FEBRUARY•2012

PULSE ON THE

MARKET Page 4 Duh... • Big Fat Greek Debt Again! EU Citizenry? • Empty Fed Trick Bag LMRBuilding The 10% Gas Up • Fox Tales “The Master Plan”: Lessons From the Past Feature Story • Page 12

Blowing OURSELVES UP Turnaround interview with DR. ECONOMICS Page 17 Feature Story • Page 7

LARA-MURPHY REPORT LMR FEBRUARY 2012

Bring a Privatized Banking Seminar to your city.

Present the powerful combination of • Demystifies Fractional Reserve Banking • Learn how you can personally secede from Austrian Economics, our crumbling monetary regime and improve your financial future. The Sound Money Solution • Sound economic reasoning with a sound private strategy to direct the individual & The Infinite Banking Concept toward the escape exit. • Learn the warning signs of a coming crash to your Special Group and the steps you need to take to avoid them.

3 Speaker / Authors from the of Economics L. Carlos Lara Robert P. Murphy, Ph.D. Paul A. Cleveland, Ph.D. 3 Dynamic, Informative, Inspirational and Educational Hours

Inquire directly with Carlos Lara 615-482-1793, or Robert P. Murphy 212-748-9095, or e-mail us at [email protected] FEBRUARY 2012 LMR 1 Overview

Lara-Murphy Report The “10 Percent” is building and will be accomplished by you and everyone you help. It is not a matter of if, but when, and when seems more attainable sooner than ever. 3

F e at u r e d Turnaround Economics Hatching a new product takes time, but it will be time well spent in order to build the 10 percent. BY L. CARLOS LARA 7

“The Master Plan”: Lessons From the Past Is everything in our economic cycle just by chance? Are there men and women behind the curtain pulling levers? If so, why? BY DR. ROBERT P. MURPHY 12

E c o n o m i c D e e p E n d Pulse On The Market Duh... • Big Fat Greek Debt Again! EU Citizenry? • Empty Fed Trick Bag Gas Up 4 Blowing Ourselves Up Interview With Dr. Walter Block Depending on the timing and circumstances both personally and nationally, we could see reasons to be more or less optimistic or even 17 pessimistic. But, it really doesn’t matter. Really.

O n e M o r e T h i n g Events & Engagements You may want to learn more in person from Lara, Murphy, and other Austrian economists. Here 23 is where they will be in the coming months. 2 LMR September 2010 ABOUT LARA & MURPHY

L. Carlos Lara manages a consulting firm specializing in corporate trust services, business L. Carlos Lara consulting and debtor- creditor relations. LMREditor in Chief The firm’s primary service is working with Dr. Robert P. Murphy companies in financial Executive Editor crisis. Serving business clients nationwide over a Anne B. Lara Managing Editor period of three decades, these engagements have John R. Connolly Design Director involved companies in most major industries CUSTOMER SERVICE including, manufacturing, distribution and retail. Lara In order to subscribe to LMR, visit: incorporated his consulting company in 1976 and is www.usatrustonline.com/store headquartered in Nashville, Tennessee. and click on subscriptions. He married Anne H. Browning in 1970. To update your account information please visit the same Together they have three children and five online store, login and manage your account. grandchildren. For questions or comments concerning LMR, its articles or anything about the publication other than advertising please Dr. Robert P. “Bob” Murphy received his Ph.D. email: [email protected] in economics from New York University. After For questions or comments concerning LMR advertising please teaching for three years at email: [email protected] Hillsdale College, Murphy READERS STATUS: LMR staff and its contributors warrant and represent that they are not left academia to work for “brokers” or to be deemed as “broker-dealers,” as such terms are defined in the Arthur Laffer’s investment Securities act of 1933, as amended, or an ”insurance company,” or “bank.” firm. Murphy now LEGAL, TAX, ACCOUNTING OR INVESTMENT ADVICE: LMR staff and its contributors are not rendering legal, tax, accounting, or investment advice. All exhibits runs his own consulting in this book are solely for illustration purposes, but under no circumstances shall business and maintains the reader construe these as rendering legal, tax, accounting or investment advice. an economics blog at DISCLAIMER & LIMITATION OF LIABILITY: The views expressed in LMR concerning finance, banking, insurance, financial advice and any other area are ConsultingByRPM.com. that of the editors, writers, interviewee subjects and other associated persons as He is the author of several indicated. LMR staff, contributors and anyone who materially contributes information hereby disclaim any and all warranties, express, or implied, including merchantability economics books for the or fitness for a particular purpose and make no representation or warranty of the certainty that any particular result will be achieved. In no event will the contributors, layperson, including The editors, their employees or associated persons, or agents be liable to the reader, or Politically Incorrect Guide to the Great Depression and the it’s Agents for any causes of action of any kind whether or not the reader has been New Deal (Regnery, 2009). advised of the possibility of such damage. LICENSING & REPRINTS: LMR is produced and distributed primarily through the Murphy is an adjunct scholar with the Ludwig internet with limited numbers of printings. It is illegal to redistribute for sale or for von . He lives in Nashville, Tennessee free electronically or otherwise any of the content without the expressed written consent of the principle parties at United Services & Trust Corporation. The only legal with his wife and son. audience is the subscriber. Printing LMR content for offline reading for personal use by subscribers to said content is the only permissible printing without express written consent. Photo’s are from various public domain sources unless otherwise noted. FEBRUARY 2012 LMR 3 “It is the masses that determine the course of history, but its initial movement must start with the individual.” - How Privatized Banking Really Works

