make a society better off. On the contrary. For instance, inflation corrupts economic calculation, thereby causing entrepreneurs to make the wrong decisions. The that is politically expedient. Once the debt burden has become unsustainable and growth disappointing, it becomes increasingly difficult to prevent an inflation
and when with their property. How powerful is state capitalism? We know from sound economics that socialism – or in other words, public ownership of the means of production – cannot function: economic calculation to the attempted degree is impossible, and chaos and poverty are for quite a while and even reach some high-flying planned goals. China’s stunning growth performance in the last decades bears witness to this theoretical assessment.
or the whole of mankind better than a correct theory.” II. In today’s mainstream economics the truth value of a theory is typically tested along the lines of an is more, under the reign of positivism-empiricism-falsification there is even an economic incentive for spreading theories just for the sake of their political in the money supply — which, in turn, is necessary for output and employment growth. Capitalism exploits the working class and leads to widespread poverty, war,
Should anyone who asks for credit get something? Should employment-intensive economic sectors be favored? Should the new loans only go to ‘the industries of the lives off its substance. Only gradually, the damage becomes visible. Economicgrowth is dwindling; political conflicts over income distribution are increasing; the
the interest rate borrowers have to pay on their debt is lower than the economy’s growth rate, the economy’s overall debt-to-GDP level comes down over time; or the That said, savers and investors should bear in mind what the Austrian school of economics has to say in this context. It was Ludwig von Mises who pointed out that
banks were forced to push interest rates below zero, being the only way to foster growth and employment. The assertion that the balanced interest rate has become itself. The policy of negative rates is no cure for the economy but causes massive economic problems. Competition and Property Rights Banning cash is infringing on the
becomes clear if we reflect upon the Fed’s interest rate policy by employing sound economic theory . Let us therefore begin with highlighting five effects that result there is no fixed, or immutable, relation between figures such as, for example, growth of gross domestic product and the interest rate. In fact, a given level of the
would have been. The artificial suppression of interest rates initially causes an economic upswing, a boom. The boom has an impact on the economic production and normally contributes little to nothing to the economy’s productivity growth, borrows heavily to finance its spending. Returns on many business investments
normalize again. Unfortunately, however, this hope is clouded by the relentless economic and sociopolitical paradigm shift that is taking place. Before our eyes, the which neosocialism advocates, harbor enormous explosive potential. Because economicgrowth; i.e., the increase in available goods over time, not only increases people’s
started buying government and mortgage bonds in the course of the financial and economic crisis 2008/2009. As a result, the Fed’s balance sheet expanded from $870 in the future — and to a much lesser degree by peoples’ expectations about future growth, fiscal deficits, inflation, and credit risk, to name a few. The bond market
What is the Mises Institute?
The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard.
Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.