Month: July 2019

Global Manufacturing PMI Crashes To 7-Year Lows As New Orders Slump

It’s a bloodbath. No matter where you look, global manufacturing surveys are signaling growth is over (and in most cases, outright contraction is upon us).

JPMorgan’s Global Manufacturing PMI fell to its lowest level for over six-and-a-half years and posted back-to-back sub-50.0 readings for the first time since the second half of 2012.

June data signalled a mild decrease in global manufacturing employment for the second month running (but every sub-index declined in June).

Of the 30 nations for which a June PMI reading was available, the majority (18) signalled contraction. China, Japan, Germany, the UK, Taiwan, South Korea, Italy and Russia were among those countries experiencing downturns. The US, India, Brazil and Australia were some of the larger industrial nations to register an expansion.

Commenting on the survey, Olya Borichevska, from Global Economic Research at J.P.Morgan, said:

“The global manufacturing sector downshifted again at the end of the second quarter. The PMI surveys signalled that output stopped growing, as inflows of new business shrank at the fastest pace since September 2012. This impacted hiring and business optimism, with the latter at a series-record low. Conditions will need to stage a marked recovery if manufacturing is to revive later in the year.”

So, we ask you, which market do you think is getting things right? Bonds or stocks?

It’s not rocket science!!

via ZeroHedge News https://ift.tt/2KQ2ukm Tyler Durden

San Jose Woman Says Tesla Auto-Accelerated, Crashed Into Garage Causing $100,000 In Damages

A San Jose woman claims that her brand new Tesla Model 3 auto-accelerated on its own at a “high rate of speed” last month, crashing through her garage and colliding with her husband’s car before being stopped by a wall, according to CBS. “It seems like it was not in my control. It would’ve cost a life,” said driver Supriya Gupta.

Her husband said: “It sounded like a bomb exploded or something.” The accident also caused damage to her kitchen, where her mother was cooking at the time.

The family caught the incident on their home surveillance system and later shared the video with Tesla. Gupta claims that her foot was on the brake pedal as she was slowing down to park in her driveway, but that the car then “shot forward uncontrollably at a high rate of speed.”

Tesla has another story. They told CBS: “We investigate the vehicle diagnostic logs when a driver claims their car ‘suddenly’ and ‘unexpectedly’ accelerated, and in every case the vehicle’s diagnostic logs confirm the vehicle operated as designed.”

Of course, if you are to take the company’s word for it, it hasn’t been at fault for a single one of these accidents – ever.

Gupta has reportedly asked Tesla for a copy of the diagnostic log but – surprise – she didn’t get a response and hasn’t heard from Tesla at all. Her husband said: “We just want a fair investigation.” Gupta commented further: “Luckily, my kids were not there. It’s like a nightmare to think about that. I couldn’t sleep for three days.”

She insists that the accident was not her fault and said that in the 12 years she’s been in the United States, she’s never been in an accident. She also says she “doesn’t feel safe” driving a Tesla again.

“I think something is fishy and they are hiding from us. It could happen on the road also, so I don’t feel safe for my family, as well as for me,” she said. 

The damage is estimated to have come in at about $100,000.

via ZeroHedge News https://ift.tt/2XhC8JK Tyler Durden

The ACA Cases Continue

On July 9, at 1pm Central time, the U.S. Court of Appeals for the Fifth Circuit will hear oral argument in Texas v. United States, the latest effort to have the Affordable Care Act struck down in federal court. The panel hearing the case (announced this morning) consists of Senior Judge Carolyn Dineen King, Judge Jennifer Walker Elrod, and Judge Kurt D. Englehardt. Audio of the oral argument should be posted later that afternoon.

Many commentators have evaluated this case through a partisan prism, assuming that the best way to predict the outcome is simply by looking at the partisan affiliation of the Presidents who nominated the judges. I think this is mistaken for multiple reasons.

First, unlike the prior ACA cases to reach the Supreme Court, the underlying arguments advanced by the plaintiffs are not well grounded in conservative jurisprudential principles. Whereas the arguments in NFIB and King were rooted in aggressive enumerated powers and textualist jurisprudence, the arguments here actually cut against traditional conservative approaches to justiciability (standing in particular) and severability. As a consequence, there is less fertile ground in which the case can take root.

