5 Things The Libertarian Party Stands For

With Libertarian Party registrations soaring, and the two establishment party presidential candidates vying for most-hated in history, The Hill's Ben Kamisar, explains the five major pieces of the party's platform…

Billionaire reality TV star Mark Cuban was asked last Sunday if he would run for president as a Libertarian. And like a majority of Americans, he admitted he didn't really know where the party stands on issues.  

 

Thanks to how unpopular the likely Democratic and Republican nominees are, top Libertarians hope that the increased focus on their party as an alternative will help shed light on the Libertarian message. 

 

But many Americans remain in the dark—a 2014 Pew Research survey also showed that 44 percent of Americans didn't know the correct definition of the party. So the challenge the party faces as it holds its national convention this weekend is familiarizing Americans with its platform.

Here are five major pieces of the Libertarian Party platform, as well as some issues its platform committee on Saturday is looking to change for this year:  

Individual freedom 

The idea of individual freedom defines the libertarian movement—it’s the party of limited government, in all forms.  

“We are the only political party that stands for your right to pursue happiness in any way you choose as long as you don’t hurt anyone else and as long as you don’t take their stuff,” party chairman Nicholas Sarwark told The Hill.  

This year, the party’s platform committee is looking to highlight how that differs with the two main parties with a new addition to the platform preamble: “Our aim is to keep the Republicans out of your bedroom and the Democrats out of your pockets, so that you can make your own choices and live your life as you choose.” 

That push for individual freedom colors the views of the party on just about every issue—including drug legalization, free trade, and free-market health care, as well as the elimination of campaign finance and gun control laws.  

Social liberals

The push for individual freedom puts libertarians toward the left side of the political spectrum on many of the major social issues.  

The 2014 platform argues that “government does not have the authority to define, license or restrict personal relationships,” adding that “consenting adults” should have freedom to chose what makes them happy. 

The same goes for drug legalization—the party considers drug use and possession as victimless crimes that should be fair game unless the user hurts someone else in the process.  

The platform does not currently address the death penalty, but the platform committee has proposed an indefinite suspension of the practice, noting the number of exonerations since 1973 and the disproportional use of the death penalty based on race. 

Economic conservatives

Libertarians have faith in the free market and believe that there’s little the government can do to pressure businesses or individuals that would be better than the power of the “Invisible Hand.”  

That means unrestricted competition among financial institutions as well as the elimination of the Internal Revenue Service, Social Security and income taxes.  

The main argument is that social pressure and the free market will convince individuals and companies to donate to charity to help the less fortunate — replacing the need for the government-run social safety-net — or make business decisions to protect the environment in the hopes of being rewarded by the market for those efforts.  

And in the free market, companies live and die without the help of the government, so no bailouts.   

But that doesn’t mean taking the government entirely out of the equation—the platform committee has proposed clarifying that victims of a company’s disregard for the environment should be given restitution when "damages can be proven and quantified in a court of law.”   

Abortion

Despite the socially liberal bent, this is an issue where libertarians disagree.  

The 2014 platform echoed an effectively pro-abortion rights position, arguing “government should be kept out of the matter, leaving the question to each person for their conscientious consideration.” 

But this year, a potentially contentious change recommended by the party’s platform committee includes a complete retool of that platform, shifting the rhetoric back toward the center. 

If adopted, the plank will declare that Libertarians believe that taxpayers should not "forced to pay for other peoples' abortions." That's a dramatic shift from the previous assertion that the issue should be left solely to the individual.  

A proposal would add to that new wording that Libertarians “respectfully disagree” on abortion and where life begins, while another proposal would simply note that "Libertarians along the spectrum present logical arguments in support of their principled positions on abortion." 

A fourth proposal by the platform committee calls to eliminate regulations on “over-the-counter” contraceptives to help prevent unwanted pregnancies.  

Non-interventionist foreign policy

Libertarians want America to “abandon its attempts to act as a policeman for a world,” and its platform on defense reads like a criticism of America’s foreign policy direction.  The party’s goal is to maintain a military devoted only to national defense, while shutting down foreign military and economic aid.   

