Getting Closer to Debasing the Currency

August 7, 2008 6:19 AM by Thorsten Polleit

Whatever the technicalities for propping up the government-sponsored paper-money systems may be, the decade-long debt binge will most likely end in inflation. This is because the "crisis" is widely perceived as a calamity -- rather than the necessary economic correction of malinvestment brought about by central banks' manipulation of market interest rates through credit and money expansion. On top of that, people fear deflation much more than inflation. Lower interest rates and more credit and money are seen as a remedy of the disease brought about by central banks' artificial lowering of the interest rate through credit expansion. FULL ARTICLE

Link post | Digg it | Other posts by Thorsten Polleit | Comments (58)

Mises's Apriorism Against Relativism in Economics

April 25, 2008 8:21 AM by Thorsten Polleit

Mises's work on the logical status of the science of economics needs to be brought back to public attention: his work actually forms the intellectual bulwark against the degeneration of the free societal order. The positivist-empiricist doctrine, which forms the core of today's mainstream economics, is not only an intellectual failure; it also encourages -- actually provokes -- social relativism, thereby opening the door to anti-free-market policies, which, once set into motion, are difficult to reign in. In that sense, positivism is, if put into practice, an anti-capitalist doctrine. FULL ARTICLE

Link post | Digg it | Other posts by Thorsten Polleit | Comments (37)

Inflation Is a Policy that Cannot Last

March 14, 2008 8:09 AM by Thorsten Polleit

To Austrian economists, the so-called international credit market crisis is a prima facie case of the inherent destructive tendency of government-controlled paper money: it is the consequence of an excessive expansion of credit and money, which encourages uneconomic investment and leads to unsustainable debt burdens.

Once the inflation-fueled boom (the time span in which malinvestment occurs) is about to turn into bust (the period in which malinvestment is corrected), the government-sponsored central bank steps in and lowers the interest rate, in an effort to reverse the economic downswing into a boom.

Mises was aware that an inflation policy could not go on forever, but must break down sooner or later: "the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears." FULL ARTICLE

Link post | Digg it | Other posts by Thorsten Polleit | Comments (139)