The archive.

Blame the speculators: that was the official explanation for the currency collapses that swept Southeast Asia in the late 1990s. This hard-money post-mortem turns the charge back on the governments themselves, which pegged their currencies to the dollar while inflating domestic money and credit. The crisis, Sennholz argues, springs from the standing conflict between the market rate of a currency and the official rate—between economic principle and government edict. Pegs attract foreign capital and mute exchange risk, but they store instability rather than remove it; when the peg snaps, dollar- and yen-denominated debts turn crushing, banks buckle, and asset inflation is exposed as malinvestment. He rejects the IMF's faith in dollar pegging and warns a complacent United States against assuming immunity. The turmoil, he concludes, is the making of governments and their central banks.

Fixed exchange rates act like "coiled springs;" growing compression finally releases the energy.

Fiscal legerdemain is the charge at the heart of this November 2000 polemic: the celebrated Clinton-era surpluses, Sennholz contends, are an accounting illusion produced by counting Social Security and other trust-fund inflows as current revenue while the national debt keeps climbing. He separates genuine debt reduction from mere debt shifting, retiring bonds held by the public by drawing on obligations owed to future retirees, and treats the Treasury's reliance on trust funds and Federal Reserve remittances as circular, costless-seeming finance that conceals an inflationary base. Behind the arithmetic lies a hard-money conviction that the power to create money is a coercive privilege silently depreciating the dollar. The forecast is bleak: demographic pressure from Social Security and Medicare will convert today's paper balances into tomorrow's large deficits.

The power to print money and force it on the people is the power to engage in inflation, which is one of the political evils of our time.

Written in the shock after September 11, this essay treats the attacks as a declaration of war not on the United States alone but on civilization itself, on the peaceful exchange and association Sennholz equates with civilized life. The enemy is new because he is faceless and stateless, linked to regimes yet fighting as none. Sennholz traces the anger to Islam's fusion of faith and rule, to the Taliban, and pointedly to American blowback: the money and intelligence that once armed anti-Soviet jihad, a bitter harvest whose seeds Washington helped sow. He roots much of the hatred in U.S. support for Israel and prescribes a libertarian peace of secure property, privatization, and open land markets. Against calls for expeditionary war he warns of another Vietnam, rejects nuclear vengeance absolutely, and urges intelligence-led self-defense: detection, pursuit, arrest, and trial.

To wreak a nuclear holocaust on any Muslim city would be a crime against humanity and the start of a hundred-year-war between Islam and the West.

Framed against recessionary anxiety and White House warnings that a light was flashing on the economy's dashboard, President Bush's 2001 proposal to cut taxes by $1.6 trillion is weighed here and found wanting, not because lower taxes are undesirable but because a cut that leaves spending, debt, and monetary intervention intact is no reform at all. The critique targets the plan's Keynesian defense as consumer stimulus and the supply-side hope that lower marginal rates alone constitute fiscal repair. Child credits, marriage-penalty relief, and estate provisions look attractive yet economically thin, while projected surpluses dissolve once trust-fund accounting is stripped away. If recession is the painful readjustment after prior distortion, consumption cannot restore sustainable production, and unfunded cuts merely shift burdens onto borrowing, future taxation, and the Federal Reserve.

It is significant that the tax plan makes no mention whatever of any need for a reduction in government spending.

By March 2001, as the dot-com boom collapsed, the Federal Reserve had become the object of a cult, with Wall Street, journalists, and politicians alike crediting Alan Greenspan's guidance for a decade of prosperity. Against that reverence stands this Austrian polemic, which reverses the usual causal story: central banks do not merely fail to prevent busts, they manufacture the preceding booms by issuing fiat money and credit that falsify interest rates and lure entrepreneurs into malinvestment. Rate cuts cannot turn bad investments into sound ones; recession is the painful liquidation of accumulated error. Keynesians, Supply-Siders, and Monetarists are each faulted for retaining a central monetary authority, and the classical gold standard is invoked as the obstacle to heedless spending that fiat money removed, even as every organized interest keeps demanding more credit, not less.

Ideas control the world, and monetary ideas shape monetary institutions.

Aggressive Federal Reserve rate cuts, rapid dollar money growth, a yawning trade deficit, and still, in 2001, the dollar climbed as no other currency shone so brightly. Sennholz explains the paradox first through the euro cash changeover, which drove holders of old European notes, tax evaders and criminal organizations among them, to liquidate quietly into dollars. The deeper account is Austrian: the dollar sits at the narrow base of an inverted pyramid of bank credit, securitization, derivatives, Eurodollar markets, and foreign Treasury purchases, so that crises abroad only strengthen it. Reserve-currency privilege is thus both power and vulnerability. Defending inflated asset prices and mortgage credit, he warns, will bring renewed inflation, rising yields, and a deeper recession beneath the bright surface.

Recessions, after all, are the corrections of the preceding excesses and maladjustments; they may be delayed for a while, but cannot be avoided once the harm has been done.

