Monetary Theory

Recorded at Mises University 2007.

Recorded at Mises University 2007.

This is a story about Linda Combs, who cleaned up the government’s

Mises knew why abandoning the principle of sound money would be so problematic: "In the opinion of the public, more inflation and more credit expansion are the only remedy against the evils which inflation and credit expansion have brought about."

All action is really exchange. What the actor prefers less is exchanged for something he prefers more, including gift giving. It is a fallacy to say that the goods exchanged have equal value.

The absence of a central bank in Panama has created a completely market-driven money supply. Panama's market has also chosen the US dollar as its de facto currency. The country must buy or obtain their dollars by producing or exporting real goods or services; it cannot create money out of thin air. In this way, at least, the system is similar to the old gold standard. Annual inflation in the past 20 years has averaged 1% and there have been years with price deflation, as well: 1986, 1989, and 2003.

Where is Bernanke going to create the next bubble, the one that will mask the hangover from the housing bubble in the same way that the housing bubble masked the hangover from the tech stock bubble?

The ancient transgressions of murder, pillage, bestiality, thievery, and rape still shout from the headlines.

Because of Iran's great oil wealth, it has been able, thus far, to stave off a hyperinflationary blow-off.

Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term "inflation" to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise.