All posts by Andre Wendt

Murder is a Habit

GIS* statement by Prince Michael of Liechtenstein

World-famous British crime novelist Agatha Christie was an outstanding observer of human nature. In Murder in Mesopotamia, her sleuth hero, Hercule Poirot, makes this astute observation: “There are things that my profession has taught me. And one of these things, the most terrible thing, is this: murder is a habit.” The implication is that after one commits a crime for the first time, doing it again becomes easier. Looking at the present behavior of governments and institutions in Europe, one is reminded of the wisdom of this insight.

When a law – or even a best practice – is violated and no sanction follows, what was once a transgression becomes a common practice. Habitual abuse of the law is a form of corruption. There will always be miscreants deriving advantages from this – for example, to get reelected.

The tendency for disregarding sound rules of governance became noticeable in Western Europe a number of years ago, mostly due to public overspending. This has led to various crises today. Among them is a crisis of political institutions.

For one, the European Central Bank does not respect the necessity to separate monetary policy from fiscal policy. Its artificially low interest rates erode the value of money, while quantitative easing constitutes a significant breach of the EU’s fundamental no-bailout rule …

Continue reading the original statement “Murder is a Habit” here -> GIS Statements

*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defence, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyse the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyse and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.

Vernon Smith Prize 2016: Call for Papers!

Vernon Smith Prize 2016 Call for Papers
Vernon Smith Prize 2016

Call for Papers!

The 9th International Vernon Smith Prize for the Advancement of Austrian Economics is an essay competition sponsored and organized by ECAEF European Center of Austrian Economics Foundation, Vaduz (Principality of Liechtenstein). This years’ topic:

Direct Democracy versus Representative Democracy.
Cost and Benefits for the Citizenry!

|- First Prize EUR 4,000 -|

|- Second Prize EUR 3,000 -|

|- Third Prize EUR 2,000 -|

Although, democracy is fundamentally a method for preserving individual liberty and civil rights, this almost narcotic term has become so powerful today that all essential limitations on governmental power are breaking down before it. By deteriorating into a scheme of legitimizing the regime of coalitions of organized interests, representative democracies gradually transform into oligarchies. While it is assumed that governments always have the people’s best interests in mind, for the most part they seem to act in their own behalf. In direct democratic systems, however citizens have more controlling devices at their disposal and can propose, decide, or profoundly modify their governing laws, and even secede from the republic. Are direct democracies more cost effective and beneficial for the citizenry?

Direct Democracy versus Representative Democracy.
Cost and Benefits for the Citizenry!

ECAEF invites papers on this topic which meet the following requirements:

1: Entries may be submitted by individuals of up to 30 years (in 2016).

2: Entries may not exceed 12 pages; 1.5 spacing; left/right margins no less then 1 inch; full bibliography and a 1/2 page summary (abstract) must be included.

3: Entries must be submitted in English in electronic form (PDF) to and must include an abbreviated CV, featuring DoB, education, and current position

4: Entries must be received on or before November 11, 2016.

5. It is mandatory that all prize winners participate in the award ceremony in Vaduz Prizes are not transferable and will be awarded on the basis of originality, grasp of subject, and the logical consistence of the argument.

Essays will be judged by an international jury and the winners will be invited to present their papers at a special event in Vaduz, Principality of Liechtenstein, on February 6, 2017. First Prize €4,000 – Second Prize €3,000 – Third Prize €2,000.

Who is afraid of Donald Trump?

GIS statement by Prince Michael of Liechtenstein

Europe and the world are watching Donald Trump’s behavior in the United States presidential campaign with amazement. He has shocked his country’s media elites, who are more accustomed than their European counterparts to harsh talk and mudslinging between candidates. His aggressive rhetoric and erratic tactics are a novelty for even seasoned followers of U.S. politics, writes Prince Michael of Liechtenstein.

Most interestingly, though, Donald Trump continues to run a successful campaign. Intellectuals criticize his supporters as ignorant, but experience shows that in instances where populist newcomers are successful, there is a flaw in the system. Voters are not ignorant.

Florida, U.S., March 15, 2016: a Trump supporter gives the thumbs up to motorists honking at his sign outside the Palm Beach County Supervisor of Elections office. Source: GIS/dpa

In representative democracies, the political establishment typically reacts to newcomers by trying to marginalize them. Usually, the outsider is branded a buffoon, a racist, a radical or an extremist of one sort or another.

But instead of trying to brush aside Mr. Trump, opinion shapers should take a close look at what is wrong with the system that allowed him to get this far. The fact is that most people no longer believe that the political establishment has their best interests at heart. This is certainly the case in Europe, and Mr. Trump’s success indicates it is in the U.S. as well.

The working population feels unrepresented by both the right and the left. Entrepreneurs are increasingly stymied by overregulation. These two groups form the backbone of any properly functioning economy and are responsible for producing the country’s wealth. But there is a widening gap between them and those who reap the benefits: government, politicians and intellectuals. In this context workers can, and should, identify with entrepreneurs.

Seen from across the Atlantic, this seems to be the reason why Donald Trump’s exaggerated statements appeal to large swathes of the population. In Europe the problem is even worse; politicians’ reputations are at the lowest end of the scale.

