Economic-Policy Thoughts for Today and Tomorrow

 

Government should protect and de[1]fend against domestic and foreign aggression the lives and property of the persons under its jurisdiction settle disputes that arise, and leave the people otherwise free to pursue their various goals and ends in life. Ideally, the government should be a sort of caretaker, not of the people themselves, but of the conditions which will allow individuals, producers, traders, workers, entrepreneurs, savers, and consumers to pursue their own goals in peace.

He analyzes the failures of socialism and the welfare state and shows what consumers and work[1]ers can accomplish when they are free under capitalism to determine their own destinies. When government protects the rights of individuals to do as they wish, so long as they do not infringe on the equal freedom of others to do the same, they will do what comes naturally—work, cooperate, and trade with one another.

So we see that the best economic policy is to limit government to creating the conditions which permit individuals to pursue their own goals and live at peace with their neighbors. The government's obligation is simply to protect life and property and to allow people to enjoy the freedom and opportunity to cooperate and trade with one another.

 

CAPITALISM

The attacks against capitalism—especially with respect to the higher wage rates—start from the false assumption that wages are ultimately paid by people who are different from those who are employed in the factories.

The capitalist system was termed "capitalism" not by a friend of the system, but by an individual who considered it to be the worst of all historical systems, the greatest evil that had ever befallen mankind. That the man was Karl Marx.

In economic policies, there are no miracles. It was the application of the principles of the free market economy, of the methods of capitalism, even though they were not applied completely in all respects. Every country can experience the same "miracle" of economic recovery, although I must insist that economic recovery does not come from a miracle; it comes from the adoption of—and is the result of—sound economic policies.

 

SOCIALISM

In using the term freedom as applied to human be[1]ings, we think only of freedom within society. Yet, today, social freedoms are considered by many people to be independent of one another. Those who call themselves "liberals" today are asking for policies that are precisely the opposite of those policies which the liberals of the nineteenth century advocated in their liberal programs.

Freedom means something only within the framework of society. Freedom in society means that a man depends as much upon other people as other people depend upon him.

The fact is that, under the capitalistic system, the ultimate bosses are the consumers. The sovereign is not the state, it is the people. And the proof that they are the sovereign is borne out by the fact that they have the right to be foolish. This is the privilege of the sovereign. He has the right to make mistakes, no one can prevent him from making them, but of course, he has to pay for his mistakes.

 

INTERVENTIONISM

The government ought to do all the things for which it is needed and for which it was established. The government ought to protect the individuals within the country against the violent and fraudulent attacks of gangsters, and it should defend the country against foreign enemies. ‘Interventionism means that the government wants to do more. It wants to interfere with market phenomena

 

INFLATION

When people talk of a "price level," they have in mind the image of a level of a liquid that goes up or down according to the increase or decrease in its quantity, but which, like a liquid in a tank, always rises evenly. But with prices, there is no such thing as a "level." Prices do not change to the same extent at the same time. There are always prices that are changing more rapidly, rising or falling more rapidly than other prices. There is a reason for this.

The government may think that inflation—as a method of raising funds—is better than taxation, which is always unpopular and difficult. In many rich and great nations, legislators have often discussed, for months and months, the various forms of new taxes that were necessary because the parliament had decided to increase expenditures. Having discussed various methods of getting the money by taxation, they finally de[1]cided that perhaps it was better to do it by inflation.

We must remember that, in the long run, we may all be dead and certainly will be dead. But we should ar[1]range our earthly affairs, for the short run in which we have to live, in the best possible way. And one of the measures necessary for this purpose is to abandon infla[1]tionary policies.

FOREIGN INVESTMENT

A businessman cannot pay a worker more than the amount added by the work of this employee to the value of the product. He cannot pay him more than the customers are prepared to pay for the additional work of this individual worker. If he pays him more, he will not recover his expenditures from the customers. He incurs losses and, as I have pointed out again and again, and as everybody knows, a businessman who suffers losses must change his methods of business, or go bankrupt.

But a few decades later, capital investment abroad began to play a most important role in world affairs. Foreign investment meant that British capitalists invested British capital in other parts of the world. They first invested it in those European countries which, from the point of view of Great Britain, were short of capital and backward in their development. It is a well-known fact that the railroads of most European countries, and also of the United States, were built with the aid of the British capital. You know that the same happened in this country, in Argentina.

