Economic History

     

 

 

 

 

 


 

I write this with sadness, still, at the news of the death of my friend Heinz Blasnik. He is better known by his nom de plume, Pater Tenebrarum, who published the economics blog Acting Man and wrote for many other financial sites.

I met Heinz twice, at his home in Vienna. He was a kind and gracious host, sending his driver to pick me up and serving Austrian delicacies for lunch. When I met him, he was struggling near the end of a long illness which was the result of a youthful adventure. Even so, he retained a benevolent sense of life, and a positive spirit.

But this is not why I wanted to write this. We were friends because we shared some ideas. Important ideas. Ideas about the nature of the world, and mankind, and how man can work together and coordinate their productive activities. Economics and business are my life, and Heinz was the same way.

What better basis for a friendship than sharing important values?

Heinz was deeply, passionately interested in helping people understand economics. I know not how much time he gave to this cause—unpaid, as blogs do not make money—but it was surely more than I spend. He engaged with those who were interested. Sadly, Austrian economics is not mainstream, though there are more than enough people to keep a teacher—or sensei—busy. He was willing to correspond with me, and I credit his articles and emails for helping shape my own views.

We did not always agree. If you put 3 economists in a room then you have at least 4 opinions. But even when not, he listened with benevolent intention and did not make it personal. It was always about the ideas. I think this is an important and uncommon virtue.

On one of my visits, we discussed life, the universe, and everything. And he told me a bit about the Austrian welfare state. Which led me to write The Service Economy. I have traveled around the world, and I have shared food and drink with friends in many countries. Yet that one conversation with Heinz stands out as interesting and important. I can only recall one other discussion with one other friend that led directly to me writing an essay.

I don’t think Heinz believed in Heaven, but I hope everyone will understand when I say this. I would look forward to a day—many years in the future, I hope—when I could meet Heinz for beers in Heaven, and continue our conversation where it left off in 2021.

Adieu Heinz.

 

Dr. Keith Weiner is the president of the Gold Standard Institute USA, and CEO of Monetary Metals. Keith is a leading authority in the areas of gold, money, and credit and has made important contributions to the development of trading techniques founded upon the analysis of bid-ask spreads. Keith is a sought after speaker and regularly writes on economics. He is an Objectivist, and has his PhD from the New Austrian School of Economics. He lives with his wife near Phoenix, Arizona.

 

     

 

 

Tyranny of the Living

 

Tradition… is the democracy of the dead.

K. Chesterton

 

[ed note: this article is from Bill Bonner’s archives, originally published June 20, 2003]

 

Yesterday’s news brought word from Deputy Defense Secretary Wolfowitz that U.S. troops would be in Iraq for the next 10 years. Also came an estimate of the cost: An extra $3 billion would have to be added to the defense budget for Iraq… and an extra $1.5 billion for Afghanistan.

“Avoid foreign entanglements,” cautioned the father of the country. But corpses have no voice and no vote, neither in markets nor in politics. They might as well be dead.

 

My WolfieWolfie, back when still protected

Cartoon by Steve Bell

 

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Crack Up!

BALTIMORE – The Dow rose on Wednesday morning… after Janet Yellen made soothing remarks about a “gradual” return to normal interest rates. Then investors must have realized that returning to normal is not on the Fed’s agenda. The Dow finished the day down 99 points.

We haven’t seen normal central bank policy since the Nixon years. Normal is a currency backed by gold, not by PhD economists. Only briefly and episodically, over the last 2000 years, has the world flirted with pure paper or “fiat” money. Every time, the affair was over in a short time… and regretted for a long time.

 

1-Fate_of_CurrenciesThe result of the usurpation of money by government

 

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“On this side of the law

On that side of the law

Who is weak? Who is wrong?

Who is for and who’s against… the law”

Johnny Cash

 

Were We Unfair to the Oregon Protesters?

We return our attention to the freedom fighters holed up on the high plains… and their standoff with the law in a federal bird sanctuary in Oregon.

 

nancy-steve-ross-sepia-effect-of-cowboys-riding-seneca-oregon-usaOn the plains of Oregon…

Photo credit: Nancy & Steve Ross

 

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A Dangerous Spot

SANTORINI, Greece – “Gods were gods. Men were men,” explained our tour guide, Spiros.

“The ancient Greeks thought there was a difference. Men had to realize they weren’t gods. They couldn’t do the things gods could do. If they tried, it provoked a disaster. The gods got jealous and punished them.”

What has changed? There are still things humans can and can’t do. When men get too big for their britches, the gods still punish them. The disaster we were looking at had nothing to do with the hubris of mankind. The problem was geological.

 

santoriniSantorini – world improvers from Hollywood have apparently found housing there.

Photo via kiklamino.com

 

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Chockablock with History

ON THE WINE DARK IONIAN SEA – We drove from Palermo to Agrigento, thence to Syracuse and finally Catania. This was a quick visit to Sicily, not enough to learn very much.

Sicily is complex. It deserves time. If we had more, we would rent an apartment and get to know it better. But now we are on a ship, headed to the Greek island of Santorini.

 

mediterranean

 

mediterranean 2Mediterranean views…

Photo credit: fmh

 

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Looking at the Big Picture

Step back. Look at the big picture. Stocks are near record highs. Investor sentiment has never been more bullish. The VIX, which shows the options market’s expectation of 30-day volatility in stocks, is near record lows.

But the US stock market – broadly measured by the S&P 500 – is “above the line” of our Simplified Trading System (STS). It’s trading above 20 times reported earnings. The index could go much higher. But our simple approach tells us that the safe gains are behind us. It is better to be out than in.

 

small-dollar

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Or:  Who Knew The F***ing Lions Could Swim?

