Inquiring minds want to know: How’s the “Greatest Political Experiment of Our Age” going? Herewith, an update.

Historic… Momentous… Crushing…

These are just some of the words missing from the mainstream media’s “reporting” of Argentina’s midterm election yesterday.

Defining… Landslide… and Humiliating were also conspicuously absent from the shame-free establishment bullhorns.

And yet…

Not since the country was returned to democracy, back in 1983, have the long-suffering Argentine people delivered such a resounding defeat to their undead Peronist overlords. Indeed, an historic victory for the Libertarians hardly begins to cover it.

First, the raw numbers…

Purple Tide Rising

Javier Milei’s La Libertad Avanza (LLA) won 41% of the vote… trouncing the Peronist’s 31.6%. They also added 64 “deputies” (seats in the nation’s lower house of congress, bringing their total to 95) and 13 senators (going from 7 to 20).

Not only was the voter spread the single largest drubbing for the well-deserving Peronists in the country’s modern democratic era, with their additional seats in congress, Milei’s LLA party also sailed past the key one-third threshold, which means they now have the power to block and veto bills.

And unlike his presidential election back in 2023, when the country was experiencing fuel shortages and looking down the barrel of crippling hyperinflation and, thus, was willing to roll the dice on an “anyone else” candidate, yesterday’s voters have had almost two years to witness Milei’s performance in action and to better judge for themselves. Which they did.

Across the country, the call to “paint it purple” (LLA’s color) was heard. And boy did the voters send the Peronist establishment a clear signal. The following graphic, from local newswire Infobae, shows the rising purple tide, from zero in 2021… to it’s (so-far) high water mark today…

Peronist Purge

Perhaps more impressive still, and something even the most diehard libertarian had not dreamed possible, was LLA’s victory here, in the province of Buenos Aires.

Following last month’s local elections, where a strong showing by the Peronists spooked markets and sparked a brief run on the peso, most pollsters had the “kuka” collectivists favored to hold the province again. Imagine their surprise, then, when the “loco” libertarians nudged them out in their own traditional stronghold, 41.5% against 40.8%.

The results were even more decisive here in the capital city itself. From the Buenos Aires Herald:

In Buenos Aires City, LLA comfortably reached first place with 47% for the deputies election, followed by Fuerza Patria with 27%, a staggering 20-point difference. The senate race in the Argentine capital also saw LLA get a thundering victory, with Security Minister Patricia Bullrich leading the ticket to get 50% of the votes, followed by Fuerza Patria with 30%.

The significance of this is difficult to overstate. Until 2021, the Peronists had held a complete and uninterrupted majority in the senate… for 36 years. After the weekend’s trouncing, in which they lost 6 more senate seats, they have dropped below the “magic 30” level, which many considered an immovable, key baseline of support for the party.

Overall, the election result also marked the first time a ruling party has won a midterm election in almost a decade.

And yet, it wasn’t all libertarian rainbows and anarchist unicorns for everyone. Let us spare a thought for the so-called “journalists” in the mainstream media who, along with the ousted socialists, syndicalists, communists, collectivists and the rest of their rotten ilk, also suffered a day of mourning.

Lamestream Media

Here’s how The New York Times framed the results this morning, choking back the tears…

Argentina’s Voters Hand Javier Milei a Crucial Victory in Midterm Election

The result, which gives Mr. Milei enough legislative support to keep his vetoes from being overturned, showed that many voters still back the president’s libertarian experiment.

As one friend, a long time Argentine resident, remarked: “Makes it sound like a few people in the neighborhood still back him… as opposed to a crushing win that defied expectations.”

The Buenos Aires Times was equally tepid…

Argentine Election Results: President Javier Milei emerges strengthened from midterms

And here’s the ordinarily hyperventilating CNN, struggling to stay awake (though conscious enough to drag POTUS’s name into the headline)…

Victory for Milei’s party in Argentina midterms seen as test for his austerity cuts and Trump support

And yet, none of the popular presses, exhibiting all the excitement of a windsock on a breathless night, could quite match The Guardian for sheer delusion and wishful thinking. Here’s a screenshot of “The Grauniad’s” stories going back to the recent, provincial election last month. It’s what the kids call going “Full Retard”…

Tabloid Bingo

Let’s see… “Populist?” Check! “Far-right?” Check! Trump Delusion Syndrome (TDS)? Check! Outright lies, baseless claims and verifiable propaganda? Check, check aaand check!

Of course, it’s just another round of “Guardian bingo” for the clowns over at the UK’s notoriously reality adjacent rag. And what’s this “news” of Argentina’s “economy crashing”? We must have missed that one… unless, of course, by “crashing” the selfie-struck interns manning the editorial desk at the tabloid really meant “strongest economic growth of any country in the entire hemisphere.”

Yep. That’s probably what they meant to say. Riiight.

Of course, what could we expect from an outlet that, in the month leading up to Javier Milei’s landslide election back in 2023, when he became the nation’s first ever libertarian president, ran an article titled:

Economists warn electing far-right Milei would spell ‘devastation’ for Argentina

The open letter, penned by “influential economists,” a who’s-who of pontificating blowhards led by none other than Thomas Piketty, author of the most pretend-to-have-read economics book of the 21st century, was crammed full of exactly the kind of brainless drivel you would expect from a slack-jawed hodgepodge of career academics.

“Javier Milei’s dollarization and fiscal austerity proposals overlook the complexities of modern economies, ignore lessons from historical crises, and open the door for accentuating already severe inequalities,” they wrote, predicting that Milei’s policies “would be deeply damaging for Argentina and very unfortunate for the entire continent.”

Milei’s proposals, they continued unironically, were “rooted in laissez-faire economics” (gasp!) and “fraught with risks that make them potentially very harmful for the Argentine economy and the Argentine people.”

Again, if by “harmful” and “damaging” they really meant “invigorating” or “rejuvenating” or simply “liberating,” then… yes, they were spot on! But these men are academics, dear reader, surely too clever to misunderstand basic concepts like “words have meaning.”