 

POLITICS AND IDEAS

Political speeches, editorials in newspapers, pam[1]phlets, and books were written in order to persuade. There was little reason to believe that one could not convince the majority that one's own position was absolutely correct if one's ideas were sound. It was from this point of view that the constitutional rules were written in the legislative bodies of the early nineteenth century. These political changes, brought about by interventionism, have considerably weakened the power of nations and of representatives to resist the aspirations of dictators and the operations of tyrants. The legislative representatives whose only concern is to satisfy the voters who want, for instance, a high price for sugar, milk, and butter, and a low price for wheat (subsidized by the government) can represent the people only in a very weak way; they can never represent all their constituents

Dictatorship, of course, is no solution to the problems of economics, just as it is not the answer to the problems of freedom. A dictator may start out by making promises of every sort but, being a dictator, he will not keep his promises. He will, instead, suppress free speech immedi[1]ately, so that the newspapers and the legislative speechmakers will not be able to point out—days, months or years afterward—that he said something different on the first day of his dictatorship than he did later on.

Everything that happens in the social world in our time is the result of ideas. Good things and bad things. What is needed is to fight bad ideas. We must fight all that we dislike in public life. We must substitute better ideas for wrong ideas. We must refute the doctrines that promote union violence. We must oppose the confiscation of property, the control of prices, inflation, and all those evils from which we suffer. Ideas and only ideas can light the darkness. These ideas must be brought to the public in such a way that they persuade people. We must convince them that these ideas are the right ideas and not the wrong ones. The great age of the nineteenth century, the great achievements of capitalism, were the result of the ideas of the classical economists, of Adam Smith and David Ricardo, of Bastiat, and others.

Anti-Capitalistic Mentality

The majority of people are unaware of the economic condition before the appearance of the free market. To believe intellectuals that life before the Industrial Revolution was happy and prosperous, and that capitalism brought nothing but misery is proof that most people these days do not know the past.

"The Anti-Capitalistic Mentality" is to analyze the roots and results of ideas that hate the free enterprise.

The way to achieve prosperity is open in a capitalist society. It is acquired by those who satisfy the masses by providing products that are either cheaper or better. It is in this context that we must understand the concept of "consumer sovereignty."

In other words, those who serve the majority will receive greater income or greater profit than those who satisfy the wants of the minority.

 

Mises himself gave us a hint about what's wrong in our time. He said that the desire for the advancement of economic well-being is normal and appropriate.

The closeness of similarity between most nations' societies to aristocrat society is an outcome of anti-capitalistic mentality. Most states and political parties, which include both conservative and "progressive" foes of capitalism are determined to destroy this economic system.

 

Psychological Roots for the Denigration of Capitalism

1. Search for Scapegoat

Reading this economic insight shows that if anyone wants bigger income or profit, he must place himself in the industry that has big demand and he must equip himself with the necessary skills required by the market. If he is not willing to do this, he cannot blame anyone for his meager income.

The free market is such a society. Those who fail resent the achievements of those who succeed. A fool releases his indignation by verbally maligning the achievers. . In such a system, it is not enough to be brilliant, efficient, and industrious to be successful. Honesty and decency are punished.

2. Cover-up for Hatred

The vilification of capitalism is coming from intellectuals' hatred and envy of the success of their colleagues. Mises explained the nature of this hatred. Unlike ordinary men who do not have the opportunity to associate with those who succeed in life, the intellectuals know personally and encounter daily their colleagues who went ahead of them. "To understand the intellectual's abhorrence of capitalism one must realize that in his mind this system is incarnated in a definite number of compeers whose success he resents and whom he makes responsible for the frustration of his own far-flung ambitions.

 

3.      Socialites' Isolation

). Mises identified the members of this gathering as the "statesmen and parliamentary leaders, the heads of the various departments of the civil service, publishers and editors of the main newspapers and magazines, prominent writers, scientists, artists, actors, musicians, engineers, lawyers and physicians" and "together with outstanding businessmen," "scions of aristocratic and patrician families".

4.      Conceit and Resentment of White-Collar Workers

it refers to the experience of white-collar workers. Mises described it as resentment, but I see it as more of conceit. Mises explained that a white-collar worker has "two special afflictions peculiar to his own category" (p. 21). The white-collar worker due to apparent similarity, tends to equate his task with his boss', and considers his "intellectual" assignment is higher than the manual workers of the firm. He cannot understand and it makes him angry to see that the manual workers receive more respect and a higher salary.

