monday, India Today published an article titled, “Climate change to worsen Indian monsoon, global warming sets the stage for dangerous rains: Study.” The article claims, “The Indian monsoon is likely to get much more dangerous and wetter as global warming alters the system, new research says.”

Reporting on the same study, The Indian Express published an article today titled, “A million years of data confirms: Monsoons are likely to get worse.” The article claims, “Global warming is likely to make India’s monsoon season wetter and more dangerous, new research suggests.”

Both articles are prominently highlighted today by Google News.

Just last year, however, the Hindustan Times reported that a newly published peer-reviewed study showed that global warming will weaken monsoons and reduce monsoon rainfall.

Ominously, the Times asserted, “Monsoon rains are the main water source for agriculture in half of India with irrigation facilities being limited.”

“There is clear evidence that warming of sea surface temperatures have reduced intensity of monsoon rains in several places in India, especially the north-east, where the dip in average annual rainfall is 6-8% since 1980s,” the Times quoted K.J. Ramesh, a former director of the India Meteorological Department.

The Hindustan Times article is merely one of many articles and studies that have claimed global warming will weaken monsoons and regional rainfall. For example, in a 2015 article, the climate activist group India Climate Dialogue asserted researchers found in a peer-reviewed study that “the monsoon is weakening, at least since 1990, as researchers have now proved.”

According to India Climate Dialogue, the researchers “found that there was a 10-20% decrease in the mean rainfall in the Indian subcontinent. The monsoon was decreasing over central South Asia – from south of Pakistan through India to Bangladesh.”

“The decline is crucial because in these regions agriculture is still largely rain-fed. The South Asian monsoon brings sustenance to around two billion people,” India Climate Dialogue warned.

So, which is it? Does global warming strengthen monsoons and cause more rainfall, which we are told is bad? Or does global warming weaken monsoons and cause less rainfall, which we are told is bad? Or, just maybe – and as concluded by scientists in a recent peer-reviewed study, modest warming has little impact on monsoons, though that would be quite inconvenient for climate alarmists.

Alarmists, get you propaganda – er, stories – straight and then get back to us with your “settled science.”

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This article was published on June 9, 2021 and is reproduced with permission from Climate Realism.

State of Wyoming to Install Nuclear Reactor at Retiring Coal Plant

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Wyoming is the largest coal-producing state in the country. However, the Cowboy State is also going to be a pioneer in the emerging industry of building small, modular nuclear reactors.

According to a press release from TerraPower, the company developing the reactor.

TerraPower, Wyoming Gov. Mark Gordon and PacifiCorp today announced efforts to advance a Natrium™ reactor demonstration project at a retiring coal plant in Wyoming. The companies are evaluating several potential locations in the state.

Unfortunately, the press release did not give us any information about what the project would cost, but the Casper Star Tribune reports the plant would begin producing electricity by mid-2028. The press release continues:

The project features a 345 MW sodium-cooled fast reactor with a molten salt-based energy storage system. The storage technology can boost the system’s output to 500 MW of power for more than five and a half hours when needed, which is equivalent to the energy required to power around 400,000 homes.

The company’s innovative design means that the nuclear plant will be able to serve as a baseload power plant that also has the ability to follow electricity demand as it ramps up.

TerraPower is understandably marketing this as a way to incorporate more wind and solar onto the grid, and the flexible nature of the reactor design would theoretically make it good at this. However, given the fact that renewables are too unreliable to be depended upon, one wonders how adding them to the grid will do anything other than increasing the cost of electricity.

Wyoming’s plan to replace coal-fired power plants with new nuclear plants is a much better idea than Minnesota’s expensive combination of wind, solar, and natural gas generators.

Nuclear power plants can utilize the existing coal-plant infrastructure to keep costs low and deliver reliable power. Wind and solar require massive transmission line upgrades and “backup” energy sources for when the weather doesn’t cooperate, greatly adding to the total cost of electricity paid for by consumers.

It would be wise for Minnesota Power to replace the retiring coal plants at the Boswell Energy Center with small, modular nuclear reactors, but it is currently illegal to build new nuclear power plants in Minnesota, and liberal State Senators testified against legalizing it.

