Category Archive: 6b) Austrian Economics

Freedom and Sound Money: Two Sides of a Coin

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of right.

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“Real innovation and progress happen beyond Big Tech”

Interview with Bernd Rodler – Part I of II Those who know me and who have read my writings before will be very well aware of how important the topic of decentralization is to me and to my way of looking at the world, at our societies and our economies. I truly believe that there is no future to be had, at least not one that respects human dignity, should we continue down this same path of top-down control, mindless conformity and blind obedience...

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The Fed Gets It Wrong on Money Velocity, Too

Money velocity's role in forcing up prices is misunderstood because today's monetary "authorities" fail to consider how new money is injected into the economy.

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War in Ukraine – Week 11

Business trips are very different these days. It was a wonderful and intense week, but nothing beats coming back home with bags full of supplies!

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War, Sanctions, and Sanity: A Purely Hypothetical Inquiry

Dealing with specific geopolitical circumstances can be messy. We may disagree on the facts and on which sources are reliable, making it hard to make any headway in a discussion. This may be further compounded by extreme emotions we may have about that situation.

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Real Wages Fall Again as Inflation Stays Near 40-Year Highs

Inflation is so high in America that we’re now supposed to believe that inflation is “moderating” if it doesn’t go above 8.5 percent. That, at least, was the message in much of the speculation yesterday around what April’s CPI inflation numbers would show.

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Stagflation Comes from Exorbitant Money Creation and Unhampered Government Spending

Too much government spending and loose monetary policy lead to rising prices combined with falling economic growth rates. All Keynesian roads lead to stagflation. It is the result of economic mismanagement. Again and again, the belief has been proven wrong that central bankers could guarantee the so-called price stability and that fiscal policy could prevent economic downturns.

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Student Loans and Government Subsidies: Another Government “Benefit” Creates Financial Chaos

The origins of the federal student loan program are well documented and follow a similar trajectory to most government subsidy programs in American history.

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Lighting the Gas under European Feet: How Politicians and Journalists Get Energy So Wrong

“We live in a time where few understand how things get made. It is fine to not know where stuff comes from, but it isn’t fine to not know where stuff comes from while dictating to the rest of us how the economy should be run." —Doomberg

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Rothbard Explains The Failure of the “New Economics”

For most people, economics has ever been the "dismal science," to be passed over quickly for more amusing sport. And yet, a glance at the world today will show that we pass over economics at our peril.

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The Chinese Slowdown: Much More Than Covid

The most recent macroeconomic figures show that the Chinese slowdown is much more severe than expected and not only attributable to the covid-19 lockdowns. The lockdowns have an enormous impact. Twenty-six of 31 China mainland provinces have rising covid cases and the fear of a Shanghai-style lockdown is enormous.

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Will the Pentagon Induce Russia to Use Tactical Nukes in Ukraine?

For the past 25 years, the Pentagon has moved inexorably toward admitting Ukraine into NATO, which would then permit the Pentagon to install its nuclear missiles in Ukraine — that is, on Russia’s border.

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Contrary to What Some Economists Claim, the Fed Can’t Give the Economy a “Neutral” Rate of Interest

On April 19, 2022, at the Economic Club in New York, the Chicago Federal Reserve Bank president Charles Evans said the Fed is likely to lift by year end its federal funds rate target range close to the neutral range of between 2.25 to 2.50 percent. Furthermore, on April 21, 2022, Fed chairman Jerome Powell corroborated this by stating that the Fed wants to raise its benchmark rate to the neutral level.

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Forget What the “Experts” Claim about Deflation: It Strengthens the Economy

For most experts, deflation is bad news since it generates expectations for a continued decline in prices, leading consumers to postpone the purchases of present goods, since they expect to purchase them at lower prices in the future. Consequently, this weakens the overall flow of current spending and this, in turn, weakens the economy.

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War in Ukraine – Week 10

This is Liza. She is 15 years old. After her town got shelled and two people got injured she volunteered to drive them to get some medical help, because no one else would. First she got through mines on the road, then Russian soldiers shot at the car, injuring both of her legs. But she kept driving until the car stopped. Fortunately, they got picked up by our guys, and this brave little girl and her passengers are recovering right now.

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Is It “Disloyal” to “Side with Russia”?

Last week, I received an email from a conservative-oriented libertarian who suggested to me that it is disloyal to “side with Russia” because Ukraine was “just sitting there” when it was invaded by Russia.

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Roots of Our Current Inflation: A Deeply Flawed Monetary System

A monetary system that allows the creation of money out of thin air is vulnerable to the fits of credit expansion and credit contraction. Periods of credit expansion typically occur over many years and even decades while the phases of credit contraction happen like sudden implosions. The monetary policy makers tend to promote the prolongation of credit expansion because they fear deflation.

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Expect Washington to Throw a Fit over China’s New Deal with the Solomon Islands

Washington regards the entire world as its "sphere of influence." But now Beijing is looking to follow the US playbook on hegemony and expand Beijing's network of military bases abroad.

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The EU energy price crisis – is the market design to blame?

The electricity prices reflect the supply and demand conditions in Europe and interfering with the price formation mechanism would have dangerous consequences.

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What Determines Interest Rates? Comparing Mainstream Economics to the Austrian School

The conventional view among mainstream economists, as presented by Milton Friedman, is that three factors determine market interest rates: liquidity, economic activity, and inflationary expectations. In this viewpoint, whenever the central bank raises the growth rate in the money supply by buying financial assets such as Treasurys, this pushes the prices of Treasurys higher and their yields lower.

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