Continued their whiney op-ed:

“This is not just the social chaos that could be generated by extreme right positions but also the economic chaos that would ensue from a decline in both public revenues and public spending…

“Argentinians are going to vote in an election where there are these very tough choices. But a libertarian solution that vilifies the public sector will only add to the suffering.”

Except, the economy is not “suffering.” It is flourishing. Stripped of the burden of public disservice, the forces of free market capitalism are doing what they do best… adding real world value to people’s lives and proving useful idiots and “influential economists” dead wrong along the way.

The only “social chaos” we saw in the past month came on the back of the Peronist’s win in a piddling local election here, when people feared a return of that savage blight and rushed to sell their pesos before the print-and-spend brigade was given another chance to torch their savings.

Following yesterday’s victory, Argentina’s markets were poised to post their single best day in history today… with national bank and energy stocks up 20…30… 40% and more at time of writting. The peso, surviving the near fatal miss of another Peronist victory, rallied like a cryptocurrency, moonshotting more than 10%.

Moreover, country risk premium declined precipitously today, falling almost 40% in a single session. (A lower reading means less implied risk for foreign investors looking to deploy capital here.)

It had spiked over 1,400 following the local elections last month (in which the Peronists rose like zombies from their graves). Today, it plummeted into the 600s, continuing a trend of lower risk that has characterized Milei’s free market-friendly presidency and proving once again that, when it comes to investors putting their moolah where their mouths are, “country risk” is really just “socialist risk.” From Infobae and JP Morgan:

Walking back from a day in the park yesterday, we saw people cheering in cafes, honking their horns up and down the street and waving from balconies, like they’d won the world cup all over again.

But then, what would the people living here know about their own conditions, especially when their day-to-day experience dares to contradict the mainstream media and tools of the machine, like Piketty & Co.?

Fear not, dear reader. The Greatest Political Experiment of Our Age continues apace. And given the weekend’s results, we’ve a feeling we’re only just getting started…

Ensure you don’t miss a single Note by joining our ranks, here…

The post A Victory for Liberty appeared first on Daily Reckoning.

In 2016, an unlikely U.S. presidential candidate focused the nation’s divided attention when he promised to “drain the swamp.”

Alas, what Mr. Trump encountered inside the deep state moat (I-495, aka the Beltway) was even more corrupted, more sinister, more gnarled and devious than could have been imagined.

Now, eight years on, and as the 45th president again sets his sights on “enemies foreign and domestic,” he faces tremendous resistance from those who stand to lose the most: special interests, deep state puppeteers, globalist elites, invisible insiders.

Make no mistake: Trump winning the election on Nov. 5 would just be the beginning. It’s only then that the real Herculean tasks begin, starting with clearing out those filthy Augean Stables.

Happily for lovers of liberty up and down the Americas, they have an important ally here in Argentina, in a president who has spent the past nine months giving an absolute master class on draining the swamp.

Welcome to the front lines of what I’ve been calling “the Greatest Political Experiment of Our Age,” where the world’s first self-described libertarian president is taking his chain saw to the bloated Leviathan and delivering power back to that long-forgotten class: We the People.

The Ultimate Outsider

When I first began writing about Senor Javier Milei almost two years ago, the brash econo-nerd wasn’t yet even considered a political outsider. In fact, among those in the capital’s “cocktail class,” he was barely considered a clown. The “political caste” scoffed at him… the media mocked him… the celebrities jeered and shook their empty heads.

Still, I recognized the power of Milei’s ideas, ideas that I’d been writing about and studying since I first moved here, back in 2010, when I was working with Bill Bonner and Addison Wiggin on The Daily Reckoning.

Milei pounded the drum for ideas like free markets… balanced budgets… Austrian School economics… natural rights and limited government…

In a word, liberty.

Argentina’s President Javier Milei proclaimed his trademark slogan, “Viva la libertad, carajo!” (Long live liberty, dammit!). He promised to hack back the wretched overgrowth of the Peronist kleptocracy, to oust the socialist political caste and to return the riches and opportunities of the nation to her hard-working people.

Milei won in the biggest landslide since Argentina returned to democracy 40 years ago. Clearly, Milei expressed an idea whose time had come.

9 Months On… Rebirth of a Nation

We know of no modern democracy, certainly none of this size — population 46 million — that has voluntarily decided so dramatically to halt and reverse the insatiable growth of the bureaucratic state.

This alone makes Milei’s political experiment worth watching for American citizens now facing a decision between the promise of government subsidies and controls on the one hand and precious freedom on the other.

With so much legacy bureaucratic state to hack back, and hyperinflation already knocking on the door, el presidente nuevo wasted little time once on the job. Within 48 hours of taking office, Sr. Milei’s administration had:

• Slashed the number of government ministries in half, from 18 to nine
• Ended all state funding for “media” (propaganda) outlets
• Halted all public infrastructure projects not already underway
• Abolished entire divisions and subdivisions of the vast administrative state
• Ended all fuel and energy subsidies
• Quashed meddlesome import/export regulations
• And put tens of thousands of government workers, known here as “gnocchis,” on notice.

And that was just the beginning. Between the decreto nacional urgencia (DNU — roughly similar to a sweeping executive order in the U.S.) and the massive Ley de Bases (an historic legislative reform act that passed the nation’s congress a couple of months ago), Milei’s administration advanced literally thousands of reforms aimed at defunding useless government programs and derogating state power back to “We the People.”

If our American readers here recall the ghostly voices of their own Founding Fathers, it’s with good reason. Milei’s Ley de Bases was even modeled on the foundational work of Sr. Juan Bautista Alberdi, the 19th-century Argentine statesman (and great admirer of Mr. Thomas Jefferson) who wrote the country’s founding document, upon which the Argentine constitution is based.

Early results have been astounding.

Drain That Swamp: The Chain Saw, So Far

After taking his trademark motosierra (chain saw) to the rotten branches — shuttering around 50% of the federal government’s parasitic ministries and sacking tens of thousands of useless, bottom-feeding bureaucrats — Sr. Milei’s administration has so far…

• Reversed decades of national fiscal deficits, returning the national budget to the first surplus in a dozen years and posting eight consecutive monthly budgets “in the black”
• Announced a bill to criminalize seigniorage – printing money to fund government boondoggles and vote-buying scams… and to jail crooked politicians found doing so to fund the treasury for political purposes
• Deregulated health insurance
• Announced the imminent sale of the state-owned air carrier, Aerolineas Argentina, long a sticking point with corrupt politicians and entrenched union bosses
• Confirmed he will indeed dollarize the economy, as proposed during the presidential campaign.