 

5.      Disgruntled Relatives of Capitalist Families

Another interesting psychological root for the vilification of capitalism can be traced from disgruntled relatives of capitalist families. Mises described them as "cousins" referring to the "brothers, cousins, nephews of the bosses, more often their sisters, widowed sisters-in-law, female cousins, nieces and so on" (p. 27). These relatives financially support various types of projects that promote anti-capitalistic mentality.

 

6.      Entertainers' Expectation of Deliverance from Public Capriciousness

The final psychological root comes from the entertainment industry. As we all know, many entertainers live an affluent lifestyle, and so it is difficult to accept that "Hollywood and Broadway, the world-famous centers of the entertainment industry, are hotbeds of communism".

To understand this phenomenon, one must first start with a comparison between the products offered by manufacturers and the entertainers. In the case of manufacturers, they sell tangible goods, which provide a measure of stability that the entertainment industry does not have. In the case of entertainers, they are primarily dependent on the wishes and capriciousness of the public. People are bored, and that is why they "buy" the entertainers' "products." But people are very difficult to please for they crave for something "new," "unexpected," and "surprising".

 

Mises accepts the very nature of the public and no relief can be found to cure the uneasiness of stage performers. However, in their search for a remedy, some of them think that communism will give them deliverance.

 

A Social Philosophy - Two Kinds of Progressives

1.      The Unfortunate State of Economic Ignorance

The reason for this unfortunate state is not only due to the inherent difficulty of the subject that requires unusual and demanding intellectual exertion, but also due to general impressions that the study of the subject is considered "strange," "repulsive," "nonsensical," and often "viewed with suspicion".

2.      Material Productive Forces' Continuous Evolution

Corollary to the failure to account for the real cause of economic progress, our common man improperly ascribed all economic development to "natural sciences and technology" (p. 36) and he saw them as "self-acting" toward continuous development regardless of "political and economic organization of society".

3.      Three Progressive Classes

Let us see the role of these progressives in economic well-being. For Mises', the increase in productivity is not due to labor per se but the use of better tools and machines, which is made possible through "the accumulation and investment of more capital" through saving. In fact, "Every step forward on the way toward prosperity is the effect of saving". Entrepreneurs "employ the capital goods made available by the savers for the most economical satisfaction of the most urgent among the not yet satisfied wants of the consumers". Saving and the accumulation of capital when they surpass population growth have two advantageous results, an increase of marginal productivity of labor and a reduction in the price of goods. It is exactly the availability of the supply of capital that distinguishes "progressive" (which the mainstream describes as developed countries) from backward countries.

4.      Misrepresentation of Capitalism

Our common man thinks that the wealth of the wealthy is the primary cause of poverty. He failed to see that the mark of big business is mass production aimed towards mass consumption, in which the workers are the main consumers. He could not understand that "the entrepreneurs, the capitalists, and the technologists prosper as far as they succeed in best supplying the consumers".

 

The Progressives. "Unorthodox dogmatism" is Mises' summary description of the taboos of progressivism. He described it as "self-contradictory and confused mixture of various doctrines incompatible with one another". Concerning sources of dogmas, it is eclectic "at its worst, a garbled collection of surmises borrowed from fallacies and misconceptions long since exploded. It includes scraps from many socialist authors, both 'utopian' and 'scientific Marxian,' from the German Historical School, the Fabians, the American Institutionalists, the French Syndicalists, the Technocrats. It repeats errors of Godwin, Carlyle, Ruskin, Bismarck, Sorel, Veblen and a host of less well-known men"

The progressives' basic accusation "against capitalism is that the recurrence of crisis and depressions and mass unemployment is its inherent features". Exposing these economic problems as products of government intervention silence the progressives, and since they cannot give a credible response to "economists, they try to conceal them from the people and especially also from the intellectuals and the university students. Any mentioning of these heresies is strictly forbidden. Their authors are called names, and the students are dissuaded from reading their 'crazy stuff' ".

 

Three Fundamental Errors

Instead of giving a detailed analysis of the mentioned "moderate" stance, Mises just focused on giving an overview of the three fundamental errors inherent in it.

