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The Lighthouse is the weekly email newsletter of the Independent Institute.
Subscribe now, or browse Back Issues.

Volume 16, Issue 28: July 15, 2014

  1. ZIRP: The Fed’s WMD Against Savers
  2. Trade Restrictions Even Worse than Obamacare?
  3. Obama’s Smoke Screen on Pot Policy
  4. EVENT: Are There Lessons for Us Today from Nazi Gun Control? (Oakland, CA; 7/24/14)
  5. New Blog Posts
  6. Selected News Alerts


1) ZIRP: The Fed’s WMD Against Savers

John Maynard Keynes famously called for “the euthanasia of the rentier,” that is, the destruction of landowners who live on rental income. Does Federal Reserve Chair Janet Yellen advocate the same treatment for retirees trying to live on interest income? One wonders. The Fed’s policies have devastated seniors and others who have scrimped and saved only to find that inflation has eaten away at the paltry interest they’ve earned from nominally “safe” financial assets, such as bank savings accounts, certificates of deposits, and U.S. Treasury bonds. Independent Institute Senior Fellow Robert Higgs examines the havoc in the summer 2014 issue of The Independent Review.

“The politicians constantly bark about their solicitude for those who are helpless and in difficulty through no fault of their own,” Higgs writes. “Yet scores of millions of people who save money to support themselves in old age now find themselves progressively despoiled by the very officials who purport to be their protectors.”

Since late 2008, the Fed has pursued a zero interest-rate policy (ZIRP) aimed at keeping rates low. This may be good for the federal government, because it holds down the interest costs of the soaring national debt, but it has devastated ordinary savers, Higgs explains. Just compare savings yields and inflation. According to a June press release by Bureau of Labor Statistics, the “all items” Consumer Price Index is rising 2.1 percent per year. This rate exceeded the yields that month for savings accounts (1 percent or less), 5-year CDs (1.37 percent), and 5-year Treasury bonds (1.69 percent). Here’s another way to view the scope of the problem. In the United States, every age group over 16 years old has seen a decline in labor participation—with one exception: those 55 years and older. ZIRP isn’t the only cause that has sent Grandma and Grandpa back into the workforce, but it has certainly been a powerful “stick” to get them to seek out Help Wanted signs at the local mall.

The Fed’s Immiseration of People Who Live on Interest Earnings, by Robert Higgs (Spring 2014, The Independent Review)

Reining in the Fed, by J. Huston McCulloch (The Beacon, 7/13/14)

Delusions of Power: New Explorations of the State, War, and Economy, by Robert Higgs

Crisis and Leviathan: Critical Episodes in the Growth of American Government (25th Anniversary Edition), by Robert Higgs

The Independent Review: Please be sure to take advantage of our special offer of your choice of a FREE book when you renew or order a new subscription online.

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2) Trade Restrictions Even Worse than Obamacare?

Obamacare and Dodd-Frank have created enormous and costly uncertainty in the U.S. economy since their passage in 2010. Yet bad as they are, the Hawley-Smoot tariff hike of 1930 was worse. Independent Institute Research Fellow Burton A. Abrams, author of the award-winning book The Terrible 10: A Century of Economy Folly, considers the legislation to be one of the most destructive economic policies in American history.

The bill was publicly opposed by more than 1,000 professional economists and cleared the Senate by only two votes, but this didn’t mitigate the economic damage it inflicted. “The average tariff on protected goods was 53 percent, but the rates varied,” Abrams writes in Investor’s Business Daily. “In today’s terms, the tax on a $20,000 imported automobile would be $10,600.”

There were other negative consequences as well. The protectionist measure prompted retaliation from America’s trading partners, leading to a huge reduction in international trade and contributing to the Great Depression. As for the co-sponsors’ political fate, Hawley and Smoot lost their 1932 re-election bids, but by then the damage had already been done. The same is true of most bad economic policies, Abrams explains: “Sadly, the negative consequences of those misguided policies can easily outlast the election.”