As I wrote in our Fall 2020 issue of Thinking Minnesota, wind and solar are the energy past, fossil fuels are the energy present, and nuclear power is probably the energy future. The sooner we realize this, the better.

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This article was published on June 9, 2021 and is reproduced with permission from the Center for the American Experiment.

Ohio Lawsuits Wants Google Subject To Government Regulation

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Ohio Attorney General Dave Yost wants internet search engine Google designated as a public utility, rather than a public company, to rein in how it provides search results to Ohioans, according to a lawsuit filed Tuesday.

Yost called the lawsuit landmark, saying Google is discriminatory and anti-competitive. He filed the lawsuit in Delaware County Court and said Ohio is the first state in the country to bring such a lawsuit.

“Google uses its dominance of internet search to steer Ohioans to Google’s own products – that’s discriminatory and anti-competitive,” Yost said. “When you own the railroad or the electric company or the cellphone tower, you have to treat everyone the same and give everybody access.”

Yost’s lawsuit wants Google declared as a common carrier, or public utility, and be subject to government regulation. It also says the California-based company has a duty to offer sources or competitors rights equal to its own, claiming it should not prioritize the placement of its own products, services and websites on search results.

Yost said he wants those equal rights to extend to advertisements, enhancements, knowledge boxes, integrated specialized searches, direct answers and other features.

The lawsuit does not seek monetary damages.

Yost claims Google hurts Ohioans by not offering all the information in order for someone searching to make the best decision. He used searching for a flight as an example, saying if Google returns its own search results to steer someone to Google Flights, the person will not see offers from competitors such as Orbitz or Travelocity.

“Google search is designed to provide people with the most relevant and helpful results. AG Yost’s lawsuit would make Google Search results worse and make it harder for small businesses to connect directly with customers,” Google said in a statement to The Center Square. “Ohioans simply don’t want the government to run Google like a gas or electric company. This lawsuit has no basis in fact or law, and we’ll defend ourselves against it in court.”

The lawsuit is the second Yost has filed against Google in the past several months. He joined 37 other attorneys general in December in an action that claimed the company violated the Sherman Act, which was established to stop groups of businesses from colluding to form a monopoly to reduce economic competition.

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This article was published on June 8, 2021 and is reproduced with permission from The Center Square.

Problems of Federal Reserve Policy—and How to Solve Them

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The U.S. government is constantly expanding its influence on the economy, including the monetary system. With inflation on the rise, political tensions high and congressional dysfunction in Washington, D.C., what should we expect from our central bankers and monetary institutions? How can we get monetary policies that will benefit ordinary Americans?

A new book tackles these questions with vivid historical examples and surprisingly uncommon “commonsense” economics. “Money and the Rule of Law” by Peter Boettke, Alexander Salter and Daniel Smith discusses the difficulties of central banking, especially when decisions are made according to subjective discretion rather than stable, predictable rules.

As the central bank of the United States, the Federal Reserve (the Fed) manages the supply of money in the economy, the most important determinant of short-term economic outcomes. While many economists love the idea of the federal government running the monetary system, Boettke, Salter and Smith explain a number of difficulties faced by central bankers that can make the economy worse, not better. As the authors describe, “Discretion in monetary policy is the reason central banking fails to live up to its lofty promises of economic and financial stability.”

Knowledge Problems and Political Incentives

One problem with central banks is that governments simply do not have the information or knowledge necessary to run a complex economy. The Fed uses aggregate statistics that may not represent underlying trends or up-to-the-minute changes affecting businesses and consumers.

Even if the data were accurate, there is no agreed-upon theory the Fed could use to manage the economy. How should it balance inflation and unemployment? How should it respond to supply-side shocks or to asset price booms? These questions cannot be resolved with economic science, meaning the Fed’s actions are, at least to some degree, purely guesswork. And because the Fed’s economic decisions vary depending on who the central bankers are, they are difficult to predict, increasing economic uncertainty and instability.

A second well-known problem is that government officials face political incentives. The authors provide many examples of Fed decisions driven by political motives instead of sound economics. These include poor monetary policy decisions, such as Fed Chair Arthur Burns’ capitulation to President Richard M. Nixon’s request to boost the economy in an election year, as well as the repeated accommodation of federal government debt and caving to special interests and powerful banks.