 

1. The first mistake is related to the erroneous diagnosis of the nature of the ideological problem. "The great ideological conflict of our age," says Mises is neither about the distribution of business profit nor class warfare. Instead, it is about the struggle "concerning the choice of the most adequate system of society's economic organization". Mises explains the nature of this struggle:

2. The second error is the failure to see the similarity of the economic system of both socialism and communism. Yes, it is true that under socialism, the "anti-communist bourgeois" are not assassinated and that the secret documents of a nation are not submitted to a "superior" socialist nation. In this instance, socialism is more moderate than communism. But besides this, there is no difference between the two especially when it comes "to the ultimate goal of political action;" both socialism and communism are aiming for "public control of all the means of production".

 

3. The third error is the naive belief about the possibility of a third economic system resulting from a combination of both socialism and capitalism. Affirming this possibility springs from ignorance to understand the real nature of both socialism and capitalism. They "are two distinct patterns of social organization” for socialism is based on public control of the means of production, whereas capitalism can only exist if "private control of the means of production" is protected. There cannot be a reconciliation between these two. Economists call this form of the economic system "interventionism" and for Marx and Engels, when they "advocated definite interventionist measures, they did not mean to recommend a compromise between socialism and capitalism". Mises perceives them as stepping stones on the way to "the establishment of full communism". Therefore, "the social and economic philosophy of the progressives is a plea for socialism and communism". "Mixed economy" or "a middle-of-the-road solution" does not exist. Expecting it to be so is to believe in the illusion.

 

Capitalism, with its promise of material well-being, cannot make people happy. Mises' first objection deals with this subject of happiness, and he puts it in a way similar to this: Possession of the latest gadgets does not make people happy, and besides, there are lots of people who do not have those gadgets.

Capitalism promotes social injustice, and therefore must be discarded and replaced.

The primary trouble with the above idea of justice is that it ignores scarcity, which is a fundamental economic reality. And not only that, apart from man's use of reason, there is no way for him to protect himself from the threat to human life displays by the operation inherent in nature. The truth is, the expansion of wealth is not natural. It is an outcome of the division of labor, which is a product of human reason.

Concerning the Nature of Capital. In dealing with this topic, Mises explained the basic ideas surrounding the subject of capital and the relationship between capital and population growth.

"Capital is not a free gift of God or of nature. It is the outcome of a provident restriction of consumption on the part of man. It is created and increased by saving and maintained by the abstention from dissaving".

          "What is required to raise, in the absence of an increase in the number of workers employed, the total amount of. . . industrial output is the investment of additional capital that can only be accumulated by new savings. It is those saving and investing to whom credit is to be given for the multiplication of the productivity of the total labor force".

 

 

BEREAUCRACY

        People in government prefer to be called "civil servant." Progressives argue that bureaucracy is a system inherent in capitalism, which is inescapable in the inevitable process of its own disappearance. It is therefore mistaken to blame the system if the bureaucrats are no longer acting as civil servants "but irresponsible and arbitrary masters and tyrants". The culprit is the new political system, "which restricts the individual's freedom to manage his own affairs and assigns· more and more tasks to the government" (ibid.). And besides, the political system considers the anti-business policy of bureaucracy as commendable, and any businessman who resists it is considered a public enemy.

Corporate Bureaucracy 

Under this section, we will see how the "progressives" divert the attention of the people to big business by attacking its bureaucratic system. In it we find the nature of the accusation in general, the absence of "creative leadership" as the chief accusation, and the subtle way the government used the income tax to stifle creativity among entrepreneurs.

• The Nature of Accusation
• Creative Leadership
• Income Tax

Government Omnipotence 

The next section shows how the advocates of government omnipotence utilized the bureaucratic system to advance the power of the state. Mises started his argument by narrating first that "The history of government bureaucratism is very old," and "It characterizes the governments of ancient Egypt and imperial China". In fact, the rise of modern government bureaucratism out of the ruins of feudalism was simply an attempt on the part of the state to substitute "the supremacy of a multitude of petty princes and counts" with bureaucratic management. 

Profit Management

The best way to assess the bureaucratic system is by comparing it to profit management "within the framework of a capitalist society" (p. 18). Both "The essential features of capitalism" and the nature of the bureaucratic system are not widely known. The former has been misrepresented through "spurious legends" (ibid.). Capitalism has been discredited "as an 'economy of scarcity,' " whereas socialism has been praised as the economy of abundance. Mises refused to give a detailed analysis of these "fables" (p. 19). (He did that elsewhere). His primary concern in the book is to show "what the two systems in question are, how they work, and how they serve the needs of the people".

