Has the Atomic Bombing of Hiroshima and Nagasaki been about the Cold War?

In the US, many political insiders opposed the gruesome atomic bombing Nagasaki and Hiroshima in 1945, which slaughtered civilians conservatively estimated at 75,000 and 150,000 respectively, saw the bombing as unnecessary.

The Washington Blog enumerates them and further reveals of the real reason why this tragic event occurred: as psychological deterrent to the Soviet Union (hat tip Lew Rockwell.com) 

From the Washington’s Blog (all bold original)

History.com notes:

In the years since the two atomic bombs were dropped on Japan, a number of historians have suggested that the weapons had a two-pronged objective …. It has been suggested that the second objective was to demonstrate the new weapon of mass destruction to the Soviet Union. By August 1945, relations between the Soviet Union and the United States had deteriorated badly. The Potsdam Conference between U.S. President Harry S. Truman, Russian leader Joseph Stalin, and Winston Churchill (before being replaced by Clement Attlee) ended just four days before the bombing of Hiroshima. The meeting was marked by recriminations and suspicion between the Americans and Soviets. Russian armies were occupying most of Eastern Europe. Truman and many of his advisers hoped that the U.S. atomic monopoly might offer diplomatic leverage with the Soviets. In this fashion, the dropping of the atomic bomb on Japan can be seen as the first shot of the Cold War.

New Scientist reported in 2005:

The US decision to drop atomic bombs on Hiroshima and Nagasaki in 1945 was meant to kick-start the Cold War rather than end the Second World War, according to two nuclear historians who say they have new evidence backing the controversial theory.

Causing a fission reaction in several kilograms of uranium and plutonium and killing over 200,000 people 60 years ago was done more to impress the Soviet Union than to cow Japan, they say. And the US President who took the decision, Harry Truman, was culpable, they add.

“He knew he was beginning the process of annihilation of the species,” says Peter Kuznick, director of the Nuclear Studies Institute at American University in Washington DC, US. “It was not just a war crime; it was a crime against humanity.”

***

[The conventional explanation of using the bombs to end the war and save lives] is disputed by Kuznick and Mark Selden, a historian from Cornell University in Ithaca, New York, US.

***

New studies of the US, Japanese and Soviet diplomatic archives suggest that Truman’s main motive was to limit Soviet expansion in Asia, Kuznick claims. Japan surrendered because the Soviet Union began an invasion a few days after the Hiroshima bombing, not because of the atomic bombs themselves, he says.

According to an account by Walter Brown, assistant to then-US secretary of state James Byrnes, Truman agreed at a meeting three days before the bomb was dropped on Hiroshima that Japan was “looking for peace”. Truman was told by his army generals, Douglas Macarthur and Dwight Eisenhower, and his naval chief of staff, William Leahy, that there was no military need to use the bomb.

“Impressing Russia was more important than ending the war in Japan,” says Selden.

John Pilger points out:

The US secretary of war, Henry Stimson, told President Truman he was “fearful” that the US air force would have Japan so “bombed out” that the new weapon would not be able “to show its strength”. He later admitted that “no effort was made, and none was seriously considered, to achieve surrender merely in order not to have to use the bomb”. His foreign policy colleagues were eager “to browbeat the Russians with the bomb held rather ostentatiously on our hip”. General Leslie Groves, director of the Manhattan Project that made the bomb, testified: “There was never any illusion on my part that Russia was our enemy, and that the project was conducted on that basis.” The day after Hiroshima was obliterated, President Truman voiced his satisfaction with the “overwhelming success” of “the experiment”.

We’ll give the last word to University of Maryland professor of political economy – and former Legislative Director in the U.S. House of Representatives and the U.S. Senate, and Special Assistant in the Department of State – Gar Alperovitz:

Though most Americans are unaware of the fact, increasing numbers of historians now recognize the United States did not need to use the atomic bomb to end the war against Japan in 1945. Moreover, this essential judgment was expressed by the vast majority of top American military leaders in all three services in the years after the war ended: Army, Navy and Army Air Force. Nor was this the judgment of “liberals,” as is sometimes thought today. In fact, leading conservatives were far more outspoken in challenging the decision as unjustified and immoral than American liberals in the years following World War II.