Second (and somewhat related), the arguments advanced by the red-state plaintiffs have not garnered support within the conservative legal or political establishment. Conspicuously absent from the filings before the Fifth Circuit are briefs from Republican lawmakers or the conservative legal intelligensia. Even more conspicuously, prominent conservative political and legal figures—including Michael McConnell and Ohio AG Dave Yost—have filed briefs on the other side. At the same time, noted ACA critics, such as the Cato Institute’s Michael Cannon, have also been quite critical of the red-state arguments. This is further evidence of the weak and unorthodox nature of the plaintiffs’ arguments, and this fact is unlikely to be lost on the judges hearing the case. What this means is that Texas v. US is more like the Origination Clause challenge to the ACA than it is like NFIB or King.

As regular VC readers know, I’ve blogged on this litigation extensively and contributed to amicus briefs before the district and circuit courts. Here’s a listing of my prior posts on this litigation:

I’ve also co-authored two New York Times op-eds on the case with Abbe Gluck, available here and here.

Texas v. US is not the only ACA case in town. While folks were focused on the Census, redistricting, and cross cases, the Supreme Court accepted certiorari in a trio of cases concerning whether the federal government owes health insurance companies risk corridor subsidy payments. The ACA declares that insurance companies are entitled to such money, but Congress pointedly refused to appropriate the money, and adopted an appropriations rider saying no money could be spent to fulfill this obligation. A divided U.S. Court of Appeals for the Federal Circuit rejected the insurance companies’ claims. At stake is a good bit of money—$12 billion—in addition to broader principles about appropriations law, and the ability of Congress to use appropriations riders to alter legal or financial obligations contained in previously enacted statutes.

Nicholas Bagley has more background on these cases here.

 

 

from Latest – Reason.com https://ift.tt/322z3RB
via IFTTT

Bitcoin Tumbles To 10-Day Lows As Major Korean Bank Clamps Down On Crypto-Linked Accounts

Bitcoin prices have accelerated lower overnight, breaking below the $11,000 level and falling to 10-day lows.

Bitcoin is leading the charge lower but the rest of crypto is also sliding…

While potentially some relief from the China-US trade truce could be driving some selling in cryptos, some market participants noted that fears of further crackdowns in Asia also sparked some unwinds.

As CoinTelegraph’s Thomas Simms reports, one of South Korea’s biggest banks is planning to intensify regulations on accounts linked tocrypto exchanges, BEI News reported on July 1.

image courtesy of CoinTelegraph

The “special measures” Shinhan Bank are proposing would reportedly involve dedicating staff to analyzing account transactions.

It is believed the bank is hoping to distance itself from claims that it is helping financial criminals, amid a rise in the number of fraud cases involving exchanges.

Later in July, the bank is also hoping to launch an artificial intelligence monitoring system that uses deep learning to identify fraudulent transactions more quickly and accurately.

BEI News quoted a Shinhan Bank spokesperson as saying:

“We have set up a comprehensive plan for the elimination of telecommunication and financial fraud… We will continue to implement preventive measures so that customers will not be harmed in the future.”

The clampdown comes as crypto exchanges continue to fall victim to hacks — including the South Korean platform Bithumb.

Bithumb has suffered several major hacks. In March, more than three million eos (worth $17.5 million at press time) was stolen from a hot wallet.

A bigger attack last summer saw $17 million stolen across 11 cryptocurrencies, predominantly bitcoin (BTC) and ether (ETH.)

via ZeroHedge News https://ift.tt/2RMT5KU Tyler Durden

The ACA Cases Continue

On July 9, at 1pm Central time, the U.S. Court of Appeals for the Fifth Circuit will hear oral argument in Texas v. United States, the latest effort to have the Affordable Care Act struck down in federal court. The panel hearing the case (announced this morning) consists of Senior Judge Carolyn Dineen King, Judge Jennifer Walker Elrod, and Judge Kurt D. Englehardt. Audio of the oral argument should be posted later that afternoon.

Many commentators have evaluated this case through a partisan prism, assuming that the best way to predict the outcome is simply by looking at the partisan affiliation of the Presidents who nominated the judges. I think this is mistaken for multiple reasons.