Historical Challenges

Historically, the Fed’s actions have increased the severity of economic downturns and financial crises. During extraordinary circumstances, the Fed has ignored its legal limitations and traditional guidelines in favor of whatever seemed viable at the time. For example, many economists, including former Fed Chair Ben Bernanke, agree that the Fed’s mistakes of the 1930s turned what would have been a regular recession into the Great Depression.

Boettke, Salter and Smith argue that the same thing occurred in the 2008 financial crisis. Ignoring traditional economic guidelines, the Fed’s emergency lending programs bailed out insolvent banks, increased risk in the financial system and magnified the credit crunch. Unconventional monetary policies of quantitative easing and paying banks interest on their reserves still cause economic distortions today.

There are simple ways to improve upon the discretionary, and often disastrous, decisions of central bankers. First, discretionary policy should be consistent and predictable so that consumers and businesses can plan for the future. Second, monetary policy decisions should be based on simple rules that are well known but also “robust,” meaning they can be effective without requiring discretionary actions even when things go wrong. Third, rules should be formalized to the greatest extent possible to form a “monetary constitution” that governs the monetary system by the rule of law, just as the legal system provides a foundation for commerce.

These guidelines would provide a stable and predictable monetary system resistant to the mistakes and politics that have plagued discretionary central banking. Although these lessons may seem clear to the casual reader, they are strongly contested by central bankers who prefer to maintain their discretionary powers.

To stabilize the economy, informed citizens must study the faults of discretionary central banking and call for reforms to protect against them. “Money and the Rule of Law” accomplishes the first goal. The second is up to us.

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This article was published on June 8, 2021 and is reproduced with permission from AIER, American Institute for Economic Research.

 

Business Roundtable Chairman Confirms Controversial Roundtable Statement Changes Nothing

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Business Roundtable (BRT) Chairman Doug McMillon affirmed today that he understood the BRT’s controversial “Statement on the Purpose of a Corporation” to merely outline good business practices rather than establish new standards of stakeholder primacy.

McMillon, who also serves as the CEO of Walmart, clarified this in response to a question submitted by the Free Enterprise Project (FEP) of the National Center for Public Policy Research at Walmart’s annual shareholders meeting. The question followed up on Walmart’s written response to a shareholder proposal presented by FEP earlier in the meeting.

FEP’s proposal, and Walmart’s written response to the proposal, can be found on pages 96-97 of the company’s proxy statement. FEP Deputy Director Scott Shepard‘s statement supporting the proposal can be read here and heard here.

Scott Shepard

Scott Shepard

During the meeting, Shepard also submitted this question:

Earlier in the meeting my organization submitted a proposal asking the Board to study the legal and other risks that would arise from making a genuine shift from shareholder primacy to so-called “stakeholder capitalism,” as many of the members of the Business Roundtable say was the purpose of its 2019 redefinition of the purpose of a corporation. Walmart’s opposition statement indicates the company’s understanding that shareholder primacy already includes appropriate concern for relevant stakeholders as urged by the Roundtable Statement. Would you then, as president of the Roundtable, say that the Roundtable Statement really did nothing other than to clarify the shareholder primacy standard that already existed? If not, could you succinctly characterize what the Statement did and did not do?

The company rephrased the question so that it read: “How does Walmart’s shared value philosophy align with the Business Roundtable’s Statement on the Purpose of a Corporation?”

McMillon responded:

Thank you for the question. When we made the change from a Business Roundtable Statement point of view, it was actually a bit of a surprise to me how the world reacted at that, because at Walmart – and I think at other companies to some extent – we had already felt like we were serving multiple stakeholders for quite some time. With our focus – particularly in 2004 and 2005 – shifting to environmental sustainability and social sustainability, we had broadened how were thinking about stakeholder capitalism. At that time we didn’t use that term, but that’s what happened.