***

Instead [of allowing other options to end the war, such as letting the Soviets attack Japan with ground forces], the United States rushed to use two atomic bombs at almost exactly the time that an August 8 Soviet attack had originally been scheduled: Hiroshima on August 6 and Nagasaki on August 9. The timing itself has obviously raised questions among many historians. The available evidence, though not conclusive, strongly suggests that the atomic bombs may well have been used in part because American leaders “preferred”—as Pulitzer Prize–winning historian Martin Sherwin has put it—to end the war with the bombs rather than the Soviet attack. Impressing the Soviets during the early diplomatic sparring that ultimately became the Cold War also appears likely to have been a significant factor.

***

The most illuminating perspective, however, comes from top World War II American military leaders. The conventional wisdom that the atomic bomb saved a million lives is so widespread that … most Americans haven’t paused to ponder something rather striking to anyone seriously concerned with the issue: Not only did most top U.S. military leaders think the bombings were unnecessary and unjustified, many were morally offended by what they regarded as the unnecessary destruction of Japanese cities and what were essentially noncombat populations. Moreover, they spoke about it quite openly and publicly.

***

Shortly before his death General George C. Marshall quietly defended the decision, but for the most part he is on record as repeatedly saying that it was not a military decision, but rather a political one.

Let me add this paper from Stanford University authored by Gene Hu 

There is considerable evidence that the American perspective on the Soviet Union and the diplomacy that occurred between the U.S. and the Soviet Union prior to these powers entering into a full-blown Cold War, was influenced by the advantage the Americans had because they had developed nuclear weapons technology. The development of such technology moreover, was dramatically and conclusively demonstrated when Truman dropped the bomb on Hiroshima, then Nagasaki. There was no doubt in the world’s mind that the technology was real and that whoever controlled it, wielded an incredible power. One is tempted to conclude that while the bombing of Hiroshima possibly ended the war with Japan in ways that may have spared both sides lives, it also conveniently served to inform the world of the Americans’ superior military might.

History is written by the victors.

Whether these bombings were due to “insistence on unconditional surrender that was the root of all evil” (Philosopher GEM Anscombe per historian Ralph Raico) or as political psy-war meant as deterrent against the fast expanding forces of the Soviet Union, the barbarism from the use of weapons of mass destruction makes those whom unleashed it war criminals.

To quote historian Ralph Raico 

The destruction of Hiroshima and Nagasaki was a war crime worse than any that Japanese generals were executed for in Tokyo and Manila. If Harry Truman was not a war criminal, then no one ever was.

Quote of the Day: The Folly of Institutional Worship

The individual is king, and all these other things exist for the service of the king. It is a mere superstition to worship any institution, as an institution, and not to judge it by its effects upon the character and the interests of men. It is here that socialist and Catholic make the same grand mistake. They exalt the organization, which is in truth as mere dust under our feet; they debase the man, for whose sake the organization and all other earthly things exist. They posit a priori the claims of the external organization as supreme and transcending all profit and loss account, and they call upon men to sacrifice a large part of their higher nature for the sake of this organization. They both of them sacrifice man, the king, to the mere dead instrument that exists for man’s service.

(bold mine)

This excerpt is from writer, theorist, and 19th century individualist Auberon Edward Herbert in a splendid rejoinder against socialist J. A. Hobson in 1899. (libertarianism.org)

Cartoon of the Day: The Johari Window of Barack Obama

 

hat tip Lew Rockwell Blog

Phisix: Bullmarket Reprieve Represents Profit Opportunities

Life in general has never been even close to fair, so the pretense that the government can make it fair is a valuable and inexhaustible asset to politicians who want to expand government.-Thomas Sowell

Since I look at the world events from the big picture perspective, I hardly change on my views unless some random events (for me) should radically alter the embedded trends.

Following the FED-ECB announcements to support asset prices, I hold on to the premise that these actions combined with domestic interest rates are likely to feed through asset prices especially for ASEAN-Phisix markets

As I wrote last week[1],

artificially suppressed interest rates that have brought about a domestic negative real rates regime, as well as, foreign capital flow movements influenced by external credit easing policies (negative real rates and Quantitative Easing), are likely to further inflate bubble dynamics in the country and in the region, far more than their developed economy and BRIC counterparts.