On the deficit spending front, a favorite plaything of his predecessors and other spendthrift politicos the world over, Milei has remained steadfast in his “non-negotiable” commitment to balanced budgets.

In September, he delivered the annual budget to congress himself, announcing he will veto all spending bills that are not balanced with commensurate spending cuts.

“After years where the political class put restrictions on individual freedoms, today we come to put restrictions on the state,” President Milei told congress in a nationally televised address. “This budget is going to change the history of our country forever.”

Milei even went so far as to propose returning the difference during the “years of plenty” to the people through lower taxes:

And, for periods of abundance, such as the coming years, it will force the government to return excess revenue to society by lowering taxes. This means that, if this methodology is maintained from now on, we will not only be able to reduce taxes but also the size of the state, which is the real tax burden.

[NB: As I prepare to click “send” on this note, news is hitting the wires that Milei has just announced he will abolish AFIP, Argentina’s version of the IRS, to be replaced with a much smaller, simpler, fairer tax authority. Just another day in libertarian-land…]

Whipping Inflation

And as for the scourge of inflation, that “sneaky tax” robbing the poor and middle classes of the value of their hard-earned pesos, Sr. Milei’s administration has managed to lasso that bolted bronco, too.

From an eye-watering rate of 25.5% per month in December 2023 (when Milei took office), the rate has come down each quarter to where it is now solidly in the single digits. At 3.5% for September, monthly inflation is now at its lowest level since 2021 (core inflation came in at 3.2%).

Not surprisingly, international capital markets have responded to Milei’s fiscal and monetary reforms down here with a massive vote of confidence; Argentine stocks and bonds are already testing their all-time highs. And there’s plenty of upside for a country that has, for all intents and purposes, been seen as a no-go basket case among serious foreign investors for many decades.

Already, many high-profile investors are queuing up to deploy capital in Argentina. Guys like billionaire Wall Street legend Stanley Druckenmiller, who began buying companies here in May after he called Javier Milei “the only free market leader in the world.”

There’s also Silicon Valley icon and startup visionary Peter Thiel, whom Milei hosted at the presidential palace, the Casa Rosada, a few months back.

And then there’s Mr. “Mega MAGA” himself, Elon Musk, who has been in something of an open “bromance” with Milei as the pair continue to discuss “active investments” in the country. (Musk has reportedly expressed a particular interest in Argentina’s enormous lithium reserves, a crucial component in Tesla’s battery packs.)

Trump, Musk… Milei

When it comes to draining swamps, President Milei is executing a master class down here at the end of the world, a fact that is not lost on Donald Trump, who had this to say about Milei during a campaign speech in Virginia:

He’s doing a good job over there, he’s cutting like hell, he’s getting rid of a lot of waste in a lot of things and I hope they do well, because it’s a beautiful country, but I really think they have a good head man right now, he’s a tough guy.

They say it’s darkest before the dawn, and in no place is that truer than right here in Argentina. But after 75 years enduring the ravages of socialism, Argentina is once again roaring back to life.

When Sr. Milei spoke at his inauguration back in December, he told those gathered, “I didn’t come here to lead lambs… I came here to wake lions!”

It all sounds very Trumpish (if that’s a real word, but you know what I mean). Indeed, the lions of liberty are not only stalking the Pampas of Argentina, but on the loose in the U.S. as well.

We shall see, right? Nov. 5 is coming. Swamp creatures, beware.

The post The Greatest Political Experiment of Our Age appeared first on Daily Reckoning.

[This article originally appeared in The Daily Reckoning on March 4, 2013]

Well, Fellow Reckoner, it’s been something of a sad week for proponents of Bitcoin…

Would-be buyers of the fringy cyber experiment have had to watch as the price of their beloved currency shot to within (as of this writing) a few cents shy of $35 per coin. No buyer wants to see that kind of action…unless they are also an “already boughter.”

In other words, current owners and maybe-one-day sellers are sitting fairly pretty. Since the beginning of January, the bitcoin price in dollars has rocketed roughly 270%. Not a bad move for those who spent the past couple of months “hoarding.” (The correct word, let it be on the record, is “saving.”) And not bad for a currency that suffers the ignominy of existing without the indispensable aid of a central bank.

To be sure, true believers will still be scooping the controversial coins up for what they surely see today as a bargain. As we remarked in this space earlier in the week…

“Speculation about the potential value of a single coin varies widely [in the bitcoin community]. We’ve heard wide-eyed forecasts running into the many thousands of dollars. That’s why enthusiasts are scrambling to build their stash now, before the price rockets….Get rich or die mining, as they say.”

Of course, as we all know, the Bitcoin crowd is really just a of cabal of dissidents, brimming with lunatics who would trust the free market to its own devices, without the tireless vigilance and service of the government. (“But who would build the…?”) What might happen if these malcontents were to gain traction, with their silly little ideas about “liberty this” and “freedom that”?

Imagine for a moment, Fellow Reckoner, a scenario in which the value of a currency was determined by the people who actually use it, and not by some all-knowing, all-powerful demigod on a Federal Reserve board. What might happen to central banks as they exist today?

Imagine that fees and charges more or less disappeared, so that opening a digital wallet was as easy as setting up an email account, and sending and receiving payments as simple as firing off a text message. What might happen to banks and financial institutions that today shower their loyal customers in myriad penalties and fees?

Imagine that bureaucratic red tape vanished into the ether, so that anyone with a sound idea and the gumption to see it through could enter the self-regulating ecosystem of service providers without need of state license or permit? What would happen to that friendly monopoly of mega banks steadfastly committed to fragilizing the global financial system…not to mention the chubby-mitted congress of politicians diligently taking bribes from them on our behalf?

