Speculation, Human Action and Financial Markets


Speculation, Human Action and Financial Markets

By Duncan Whitmore

Within the past two weeks, retail investors congregating on the social media site Reddit bid up the stock of ailing company GameStop at the expense of large Wall Street hedge funds, all of whom had significant financial stakes reliant upon the price of the stock falling rather than rising. Several of these hedge funds were thrown into serious financial difficulty as a result of the price rocketing from around $20 a share to a high of nearly $400 in the space of only a few weeks. At the time of writing, the day traders have apparently turned their attention to the manipulated silver market, which is also starting to see significant gains. Fed up with a rigged casino market in which all of the spoils go to large Wall Street banks and financial firms, the amateurs appeared to have beaten the latter at their own game – at least, that is, in terms of having forced them to reveal the corrupt nature of the system if not in monetary profit.

This latest round in the battle of the populists vs the elitists is part of the ongoing collapse and rejection of inflationary state corporatism (the Western form of socialism that was birthed by World War One) and political globalism. Every blow that is dealt to this odious, oligarchic system – such as by Brexit and Trump – is one to be welcomed. However, whereas outright socialism (such as that practised in the former Soviet Union) entails direct state ownership over the means of production, the corporatist system operates through capitalistic facades such as nominally private businesses, free trade and exchange, stock markets, and so on. As a result, the socialised elements of our economic system have, for too long, been able to get away with offloading the blame for the problems they cause onto “capitalism” or “too much freedom” instead of the root cause which is state privilege and state interference with genuine private property rights. Indeed, that was exactly what happened after the housing market crash in 2008, with the whole fiasco being blamed on “greedy”, private bankers instead of the state induced, inflationary financial system. The long run result of our failure to identify the state as the true source of the problems has been that state failure has been rewarded with state growth.

Unfortunately, therefore, it is not enough for libertarians to simply cheer on the demise of the current, rotten system. In addition, we have to ensure that the proper enemy is identified and outed as state force and fraud, not the capitalistic institutions through which they operate. We must keep an eye not only on the current crop of elites, but also the circling vultures of popular, hard left politicians such as Bernie Sanders, Elizabeth Warren and Alexandria Ocasio-Cortez, who will be poised to blame everything indiscriminately on “capitalism” before advocating for total economic socialism as the answer.1 It would be a complete disaster if we were to allow one form of tyranny to be succeeded by another. Indeed, even the so-called “Great Reset” – which, far from being any kind of “revolution” or “renewal”, is actually a repackaging and rebranding of the present system in a far more potent form – is being sold as a reset of capitalism, the latter of which has supposedly failed us. Continue reading

Economic Myths #5 – Banking is Capitalist


By both mainstream economists and the general public the cycle of “boom and bust” is believed to be a tendency inherent in any capitalist economy. The fact that the latest of such cycles, beginning in 2008 (and arguably not having ended), originated in the banking sector and that large banks and bankers ratcheted up huge earnings and bonuses only to cause disaster has implicated banking as representative of the very worst aspects of capitalism – the epitome of uncontrollable greed that ends in catastrophe.

Unfortunately this popular view of the mainstream could not be further from the truth. In fact, with its intimate ties to the state and its special, legal privileges it is hard to imagine a less capitalistic industry than banking. Part of the deception – wilfully inflamed by politicians and their lackeys – is one that engulfs other industries subject to state meddling such as utilities markets. This is the belief that, simply because the participants in the industry in question are private individuals or entities that are not officially part of the state, the enterprise must be classified as part of the free market and saddled with all of the supposed flaws of that system. Very often, however, private companies and brands are simply the public facade of what is essentially a state owned operation or state controlled cartel. Continue reading

In Defence of Loan Sharking


Loan Sharking: A Brief Defence
By Sean Gabb

The British Government has announced it will cap the rates of interest on the loans people take out to tide them over till payday. It will amend the current Financial Services Bill to give the planned Financial Conduct Authority the power to limit charges.

Now, some of the interest rates charged do look astonishing. The loan companies that advertise on Channel Five all charge about 2,000 per cent. Others are said to charge as much as 4,000 per cent. The last time I borrowed money, I paid five per cent. I avoid going into debt on my credit cards, because of the 22 per cent charged on them. It may seem heartless to defend the right to charge very high interest rates – especially as these are charged to the very poor, who then have trouble getting out of debt. However, limiting the rate of interest they can be charged is not the way to help the poor. Let me explain. Continue reading

An Anarchist Response to the UK Autumn Statement


by Daniel Pryor

An Anarchist Response to the UK Autumn Statement

Major political parties in the United Kingdom are so far divorced from market anarchism as to render them a homogeneous mass of irrelevance. That said, it’s worth examining the policy announcements in Wednesday’s Autumn Statement by Chancellor George Osborne, if only to clarify the anarchist position and provide a critique of what many Brits incorrectly perceive to be “free-market” policies. Continue reading

Godfrey Bloom on the Pensions Scandal


by Godfrey Bloom

I spent 40 years with City institutions. I am so glad to be out of it. I retired in 2004. It is impossible to value assets in any realistic way. As a neo-Austrian economist I understand well enough that value is totally subjective in terms of goods or services. The argument needs no repetition for readers of this blog, although much repetition in economics class rooms in state universities.

Money is simply a utility of exchange, a deferment of the completion of a transaction to avoid a return to a barter system. But how do you value a money instrument? I ran a fixed interest fund with some success in the late 80’s and early 90’s, interest being the compensation for deferment of receiving goods or services. The problems we now have were all in the system then but nowhere near the scale of today. Continue reading

British State Getting Ready to Dump the Dollar


by Don Hank

My recent article on dedollarization mentioned several countries that were dedollarizing but not the UK, which had not yet joined the fray.

However, the UK has taken the most significant and daring step of all. Today’s morning paper says the United Kingdom is issuing SOVEREIGN BONDS denominated in…are you ready for this?…

RENMINBI. You can now buy UK bonds denominated in the Chinese yuan!!!  Continue reading