Yet such credit driven boom will be interpreted by the mainstream as “economic growth” when in reality they represent a bubble cycle or systemic misallocation of capital in progression.

One must be reminded that bubbles come in stages. So far the Philippines seem to be at a benign phase of the bubble cycle.

Again bubbles will principally be manifested on capital intensive sectors (like real estate, mining, manufacturing) and possibly, but not necessarily, through the stock markets.

This means that for as long as the US does not fall into a recession or a crisis, ASEAN outperformance, fueled by a banking credit boom and foreign fund flows operating on a carry trade dynamic or interest rate and currency arbitrages (capital flight I might add), should be expected to continue.

And again I will maintain that ASEAN’s record breaking streak may be sustained at least until the end of the year 2012.

Yet such streak will strictly be conditional to the political-economic developments abroad, as well as, on the monetary engagements by major central banks.

It is important to point out that given the fragility of the current external environments shocks, which may be viewed as a random or “black swan” event, should not be discounted.

Nevertheless global markets as indicated by major benchmarks mostly retrenched this week.

The current pullback (dark maroon bars) essentially represents reversals from last week’s material gains (light maroon bars). This is particularly true for ASEAN markets, India, Russia, France and the US.

So far, this suggests of an environment marked by trading range or a consolidation period.

For the Phisix, the current retreat off the recent record highs should be seen as countercyclical correction phase which normally follows a landmark upside breakout. This should be used as an opportunity to position or accumulate depending on the industry.

From a technical support-resistance perspective, the correction phase brings back the Phisix to the former resistance level (about 5,365), currently the minor support level.

Should the profit taking stage continue, then the 5,175-level can be seen as the next stop or the next support level.

Although my guess is that this bullmarket reprieve is likely to be short and narrow

Rotational and Seasonal Forces at Work

I may further that a rotation process typifies this week’s sectoral performance.

The mining index, which has lagged the broader market last week (light violent) and for the rest of the year, has considerably outperformed this week (dark violent).

Rotating leadership has been the crux of the inflationary boom in the Phisix.

As I pointed out last week, I expect 2013 to be the year where the mining index would regain their leadership. The alternating annual leadership since 2007, not only accounts for the normative rotational process, but also of the truism of “no trend moves in a straight line”, and or, the reversion to the mean.

I would add that seasonal factors could also be a factor in play.

The September-October window has been notorious for major stock market crashes[2].

But given that the US Federal Reserve and the European Central Bank’s recent announcement of “unlimited” buying of bonds (estimated at $2 trillion or more), particularly aimed at providing support to financial assets, the likelihood of a nearby crash seems vastly reduced.

Again as pointed out last week, instead what we may be seeing could be the “buy the rumor, sell on news” dynamic. The massive build up of expectations from central bank steroids priced in a boom. The realization brought about by these central banker’s moves to reflate the system may have triggered some profit taking activities.

So “sell on news” could have been compounded by seasonal weakness[3]. This perhaps could be due to back to school expenditures in the US, and for the Philippines, second semester[4].

Yet as October culminates, we should expect an acceleration of the price recovery of the Phisix and ASEAN bellwethers which will likely come in the backdrop of the ECB’s active engagement of asset purchases. This should emanate from the activation or institution of the permanent bailout fund, the European Stability Mechanism[5].

Parallel Universe: Markets and Economic Reality Diverge

Lingering global economic weakness could be a factor too.

However, this seems likely a subordinate force. That’s because massive interventions in the marketplace have spawned a parallel universe—where prices of financial assets have departed from economic reality.

Proof?

The Phisix continues to break into new highs even as a sharp fall in Philippine exports last August will likely to weigh down on statistical economic growth and on earnings of export based publicly listed companies.

Contra mainstream expectations, whom have mostly been entranced by political illusions, the decline in exports validates my prognosis last July[6]. 

Yet no amount of downward revisions of company earnings[7] has put to halt to the year-to-date advances of US equity benchmarks specifically, the Dow Industrials 9.1%, the S&P 500 13.6% and the Nasdaq 16.85% in spite of this week’s substantial 2%+ of losses for each of them.

