The more capitalism produces, the more it’s maligned. From John Stossel at townhall.com:
Reporters complain about business. We overlook the constant improvements in our lives made possible by greedy businesses competing for your money. Think about how our access to entertainment has improved.
“When I was a kid,” says Sean Malone in a new video for the Foundation for Economic Education, “my TV broadcast options were PBS, Fox, ABC, NBC and CBS. Depending on the weather, it was hit or miss whether or not they were even watchable.”
1977 brought the first video rental store. “We literally had to rent a VCR along with two or three movies we could get on VHS from Blockbuster,” Malone reminds us, pointing out how much changed. “Now just about anything I’ve ever wanted to watch is available at the click of a button.”
Here’s a short version I released this week of the FEE video. It wasn’t government or big movie studios that made the amazing array of new options available. They dragged their feet. Malone points out that “the astounding wealth of home entertainment options we have today are the result of entrepreneurial start-ups, like Blockbuster.”
Alasdair Macleod outlines how the US could return to gold-backed money. From Macleod at goldmoney.com:
Given the current fiat money system is on a path towards its own destruction it is not surprising that there has been increasing talk of a monetary reset. Without a completely different approach and by retaining the same institutions and macroeconomic concepts, any such reset is bound to fail.
This article provides a template for an enduring sound money solution that will deliver economic progress while eliminating destructive credit cycles. It posits that a properly constructed gold and gold substitute monetary system, which also includes the removal of bank credit inflation as a means of providing investment capital, is the only way that lasting stability and prosperity can be achieved. As well as the establishment of an incorruptible monetary system, the state’s role in the economy must be curtailed, budgets always balanced, banking reformed, and the private sector allowed to accumulate the wealth necessary to provide the investment for producers to produce.
Monetary reform involves a clear understanding of why free markets succeed and why socialism, together with neo-Keynesian macroeconomics, are responsible for the impending monetary and economic collapse. It will require a complete change of socio-political and economic cultures, but properly approached it can be done.
There has been very little commentary in recent years about the benefits of sound money, being limited almost entirely to followers of the Austrian school of economics. Even less has been written about how to back out of inflationism, end unsound money and return to a monetary arrangement which cannot be corrupted by governments and the banking system.
The most notable attempt was by Ludwig von Mises who appended a chapter on the subject in his updated 1952 version of The Theory of Money and Credit[i] The circumstances were very different from that of today. At that time, the US had corrupted its gold exchange standard to progressively exclude the ability of individuals to demand gold for paper dollars. And both Keynesianism and socialism, in the West at least, were in their earlier days. Today, we face more of an end game where considerable damage has been done since to the status of circulating money, and we face the prospect not of reform but of a collapse of the entire fiat money system.
Posted in banking, Business, Capitalism, Collapse, Currencies, Debt, Economics, Economy, Governments, Money
Tagged Bank Deposits, Central banks, Federal Reserve, Gold Standard, government bonds
The year almost past saw the ascendence of some uncommonly stupid ideas. From Max Gulker at aier.com:
At first glance 2019 was a rough year for anyone in favor of an economy and society guided from the bottom up by people with the freedom to exchange, cooperate, and think as they choose. The highly visible left flank of the Democratic Party, fully embracing socialism in name and approach, erupted with proposals that would drastically change the country in ways they intend and many more in ways they do not. Meanwhile, the Republican Party’s debt from its Faustian bargain with President Donald Trump began to come due.
What can we learn from bad ideas? Plenty, if we approach them with curiosity rather than assumed intellectual or moral deficiency on the part of those trafficking in them. The truth, that people have a really hard time understanding the benefits of free markets and bottom-up organization, is both difficult and galvanizing. Free-market ideas don’t really have a place in the current incarnation of our two-party system. We’re free agents and that can open a world of new possibilities if we let it.
Posted in Business, Capitalism, Economics, Economy, Governments, Politics, Technology, Trade
Tagged Big Tech, Elizabeth Warren, Green New Deal, protectionism
It’s worthwhile reading every single word of this very long article, especially if you have any interest in economics (some people do). From Jesús Huerta de Soto at mises.org:
[Opening lecture at the Twelfth Conference on Austrian Economics organized by the Juan de Mariana Institute and the Universidad Rey Juan Carlos, May 14–15, 2019.]
The topic of my lecture today is the Japanization of the European Union. I would like to start with an observation Hayek makes in his Pure Theory of Capital. (Incidentally, through Union Editorial, we have just published an impeccable Spanish edition, and I recommend it to all of you.) According to Hayek, the “best test of a good economist” is understanding the principle that “demand for commodities is not demand for labor.” This means that it is an error to think, as many do, that a mere increase in the demand for consumer goods gives rise to an increase in employment. Whoever holds this belief fails to understand the most basic principles of capital theory, which explain why it is not so: growth in the demand for consumer goods is always at the expense of saving and the demand for investment goods, and since most employment lies in the investment stages furthest from consumption, a simple increase in immediate consumption always occurs at the expense of employment devoted to investment and thus net employment.
I would add to this my own test of a good economist: the Professor Huerta de Soto test. According to my criteria, the best test to determine whether we are dealing with a good economist (and I do not mean to detract from Hayek’s test) is whether or not the person understands why it is a grave error to believe the injection and manipulation of money can bring about economic prosperity. In other words, the best test of a good economist according to Professor Huerta de Soto is understanding why the injection and manipulation of money are never the way toward sustainable economic prosperity.
Posted in banking, Business, Capitalism, Debt, Economics, Economy, Financial markets, Investing, Money
Tagged capital formation, central bank policies, interest rates, Investment, Negative rates, Savings, zero rates
Take interest rates to zero or negative, and you’ve rendered time worthless, at least in a monetary sense. That threatens one of the foundations of civilization. From Claudio Grass at lewrockewell.com:
When I was asked to write an article about the impact of negative interest rates and negative yielding bonds, I thought this is a chance to look at the topic from a broader perspective. There have been lots of articles speculating about the possible implications and focusing on their impact in the short run, but it’s not very often that an analysis looks a bit further into the future, trying to connect money and its effect on society itself.
Let us begin with a basic question, that lies at the heart of this issue: Who profits from a loan that is guaranteed to pay back less than the amount borrowed? Obviously, it is the borrower and not the lender, which in our case is the government and those closely connected to it. Negative rates and negative yielding bonds, by definition favor the debtors and punish the savers. In addition, these policies are an affront to basic economic principles and to common sense too. They contradict all logical ideas about how money works and they have no basis and no precedent in any organic economic system. Thus, now, in addition to the hidden tax that is inflation, we also have another mechanism that redistributes wealth from the average citizen to those at the top of the pyramid.
Posted in banking, Capitalism, Civil Liberties, Collapse, Debt, Economics, Economy, Governments, Money
Tagged central bank policies, Negative interest rates, Time value