So to me this comes down to mainly an issue of timing. If you have a really short-term view, it can be challenging to make choices that meet the needs of every stakeholder group. But if you look at it over time, you can see we’ve made choices to invest in price, or to do things for associates related to wages, or change a policy as it relates to how we interact with suppliers like our “Made in America” commitment. You can see us making choices related to the planet. All of those things form a mosaic over time that results in stakeholder capitalism, with every group being served to an extent. And that does take judgment, and there’s not an economic formula that I’m aware of that gives you an answer yet. So we weigh the needs of all the groups as we think about decisions, and try to create a system that benefits everyone over time.

The rephrased question and McMillon’s response can be heard here. Shepard’s original question, as submitted, can be read here.

After the meeting, Shepard responded:

Doug McMillon and Walmart today confirmed their understanding that the Business Roundtable’s “Statement on the Purpose of a Corporation” didn’t – and really was never meant to – change much of anything. This is a big deal because: (a) McMillon is the current chairman of the Business Roundtable and (b) other Business Roundtable leaders have publicly acted as though the Statement represented a sea change in corporate attitude and behavior, while quietly fighting all efforts by left-wing groups to put any teeth into the “stakeholder capitalism” that they claimed the Statement had inaugurated.

We are immensely grateful to McMillon for his clear and thoughtful clarification. We wish he would have a word with Larry Fink, Brian Moynihan, Alex Gorsky and the other self-anointed Masters of the Universe who lead the Business Roundtable, and let them know that their pose has worn thin.

Whether it was meant merely as a sop to activists or as an attempt to evade responsibility to shareholders and thus free corporate executives to act as petty tyrants, the Statement has failed as anything more than a recital of longstanding good intentions. Acting under any other assumption misleads shareholders and the general public, and tarnishes the reputations of firms led by those who claim otherwise.

Conservative investors can learn how to oppose leftism in corporate America by downloading FEP’s new 2021 Investor Value Voter Guide and Balancing the Boardroom voting guide. The new website Stop Corporate Tyranny also provides tools for engagement with corporate leaders.

Today’s meeting marks the 38th time FEP has participated in a shareholder meeting in 2021. To schedule an interview with a member of the Free Enterprise Project on this or other issues, contact Judy Kent at (703) 477-7476.

Launched in 2007, the National Center’s Free Enterprise Project focuses on shareholder activism and the confluence of big government and big business. Over the past four years alone, FEP representatives have participated in over 100 shareholder meetings – advancing free-market ideals about health care, energy, taxes, subsidies, regulations, religious freedom, food policies, media bias, gun rights, workers’ rights and other important public policy issues. As the leading voice for conservative-minded investors, it annually files more than 90 percent of all right-of-center shareholder resolutions. Dozens of liberal organizations, however, annually file more than 95 percent of all policy-oriented shareholder resolutions and continue to exert undue influence over corporate America.

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This June 2, 2021 Press Release is reproduced with permission from the National Center for Public Policy Research.

Will Biden’s Sham Corruption Crackdown Endanger Freedom?

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Denouncing corruption is the easiest way for rascally politicians to appear honest. Upholding a venerable Washington Kabuki tradition, President Joe Biden announced on Thursday that he was “issuing” a memo to “establish combatting corruption as a core U.S. national security interest.” But Biden’s crackdown is more likely to subvert financial freedom than to create a new era of trustworthy politicians.

Though Biden’s announcement evoked predictable praise from the media, the latest push for purity will likely include the same exemption used in federal anti-money laundering regulations. Federal agencies require banks to take far more precautions when handling financial transactions involving “politically exposed persons” – which includes almost all foreign politicians, their family members, friends, associates, and anyone else likely to take the money and run. But, as a 2020 federal regulatory notice declared, federal banking agencies “do not interpret the term ‘politically exposed persons’ to include U.S. public officials.” Biden and his appointees are castigating foreign corruption but his crackdown will likely exclude corruption by the U.S. government and American politicians.

The administration issued a background statement last Thursday declaring, “We will crackdown on tax havens and illicit financing that contribute to income inequality, fund terrorism, and generate pernicious foreign influence.” What is “pernicious foreign influence?” The term is not defined: will it include any foreign criticism of Biden or his initiatives? “Illicit financing” is another vague term that could produce plenty of both mischief and government revenue.