The anti-Trump forces are now resorting to the marginalization tactic. This might work for the moment. But if the political classes do not learn the lesson of why people are gravitating toward more realistic, less intellectual, less party-centered politics, the consequences could be dire. The “newcomers” who crop up in the future could make Mr. Trump look far less radical than we see him today.

Read the original statement “Who is afraid of Donald Trump?” here -> GIS Statements

Unzulässiger Eingriff in persönliche Freiheit

Liewo Prinz Michael von Liechtenstein

Interview von Liewo-Redakteur Michael Winkler mit Prinz Michael von und zu Liechtenstein – erscheinen am 13. März 2016

Im Kampf gegen den Terror will die EZB grössere Banknoten abschaffen, zum anderen eine Bargeld-Obergrenze einführen. Dem ganzen steht der Präsident des Think Tanks ECAEF, Prinz Michael von und zu Liechtenstein, kritisch gebenüber. Er wagt im Gespräch mit der Liewo* eine Einschätzung der Gefahrenlage. Lesen sie den gesamten Beitrag hier ->  Liewo: Prinz Michael von Liechtenstein (PDF, 273kb)

*Liewo ist eine Wochenzeitung im Fürstentum Liechtenstein. Sie wird sonntags in alle Haushalte in Liechtenstein verteilt. Aktuelle Auflage: 37500 Exemplare.

The Political Value of Gold

GIS statement by Gisela von Liechtenstein*

People and economies have always needed means of exchange that represent value and set prices, even in a barter economy. These means of exchange had to have a trusted value and as economies evolved, precious metals, silver and gold served this purpose. As international trading developed, nations relied on paper money supplied by their governments and central banks that was still backed by silver and gold. This gave value and trust to the currency and forced discipline on the emitting institution.

EZB Draghi Helicopter Money

In the course of the 20th century, the gold standard was abandoned and trust in the resulting fiat money depended on assessments of the underlying economy, political stability and belief that the central bank would protect the value of the currency with responsible monetary policies. This worked in some instances. Germany and its Bundesbank set with the deutsche mark an outstanding example of prudent monetary policy, impervious to pressure from politicians.

Unfortunately, government overspending led to large budget deficits and a fiscal crisis. Allowing economic cycles to run their course is rejected for political reasons, meaning that unsustainable cheap money is often used to ease cyclical lows in the economy. On the whole, the European Central Bank (ECB) has followed the politically expedient approach of southern European countries rather than the discipline that was the bedrock of the old German Bundesbank.

All means of exchange should be constrained in supply in order to retain value. For fiat currencies, the supply limit is no longer restrained. The euro area’s monetary base has increased from approximately 700 billion euros in 2006 to about 1.8 trillion euros in 2016, according to the ECB. This additional money creation, not covered by an economic basis, is worrying.

Gold-backed currencies used to provide a measure of control on monetary aggregates that is lacking today. Without controls on the money supply, confidence in its rarity is being sacrificed along with value. While gold may no longer be a realistic form of currency, it is still a valid medium of exchange with the advantage of holding intrinsic value and being limited in supply.

With individuals being discouraged from acquiring gold, central banks are buying again – especially Russia and China. Increasing gold reserves relative to foreign currency reserves has the advantage of reducing exposure to foreign monetary policies. There are large uncertainties around the quantity of gold the Chinese are acquiring, as the Peoples Bank of China may not be the sole purchaser. The authorities in Beijing can use other entities to buy gold on global markets, while China is also the world leader in gold mining output.

Both China and Russia are seeking to reduce their dependence on the U.S. dollar, especially China, which is striving to establish the renminbi as a global reserve currency. The gold in the vaults of the Russian and Chinese central banks is insufficient to back their currencies. So why are these countries buying? They are probably trying to use gold as a lever to increase confidence in their currencies and make them more independent from U.S. monetary policies and the dollar.

Meanwhile, there is growing awareness that central banks have misused their money creating capacity for political ends. This realization, combined with low interest rates, plunging confidence in traditional currencies and government institutions, and increased gold demand by Eastern central banks, may be contributing to the present rally in gold prices.

Unless Western governments and central banks change their policies, people may start shifting their trust from fiat money back to gold. Precious metals have the advantage of being easily storable, holding intrinsic value, and not being subject to negative interest rates, as is the case with bank deposits. Gold will only become more attractive if governments make progress in their current push to physically abolish cash.

A key concern is that today’s policymakers could abuse their legislative powers to outlaw physical ownership of gold, especially in Europe and the U.S., as a way of extending the control and reach of monetary policy. There are precedents for this, including President Franklin Roosevelt’s executive order in 1933 to outlaw gold currency ownership by individuals. The step would be a logical, if totalitarian, outcome of current monetary policies.

It is just one small step from abolishing cash to outlawing gold ownership. If the current economic policy direction is maintained, the strength of the U.S. dollar and the euro will wane, people’s trust in gold relative to their own currencies will increase, and certain members of the “dollar bloc” will prepare themselves to stop following the lead of the Federal Reserve and the U.S. currency.

Read the original statement “The Political Value of Gold” here -> GIS Statements

*GIS expert Gisela von Liechtenstein is an environmental engineer working in sustainability management at Midas Gold Corp., a Canadian mining company focused on gold exploration.