First, unlike the prior ACA cases to reach the Supreme Court, the underlying arguments advanced by the plaintiffs are not well grounded in conservative jurisprudential principles. Whereas the arguments in NFIB and King were rooted in aggressive enumerated powers and textualist jurisprudence, the arguments here actually cut against traditional conservative approaches to justiciability (standing in particular) and severability. As a consequence, there is less fertile ground in which the case can take root.

Second (and somewhat related), the arguments advanced by the red-state plaintiffs have not garnered support within the conservative legal or political establishment. Conspicuously absent from the filings before the Fifth Circuit are briefs from Republican lawmakers or the conservative legal intelligensia. Even more conspicuously, prominent conservative political and legal figures—including Michael McConnell and Ohio AG Dave Yost—have filed briefs on the other side. At the same time, noted ACA critics, such as the Cato Institute’s Michael Cannon, have also been quite critical of the red-state arguments. This is further evidence of the weak and unorthodox nature of the plaintiffs’ arguments, and this fact is unlikely to be lost on the judges hearing the case. What this means is that Texas v. US is more like the Origination Clause challenge to the ACA than it is like NFIB or King.

As regular VC readers know, I’ve blogged on this litigation extensively and contributed to amicus briefs before the district and circuit courts. Here’s a listing of my prior posts on this litigation:

I’ve also co-authored two New York Times op-eds on the case with Abbe Gluck, available here and here.

Texas v. US is not the only ACA case in town. While folks were focused on the Census, redistricting, and cross cases, the Supreme Court accepted certiorari in a trio of cases concerning whether the federal government owes health insurance companies risk corridor subsidy payments. The ACA declares that insurance companies are entitled to such money, but Congress pointedly refused to appropriate the money, and adopted an appropriations rider saying no money could be spent to fulfill this obligation. A divided U.S. Court of Appeals for the Federal Circuit rejected the insurance companies’ claims. At stake is a good bit of money—$12 billion—in addition to broader principles about appropriations law, and the ability of Congress to use appropriations riders to alter legal or financial obligations contained in previously enacted statutes.

Nicholas Bagley has more background on these cases here.

 

 

from Latest – Reason.com https://ift.tt/322z3RB
via IFTTT

French Bond Yields Slide Below Zero, Hit All Time Record Lows

Ten days ago when global bond yields tumbled amid renewed fears that the global economy was headed for a recession, we reported that a record $13 trillion in global sovereign debt was trading with a negative yield.

And while we don’t have the latest numbers from Bloomberg, pending their EOD update at the close, it is safe to say that as of this moment, there is a new all time high in negative yielding debt, because while German yields tumbled deeper into record negative territory this morning following abysmal global PMIs and comments from the ECB that the central bank was prepared for any contingency (i.e., ready to cut rates even more), it was the turn of France to follow Germany into sub-zero territory as the French 10Y yield just dropped below 0%, assuring that the total amount of negative-yielding debt just rose by a few hundred billion.

Meanwhile, the disconnect between global bonds – which are now screaming “recession is coming” – and global stocks which are partying as if the Fed can’t wait for S&P 3,000 to cut rates not by 25bps but 50bps, if not more, has never been greater.

via ZeroHedge News https://ift.tt/2ZZ1kXi Tyler Durden

“Libya Under Turkish Invasion”: Haftar Releases Hostages But Vows War On Turkish Planes, Vessels

We’ve noted before that Libya’s new civil war has increasingly come out in the open as in reality an international proxy war, with even the White House in the past months “switching” support from the UN-backed Government of National Accord (GNA) in Tripoli to the renegade General Khalifa Haftar, whose LNA forces have for months laid siege to the capital in an attempt to wrest the country from GNA authority.

And to nobody’s surprise, advanced American-made anti-tank missiles believed supplied by the UAE have recently been found among Haftar’s weapons stockpiles. All of this makes Gen. Haftar’s latest “declaration of war” on Turkey more interesting. Over the weekend the LNA threatened to shoot down Turkish airplanes found in Libyan air space and to destroy Turkish ships off the Libyan coast, in response to Turkish military support to GNA forces in Tripoli, which resulted in a significant setback for pro-Haftar militants.

