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Month: May 2014

What Does The US Government Want in Ukraine? – Article by Ron Paul

What Does The US Government Want in Ukraine? – Article by Ron Paul

The New Renaissance Hat
Ron Paul
May 11, 2014
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In several eastern Ukrainian towns over the past week, the military opened fire on its own citizens. Dozens may have been killed in the violence. Although the US government generally condemns a country’s use of military force against its own population, especially if they are unarmed protesters, this time the US administration blamed the victims. After as many as 20 unarmed protesters were killed on the May 9th holiday in Ukraine, the State Department spokesman said “we condemn the outbreak of violence caused by pro-Russia separatists.”

Why are people protesting in eastern Ukraine? Because they do not believe the government that came to power after the US-backed uprising in February is legitimate. They do not recognize the authority of an unelected president and prime minister. The US sees this as a Russian-sponsored destabilization effort, but is it so hard to understand that the people in Ukraine may be annoyed with the US and EU for their involvement in regime change in their country? Would we be so willing to accept an unelected government in Washington put in place with the backing of the Chinese and Iranians?

The US State Department provided much assistance earlier this year to those involved in the effort to overthrow the Ukrainian government. The US warned the Ukrainian government at the time not to take any action against those in the streets, even as they engaged in violence and occupied government buildings. But now that those former protesters have come to power, the US takes a different view of protest. Now they give full support to the bloody crackdown against protesters in the east. The State Department spokesperson said last week: “We continue to call for groups who have jeopardized public order by taking up arms and seizing public buildings in violation of Ukrainian law to disarm and leave the buildings they have seized.” This is the opposite of what they said in February. Do they think the rest of the world does not see this hypocrisy?

The residents of eastern Ukraine have long been closer to Russia than to the US and EU. In fact, that part of Ukraine had been a part of Russia. After February’s regime change, officials in the east announced that they would hold referenda to see whether the population wanted autonomy from the US-backed government in Kiev. The US demanded that Russian President Putin stop eastern Ukraine from voting on autonomy, and last week the Russian president did just that: he said that the vote should not be held as scheduled. The eastern Ukrainians ignored him and said they would hold the vote anyway. So much for the US claims that Russia controls the opposition in Ukraine.

Even though the Russian president followed US demands and urged the eastern Ukrainians to hold off on the vote, the US State Department announced that the US would apply additional sanctions on Russia if the vote is held! Does this make any sense?

The real question is why the US government is involved in Ukraine in the first place. We are broke. We cannot even afford to fix our own economy. Yet we want to run Ukraine? Does it really matter whom Ukrainians elect to represent them? Is it really a national-security matter worth risking a nuclear war with Russia whether Ukraine votes for more regional autonomy and a weaker central government? Isn’t that how the United States was originally conceived?

Has the arrogance of the US administration, thinking they should run the world, driven us to the brink of another major war in Europe? Let us hope they will stop this dangerous game and come to their senses. I say let’s have no war for Ukraine!

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

Extending Life in Mice With Artificially Shortened Life Spans is Rarely Directly Relevant or Useful – Article by Reason

Extending Life in Mice With Artificially Shortened Life Spans is Rarely Directly Relevant or Useful – Article by Reason

The New Renaissance Hat
Reason
May 4, 2014
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There are numerous examples of studies that use mice genetically engineered to suffer forms of shortened life span with the appearance of accelerated aging. One has to be very cautious in reading anything into this sort of work, however: it is rarely of any great relevance to normal aging, as it creates and then attempts to ameliorate an entirely artificial situation. The appearance of accelerated aging is not in fact accelerated aging, but is rather often caused by mechanisms that are of little importance in normal aging. Even when the mechanisms are relevant, the overall metabolic circumstances can render it impossible to determine whether or not a partial treatment will be of any use in normal aging. The gold standard for relevance when evaluating new methods is the extension of life in unmodified mice, but unfortunately this is expensive and slow.

The publicity materials quoted below are a good example of research in animals exhibiting shortened life spans. Here scientists are investigating a protein involved in the induction of cellular senescence. As is often the case, however, from the structure of the work it is impossible to tell whether or not their drug candidate will be of any use as a treatment to lower levels of cellular senescence in normal aging and thus produce benefits such as extended health and life span. Those tests will still have occur:

Quote:

When cells or tissue age – called senescence – they lose the ability to regenerate and secrete certain proteins, like a distinctive fingerprint. One of those proteins, PAI-1 (plasminogen activator inhibitor) has been [a focus of] research, originally as it relates to cardiovascular disease. “We made the intellectual leap between a marker of senescence and physiological aging. We asked is this marker for cell aging one of the drivers or mechanisms of rapid physiological aging?”