Along with that de-emphasis on the offensive, the platform repudiates the tradeoff between liberty and security by declaring that national defense “must not take priority over maintaining the civil liberties of our citizens.”  

That means vigilant oversight on national security programs to ensure no rights are infringed upon as well as getting rid of any security classification that could keep information out of the hands of the public.

 

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Friday Humor: “Wesley’s Boobie Trap” Replaces Strippers With Robots

First fast-food workers, now exotic dancers… it appears the minimum-wage-driven robotization of the American economy is hitting everyone…

After talks of raising the minimum wage have stirred across the country, The Ostrich's Matt Mitchell reports that Wesley's Boobie Trap CEO David Sellers warned that a drastic increase to $15 an hour could force him to fire his staff and replace them with exotic-dancing robots.

 

 

"The Trap," as it is known by loyal patrons, is a popular bar in Sayre, a small community on the outskirts of Jefferson County.

 

"It's cheaper to build a dancing robot than it is to hire another Jasmine or Tiffany at $15 an hour," explained Sellers. "Our dancers average about 3 hours of work a night. That's about….hold on….carry the one…well, it's a lot of money. I promise you that."

 

Sellers admits he's never actually built a robot before, but he has enrolled in a welding class at nearby Bevill State Community College. Until he completes his first fully functional robot, dancers will likely be replaced by those large inflatables that violently swing their arms.

 

"The car lots don't use those inflatables at night," said Sellers. "So there ain't no reason why they can't make a little extra money."

 

Sellers' statements about the robotic replacements spread quickly to The Trap's human dancers, who were not amused by the CEO's threats.

 

"Sure, we both take dollar bills, but can a dancing vending machine do THIS? Or how about THIS?" shouted a visibly angry Crystal as she did things we cannot describe without testing the limits of your employer's web filter.

 

To prove his regular customers wouldn't notice the difference between a typical human and robot dancer, Sellers pushed one of his prototypes onto the stage during a busy Saturday night. Comprised mostly of lawnmower scraps, the Tiffany 5000 twirled in front of customers for roughly 20 seconds before bursting into flames. Only one customer, known simply as "Lester," sustained an injury after he reportedly approached the blazing Tiffany 5000 to request a private dance.

 

While his prototype was a complete loss, Sellers deemed the trial run a huge success. Surveys obtained from customers that night ranked Tiffany 5000 as the 2nd most entertaining dancer, surpassed only by Lester, who performed the stop, drop, and roll flawlessly.

 

"This is a game changer," admitted Sellers. "I lost an entire robot tonight, but I'll just build another one tomorrow. If one of these girls loses a foot, they're out of commission for days. And when they do come back to work they're falling off the stage every other dance."

 

Despite Sellers' enthusiasm, some employees remain highly skeptical. Eileen, The Trap's most tenured one-legged dancer, said she thinks this robot talk is just a passing fad. She believes the Average Joe comes to Wesley's to escape the modern, industrial world and enjoy a simpler time when men displayed their approval for women by banging wooden blocks on the table.

 

"When I started to work here, there was no such thing as a minimum wage," stated Eileen. "Then Obama was elected and the government decided everyone should make at least a nickel an hour. Next thing you know, I'm being replaced by a mannequin on roller skates."

 

The mannequin dancers lasted less than a week after one accidently rolled into the parking lot and across Highway 78, where it was immediately run over by a coal truck.

 

"The customers were devastated," recalled Eileen. "Lester still won't talk about it."

 

At press time, Lester was still in the hospital receiving treatment for multiple burns and a broken heart. He is expected to return to The Trap tonight, against medical advice.

*  *  *

Matt Mitchell is the creator of The Ostrich, Walker County's least trusted news source, and was the 3rd round draft pick of the Denver Nuggets. Roughly half of what he writes is untrue.