Front line fighting near Tripoli, via the BBC

Haftar’s rebel force had claimed Libya is “under Turkish invasion” and that it would act against any Turkish threat, including Turkish flagged vessels found in Libyan territorial waters. 

Over the weekend Turkey threatened to attack Haftar’s forces in eastern Libya directly as a “legitimate target” if the LNA failed to release six Turkish citizens under its detention. Haftar had previously declared intent to detain all Turkish nationals in Libya, but walked back the threat while additionally releasing the six Turkish hostages on Monday. 

Ankara’s threat of attack appeared to have worked, according to Al Jazeera: “The spokesman of Haftar’s forces, Colonel Ahmed Masmari, earlier said they were detaining all Turkish nationals in Libya. But last night [Sunday], he retreated saying he does not have any knowledge of the detention of the Turkish nationals.” The Turkish Foreign Ministry has confirmed the Turkish nationals’ release on Monday. 

However, Haftar has yet to walk back LNA statements declaring Turkey “an enemy of the state”. Having such a powerful and military involved enemy as Erdogan’s Turkey could permanently stall his attempts to take all of Libya. 

Gen. Haftar — who solidified control of Eastern Libya over the past two years and swept through the south early this year, has sought to capture Tripoli with the support of countries like the UAE and France, but is strongly opposed by Turkey and most European countries. He holds a huge portion of the country as well as oil production. 

Haftar has long been described by many analysts as “the CIA’s man in Libya” — given he spent a couple decades living in exile a mere few minutes from CIA headquarters in Langley, Virginia during Gaddafi’s rule.

He was inserted back onto the Libyan battlefield before Gaddafi’s eventual capture and field execution at the hands of NATO supported Islamist fighters in 2011.  

It was only months ago that President Trump for the first time voiced public support to Haftar’s forces. The president’s April comments signaled a complete reversal of US policy, given that up to that point the US had officially backed the GNA.

via ZeroHedge News https://ift.tt/2Yn2MlL Tyler Durden

Drug Warriors Peddle Fears About Cocaine. Again.

Drug warriors are once again pushing a high grade of cocaine fears to willing users. It’s a market in pointless prohibitionism that just won’t go away.

Tough drug laws and brutal enforcement haven’t done much to stifle the market for illegal intoxicants, as drug-enforcement agencies around the world readily admit. But they do make the black-market production of concentrated-value products like cocaine a profitable undertaking. That’s good news for prohibitionists who need something to justify their paychecks and see a growth industry in fanning new fears.

“Current data on cocaine show that both the number of seizures and the volumes seized are at an all-time high,” the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) warns in its 2019 report. 

Not to be outdone, the United Nations Office on Drugs and Crime (UNODC) cautions that “opium production and cocaine manufacture remain at record levels. The amounts intercepted are also higher than ever, with the amount of cocaine seized up 74 per cent over the past decade, compared with a 50 per cent rise in manufacture during the same period.”

Wow! That sounds like a soaring market. And yet: “In 2017, an estimated 18 million worldwide, or nearly 0.4 per cent of the adult population aged 15–64, had used cocaine in the past year,” according to the UNODC.

A whole 0.4 percent? Are we sure they weren’t just cleaning staff for Charlie Sheen’s hotel rooms?

The EMCDDA note that 1.2 percent of EU residents used cocaine last year. By comparison, about 2.2 percent of Americans used cocaine over the past year, according to the National Institute on Drug Abuse.

“The 2016 estimate for current cocaine use was similar to the estimates in most years between 2007 and 2015, but it was lower than the estimates in 2002 to 2006,” notes the latest U.S. National Survey on Drug Use and Health.

Small and steady numbers of cocaine users? As crises go, even for those who are prone to worry, this would seem to rank alongside the Graboid menace from the Tremors franchise. So, what’s the big deal?

Part of the problem seems to be that retail prices have dropped a bit over the past decade even as purity improved, giving users more bang for their dollars/euros/whatever.

“From January 2016 through December 2016, the [price per gram pure] of cocaine decreased 20.3 percent ($177 to $141), while the purity increased 21.6 percent from 51 to 62 percent,” says the U.S. DEA.

“There is also evidence of an increase in the availability of cocaine of the highest reported purity for over a decade in the European Union,” adds the UNODC—an assessment with which the EMCDDA agrees.