Theological Response

Four years after the publication of Bureaucracy, R. B. Kuiper of Westminster Theological Seminary published an essay in November 1948, The Word of God Versus the Totalitarian State. The essay has five sections: the function of government, the nature of man, the autonomy of spheres, the kingship of Christ, and the sovereignty of God. Since Mises explained in the Introduction that totalitarianism is the destiny of the bureaucratic system, I want to share what Kuiper has to say on the subject limiting my summary to the first two sections of his essay. 

Bureaucratic Management The foregoing section is about profit management. which is about bureaucratic management. Mises explains this subject under five sections: 

• Bureaucracy under despotic government 
• Bureaucracy within a democracy 
• The essential features of bureaucratic management 
• The crux of bureaucratic management, and 
• Bureaucratic personnel managemen

The Two Biggest Obstacles However, fulfilling the above duty is not easy. There are many obstacles to overcome, and two of them are intimidation by professionals who strongly advocate bureaucratization and socialization, and the settlement to compromise between capitalism and socialism, the third way.

• Intimidation by professionals. 
• Settling for the third way, government interventionism

In the Philippines, we have yet to see a public figure, whether a politician, a political and economic commentator or a journalist who advocates personal responsibility, economic liberty, and limited government. So far, the political and economic stance of most public figures we know are statist, socialist, nationalist, interventionist, and progressive. Filipino citizens do not have to wait for the emergence of a libertarian leader. 
 

HUMAN ACTION

 Liberalism is a political and social philosophy that promoted individual rights, civil liberties democracy, and free enterprise. Human action serves purposely behavior. When we talk about action, it is the will that put operation and transformed into an agency, goalkeepers, response in ego stimuli, and environmental conditions. The unconscious behavior of the bodily organs and cells is for the acting ego no less than the fact of the external world. Remember man can sometimes succeed through and by the use of the power of his will in overcoming sickness. Human response to the action is not simply to give preference. The man also shows preference in situations in which things and events are unavoidable or are believed to be so. To express wishes and hopes and to announce planned action may be forms of action in so far as they aim in themselves at the realization of a certain purpose. Action refers to the real matter. We may say that action is the manifestation of a man's will. Contentment or satisfaction is the state of a human being that doesn't and cannot result in any action. The acting person is eager to substitute a more satisfactory state of affairs for a less satisfactory. Human Action striving for happiness. The ultimate goal of human action is always the satisfaction of the acting man's desire.

Human action is one of the agencies that bring change. The action is the essence of his nature and existence. It is necessary always rational. Rational action must be pleonastic and must be rejected as such. And at the end of it is the satisfaction of some desires of the acting man. It may call irrational if its aims are at the expense of “material” and tangible advantages. Remember the opposite action is not irrational behavior, but a reactive response to stimuli on the part of the bodily organs and instincts that cannot be controlled by the person's volition. To the same stimulus, man can under certain conditions respond both by the reactive response and by action. We must simply establish the fact that to act, man must know the causal relationship between events, processes, or states of affairs.

Thinking and acting are the specific human features of a man. This human action which is inextricably linked with human thought is conditioned by logical necessity. The human mind can't conceive a mode of action whose categories would differ from the categories which determine our own actions.

Change can be conceived as the outcome either of the operation of mechanistic causality or of purposeful behavior; for the human mind, there is no third way available.

Daily experience proves not only that the sole suitable method for studying the conditions of our nonhuman environment is provided by the category of causality; it proves no less convincingly that our fellow men are acting beings as we ourselves are.

The Economic Effects of Pandemics: an Austrian Analysis

 

    The Economic Effects of a pandemic: An Austrian Analysis Our current status in the pandemic brings a lot of effects not only to the health of the people and most of all in our economic state. The possible impact of this pandemic on the economic structure arouse. Functioning of the spontaneous market order driven by dynamic efficiency of free and creative entrepreneurship. In this way, most of the entrepreneurs devote themselves in a decentralized manner, looking forward to the pandemic pushes' problems and challenges. 

    In doing so, we need to analyze the impossibility of economic calculation and of the efficient allocation of resources. Examining the specific case of massive interventions by government, central banks in monetary and financial markets so they can deal with the pandemic by seeking to lessen its effects.