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Former Kentucky Constable Accused of Running Prostitution Ring for Police and Lawmaker Friends

A “prostitution ring” in Kentucky’s capitol city may have shared a lot more than proximity with powerful state officials. The operation, allegedly run by former Franklin County constable Thomas Banta, is accused of servicing a roster of local legislators and police officers

Banta, 67, was indicted in early May on suspicion that his company, Banta Security and Investigations, had a healthy side business in the sex trade. He’s charged with five felonies, including promoting prostitution, kidnapping, and impersonating a peace officer. The latter two charges stem from an alleged 2015 incident in which Banta and an associate supposedly approached a 17-year-old boy under the guise of being police detectives, then abducted him. The teen claims they interrogated him for more than two hours about a burglary that took place next to an apartment where his grandma lived, and also pressured his relatives while pretnding to be police. 

Banta—who served as an elected county constable from 2011 through 2014—plead not guilty to all charges, as did his alleged associate, Hendra “Dre” Chanault Valentine.

The case does contain a few red-flag details, such as a claim by one woman that, under Banta’s direction, she had appointments with 15 to 20 clients per day, twice a week, and was once offered $500 to have sex with a dog. 

According to the Kentucky Center for Investigative Reporting, documents filed with the Franklin County Circuit Court say that clients of this operation included local politicians and police officers, though no one in particular is named. The individuals who said that Banta managed them were adults, though one claims she was in eigth grade when Banta first started paying her to have sex with him and others.

Interestingly, none of the Ketucky media that have reported on the story have been throwing around terms like “sex trafficking,” despite the possible link to at least one underage woman. I guess it’s only sex trafficking when former government officials aren’t involved. 

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Trump Decides He Won’t Debate Bernie, Says “Inappropriate To Debate Second Place Finisher”

Having already scored a political victory by redirecting the news cycle to his proposal to debate Bernie Sanders in lieu of a debate between the Vermont socialist and Hillary Clinton, Donald Trump moments ago decided to also slam Sanders himself as well as the democratic race, when the Republican presidential nominee announced that he will not participate in a debate with Bernie Sanders, as “it seems inappropriate that I would debate the second place finisher” and also because the networks who “want to make a killing on these events and are not proving to be too generous to charitable causes.”


His full statement.

Based on the fact that the Democratic nominating process is totally rigged and Crooked Hillary Clinton and Deborah Wasserman Schultz will not allow Bernie Sanders to win, and now that I am the presumptive Republican nominee, it seems inappropriate that I would debate the second place finisher. Likewise, the networks want to make a killing on these events and are not proving to be too generous to charitable causes, in this case, women’s health issues. Therefore, as much as I want to debate Bernie Sanders – and it would be an easy payday – I will wait to debate the first place finisher in the Democratic Party, probably Crooked Hillary Clinton, or whoever it may be.

Sadly for Bernie, just minutes before Trump’s statement, Sanders’ campaign manager said two broadcast networks offered to make a major contribution to charity in order to host a debate between Sanders and Donald Trump.

“Our campaign and the Trump campaign have received two offers by broadcast television networks to host the Sanders-Trump debate that we suggested. Both offers include a major contribution to charity,” Sanders campaign manager Jeff Weaver said in a statement on Friday. “We are prepared to accept one of those offers and look forward to working with the Trump campaign to develop a time, place and format that is mutually agreeable. Given that the California primary is on June 7, it is imperative that this all comes together as soon as possible. We look forward to a substantive debate that will contrast the very different visions that Sen. Sanders and Mr. Trump have for the future of our country.”

Will Trump’s decision finally prompt Hillary to take on the debate with Bernie which she has shied away from, leading to this latest media spectacle?  Meanwhile, Trump continues to play the “networks”, the media and their pundits like puppets, eager to soak up every decision and statement he makes, while evern the runner-up Democratic challenger has confirmed he is desperate for the kind of media exposure only Trump can provide.

Of course, in the end the debate may well be between Trump and Joe Biden if the noose which tightened around Hillary Clinton with the OIG report’s release this week is any indication which way the democratic campaign is headed.

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Weekend Reading: Are The Bulls Back?

Submitted by Lance Roberts via RealInvestmentAdvice.com,

This past week, the markets rallied sharply from last week’s lows sending the “bulls” stampeding into the market with claims the market is back. To wit:

“Hold on to your hats, folks.

 

According to Andrew Adams, a market strategist at Raymond James, there exists a perfect mix of conditions that could send stocks on a ride up, up, and up.