The Biden administration is trumpeting the Justice Department’s Kleptocracy Asset Recovery Initiative, designed to snare money stolen by thieving governments. Unluckily for American citizens, this is another virtue-signaling campaign that exempts federal, state, and local governments. As a powerful senator in the 1980s and 1990s, Joe Biden was the architect of asset forfeiture programs that unleashed official looting across the United States. Biden championed laws that enabled government agencies to confiscate the property of hapless citizens who have been convicted of no crime, often based solely on unsubstantiated accusations by government agents. Federal law enforcement agencies used asset forfeiture programs in 2014 to seize more property from Americans than all the burglars stole nationwide. Government agencies routinely keep most of the money they confiscate, sometimes using it to pay bonuses to the lawmen who plundered private citizens.

Biden’s corruption crackdown could pose even more perils to Bitcoin than Elon Musk’s tweets. The Treasury Department is seeking to make sure that “law enforcement is able to view the proceeds of corruption such that illicit actors can’t hide behind anonymity,” declared an anonymous “senior administration official” in a briefing last week. Biden’s enforcers will examine the “impact of cryptocurrency as a means of illicit finance” and will look for ideas on how “to modernize [the Bank Secrecy Act] to deal with issues like crypto.” This could be especially troublesome considering a proposal by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) that could compel reporting to the feds the identity of anyone who purchased a single bitcoin. The Electronic Frontier Foundation warns that the proposed regulations “would undermine the civil liberties of cryptocurrency users, give the government access to troves of sensitive financial data beyond what is contemplated by the regulation, and… could chill innovation” in blockchain technology. Government tax collectors have always lusted to treat financial anonymity as a “pre-crime.”

In a background briefing on the morning of Biden’s announcement, a “senior administration official” declared that “the way that corruption is exposed is through the work of investigative journalists and investigative NGOs.” The spiel omitted a hat tip to Jeremy Scahill, an American journalist who revealed how the Obama administration’s drone assassination program became an automatic killing machine that fraudulently denied slaughtering many innocent civilians. Biden’s Justice Department recently browbeat former intelligence analyst Daniel Hale into pleading guilty to “retention and transmission of national security information” for leaking documents to Scahill. Hale continues to face charges of Espionage Act violations. This was the favorite censorship tool of the Obama administration, which prosecuted twice as many Americans for Espionage Act violations than all the presidents combined since Woodrow Wilson.

At least Biden has gold-plated precedents for his latest crusade. A dozen years ago, President Barack Obama proclaimed at the United Nations that the U.S. government is “leading a global effort to combat corruption.” Five years ago, speaking at an Anti-Corruption Summit in London, Secretary of State John Kerry lamented, “I’ve been shocked by the degree to which I find corruption pandemic in the world today.” Kerry sounded like the French detective in Casablanca who was “shocked” to discover gambling. Kerry vowed: “We have to get the global community to come together and have no impunity [sic] to corruption.” The London conference produced one day’s worth of positive headlines for Kerry and the Obama administration.

The Biden administration is calling for the adoption of “anti-corruption best practices” for foreign assistance programs. President George W. Bush made the same pledge to reform foreign aid 19 years ago: “We won’t be putting money into a society which is not transparent and corrupt.” (He probably meant “corruption-free.”) But U.S. aid programs — which cost taxpayers more than $40 billion a year — continued to bankroll many of the world’s most crooked regimes. Secretary of State Hillary Clinton went to the barricades on this issue in 2011, except on the wrong side. When a congressional committee sought to stop payouts to political bandits abroad, Clinton warned that restricting handouts to nations that fail anti-corruption tests “has the potential to affect a staggering number of needy aid recipients.”

Biden has the first-hand experience with foreign aid corruption. In early 2009, when he was Vice President-elect, Biden visited Afghanistan to admonish President Hamid Karzai to stop the corruption that was destabilizing that nation. But the Obama administration continued deluging Afghanistan with cash regardless of the government’s depravity. Corruption became so bad that at Afghanistan’s premier military hospital, some wounded Afghan soldiers starved to death because they could not afford to bribe the hospital staff for food. Obama’s ambassador to Afghanistan, Ryan Crocker, later admitted:“Our biggest single project, sadly and inadvertently, of course, may have been the development of mass corruption.”

