The Origins of the Fed

By Ron Paul

 

The Federal Reserve cartelizes the banking industry, allowing individual banks to inflate together, earning them and the government enormous profits, while making sure that they are never held accountable for their fraudulent practices.

 

The Federal Reserve Cartelizes the Banking Industry

Here's how we got saddled with this monstrosity: In the early 1900s — during the so-called Progressive Era — the US government began a radical program of intervention into the economy. Pundits hailed this as fostering a new "spirit of cooperation" between business and government. In fact, the new system was a precursor of socialism and fascism.

 

Government-business cooperation took several forms, all of which conferred special privileges on favored firms, insulating them from the competition of the free market. Individual businesses and whole industries lobbied and bribed government officials for laws that benefited them at the expense of the consumer, and the whole operation was sold to the public as antimonopoly measures. This illegitimate and unconstitutional process happened time and time again, and government intervention became a permanent part of manufacturing, railroads, agriculture, and many other industries in the United States.

 

This was the era when the US free market received a beating, and, for lovers of liberty, its effect was much worse than the New Deal's.

 

In the free market, opportunity is granted to all and privilege to none. Laws affect… (Read more)

 

Source: Mises.org

Iraq: Cost of Embassy and Consulate Operations

Office of the Spokesperson

Washington, DC

 

Question Taken at the December 12, 2011 Daily Press Briefing

 

Question: What will be the annual operating costs for running our Embassy and consulates in Iraq?

 

Answer: The Department requested $3.8 billion for operations in Iraq during FY 2012. This figure includes mission operations, such as security, logistics, and life support, as well as construction, educational and cultural exchanges, contributions to international organizations, and other general management expenses.

Entrepreneurs: Don’t Just Try

By Christopher Westley

 

He stood in front of my desk, fidgeting, and avoiding eye contact. This was a necessary but not pleasant conversation.

 

"Look," I said, "to get a B in the class, you will need to do just a little better on the final than you have so far on your previous tests. But just a little. Remember: Students usually raise their averages on the final exam. You have seen most of this material before. You understand it better now. And since the final is weighted more heavily than the other tests, I'd say you are in a pretty good position to pull out a B. Can you do it?"

 

He looked up from the floor. "Well, I'll try."

 

It's a conversation I have multiple times toward the end of every semester. A student wants to clarify where he stands in the class and what he needs to earn on the final to both maintain his current grade and to perhaps even raise it.

 

It's a short, one-act play in which we both know our parts. I pull out my calculator and show the student the necessary score. Often, I'll add that I am not saying that he has to ace the final but only improve his previous performance by a small, marginal amount.

 

And then the student says, "Well, I'll try."

 

It wasn't until the most recent semester that this retort began to… (Read more)

 

Source: Mises.org

The Risk of Sovereign Debt

By David Howden

 

With a 50 percent haircut recently given on the Greek sovereign-debt question, investors are increasingly asking what the real risk of sovereign debt is. It would appear that investors underpriced the risk inherent in sovereign debt, especially that of Europe's periphery. One might even go so far as to say that investors made foolish choices in the past and are now getting their just deserts.

 

Such statements require an assessment of what the specific risk is of holding sovereign debt, and how specific European institutions affected these risk factors.

 

Debt is in almost all cases collateralized by some asset. A mortgage is backed by the value of the house that it is borrowed against. Student loans are backed against the future earnings ability of the student (or their parents' income and assets if cosigned). In almost all cases debt is collateralized by the asset that it is used to purchase.

 

Sovereign debt is slightly different, as no clear asset stands ready to serve as collateral. Instead, borrowing is backed by the future taxing capacity of the state. When investors purchase sovereign debt, they do so knowing that if their plans turn out wrong they will not be receiving some portion of that state's assets as the consolation prize. They purchase the bond knowing that the ability to repay is conditioned by the future economic health of the country, and also by its future taxing power. As there is a general negative relationship between tax rates and economic health there is an upper bound on how much tax revenue can be raised in the future to pay off debts incurred today.

 

When we say that sovereign debt is "risk free," we mean that there… (Read more)

 

Source: Mises.org

Is There Room For Compromise With Socialism?

