Tomáš Frömmel contends that a negative inflation target combined with the Taylor Rule can be a non-distortionary monetary policy consistent with Austrian business cycle theory.
Presented at the Mises Institute's "First Annual Advanced Instructional Conference in Austrian Economics" at Stanford University.
Central bankers want to find a means of resetting everything, exploring solutions such as digitising currency through blockchains, doing away with cash, and finding other avenues to try to control the so-called vagaries of free markets.
Why does this domino process affect only banks, and not real estate, publishing, oil, or any other industry that may get into trouble?
Central banks can only distort and mask real interest rates with monetary policy. Interest rates are really set by each individual's time preference.
The true lesson from Japan is that central planners prefer to gradually nationalize the economy before even considering a moderate reduction in government size and control.
When governments devalue the currency to push more exports, the country is getting rich in terms of foreign currency, but it is getting poor in terms of real wealth.
Suppose that a convincing orator should go on TV tomorrow, and urge the public: "The banking system of this country is insolvent."
The psychological impact of a lifetime within a fiat money economy cannot be underestimated. With more wealth seemingly available at the click of a computer button, refusal to spend more on government programs must stem only from cruelty and greed.
Inflationary monetary policy is driving markets toward ever larger and more monopolistic firms that dominate the marketplace.
