The archive.

Output rising, unemployment and inflation falling, stock prices soaring, politicians claiming credit—the late-1990s expansion had economists reaching for superlatives. Sennholz reads it instead as a credit-driven bubble in the lineage of the 1920s United States, 1980s Japan, and the 1997 Asian crisis, its danger masked precisely because consumer prices stayed stable. Conventional aggregates like M1 and M2, he contends, miss the real fuel: bank credit expansion, loan securitization, derivatives, offshore banking, the yen carry trade, and foreign central banks recycling current-account dollars into U.S. Treasuries. Rising equity values signal mergers and buybacks, not capital formation. Written in December 1997, the essay anticipates later debates over asset inflation and global imbalances, and predicts that when the bubble bursts officials will blame speculators and foreigners rather than the monetary order.

All these symptoms do not make a “new era economy” but rather a highly vulnerable “bubble economy.”

Rome, the Hapsburg monarchy, the Soviet collapse—Sennholz ranges across empires to argue that ethnic and racial diversity is not inherently destabilizing. Plurality turns dangerous, he contends, only when political institutions abandon equal liberty for group favoritism, redistribution, or cultural fragmentation. Rome flourished through toleration, citizenship, and law until military centralization made it a garrison state; the Hapsburg polyglot dynasty endured through impartial reform until nationalism dissolved it. Lacking common ancestry, Americans depend instead on a shared system—Judeo-Christian values, equality before the law, individual freedom, economic opportunity—and it is this framework, he warns, that multiculturalism and the public schools erode when they teach citizens to understand themselves through separate group grievances rather than the principles that unite them.

Diversity in freedom makes for social peace, economic productivity, and great prosperity.

Europe's malaise, on Sennholz's February 1997 diagnosis, is self-inflicted—the predictable yield of welfare-state transfers, high mandated fringe benefits, and rigid labor rules dressed up as social progress. His argument is marginalist: labor costs do not cause unemployment until law and policy push total compensation above a worker's productive contribution, at which point the least productive are priced out of work. Comparing labor costs across Germany, France, Italy, Britain, and Spain, he traces stagnation and deficits to the benefit burdens heaped on business in the 1970s and '80s, then dismantles the rival explanations—computer technology as neo-Luddism, cheap foreign labor and immigrants as scapegoating, job-sharing as the fallacy that work is a fixed stock. Europe, he closes, is a warning the United States would be foolish to ignore.

Yet, no matter how high the labor costs may be, they do not cause unemployment provided they do not exceed labor productivity.

Historically exhausted, bound up with class conflict, taxation, debt, and monetary debasement, the welfare state may linger a while, Sennholz declares, but not for long. Written after the 1996 federal welfare act, this essay reads that law's devolution to the states, work requirements, and time limits as a partial retreat rather than a genuine reform. Its central move is to shift attention from recipients' incentives to the labor market's legal architecture: even without benefits that discourage work, statutory barriers would still keep the unskilled from being hired. Chief among them is the minimum wage compounded by mandated employment costs, alongside the Davis-Bacon Act, ERISA, and EEOC liability. The result is a self-defeating contradiction, reformers ordering people into jobs while maintaining the laws that price them out. True reform, he concludes, must first dismantle the state's own barriers to work.

The welfare reformers are laboring to roll the welfare stone up the mountain to the barriers they themselves erected.

Far from being a neutral stabilizer, the International Monetary Fund is portrayed here as an internationalized extension of the very monetary interventionism that produces crises in the first place. Written in October 1998 amid the Asian financial collapse, the essay traces business cycles to political control over money and reads Bretton Woods less as a remedy than as institutionalized error. Sennholz stresses the asymmetry of a Fund supplied by a few hard-currency states and drawn upon by weak-currency debtors, and identifies its power with the United States and the dollar system. Bailouts, he argues, reward profligate governments and export welfare-statist fiscal assumptions—his Guatemala and Indonesia cases supply the evidence—while teaching borrowers and lenders to expect rescue. Against them he sets lower taxes, balanced budgets, freely adjusting interest rates, and the refusal to save failed financial managers.

In other words, only unstable high-risk debtors may apply.

April 15 turns depreciation schedules and deduction forms into a moral test. Sennholz's 1998 essay asks how a reflective citizen should act when private honesty is demanded by institutions he judges coercive—whether to correct an accountant's favorable error, and whether resentment at an arbitrary IRS can ever license dishonesty. His answer refuses both easy exits: two wrongs make no right, yet legality does not make plunder moral, and redistribution by majority vote remains continuous with theft. Between Kantian truth-telling and consequentialist calculation he seeks a hierarchy of duties in which truth is basic but not absolute, property essential but no idol above life. Lawful avoidance—tax-exempt investment, charitable foundations, even emigration—becomes the mediating practice. Private and civic morality, he concludes, stand or fall together.

Stealing is not defensible morally even if it is done by majority vote.