 

In a note out Thursday, Adams noted that there was a significant shift of investors from the stock market to ‘safer’ assets. Eventually this move to the sidelines will have to change.

The problem is that Adams is incorrect about the “cash on the sidelines” theory. As Cliff Asness penned previously:

“Every time someone says, ‘There is a lot of cash on the sidelines,’ a tiny part of my soul dies. There are no sidelines. Those saying this seem to envision a seller of stocks moving her money to cash and awaiting a chance to return. But they always ignore that this seller sold to somebody, who presumably moved a precisely equal amount of cash off the sidelines.

 

Even though I’ve thrown people who use this phrase a lifeline, I believe that they really do think there are sidelines.

 

There aren’t. Like any equilibrium concept (a powerful way of thinking that is amazingly underused), there can be a sideline for any subset of investors, but someone else has to be doing the opposite.

 

Add us all up and there are no sidelines.”

Adams comment would also suggest that investors are sitting primarily in cash and bonds rather than equities. Again, they aren’t.

AAII-Allocation-Survey-041416

All that really happened last week, as shown in the chart below was an oversold bounce on deteriorating volume confined to an overall market downtrend.

SP500-Weekly-052716

This isn’t a rally that should embolden investors to take on more riskbut rather considering “selling into it” as we head into the seasonally weak period of the year. 

But that’s just me.

One note though. The markets have not made a new high within the past year. What does history suggest happens next? 77% of the time it has evolved into a bear market. 

On second thought, maybe that should be you too.

Here is your reading list for the weekend.


CENTRAL BANKING


THE MARKET & ECONOMY


BEST 6 MINUTES YOU WILL SPEND

Gross Trying To Short Credit Against Instinct by John Gittelsohn via Bloomberg


INTERESTING READS


“The contrary investor is every human when he resigns momentarily from the herd and thinks for himself” – Archibald MacLeish

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Obama Wants End of Nukes, Iowa Bans Life Sentences for Teen Killers, About That Study on Cell Phones and Cancer: P.M. Links

  • RatsPresident Barack Obama called for an end to nuclear weapons at the first visit by a sitting U.S. president to Hiroshima.
  • That study about cell phones causing cancer in lab rats doesn’t say what all the panicked headlines are saying. Somebody should do a study to determine whether cherry-picking data causes cancer.
  • Iowa’s Supreme Court has banned sentences of life without parole for juveniles convicted of murder as cruel and unusual punishment under the state’s constitution.
  • Everybody’s going to be talking about the Libertarian Party this weekend as the delegates select their presidential nominee in Orlando.
  • Louisiana’s governor has signed into law a bill that adds the targeting of police or emergency personnel to the state’s hate crime laws.
  • North Korean leader Kim Jong Un’s aunt has been living a quiet life in the United States since fleeing here in 1998.
  • Your last-minute Trump: Donald Trump will not debate Bernie Sanders after all.

Follow us on Facebook and Twitter, and dont forget to sign up for Reasons daily updates for more content.

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Stocks Soar On Hawkish Fed As Gold Suffers Worst Week In 6 Months

Must.Stay.Green.In.May…

 

So despite weaker than expected GDP, and tumbling GDP expectations…

 

Yellen has jawboned rate hike expectations up to record highs for July…

 

And stocks loved it!??

Stocks had their best week in over 3 months – mainly driven by a panic bid on Tuesday as Fed speakers went full hawktard…

 

And here are futures this week… just unreal…

 

As S&P cash was squeezed up toward 2,100 and VIX near a 12 handle once again… #FAIL 2098.87, and 13.10

So to be clear, The Fed signals as loud as possible that rate hikes are coming to ensure it has ammo "in case of a shock," everyone proclaims that The Fed is stirring up volatility…and VIX collapses?!

For now it looks like the short-squeeze has stalled…

 

Volume was non-existent.. even for a pre-Memorial Day market…

 

Yen plunged on the stronger dollar inferred by Yellen's hawkishness – catching up to stocks…

 

Treasury yields ended the week (early) 1-3bps higher with the short-end underperforming…

 

As 2s30s plunged after Yellen's comments to end the week 2bps flatter…

 

So Buy Banks!!??