Beneath America's rhetoric of surpluses and fiscal restraint, Sennholz finds chronic deficit spending disguised by raided Social Security trust funds and debt ceilings suspended through Treasury maneuver, creative financing, as he dryly names it. His method is demystification: surplus becomes hidden deficit, the dollar safe haven becomes a mortgaged harbor carrying the biggest debt on earth, and Treasury wealth becomes capital already consumed. The reserve currency, unlike gold, costs almost nothing to issue and rests entirely on belief; on that base banks, offshore lenders, and foreign central banks pile expanding layers of dollar credit. Low Federal Reserve rates inflate housing and tempt owners to extract equity, the domestic face of the wider pyramid. Should confidence break, liquidation could sink the dollar and equities alike, leaving military overreach after September 11, and a looming Iraq war, resting on a fragile financial base.

Many a victory has been suicidal.

A brief 2002 tour of a few Russian towns becomes the occasion for an Austrian diagnosis of why the passage from command socialism to markets stayed slow, painful, and morally confused. Sennholz reads post-Soviet Russia through Ludwig von Mises's socialist-calculation argument: without private ownership and market prices, the USSR was not merely mismanaged but structurally incoherent, and seventy years of institutional and psychological habit could not be shed by decree. He follows Yeltsin's price liberalization, voucher privatization, and land and housing reform against the resistance of the Duma, subsidy expectations, and inflationary finance, distinguishing formal ownership from real capitalism. The economy, he argues, hovers between command, market, and black-market orders, while oligarchs gain wealth through political connection. Prosperity, he concludes, waits on a change in economic thought toward freedom.

The distance from Communism to democratic freedom and a market order is greater by far than the distance from the poorest market economy to the most productive and prosperous country.

When the dot-com boom collapsed, Alan Greenspan pleaded that no central banker could know a bubble existed or prick one without triggering recession. Sennholz reverses both claims. The 1990s, he argues, furnished abundant warning—extreme price-earnings ratios, debt-financed mergers, stock buybacks, collapsing savings, swelling consumer debt—and the Fed held concrete instruments to restrain the mania: margin requirements, reserve requirements, the discount rate, open-market operations. Greenspan preferred popularity and accommodation to discipline. But the polemic reaches past one man to the institution itself: a politically created fiat-money monopoly that, by holding interest rates below market levels, inevitably breeds speculation, malinvestment, and cyclical collapse. Sennholz extends the postmortem to housing, Treasuries, and precious metals, warning that fresh rate cuts merely relocate the fever rather than permit the liquidation recovery requires.

Economic bubbles have plagued the American economy ever since the First United States Bank opened its doors in Philadelphia in 1791.

Neither historical grievance nor military force can by itself produce peace: that is the organizing claim of this classical-liberal reading of Arab-Israeli enmity. Sennholz's central target is restorationism—the demand that political arrangements be returned to some earlier moment—whether in the Palestinian right of return, which he says would dispossess later inhabitants and invite renewed war, or in appeals to the pre-1967 map. He faults Arab governments, militant movements, and international aid systems for preserving refugee camps as a permanent political indictment, and asks whether Oslo-era Israeli concessions strengthened militant expectation rather than moderation. Against repression and welfare-state controls alike, he proposes an order of private property, equal protection, civil rights, and free exchange, placing moral burdens on both peoples. Violence persists, he argues, where historical claims, ethnic discrimination, and economic closure dominate public life.

The wars did not bring peace; they generated ever more hatred which breeds more wars.

Years of rate cuts and rapid credit expansion had failed to dispel recession, leaving the Federal Reserve, in this September 2002 essay, genuinely trapped. Further ease might undermine the dollar and estrange foreign creditors; yet with firms insolvent, debts liquidating, and households hoarding cash, cheaper money might accomplish nothing. The dilemma, Sennholz argues, is the Fed's own handiwork—an abused, overleveraged credit market turned unmanageable after long manipulation. He grants the dollar a unique privilege as the world's reserve currency, yet insists that privilege rests on foreign confidence increasingly spent on Treasury debt rather than productive enterprise. Recession, he notes, can mask inflation as distress sales push prices down even while the money stock swells. Japan supplies the warning; a looming Iraq war, he predicts, would only postpone the reckoning.

The Federal Reserve System may have run out of room to maneuver.

Medicare's crisis, Sennholz insists, is not demographic but ideological and moral—a program misdiagnosed when blamed on baby-boom retirement rather than on the doctrine that elevates the state into universal provider. This December 2002 essay traces federal health policy from German and British social insurance through Roosevelt, Eisenhower, Johnson, Reagan, and Clinton, then turns to the machinery of supervision: HCFA reviews, the Benefit Integrity Unit, the HHS Inspector General. Subsidized demand cannot abolish scarcity, he argues; when market allocation is displaced, rationing returns as rule, review, and decree. Administrative terms like aberrant and medically necessary become instruments of normalization, and official education becomes intimidation that exposes physicians to fines, imprisonment, and ruin while pushing the ablest to opt out and contract privately. Reform, he predicts, will change the form of coercion more than its substance.

The welfare state breeds insoluble political and social conflict.