Similarly no amount of downward revisions[8] has been an obstacle to substantial year-to-date gains of over 10% for industrialized economies of ex-Japan Asia; Singapore, Hong Kong, Australia and New Zealand, except for Taiwan and Korea whom are up by 5%+. For emerging Asia the story has been the same, Thailand, Philippines, India, Vietnam and Indonesia has been on fire with 10-20% gains except for Malaysia (8%+).

This serve as more proof that in a world of fiat money, corporate earnings have hardly been a major factor in determining the price direction of equity markets.

Now that the FED-ECB has thrown the gauntlet for significantly more interventions, mainstream analysts have begun to bloviate about a “recovery” in earnings, i.e. to justify even higher prices.

If downside revisions hardly influenced stock prices to reflect on its “actual” state, the same analysts have now suggesting that “improvements” in earnings will extrapolate to higher stocks. It’s a bizarre twist of logic.

The Asian outperformance has been bruited as sporting a low beta relative to the US S&P and Euro Stoxx[9] which seem to imply of “decoupling”.

This placid state of relative low beta has accounted for the non-recessionary environment for the US. The notion of decoupling in a deeply interconnected world and financial markets resonates Sir John Templeton’s four most dangerous words in investing, “This time is different”[10]

As the Asian Development Bank warns[11],

Yet, the Lehman shock in 2008 and the ongoing eurozone debt crisis have tested the resilience of these markets, and the threat of financial contagion is real. A closer analysis shows that shock and volatility spillovers from both crises to Asian markets are quite significant.

Finally the main empirical evidence on why ASEAN has been relatively outperforming the rest of Asia…

…can be seen from ASEAN’s credit growth[12], where ASEAN has surpassed the region’s industrialized and major emerging market counterparts.

As I have repeatedly been pointing out, these have been the outcome of lesser fiscal baggage, which brings about more traction on the negative real rates imposed by their respective central banks, and from the steep yield curve, which induces the banking system to issue more credit to take advantage of the spread.

All these constitutes as main ingredients to a credit bubble.

The Progressing Inflationary Boom, Political Feel Good But Cruel Intentions

Internal market indicators remain buoyant

Despite this week’s retrenchment in major Phisix weighted issues, broadbased sentiment have been perking up behind the scenes.

The weekly averaged daily trades have been rebounding. This means either that there have been more market participants or that current participants have been trading or churning their accounts more frequently. To do so suggests of confidence in the marketplace.

The rebound in daily trades has equally been confirmed by a bounce in the average number of issues traded daily.

Confidence has also been diffusing to the extent where market participants have been dabbling with third tier issues.

And considering the lack of liquidity, third tier issues tend to generate outsized returns that often magnetize people afflicted with the gambler’s tick.

The supercilious idea by certain bureaucrats that some speculators have formed into syndicates of “trading gangs”[13] to take advantage of others through manipulation of the markets via social media misses the point entirely: Inflationary booms electrify the gambler’s adrenalin or the speculator’s dopamine[14].

Both charts above reveals of the broad based yield chasing phenomenon brought about by negative real rates regime.

Since incentives drives people’s actions, the incentive to punt or to wager has been prompted for by the desire to eke out returns on an environment imposed upon the unwitting public of policies that penalizes savings and rewards irresponsibility and fecklessness.

The narrowing people’s time preferences only encourage wanton wagering.

In reality people’s response to incentives from government’s  manipulation of the marketplace signify as symptoms of the bubble or business cycle in motion.

Read my lips: Don’t mistake effects as the cause; it is government policies that incentivize on most of such malfeasance.

Yet people don’t realize that at the peak of a mania, imprudence becomes the norm. (see above diagrams)

As late economist Lionel Robbins wrote[15],

And if they do not last — and you can see that once people have been seized with the speculative mania it would take a continuously increasing inflation to keep them going — if these conditions do not last, then these mistakes are revealed.

The fact that authorities cannot see these manifests of their cluelessness or of their dishonesty by attempting to pass the blame onto the marketplace what truly has been a policy design, i.e. To promote aggregate demand through consumption and speculation via inflationary “euthanasia of the rentier” policies.

