Artis Shepherd



Articles by Artis Shepherd

How Washington and the Fed Caused the Commercial Real Estate Crisis

What is the Mises Institute?

The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.

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The State Wants to Nationalize Second Mortgages. What Possibly Can Go Wrong?

What is the Mises Institute?

The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.

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The State Wants to Nationalize Second Mortgages. What Possibly Can Go Wrong?

Recently, Freddie Mac, a government-sponsored enterprise, sought approval from its oversight agency, the Federal Housing Finance Agency (FHFA), to purchase and guarantee second mortgages in the United States.While the business case for this proposal is deficient (for an excellent perspective on that, see the article by R. Christopher Whalen), I will discuss the economic and political premises behind this move and its possible consequences.What Does It Mean to “Nationalize Second Mortgages”?Understanding the single-family mortgage market in the US means realizing that there is no market in the real sense of that term. A whopping 70 percent of home mortgages in the US are owned or guaranteed by Freddie Mac and Fannie Mae, the two government-sponsored enterprises created by Congress to

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Scott Galloway’s TED Talk Reveals a Basic Ignorance of Economics

What is the Mises Institute?

The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard. Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.

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How Washington and the Fed Caused the Commercial Real Estate Crisis

Mainstream financial news today is replete with stories about “distress” in the commercial real estate market. But what is the precise nature of this distress, and what implications does it have for those outside of the respective industry or asset class? More importantly, what set of factors contributed to the distress, and what does that say about its potential alleviation?Broadly, “distress” in the commercial real estate context refers to the inability of a property, or portfolio of properties, to make required payments on the underlying loan (to “service debt,” in industry terms). There is also physical distress—lack of physical upkeep, accumulation of deferred maintenance, etc.—but the inability to service debt is what’s generally referred to as distress in the financial media. I’ll

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Take the Clear Pill on Inflation

On April 10th, the Bureau of Labor Statistics reported figures for the March Consumer Price Index (“CPI”). CPI purports to represent changes in the overall price level of the American economy – an obscenely vague abstraction in a country of 350 million people. Let’s pretend for a moment that it does that.In March, overall CPI grew at 3.5 percent from a year ago and so-called “core CPI,” which excludes food and energy items, increased by 3.8 percent from a year ago. Across the board, price inflation was higher than expected. Of more relevance, both measures increased by 0.4 percent from last month, representing a 4.9 percent annualized rate of price inflation.In response to the report, bond yields rose, stocks dropped, and analysts in the lobotomized financial press reacted in muted shock,

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Hair of the Dog — Progressives in Congress Need Another Hit of Low Interest Rates

Bernie Sanders, Elizabeth Warren, and the Congressional Progressive Caucus recently sent an open letter to the chairman of the Federal Reserve, Jerome Powell, demanding lower interest rates.The letter is full of the economic illiteracy one would expect from progressives, especially those in Congress. For example, it misreads price inflation data and argues that the failure to lower interest rates endangers home affordability and increases income inequality. These assertions are false and easily disproven.Artificially low interest rates lead to more of the same economic sickness—malinvestment, bloated government and personal debt, and a never-ending cycle of boom and bust that enriches the political class while impoverishing the average American.Home AffordabilityCongressional progressives

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Apartment Bridge Loans Are Collapsing

Stoked by ultra-loose monetary policy from the Federal Reserve, capital markets have been in a persistent bubble for several years. Printing trillions of new dollars and maintaining a zero-interest rate policy (“ZIRP”) was marketed by politicians and bureaucrats as supportive of the “main street economy,” but those trillions were directed primarily towards speculation in capital markets. 

