Production Theory

Thanks to past interventions, the economy is now rife with malinvestments and prices that don't reflect real demand. The solution is to allow deflation and other types of painful readjustment. Otherwise true growth will elude us.

Central banks have decided that one of their main missions is to prevent deflation. But this only ends up causing the malinvestments that lead to economic busts.

Prices and purchasing power are determined by how individual consumers value goods and services. The "velocity of money" won't help us understand prices or the money supply.

Prices and purchasing power are determined by how individual consumers value goods and services. The "velocity of money" won't help us understand prices or the money supply.

No matter what levers are pulled by the fiscal and monetary authorities, stones will not be turned into bread.

Although the money supply has greatly increased, accompanying growth in production has it possible to keep the current system of immense debt increase going for a long time.

Although the money supply has greatly increased, accompanying growth in production has made it possible to keep the current system of immense debt increase going for a long time.

Formal models of the economy, writes Murray Rothbard, tend to overlook a crucial instrument of change: entrepreneurship.

There is productive consumption and there is non-productive consumption. In the Keynesian mind, it's not necessary to produce anything, so long as people spend and consume endlessly, even to the point of destroying real wealth.