You are receiving this email because you signed up to receive our free e-letter Skousen Investor Cafe, or you purchased a product or service from its publisher, Eagle Financial Publications. [Skousen's Investor CAFE] [Forecasts & Strategies]( [Fast Money Alert]( [Five Star Trader]( [Home Run Trader]( [TNT Trader]( Milton Friedmanâs Blind Spot By Mark Skousen
Editor, [Forecasts & Strategies]( 04/18/2024 Sponsored Content [7 Powerhouse Stocks to Buy and Hold Forever]( Every investor I know is worried about the same thing right now⦠Will this incredible market rally continue, or are we about to see a massive correction? Look, the honest answer is nobody knows. But I DO know a way to stop worrying about the marketâs next moveâ¦Own a select group of stocks that can weather whatever the market has in store. These 7 stocks fit the bill and Iâm making the full list available completely FREE for a limited time in our new report, â7 Stocks to Buy and Hold Forever.â [Get it now.]( âAdam Smith was a radical and a revolutionary in his time -- just as those of us who preach laissez-faire are in our time.â -- Milton Friedman (1976) Last week, I was on a panel at the Association of Private Enterprise Education (APEE) meetings in Las Vegas. We were there to review the new biography, âMilton Friedman: The Last Conservativeâ (New York: Farrar, Straus and Giroux, 2023, 575 pages) written by Professor Jennifer Burns, who teaches at Stanford University. You can [buy the book on Amazon](. I also recommend Lanny Ebenstein's excellent book, "Milton Friedman: A Biography," written in 2007. It is based on extensive interviews with Friedman before he died. Order it [here](. APEE Meeting on April 9, 2024, in Las Vegas. Bottom row: Tom Miller (moderator), Jennifer Burns, David Henderson. Top row: Michael Bordo, Mark Skousen. Milton Friedman (1912-2006) and I maintained a friendship and correspondence from the early 1980s until his death on November 16, 2006. In fact, I may have been the last person to have lunch with him at his favorite Italian restaurant in San Francisco, just a few weeks before he died. He had forgotten to shave, but we had a great time together. He had full use of his mind, but he complained that he was losing his eyesight at age 94. âMaybe youâll live to be 100,â I said. He replied, âI hope not.â Lunch with Milton Friedman in 2006, a few weeks before his death. He is one of those people you wish you could meet today and discuss the latest news and economic theories. After his passing, I wrote a tribute to this happy warrior, calling it âMy Friendly Fights with Milton Friedman.â In it, I recount the various encounters and debates I had with Friedman over the years. Read it here: [My Friendly Fights with Dr. Friedman](. Despite our disagreements, he was kind enough to endorse two of my books that he especially liked: âVienna and Chicago, Friends or Foes? A Tale of Two Schools of Free-Market Economicsâ (Capital Press, 2005), in which he said, âWe were friends -- and foes!â, and my history of thought, âThe Making of Modern Economics,â in which chapter 15 on Friedman is called âMiltonâs Paradise.â (Available [here](.) Iâve written a full review of Burnsâs book [here](. [Forget Oil and Solar ⦠This is the Future of Power]( This single, one-half inch pellet of fuel contains more power than 120 gallons of oil ⦠17,000 cubic feet of natural gas ⦠and one ton of coal. Itâs safe, efficient and best of all⦠itâs 100% clean. [For the full story, click here!]( Did Milton Friedman Have a Blind Spot? Overall, Iâm a big fan. So much so, that I dedicated my âEconomic Logicâ textbook to him and the Austrian economist Friedrich Hayek. (Find it [here](.) But in this article, I want to focus on one of Friedmanâs weaknesses, what I might even call his Achilles Heel: His excessive emphasis on the aggregate economy instead of analyzing the various sectors of the economy that might prove to be vulnerable. He seldom examined what I call âthe structure of productionâ or the innerworkings of the economy that might cause a recession or crisis down the road. Friedman has long advocated a policy he called ârules, not discretionâ when it came to monetary policy. He wanted the Fed to adopt a stable âmonetarist ruleâ by