Lara-Murphy Report

February 2012

Dear Readers,

Sound money advocates wonder if there is any gold inside Fort Knox or in the underground vault of the New York Federal Reserve. If the records are accurate, the United States Bullion Depository alone holds some 2.5% of all the gold ever refined throughout human history—a testament to the lasting power of gold. Although monetary officials continually play down gold’s importance and value, our human intuition counsels us differently. Gold is, and always has been, real money.

The biggest problem with gold is that it ishonest money. The gold standard when it is part of monetary policy keeps politicians in check and prohibits them from running up deficits. Wars cannot be easily waged without having to tax the citizenry excessively. In fact, any prolonged government borrowing is untenable. Consequently, gold is a huge problem for dishonest men. The only way to solve this problem is to get rid of gold as money.

It is still inconceivable to many of us that 79 years ago, a Presidential Executive Order outlawed the private ownership of gold coins, gold bullion and gold certificates and forced American citizens to sell these to the Federal Reserve. Shortly thereafter, the government “revalued” gold from $20.67 to $35 an ounce—a nice way to make a profit. Indeed, the value of the government’s gold holdings went from $4 billion in 1933 to $12 billion in 1937!

When gold was officially detached from the dollar internationally in 1971, remarkably the monetary system did not collapse, but its demise was certainly set in motion. Today we are left with the consequences of those earlier choices.

If we are to have any hope of reversing the absurdity of our current monetary system we must return to sound money. This starts by first recognizing that there is no constitutional basis for our current monetary policy. The Federal Reserve itself is unconstitutional. To restore our present fiat money to sound money, our dollars must have precious metal backing once again and banking must be returned to the private sector. For all this to happen we need to educate more people in Austrian economics until public opinion changes.

At the recent IBC Think Tank in Birmingham we were amazed at how many of the participants have embraced the building of the 10%. It is no longer an unreachable impossibility, but rather a very achievable goal. The more we comprehend the irrationality of our current system, the more it becomes our moral responsibility to teach and spread this truth everywhere. The tipping point is near!

Yours Truly,

Carlos and Bob

Above Photo from Flickr by: Brian Giesen 4PULSELMR FEBRUARY 2012 ON THE MARKET

Recent developments that may be of interest to readers of the Lara-Murphy Report…

PULSE ON THE MARKET FEBRUARY 2012 LMR 5 Good Thing Chevy Chase Already Took That Vacation. The European debt crisis continues to deepen. Moody’s followed the lead of its competitors and in mid- Duh... February cut the rating of six European governments (Spain, Italy, Portugal, Malta, Slovakia, and Slovenia), and was the first major ratings agency to switch the outlook on Great Britain to negative.

Kicking the Greek Can. Speaking of the European debt crisis, markets around the world rallied in response to the announcement of a second major bailout of Greece, this time for €130 billion, bringing the total European Union / IMF aid to €237 billion thus far. Critics contend that at best this latest package only allows Big Fat Debt Greek Again! the Greek government to roll over its massive debts for a few months, and indeed German Finance Minister Wolfgang Schäuble confirmed that Greece will likely need a third bailout, even before his government voted on its contribution to this second major bailout. A leaked memo from “Troika” (the EU, European Central Bank, and IMF) researchers projected that the Greek’s government’s debt-to-GDP ratio would probably fall within 126% to 160% through 2020. More and more Europeans are calling for everyone to admit the obvious: The Greek government is bankrupt and needs to default on its bonds. Yet the powerful bankers holding those bad assets want to keep the fiction alive that a few more injections of taxpayer- and printing-press-money will turn things around.

Not Letting a Crisis Go to Waste. Recently Murphy gave a talk to the Houston Mises Circle entitled, “How the Private Bankers Are Using the Financial Crisis to Reshape World Government.” (The speech is available at YouTube with that title.) The unfolding events in Europe are vindicating that ominous assertion. The latest Greek deal involves onerous budget cuts (at least in theory!), and 25 European

nations have agreed to the German initiative of a pan-European fiscal union. Let EU Citizenry? us be clear: We hate government budget deficits even more than Angela Merkel. But we also recognize the danger in the citizens of the separate European nation- states ceding their sovereignty to unelected technocrats who will fleece them in the interests of multinational banks. There’s nothing wrong with large banks if they are in the voluntary private sector. But when rich bankers can make bad loans and get bailed out by central banks and taxpayers—particularly when those taxpayers can’t even vote on the people making these decisions—then hold on to your wallet. In the meantime, we urge our readers more than ever to consider transferring wealth out of the commercial banking system and into the safer insurance sector.