Let me add that if local authorities can’t seem to see this, ironically the IMF has[16]

“It is a concern,” said Laura Kodres, an assistant director in the IMF’s monetary and capital markets department, told reporters in Washington today. “The low interest rates environment has a lot of other effects besides lowering interest rates to consumers.”

“Widespread evidence suggests that a prolonged period of low short-term interest rates encourages excessive risk taking” by financial institutions, the IMF wrote in a chapter of its Global Financial Stability report released today.

If financial professionals are gullible enough to fall into the low interest rate trap, then how much more the retail investors?

Yet pretentious attempts to control prices from supposed unwieldy behavior by the markets through feel good sounding regulations represents as the alter ego of inflation.

As the great Ludwig von Mises warned[17],

The second mischief is that those engaged in futile and hopeless attempts to fight the inevitable consequences of inflation — the rise in prices — are masquerading their endeavors as a fight against inflation. While fighting the symptoms, they pretend to fight the root causes of the evil. And because they do not comprehend the causal relation between the increase in money in circulation and credit expansion on the one hand and the rise in prices on the other, they practically make things worse.

This week’s substantial retreat by the Phisix has hardly accounted for as a broad market decline. This only solidifies the theory of rotation or relative pricing from an inflationary boom as evident in the stock market.

Many took profits from outperforming Phisix issues and shifted to the mining industry and to other third tier issues.

Nevertheless these signify as signs that market participants still desire to remain engaged with the stock market.

Amidst QE: The Mighty Peso and Prospective Foreign Fund Flows 

Finally it has been clear that local investors have been instrumental in providing most of the support on the domestic market so far.

Typically, foreign funds accounts for about 40-45%

This matches the fund flows monitored by the IMF where foreign fund flows to emerging market bonds and to equities have remained modest through most of 2012.

This dynamic I expect to change soon.

A simple clue can be seen below

I have argued that domestic financial repression policies by developed economies will eventually prompt for more dramatic yield chasing dynamic or euphemism for capital flight on a global scale.

While all central banks have been engaged in either printing money or adding digital entries to their balance sheets, the difference is on the degree.

The highly impressive strength by the Philippine Peso exhibits this seminal phenomenon.

The Peso has been rising against the European euro, the Japanese yen, the British pound and even the Chinese Yuan. I purposely excluded the US dollar since everyone has been fixated on this, as well as, the Swiss franc which has been anchored to the euro. Nevertheless, the mainstream will be surprised to realize that the Peso has been outperforming currencies of major economies; no not because of grandeur accomplishments by political leaders but as consequence mostly from the war on interest rates from monetary actions

I believe that the Japan may spearhead that capital flight to ASEAN[18] 

Considering that the valuations of currencies have to take into account principally the demand and supply as per the great Professor von Mises’ advise [19],

The valuation of a monetary unit depends not on the wealth of a country, but rather on the relationship between the quantity of, and demand for, money. Thus, even the richest country can have a bad currency and the poorest country a good one.

The supply of money remains relatively in favor of the Peso. That’s because the Bangko Sentral ng Piliipinas, or the BSP, does much less in balance sheet expansion than her peers. Oh yes you can ignore or take the verbal waffling or twaddle about the BSP refusing to print money with a grain of salt, unless they obscure or change the definition of money creation. In reality they have been doing as their peers[20].

On the demand side, the underlying and largely ignored credit boom has been painting the Philippines and the ASEAN peers as providing the economic “growth” premium.

Bottom line: Despite the current fragility from global economic anxieties, I expect financial repression in developed economies to funnel significant amount of money into ASEAN region and into the Philippines.

For now, unless stagflation becomes a clear and present danger, expect the Phisix and ASEAN markets to reach new highs until at least the year end, provided no external shocks emerge.