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Don’t Let Your Adversaries Raise Your Children

Socialist Antonio Gramsci’s “long march through the institutions” describes the slow and gradual intellectual capture of a society through its influential and powerful institutions, including the church, media, the arts, corporations, schools, and universities, eventually leading to full infiltration.
It takes little awareness to realize that these strategies have succeeded. In the United States, all of Gramsci’s institutions are now socialist in their politics and collectivist in their ethics.
To freedom-minded individuals, arguably the most critical of Gramsci’s institutions are the schools. The greater the extent that children can gain appropriate skills of reason and moral instruction in their formative years—avoiding collectivist indoctrination—the better equipped they will be to

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Government Prohibitions on Raw Milk Are Ignorant and Dangerous

Since government regulates nearly everything, it is not surprising that regulations often prohibit the sale and consumption of raw milk. Like many other regulations, these prohibitions reflect political favoritism, not health science.
Original Article: Government Prohibitions on Raw Milk Are Ignorant and Dangerous

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Negative Leverage: The Fed’s Latest “Gift” to Apartment Investors

The Federal Reserve’s inflation of the money supply and interest rate manipulation distort capital markets through, among other things, the creation of asset bubbles. As the cost of borrowing decreases and cheap money floods an economy, speculation in capital markets increases, leading to prices unmoored from fundamentals.
Underlying these asset bubbles is a certain investor psychology—one based on expectations, encouraged by Fed actions over the last thirty-five years—that the Fed will always step in with easy money when asset prices threaten to decline.
Overleveraged speculators caught out by rising interest rates and risky loans are experiencing significant distress. Meanwhile, the apartment market continues to demonstrate dangerously speculative behavior.
Higher Risk, Lower Return
A

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Government Prohibitions on Raw Milk Are Ignorant and Dangerous

“Salus populi suprema lex.” The health of the people is the supreme law.
As ruling ideals go, this is a good one. Unfortunately, the governing class in America decided long ago that raw milk—one of nature’s most perfectly nutritious substances—must be regulated and prohibited to the point of making it nearly impossible to obtain. In its place, they teamed with the dairy industry to promote pasteurized milk, a lifeless liquid so devoid of the natural beneficial compounds found in raw milk that it should more accurately be called a “milk-like substance.”
In spite of government restrictions, freedom-minded and health-conscious citizens would do well to find good, clean sources of raw milk, consume it often, and encourage others to do the same.
The Genesis of the Government’s War on Raw Milk

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The Fed-Enabled Apartment Bubble Is Unraveling

Thanks to Federal Reserve intervention, apartments and apartment buildings have turned into giant malinvestments. Once again, a federal entity intervenes in markets presumably to make them work better, but things end in a crisis.
Original Article: The Fed-Enabled Apartment Bubble Is Unraveling

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Apartment Investment Syndication: A Predictably Unraveling Scheme, Thanks to the Fed

The apartment investment industry has experienced severe malinvestment over the last several years, resulting in a massive bubble that has only recently begun to deflate with rising interest rates. A tidal wave of easy money—enabled by the Federal Reserve and four consecutive United States administrations, from George W. Bush to Joe Biden—drastically lowered the barriers to entry. As a result, even those with no investment acumen have raised and used other people’s money for complex, high-risk projects like buying, developing, and managing apartment buildings. Bridge loans, a natural outgrowth of enormous amounts of liquidity searching for yield in an environment with a zero-interest rate policy, have facilitated this process. The results should not be surprising, and to some they aren’t.

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Fear of Failure is Vital to the Success of a Free Market Economy

It has become popular, especially in certain fields and among certain crowds, to glorify failure. So-called entrepreneurs and social influencers often brag about their failures. Multinational corporations publish poems encouraging failure. Vapid mottos rejecting the fear of failure are ubiquitous on motivational posters and T-shirts.
These efforts are apparently meant to convey an enterprising spirit and a fearlessness about trying new things in an effort to push the boundaries of a particular field.
While there’s tremendous value in attempting to achieve something worthwhile despite the risk of failure, failure itself is never the goal. And “learning from our failures” is part of the process of success, not an end in itself. Rejecting the fear of failure is not only impossible but harmful

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