Competition as a social price policy

The political organization and legal institutions of all nations, in their treatment of private property and the rights of citizens, involve various social price policies. The term “social price policies” is used here in contradistinction to the individual price policies of private enterprisers. Our own economic order known as capitalism, with its complex system of laws, traditions, and business practices, assumes the policy of competition as the general rule.

Sometimes, when central bankers talk, they reveal within the very same discussion a sign of complete obliviousness. The ECB’s Peter Praet recently gave an overview of monetary policy and price stability. By way of reminder, price stability refers to the central bank’s efforts to keep the prices we pay from dropping lower. This would be terrible.

In his overview, he describes what preceded the 2008 crisis with this:

The late Murray Rothbard thought war and peace was the most important libertarian issue. He argued that war was justified only in response to a direct attack. Interventions abroad to advance supposed American interests or values serve only to advance the power of the Leviathan State and ought to be entirely rejected. By this measure, US foreign policy in the 20th and early 21st centuries has been a disaster. Interventionism, nation-building, and wars of choice have caused enormous damage and increased the State’s power, just as Rothbard foresaw. 

Before the United States ran aground on the dangerous reefs of State interventionism and centralism, the dollar was not only a sign of stability, but also a symbol of human freedom. A dollar was a means to express your wants and commands to the business class. The consumer, for the most part, was sovereign. Any American could save, consume, and invest his money whose value was not debauched by a government in lack of resources. To this day, and despite the evils of inflationism and central banking, the dollar remains an instrument of freedom and independence for many Americans.

[Editor’s Note: In 2010 at the Austrian Economics Research Conference at the Mises Institute, William Green presented a paper titled “Ending the Federal Reserve from the Bottom Up: Re-Introducing Competitive Currency by State Adherence to Article I, Section 10.” Today, Greene is best known as the “faithless elector” in the Electoral College who voted for Ron Paul in 2016.

It is common for commentators and economists in their discussions to continuously refer to something called the “economy” — which sometimes performs well and at other times poorly. This “economy” is presented as a living entity apart from individuals.

For example, various experts report that the “economy” grew by such and such percentage, or the widening in the trade deficit threatens the “economy.” What do they mean by the term “economy”? Does such an entity actually exist?

[Editor’s note: Shostak employs a different measure of the money supply than the Rothbard-Salerno money supply measure used here. For a more full explanation, see here.]

On October 2016, the US Money Market Fund (MMF) industry underwent a reform with new requirements for US institutional prime and municipal MMFs becoming effective.

With the Fed continuing to portray a “hawkish” message, focused on three or four 2017 rate hikes, the ECB is too having to decide whether their easing policy should be cut back. The Fed began its tapering of (official) QE years ago and is therefore now onto rate hikes and balance sheet efforts. The ECB, however, is still heavily in asset-purchasing mode.