More worrying for those who would save us from good times is that prices dropped and quality improved, as illicit dealers responded to consumer demand with the same flexibility and technological innovation that entrepreneurs have brought to pretty much every single industry on the planet. Notes the EMCDDA report:

Smaller groups have been able to enter the market by using a range of information technology like encryption, darknet market places, social media for dealing and cryptocurrencies. Entrepreneurship in the competitive cocaine market is evident from innovative distribution strategies, such as cocaine-exclusive call-centres. These new methods appear to reflect to some extent the type of disruption seen in other areas facilitated by the common use of smartphones — a potential ‘Uberisation’ of the cocaine trade — a competitive market in which sellers compete by offering additional services such as fast and flexible delivery options.

Drug warriors may dislike cocaine, but its users enjoy the stuff and providers like profits that they gain by keeping users happy. The result has been, despite the distortions necessitated by working around laws and governments, a dynamic and evolving market.

From a consumer-value perspective, this is a win-win! Well, except for the people arrested for engaging in underground trade, the victims of the criminals who were handed control of that trade by lawmakers, and the frustrated prohibitionists whose record seizures of bundles of happy dust can’t keep quality from rising and prices from dropping.

But what did they expect? Cocaine is almost the perfect product to illegally manufacture and smuggle. Its price reflects huge mark-ups and therefore profit margins, meaning that each successful shipment means a healthy payday.

Just three weeks after Brazil’s President Jair Bolsonaro enacted tougher anti-drug measures, an airman was caught smuggling 86 pounds of cocaine on the president’s own airplane. “Sergeant Rodrigues walked off the plane carrying a garment bag and a carry-on suitcase, law enforcement officials in Spain told the newspaper El País. When airport screeners inspected the bag, they found 37 bundles of cocaine and nothing else in the bag,” reported The New York Times.

That’s a multi-million-dollar shipment in terms of retail prices, and a nice windfall for people at each stage of the transaction—assuming they don’t get caught. Sergeant Rodrigues is out of action, but whoever was paying him will just find another courier willing to take the risk in return for a lot of cash. And users will barely notice a blip in their supply or the prices they pay for it.

Drug warriors have been at this business for decades, so they must know their efforts won’t keep users from enjoying cocaine and producers from supplying it, no matter what laws say. That’s especially true of a substance that packs massive profits into small packages. The stability of demand and the resistance of prices and supply to interdiction efforts demonstrate that this is a market that isn’t going away.

Then again, anti-drug bureaucrats and law enforcers are dealers in their own way, supplying endlessly repetitive reports, reams of useless data, and pointless policy proposals to lawmakers and worried members of the public who just can’t kick the prohibitionist habit. Satisfying demand keeps the warriors well-paid and in the public eye. That it does so at the cost of full prisons and empowered criminals is lost on too many people.

All things considered, the trade in prohibitionist fears offers a lot less value than that for cocaine.

from Latest – Reason.com https://ift.tt/2XAOv88
via IFTTT

Drug Warriors Peddle Fears About Cocaine. Again.

Drug warriors are once again pushing a high grade of cocaine fears to willing users. It’s a market in pointless prohibitionism that just won’t go away.

Tough drug laws and brutal enforcement haven’t done much to stifle the market for illegal intoxicants, as drug-enforcement agencies around the world readily admit. But they do make the black-market production of concentrated-value products like cocaine a profitable undertaking. That’s good news for prohibitionists who need something to justify their paychecks and see a growth industry in fanning new fears.

“Current data on cocaine show that both the number of seizures and the volumes seized are at an all-time high,” the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) warns in its 2019 report. 

Not to be outdone, the United Nations Office on Drugs and Crime (UNODC) cautions that “opium production and cocaine manufacture remain at record levels. The amounts intercepted are also higher than ever, with the amount of cocaine seized up 74 per cent over the past decade, compared with a 50 per cent rise in manufacture during the same period.”

Wow! That sounds like a soaring market. And yet: “In 2017, an estimated 18 million worldwide, or nearly 0.4 per cent of the adult population aged 15–64, had used cocaine in the past year,” according to the UNODC.