For the study, [researchers] used mice bred to be deficient in a gene (Klotho) that suppresses aging. These mice exhibit accelerated aging in the form of arteriosclerosis, neurodegeneration, osteoporosis and emphysema and have much shorter life spans than regular mice. [These] rapidly aging mice produce increased levels of PAI-1 in their blood and tissue.

Then scientists fed the rapidly aging mice TM5441 – the experimental drug – in their food every day. The result was a decrease in PAI-1 activity, which quadrupled the mice’s life span and kept their organs healthy and functioning. “This is a completely different target and different drug than anything else being investigated for potential effects in prolonging life. It makes sense that this might be one component of a cocktail of drugs or supplements that a person might take in the future to extend their healthy life.”

Link: http://www.northwestern.edu/newscenter/stories/2014/04/experimental-drug-prolongs-life

Reason is the founder of The Longevity Meme (now Fight Aging!). He saw the need for The Longevity Meme in late 2000, after spending a number of years searching for the most useful contribution he could make to the future of healthy life extension. When not advancing the Longevity Meme or Fight Aging!, Reason works as a technologist in a variety of industries. 
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This work is reproduced here in accord with a Creative Commons Attribution license. It was originally published on FightAging.org.

The Methuselah Mouse Prize: Changing the Conversation about Aging – Article by Advocate of Negligible Senescence

The Methuselah Mouse Prize: Changing the Conversation about Aging – Article by Advocate of Negligible Senescence

The New Renaissance Hat
Advocate of Negligible Senescence
May 3, 2014
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ANS_Methuselah_Mouse_Prize
Methuselah Foundation created a stir in the research community by introducing the Methuselah Mouse Prize in 2003. The Mouse Prize was designed to directly accelerate the development of revolutionary new life extension therapies by awarding two cash prizes: one to the research team that broke the world record for the oldest-ever mouse; and one to the team that developed the most successful late-onset rejuvenation strategy.Unlike other engineering prizes (for example, the X Prize for lunar exploration), an award of the Methuselah Mouse Prize is not the end of the matter. The winner establishes a record that others have to break.
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Why mice? Mice are genetically similar to humans. They are small and inexpensive to maintain so studying large quantities is feasible. Their short lifespan, about three years, makes it possible to see if interventions result in longer, healthier lives—all in time to be of benefit to our own lives.

The Mouse Prize for longevity was first won by a team led by Dr. Andrzej Bartke of Southern Illinois University. The prize for rejuvenation first went to Dr. Stephen Spindler of the University of California.

Additionally, in 2009, the first Special Mprize Lifespan Achievement Award went to Dr. Z. Dave Sharp for the successful healthy life extension of already aged mice using a pharmaceutical, rapamycin.
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Through programs like the Methuselah Mouse Prize, Methuselah Foundation has helped change the conversation on aging and longevity, lending credibility and prestige to areas of research that once were openly frowned upon.
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Previous winners have already proven that healthy life can be extended; more wins are possible by researchers who can best previous winners’ performances, and each new winner pushes the outer limits of healthy life back even further.

How translatable the lesson of a Methuselah mouse will be to people is a matter of debate. The logic of disposable-soma theory applies to both species.

Private donations made since 2003 have bumped the prize value up to nearly $3.5 million, according to the latest update on the Methuselah Foundation website.

Don’t be misled by the size of the fund into thinking that a small donation will make no difference, because this is fundamentally a popular enterprise, a people’s prize, so the number of individual donors is really just as important as the total.

Searching for a cure for age-related ill health, a problem that kills more people than all other causes combined, is a moral imperative. The Advocate for Negligible Senescence publishes articles that discuss and educate the public about research to combat senescence. See the Advocate’s Facebook page.  
Military Conscription Shows the Evil of Ukraine’s Government – Article by G. Stolyarov II

Military Conscription Shows the Evil of Ukraine’s Government – Article by G. Stolyarov II

The New Renaissance Hat
G. Stolyarov II
May 1, 2014
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I have, in the past, expressed ambivalence regarding the government of Oleksandr Turchynov and Arseniy Yatseniuk in Ukraine, but that government’s decision on May 1, 2014, to impose military conscription for men aged 18 to 25 clearly reveals it to be evil and unworthy of even verbal support, not to mention the material assistance and economic bailouts currently lavished on it by Western governments and the International Monetary Fund.