Imagine that transactions of the currency were virtually anonymous, so that individuals could conduct their daily business, buying and selling goods and services, in cryptographically-ensured security and privacy. What might happen to the lifeblood of The State when it is unable to easily invade the privacy of its citizens in order to track and steal their money for them?

Imagine that…

No! Let us imagine no more! We must put a stop to this. We must rage against these margin-traipsing ne’er-do-wells. And we must sully the name of their wretched cyber currency initiative.

And finally, we must hope the bitcoin price falls back through the floor…so a better buyer again we can be.

Regards,

Joel Bowman
The Daily Reckoning

Ed. Note: For more on the “fringy cyber-crypto currency” as Joel calls it, sign up for the Laissez Faire Today email edition. It provides readers with regular updates on the likely future of Bitcoin and how you can take full advantage of it. Sign up for FREE, right here.

Twitter: https://twitter.com/JoelBowman

The post Boycott Bitcoin! appeared first on Daily Reckoning.

[Ed. Note: This article originally published on Jan. 24, 2013]

Stocks up. Gold down. Bitcoin…waaay up.

The S&P 500 busted through the 1,500 mark this morning. Stocks haven’t been this expensive since 2007…right before they got a whole lot cheaper…for a whole lot longer. Gold, meanwhile, dipped a tad. This, despite central bankers of the world goading it on, promising to dilute the value of their respective paper currencies against the Midas Metal. Befriend the dips.

And what about bitcoin? Wait…what is bitcoin??

Why, it’s a speculation, of course; a dark horse, beloved by anarchists, ne’er-do-wells and fringe-dwelling lunatics, the kind of people you wouldn’t invite over for tea with your mother-in-law. It is the fascination of the ill-adjusted, the oddly-mannered, the heterodoxical hedonist. Indeed, the very idea of bitcoin, a “decentralized, cyber-crypto currency,” has to it a ring of the unknown…of disruption, rebellion…perhaps even revolution…

In plain English, it’s not to be trusted by members of polite society. And these are just some of the reasons we like it so much!

Since we first disgraced these pages with mention of the wretched thing, bitcoin has quadrupled in price…then fallen through the floor…then risen once again, like a Phoenix, nurtured by the fertile ashes of doubt and skepticism.

On the subject of cyber currencies, pointy-headed professors remain predictably divided. Economists, too, are split down the middle.

Even the libertarian camp seems unsure of its “official” stance…

“Can we fairly consider bitcoin a money? Is it even real? Can we take it to be intellectually ‘valid.’”

What a pompous band of academic lickspittles! You who criticize the mainstream for their blind adherence to rigidly archaic principles. You who admonish the stuffy Ivy Leaguers for their brittle little theories, lacking in dynamism and ill-equipped to deal with the world as it is and as it changes. You who rage against the concentration of power, against the arrogance of control and the folly of central planning.

Well then…Here is your misfit! Your champion of decentralized power…your catalyst for democratic, horizontal information dissemination. And with it, a price…determined by the free market you profess to adore. Here, within your grasp, lies a spectacular failure…or else the agent of change for which you’ve long been waiting. Have you nothing to say but, “Yes…but does it satisfy Aristotle’s requirements of sound money?”

Ah, Phooey to you all!

We first brought you word of this underdog currency a couple of years back, shortly after it began making waves on Internet message boards. The premise seemed appealing. It was – and still is – a bet against the omniscience of central bankers. Demand for the currency rests, in no small part, on the continued arrogance of the Bernankes, Shirakawas, Kings, Stevens and Draghis of the world.

“The demand for a totally free market currency arose, naturally, out of the dismal state of the current monetary environment,” we wrote at the time, an environment “in which governments around the world systematically debase the value of their printed monies in order to pay for the various welfare-warfare states they promised but can’t possibly afford. The resulting inflation is sometimes referred to as a ‘sneaky tax,’ one that silently, insidiously infiltrates the marketplace, with each freshly-inked dollar compromising the value and integrity of each and every currency unit already in circulation.”

What, if anything, has changed in the two years since we penned those words? Has a single central banker admitted a single mistake? Has one been reprimanded for his gross negligence – be it criminal, cerebral or a combination of the two? Is one of them serving time behind bars…or on the rack…for his crimes against progress and human advancement?

Not a chance! Indeed, it is to those who caused the mess that a brain dead populace look for solutions! These are the men, mind you, who worked – actually labored – to keep alive companies that ought now to be decomposing in the tar pits of corporate failure, breaking down in order that other creative agents might one day unlock its idle energy and potential. The very presence of these individuals at the solution table is an offense to decency.

In the end, bitcoin is a bet on the other side of The State’s coin; the free market side. It’s a bet that voluntary trade will, in the end, overcome neanderthalic force and coercion. It’s a wager that the conversation currently underway in the shadowy “black” market is far more intriguing, far more complex, far more nuanced and exceedingly more interesting than the yip-yapping that distracts the undead, mainstream TV-consumer for an hour or so around feeding time every evening.

If bitcoin goes to its grave tomorrow – and it may well do so – it will be in service of precisely the point free market enthusiasts have been advocating all along: That it is not for a committee to determine the price of a good (including money itself)…or for a state or a central agency or a law or an edict.

That is for the market to decide. Today, that market says a bitcoin is worth $19. Tomorrow, maybe 19 cents…or $19k. No one body knows…and that’s exactly the point.

Regards,

Joel Bowman
for The Daily Reckoning

Ed. Note: Joel’s been following this cyber-crypto currency for years now, and his insight has given readers plenty to think about. This kind of analysis, especially as regards fringey little Interent currencies, is just what you’ll find in the FREE Laissez Faire Today email edition – a daily newsletter devoted to providing the most in-depth analysis on the topics of liberty, freedom and politics the world has to offer. Don’t wait. Sign up for FREE, right here.

The post Bitcoin Bytes Back appeared first on Daily Reckoning.

It’s not about the size of the gun, Fellow Reckoner…it’s about how easily you can download it!

The national debate on gun control underwent a kind of paradigm shift last week when non-profit outfit, Defense Distributed, introduced The Liberator, a fully 3D-printable weapon, to the Internet. Many hailed it as a game changer.