increasing the money supply at a low, steady rate equal to the long-term economic growth rate (3-4% a year). Thus, the Fed could be abolished, or reduced to a regulatory banking institution. However, near the end of his life, he extolled the virtues of Alan Greenspan, the Fed chairman from 1986 to 2006. Price inflation and interest rates gradually declined under Greenspan, despite the switching back and forth from easy to tight money half a dozen times. Friedman said he was impressed with Greenspanâs skill in bringing down inflation and interest rates while still maintaining a âGoldilocksâ economy. Then Came the Financial Crisis of 2008 But Friedman did not live to witness the financial crisis of 2008, a major blight on Greenspanâs legacy. But his co-author and colleague Anna J. Schwartz did (she died in 2012). Interestingly, Friedman and Schwartzâs famous chapter on the Great Depression (âThe Great Contraction, 1929-1933â), taken from their magnum opus, âA Monetary History of the United States, 1869-1960,â (Princeton University Press, 1963), was reprinted in 2007 with a new introduction by Anna Schwartz. The short work on the Great Depression was brought back just before the financial crisis started in 2008 and after Milton Friedman died. It was perfect timing as we were about to witness the worst economic debacle since the Great Depression. Yet, Schwartz was oblivious to any evidence of a collapse. In the introduction of the new 2007 reprint, she wrote, âAs the federal funds rate moves in a low and narrow range in response to low and stable inflation, volatility of the business cycle and real economy has moderated.â She couldnât have been more wrong. The financial crisis that occurred a year later was the worst economic crisis since the Great Depression, causing a collapse in real estate, stocks and major financial institutions. If it werenât for massive intervention by the Fed and the Treasury, it could have turned into a 1930s-style Depression. Friedmanâs (and Keynesâs) Fatal Flaw This is the flaw in the Chicago (and Keynesian) schools -- their macroeconomics is too aggregate to see the malinvestments developing inside the economy, in this case, the real estate boom and bust. Friedman failed to see the inner workings of the real estate bubble that developed under Greenspan -- the subprime and no-doc mortgage loan scandal, the leveraged buying and selling of mortgage securities both here and abroad, the triple-A rating of Freddie Mac and Fannie Mae and the overvaluation of housing values due to Greenspanâs pushing short-term interest rates to 1% in 2004. As the chief banking officer of the United States, he (and his successor Ben Bernanke) should have known better than to allow these clear violations of the âprudent manâ rule in banking. No other nation allowed no-doc and subprime mortgages to individuals who had no business buying a home -- not Canada, Australia or France. As the chief banking officers of the United States, both Greenspan and Bernanke were aware of these shoddy mortgage practices and the high risk involved in leveraged mortgage securities but did nothing about it. Is the American Economy Depression Proof? In 1954, Friedman gave a lecture in Stockholm, Sweden, entitled âWhy the American Economy is Depression Proof.â He claimed that federal bank deposit insurance, the abandonment of the gold standard, the adoption of a generous welfare state as a âbuilt-in stabilizerâ and the Federal Reserve acting as a lender of last resort would keep the capitalist system afloat and end forever-runs on banks and other financial institutions. He came close to being wrong in 2008. We dodged a âgreat depressionâ bullet back then, but one wonders if we are not headed for a worse crisis down the road, given the governmentâs penchant to overspend, overborrow and promise too much in benefits without paying for them. I wouldnât be selling my gold or silver any time soon. [Your Recession Shield is A.I.]