As I wrote in 2008 in “Why Freedom is Free and Rights Are Right: The Case Against Conscription, Compulsion, and Confiscation”, conscription is murder by lottery: “By fielding an army of conscripts, a government necessarily guarantees that some of those conscripts will be killed – although nobody knows in advance who will die. In effect, this is no different from selecting a large number of fit young men, assigning numbers to each of them, and picking a few of the numbers out of a hat – whereafter those whose numbers have been picked will be shot. Conscription is just such a murder by lottery – except that the picking of numbers is performed by the vicissitudes of the battlefield rather than the luck of a draw. The responsibility for the deaths of millions of young men from conscripted armies throughout world history lies solely on the shoulders of the governments who conscripted them. The enemy soldiers who killed them were mere instruments of murder; they were likely only following orders – and were likely themselves under compulsion to do so. The government officials who drafted the men, however, did so of their own free will and even with enthusiasm.”

It would be a complete contradiction of the principles of liberty and peace to support any government that conscripts its young men to become cannon fodder – disposable pawns in the power struggles of older, powerful leaders who will not themselves bear the physical costs of their desires to dominate over one group of people or another. Vladimir Putin’s regime is evil, too, and so are many of the militants aligned with it, as I have acknowledged previously. But supporting one evil just because it is arrayed against another is neither moral nor effective. American foreign policy engages in this support for the “enemy of the enemy” at almost every available opportunity, and this always comes back to hurt Americans in both the long and the not-so-long term.

Ironically, it was the overthrown Viktor Yanukovych who had abolished conscription in 2013 – perhaps the only good and liberty-friendly decision he made. Yanukovych deserved to be overthrown for instigating the killings of his own people, but this new government of thugs is no better. Indeed, it has managed to undo the one good legacy of Yanukovych’s reign! And yes, it is a government of thugs. This March 5 article from Channel 4 News in the United Kingdom – no Putin mouthpiece! – explains how many of the top posts in the Ukrainian government are occupied by leaders of Svoboda and Right Sector, two ultra-nationalist groups that grew out of explicitly fascist movements that use explicit Nazi symbols such as the Wolfsangel. Here are two images: at the top, Svoboda’s Oleh Tyahnybok delivers a Nazi salute; at the bottom, he poses with arch-interventionist and neoconservative warmonger John McCain. Right Sector’s leader Dmytro Yarosh is Ukraine’s Deputy Secretary of National Security – security, that is, for those who meet Yarosh’s standards of ethnic and linguistic “purity”.

Neither side in the conflict in Eastern Ukraine is just or right, or anything but destructive to the interests of the only innocent parties in the mix – civilians who seek to live and work in peace. No principle, no signal, no feverish nationalistic pride, no set of lines drawn on a map is worth the life of a single human being. As Voltaire poignantly and perceptively expressed it in his Philosophical Dictionary, “It needs twenty years to lead man from the plant state in which he is within his mother’s womb, and the pure animal state which is the lot of his early childhood, to the state when the maturity of the reason begins to appear. It has needed thirty centuries to learn a little about his structure. It would need eternity to learn something about his soul. It takes an instant to kill him.” No worthless, ephemeral power struggles and posturing can ever justify sacrificing the existence of the rich individual universe – the incomparably intricate and sophisticated mind and body – of any actual human being.

The Ukrainian government is forcing young men to kill their fellow Ukrainian and Russian young men, against whom they have no individual grievances. This is vile and reprehensible, and the Ukrainian government deserves to fall. It would be easy for it to fall and would not require active external intervention; the West would just need to withdraw its support and let the situation unfold as it would with only the involvement of local actors. If the West continues to prop it up with aid, this would only prolong the spree of destruction engaged in by people who should never have had a chance at high office in any civilized society, who should have been marginalized much like the Ku Klux Klan and various neo-Nazi parties are treated in the United States today. No government that uses its own people as cannon fodder against their will deserves to exist; no country whose “territorial integrity” must be maintained by a conscript army deserves for its territory to remain intact.