PULSE ON THE MARKET PULSE ON THE MARKET 6 LMR FEBRUARY 2012 Even Bogus Inflation Meters Starting to Sound the Alarm. Long-time readers know that we prefer the classical usage of the term “inflation” to mean an increase in the quantity of money and credit. It was a case of the old switcheroo during the 20th century, when the term “inflation” came to mean “rising prices.” By taking away the very name of the policy, critics lost the ability to fight it. Rather than fingering the true culprit—the central bank with its constant issuance of new dollars—Americans blamed “inflation” on labor unions, greedy businesses, or Arab oil tycoons. Even on Empty Fed Empty Trick Bag this metric, however, things could get quite bad, and so government statisticians have developed all sorts of neat tricks to minimize the numbers. For example there’s “core consumer prices,” which take out food and energy, and there is also “trimmed mean consumer expenditure price index” and other such exotic constructions. What’s interesting is that even according to these criteria, the Fed is overheating the economy—several of them are up more than 2% for the last 12 months, which is the top of the Fed’s presumed comfort zone. We are thus limping along into a stagflationary period, even according the government’s own numbers, where Keynesian policy advice breaks down completely. The Keynesian view is that the Fed can step on the gas to boost employment but raise prices too, or it can slam on the brakes to nip (price) inflation in the bud, while regrettably causing job losses. Yet what happens when unemployment and inflation are both too high at the same time? Step on the gas and brake at the same time?!

Pain at the Pump. Speaking of energy prices, motorists are feeling the hurt when they fill up. Never before has gasoline been this high, this early in the year. Some of Gas Up the price hikes are due to the brewing hostilities in the Middle East (which could disrupt oil exports from the region), but we can’t ignore the elephant in the room: Ben Bernanke’s incredibly expansionary monetary policy.

Oh Really? Fox News superstar Bill O’Reilly pontificated on his show with Lou Dobbs that the president needs to “jawbone” the big oil companies to reverse their recent price hikes. O’Reilly opined that the oil companies are only jacking up prices because they think they can get away with it. O’Reilly’s “analysis” throws out the Tales Fox entire body of economics. Big companies don’t just set prices at whatever they feel like; they are determined by supply & demand. Sure, some oil executives might be ruthless, and their shareholders might be really greedy, but these traits didn’t suddenly develop last Tuesday. Presumably these people were just as ruthless and greedy three years ago in February 2009, when the world price averaged $39 per barrel.

PULSE ON THE MARKET FEBRUARY 2012 LMR 7

TURNAROUND ECONOMICS

Photo from Flickr by: rosmary PULSE ON THE MARKET TURNAROUND ECONOMICS 8 LMR FEBRUARY 2012 BY L. CARLOS LARA

On February 9th at the The Great Depression annual IBC Think Tank event, the audience, represented mostly of the 1930s, the by agents in the life insurance industry, was treated to this remarkable 12-minute video— stagflation of the 1970s, the brainchild of the LMR’s design director, John R. Connolly. and our current global Click here for the video. financial crises—aren’t ...or paste this in your web browser... http://www.usatrustonline.com/articles- videos/9-teaching-videos/90-insurance- the fault of capitalism... agents-how-do-you-get-your-clients

When the video’s last multiply exponentially that stagflation of the 1970s, and our explosion went off and the original effort. Consequently, current global financial crises— excitement of the crowd died getting Turnaround Economics aren’t the fault of capitalism, the down, Robert Murphy took the off the drawing board and into culprit is government meddling stage and began his explanation production became our main in the areas of banking and of the message behind the priority late last year. Now it is money. Where we see this most video. I followed immediately out of the gate and scheduled to is in the qualitative shift in the afterwards and together we be completed and functional by size of government in our lives, introduced the crowd to a the end of the fourth quarter of and in particular the Federal revolutionary new product—an this year. It is our firm belief that Reserve’s assumption of dreadful online video educational service with this product we will be able powers to create billions of called Turnaround Economics. to reach the 10% much sooner dollars out of thin air, distributed than previously expected. as it pleases. This should be It should come as no surprise immensely disturbing to all of to anyone who understands the We have always felt that the us, but so many people simply passion we have for building need to educate the public on can’t make the connections. the 10% that this idea would how the economy really works What is mostly at stake is our sooner or later be explored and was of primary importance. individual freedom, but we feel developed. When we wrote our Much of the public is totally it most in our pocketbooks. To book, How Privatized Banking unaware of basic economic know and understand how all Really Works, the main goal was principles. People need to know this comes about actually helps always to reach as many people as that the cataclysmic events that individual households protect possible and as quickly as possible. we have all experienced as a themselves in the future if they For that reason we placed a PDF society these last seventy-five can be made aware of it. In fact, of the book on the Internet years didn’t just fall out of the it is impossible to think soundly giving everyone quick and free sky, but instead were created by about money, banking, interest access to its message. This project, powerful forces working behind rates, investments and even our Turnaround Economics (TE), the scenes to enrich themselves savings without this fundamental however, made us recognize at the public’s expense. The Great education. that it had the potential to Depression of the 1930s, the