Prior to last week’s announcement, Biden’s most visible assault on corruption occurred in Ukraine. In a 2015 speech to the Ukrainian parliament, Biden denounced the “cancer of corruption” and admonished that “a lot of hard work remains including reform of Ukraine’s law and justice sectors.” After the Obama administration promised massive aid to Ukraine in 2014, Biden’s son Hunter jumped on the gravy train, collecting $83,000 a month for a “ceremonial position” as a board member with Burisma, a natural gas company. The absurdity of Biden visiting Ukraine to denounce corruption while his son was dough-raking was widely recognized in Ukraine at the time as well as the Wall Street Journal and New York Times.

When he was challenged on this issue in a 2019 Democratic presidential candidates debate, Biden declared, “I did nothing wrong. I carried out the policy of the U.S. government in rooting out corruption in Ukraine.” Biden also dismally failed on that score. The Wall Street Journal reported in 2019 that the International Monetary Fund, which has provided more than $20 billion in loans toUkraine, “remains skeptical after a history of broken promises [from the Ukraine gov’t]. Kiev hasn’t successfully completed any of a series of IMF bailout packages over the past two decades, with systemic corruption at the heart of much of that failure.” Voters only recently learned that Biden, while he was Vice President, attended a private Washington dinner with a Burisma official arranged by Hunter in April 2015.

Biden proclaimed on Thursday that “the United States will lead by example and… stand in support of courageous citizens around the globe who are demanding honest, transparent governance.” But it is unlikely that Biden’s “leadership by example” will extend beyond yapping about secretive foreign regimes. What are the chances that Americans will learn the full reasons why the Biden administration shut down a State Department task force probing whether Covid-19 leaked out of a Wuhan laboratory? Will the Biden administration come clean on the rigged investigation of Covid-19 origins exposed last week by Vanity Fair? After Biden fueled fears of Covid-19 to capture the White House (exaggerating the death toll by a hundredfold), his credibility might be fatally damaged by a full exposure of all the machinations and cover-ups inside the federal government and beyond.

Biden has never provided any evidence that he is more trustworthy on corruption than any other career Washington politician. If Biden’s anti-corruption crackdown goes awry, will the media cover it up the same way that they made Hunter Biden’s laptop vanish before the election? Regardless of the plaudits that Joe Biden receives, new federal crackdowns on cryptocurrency and “pernicious foreign influence” could roil financial markets and undercut freedom of the press.

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This article was published on June 7, 2021 and is reproduced with permission from AIER, American Institute for Economic Research.

Governments Don’t Hate Gold Because It’s Gold. They Hate It Because It’s Not Fiat Money.

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Men have chosen the precious metals gold and silver for the money service on account of their mineralogical, physical, and chemical features. The use of money in a market economy is a praxeologically necessary fact. That gold—and not something else—is used as money is merely a historical fact and as such cannot be conceived by catallactics. In monetary history too, as in all other branches of history, one must resort to historical understanding. “If one takes pleasure in calling the gold standard a barbarous relic, one cannot object to the application of the same term to every historically determined institution. Then the fact that the British speak English — and not Danish, German, or French — is a barbarous relic too, and every Briton who opposes the substitution of Esperanto for English is no less dogmatic and orthodox than those who do not wax rapturous about the plans for a managed currency.”(1)

The demonetization of silver and the establishment of gold monometallism was the outcome of deliberate government interference with monetary matters. It is pointless to raise the question concerning what would have happened in the absence of these policies. But it must not be forgotten that it was not the intention of the governments to establish the gold standard. What the governments aimed at was the double standard. They wanted to substitute a rigid, government-decreed exchange ratio between gold and silver for the fluctuating market ratios between the independently coexistent gold and silver coins. The monetary doctrines underlying these endeavors misconstrued the market phenomena in that complete way in which only bureaucrats can misconstrue them. The attempts to create a double standard of both metals, gold and silver, failed lamentably. It was this failure that generated the gold standard. The emergence of the gold standard was the manifestation of a crushing defeat of the governments and their cherished doctrines.