See the following effects of pandemics on the real productive structure

1. The labor market

The current pandemic is not having a noticeable impact on the supply of labor and human talent in the labor market, since the death rate increase among the people working age is small. It becomes wartime to a peacetime economy and great credit expansion is in the process. Over the time of history, various pandemics have actually hit and exerted a much stronger impact on the labor market. The productive structure and capital goods Uncertainty and the demand for money

2. Pandemics: systematic government bureaucrat coercion versus spontaneous social coordination

The tragic outbreak of the Covid-19 pandemic has given us one real-life example--more closer and concrete which illustrates and confirms what the theory holds. The impact worldwide of this current pandemic affected all countries regardless of tradition, culture, wealth, or political system. But the thing is some other governments may have managed this crisis better than others difference is only the degree than of kind. We can see how this article deals with economic analysis of pandemic that implies that viewpoint of the contemporary reader, a current pandemic that closes to time and goes on to the personal impact. The intervention models are employed in other pandemics. Coordinate with the commands that need a huge volume of information and knowledge, countless specific and personal circumstances of time and place. The vitality of information or knowledge is essentially subjective and practical, thus it cannot be transmitted to the state central planning and decision-making agency. The eagerness to search for the solutions and the efforts made to detect and overcome problems as they arose would be dynamically efficient. As about to observe and analyze, problems would be handled in a manner exactly opposite to what we see with the state and the combined action of its politicians and bureaucrats, regardless of the good faith and work they put in their efforts. We can see how these people still obey both discipline and resignation the politicians and public authorities towards the inadequacies, insufficiencies, and contradictions inherent in state management.

3. The pandemic as a pretext for an increasing lack of fiscal and monetary control by governments and Central banks

We cannot deny the fact that the economy affected by the pandemic requires a variety of conditions, such as to permit the economy to adapt to the new circumstances at the lowest cost possible and if it is done, permit a healthy and sustainable recovery to begin. In regards to the labor market, we must avoid any sort of regulation which cause the decrease of supply, mobility, and full availability of labor to quickly and smoothly return to work on new investment projects.

Central banks have gone done. If they were trying to escape and even advance their policy of monetary expansion and monetization of an ever-increasing public deficit, they run the risk of provoking a grace crisis of public debt and inflation.

 

There is no shortcut to escape from the severe causes of the current pandemic. Even the authorities were trying to be “saviors” to save people from dying it will become harder. Everything will be forgotten.

MONETARY HISTORY: Gold, Peace and Prosperity (Cong. Ron Paul)

Inflation rates spiked to 4.7% in February 2021 highest since the 4.4% recorded in January 2019. It is also the 5^th straight monthly increase, and follows the 4.2% inflation rate in January 2021. A year ago, in February 2020, the rate of increase in the prices of goods was only at 2.6 %.

Inflation Rate:

2017      -              2.85 %

2018      -              5.21 %

2019      -              2.48 %

2020      -              2.44%

In the Philippines the volatility of inflation rate was been caused by factors such as disturbances in agricultural food supply or movements in international oil prices. Such knowledge is important in the formulation of economic policy, particularly monetary policy which respond mainly to broad-based pressure on prices. There is time to prepare for monetary form since we need to end the inflation.

Since if we observed the law of economics there is no indication that only gold can be used as money in a free society. But the matter shows that gold served as the principal medium of exchange.

Fiat currency standard

Dollar is now manage the fiat currency ushered in even greater inflation, economic turmoil and set the stage for total loss of confidence in the dollar. The task is not difficult, if we ignore –for once—the political pressure from the special interest whose demands are fulfilled through inflation of the money supply. Inflation whether for the benefit of big companies, bankers, monopoly wages, transfer payments or political careers must be ended.

Inflation often leads to prices and wage controls which destroy the pricing system, the planning mechanism of the free economy. The only reason they could promote inflation would be destroy freedom.

Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers of gold. In 2019, official sector activity declined 1 percent from the year prior, with central banks adding 650.3 tonnes. This is slightly lower than 2018 when banks purchased 656.2 tonnes – the second highest level this century, according to the World Gold Council (WGC).

The top 10 central banks with the largest gold reserves have remained mostly unchanged for the last few years. The United States holds the number one spot with over 8,000 tonnes of gold in its vaults – nearly as much as the next three countries combined.