 

Stocks and bonds decoupled from the close of Europe on Tuesday… one wonders if Yellen called Draghi again?

 

The USD Index managed to scramble back into the green for the week after Yellen spoke as EURUSD tumbled to 1.1100 – 2 month lows…

 

Commodities were mixed despite the gains in the dollar with crude and copper strong and PMs weak…

 

Gold fell for the 4th week in a row (for the first time since Nov 2015) and dropped over 3% on the week (the worst week since October)…

 

Charts: Bloomberg

Bonus Chart: For all those claiming there is money on the sidelines or that this is the most-hated rally… Net Longs in S&P Futs and minis are at their highest in 18 months…

h/t @DonDraperClone

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What Killed The US Consumer, In One Chart

Once again, a topic we have beaten to death over the past several years, namely that US consumers spending on discretionary items has collapsed for the simple reason simply because these same consumers are forced to spend much more on staples such as housing (or since nobody can afford houses anymore, on rent) and health insurance (thanks Obamacare), has made it into the sellside, in this case the latest Greed and Fear report by CLSA’s Chris Wood.

Here is the Chris Wood’s delightfully simple explanation which summarizes what we have said over the past three years.

The failure of American consumption to pick up over the past year and more in the manner expected can be explained not just by increased consumer caution but also by the increasing costs of two essentially nondiscretionary items for most Americans. That is the soaring cost of medical care and the rising cost of rents.

 

Thanks president Obama and Janet Yellen for killing the US middle class, but it was all worth it: the S&P is at 2,100, or as Janet Yellen would say “the Fed’s handling of financial crisis nothing short of magnificent.”

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ISIS Commander Killed In Falluja Airstrikes As A Familiar Face Emerges

At this point in the war against ISIS, which as we pointed out previously is in full retreat now that its supply of oil-based funding from Turkey has dried up, the only question is when some of the main strongholds of the Islamic State in the region fall, putting what’s left of the terrorist organization in terminal disarray. Chief among ISIS’ core cities are Raqqa and Deir el-Zour in Syria and Mosul, Baiji and the outskirts of Baghdad, including Falluja in Iraq.

First, a big picture view of the situation.

As RFERL reported yesterday, a triumphant Iraq says it has retaken around two-thirds of the territory seized by the Islamic State in the militant group’s lightning-fast sweep across the country’s north and west in 2014; a sweep that was funded and supported by not only Saudi Arabia and Qatar, but also by the CIA as we learned one year ago.

“Daesh’s presence in Iraqi cities and provinces has declined. After occupying 40 percent of Iraqi territory, now only 14 percent remains,” government spokesman Saad al-Hadithi said in a televised statement on May 11. While that calculation appeared rosier than recent estimates from John Kerry, even the official US estimate reveals that IS had lost 44% of the territory it held in Iraq.

Iraq’s military, along with Kurdish Peshmerga forces, Shi’ite Muslim militias, and Sunni tribal fighters, backed by U.S.-led coalition forces, have recaptured several cities in the past year, including Ramadi, Tikrit, and Baiji from a severely weakened Islamic State, whose source of funds was ended when Russian airborne sorties took out key oil infrastructure choke points. 

Sensing the rising weakness among the ISIS ranks, which despite horror stories meant to stem deserters from its army has so far failed to do so, the leader of one of the largest Shi’ite militias taking part in the operation alongside the Iraqi army said earlier today that the final battle to recapture the ISIS strongholder of Falluja, located near Baghdad, will start in “days, not weeks.”

 

The first phase of the offensive that started on Monday is nearly finished, with the complete encirclement of the city that lies 50 km (32 miles) west of the capital, said Hadi al-Amiri, the leader of the Iranian-backed Badr Organization. Amiri, in military fatigues, spoke to state-TV from the operations area with Prime Minister Haider al-Abadi standing by his side, wearing the black uniform of Iraq’s elite counter-terrorism force.