TURNAROUND ECONOMICS FEBRUARY 2012 LMR 9 What sets TE apart and and create from them a series The key instructors for makes its form of education of short lessons in video format. Turnaround Economics will be different from all others These lessons will be structured Nelson Nash, Robert Murphy that attempt to explain the under segmented modules that and myself, but each video social, political and economic will cover a wide range of topics. clip will also be interspersed ramifications of our environment For example, one lesson will with eye-catching graphics is its offer of a conservative explain the importance of private and documentary-style video solution for the individual. The property. Another explains how segments to add extra emphasis good news is that the solution money is created. A different to each teaching lesson. There will can be implemented immediately lesson will explain how to better also be questions or calculations and works both for the country manage your household’s cash generated by the instructors that and the individual household. flow. Another will explain the will prompt viewers to type in dangers of 401(k)s, IRAs and their own information thereby similar government-designed helping to enhance the entire A Service to Educate the Masses retirement programs, and so learning experience. The key, of forth. Just as our books currently course, will be to grab viewers The principal idea behind guide readers into implementing from the very beginning and TE is to spread Austrian a sound private strategy that hold their interest. Additionally, Economics, The Sound Money allows them to escape from our the viewer must be motivated Solution and Privatized Banking, present corrupt monetary system, to view one video after another as described by R. Nelson Nash’s TE will do the very same thing, and ultimately view all of the Infinite Banking Concept. Its except online. The benefits of teaching modules in the series. audience is the consumer who going to a designated website Certainly not easy tasks for prefers visual education over and learning all of this invaluable an online software program to the printed page. Unfortunately, information online, on one’s own accomplish by any stretch of the there are a lot of people that fit time and at one’s own pace could imagination, but nonetheless this profile and the list is growing. spell the difference in converting an absolute requirement for its Much of our society simply lacks thousands who otherwise would success. For this reason TE’s time to read. Therefore, in order to never be interested in this type of content and cinematography will target this sector of the population education if they actually had to be of the highest quality. we will reduce our book and read it all in books. Nelson’s book into small chunks

TE will do the very same thing, except online.

TURNAROUND ECONOMICS TURNAROUND ECONOMICS 10 LMR FEBRUARY 2012 The Agent as Liaison idea of where to concentrate his bigger and wider net! An agent efforts. could potentially have 100s of Turnaround Economics’ most people going through these video spectacular feature will be the In addition to this efficiency, modules all at the same time agent’s computer dashboard. TE will save time and money with all of them moving in the Agents who have invited both for the prospect and the direction of implementing whole potential prospects to visit the agent. When you stand back and life insurance. Then the software online service will actually be able think about it, when an agent will help the agent quickly isolate to see how their prospects are uses Nelson’s book (or our book), the likeliest candidates. Because progressing with their education he is casting a net and at the these leads are designated to online. Currently, when an agent same time trying to leverage his the member agent, the agent’s hands out or sells Nelson’s book time, by getting people to educate closure rate will increase and will to someone, the agent doesn’t themselves (by reading the book). allow him or her to sell far more know if that person has actually What we already know is that policies than before. read it. But, with our interactive someone who has read Nelson’s dashboard, an agent will be able book cover to cover is more likely The toughest part of an to see which leads are actually to show up at the agent’s office agent’s business is getting clients. going through the modules, and be ready to sign on the dotted This is why as conscientious working through the Q and A’s line. We are taking that same businessmen and women, agents and typing in information. An formula and applying it online. It attend seminars, study “how agent will have a much better will allow agents to cast an even to” books and ask each other

TURNAROUND ECONOMICS FEBRUARY 2012 LMR 11 privately the same question year want people running away from teaching tools, Turnaround after year, “How do you get your them. They want people who are Economics will help insure that clients?” Why do they want to attracted to them and really want a steady and continuous flow of know? — Because it’s vital to what they have to offer. And, interested prospects never stops. the survival of their business and what IBC agents have to offer is it’s hard work. Without a steady the best-kept financial secret in Look for more on flow of prospects to talk with the world! How can agents best Turnaround Economics in future nothing happens. What is most get that message across? Well, LMR issues… important is that the answer to we believe that this is precisely this question needs to be a good what Turnaround Economics will one and one that the agent can provide. When used properly to actually use. After all, agents don’t supplement the agent’s current

TURNAROUND ECONOMICS TURNAROUND ECONOMICS 12 LMR FEBRUARY 2012 “THE MASTER PLAN”