Until that moment, the public discourse had been focused on what the government “should” or “should not” do with regards to regulating citizens’ means of self defense. Then, with the click of a mouse, the conversation shifted from what the government “should” do to what, if anything, it “could” do.

If one could simply print a gun in the privacy of their own home, what, exactly, was anyone going to do about it? The Liberator is a single shot, .22 calibre plastic handgun. To be sure, that’s no match for the kind of heat The State’s goons are packing. But how long would it be before the blueprints for more complex weapons — semi- and/or fully-automatic weapons — become available online? Not long, we’d reckon.

Wasting no time to think, windbag senators with names like “Schumer” bravely donned their chainmail and went about loading bronze-tipped arrows into their bows. Lest we forget: these are people who have dedicated their entire lives to acquiring permanent residence on the front lines of the last battle. And so they stood, lances pointed into the dark, ready for action. Alas, the enemy was nowhere to be seen. Before the senators even thought to look up the term “asymmetrical warfare,” The Liberator’s files were busy zipping across cyberspace at warp speed, finding their way into the digital quivers of users all over the world.

The Liberator was free.

In a frantic attempt to demonstrate its own ignorance as to how the Internet actually works, the US State Department counter-attacked on Thursday, sending a letter to Defense Distributed demanding the removal of the online files which allow users to 3D-print their own, unregistered Liberator at home.

It’s as if they thought the toothpaste could just be pushed right back into the tube. Wrong.

Cody Ross, the brains behind Defense Distributed did, indeed, comply with the Fed’s demands. But by the time the files were removed from his site, over 100,000 people around the planet, in hundreds (perhaps thousands?) of separate jurisdictions, had already downloaded them…and posted them on hundreds more sites. It takes a half-baked chimpanzee about six seconds to find the blueprints online. Granted, that puts them out of the senators’ reach…but that’s hardly the point.

The message from The People was clear: Your move, State.

Of course it is true that, in addition to their intellectual arsenal of rocks and spears, The State, through a combination of brute force and dumb luck, has also managed to acquire a vast and impressive cache of extremely deadly weapons… like Predator drones, Abrams tanks and nuclear-armed atrocities of many and varied descriptions. But what good is a rocket-launcher against a swarm of killer bees? And is that even the point?

As Fellow Reckoners know, we have a soft spot for the underdog…the misfit…the downtrodden. And so, sensing that Defense Distributed will be assuming the “Little Guy” role from here on out, we penned a few unsolicited notes on the company’s behalf…

Dear The State,

Let’s be clear: our 3D gun doesn’t attempt to compete with the big, manly weapons you’re always prattling on about (at least not directly). Rather, it calls into question your claim to be able to control and regulate every aspect of our lives, from whom we form relationships with, to whom we contract with and on what terms, to what substances we put in our own bodies, to how much of our life and property you are entitled to and, yes…to the inanimate objects with which we choose to defend ourselves and our families.

So please, feel free to fixate on the “adequacy” of your own big, strong weapons. The rest of us will be busy downloading ours.

Sincerely,

The People

Regards,

Joel Bowman
Editor at Large for The Daily Reckoning
Follow on Twitter: @JoelBowman

The post 3D Guns: Your Move, State appeared first on Daily Reckoning.

“Ten-to-one! Can you believe it? Ten-to-f#@king-one!”

Our friend was clearly exasperated. He couldn’t believe it.

“Ten-to-one” wasn’t the time…nor the odds he’d been offered for backing some dodgy ol’ nag down at the racetrack. It was — it is — the unofficial “blue” rate at which pesos are exchanged for dollars here in Argentina.

“Why is this peculiar?” Fellow Reckoners want to know. “Why should those of us who don’t carry Argentine liabilities worry about what’s going on south of the Pampas?”

Ah, we’re glad you asked. Think of the Argentines as a kind of canary, deep down the mineshaft of monetary mismanagement. What the Argentine government does not know about how to ruin an economy is probably not worth knowing. In 160th position, the latest Heritage Economic Freedom Index ranks the uselessly resource rich country a couple of slots above Uzbekistan…and a couple below Angola. Cristina Kirchner’s bestest buddy, the late Hugo Chavez, managed to drive his own poor nation down to the 174th spot on that list before his bilged corpus reached room temperature, narrowly beating out the centrally-planned paradises of Zimbabwe, Cuba and North Korea. In Christina’s eyes, there’s still more work to be done in impoverishing “her” people.

In other words, the Argentine state is a shining example for all meddler states…yours included. So, back to our story…

The ten-to-one exchange rate is important because it tells us (albeit approximately) just how detached from reality the Argentine government has become…and it is a leading indicator on just how detached from reality all governments eventually become. It also reveals to us the sad and sorry state of the local economy, as experienced by real and honest people, those hard-working folk who don’t hold positions in the nation’s political class.

At ten-to-one, the “blue” rate demonstrates an enormous spread over the official exchange rate, which currently sits at 5.14 pesos to the USD. La brecha — the spread — between what the government decrees and what the market realizes is, in other words, non-trivial.

We took a bottle of wine to a friend’s place a couple of nights back. One hundred pesos it cost us. At the official exchange rate, that’s a $20 vino tinto. Not bad (and a good drop it was, too!) At the unofficial rate, however, it worked out at only $10. How could this be?

First of all, Argentina has fantastic wine at any price. Your editor’s wife won’t have him spend more than a few months per year in climates that aren’t conducive to producing fantastic local wine. We go along because we don’t want any trouble…

Secondly, nobody changes dollars for pesos here at the official rate. Not if they know what’s good for them. A few blocks from where we sit is a casa de cambio that follows the unofficial rate. Everyone knows it’s there. The police — mostly corrupt and “on the take” anyway — know it’s there too. Heck! they stand right across the street, smoking cigarettes and watching people come and go…nervous old ladies clutching their purses…young businessmen converting their pay out of pesos…sweaty foreigners in backpacks who read about the “dolar blue” online and want a better rate than CFK’s goons will give them. The cerdos policias do nothing. They can do nothing. There are thousands of places around the city where people buy dollars illegally.

The whole scene is a pretty fair example of Gresham’s Law, where (simply stated) “bad money drives out good.”

