Posted tagged ‘Central Bank Money Printing’

Some Econ Homework

July 16, 2019

Austrian Business Cycle Theory, Explained, by Murry N. Rothbard, at This is a short explanation of the boom-bust cycle that is created by monetary intervention into the free market via bank credit expansion. Excerpt from the article:

…bank credit expansion sets into motion the business cycle in all its phases: the inflationary boom, marked by expansion of the money supply and by malinvestment; the crisis, which arrives when credit expansion ceases and malinvestments become evident; and the depression recovery, the necessary adjustment process by which the economy returns to the most efficient ways of satisfying consumer desires.

Keynesian Fake News In The Wall Street Journal, by Daniel J. Mitchell, at Government spending will not stimulate the economy. Government can only spend what it takes from the private sector. There is only a transfer of how the private sector would allocate its production, to government politicians and bureaucrats who will allocate their newly confiscated production according to what they value. Government doesn’t produce anything that it can exchange for money. It can only confiscate private sector production. The transfer via taxes is a transfer of something for nothing. It is not only theft, it is a reduction of wealth.

Why Socialism Must Fail, by Hans Hermann Hoppe, at Excerpt from the article:

Socialism and capitalism offer radically different solutions to the problem posed by scarcity: everybody can’t have everything they want when they want it, so how can we effectively decide who will own and control the resources we have? The chosen solution has profound implications. It can mean the difference between prosperity and impoverishment,

“The United States is not fully socialized, but already we see the disastrous effects of a politicized society as our own politicians continue to encroach on the rights of private property owners. All the impoverishing effects of socialism are with us in the U.S.: reduced levels of investment and saving, the misallocation of resources, the overutilization and vandalization of factors of production, and the inferior quality of products and services. And these are only tastes of life under total socialism.”

When Will The Stock Market Respond to 2016’s Liquidity Collapse? by Frank Shostak, at Intervention into the free market via lower interest rates and an increase of the money supply leads to artificial booms and all to real busts. If the Fed is to keep the Stock Market from correcting the Feds previous monetary expansion, it has to lower interest rates.

Social Pressure vs. Consumer Preferences, by Joakim Book, at Excerpt from the article:

“Indeed, on a more fundamental economic level, this is the logical conclusion of division of labor. Taking information from others is how we survive in large-scale complex market societies. This is easy to see when discussing a broken car or leaking pipes: you could probably learn how to fix those pipes yourself and develop your car mechanic skills to be able to repair the car, but it would likely take much more time, effort and money than you’re willing to part with — hiring a specialist makes economic sense. Similarly, you can think of relying on others’ tastes when it comes to music or food flavors or TV shows to be a trove of useful information, deflated appropriately by how much you tend to like what others like.”

What’s Up With The Obsession About Low Interest Rates, by Mark J. Perry, at carpediemblog. Excerpt from the article:

“Raising/lowering prices, wages, or interest rates can only benefit one half of the market (buyers or sellers, workers or employers, borrowers or savers, but not both) and those benefits come at the direct expense of the other half of the market (buyers/sellers, workers/employers, borrowers/savers). In other words, it’s is zero-sum outcome that redistributes gains and losses, but without any net gains, similar to the Keynesian stimulus fallacy illustrated below.”

So what’s with the obsession, especially the political obsession, with lower interest rates that are guaranteed to do great harm to savers while benefiting borrowers?”

“The answer must be that there’s a much greater political short-run payoff from lower interest rates than from higher interest rates. That is, borrowers (including corporations) must have a louder and more organized political influence than disorganized savers. In that case, aren’t lower interest rates a form of legal plunder and crony capitalism that allow borrowers to take advantage of savers enabled by easy monetary policy by the Fed?”


Must Reads For The Week 6/4/16

June 4, 2016

Payrolls Huge Loss: Only 38,000 New Jobs Added In May; Worst Since September 2010, at The number crunchers used to figure that 150,000 jobs become obsolete every month because of the creative destruction of the market. So there has to be 150,000 jobs created every month just to start at zero. So 38,000 jobs created means there was a net loss of 112,000 jobs last month. Also the last two months job numbers have been revised down. So how robust is the “recovery”

These Are The 9 Zero Hedge Charts Showing The “Obama Recovery” That Angered The Washington Post, at The labor participation rate is the one chart that can’t be spun. The percentage of working age people is lower than at anytime since the early 70’s. If fewer people are working, and many work fewer hours because a lot of the newly created jobs are part-time, how can we possibly be producing more? The GDP supposedly measures production. Even though government spending (financed by borrowing and central bank money printing), is added into the GDP number, growth has averaged around 2% over the last 8 years. We can’t even counterfeit our way to robust growth. We haven’t even found a bottom to the 2008 recession because the Fed has propped up all the misallocations that it produced with the money it printed in the first place.

Allan Greenspan: “We’re Running To A State Of Disaster”, at Greenspan says: “Entitlements are crowding out savings, and hence capital investment. Capital investment is the critical issue in productivity growth, and productivity growth in turn is the crucial issue in economic growth…….Unless and until we can rein in entitlements, which have been rising at a nine percent annual rate in the US and comparable levels throughout the world. We are going to find that productivity is going to maintain a very low rate of increase.”

I think it is interesting he is blaming it on congressional spending when it is his Federal Reserve that printed the money that the government borrowed which led to the increased spending. He also fails to mention all the misallocation of resources that were the result of the Feds credit expansion policy.

Lessons From Cyprus: Spending Restraint Is The Pro-Growth Way To Solve A Fiscal Crisis, by Dan Mitchell, at Cyprus bit the bullet and cut spending. This has led to a recovering economy. Greece did the opposite, and is still in the toilet.