LeSSONS FROM THE PAST “THE MASTER PLAN”: Lessons From the Past FEBRUARY 2012 LMR 13 by Dr. Robert P. Murphy were, “It’s happening again, isn’t politically powerful, even as the it?” vast majority of citizens oppose them. How can this be? Isn’t In his article this month, Carlos and I dedicated our this a democracy? Whatever its Carlos has mentioned the book to all those who love liberty flaws, don’t the people get the video we shared at this month’s (and champion sound money). government they want? Infinite Banking ConceptYes, we agree that dividend- (IBC) Think Tank conference paying whole life insurance is There is a sense in which in Birmingham, Alabama.(1.) an incredibly resilient financial this statement is true, yet another During our presentation, we first vehicle that every middle- and in which it is demonstrably false. showed the video, then I spoke upper-income household should The public overwhelmingly for about 20 minutes, and finally use. But we didn’t throw ourselves opposed the $700 billion TARP Carlos addressed the crowd. In into this arena merely to get the package—some Congressmen this article, I want to elaborate on public to buy more insurance were getting phone calls 9-to- my reaction to the video and the policies—we did it because it’s 1 against as they voted. Yet it lessons I drew from it. vital to build the 10 percent. The went through anyway. And as the only way we can stop another Fed bails out bankers who made major erosion of our liberty is to foolish investments in mortgage- It’s Happening Again educate enough people before it’s backed securities, regular banks too late. crack down and foreclose on The crowd was families where the breadwinner understandably sober after seeing It’s all too easy to see can’t find a new job. Virtually the clips from FDR(2.), which right now how it can be, that no citizen supports this state of were eerie in their similarity to the government—under both affairs. statements coming daily from the Republican and Democratic White House in our own times. leadership—implements In Europe we see a similar The first words out of my mouth policies that benefit the rich and situation unfolding. Government spending on “social” programs is cut, so that international bankers can be assured of their interest payments on reckless loans they made to corrupt governments. Without endorsing the worldview—let alone the tactics!—of the people rioting in the streets, their anger is understandable.

Many “conservative” commentators have berated the people who are hopping mad at how things have developed during the last three years, but this isn’t simply a matter of crybabies who want handouts from the government. It seems to me the real source of outrage

“THE MASTER PLAN”: Lessons From the Past “THE MASTER PLAN”: Lessons From the Past 14 LMR FEBRUARY 2012

a farce. It breeds disrespect for billion to financial institutions, property rights and contract, to pronto. Some cynics at the time see that these rules only apply to likened Paulson’s claims to a the little guy. gigantic ransom note.

Why did this threat work? The Twin Evils: Because the average American household at that time was Fear and Ignorance plagued by fear and ignorance. The stock market was down What ultimately drives this about 40% on the year, meaning dynamic, and how do we stop that people who had done the it? I submit that the twin evils “sensible” thing by socking their responsible for the growth in Big college and retirement savings Government—back in the 1930s into mutual funds saw almost and during our current crisis— half of their efforts evaporate, are fear and ignorance. just like that. And because most of them really had no idea how Even though they opposed a market economy functions— TARP and the Fed’s secret let alone could they understand bailouts, the average citizen mortgage-backed securities, didn’t really stand up and object credit default swaps, and all the because he was terrified. In the other jargon—they really had no fall of 2008, shortly after the fall way of assessing the validity of of Lehman Brothers, George Paulson’s threats.

Photo from FlickrPhoto from david_shankbone by: Bush’s Treasury Secretary,

is the sheer hypocrisy of it all. Building the Percent If times are tough and the 10 government needs to slash its In this context, we can budget, fine, fair enough: In fact understand the importance I agree wholeheartedly and think of spreading our messages of they should slash even more. Austrian Economics, Sound Money, and Privatized Banking. Yet the same politicians and If just 10 percent of the country many of the leading financial had been financially independent “experts” who calmly discuss the of the volatile stock market and urgent need to raise taxes, cut commercial banking sector in unemployment benefits, raise the fall of 2008, and if those tuition fees, etc. in the very next same people understood full well breath explain that it would spell the folly of massive government disaster for the world economy if Henry Paulson—a former CEO deficits and easy-money from international banks weren’t paid of Goldman Sachs, let us not the Fed, then history would be on loans they made to the Greek forget—warned Americans that different. The reader may not government. The average citizen the world’s financial system remember, but the first TARP can smell a rat, and he begins might literally collapse if the vote actually failed. Who knows to suspect the whole system is taxpayers didn’t fork over $700