As with everything here in Argentina, there is the “official” number…and then the truth. “Officially,” inflation runs at just shy of 10%. Unofficially, it’s closer to 30%. And, truthfully, it’s probably a fair bit higher again. Maybe 40%…or more. As such, Argentine savers — who are used to thieving politicians swiping their hard-earned dough — look to save in currencies their government can’t (directly) manipulate. The US dollar is the most popular choice…hence the reason it’s virtually illegal to buy them…and hence the reason for the black market premium.

When we first came to Argentina a few years back, taxi drivers wouldn’t take 100 pesos notes. They couldn’t make change. Now, it’s a different story.

“Hoy por hoy, no es mucho,” they say. The value of the peso decays by the day…and along with it goes the value of the savings and retirement accounts of the long-suffering people of Argentina.

And so, from time to time la gente organize protests and demonstrations against “La Dictadura.” They bang their pots and march up and down the streets. They gather around el obelisco, waving placards and chanting slogans. But for what? Isn’t asking the State not to steal your money a bit like lobbying the KKK to amend their unequal employment policy? Ain’t gonna happen, brother! Just as racism and bigotry form a core part of the KKK’s…ahem… “value set,” stealing, coercion and violence are defining components of the State’s genetic code. After all, if it didn’t steal from you, it wouldn’t be called “the State”…it would be called “a business,” and you’d be free to purchase its goods and services (such as they are)…or not.

“All governments engage in larceny and fraud,” observed Bill Bonner earlier in the week, “using their authority to transfer wealth and power from the outsiders to the insiders. But the clever government does so by deception… while the clumsy one does so with no pretense or excuses.”

We have little doubt that ten-to-one will soon become twenty-to-one… thirty-to-one…one-hundred-to-one and beyond. It’s in the nature of governments to steal from their people. The Argentine people have come to expect it. They march along and bang their pots…but secretly they are making escape plans. Those in the “civilized” world, by contrast, have no idea what’s coming. Our sense is, they’ll find out soon enough…

Regards,

Joel Bowman
Editor at Large for The Daily Reckoning
Follow on Twitter: https://twitter.com/JoelBowman

The post Argentina Sings the Dollar Blues appeared first on Daily Reckoning.

The Central Planners are at it again, Fellow Reckoner. Greasing the gears…feeding the engines…and speeding headlong and strapped to their seats towards the next crisis.

Leaders of two of the world’s largest criminal organizations gathered in Washington, D.C. this week for the World Bank/IMF Spring Meetings. The Mob fête was attended by all the usual suspects…central bankers…trade secretaries…finance ministers…policy wonks and assorted other rapscallions and reprobates.

Their wooden pledges sounded nice enough…

U.S. Treasury Secretary Jack Lew called for “universal women’s empowerment.” World Bank President Jim Yong Kim called for “universal education.” As for the IMF’s own Managing Director, Christine Lagarde, madam had ideas of her own:

“What we need is a full-speed global economy,” she told the audience, “growth that is solid, sustainable, balanced, but also inclusive and very much rooted in green developments.”

“Why stop there?” we wondered. Why not promise strawberry ice-cream for the elderly…and winning lottery tickets for all inner city families of five or more…and high-speed Internet for orphans…and…and…and…

It’s easy to make pledges, Fellow Reckoner, to promise every downtrodden dolt and hard knock story something for nothing. The hard part comes in actually paying for it all. As everyone knows, strawberry-flavored Internet lottery jackpots don’t come cheap!

And yet, the powers-that-won’t-stop-being don’t seem overly concerned in the face of this inconvenient accounting truth. Shocker! Their masterly payment plan is, to quote the Talking Heads, the “same as it ever was.”

As we remarked in these pages a couple of Weekenders ago, the Fed, the BoE and the ECB are providing a massive “jolt” of freshly inked currencies to their respective economies, hoping to prop up optimistic asset prices. The rate of expansion is, says Bill Bonner, “unprecedented in world history.”

We’re talking, of course, about ZIRP, QEI, QEII, Operation Twist (OP) and other such dubious, acronymic concoctions. All the tools’ tools, in other words.

But wait! Doesn’t EZ money policy lead to rank malinvestment and moral hazard…the exact same recipe that baked the world economy into such a sordid mess the last time? Well, yes.

As CounterPunch’s Mike Whitney explains, using this graph:

Investors have boosted their borrowing to near-record levels to load up on stocks. The last time that margin debt was this high was just before the bubble burst in 2007. In January, New York Stock Exchange (NYSE) margin debt tipped $366 billion, just shy of the 2007 peak of $380 billion. The Fed’s zero rates and $85 billion per month bond buying program (QE) have sparked the same irrational exuberance that preceded the Crash of ’08. Investors are piling on the leverage because they feel confident that Fed chairman Ben Bernanke will not allow markets to fall too sharply. (This is called the Bernanke Put.)

Skeptical Reckoners might be wondering, therefore, how do these Ph.D. ponies know where they’re going? How do they know their “extraordinary” measures will work? Even by their own admission, they don’t.

Speaking at the same D.C. gabfest, Lorenzo Bini Smaghi, a former member of the European Central Bank’s executive board, admitted, “We don’t fully understand what is happening in advanced economies.”

Yes, Mr. Smaghi, we all know that you don’t know what you’re doing. Rest assured, your ignorance was never in question. It is your — and your colleagues’ — arrogance that is on trial.

Like Smaghi, Sir Mervyn King, the outgoing governor of the Bank of England, must have been caught off-guard when he let it slip that, “there is the risk of appearing to promise too much or allowing too much to be expected of us.”

Again, Sir King (…Jr. III Highness Earl Duke etc.), let us repeat: Far from expecting too much from you, we would happily settle for nothing at all. In fact, we want nothing from you. No cure-all levers. No magic buttons. If only you and your meddlesome ilk could stay your chubby little hands. Alas, the possibility of aggressive inaction seems unlikely to prevail…

Reports CNBC: “The IMF was clear in its global financial stability report that it did not want to see an end to the extraordinarily loose monetary policy being implemented across rich countries.”

