The average card-carrying Austrian would say that the Federal Reserve is creating money by the bale, with evidence being Consumer Price Index prints of 8.6 percent per the Bureau of Labor Statistics or over 15 percent per John Williams’s shadowstats.com computation based on the way the government calculated CPI back in 1980. Surely, at best, the US dollar is only the cleanest dirty shirt in the currency laundry basket.
Uvalde, Texas, is where I was born. It’s where my mom taught kindergarten less than a mile from Robb Elementary. Uvalde is where I learned to master a Daisy BB gun. I took that – that took two years before I graduated to a 410 shotgun. Uvalde is where I was taught to revere the power and the capability of the tool that we call a gun. Uvalde is where I learned responsible gun ownership. And Uvalde called me on May 24th, when I learned the news of this devastating tragedy.
Money supply growth fell slightly in April, falling below March’s eight-month high. Even with March’s bump in growth, though, money supply growth remains far below the unprecedented highs experienced during much of the past two years. During the thirteen months between April 2020 and April 2021, money supply growth in the United States often climbed above 35 percent, well above even the “high” levels experienced from 2009 to 2013.
When the Bourbon dynasty was restored to power in France in the early 1800s after Napoleon’s abdication, the French statesman Charles-Maurice de Talleyrand famously said of that family: “They had learned nothing and forgotten nothing.” In modern economic parlance, one can say the same thing about progressives, who once again are demanding price controls to “fight inflation.”
(The following text is a revised update of an article that was first published in 2005.)
The recent outbreak of price inflation with the jump to an annual rate of 8.6 percent in May 2022 came as a surprise to the US central bank (the Federal Reserve). Having ignored the warnings of the Austrian school economists, the policy makers were paralyzed in the face of a phenomenon they deemed impossible to happen. None of their forecasting models had triggered an inflation alert.
Thank you very much for the invitation. I am delighted to have the opportunity to share some thoughts with you on a topic I am very much interested in and that I believe is of the utmost importance to people around the globe—and that is “the digital future of markets and money.”
So let us dive right in!
When I was your age, dear students, there were no cell phones, no internet, no Google, no Amazon, no Facebook, no Twitter, no TikTok, no YouTube. People did not have Apple Pay, PayPal, Alipay, or WeChat Pay.
A familiar question in a standard microeconomics graduate seminar goes something like this: a Pigouvian tax is not market distorting. True or false?
The expected answer: true.
True?
Any fiscal intervention being definitionally a distortion of how a given market would otherwise operate, how can this be?
Spoiler alert: it boils down to little more than academic charlatanry.
The economy consists of a huge chain of the division of labor that is interlocked to such a limit where there exists hardly any single individual or firm that produces the whole of the product alone. This is famously illustrated in the essay “I, Pencil,” by Leonard Read.