I found myself in a Northern one-horse town some 20 miles west of Aquilea  with no apparent means of getting back to Rome. No, let me amend that, from my personal perspective, it might as well have been a no-horse town. Romans and their money! With every new emperor the denarius becomes worth less than before. And so the ten denarii I still called my own (which of course were all new denarii) wouldn't even buy me a horse. Thanks much, emperor!  Actually, when I left Aquilea – rather in a mad rush on the spur of the moment – I had a lot more money with me than ten denarii. Little did I know that pillaging gangs of Marcomanni had already invaded the empire. I learned about this the hard way, as I encountered a troupe of these bandits three leagues to the West of Aquilea. I can thank Glycon – all hail Glycon!-  and probably several of the other gods profusely that I actually survived the encounter. After all, it is well-known what these Germanic brutes are capable of when they are putting their mind to it. Unfortunately this inadvertent crossing of paths with the barbarian hordes cost me my horse and most of my money. Not to mention my coat and my boots. The only reason why I was left these 10 denarii was that they didn't find my spare purse, which I wear affixed in a place that robbers don't check most of the time, unless they're really hard up. In a way it is an example of poetic justice, or injustice, depending on one's viewpoint. I probably should accept my fate without demur though, since I had to agree with Alexander that to remain in Aquilea was simply no longer an option.

That cheeky little git Commodus – what is he, 10 years old? 11? – even made up a limerick about some unnamed 'Greek fraud and his Roman butt-boy' that he kept reciting all day long and it was pretty clear to everyone whom he meant. I swear that rascal has a glint of Caligula in his eye, it's probably no coincidence that he shares his birthday. Of course the auguries all pronounced a glorious future for the git when he was born, regardless of that unmistakable  hint the date of his birth provided them with. I actually doubt that he is the emperor's son, he's much too healthy for that.  Faustina must have cuckolded Marcus, the gods know she had plenty of opportunity. To think that this naughty and cruel child could one day become emperor makes me shudder. Anyway, that very same day, when we had retired after dinner, Alexander called for me, inviting me to a night-cap. We inevitably turned to discussing recent events with a good helping of trepidation and Alexander pointed out that it was probably rather significant that no-one had attempted to discipline the boy. His tutors made as though they hadn't heard anything, a number of people were giggling as if he had told the joke of the year and the emperor himself reacted mainly by occasionally fixing us with that rather cold glare he sometimes affects.

 

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The ANC, Communism and Umkontho we Sizwe

A veritable flood of articles has been published in the mainstream media in recent days on occasiom of South Africa's first black president, Nelson Mandela passing on recently. We want to take a look at a few aspects of Mandela's and South Africa's history that have not received as much attention as they probably deserve. Most of the world is understandably (and rightly) fawning over Mandela and his achievements, but the US state department had him designated as a terrorist until 1990 and for several decades regarded him as a communist sympathizer. Of course every feted revolutionary leader who has managed to vanquish the oppressors of his people was a 'terrorist' at some point in the past. Anyone who leads an armed revolt against a government is designated a terrorist by those he fights.

 

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1600 Years Ago, in the Year 412 AD, or 1156 Ab Urbe Condita (since the founding of Rome) …

In 412, the Western Roman Emperor Honorius (full name Flavius Honorius Augustus), the son of Theodosius I.,  teamed up with the Visigoth king Ataulf (also: Atawulf, the 'father of wolves') against the usurper Jovinus.

Jovinus had unilaterally proclaimed himself Augustus and made his brother Sebastianus his co-emperor, taking control of Northern Gaul with the help of the Gallic nobility as well as King Gundahar of the Burgundians and King Goar of the Alans. The Burgundians used the opportunity to establish themselves on the Roman side of the Rhine, founding a new kingdom there with Worms as the capital.

Ataulf marched from Italy to Gaul, with ex-emperor Priscus Attalus and Honorius' half-sister Galla Placidia in tow as hostages, ostensibly to join Jovinus.  While on the way, Ataulf crossed paths with another Visigoth chieftain named Sarus, who was supposed to help Jovinus militarily. Ataulf evidently wanted to be the only Visigoth of importance in Gaul and without further ado decided to attack and kill Sarus.

 

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How to Deal with Economic History

In a recent article at the NYT entitled 'Incredible Credibility', Paul Krugman once again takes aim at those who believe it may not be a good idea to let the government's debt rise without limit. In order to understand the backdrop to this, Krugman is a Keynesian who thinks that recessions should be fought by increasing the government deficit spending and printing gobs of money. Moreover, he is a past master at presenting whatever evidence appears to support his case, while ignoring or disparaging evidence that seems to contradict his beliefs.

Among the evidence he ignores we find e.g. the 'stagflation' of the 1970's, or the inability of Japan to revive its economy in spite of having embarked on the biggest government deficit spending spree ever in a modern industrialized economy. Evidence he likes to frequently disparage is the evident success of austerity policies in the Baltic nations (evident to all but Krugman, one might say).

 

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Something Is Cooking

 

By now it has made the rounds that both Super Mario and Thomas Jordan, chairman of the 'Zimbabwe of the Alps' (h/t Jim Grant) suddenly have found out they are either too busy with urgent work or have prior engagements that keep them from appearing at Jackson Hole.

This is potentially quite significant, as whenever these guys postpone long awaited public appearances at important meetings, they are hatching out something big, which they then spring on us mere mortals at the earliest opportunity. The Jackson Hole pow-wow certainly qualifies as an important meeting, as all the CB bigwigs tend to go there, accompanied by a gaggle of academic apologists for central monetary planning who give them new ideas. Everybody gets to hold a speech or present a paper, and we can be fairly sure that the informal gatherings are inter alia used to talk about policy coordination.

 

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