As to the young Ukrainian men about to suffer under the yoke of military conscription, my advice to them can be found in my poem “The Draft Dodger”, written in 2004 but still just as relevant ten years later. As one who proudly escaped Alexander Lukashenko’s Belrusian military conscription myself (I have subsequently become a US citizen – so I am thankfully safe from that particular tyranny), I wish these innocent young men all the best in finding peaceful, prosperous lives outside the heinous havoc which they did not create.

The Draft Dodger (2004)
G. Stolyarov II

I have been sentenced to a war.
And my offense? Naught but my age.
I’ll suffer pestilence and gore,
And die upon a foreign stage.
The verdict has been passed by those
Who wish to equal me to rags,
Plug sand into a breathing nose,
Borrow my life, return dog-tags.

They tell me, “Freedom is not free,”
And thus they seek mine to deprive.
But no! I’ll courage have to flee,
To choose to prosper and survive!
The right that mine was from the womb,
That I had bought with Reason’s gold,
I shall not lay before a tomb,
But will Self’s Shrine from robbers hold.

I claim no more than what is mine;
To rise each morning when I will,
To build, compose, create, refine,
And heed no Congressman’s dread bill,
Whose parasitic voting bloc
My soul as spoils of war would claim,
No noble war of awe and shock,
But rabble-rousers’ power game.

When nations seek me for their slave,
Their cause, their plight shall pass in vain.
Let no man give but what he gave,
Of his own will, for his own gain.
Freedom can’t stand on sacrifice;
With blood and bones I shan’t it craft.
I shall not offer prey to vice,
And, proudly, I shall dodge this draft!

Ron Paul, Richard Cobden, and the Risks of Opposing War – Article by Ryan McMaken

Ron Paul, Richard Cobden, and the Risks of Opposing War – Article by Ryan McMaken

The New Renaissance Hat
Ryan W. McMaken
May 1, 2014
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Since at least as early as the eighteen century, classical liberalism, and its modern variant libertarianism, have opposed warfare except in cases of obvious self-defense. We see this anti-war position clearly among the anti-federalists of eighteenth-century America (who opposed all standing armies) and more famously within George Washington’s Farewell Address. Thomas Jefferson frequently inveighed against war, although in moves typical for Jefferson, he acted against his own professed ideology on a number of occasions.

On the other side of the Atlantic, liberalism finally made significant gains in Britain with the rise of the Anti-Corn Law League in the late 1830s. The head of the league, a radical liberal named Richard Cobden, rose to prominence throughout the 1840s and is notable today for his active defense of laissez-faire capitalism as a member of the House of Commons, and also for his staunch anti-interventionism in foreign affairs.

For a time, his political star rose quickly, but by the time the Crimean War ended, Cobden, had been cast aside by both a ruling class and a public enthusiastic for both empire and war.

Prior to the war Cobden traveled Europe as an honored guest at international peace conferences while advocating for free markets, civil liberties, and libertarianism everywhere he traveled. But in the end, as has been so often the case, his political career was ended by his opposition to war, and his refusal to buy into nationalistic propaganda.

Like the Crimean crisis of today, the Crimean crises of the early 1850s were caused by little more than the efforts of various so-called great powers to tip the global balance of power in their favor. Foremost among those grasping for global power was the British Empire.

But even as early as the 1830s, the British were seized by a series of national hysterias whipped up by a variety of anti-Russian pundits who were obsessed with increasing British military spending and strength in the name of “defense” from the Russians.

As is so often the case in securing the case for war, the pro-militarist argument among the Brits rested on perpetuating and augmenting the public’s nationalistic feelings that the Russians were uncommonly aggressive and sinister. Cobden, obviously far better informed on the matter than the typical Brit, published a pamphlet on Russia in 1836 actually considering the facts of Russian foreign policy, which he often compared favorably to the hyper-aggressive foreign policy employed by the British Empire.

Cobden began by comparing Russian expansion to British expansion, noting that “during the last hundred years, England has, for every square league of territory annexed to Russia, by force, violence, or fraud, appropriated to herself three.” And that among the self-professed opponents of conquest, the British failed to recognize that “If the English writer calls down indignation upon the conquerors of the Ukraine, Finland, and the Crimea, may not Russian historians conjure up equally painful reminiscences upon the subjects of Gibraltar, the Cape, and Hindostan?”

