The Daily Reckoning - Miseaian For Life (Lew Rockwell)

verfasst von Firmian, 29.07.2004, 19:45

-->Miseaian For Life

The Daily Reckoning

Wednesday, 28 July 2004

Wednesday, July 28, 2004

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*** The value of trash...why we might hoard London's
refuse!

*** Stocks, dollar up...bonds, gold down...

*** Kiwanis Conventions, moose get-togethers and the
Democrats!

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All its frauds, excesses and self-aggrandizing delusions
are on display at the Democratic National Convention in
Boston. Speaker after speaker rises to the immense,
illuminated pulpit and hammers away as if he were
desperately trying to break down a barroom door on a
Sunday. Meanwhile, a crowd of onlookers - fat and foolish -
clap and cheer, and rise to its feet when the lock gives
way.

Never did a politician draw breath except to exhale a lie;
and thousands of them were breathing heavily last night.
The great circus carried on. Clown after clown rose to the
platform:"Public service...""Service to the nation..."
"Serving this great country..." - every one of them claimed
to be devoting his life to the sole purpose of helping his
neighbors. Thus did every speech begin with a lie and end
with a call to mischief. Vote for Kerry, listeners were
told, and he will restore the integrity of the federal
government...and also pick rich peoples' pockets on their
behalf.

But, in the interests of fairness and balance, we remind
readers that in less than 2 years, the incumbent president,
George Bush, shuffled out so much loot, he turned a modest
surplus into an extravagant deficit...a turnaround of $9
trillion dollars! He doubled the rate of government growth
- so that Federal expenditures are getting dealt out 4
times faster than the GDP growth rate. And he's managed to
issue so much new debt that the Congressional Budget office
projects a national debt of $14 trillion in 10 years...with
interest alone of nearly $1 trillion annually.

And he's done all this while lowering taxes. Here again, we
admire the blinding, polished gleam of it. For now the
burden of supporting the U.S. government's projects falls
neither on the rich nor on the poor...but on the honest
simpletons all over the world who were attracted by the
shine of the world's most dynamic economy...and naive
enough to believe its promises.

Our head spins.

More on the nation's ugly fraudulent elections below...

In the meantime, the news from Tom Dyson...

---------------------

Tom Dyson, from London's Golden Balls building...

- We found ourselves on the Piccadilly line of the London
Underground yesterday evening, when we noticed an unusual
exchange between two passengers.

- A man, whom we came to assume was from India, was eating
poppodums from a paper bag. When he had finished his snack,
he screwed the paper bag into a ball, and tried to
surreptitiously discard it on the little shelf that runs
behind the seats on the ailing, decrepit Tube.

- There was a lady sitting next to him. She was reading
furiously, with a face like a bag of wrenches and a
scowling expression. She could have been a headmistress.
Alerted both by the man's hand - which was now just behind
her left ear - and the scratching sound of his paper ball,
the old battleaxe turned to him and inquired loudly:"Why
don't you take your rubbish home with you?"

- The woman glared at him with a look of such ferocity,
even the Great Mogambo Guru would have wilted. But not only
that, the man was now the focus of an entire Tube-carriage-
load of snickering rush-hour commuters."Uh, I was going
to," replied the man, squirming in his seat. He quickly
grabbed the offending item.

- The confrontation quickly evaporated, as the woman
returned to her book and the commuters to their newspapers.
Your editor, however, dwelled on the subject. We are
interested in trash, you see, dear reader, because garbage
is the very definition of a contrarian asset. Everyone
thinks it worthless and totally undesirable. But in the
markets, that kind of negative sentiment usually precedes a
rally.

- Not that we're about to go out and begin hoarding
London's refuse...but we suspect rubbish may be more
valuable than people think.

- Gold is another asset that’s more valuable than most
people think...and, unlike trash, we really do like to
hoard it. This morning, gold is even better value.
Yesterday, the strange yellow metal fell almost $3 at the
Comex, to end the session at $387. Gold has now lost over
$21 since its recent peak of $408.55 reached on July 12.

- Why has gold wobbled? We think it may have something to
do with the dollar, which, yesterday, surged to a new
multi-week high, gaining over 1% against the pound and 0.7%
against the euro. By close of trading, a pound was worth
$1.82, and a euro bought $1.20. The press attributed the
dollar's leap to a strong reading on the University of
Michigan's consumer sentiment index...

- U.S. consumer confidence shot up in July - with Americans
convinced they face a bright future of endlessly secure
jobs, accompanied by a self-sustaining recovery. In other
words, they swallowed Sir Alan of Greenspan's assertion
that poor economic data in June was nothing but a glitch in
the tape.

-"This proves that Greenspan was right and that the soft
spot in the June data was temporary," said ECU's Neil
Mackinnon."It's looking very positive for the dollar to
establish the beginnings of a new primary uptrend," he
said.

