The crash of 1929 came after a decade of interventionist politics following world War I. "Free markets" were blamed anyway. Decades later, we pursue even more interventionism, and when it fails, we blame "free markets" all over again.
As news of Venezuela’s suffering keeps coming through, one cannot help but feel a certain sense of dread. All governments control the money supply to essentially the same extent that Maduro’s administration does. All around the world we have monetary socialism, where national currencies are subject solely to political power. And one cannot help but wonder (and fear) how many more such economic disasters it will take before it becomes clear that socialism of all shapes, sizes, and degrees, is unrealizable, unbearable, and unforgivable.
Governments have long hated physical cash because it allows for untraceable purchases. But a bigger problem for governments is the fact that holders of cash can signal a lack of trust in central banks by removing all their cash from the financial system.
Consumer prices have been stable, but we should pay attention to 2014's decline in the money supply which mirrors a similar decline from 1927 and 1928, which was followed by a collapse in industrial production.
The Fed is talking about raising interest rates, but it knows that any move in that direction is likely to cause a recession and more economic pain. But it also knows it can't keep forcing down interest rates forever.
Interviewed by host Paul Molloy, Mark Thornton discusses the consequences of having a minimum salary of $70,000. They also discuss the negative impact of the minimum wage, and how fair wage rates are determined by the market.
The European Monetary Union has failed to bring economic stability, and it has also increased nationalistic tensions among member nations. Some taxpayers, such as German taxpayers, view themselves as working to subsidize foreigners. Meanwhile, central banks continue to distort the economy.
Asset-price inflation is being ignored as pundits focus on consumer goods. But if we look at asset prices, the carry trade, and commodities, we have reason to believe that the current boom is entering a stage similar to what we saw in 2007.
Europe’s problems will not be solved by a Greek exit, and a breakup of the euro certainly won’t fix things as long as the Europeans remain in the thrall of many economic fallacies that have long driven the debate over the euro.