As Bad As Obamacare Is, Hawley-Smoot Tariff Act Was Worse, by Burton A. Abrams (Investor’s Business Daily, 6/13/12)

The Terrible 10: A Century of Economy Folly, by Burton A. Abrams

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3) Obama’s Smoke Screen on Pot Policy

President Obama told CNN’s Jake Trapper in January that it’s up to Congress to decide whether or not to remove marijuana from the list of Schedule I narcotics, the most serious classification in law. The president’s evasion is apparent. As Independent Institute Research Fellow Wendy McElroy notes, Obama has several options available for decriminalizing pot.

The Obama administration could direct the Drug Enforcement Agency to reclassify marijuana to a Schedule III drug or even declassify it entirely, a power provided by the Controlled Substances Act; Obama could issue an executive order to declassify pot; Obama could order Attorney General Eric Holder to stop prosecuting pot growers and dealers. Each of these options has parallels to steps the White House has taken on other controversial issues. Clearly, the issue is one of political will—not legal authority.

Writes McElroy: “Placing a young, inhaling Obama in jail would not have accomplished anything positive. Why is he willing to persecute today’s young people for past behavior about which he jokes?”

A Federal Schizophrenia about Marijuana, by Wendy McElroy (The Hill, 6/27/14)

Drug War Crimes: The Consequences of Prohibition, by Jeffrey A. Miron

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4) EVENT: Are There Lessons for Us Today from Nazi Gun Control? (Oakland, CA; 7/24/14)

Constitutional legal scholar, attorney, and historian Stephen P. Halbrook has labored in two trenches in the defense of the Second Amendment. On the legal front, he is a leading lawyer who has argued—and won—three cases in the U.S. Supreme Court in defense of private gun ownership. On the scholarly front, he has authored numerous books and scholarly papers about the origins of the Second Amendment, the importance of “the right to bear arms,” and related issues.

On Thursday, July 24, Halbrook will be at the Independent Institute in Oakland, California, to discuss the explosive findings of his latest book, Gun Control in the Third Reich: Disarming the Jews and “Enemies of the State,” a fascinating work that sheds important new light on how the Nazi regime used firearms restrictions to repress its political foes and consolidate power.

The book tells the dramatic tale of gun laws in Germany before and after Hitler’s rise to power and their role in one of the regime’s most infamous campaigns before World War II: Kristallnacht. Oddly, the role of gun control in Weimar Germany and the Third Reich is a subject rarely mentioned in the voluminous literature on Nazism. Some readers have argued that Halbrook’s book has important lessons for today’s heated debate over gun control in the United States; others remain skeptical. Halbrook will address this issue head on in his July 24 presentation—his only scheduled public appearance in Northern California.

Who
Stephen P. Halbrook is a research fellow at the Independent Institute and author of the new book, Gun Control in the Third Reich: Disarming the Jews and “Enemies of the State”. His other books include The Founders’ Second Amendment, Securing Civil Rights, and That Every Man Be Armed. As a leading Second Amendment attorney, he successfully argued three Supreme Court cases: United States v. Thompson/Center Arms Company (1992), Printz v. United States (1997), and Castillo v. United States (2000).

When
Thursday, July 24, 2014
Reception and Book Signing: 6:00 p.m.
Program: 7:00 p.m.

Where
Independent Institute Conference Center
100 Swan Way, Oakland, CA 94621-1428
Map and Directions

Tickets
General Admission: $20 ($15 for Members)
General Admission plus a hardcover copy of the book Gun Control in the Third Reich: $40 ($35 for Members)

MORE INFO: Are There Lessons for Us Today from Nazi Gun Control?, featuring Stephen P. Halbrook (Oakland, CA; 7/24/14)

AUDIO: Halbrook on Operation Freedom Radio with Dr. Dave Janda (6/29/14)

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5) New Blog Posts

From The Beacon:

From MyGovCost News & Blog:

The $3.7 Billion Child Trafficking Tab
K. Lloyd Billingsley (7/14/14)

A Lack of Control
Craig Eyermann (7/11/14)

$100 Billion in Improper Payments
K. Lloyd Billingsley (7/11/14)

Covered California Privatizes Email Stonewalling
K. Lloyd Billingsley (7/9/14)

The Mispriorities of Bureaucrats
Craig Eyermann (7/8/14)

You can find the Independent Institute’s Spanish-language website here and blog here.

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6) Selected News Alerts

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