---

[1] see Phisix-ASEAN Bellwethers at Fresh Record Highs October 8, 2012

[2] Wikipedia.org List of stock market crashes and bear markets

[3] Business Insider September Is The Worst Month For Stocks — But Do You Realize HOW Bad It Really Is? September 3, 2012

[4] See Austrian Business Cycle and September Market Crashes June 27, 2012

[5] See Europe’s ESM Activated, Expect ECB to Rev Up on the Printing Press October 9, 2012

[6] See I Told You So Moment: Philippine Exports Hit in August, October 12, 2012

[7] Ed Yardeni S&P 500 Revenues & Earnings October 9, 2012

[8] DBS Group Research Economics Markets Strategy 4^th Quarter September 13, 2012

[9] DBS Research ibid

[10] Parkman Bob Consider these 'words of wisdom' about investing SirJohnTempleton.org September 20, 2006

[11] Asian Development Bank ASIA BOND MONITOR SEPTEMBER 2012 ADBOnline.adb.org

[12] IMF Regional Economic Outlook Asia and Pacific Regional Economic Outlook––October 2012 Update, October 11, 2012

[13] See The Philippine SEC’s Phantasm of “Trading Gangs” October 14, 2012

[14] See The Magic of Central Banking Talk Therapy July 28, 2012

[15] Lionel Robbins The Twofold Roots of the Great Depression: Inflationism and Intervention, October 1, 2010, Mises.org

[16] Bloomberg.com Low Interest Rates May Lead to Risky Behavior, IMF Says September 28, 2012

[17] Ludwig von Mises Inflation and Price Control May 27, 2005

[18] See Will Japan’s Investments Drive the Phisix to the 10,000 levels?, March 19, 2012

[19] Ludwig von Mises STABILIZATION OF THE MONETARY UNIT—FROM THE VIEWPOINT OF THEORY (1923) THE CAUSES OF THE ECONOMIC CRISIS p.18 Mises.org

[20] See How True is it that the BSP Refuses to Print Money? October 9, 2012

The Philippine SEC’s Phantasm of “Trading Gangs”

Below is an example of Hayek's Fatal Conceit applied to the Philippines

From the Business Mirror,

The Securities and Exchange Commission (SEC) is studying new surveillance initiatives that may see the establishment of a special division to monitor online chatter targeting so-called trading gangs, SEC Commissioner Juanita Cueto said on Thursday.

Trading gangs, according to Cueto are loosely defined as short-term trader syndicates who have both the resources and numbers to drive market prices and volumes.

She added that the trading rings that “play” the market are nothing new in the country or even abroad, but she noted that their influence had been growing in recent years, aided by the anonymity offered by the Internet and the influx of new and relatively inexperienced investors who may fall prey to these groups.

“They have pseudo names on the Internet. The scary part is they buy and sell in unison. Some of their analyses are inaccurate and can hurt issuers,” Cueto told the BusinessMirror. “It is a concern of legitimate brokers and issuers.”

She said the surveillance measures could involve closer scrutiny of Internet-based stock-market forums.

Some people cheer at this development WITHOUT an inkling of understanding HOW the SEC will be able to define and enforce surveillance of the so called "short term trader syndicates" that “have both the resources and numbers to drive market prices and volumes” from so-called trading gangs.

At what criterion will groups of people (syndicates) who shares “beliefs” in certain stocks, even in the short term, whom they are or could be exposed to, culpable of “driving” market prices and volumes? What if the stocks they promote indeed goes up? 

If a prediction fails, does this mechanically imply fraud?

In bear markets, does allegations of “pump and dump” proliferate or even exist at all?

Importantly what delineates “belief” and “analysis” from the intent to “defraud” through manipulation?

So the implication is that such regulations will be arbitrarily defined or established according to the whims of the political masters.

People who espouse political intrusions have a strange mystic adulation for the supposed omniscience of authorities and of the platonic ethics of regulators.

Yet if this logic holds true, then markets DO NOT need to exist at all.

Áll such ruckus essentially boils down to the definition of prices and values.

Who determines what appropriate prices and values are? The SEC? From what basis?

For starters, market prices are ALWAYS subjectively determined

To quote the great Ludwig von Mises,

It is ultimately always the subjective value judgments of individuals that determine the formation of prices. Catallactics in conceiving the pricing process necessarily reverts to the fundamental category of action, the preference given to a over b. In view of popular errors it is expedient to emphasize that catallactics deals with the real prices as they are paid in definite transactions and not with imaginary prices. The concept of final prices is merely a mental tool for the grasp of a particular problem, the emergence of entrepreneurial profit and loss.