“THE MASTER PLAN”: Lessons From the Past FEBRUARY 2012 LMR 15

what carrots and sticks were spreading like wildfire. But the Conclusion used, but the bankers pressured economy would eventually have enough Congressmen to alter bottomed out, probably sometime As I stressed in Birmingham, their votes to ram it through, within 2009, to be followed by the similarity between our even though their constituents strong economic growth built on situation and that in the 1930s were wildly opposed. Had the a firm foundation. By this point, can be cause for either pessimism forces of economic liberty and in 2012, that agony would be long or optimism. We can deplore the sound money been just a little forgotten and the unemployment laziness and ignorance of our more numerous and if just a few rate would be back to normal. neighbors as they allow these last of their spokespeople could have shreds of economic freedom slip influenced the public debate, then Instead we limp along, away, or we can look back with TARP surely would have failed cheering whenever the official new wisdom on our predecessors altogether. Rather than creating unemployment rate drops a few and understand how it happened. more money in a few months tenths of a percentage point, even Our neighbors aren’t lazy or than all previous Fed chairmen if most of the “improvement” is ignorant in the grand scheme of combined, Bernanke would have simply due to people giving up things; they’re busy driving their been far less audacious in his gifts hope of ever finding a job. In kids to soccer practice, keeping to the bankers. short, we are living through the their businesses afloat, fixing the second Great Depression—even leaky upstairs faucet, and so on. It’s true that in this alternate the rhetoric from the White Yes, most of them are ignorant of timeline, things would have been House sounds the same, as our sound economic principles, but very painful, with major firms video documented. how can you blame them? Look collapsing and bankruptcies at how economics is taught in the typical college classroom.

“THE MASTER PLAN”: Lessons From the Past “THE MASTER PLAN”: Lessons From the Past 16

I am still in awe of the “In that video did something—they low. And as Our Hands, Part 3: How To made “The Master Plan” video, used to point out—who knows? Lose What We Have (1950)” after all! We just might win. Very few (3.)which I refer to as “The people had any idea in early 1989 Master Plan” production, an It’s true, it didn’t work, that later that year, the Berlin abbreviated version of which is in in the sense that our liberties Wall itself would come down. our video. The people who made have receded even more since All we can do is keep our heads that didn’t depict the American that video was produced. But as down and plod along, spreading voters as evil or imbeciles; they Walter Block says in this month’s the message of liberty to anyone simply didn’t realize what they interview, the moral duty to fight who will listen. were choosing. And rather than for liberty exists, whether the sulk about it, the people behind chances for success are high or

“The Master Plan”: Lessons From the Past Bibliography

1. Our edited video is available at: http://www.usatrustonline.com/articles-videos/9-teaching-videos/90-insurance-agents-how-do-you-get-your-clients. 2. FDR Fireside Chats: http://www.archive.org/details/WorldHistoryFranklinD.Roosevelt-SixFiresideChats1933-1938 3. Full length “In Our Hands (Part 3.)” video is at: http://www.archive.org/details/InOurHan1950_3

“THE MASTER PLAN”: Lessons From the Past FEBRUARY 2012 LMR 17

“THE MASTER PLAN”: Lessons From the Past BLOWING OURSELVES UP - An INTERVIEW WITH DR. WALTER BLOCK 18 LMR FEBRUARY 2012 Walter Block is Harold E. Wirth Endowed Chair and Prof. of Economics, College of Business, Loyola University New Orleans, and Senior Fellow at the Mises Institute. He earned his PhD in economics at Columbia University. He is an author or co-author of literally hundreds of peer-reviewed journal articles.

His earliest book, Defending the Undefendable (1976), has been translated into 12 languages and is a classic in libertarian thought. It intentionally adopts a shocking defense of the non-coercive actions of the capitalist pig, the pimp, and the litterbug, among others. Block’s most recent book is The Privatization of Roads and Highways: Human and Economic Factors (2009) available for free at http://mises. org/books/roads_web.pdf.

Lara-Murphy Report: How Murray converted me to anarcho- economics from my Ph.D. did you discover Austrian economics? capitalism [which claims even program, and was loath to give police and military functions up the neoclassical school. I was Walter Block: Through should be privatized—eds.] in a devotee of the logical positivist Murray N. Rothbard. I was about 10 minutes, using [Henry] philosophy, according to which a introduced to Murray by Larry Hazlitt-type arguments on me statement was either (a) empirical, Moss and his roommate, Jerry regarding defense, police, law, etc. in other words it was “about the Woloz. My introduction to But my conversion to Austrian real world,” in which case it could Murray was solely based on my economics took a lot longer. I only be tentatively known, or (b) interest in libertarianism; I had had an investment in mainstream it could be absolutely apodictically at that time not even heard of the Austrian School of Economics. I was then a graduate student Some 40,000 people die at Columbia University, and was a minarchist [who believes on the government roads government should enforce property rights and keep out every year. Were highways foreign armies—eds.] libertarian, and streets run by private thanks to Ayn Rand and Nathaniel Brandon, my first mentors of the enterprise, there would be freedom philosophy, and the two books they urged me to read: a hue and cry about this Atlas Shrugged and Economics in to end all hues and cries. One Lesson. That conversion took me several months. In contrast,