- Consumer confidence proves the economic outlook is sound?
We're not convinced. The dollar may continue to rally for a
while yet, certainly. But here at the Daily Reckoning, we
doubt the staying power of this recovery.

- America's massive tax cuts came to an end only last
month. The result? Rosy forecasts for the economy will
slowly start to peter out as the impact of these cuts
diminish. Moreover, higher bond yields are already reducing
mortgage refinancing - a key indicator of consumption. Add
that to a 60% slump in mortgage applications in the year to
mid-June, and it looks like the Fed has a problem. When
investors notice - well, stocks may get dumped.

- The lumps couldn’t see the garbage piled up on Wall
Street yesterday though. The Dow fought its way back above
10,000, adding 123 points and closing at 10,085. The S&P
added 1%, or 11 points, to reach 1,095 by the bell. The
Nasdaq added 1.6% to 1,869.

- But while stock investors were making hay, Treasury
holders got trashed. The Ten-year note gained 13 basis
points, to yield 4.61%, their biggest drop since May 7.
"Ten-year yields have risen almost a quarter-point in the
past week, after Greenspan said in congressional testimony
last week that an economic slowdown in June should prove
short-lived," comments Bloomberg.

- As for the litterbug on the Tube here in London, well, as
soon as the lady alighted from the train at Green Park, he
stuffed that paper bag down between the seat cushions.

-"Excuse me, sir...!"

---------------------

Bill Bonner, back in Baltimore...

*** It is an unflattering moment for America.

A national election is unbecoming at any time. But this
year seems to bring out the worst in the American
character. Americans are as susceptible to fraud and
illusion as any people, but more ready to give into self-
adulation than most. A long run of very good luck has made
fools of them. They fly the flag from every lamppost and TV
antenna and congratulate each other on what a fine country
they've put together. But it is a Republic of happy morons
- going deeper and deeper into debt with no clue how ever
to get out; meanwhile, they sell houses to one another and
believe they are getting rich. It is a Democracy of dolts,
ready to believe that the world's most powerful nation is
in a life or death struggle against a handful of Muslim
fanatics; every speaker in Boston reminds us of what a
patriotic soldier John Kerry was and how he will make such
a good leader in the great battle ahead.

When times are really good, government is an inevitable but
amusing flim-flam. In small, annoying ways, government
bosses around its citizens, pretending to do so for their
own good - that is, as a 'public service.' When times are
bad, government murders people - either its own citizens or
those of some other government - again, for the good of
those who are left living.

"Government," said George Washington,"is not reason. It is
not eloquence. It is force."

The Democrat's national convention might just as well be a
huge group of Kiwanis members...or a Moose get-together.
Attendees wear funny hats and have some vague intention of
doing good for their fellow men...while also having a good
time for themselves. What sets this reunion in Boston apart
is that it is part of the process of government, which
means that ultimately, should they prevail in the November
elections, whatever these clowns want could become the law
of the land.

---------------------

The Daily Reckoning PRESENTS: The welfare state is
immoral...inflation is theft...and Europe is a prescription
for chaos and bureaucracy. If ever we needed to study the
work of Hans Sennholz, it’s now.


MISESIAN FOR LIFE
by Llewellyn H. Rockwell, Jr.

Hans F. Sennholz is one of a handful of economists who
dared defend free markets and sound money during the dark
years before the Misesian revival, and did so with
eloquence, precision, and brilliance. From his post at
Grove City College, and his lectures around the world, he
has produced untold numbers of students who look to him as
the formative influence in their lives. He has been a
leading public voice for freedom in times when such voices
have been exceedingly rare.

This much is well known about him. But there are other
aspects to his life and career you may not know. Sennholz
was the first student in the United States to write a
dissertation and receive a PhD under the guidance of Ludwig
von Mises. Mises had only recently completed"Human
Action". Imagine how having such an outstanding student,
and a native German speaker no less, must have affected
Mises's life...how it must have encouraged him to know that
his work could continue through outstanding thinkers such
as this.

When Mises arrived in New York, determined to make a new
life for himself after having first fled Austria and then
sensing the need to leave Geneva too, he had no academic
position waiting for him. He had no students and no
prospects for students. But then came Sennholz. Here was
living proof that ideas know no national boundaries, that
even in the darkest hour there was hope for a new
generation of economic scientists who cherished freedom,
and were not fooled by the promise of government planning.

And think of the crucial time in which he entered the
Austrian picture. Mises was by now carrying the school by
himself. Most of his students had moved on to other things,
whether Keynesian economics or social theory. For the
Austrian School to survive in a profession now fully
dominated by interventionists, it needed economists. The
School desperately needed the new life that only new faces,
names, books, and ideas provide.