Amiri earlier this week said the Shi’ite paramilitary coalition known as Popular Mobilization will only take part in the encirclement operations, and let the army storm the city, a historic bastion of Sunni Muslim insurgency. Popular Mobilization would only go in the city if the army’s attack fails, he said.

The spiritual leader of Iraq’s Shiites on Friday has called on Iraqi forces battling to retake the city of Fallujah from ISIS militants to protect civilians trapped there.  “Saving innocent people from harm’s way is the most important thing, even more so than targeting the enemy,” the Associated Press quoted Grand Ayatollah Ali al-Sistani as saying. His comments were delivered at Friday prayers by his representative Ahmed al-Safi in the holy city of Karbala.

* * *

Curiously, it was here that a familiar to Zero Hedge readers face has re-emerged, that of Iran’s notorious Qassem Soleimani, the head of the Iranian Revolutionary Guards Corps-Qods Force, the external operations wing of the Revolutionary Guards, who according to the Long War Journal was been spotted near Falluja.

As the military operation to dislodge the Islamic State from one of its last remaining strongholds in Anbar province continues, the in-demand Soleimani is reportedly helping direct operations for the plethora of Iranian-backed militias taking part in the fighting.

A picture of Soleimani in the “Falluja operations room” was posted to the Facebook account of Harakat al Nujaba (shown above). The militia’s leader, Akram al Kaabi, who is a US-designated terrorist, is also shown in the photo alongside Abu Mahdi al Muhandis. Muhandis is another US-designated terrorist and leads both Kata’ib Hezbollah (Hezbollah Brigades) and the umbrella Popular Mobilization Units.

Also pictured is Hadi al Amiri, the leader of the Badr Organization, another Iranian-backed militia. Amiri is closely tied to Iran and its Islamic Revolutionary Guards Corps, and to Qassem Soleimani. During the Iran-Iraq war in the 1980s, Badr fought on the side of the Iranians. Amiri is routinely photographed with Soleimani, and has been quoted as saying, “I love Qassem Soleimani! He is my dearest friend.”

The well-traveled Soleimani has been spotted numerous times in both Iraq and Syria helping direct Iranian-backed militias. In Iraq, this includes Tikrit, Samarra, and Jurf al Sakhar and a previous effort in Anbar province. In Syria, Soleimani has been spotting giving speeches to Hezbollah fighters in the coastal province of Latakia and has been seen with different militias in Aleppo. Soleimani was also photographed with militia fighters in southern Aleppo just last week.

* * *

It is unknown whether Soleimani was involved, but moments ago US-led coalition air and artillery strikes have killed 70 ISIS fighters in Fallujah, including the militants’ leader in the Iraqi city, a military spokesman said Friday. Baghdad-based Colonel Steve Warren said that over the last four days, 20 strikes in the besieged city had destroyed ISIS fighting positions and gun emplacements.


Iraqi security forces celebrate as they hold an ISIS flag captured
in Ramadi, 70 miles (115 kilometers) west of Baghdad, Iraq

We’ve killed more than 70 enemy fighters, including Maher Al-Bilawi, who is the commander of ISIL forces in Falluja,” Warren said, cited by Al Arabiya.

This, of course, won’t completely cause the enemy to stop fighting, but it’s a blow. And it creates confusion and it causes the second-in-command to have to move up. It causes other leadership to have to move around,” he added.

Between 500 and 1,000 ISIS fighters hold Fallujah, and about 50,000 civilians are trapped inside the city, with the jihadists trying to kill those who attempt to flee.

As of this moment, the fall of Fallujah and shortly thereafter Mosul, is likely just a matter of time.

* * *

Meanwhile, as the offensive to recapture key Islamic State strongholds in Iraq escalates, the battle for Raqqa, the Islamic State’s self-declared capital in Syria, has also begun.

 

As Startfor writes, the Syrian Democratic Forces are advancing toward the city, engaging the jihadist group in the villages of al-Hisha, Tal Samen and Mutamshirij along the way.

Because of Raqqa’s strategic importance, the Islamic State will do everything in its power to keep the city within its grasp. Driving the militants from their stronghold will not be easy or cheap, but if the SDF is successful, it will greatly accelerate the Islamic State’s  defeat in Syria. For the Islamic State, the loss of Raqqa would be a devastating blow.