A whole 0.4 percent? Are we sure they weren’t just cleaning staff for Charlie Sheen’s hotel rooms?

The EMCDDA note that 1.2 percent of EU residents used cocaine last year. By comparison, about 2.2 percent of Americans used cocaine over the past year, according to the National Institute on Drug Abuse.

“The 2016 estimate for current cocaine use was similar to the estimates in most years between 2007 and 2015, but it was lower than the estimates in 2002 to 2006,” notes the latest U.S. National Survey on Drug Use and Health.

Small and steady numbers of cocaine users? As crises go, even for those who are prone to worry, this would seem to rank alongside the Graboid menace from the Tremors franchise. So, what’s the big deal?

Part of the problem seems to be that retail prices have dropped a bit over the past decade even as purity improved, giving users more bang for their dollars/euros/whatever.

“From January 2016 through December 2016, the [price per gram pure] of cocaine decreased 20.3 percent ($177 to $141), while the purity increased 21.6 percent from 51 to 62 percent,” says the U.S. DEA.

“There is also evidence of an increase in the availability of cocaine of the highest reported purity for over a decade in the European Union,” adds the UNODC—an assessment with which the EMCDDA agrees.

More worrying for those who would save us from good times is that prices dropped and quality improved, as illicit dealers responded to consumer demand with the same flexibility and technological innovation that entrepreneurs have brought to pretty much every single industry on the planet. Notes the EMCDDA report:

Smaller groups have been able to enter the market by using a range of information technology like encryption, darknet market places, social media for dealing and cryptocurrencies. Entrepreneurship in the competitive cocaine market is evident from innovative distribution strategies, such as cocaine-exclusive call-centres. These new methods appear to reflect to some extent the type of disruption seen in other areas facilitated by the common use of smartphones — a potential ‘Uberisation’ of the cocaine trade — a competitive market in which sellers compete by offering additional services such as fast and flexible delivery options.

Drug warriors may dislike cocaine, but its users enjoy the stuff and providers like profits that they gain by keeping users happy. The result has been, despite the distortions necessitated by working around laws and governments, a dynamic and evolving market.

From a consumer-value perspective, this is a win-win! Well, except for the people arrested for engaging in underground trade, the victims of the criminals who were handed control of that trade by lawmakers, and the frustrated prohibitionists whose record seizures of bundles of happy dust can’t keep quality from rising and prices from dropping.

But what did they expect? Cocaine is almost the perfect product to illegally manufacture and smuggle. Its price reflects huge mark-ups and therefore profit margins, meaning that each successful shipment means a healthy payday.

Just three weeks after Brazil’s President Jair Bolsonaro enacted tougher anti-drug measures, an airman was caught smuggling 86 pounds of cocaine on the president’s own airplane. “Sergeant Rodrigues walked off the plane carrying a garment bag and a carry-on suitcase, law enforcement officials in Spain told the newspaper El País. When airport screeners inspected the bag, they found 37 bundles of cocaine and nothing else in the bag,” reported The New York Times.

That’s a multi-million-dollar shipment in terms of retail prices, and a nice windfall for people at each stage of the transaction—assuming they don’t get caught. Sergeant Rodrigues is out of action, but whoever was paying him will just find another courier willing to take the risk in return for a lot of cash. And users will barely notice a blip in their supply or the prices they pay for it.

Drug warriors have been at this business for decades, so they must know their efforts won’t keep users from enjoying cocaine and producers from supplying it, no matter what laws say. That’s especially true of a substance that packs massive profits into small packages. The stability of demand and the resistance of prices and supply to interdiction efforts demonstrate that this is a market that isn’t going away.

Then again, anti-drug bureaucrats and law enforcers are dealers in their own way, supplying endlessly repetitive reports, reams of useless data, and pointless policy proposals to lawmakers and worried members of the public who just can’t kick the prohibitionist habit. Satisfying demand keeps the warriors well-paid and in the public eye. That it does so at the cost of full prisons and empowered criminals is lost on too many people.