In the 17th century, the rates at which the English government tariffed the coins overvalued the guinea with regard to silver and thus made the silver coins disappear. Only those silver coins that were much worn by usage or in any other way defaced or reduced in weight remained in current use; it did not pay to export and to sell them on the bullion market. Thus England got the gold standard against the intention of its government. Only much later the laws made the de facto gold standard a de jure standard. The government abandoned further fruitless attempts to pump silver standard coins into the market and minted silver only as subsidiary coins with a limited legal tender power. These subsidiary coins were not money, but money-substitutes. Their exchange value depended not on their silver content, but on the fact that they could be exchanged at every instant, without delay and without cost, at their full face value against gold. They were de facto silver printed notes, claims against a definite amount of gold.

Later in the course of the 19th century, the double standard resulted in a similar way in France and in the other countries of the Latin Monetary Union in the emergence of de facto gold monometallism. When the drop in the price of silver in the later 1870s would automatically have effected the replacement of the de facto gold standard by the de facto silver standard, these governments suspended the coinage of silver in order to preserve the gold standard. In the United States, the price structure on the bullion market had already, before the outbreak of the Civil War, transformed the legal bimetallism into de facto gold monometallism.

After the greenback period, there ensued a struggle between the friends of the gold standard on the one hand and those of silver on the other hand. The result was a victory for the gold standard. Once the economically most advanced nations had adopted the gold standard, all other nations followed suit. After the great inflationary adventures of the First World War, most countries hastened to return to the gold standard or the gold-exchange standard.

The gold standard was the world standard of the age of capitalism, increasing welfare, liberty, and democracy, both political and economic. In the eyes of the free traders its main eminence was precisely the fact that it was an international standard as required by international trade and the transactions of the international money and capital market.(2) It was the medium of exchange by means of which Western industrialism and Western capital had borne Western civilization into the remotest parts of the earth’s surface, everywhere destroying the fetters of age-old prejudices and superstitions, sowing the seeds of new life and new well-being, freeing minds and souls, and creating riches unheard of before. It accompanied the triumphal unprecedented progress of Western liberalism ready to unite all nations into a community of free nations peacefully cooperating with one another.

It is easy to understand why people viewed the gold standard as the symbol of this greatest and most beneficial of all historical changes. All those intent upon sabotaging the evolution toward welfare, peace, freedom, and democracy loathed the gold standard, and not only on account of its economic significance. In their eyes the gold standard was the labarum, the symbol, of all those doctrines and policies they wanted to destroy. In the struggle against the gold standard, much more was at stake than commodity prices and foreign-exchange rates.

The nationalists are fighting the gold standard because they want to sever their countries from the world market and to establish national autarky as far as possible. Interventionist governments and pressure groups are fighting the gold standard because they consider it the most serious obstacle to their endeavors to manipulate prices and wage rates. But the most fanatical attacks against gold are made by those intent upon credit expansion. With them, credit expansion is the panacea for all economic ills. It could lower or even entirely abolish interest rates, raise wages and prices for the benefit of all except the parasitic capitalists and the exploiting employers, free the state from the necessity of balancing its budget — in short, make all decent people prosperous and happy. Only the gold standard, that devilish contrivance of the wicked and stupid “orthodox” economists, prevents mankind from attaining everlasting prosperity.

The gold standard is certainly not a perfect or ideal standard. There is no such thing as perfection in human things. But nobody is in a position to tell us how something more satisfactory could be put in place of the gold standard. The purchasing power of gold is not stable. But the very notions of stability and unchangeability of purchasing power are absurd. In a living and changing world there cannot be any such thing as stability of purchasing power. In the imaginary construction of an evenly rotating economy there is no room left for a medium of exchange. It is an essential feature of money that its purchasing power is changing. In fact, the adversaries of the gold standard do not want to make money’s purchasing power stable. They want rather to give to the governments the power to manipulate purchasing power without being hindered by an “external” factor, namely, the money relation of the gold standard.

The main objection raised against the gold standard is that it makes operative in the determination of prices a factor that no government can control — the vicissitudes of gold production. Thus an “external” or “automatic” force restrains a national government’s power to make its subjects as prosperous as it would like to make them. The international capitalists dictate and the nation’s sovereignty becomes a sham.