The city has symbolic value as the capital of the group’s so-called caliphate; it is also an important hub for transporting people and supplies. Raqqa sits on the Euphrates River and is the key to controlling several critical highways in Syria. Without it, the Islamic State would have a much harder time moving fighters and goods from Aleppo province to eastern Syria and beyond. Instead it would be forced to rely on the Resafa-Ash Shola road, which is increasingly threatened by the Syrian government’s advances toward Deir el-Zour.

Given the city’s significance to Islamic State operations in Syria, the group can be expected to funnel substantial resources and reinforcements toward its defense. In addition to sending more fighters to Raqqa, the Islamic State will likely launch counterattacks along the SDF’s other front lines, including al-Hasaka, in an effort to distract its foe. However, the Islamic State will be at a disadvantage: While the SDF is focusing most of its attention on attacking the jihadist group, the Islamic State has to contend with the Syrian rebels, Syrian government troops, Kurdish peshmerga and Iraqi forces. Devoting additional attention and resources to Raqqa when it is already overstretched will inevitably hurt the extremist group elsewhere on the battlefield.

* * *

Ultimately, with little funding left, with little US, Saudi and Turkish support available, and with little strategic relevance for ISIS now that Assad’s government is once again safe, the entire point behind the sudden and dramatic emergence of ISIS is gone. Expect ISIS to quietly disappear as its territory is regained by Iraq and Syria respectively, with just the occasional splinter group leftover to source terrorists that make their way into Europe for the occasional suicide bombing, meant to keep Europeans on their toes.

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What Would Ludwig von Mises Do In Venezuela?

Submitted by Tho Bishop via The Mises Institute,

The crisis in Venezuela is the most modern illustration of the horrific consequences of socialism and the devastating reality of hyperinflation. What makes this disaster all the more infuriating is that it could have been avoided with a basic understanding of history. We’ve seen the disaster of socialism and interventionism in various forms play out across the world time and time again with similar results, and yet new generations of central planners — backed by ideologically aligned intellectuals — are consistently able to fool people into believing that “this time will be different.”

Ludwig von Mises himself lived through one of these historical episodes.

Following defeat in World War I, the Austro-Hungarian Empire was in a state of crisis. The Habsburg monarchy ended in 1918 and with it came the dissolution of the Empire. The German-speaking population formed what we now know as Austria, and the nation soon faced a severe economic crisis. The government, led by a coalition of Social Democrats, Christian Socialists, and a Nationalist Party, implemented an ambitious economic program of price controls, food subsidies, nationalization of industries, protectionism, and welfare — and funded it with a printing press.

The result was catastrophe, just as Mises predicted.

Faced with this unbearable reality, Mises used his position as chief economist of the Austrian Chamber of Commerce to push for a series of economic reforms. Given some similarities between today’s situation in Venezuela and the crisis that struck Austria, looking at Mises’s prescription from the past can illustrate a path to prosperity for Venezuela’s future.

1. Abandon and Condemn Socialism

This one is obvious, but it’s a vital first step. Venezuela is a nation of abundant resources, including the world’s largest oil reserve and awe-inspiring tropical beauty. The crisis that Venezuela finds itself in is purely one of ideology, and there is no hope for the country until that is understood. This was the same problem Mises faced in Austria. Writing in 1923, Mises lamented that:

Austria is suffering from a fundamental problem: the dominance of socialist ideas in the country….The Social Democrats rule because they have armed forces behind them, and because at every moment they can impose their will upon the populace by shutting down the transport facilities and the power stations. As long as their unbroken dominance continues, every attempt to put the country back on its feet must fail.

Until the power of Nicolás Maduro’s United Socialist Party of Venezuela is broken, Venezuela has no hope.

2. It Must Abandon the Bolivar

While the official numbers have Venezuela’s annual inflation rate at over 180%, there are many who say the real inflation number is still higher. Whatever the “real” rate is, we’ve seen the Bolivar literally reduced to toilet paper as its value has evaporated to the point that thieves won’t even bother stealing it.