José Viñals, the IMFs head of financial stability, even went so far as to claim that central banks’ efforts were “absolutely necessary.”

And so, as their engines careen toward the precipice, the central planners busily shovel loads of blind incompetence into the blazing hot furnaces of their own ego. “Full steam ahead!” they holler. “Full steam ahead!”

Regards,

Joel Bowman
The Daily Reckoning’s Editor at Large
Follow Joel on Twittter: @JoelBowman

The post Committed to Ruining the Economy appeared first on Daily Reckoning.

Whoa! Did you see that? The wonder currency of bitbugs and anarchist types crashed big time this week…all the way back to a (roughly) 400% gain YTD! Woe to those ne’er-do-wells and techno-geeks. ¡Pobrecitos!

As you might recall from our scribbles last weekend, the price of a single unit of the digital currency had risen meteorically in recent times…from a “paltry” $12 back in January to a vertiginous high of $260+ this week…before plummeting back to the upper double-digits (as we write). What to make of it all? The question is deeper than a mere price chart reading…it demands actual thinking. More on that in a second…

Meanwhile, back in the world of “real” monies…

Stocks were up 300 points this week…at least as they are priced in the government’s rapidly increasing supply of dead president-emblazoned paper notes. Hmm…

Gold tumbled through the psychological $1,500 mark on Friday. Last we checked, an ounce of the Honest Metal was trading for around $1,480. A buying opportunity? Maybe…

Meanwhile, the Fed, the BoE and the ECB are providing a “jolt” of freshly inked currencies to their respective economies, hoping to prop up optimistic asset prices. The rate of expansion is, says Bill Bonner, “unprecedented in world history.” How will this all end?

“We don’t know,” asserts Bill, with characteristically emphatic uncertainty. “We simply note most of the world’s major central bankers are putting their money on the same color… and as the wheel spins… we urge dear readers to leave the casino.

“Neither in yen, euros, pounds nor in dollars should we be. For when the dust finally settles on this wild riot of radical gambles by central bankers, gold will be the ‘last man standing.’”

Which brings us back to the notion of money…and of man’s inextricable relationship to it.

First there was commodity-backed money: gold/silver/bimetal-pegged coins and the like. Then came politically-backed money: Think of the post-’71 U.S. notes, backed by the “full faith and credit” of the United States…and the formidable military industrial complex standing behind them. And now…what? A mathematically-based currency? That’s what the “bitbugs” would have us believe. But are they to be trusted? Will 2+2 always = 4? In the hands of the politicos, no. But in the safekeeping of non-Procrustean “rulers”…i.e., the market?

As we see it, the bitcoin concept can be roughly divided into three main “tiers.”

1. The Bitcoin protocol; the code upon which the bitcoin network, a decentralized ledger of transaction records, is secured. An open-source code, this has been wide open for would-be hackers to “crack” for four or five years now…maybe longer. It’s the “holy grail” of the “hacktiverse.” You’d think some basement-dwelling nerd would have cracked it by now. Of course, just because it hasn’t happened yet, doesn’t mean it can’t happen. And if it does, game over…at least for this iteration of the decentralized, digital currency experiment…

2. The peripheral service providers currently populating and building out the network’s infrastructure. These are the exchange portals, wallets, various apps and associated support software. This “downstream” market is extremely nascent and, as we’ve seen, highly prone to fracture under pressure…for now. And finally…

3. The price of bitcoin itself, largely — at this stage — driven by speculators and “get-rich-quickers.” (Again, for now…)

As we’ve seen in recent months, the network infrastructure is far from robust. But is it, to hijack a Talebian term, “antifragile”? Does it, in other words, become stronger, more resilient, under the increasing strain of speculator-driven stressors? The last crash, in which the currency increased some 30-fold in a matter of weeks…only to collapse 16-fold in a matter of hours, would seem to suggest so. Why? Because the underlying, first tier code remained strong, allowing the second tier participants to resume building out a stronger, more resilient infrastructure on its solid foundation. Antifragility.

The bitcoin economy of 2011 could never have supported a participation increase that drove the price of the currency to even $50, much less $100…or more. It fell from $30 per coin to less than $2. The message to downstream engineers was clear: you’ve got all your work ahead of you. After some post-shock frustration, they got back to work.

If you build it, goes the old adage, they will come. And come they did. In droves. This time, the network infrastructure cracked in spectacular fashion…though at a much higher pressure point. Moreover, the price fell far less this time around, in percentage terms, than in the last episode.

If and where it stabilizes is, of course, anyone’s guess…but the real question remains one concerning first tier integrity. Will the foundation upon which the concept is built remain strong? Additionally, will the second tier infrastructure participants continue to respond to corrections creatively, organically, building new and better services?

Markets that are “allowed” to crash, sometimes violently, are usually quick to adapt and evolve, something akin to Schumpeter’s “creative destruction.” They are dynamic, responsive, adaptive. In sharp contrast, markets that receive government/taxpayer-sponsored bailouts are “fragilized”…rendered deaf to the market’s timely lessons…and mute in response to the new demands and expectations of market participants.

This is a complex subject, Fellow Reckoner, one deserved of more head scratching in the future.

Joel Bowman
for The Daily Reckoning

The post Where Currencies Fear to Tread appeared first on Daily Reckoning.

Emblazoned across the lucre-basted exterior of the Internal Revenue Service Building in Washington, D.C., is one of the most intellectually polluted quotes any free mind is ever likely to encounter:

“Taxes are what we pay for a civilized society.”

Its effortlessly officious author, Associate Justice of the United States Supreme Court Oliver Wendell Holmes Jr., could scarcely have been more wrong in his (albeit paraphrased) assertion. Unless, that is, the mustachioed Rooseveltian meant to define “civilized society” as an arrangement that favors and promotes rule by brute force and violence, rather than one of free and voluntary association.

If, indeed, that was Justice Holmes’ idea of “civilized,” we shudder to think what he regards as uncivilized. But shudder we will…

Let us consider, by way of illustration, the concept of the caveman, that apocryphal amalgam of prehistoric humans so often used to epitomize the unwashed, uncivilized elements of mankind’s past. To what does this boorish troglodyte resort when it comes to resolving complex matters of dispute? What is his go-to instrument for dealing with the problem posed by, say, the natural scarcity of goods? With what tool does he arbitrate over issues involving titles, rights, and claims?