All things considered, the trade in prohibitionist fears offers a lot less value than that for cocaine.

from Latest – Reason.com https://ift.tt/2XAOv88
via IFTTT

It’s No Bitcoin: Facebook’s Libra Currency Is Tied to Government Currencies

Authored by Ralph Fucetola via The Mises Institute,

Nobel laureate F.A. Hayek was, as he says in the 1990 introduction to his Denationalization of Money: The Argument Refined, one of the chief “gold bugs” of the 20th century. And he reminded us, so long as politicians want to control money, gold-backed currency is essential to protect our liberty from the politics of inflation.

But his concern for money and market reached back to his earlier work, as noted in a number of articles posted in recent years at mises.org. As noted by Nikolay Gertchev:

In a series of five lectures delivered in 1937, and published under the title Monetary Nationalism and International Stability, Hayek offers an in-depth analysis of the main deficiencies of the present-day monetary system. In a nutshell, he identifies two factors that disrupt international economic relations: the fractional reserve commercial banks and the national central banks. The former are the primary source for the international transmission of the business cycles, while the attempts of the latter to correct the imbalances de facto amplify the resulting instability.

And Demelza Hays writes:

In 1975 Hayek eventually gave a lecture entitled “Choice of Currency,” in which he articulated for the first time the provocative demand that the state monopoly on money should be repealed. The publication of the monographs Free Choice in Currency and The Denationalization of Money followed a year later, in which he expanded in greater detail on his ideas on competition between private money issuers. …

What shape would an order reflecting these power-sharing principles take, and how could it emerge? Hayek argues that such an order would take shape if the following liberties were granted:

Fast forward nearly a half century and Hayek’s call for the denationalization of money seems to be a real possibility, not just a crank libertarian position safely ignored by the monetary authorities.

The coming of the block chain technology and cryptocurrencies certainly suggest that the original post-World War II Bretton Woods “settlement” of the status of money, that gold and US dollars, redeemable in gold, were the basis for international settlements, failed. As have later revisions of the idea. Thus, an era of monetary uncertainty may give rise to possibilities for market-oriented reforms.

Bitcoin, as an example of “virtual gold,” gains its value from the limited number of units of that cryptocurrency and the expense in “mining” more of those units, not unlike real gold. While Bitcoin is the best known of the cryptocurrencies, CoinMarketCap.com lists over a thousand crypto currencies that are traded (though a significant percentage of these are actually ICOs — Initial Crypto Offerings — a way to raise funds for a particular project). Much of the power of the cryptos is that they can be easily, and privately, bought, sold, and exchanged.

Hayek predicted that normal market forces would apply to the goods we use to facilitate exchange (“currencies”) if only governments would get out of the way. In a free market for money he suggested that major financial institutions would sponsor competing currencies, probably defined by “baskets” of commodities. He speculates on how the market would maintain the value and stability of such currencies, far better than any political system of legal tender.

To some degree, this seems to be happening with cryptocurrencies.

And then along comes the 900 pound gorilla. Facebook, with two billion users, has decided to enter the cryptocurrency market with its Libra coin. Since the Libra would be usable as a currency on Facebook itself, the company probably has calculated that it will have a strong competitive advantage over any of the competing currencies.

Ah, but … and here is the rub, the Libra is not a naturally limited good, as Bitcoin is, but can be multiplied to infinity. It is not stabilized by reference to a basket of commodities as Hayek recommended. Rather, it will be defined by a changeable basket of fiat currencies!

That’s right. Facebook and Libra’s cooperating founding organizations (including PayPal, Visa, Uber …) hope to provide a stable cryptocurrency by tying it to a group of government currencies! According to Techcrunch:

A Libra is a unit of the Libra cryptocurrency that’s represented by a three wavy horizontal line unicode character ≋ like the dollar is represented by $. The value of a Libra is meant to stay largely stable, so it’s a good medium of exchange, as merchants can be confident they won’t be paid a Libra today that’s then worth less tomorrow. The Libra’s value is tied to a basket of bank deposits and short-term government securities for a slew of historically stable international currencies, including the dollar, pound, euro, Swiss franc and yen. The Libra Association maintains this basket of assets and can change the balance of its composition if necessary to offset major price fluctuations in any one foreign currency so that the value of a Libra stays consistent.

Well, that’s it. Zuckerberg is no Hayek. And the Libra is no Bitcoin.

via ZeroHedge News https://ift.tt/2J0OToi Tyler Durden