When Sennholz began studying with Mises, it would still be
another twelve years before Rothbard's"Man, Economy, and
State" would appear, and nearly a quarter century before
Kirzner's"Competition and Entrepreneurship" would be
published. Sennholz provided exactly what was needed: that
crucial bridge from the prewar School to the postwar School
in America, where the Austrian School would now make its
home.

His dissertation became the book"How Can Europe Survive,"
published in 1955. It remains the best and most complete
critique of European political union ever written. Sennholz
demonstrated - some fifty years before others even cared -
that political union under the interventionist-welfare
state was only a prescription for chaos and bureaucratic
rule. True union, he demonstrated, comes from free trade
and decentralized states that do not attempt to plan their
economies.

Europe today has a burgeoning movement of intellectuals who
realize this same thing, and are working to curb the power
of Brussels even as they attempt to preserve the free-trade
zone. But we must remember that Sennholz anticipated this
critique and agenda by nearly five decades. By taking a
detailed look at all the programs for unification that were
then being batted around, he saw precisely what was ahead
for Europe: not prosperity and peace, but stagnation and
conflict. So it is and will continue to be, so long as
Sennholz's final chapters - which present a blueprint for
authentic unity - are not followed.

Sennholz followed up this treatise, which included an
account of the Great Depression and the onset of war, with
a long string of trenchant writings on monetary theory and
history, on employment, on fiscal policy, and even on the
moral basis of freedom. Truly he followed in Mises's
footsteps, and, like Mises, he refused to let the
ideological hostility of his age and ours deter him from
speaking truth to power, using every means at his disposal.

Let me provide one example of just how he carries the
torch. During the 1980s, much like today, there were two
camps on fiscal policy: the left, which wanted more
spending and no tax cuts, and the supply-siders who wanted
tax cuts plus spending increases. Sennholz became the voice
for sanity: in Misesian terms, he called for tax cuts to be
matched by spending cuts.

In doing so, he dismissed the magic fiscal dust called
"dynamic scoring" as well as the socialist demand for
bigger government, while warning against the dangers of
inflationary finance. Here was a hero of fiscal
conservatism! During the early eighties, too, he wrote an
extended Austrian critique of supply side that anticipated
all future trends of the decade.

At Margit von Mises's request, Sennholz was the translator
of Mises's"Notes and Recollections," which is the closest
thing we have to an autobiography. It has been this book,
above all else, that has shaped the way the generations
that never had the chance to meet Mises have come to know
the way an economist thinks about science and life amidst
personal tragedy. Sennholz and his wife Mary produced the
first"Mises Festschrift," presented to Mises on February
20, 1956, long before Mises's fame in the United States
would grow. Sennholz alone took the initiative to do Mises
this honor.

Sennholz acquired Mises's paper for Grove City College,
where they have been guarded as the treasures they are. He
made Grove City stand out among American colleges as one of
the few places where economic sense was taught during the
heyday of Keynesian orthodoxy.

Sennholz did not only work to promote the Misesian school.
He has been a great benefactor to all economists and
scholars by being the translator and promoter of the work
of Mises's teacher, Eugen von Boehm-Bawerk. This was an act
of great intellectual piety, since the market was not
exactly clamoring for hundred-year old books on interest-
rate theory. And he did it all on the urging of Mises.

And though an outstanding theoretician, Sennholz placed a
strong emphasis on the application of Austrian theory to
the timing of the business cycle, and to explaining the
current state of affairs. This is, by itself, highly
unusual in the economics profession. If you know anything
about academic economists, you know that they are the last
people you want to ask about the state of the economy. But
Sennholz made it his job to explain the world around him, a
trait which drew many to his thought.

The Mises Institute, for which he serves as an adjunct
scholar, is grateful to Professor Sennholz for his early
support of our work. He wrote a wonderful paper on Carl
Menger, later published in a volume on the gold standard,
in which he showed that Menger was not just a theorist, but
an activist in the cause of sound money. That paper changed
the way we viewed Menger. We came to see him more clearly
for what he was: an old-world liberal concerned about the
fate of his country in difficult times - much like Sennholz
himself.

Finally, I must add that Sennholz has never been shy about
insisting on the centrality of ethics in the study of
economics. He has decried the welfare state as confiscatory
and immoral. He has called inflation a form of theft. He
has identified government intervention as coercion contrary
to the true spirit of cooperation. He did this at a time
when saying such things was taboo in the profession. Here
again, he was keeping alive the spirit of Mises, and the
spirit of truth.

Nobody can ever gauge the full impact of a great
intellectual in the development of culture. His influence
spreads like waves in a lake; by the time the waves hit the
shore, few are in a position to remember the source. But
this much I'm sure of. We are in Hans Sennholz's debt far
more than we know.

Regards,


Lew Rockwell,
for The Daily Reckoning

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