Like Justice Holmes, Capt. Caveman’s preferred instrument of justice is… a club. Force, in other words. “It’s my way… or (insert oafish, baboonlike noises here) me club you to death.”

There is no opt-out here. No choice. And therefore, it must be said, no freedom. As the author Salman Rushdie (a man who has spent a good deal of his life under threat of force and violence from a particularly hysterical clutch of our fellow primates) once remarked, “Freedom to reject is the only freedom.”

Justice Holmes may have liked paying taxes. (He may have liked being flogged with a club, too. Who are we to say?) But by mandating that others do likewise, by employing the force of the state to ensure that they do, by denying them the freedom to reject the state’s claim on their property and to defend themselves against it, he is wielding the club — dangerously disguised as a gavel — of a decidedly uncivilized version of “justice.”

There are, of course, those questionless minds among us who take false refuge in such meaningless platitudes as, “But… but… but it’s the law!” To which we reply, “What kind of law is yours that seeks to endorse violence, rather than to protect us from it?”

“The purpose of the law,” observed classical liberal theorist Frederic Bastiat, “is to prevent injustice from reigning.” It is not to cause justice, in other words, but to shield us from its opposing force. And how are we to know when a law has fallen into the service of evil? The Frenchman offers this simple litmus test:

“See if the law take from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what that citizen himself cannot do without committing a crime.”

And if we find the state of affairs to be as such? Bastiat urges us to “abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals.”

For Holmes and his wretched ilk, the difference between “them” and “us,” between savage and civilized, is not to be found in the distance between war and peace, between force and voluntarism, between slavery and freedom. His is a civilization measured in degrees according to the size and efficacy of the agent of force… and the sickening pleasure its beggarly subjects derive in forever dwelling on the harsh receiving end of it.

Of course, the liberty-minded recognize immediately, almost instinctively, that no amount of initiated force is ever tolerable in a truly just and civilized society. Indeed, this is the core tenet of the nonaggression principle. Writes noted free market economist Walter Block on the subject:

“The nonaggression axiom is the lynchpin of the philosophy of libertarianism. It states, simply, that it shall be legal for anyone to do anything he wants, provided only that he not initiate (or threaten) violence against the person or legitimately owned property of another.”

In stark contrast to this fundamental bedrock of freedom, Justice Holmes not only implicitly advocates the use of force… but explicitly revels in it as a kind of privilege for which to be eternally thankful.

Wherever this core principle is endorsed, it betrays in its proponents a profound disgust for the human species, a disgust so visceral that it compels, urges, lusts even, for their ownership over and enslavement of others… all for the slaves’ own good, of course.

The impulse to own and to be owned is rooted in a foul and reprehensible sociopathy, one forged from a deep self-loathing, at once slavish and brutal. As such, it stands in special need of constant and public denunciation, of fierce, unapologetic, and uncompromising resistance by all who strive to further the cause of liberty.

Joel Bowman
Original article posted on Laissez Faire Today

The post A Caveman’s Account of “Civilized Society” appeared first on Daily Reckoning.

News hit the wires over the weekend that the Republic of Cyprus would begin stealing money from depositors in order to resurrect confidence in its flailing banking system. They want to avoid a crisis, in other words, by creating exactly the kind of uncertainty in which crises thrive.

“More likely,” observes Laissez Faire Books’ Jeffrey Tucker, “the plan to tax all Cyprian bank deposits 6.75-10% will trigger one. Or maybe just the talk of it already has. We can’t know for sure, because the government of Cyprus has declared a banking ‘holiday,’ a term that means that the robbers take a vacation from being held accountable for their actions.

“True to the nature of government propaganda,” continues Mr. Tucker, “the Cypriot head of state, Nicos Anastasiades, says this ‘stability levy’ is necessary to forestall ‘a complete collapse of the banking sector.’ It’s the same kind of language we heard in fall 2008 — an intimidation tactic used to shove through TARP and unending bailouts.”

Predictably, the measures met with harsh resistance. Turns out people don’t like having their money stolen…even if they’re happy to receive money stolen from others. Reading from that tired old playbook, Cypriot legislators have since sought to shift the terms of the heist to focus on higher-net-worth depositors, those who are “able” to shoulder a larger portion of the “social responsibility.”

One new draft bill proposes that accounts under €20,000 ($25,900) be spared, while a larger scythe would be taken to those above that amount. “From each according to his ability, to each according to his need” was the tune to which Marx marched.

The question, of course, is will the masses fall in line? It seems likely. In times of scarcity, those with plenty (or indeed any) become unpopular. They begin to feel the targets on their foreheads…the sniper’s red dot burning into their brow. Then the crowds grow restless, whipped into a frenzy by government officials demanding action, each of whom has his own eye on a portion of the to-be-stolen loot. Folks with something to lose begin looking around nervously. Some bunker down…others head for the escape chutes…

“Back in the bad old days of 2009,” recalls Dan Denning of The Daily Reckoning Australia, “it was like Stalingrad every day. Trapped capital was encircled by wealth-destroying news events. Money that could still walk fled to the core of the global financial system.

“Are we going to see the same pattern again?” Mr. Denning wonders. “The weekend drama in Europe could prompt another money migration from the periphery to the core — from southern Europe to northern Europe and from the euro to the dollar. It depends on how self-aware and how arrogant Europe’s political leaders are.”

The moment may soon arrive when are again forced to choose between the certainty of government-sponsored theft…and the uncertainty of decentralized workarounds.

On that last note, one data point that has not gone unnoticed: While fear and uncertainty spreads across the European banking sector, that fringy cybercurrency we’re hearing so much about, Bitcoin, shot up roughly 25% overnight.

Maybe a 400%-plus increase YTD signifies a bubble…then again, parachutes tend to appreciate rather quickly when the plane begins to nose-dive.

Our advice: Grab a chute now before they’re all gone…

Regards,
Joel Bowman

Original article posted on Laissez-Faire Today

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