Leithner Letter Nos. 124-126
26 April 2010 - 26 June 2010

It would appear that the more liberty we lose, the less people are able to imagine how liberty might work. It is a fascinating thing to behold.

  • People can no longer imagine a world in which we could be secure without massive invasions of our privacy at every step, and even being strip-searched before boarding airplanes, even though private institutions manage much greater security without any invasions of human rights;
  • People can no longer remember how a true free market in medical care would work, even though all the problems of the current system were created by government interventions in the first place;
  • People imagine that we need 700 military bases around the world, and endless wars in the Middle East, for “security,” though safe Switzerland doesn’t;
  • People think it is insane to think of life without central banks, even though they are modern inventions that have destroyed currency after currency;
  • The idea of privatizing roads or water supplies sounds outlandish, even though we have a long history of both;
  • People even wonder how anyone would be educated in the absence of public schools, as if markets themselves didn't create in America the world’s most literate society in the 18th and 19th centuries.

This list could go on and on. But the problem is that the capacity to imagine freedom – the very source of life for civilization and humanity itself – is being eroded in our society and culture. The less freedom we have, the less people are able to imagine what freedom feels like, and therefore the less they are willing to fight for its restoration.

We must begin again to imagine that freedom itself could work. In order to do this, we must learn economics. We must come to understand history better. We must study the sciences of human action to re-learn what Juan de Mariana, John Locke, Thomas Jefferson, Thomas Paine, Frédéric Bastiat, Ludwig von Mises, F.A. Hayek, Henry Hazlitt, Murray N. Rothbard, and the entire liberal tradition understood.

What they knew is the great secret of the ages: society contains within itself the capacity for self-management, and there is nothing that government can do to improve on the results of the voluntary association, exchange, creativity, and choices of every member of the human family. If you know this lesson, if you believe this lesson, you are part of the great liberal tradition. You are also a threat to the regime, not only the one we live under currently, but every regime all over the world, in every time and place. In fact, the greatest guarantor of liberty is an entire population that is a relentless and daily threat to the regime precisely because they embrace this dream of liberty.

Llewellyn H. Rockwell, Jr.
The Misesian Vision (23 January 2009)

Investors, Beware: the Crowd Is Very Optimistic

On 30 December 2008, when the All Ordinaries Index (AOI) stood at 3,638, The Weekend Australian asked a group (comprised mostly of funds managers and stock brokers, but including the head of the Australian Psychics’ Association) to predict its level – as well as that of the Dow Jones Industrial Average (DJIA), the price of an ounce of gold and a barrel of oil, the RBA’s overnight cash rate and the $A-$US exchange rate – one year hence. The most bullish member of the panel prophesied that the AOI would rise by 38% to 5,037; the most bearish forecast that it would fall by 12% to 3,200; and the mean of their predictions was a rise to 4,367. As The Weekend Australian (16-17 January 2010) put it, “at a time when the sky appeared to be falling, our panel held its nerve and predicted the market would recover to the tune of 20% in calendar 2009.” Funds managers are normally a bullish bunch; accordingly, their predictions tend to be overly optimistic. In late 2008, however, they weren’t exuberant enough: on 31 December 2009, the All Ordinaries Index closed at 4,882 – a rise of more than 33% during the year.  

Early in January, The Weekend Australian asked another group (whose membership overlapped heavily with the previous year’s) to predict the level of the AOI, DJIA, etc., at the end of 2010. The most bullish member of the group predicted that it would climb to 5,800; the most bearish (who was also the most bearish at the end of 2008) predicted that it would fall to 4,417; and the mean prediction was a rise to 5,317. As The Weekend Australian (16-17 January 2010) put it, “having slightly underestimated the extent of the 2009 share market recovery, the panel predicts an average 12% gain for the All Ordinaries Index, with the Dow tipped to add a further 8%.” “Overall,” the article concluded, “the message from the ether is encouraging. ‘Generally speaking I feel things are likely to improve,’ says Australian Psychics’ Association head Simon Turnbull.”

To read the entire Newsletter (PDF), click here.

Chris Leithner


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