Faced with a similar climate, Mises prioritized monetary reform as the first step in reversing Austria’s situation. As he wrote in 1922:

The continued depreciation of the Austrian crown destroys all prospects for reestablishing the state budget until a new bank of issue has been founded. It is not an improbable assumption that the state will be compelled to suspend all payments once it has become impossible to increase the circulation of banknotes—a possibility that entails almost unthinkable social consequences.

Mises’s ideal solution was for Austria to adapt the gold standard, with the chief reason being that it was a “stable medium of exchange that is independent of the crown.” While I favor any country returning to the gold standard, it is worth noting that there are other currencies that could be used in a Venezuelan reform package.

Daniel Fernández Méndez has written about the possibility of Venezuela adopting the US dollar, and there is certainly a great deal of logic in this approach. While there are many reasons to have doubt in the long-term stability of the Federal Reserve note, it remains the world reserve currency and would represent a major source of stability after the Bolivar. Zimbabwe adopted the dollar following its bout with hyperinflation in 2008–2009.

While adopting the dollar makes sense on paper, it’s fair to question whether such a move would be accepted by a Venezuelan populace who have been warned for years of the dangerous reach of American imperialism. The necessary economic reforms will be painful enough, adding the adoption of the dollar could be too much for Venezuelan people to accept.

An alternative option could be adopting the Chinese yuan. China already has a lot invested in Venezuela, with Chinese banks having pumped billions into the country even while oil prices were plummeting. China has made the stability of the yuan a key part of the Communist Party line, succeeded in having it included last year in the IMF’s basket of currencies.

It is worth noting that Zimbabwe’s financial minister floated the suggestion that Zimbabwe could adopt the yuan in exchange for billions of dollars in debt relief. While that suggestion was eventually shot down by The Reserve Bank of Zimbabwe, it’s a concept that could work in Venezuela.

3. Mass Privatization of the Venezuelan Economy

In 1921, Mises wrote a memo titled An Economic Policy Program for Austria. After stressing the importance of monetary reform, Mises turned his attention to government deficits, writing:

The federal, provincial, and municipal budget deficits principally all spring from the same two sources: the inefficient management of public enterprises and of the food subsidy scheme. The goal should be to transfer the public enterprises into the hands of private businessmen and to dismantle the food subsidies.

Mises spent most of his career writing about the inefficiencies of government bureaucrats trying to replicate the vital societal function of true entrepreneurs. There is perhaps no better example of this than Venezuela today, who — in spite of sitting on more oil than Saudi Arabia – is having to ration power and import oil.  By selling off Venezuela’s publicly owned oil companies — and returning formerly private oil rigs that were taken by the Venezuelan government — Venezuela will see oil production rise and a key industry restored.  

Similarly, privatizing Venezuela telecommunications would solve the problems that currently face that industry. International telecom companies in business with publicly owned Venezuela companies have begun suspending service as they have no ability to pay bills. One of the biggest drains for these Venezuelan companies is that price controls have prevented the company from raising rates to meet inflation, forcing providers to take major losses over time.

Other Recommendations from Mises

Of course, the necessary reforms that must take place within Venezuela do not end with these three broad actions. In fact, a number of the bullet points in Mises’s Economic Policy Program would also apply here. Substituting Venezuela wherever Mises wrote Austria, these include:

  • Currency trading is to be decontrolled. (Ending its current system of bizarre exchange rates.)
  • All import prohibitions are to be lifted.
  • All impediments to exportation and transit are to be removed.
  • Venezuela can cover its need for raw materials and foodstuffs only by importing them. In order to pay for imports it must export finished products, on the basis of which businesses may earn profits. Venezuela needs free trade.
  • Government oversight of industrial production of manufactured goods and the use of raw materials is to be ended.
  • The government management of food supplies is to be abolished.

Embracing these solutions, combined with a legal system dedicated to the protection of property rights, would empower Venezuela into a leading economic power in the world. With the establishment of Mises Institute Venezuela, and the presence of Austrian scholars within the country, there is hope that the works of Ludwig von Mises can obtain the same following they have obtained in Brazil.

via http://ift.tt/1TNAzyr Tyler Durden