April 1999: the dollar is slipping against the yen and the euro, and Sennholz reads that weakness as a symptom of a credit disease hidden beneath the era's celebrated low consumer-price inflation. Subdued CPI figures, he insists, prove nothing when the real action lies in asset prices, credit aggregates, and the world dollar standard. He widens the meaning of inflation from narrowly measured money to the expansion of credit and claims, securitization multiplying leverage outside conventional statistics, Long Term Capital Management, asset-backed paper approaching four trillion dollars, a Wall Street bubble fed by the very institutions the Fed oversees. Real saving meanwhile collapses as borrowing accelerates, and foreign capital and mercantilist central banks prop up the whole edifice. The Fed, he concludes, is trapped: cut rates and the dollar flees, raise them and the bubble bursts into deflationary recession.

Unfortunately, the popular faith in sophisticated computer systems and speculation models is no substitute for basic economic knowledge.

When a worldwide movement demanded the cancellation of debts owed by poor nations in the name of biblical release, Sennholz answered that charity and debt forgiveness are not the same act. This short policy-theological essay from April 1999 concedes the moral force of Jubilee 2000 while insisting that mercy be governed by consequences: does remission restore the destitute, or does it reward the banks, connected corporations, and governing elites who helped manufacture their poverty? Distinguishing the helpless debtor from the merely insolvent from the one whose ruin is his own doing, he separates private debt—priced voluntarily and better resolved through bankruptcy—from sovereign debt that too often finances civil war and socialist mismanagement. The tap root of poverty, he argues, is war and destruction, not debt service, and indiscriminate cancellation may simply preserve the regimes that impoverish.

Poor people in poor countries are no debtors; they live from hand to mouth, often shunned and despised, and without a credit rating.

Discovering in a course catalogue that Ludwig von Mises taught at New York University, a young German émigré made his choice, enrolled, and became one of Mises's first doctoral students. Part memoir and part vindication, this tribute presents Mises as the scholar who defended laissez-faire capitalism when academic opinion treated it as a discredited creed. Sennholz reconstructs the whole arc: Böhm-Bawerk's refutation of Marxian exploitation theory through subjective value, the 1920 calculation argument holding that planners without market prices cannot compare uses of scarce resources, the assault on inflation and interventionism, and the praxeological foundation of Human Action. Oskar Lange's market socialism fails, in this account, because simulated prices cannot reproduce entrepreneurs, capital markets, or genuine consumer sovereignty—and the later Soviet collapse reads as vindication of warnings issued decades before events made them fashionable.

There can only be one master: either the consumer who is guiding businessmen or the commissar director who exerts absolute authority over the economic lives of the people.

The dot-com euphoria of the late 1990s looked, to most observers, like the dawn of a new economy powered by the Internet. Reading it in October 2000, Sennholz saw instead a speculative bubble in the lineage of 1929 and Japan's 1989 asset mania—one sustained less by earnings than by faith, easy credit, and official reassurance. Valuations had abandoned dividends, earnings records, and tangible assets for hopes of future dominance among NASDAQ and Internet firms that mostly ran losses. The deeper cause, he argues in Austrian terms, was Greenspan's Federal Reserve, expanding money faster than output; because Internet competition held consumer prices down, the inflation surfaced in asset values instead. Rising household debt, margin borrowing, and foreign financing of U.S. deficits left the boom poised for a correction that policy could delay but not abolish.

Nine years of credit expansion have created countless maladjustments which the market sooner or later will correct.

Globalization, its critics charged, destroys jobs, exploits the poor, degrades the environment, and hands the world to big business. Against that indictment this polemic defends global commerce as peaceful, voluntary cooperation—made possible by falling trade barriers, post-Soviet liberalization, and capital mobility—while locating the real threat in protectionism and international management. Sennholz champions multinational corporations for raising wages and productivity abroad, denies that human rights and property rights are enemies, and rebuts Marxian exploitation theory by insisting that market alternatives, not political controls, are what shield workers from domination. His targets cut both ways: anti-globalists who would throttle trade, and the IMF, WTO, NAFTA, and EU insofar as they preserve subsidies and privilege behind liberal rhetoric. The closing warning invokes Hawley-Smoot and the Depression, when moralized attacks on trade hardened into ruinous economic nationalism.

Three market features negate any such power: competition among employers, the mobility of labor itself, and the freedom of self-employment.

How could the dollar stand so strong while America ran its largest trade deficits on record? That apparent contradiction opens a July 2000 diagnosis that credits neither American productivity nor Federal Reserve mastery, but capital inflows that can reverse. Reaching for Böhm-Bawerk's analysis of the passive trade balance, Sennholz shows how an incoming capital account can sustain imports, asset markets, and a firm exchange rate at once—until it doesn't. He reads Southeast Asia's 1997 collapse as the template: pegged currencies, central-bank credit, real-estate speculation, and sudden foreign withdrawal. Rapid M3 growth, record current-account deficits, borrowed share buybacks, unprecedented margin debt, and derivatives concentrate leverage until the Fed is trapped between defending the currency and cushioning recession. The maladjustments of years of monetary manipulation, he concludes, must be liquidated, not gently unwound.

Political intervention is ill-designed for soft landings.