However, the futility of interventionist policies has nothing at all to do with monetary matters. It will be shown later why all isolated measures of government interference with market phenomena must fail to attain the ends sought. If the interventionist government wants to remedy the shortcomings of its first interferences by going further and further, it finally converts its country’s economic system into socialism of the German pattern. Then it abolishes the domestic market altogether, and with it money and all monetary problems, even though it may retain some of the terms and labels of the market economy.(3) In both cases it is not the gold standard that frustrates the good intentions of the benevolent authority.

The significance of the fact that the gold standard makes the increase in the supply of gold depend upon the profitability of producing gold is, of course, that it limits the government’s power to resort to inflation. The gold standard makes the determination of money’s purchasing power independent of the changing ambitions and doctrines of political parties and pressure groups. This is not a defect of the gold standard; it is its main excellence. Every method of manipulating purchasing power is by necessity arbitrary. All methods recommended for the discovery of an allegedly objective and “scientific” yardstick for monetary manipulation are based on the illusion that changes in purchasing power can be “measured.” The gold standard removes the determination of cash-induced changes in purchasing power from the political arena. Its general acceptance requires the acknowledgment of the truth that one cannot make all people richer by printing money. The abhorrence of the gold standard is inspired by the superstition that omnipotent governments can create wealth out of little scraps of paper.

It has been asserted that the gold standard too is a manipulated standard. The governments may influence the height of gold’s purchasing power either by credit expansion — even if it is kept within the limits drawn by considerations of preserving the redeemability of the money-substitutes — or indirectly by furthering measures that induce people to restrict the size of their cash holdings. This is true. It cannot be denied that the rise in commodity prices that occurred between 1896 and 1914 was to a great extent provoked by such government policies. But the main thing is that the gold standard keeps all such endeavors toward lowering money’s purchasing power within narrow limits. The inflationists are fighting the gold standard precisely because they consider these limits a serious obstacle to the realization of their plans.

What the expansionists call the defects of the gold standard are indeed its very eminence and usefulness. It checks large-scale inflationary ventures on the part of governments. The gold standard did not fail. The governments were eager to destroy it, because they were committed to the fallacies that credit expansion is an appropriate means of lowering the rate of interest and of “improving” the balance of trade.

No government is, however, powerful enough to abolish the gold standard. Gold is the money of international trade and of the supernational economic community of mankind. It cannot be affected by measures of governments whose sovereignty is limited to definite countries. As long as a country is not economically self-sufficient in the strict sense of the term, as long as there are still some loopholes left in the walls by which nationalistic governments try to isolate their countries from the rest of the world, gold is still used as money. It does not matter that governments confiscate the gold coins and bullion they can seize and punish those holding gold as felons. The language of bilateral clearing agreements by means of which governments are intent upon eliminating gold from international trade, avoids any reference to gold. But the turnovers performed on the ground of those agreements are calculated on gold prices. He who buys or sells on a foreign market calculates the advantages and disadvantages of such transactions in gold. In spite of the fact that a country has severed its local currency from any link with gold, its domestic structure of prices remains closely connected with gold and the gold prices of the world market. If a government wants to sever its domestic price structure from that of the world market, it must resort to other measures, such as prohibitive import and export duties and embargoes. Nationalization of foreign trade, whether effected openly or directly by foreign exchange control, does not eliminate gold. The governments qua traders are trading by the use of gold as a medium of exchange.

The struggle against gold, which is one of the main concerns of all contemporary governments, must not be looked upon as an isolated phenomenon. It is but one item in the gigantic process of destruction that is the mark of our time. People fight the gold standard because they want to substitute national autarky for free trade, war for peace, totalitarian government omnipotence for liberty.

It may happen one day that technology will discover a method of enlarging the supply of gold at such a low cost that gold will become useless for the monetary service. Then people will have to replace the gold standard by another standard. It is futile to bother today about the way in which this problem will be solved. We do not know anything about the conditions under which the decision will have to be made.

(1) Lord Keynes in the speech delivered before the House of Lords, May 23. 1944.
(2) T.E. Gregory, The Gold Standard and Its Future (3d ed. London, 1934), pp. 22 ff.
(3) Cf. Human Action, chapters XXVII–XXXI.

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This article was published June 5, 2021 and is reproduced with permission from the Ludwig von Mises Institute. It is excerpted from Mises’ magnum opus Human Action.