BLOWING OURSELVES UP - An INTERVIEW WITH DR. WALTER BLOCK Photo below from Flickr by: William Brawley FEBRUARY 2012 LMR 19 known for sure, in which case it lucky that he was that gentle with develop our own styles. Some was not about the real world me. of it, surely, I got from Murray at all, but was only a tautology. Rothbard, the person from whom, It took me several years to see, LMR: Your lecturing and by far, I got the most from, and and agree with the Austrian writing style is decidedly “in not only intellectually speaking. praxeological insight that there your face,” in the sense that you Maybe it is a Brooklyn thing, were statements about the real are sometimes intentionally or a Jewish thing, I’m really not world that were nevertheless provocative to force your opponent sure. Perhaps being provocative is impossible to deny. For example to consider the argument. Can you my way of trying to get through synthetic apriori statements like discuss why you use this approach, to people. I am really unaware “there is a tendency for prices of and how you think it has served of this, or, better, not fully aware identical goods to be the same,” you over the years? of it. Writing and speaking are or “when there is voluntary trade, to a great degree activities that both parties gain welfare in the ex WB: Moi? In your face? you just do automatically. The ante sense,” etc. To show you the Surely you jest! Am I not known centipede was asked to explain state I was in when I first began far and wide as Walter Moderate how he coordinated all of his discussing Austrian economics Block? Okay, okay, here I go again, feet; according to the joke, he just with Murray, and with my then getting in your face now. I do couldn’t do it. Well, I think, in like mentor, Walter Grinder, I saw a indeed confess to using reductios manner, all I can do is speculate picture of Ludwig von Mises on ad absurdum [in which the about my intellectual style, as I Murray’s wall. I objected to this, opponent’s argument is shown to have been doing. I really don’t have since Mises was not an anarchist. be equivalent to an absurdity— a strong fix on this issue. I think Murray just smiled at me. I’m eds.]. I guess we each have to what we’re supposed to do, mostly,

BLOWING OURSELVES UP - An INTERVIEW WITH DR. WALTER BLOCK BLOWING OURSELVES UP - An INTERVIEW WITH DR. WALTER BLOCK 20 LMR FEBRUARY 2012 on this earth is have fun. And to end all hues and cries. I can just owner would lose profits, and face my lecturing and writing style, see politicians whining about the bankruptcy. It would be taken I think, is the most fun for me. “greed” of the private owners of over by corporation B, which was Hopefully, even, I get something these thoroughfares, and the need better able to address this problem. accomplished, although I’m not for statist intervention. But these Unhappily, there is no direct always sure precisely what. charnel houses are now owned “evidence” comparing public and and managed in the “public” sector. private roads, since there are none LMR: One of your recent So all these needless deaths go of the latter, at least not nowadays books deals with the topic of total down the memory hole. Is it too (the turnpike roads of our early road privatization, which strikes much “in your face” to point this history were private, however). some people as incredibly radical. out? My book The Privatization The reasoning I offer is that in every other industry, competition between private owners brings about a better and cheaper good or service than socialism; why not here too? I couple this with answers to the questions of how would these services be paid for, how would competition actually work, what might private road owners do to address issues such as speeding, drunken driving, etc.

LMR: Many of our readers are very interested in the insurance sector. Mises and Hernando de Soto praise insurance as a savings vehicle for the middle- class household, while Rothbard envisions a very large role for insurance companies in his conception of a truly free society. What are your thoughts on this apparent affinity between Austro- libertarians and the insurance sector?

WB: Hans Hoppe has Can you give a quick summary of of Roads and Highways: Human also done yeoman work in your position and the evidence on and Economic Factors makes and demonstrating the value of a your side? defends the claim that if this private insurance industry. I am socialized sector of the economy entirely in agreement with the WB: Some 40,000 people were fully privatized, then it emphasis on this industry as a die on the government roads every would benefit from competition, way of demonstrating the benefits year. Were highways and streets just as do all other sectors of the of laissez faire capitalism. When run by private enterprise, there economy. If highway A killed too insurance companies give lower would be a hue and cry about this many customers, that corporate rates to those who drive safely,

BLOWING OURSELVES UP - An INTERVIEW WITH DR. WALTER BLOCK FEBRUARY 2012 LMR 21 don’t smoke, get As in class, central banks around the world optimism or pessimism. Why? etc.—because these behaviors are are assuming unprecedented Because it will not affect in the associated with lower pay outs powers. Yet at the same time, the slightest what I do with my life. If, by them—then they are led by message of Austrian economics thanks to , we are on the “an invisible hand” to encourage and political liberty seems to be verge of achieving liberty, I will these beneficial behaviors on the reaching more and more receptive work really, really hard to promote population at large. fans, especially young people. liberty. If, on the other hand, I What’s your take? were convinced that we will never LMR: It’s hard to know reach this goal, guess what? I will whether to be optimistic or WB: My take on this is do the exact, identical, same thing: pessimistic these days. On the to be studiously uninterested in I will work really, really hard to one hand, governments and promoting the case for either promote liberty. And, I will do Photo from FlickrPhoto from mattmarket by:

BLOWING OURSELVES UP - An INTERVIEW WITH DR. WALTER BLOCK BLOWING OURSELVES UP - An INTERVIEW WITH DR. WALTER BLOCK 22 LMR FEBRUARY 2012 it in precisely the same manner: it hadn’t had much of an impact writing, his vote totals typically by being “in your face” about on the general culture five years average some 20% or so, he draws praxeology [Mises’ term for the later. The mainstream media were gigantic crowds wherever he science of human action, a field successfully marginalizing this appears, he is ubiquitous on radio, that included economics—eds.] book, and Rand herself dismissed television and the print media, and and the non-aggression principle. libertarians as “hippies of the good portent for the future, he is right.” When Ron Paul ran for most popular with young people But since you ask for my president on the Libertarian Party and their media, the internet. take on this question, here ’tis. ticket in 1988, he received 0.47% I am a short run optimist, a of the vote, which I take as a proxy What about the medium medium run pessimist, and a for libertarian interests. This was run, after the time that Ron Paul long run pessimist-optimist. Let a gigantic increase over the early is active? Well, there is of course me explain. In the short run, say 1960s, but not really enough to , and, hopefully, a for as long as Ron Paul is active, write home about. How is he whole bunch of other Pauls who hopefully the next decade or so, doing in 2012? To ask this is to will leave medicine for politics, I am an optimist. When I got answer it: his results are amazing but Ron is way more consistently into the freedom movement in and stupendous, compared to libertarian than is Rand. I think a around 1962, there were, maybe, what went before. The mainstream Ron Paul comes along only once a oh, a few score libertarians, and media first started out ignoring century or so. I am pessimistic for maybe a dozen or so Austrians, in him, then laughing at him, then the medium run, since I think that the entire world. Ayn Rand’s Atlas smearing him. Although none of biology is against us. My readings Shrugged came out in 1957, but this has really stopped as of this of sociobiology have convinced

Ayn Rand (1905-1982) Muray N. Rothbard (1926 - 1995) Ludwig von Mises (1881 - 1973) Philosopher/Author Austrian Economist Austrian Economist Atlas Shrugged Man, Economy, and State Human Action Capitalism: The Unknown Ideal Power and Market The Theory of Money and Credit The Fountainhead The Ethics of Liberty Planned Chaos For a New Liberty

BLOWING OURSELVES UP - An INTERVIEW WITH DR. WALTER BLOCK FEBRUARY 2012 LMR 23

To summarize: in the near time, I am a wild-eyed optimist, thanks to Ron Paul. I am a medium run pessimist, due to considerations of sociobiology.

me that human beings are hard liberty, and all we can do is to keep biological constraints to be lifted. wired for socialism-fascism. The this light going. Here, I buy into If we don’t blow ourselves up, first American Revolution was an the remnant philosophy. Our duty (the pessimistic scenario), I think anomaly (and hardly achieved is to add to the corpus of liberty, that the prospects for natural liberty, given their tolerance for keep it aflame, but not expect too liberty are positive. Intellectually, actual slavery). Ayn Rand, Murray much, except when we are in the freedom makes sense. There is Rothbard, and Ludwig von Mises hands of an aberration, such as all the empirical evidence that were anomalies. Ron Paul is an Ron Paul. anyone would want that liberty anomaly. Looking over all of our is efficacious. Only think of the history over the entire globe, the What about the long run? “natural experiments” of East light of freedom was a bare flicker. I define this as over the next versus West Germany, or North Our biology is against human 100,000 years or so, time for versus South Korea. Morally, there is no question that voluntary interaction is vastly preferable to coercion, to socialism, to fascism. Hopefully, the human race will prosper, and one day be found on all inhabitable planets, and many that are not now inhabitable (we will make them so) throughout the universe. But will the forces of evil, of unreason, of anti- libertarianism prevail? Then, we will either all die of poverty or nuclear Armageddon.

To summarize: in the near time, I am a wild-eyed optimist, thanks to Ron Paul. I am a medium run pessimist, due to considerations of sociobiology. In the long run, I am a pessimist- optimist. The former if we blow ourselves up, the latter if not. Ron Paul (1935-) Medical Doctor/Congressman Gold, Peace, and Prosperity: The Birth of a New Currency Mises and Austrian Economics: A Personal View

BLOWING OURSELVES UP - An INTERVIEW WITH DR. WALTER BLOCK BLOWING OURSELVES UP - An INTERVIEW WITH DR. WALTER BLOCK Events Engagements

2012

February 29 • Alberta, Canada Murphy discusses Canadian energy taxation at forum sponsored by PricewaterhouseCoopers MARCH 1 • Fox Business Network Murphy discusses the abolition of the SEC on the John Stossel show. APRIL 9 • MANKATO, MINnESOTA Murphy presents Austrian Economics to students at Minnesota State University APRIL 20 • CHICAGO, ILLINOIS Murphy and Lara will present at National Private Client Group

Some events may be closed to general public. For more information email [email protected]