By Ludwig Von Mises

 

Private ownership of the means of production (market economy or capitalism) and public ownership of the means of production (socialism or communism or "planning") can be neatly distinguished. Each of these two systems of society's economic organization is open to a precise and unambiguous description and definition. They can never be confounded with one another; they cannot be mixed or combined; no gradual transition leads from one of them to the other; their obversion is contradictory. With regard to the same factors of production, there can only exist private control or public control.

 

If in the frame of a system of social cooperation only some means of production are subject to public ownership while the rest are controlled by private individuals, this does not make for a mixed system combining socialism and private ownership. The system remains a market society, provided the socialized sector does not become entirely separated from the nonsocialized sector and lead a strictly autarkic existence. (In this latter case there are two systems independently coexisting side by side — a capitalist and a socialist.)

 

Publicly owned enterprises, operating within a system in which there are privately owned enterprises and a market, and socialized countries, exchanging goods and services with nonsocialist countries, are integrated into a system of market economy. They are subject to the law of the market and have the opportunity of resorting to economic calculation.

 

If one considers the idea of placing by the side of these two systems…

 

(Read more)

 

Source: Mises.org

U.S., European Union Closer to Trade Mutual Recognition Decision

Washington – U.S. Customs and Border Protection and the European Union Taxation and Customs Union Directorate agreed to language for the U.S.-EU Mutual Recognition Decision today which will lead to its signing in the Spring of 2012. Once signed, the Mutual Recognition Decision will recognize the respective trade partnership programs of the U.S. and the EU—CBP’s Customs-Trade Partnership Against Terrorism and the EU’s Authorized Economic Operator—with reciprocal benefits.

 

“The U.S. and the European Union are one step closer to a mutual recognition decision that will facilitate trade while increasing security of the global supply chain,” said CBP Assistant Commissioner Thomas Winkowski.

 

In 2007, CBP and TAXUD initiated efforts to implement Mutual Recognition between C-TPAT and AEO. Mutual Recognition is an industry partnership program that creates a unified and sustainable security posture that can assist in securing and facilitating global cargo trade. Upon achieving mutual recognition with a foreign partner, one program may recognize the validation findings of the other program.

 

C-TPAT is a voluntary government-business initiative to build cooperative relationships that strengthen and improve overall international supply chain and U.S. border security. C-TPAT recognizes that U.S. Customs and Border Protection can provide the highest level of cargo security only through close cooperation with the ultimate owners of the international supply chain such as importers, carriers, consolidators, licensed customs brokers, and manufacturers. CBP currently has mutual recognition with: New Zealand, Canada, Japan, Korea and Jordan.

 

U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security charged with the management, control and protection of our nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws.

Ten Years Later: The Enron Case

Boxes of evidence and data

It was 10 years ago this month that the collapse of Enron precipitated what would become the most complex white-collar crime investigation in the FBI’s history.

 

Top officials at the Houston-based company cheated investors and enriched themselves through complex accounting gimmicks like overvaluing assets to boost cash flow and earnings statements, which made the company even more appealing to investors. When the company declared bankruptcy in December 2001, investors lost millions, prompting the FBI and other federal agencies to investigate.

 

The sheer magnitude of the case prompted creation of the multi-agency Enron Task Force, a unique blend of investigators and analysts from the FBI, the Internal Revenue Service-Criminal Investigation Division, the Securities and Exchange Commission, and prosecutors from the Department of Justice.

 

Agents conducted more than 1,800 interviews and collected more than 3,000 boxes of evidence and more than four terabytes of digitized data. More than $164 million was seized; to date about $90 million has been forfeited to help compensate victims. Twenty-two people have been convicted for their actions related to the fraud, including Enron’s chief executive officer, the president/chief operating officer, the chief financial officer, the chief accounting officer, and others.

 

“The Enron Task Force’s efforts resulted in the convictions of nearly all of Enron’s executive management team,” said Michael E. Anderson, assistant special agent in charge of the FBI’s Houston Division, who led the FBI’s Enron Task Force in Houston. “The task force represented a model task force—the participating agencies selflessly and effectively worked together in accomplishing significant results. The case demonstrated to Wall Street and the business community that they will be held accountable.”