In an interesting parallel to the modern Crimean crisis, much of the opposition to the Russian among British militarists was based on the assertion that the Russians had annexed portions of Poland in aggressive moves that were deemed by the British as completely unwarranted. Cobden, however, understanding the history of the region to be much more murky than the neat little scenarios painted by militarists, recognized that neither side was angelic and blameless and that many of the “annexed” territories were in fact populated by Russians that had earlier been conquered and annexed by the Poles.

The Russians, while themselves no doubt hostile toward neighbors, were surrounded by hostile neighbors themselves, with the origins of conflicts going back decades or even centuries. The puerile and simplistic arguments of the British militarists, who advocated for what would become a global, despotic, and racist British Empire, added little of value to any actual public knowledge of the realities in Eastern Europe.

For his efforts in gaining a true understanding of global conflicts, and for seeking a policy of negotiation and anti-nationalism, Cobden was declared to be un-patriotic and a friend to the great enemy Russia during the Crimean war. Cobden, who had perhaps done more to consistently advance the cause of liberty than anyone else in Europe of his day, was declared to be a friend of despots.

The similarities to today’s situation are of course striking. The Crimea, an area of highly ambiguous ethnic and national allegiance is declared by the West to be a perpetual territory of anti-Russian forces much like the Eastern Polish provinces of old, in spite of the presence of a population highly sympathetic to Russian rule.

Moreover, the successor to the British Empire, the United States, with its global system of client states and puppet dictatorships and occupied territories declares itself fit to rule on a Russian “invasion” that, quite unlike the American invasion of Iraq, resulted in exactly one reported casualty.

As was the case with Cobden in the nineteenth century, however, merely pointing out these facts today earns one the label of “anti-American” or “pro-Russian” as in the obvious case of Ron Paul.

Like Cobden, Paul spent decades denouncing oppressive regimes domestically and internationally, only to now be declared “pro-Putin,” “pacifist,” “unpatriotic,” and “anti-American” by a host of ideologues utterly uninterested in familiarizing themselves with Paul’s actual record, including his denunciations, while in Congress, of Communist regimes and his warnings about Putin’s desire to expand Russian influence in Afghanistan.

Of course, Russia has not been the only target. For those who can remember the lead up to the Iraq War in 2003, this should all feel like déjà vu since many at that time, including some libertarians, claimed that opponents of invasion were “pro-Saddam Hussein” for pointing out that Iraq clearly had no weapons of mass destruction, and that his secular regime was probably preferable to the murderous Islamist oligarchy that has replaced it.

Paul remains in good company with the likes of Cobden, H.L. Mencken, William Graham Sumner, and virtually the entire membership of the American Anti-Imperialist League, including Edward Atkinson who encouraged American soldiers in the Philippines to mutiny. These were radical principled opponents of militarism who opposed government violence at great risk to themselves and their reputations. Some modern American libertarians, on the other hand, well out of reach of the Russian state, would rather spend their time stating what everyone already knows: Russia is not a libertarian paradise.

Ryan W. McMaken is the editor of Mises Daily and The Free Market. Send him mail. See Ryan McMaken’s article archives.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

Europe and Deflation Paranoia – Article by Frank Hollenbeck

Europe and Deflation Paranoia – Article by Frank Hollenbeck

The New Renaissance Hat
Frank Hollenbeck
April 30, 2014
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There is a current incessant flow of articles warning us of the certain economic calamity if deflation is allowed to show its nose for even the briefest period of time. This ogre of deflation, we are told, must be defeated with the printing presses at all costs. Of course, the real objective of this fear mongering is to enable continued national-government theft through debasement. Every dollar printed is a government tax on cash balances.

There are two main sources of deflation. The first comes from a general increase in the amount of goods and services available. In this type of deflation, a reduction in costs, in a competitive environment, leads to lower prices. The high technology sector has thrived in this type of deflation for decades as technical progress (e.g., the effect of Moore’s Law) has powered innovations and computing power at ever-decreasing costs. The same was true for most industries during much of the nineteenth century, as the living standard increased considerably. Every man benefited from the increase in real wages resulting from lower prices.

The second source of deflation is from a reduction in the money supply that comes from an increase in the desire of the public or banking sectors to hold cash (i.e., hoarding).[1] An uncomplicated example will make this point clearer. Suppose we have 10 pencils and $10. Only at an equilibrium price of $1 will there be no excess output or excess money.