Reference: https://www.usfunds.com/investor-library/frank-talk-a-ceo-blog-by-frank-holmes/top-10-countries-with-largest-gold-reserves/#.YG0WtegzZPY

15 central banks made net purchases of one tonne or more in 2019, highlighting the continued demand for bullion globally. Turkey was the number one buyer – adding 159 tonnes to reserves. Poland made the single largest purchase for the year when it bought 94.9 tonnes in June.

WGC notes that central banks bought 5,019 tonnes in the last decade, which more than offsets the 4,426 tonnes of net sales from 2000 to 2009. Gold reserves are now only 12 percent below the all-time high of 38,491 tonnes in 1966.

Everyone who believes in freedom must work diligently for sound money, fully redeemable. Nothing else is compatible with the humanitarian goals of peace and prosperity. –Cong. Ron Paul

Meltdown Thomas E. Woods Jr.

Capitalism is economic and political system in which country’s trade and industry are controlled by private owners for profit rather than by the state. Since crisis is been experienced by the whole world, capitalism is indeed they see as the culprit that caused such economic mess. The crisis was the fault of libertarianism, same thing as they considered the capitalism as well in 2008 were considered responsible for the 2008 economic trouble.

But behind of this let us look at the real culprit of this claimed. This book identified the culprits that led the economy suffer.

Federal Reserve the one who monitors ricks to the financial system and works to help ensure the system supports a healthy economy for US household. Borrowers can no longer sell any housed for their profit for price depreciation started. Greedy lenders and foolish borrowers were blamed, but not the government.

Fannie Mae and Freddie Mac, the government sponsored enterprises. The enjoyment of privileges which no private enterprises had. And in case if they were encounter trouble sure the government will be one of their back up in terms of financial burden to taxpayers.

The GSEs, the one who bought the mortgages from local banks, with funds in their hands, bankers returned to the mortgage making it easier for people to own houses, and thereby boosted the housing market.

The particular law which identify the Carter’s time and revived under the Clinton’s administration that is called the Community Reinvestment Act. This are the combination of the law coupled with political pressure from special interest groups, bankers that forced to lower lending requirements to provide easy access to housing loan for low-income borrowers.

Racial discrimination also arouse that makes the rallying cry during those years. Lenders were being afraid to go against a popular political tide and legal threat were forced to even conform to pressure and thereby loosened lending requirements.

The speculators multiplied, not only from low-income buyers same as to the higher-income borrowers. It becomes viral. The most notorious examples of this were house-flippers and market-timers. The price of houses artificially appreciated.

Private rating agencies also had their share of responsibility in the housing bubble. They failed to do their duty sue to SEC regulations. Like bankers, they were also afraid to go against popular political propaganda that caused them not to do their job.

In spite of all this how can we solve the economic crisis? Let see the US government solution from these matter.

Short-selling

The exact opposite of “buy low and sell high” strategy used by investors. By these traders return the borrowed stocks and keep the gain for themselves. Traders are doing service to investors by giving them important information about sound firms.

Increase of insurance

Another tool to aid the economy is this, increase the insurance of depositors’ money without even thinking the soundness of the bank’s finances. So if the banking crisis occurs, the probably solution to this is to return to the old trick of printing USD.

Foreclosure holidays

This result in lesser credit, depriving the common man to avail a mortgage loan, an unfortunate outcome that will be blamed on free market’s “inefficiency”.

More regulation

Regulation and deregulation is taking place, which is the act of transferring the risk of unsound companies to taxpayers. Deregulation is actually anomalous for how one can talk if it when the government allows firms to make riskier investments with the guarantee of taxpayers money.

Let’s have a concrete steps to recover from a free-market perspective.

1. Allow firms to declare bankruptcy. This avoid due to two baseless fears which related to perceived negative impact on the economy once firm disappeared and the second one is about the loss of credit.

2. Stop the bailouts and cut government spending. Stop giving subsidy. Excessive consumption and too much debt cause economic crisis.

3. Demand transparency from the Fed.

4. Keep the government away from the monopoly and manipulation of money.

REF 2: How Does Calvinism Help Protect Liberty?

 

Kuyper focuses on his lecture on the source of maintaining and protecting liberty from the threats of State tyranny and the concept of the popularity of liberty. In view of politics, it is basically grounded in religious or anti-religious ideas, as Calvinism as purely as an ecclesiastical and doctrinal movement. It’s good to know also that in view of Calvinism and Politics some country enjoy their political freedom such as the Netherlands, England, and America.