( You don't have the time to just sit around for the "interest rate" to play out. All professionals have their âtoolsâ to improve success. And more and more traders are embracing Artificial Intelligence to forecast market trends 1 - 3 days in advance with up to 87.4% proven accuracy. [Come See the Stocks Set To Skyrocket In A Brave New World>]( The Austrian School Has the Answer! I devote a whole chapter of my book, âA Viennese Waltz Down Wall Streetâ to âThe 2008 Financial Crisis: Austrian Response to the Chicago School of Milton Friedman,â and why the most recent crisis wonât be the last. See chapter 8, pp. 67-78. The book is a 256-page quality paperback with chapters on each of the great Austrian economists, including Carl Menger, Ludwig von Mises, Friedrich Hayek, Joseph Schumpeter and Murray Rothbard. In addition to my chapter on the Chicago School and the financial crisis of 2008, it has important chapters on Keynes as a speculator, economists who predicted the 1929 crash and the benefits of investing in gold and silver (chapter 17, âA Tale of Two Dollarsâ). The price of the âVienna Waltzâ book is only $21. To order, go to [www.skousenbooks.com](. I autograph each copy. Postage is free if mailed inside the United States. I will do the same for my other books, such as âThe Maxims of Wall Street,â âEconomic Logicâ and âThe Making of Modern Economics.â Dr. Lawrence Hayek, son of Friedrich Hayek, wrote, âSkousen is the only economist I know who I can understand. He writes for the common man!â See for yourself. Upcoming Conference Menlo Forum, Menlo Park, California, Saturday, April 20: I will be speaking on âWhy Inflation Is Permanent and Growing: What Are the Best Inflation Hedges?â, where I will talk about the outlook for stocks, technology, gold and bitcoin. My wife, Jo Ann, will be joining me to talk about our latest book, âThere Were Giants in the Land: Episodes in the Life of W. Cleon Skousen,â and why it was banned in China. We will also give an update on [FreedomFest]( and the Anthem Film Festival. It will be held at the Masonic Hall, 651 Roble Ave., Menlo Park, California, from 9 a.m.-12 p.m. The host is Robert Mish, president of Mish International, a recommended rare coin dealer and a big supporter of [FreedomFest](. There is a $10 charge for this event (pay at the door), and you need to register by emailing menloforum@hotmail.com. Good Investing, AEIOU, [Mark Skousen] Mark Skousen
Doti-Spogli Endowed Chair of Free Enterprise, Chapman University
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[FreedomFest]( [You Blew It!] Top Law Schools Run Amok
By Mark Skousen
Editor, [Forecasts & Strategies]( Is this coming to our neighborhood? I've been concerned for some time about the radicalism being taught in top law schools around the country, from Yale to Berkeley, in the name of âsocial justiceâ and DEI (diversity, equity and inclusion). Now we are seeing the results with this headline: Law-School Rot Hits Berkeley Dean Close to Home A few weeks ago, the dean of the Berkley Law School, Erwin Chemerinsky, and his wife Catherine (also a law professor), invited about 60 law students to their home for a pre-graduation dinner. Several students took the opportunity to attack their schoolâs supposed support for Israelâs war against Hamas in Gaza and the deanâs alleged âZionism.â The dean and his wife demanded that the protesters leave, but they refused, and a fight ensued. I guess these law students were never taught the rule of law and private property rights. Instead, at Berkeley (and other elite law schools), students were indoctrinated with radical anti-Western philosophy, encouraging a vast ecosystem of identity-based student groups. Instead of diversity and inclusion, they opt for exclusion and discrimination. The Berkeley Journal of Gender, Law and Justice even committed to not publishing pieces by Zionist writers. Read the whole story here: [Law-School Rot Hits Berkeley Dean Close to Home â Literally | National Review]( About Mark Skousen, Ph.D.: [Mark Skousen]Mark Skousen is an investment advisor, professional economist, university professor, author of more than 20 books, and founder of the annual FreedomFest conference. For the past 40+ years, Dr. Skousen has been investment director of the award-winning newsletter, [Forecasts & Strategies](. He also serves as investment director of four trading services: [TNT Trader]( [Five Star Trader]( [Home Run Trader]( and [Fast Money Alert](. About Us:
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