Suppose the production cost of a pencil is 80 cents. The rate of return is 25 percent. Now suppose people hoard $5 and stuff money in their mattress instead of saving it. The price of a pencil will be cut in half, falling from $1 to 50 cents, since we now have a money supply of $5 chasing 10 pencils. If input prices also fall to 40 cents per pencil then there is no problem since the rate of return is still 25 percent. In this example, a drop in output prices forced an adjustment in input prices.

The Keynesian fear is that input prices will not adjust fast enough to a drop in output prices so that the economy will fall into a deflation-depression spiral. The Keynesian-monetarist solution is to have the government print $5 to avoid this deflation.

Yet, this money creation is distortive and will cause a misallocation of resources since the new money will not be spent in the same areas or proportions as the money that is now being “hoarded” (as defined by Keynesians). Furthermore, even if the government could find the right areas or proportions, it would still lead to misallocations, since the hoarding reflects a desire to realign relative prices closer to what society really wants to be produced. The printing of money may actually increase the desire to hold cash, as we see today. Holding cash may be the preferred choice over consumption or investment (savings) when relative and absolute prices have been distorted by the printing press.

Of course, no one is really asking the critical questions. Why does holding more cash change the money supply, and why did the public and banks decide to increase their cash holdings in the first place?[2] Without fractional reserve banking, neither the public nor the banks could significantly change the money supply by holding more cash, nor could banks extend credit faster than slow-moving savings. The boom and ensuing malinvestments would be a thing of the past and, thus, so would the desire to hold more cash during the bust phase of the business cycle. If central banks are really concerned about this type of deflation, they should be addressing the cause — fractional reserve banking — and not the result. Telling a drunk that he can avoid the hangover by drinking even more whiskey is simply making the situation worse.[3] The real solution is to have him stop drinking.

According to the European Central Bank’s Mario Draghi,

The second drawback of low inflation … is that it makes the adjustment of imbalances much more difficult. It is one thing to have to adjust relative prices with an inflation rate which is around 2%, another thing is to adjust relative prices with an inflation rate which is around 0.5%. That means that the change in certain prices, in order to readjust, will have to become negative. And you know that prices and wages have a certain nominal rigidity which makes these adjustments more complex.

Draghi is confusing the first source of deflation with the second. The recent low inflation in the Euro zone can be attributed primarily to a strengthening of the Euro, and a drop in food and energy prices.

Economists at the Bundesbank must be quietly seething. They are obviously not blind to the ECB’s excuses to indirectly monetize the southern bloc’s debt. Draghi’s “whatever it takes” comment gave southern bloc countries extra time. Yet, little has been done to reign in the size of bloated public sectors. Debt-to-GDP ratios continue to rise and higher taxes in southern bloc countries have caused an even greater contraction of the private sector. Many banks in southern Europe are technically bankrupt. Non-performing loans in Italy have gone from about 5.8 percent in 2007 to over 15 percent today. And, the situation is getting worse.

Greece recently placed a five-year bond at under 5 percent which was eight times oversubscribed. This highlights the degree to which the financial sector in Europe is now dependent on the “Draghi put.” As elsewhere in the world, interest rates in Europe are totally distorted and no longer serve the critical function of allocating resources according to society’s time preference of consumption, or even reflect any real risk of default.

The ECB will likely impose negative rates shortly but will discover, as the Fed and others did before it, that you can bring a horse to water but cannot make him drink. QE will then be on the table, but unlike the Fed, the ECB is limited in the choice of assets it can purchase since direct purchase of Euro government bonds violates the German constitution. One day, Germany and the southern bloc countries, including France, will clash on what is the appropriate role of monetary policy.

Germany would be wise to plan, today, for a possible Euro exit.

Notes

[1] Keynesians view holding cash, and even holding savings in banks as “hoarding,” but properly understood, only the equivalent of stuffing money in a mattress is hoarding.

[2] Fractional-reserve lending is inflationary, thus contributing to inflationary booms. In turn, banks hold more cash when they fear a confidence crisis, which is also a result of the boom.

[3] Since inflationary fractional-reserve lending is a source of the problem, additional lending of the same sort is not the solution.

Frank Hollenbeck teaches finance and economics at the International University of Geneva. He has previously held positions as a Senior Economist at the State Department, Chief Economist at Caterpillar Overseas, and as an Associate Director of a Swiss private bank. See Frank Hollenbeck’s article archives.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.