If we talk about the idea and fundamentals of Calvinism it’s all about the Sovereignty of the Triune God over the whole Cosmos, all its spheres and kingdoms, the visible and invisible. As part of these fundamentals, the threefold central concept comes up.

The Sovereignty in the state

Humanity comes from one race, one blood. And if we want to maintain the organic unity politically in the post-sin world, it is now impossible. Since sin enters into the world, something comes unnatural, people against each other, there is an abuse of power, battle of ages between authority and liberty arouse and these are all because of sin. Calvinism gives two basic ideas as the political faith, God alone is sovereign over all nations, and the nature of authority that the State possesses can be derived only by the hands of God. The high view of the State, the transcendent character of God and transferred to the State. Since now, we view the state as “god”. They made the separation of State which makes the most important instrument is the law and the concept of that is not engage and harmonize with the eternal principles.

The Sovereignty in Society

Family, business, science, art, etc. are all social spheres, who do not owe existence to the state and does not derive the law to the superiority of the state but only obey by the high authority within their states, rules by grace of God this how Calvinist understand sovereignty in society. As part of the analysis, state and society exist for the other serves as the mechanical in character, and the other one is organic. In regards to the mechanical states, the principal characteristic of government is the right to life and death, the sword best symbol represents power.

Everywhere one man is powerful than the other, by his personality, by his talent and by circumstances.

Dominion is exercised everywhere, but it is dominion which works organically; not by virtue of a State-investiture, but from life’s sovereignty itself.

The Sovereignty in the Church

The difficulty of the dilemma is all around. It lies to the restrictions of liberty of worship and civil disabilities under the dominant authorities.

So the end of all these is that state officials are perceived as servants of God. They are recognized God as Supreme Ruler, from Whom they derive power. Serving God is the primary goal by ruling the people under His ordinances.

The legitimate way and standpoint of the government in the existence of the variety of churches is to respect religious liberty and must not interfere in religious affairs.

God is the only sovereign in humanity.

 

 

 

 

Reference: Kuyper, Abraham. 1931. Lectures on Calvinism: Chapter 3: Calvinism and Politics. Grand Rapids, Michigan: Wm. B. Eerdmans Publishing Company, pp. 78- 109. 

Ref 1: The Reformed Tradition and the Transformation of Culture (D.G. Hart)

 

The authors explore the attitude of Machen towards the church and the relationship of culture. Though it can view the difficulty of modern culture poses by the Reformed tradition. There is a possibility of the inseparability of gospel proclamation, cultural transformation, and the idea of the priesthood of all believers.  The author points out the importance of reformed marks which tells that the idea that Christianity involves the transformation of culture as well as the proclamation of the gospel. In view of Machen, the vision of cultural transformation is both faithful to Reformed theology and sensitive to what we call the issue of time. 

Cultural diversity and religious freedom take a great challenge to the reformed tradition that cultural transformation takes seriously.

Machen presents his vision in regards to the Reformed tradition and the transformation of culture in the following parts. First is the consecration of culture, Machen was active in cultural engagement. It shows that working with liberal Christians and non-believers in numerous humanitarian and social causes. Though there is a big difference in terms of theological principles then there is also a numerous commonality to work with them. Second is the separateness of the church, Machen’s standpoint on culture affirms in cultural engagement and withdrawal are both affirming. In view of this reason, that’s why Machen becomes active in cultural transformation. Church itself primary task is to become the witness to Christ. Being a Christian is not only a religious experience but a life founded upon doctrine and primarily an account that happened such as a piece of good news or gospel.  The third one is the relationship between church and culture, Christians must and need to work their relationship with the culture around them, because culture changes over time but the church remains it is. Fourth, the modern predicament. As reformers, they come up with their own unique interpretation of cultural transformation. Machen argues that church institution has no means, nor does its ministry involve intervening in cultural or social affairs. The power and weapon of the church in other words are spiritual, not corporal. And the last one is the responsibility of the church in our time. Machen's emphasis on the witness of the church led him to distinguish between church and individual believer’s duties. He told people the matter that could not be expected to church. It is wrong to see the church cooperating and inappropriate to expect the church to give. So for the author Machen, the church's responsibility of the church in our times is the same as in every age.

It is a great reminder for us that Machen view of the cultural transformation of Christianity may obscure the weighty matters of the gospel and the church’s duty to proclaim it.