Prices, which are subjective expressions of people’s value scales and time preferences, are principally used for economic calculations from where trades (of all kinds including stock markets) emerge, again Professor Mises

In the market society there are money prices. Economic calculation is calculation in terms of money prices. The various quantities of goods and services enter into this calculation with the amount of money for which they are bought and sold on the market or for which they could prospectively be bought and sold. It is a fictitious assumption that an isolated self-sufficient individual or the general manager of a socialist system, i.e., a system in which there is no market for means of production, could calculate. There is no way which could lead one from the money computation of a market economy to any kind of computation in a nonmarket system.

So if prices are subjectively determined, how then does the "gods" of the SEC know each and every individuals order of priorities?

And at what levels are prices to be considered “fair”?

Again Professor Mises,

The concept of a "just" or "fair" price is devoid of any scientific meaning; it is a disguise for wishes, a striving for a state of affairs different from reality. Market prices are entirely determined by the value judgments of men as they really act.

So supposed fraud will be substituted for propaganda and the curtailment of civil liberties.

This comment by a market practitioner from the same article “It could be really hard to prove wrongdoing this way,” is half correct, but has been obscured by the misleading reference of “noting how identities can be masked online”.

“Anonymity” does not automatically make stock promotions unethical. What makes unethical is the deliberate act to defraud or bamboozle people, e.g. a breach of contract or deprivation of property rights, which based on the above seems very difficult to prove.

This would be analogical to say that advertising is a fraud.

To which government providing “truth” in advertising is likewise delusional, Professor Ludwig von Mises writes,

But whoever is ready to grant to the government this power would be inconsistent if he objected to the demand to submit the statements of churches and sects to the same examination. Freedom is indivisible. As soon as one starts to restrict it, one enters upon a decline on which it is difficult to stop. If one assigns to the government the task of making truth prevail in the advertising of perfumes and toothpaste, one cannot contest it the right to look after truth in the more important matters of religion, philosophy, and social ideology.

And government interventions DO NOT make transactions ethical too, on the contrary, they make them worst.

Bruce L Benson in “The Enterprise of Law: Justice Without the State” writes, (bold emphasis mine) 

When government becomes involved in the enterprise of law, both the rules of conduct and the institutions for enforcement are likely to change. The primary functions of governments are to act as a mechanism to take wealth from some and transfer it to others, and to discriminate among groups on the basis of their relative power in order to determine who gains and who loses.

Yes most people don’t seem to realize that in an inflationary boom, the guiding incentives provided by manipulation of interest rates promote rampant gambling and irresponsible actions which are always blamed on market actors.

From the great Henry Hazlitt

Inflation, to sum up, is the increase in the volume of money and bank credit in relation to the volume of goods. It is harmful because it depreciates the value of the monetary unit, raises everybody's cost of living, imposes what is in effect a tax on the poorest (without exemptions) at as high a rate as the tax on the richest, wipes out the value of past savings, discourages future savings, redistributes wealth and income wantonly, encourages and rewards speculation and gambling at the expense of thrift and work, undermines confidence in the justice of a free enterprise system, and corrupts public and private morals.

Non-Austrian Charles Kindleberger author of Mania’s Panics and Crashes also notes how swindles emerge during bubble cycles. (Previously I quoted him here)

Commercial and financial crisis are intimately bound up with transactions that overstep the confines of law and morality shadowy though these confines be. The propensities to swindle and be swindled run parallel to the propensity to speculate during a boom. Crash and panic, with their motto of sauve qui peut induce still more to cheat in order to save themselves. And the signal for panic is often the revelation of some swindle, theft embezzlement or fraud

And as proof, I cited instances of Ponzi schemes in the US has had meaningful correlations with the FED’s credit easing policies.

When political gods determine winners and losers, contrary to popular brainwashed expectations, the outcome is not one of optimism. According to author, philosopher and individualist Ayn Rand on her classic novel Atlas Shrugged,

Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion--when you see that in order to produce, you need to obtain permission from men who produce nothing--when you see that money is flowing to those who deal, not in goods, but in favors--when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you--when you see corruption being rewarded and honesty becoming a self-sacrifice--you may know that your society is doomed. Money is so noble a medium that is does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.