GM, Ford Us Auto Sales Tumble In “Bellwether” Month Of May, at Sub-prime lending brings future demand into the present. Once future demand has run its course, there is nothing behind it to keep demand propped up. Ergo a mismatch of supply and demand. Intervention distorts economic reality.

A Visual Lesson About Economic Freedom, by Dan Mitchell, at When governments take off the interventionist shackles, even in a limited amount, their economy grows.

Black Market Ride Sharing Explodes In Austin, by John Daniel Davidson, at Austin forced Uber and Lyft out of the market. But the demand for rides is being supplied by black market ride sharing apps. This is the spirit of the American Revolution. Don’t Tread On Me!

Private Restrooms Are Private Property, by Patrick Barron, at Respect for private property would solve the made up transsexual bathroom problem. Allow the owner of the bathroom to make the decision how his bathroom will be used. There won’t be a one size fits all to down cluster fox trot. “No Shirt No Shoes No Service.” “No Vagina, Go Across The Hall.”

Eleven Measles Cases In Arizona Traced To Inmate At Immigration Detention Center, at People think rules are arbitrary. Most rules have a specific purpose. If you’ve taken the tour of Ellis Island, you would understand that part of our immigration policy was to keep out diseases, like measles, that were under control in the US. but not everywhere else.

Texas Man Pays For $212 Speeding Ticket…In Pennies, at People have different levels of tolerance for government regulations. Many have had enough.


I Hate To Do it Again.

Have you seen this on mainstream media outlets? All I want is for both Democrats and Republicans to be covered the same by the media. I wish they would show every politicians screw ups. Can you spell P-O-T-A-T-O-E? Who doesn’t know what I’m referencing?


The Greatest Economic Myths by Jeff Deist

June 3, 2016

Jeff Deist of the Mises Institute gives a 20 minute talk about the myth that we can consume before we produce. He slams the central state for spending, and central banks for electronically printing counterfeit money. These two things promote consumption before production. Watch the whole talk. It is outstanding. The talk begins at 2:40. Below are some excerpts from the video.

Here are some excerpts:

If there is one over-riding economic myth that seems to plague us every election cycle….is the motion that society can do collectively what we can’t do individually. Namely get rich by living today at the expense of tomorrow. This is the doctrine of the political class, of central bankers, of professional economists…..and I would like to term it monetary and fiscal hedonism. It’s really hedonism masquerading as economics and technical analysis.”

“When the cumulative effects of certain bad government spending policies are for off into the future, It makes sense that voters are going to vote for them because it’s just a matter of time preference….Voters are going to support things when they don’t necessarily feel the pain themselves.”

“As recently as 15 years ago we still could have dealt with the debt. Now I’m not that the political will existed at that time. I’m saying mathematically it was still possible to cut benefits and do other things to make that debt or restructure that debt to deal with it mathematically….There is nothing that’s going to come along that’s going to make us pay off this debt in any real sense…No change is coming that’s going to have a huge spike in federal tax coffers….The world knows that we are never going to pay off this debt in any real sense.”

“The world is awash in dollars especially Asian creditors of ours. So they’re caught between a rock and a hard place. On the one hand it’s not in their short-term interest for the dollar to sink rapidly but it’s very much in their long-term interest to no longer have the dollar as the worlds reserve currency because the people behind the dollar, the U.S. congress, is completely out of control, and they know this. The debts never going to be paid. Entitlements are never going to be paid….and this is the result of the myth that we can live for today at the expense of tomorrow….This is what congress is doing this is what democracy leads to….”

“There is also a monetary element to this. I’ll call it monetary hedonism. The increase in the money created by the Fed is unprecedented in human history. We have no idea what this is going to lead to. We have never had an example like this in human history where the worlds reserve currency, not a national currency, has done this….We’ve been monetizing debt for so long that it’s beginning to feel like it could go ion forever and ever….It’s monetary hedonism…it’s kicking the can down the road and saying instead of taking the bullet today we’re going to push it off to some time into the future….Is this the new normal, because I think it’s hard to conceive of an event where the Fed would ever reverse this trend or even significantly raise interest rates.”

“The desire to build things beyond ones life time is innately human. We are hard wired as human beings to build societies….Building lasting modes of living is not possible unless people work toward a future that you will not be around to enjoy themselves….. We can see the congress and the Fed are encouraging us to do the opposite.”

“Healthy societies produce capital and consume less than they produce because capital accumulation produces the upward spiral, increases productivity, increases investment and makes the future richer and brighter. Capital accumulation is what’s made it possible for human population to rise up out of subsistence and create agricultural revolution and industrial revolution the digital revolution…..Production Precedes Consumption…We have to produce before we consume. That’s what real world scarcity means…..Society produces goods or we return to subsistence living.”

“The two most powerful forces in the modern world, central states and central banks, work tirelessly to force us into this economic hedonism….. At the root of our problem is mythology. We’ve cast aside our most human impulse to save for a rainy day and build a better tomorrow for ourselves and for future generations and we bought int the myths of politics and political money. We’ve bet them get away with this economic hedonism…..We’ve lived at the expense of our grandchildren. It’s been a great party for America but good luck electing someone who will talk about the hangover.”

Make sure you invest the time to watch the video. Below are some articles related to what Jeff Deist is talking about.

Related ArticleWhat Comes First, Production Or Consumption? at

Related ArticleCapital Consumption, aka. Eating Or Seed Corn, at

Related ArticleSay’s Law And The Permanent Recession, by Robert Blumen, at

Related ArticleReal Savings vs. Counterfeit Savings, at