Such interventionism also leads to a suppression of freedom of expression.

Nonetheless, sorry to say but regulations will not solve or protect people form their silliness or foolishness, their reckless behavior and the entitlement mentality which most likely has been a result of existing policies…instead these would only do worse.

And in contrast, as I previously noted, successful investing requires Self discipline.

Thieves have Preempted Bernanke’s (QE 4.0) Helicopter Drop?

Thieves may just have arrogated team Bernanke on QE 4.0.

According to the NBC New York (hat tip Zero Hedge) 

Federal authorities are warning merchants to be on the lookout for stolen $100 bills that aren't supposed to go into circulation until next year.

The bills were stolen from an airplane that landed in Philadelphia from Dallas Thursday morning. The plane had been transporting money from the Federal Reserve facility in Dallas.

Bills meant for circulation next year will add to the already exploding currency in circulation. 

nominal currency in circulation (chart from St. Louis Fed)

annual % growth

Signs of the Accession of Austrian Economics in China

In China, anti-Keynesianism via Austrian economics seems to be gaining foothold even in the academic world. (hat tip Prof. John Cochran at the Mises Blog) 

First the recognition of the Keynesian flopperoo.

From the Wall Street Journal 

Three years ago, Keynesianism was official policy. The 2008 financial crisis had Beijing gloating over the failure of the free-market "Washington Consensus" and touting the "China Model" of government intervention. Keynesianism fit the statist zeitgeist and Beijing then suffered an export slump, so the government allocated $3.5 trillion—or about 50% of gross domestic product—in bank loans and direct spending.

Mr. Zhang's academic colleagues were all praise for the "China Model," but in 2009 he was giving speeches entitled "Bury Keynesianism." Then a top administrator at Peking University, where he now teaches economics, he argued that since the financial crisis was caused by easy money, it couldn't be solved by the same. "The current economy is like a drug addict, and the prescription from the doctor is morphine, so the final result will be much worse," he said.

Next, recognition of the bubble (business cycle) phenomenon from the growing embrace of Austrian economics

He invoked the ideas of the late Nobel laureate Friedrich Hayek and the Austrian School of Economics to argue that if the economy weren't allowed to adjust on its own, China's minor bust would be followed by a bigger one. He also advocated doing away with existing distortions such as the monopolies enjoyed in many industries by state-owned enterprises.

Those were the days when China was fast becoming the world's second-largest economy (growth in one 2010 quarter crossed 11% on an annual basis), so the establishment was in no mood to listen. "When I criticized the central government's stimulus policy, many senior officials were not happy," Mr. Zhang says. It might not have helped that at last year's World Economic Forum in China he called the government's powerful National Development and Reform Commission "a bunch of smart people doing something really stupid."

Ultimately, Beijing's stimulus fed a false investment boom that stoked asset bubbles—then the morphine wore off while the government tightened. Officials claim the economy grew at 7.6% year-on-year between April and June this year. Skeptics think the real number is closer to 4%. (One London research house says 1%.) Meanwhile, industries dominated or favored by the state, such as steel or solar power, are idling from overcapacity. Countless sheets of copper are reportedly stacked in warehouses, blocking doorways and exemplifying Hayek's notion of "malinvestment."

In other words, the stimulus was a poster child for Mr. Zhang's Austrian theories. And the sheer size of the failure suddenly has people paying attention. "The Keynesian policy didn't deliver what it promised," he says, so "more and more people realize that . . . when the government makes investment [in] something that's useless, recession will come."

Mr. Zhang’s punchline deserving of the quote of the day:

"We human beings always seek happiness," says Mr. Zhang. "Now there are two ways. You make yourself happy by making other people unhappy—I call that the logic of robbery. The other way, you make yourself happy by making other people happy—that's the logic of the market. Which way do you prefer?"

Given the snowballing forces decentralization prompted for by globalization compounded by massive technological innovation that has deepened connectivity and diffusion of the knowledge revolution, these could yet be signs of the twilight of, or as Professor Gary North predicts, "dancing on the grave of" Keynesianism.