Not even music from the heavens is immune to the laws of economics . It is no secret that public interest in J.S. Bach and Johannes Brahms is diminishing. The older patrons are dying off and the younger generations are about as attracted to classical music as Adina is to Nemorino from L’elisir d’amore.

American journalists seem mired in fantasy worlds, at least where it comes to economic analysis, and perhaps we see no greater show of ignorance than in the discussion of the presence of businesses in the poorest areas of inner cities. Time and again, pundits make the specious claim that people in cities are poor because of the presence of small businesses, such as groceries owned by Korean immigrants .

The Austrians have long argued that equilibrium models of economic phenomena cannot capture the causal, realistic aspect of human behavior. ”All things are subject to the law of cause and effect,” says Menger in the famous opening line of his Principles of Economics. Formal economic models, in contrast, typically depict systems of equations in which each variable simultaneously determines the values of the other variables. 

Las Vegas survives on visitors and immigrants. The housing market depends upon those escaping California taxes and regulation with thousands in home equity to bid up home prices in Nevada, in general, and Las Vegas, specifically.

The actual numbers, provided by WolfeStreet.com, are; 47,500 Californians moved to Nevada in 2017, while 23,800 Nevadans moved to the golden state. That’s a net 23,700 inflow from California or roughly 2,000 per month last year.

Why this matters is, as builder Toll Brothers indicated in a recent earnings call,

The productivity theory of capital dominates the popular view and public discussions. It presumes that capital generates the yield like a tree begets its fruits. In this view, more savings imply more investment, and more investment generates a higher capital stock, which in turn raises future yields. The belief is widespread that monetary assets grow and render automatically the returns. Yet already at the end of the 19 th century the Austrian economist von Eugen von Böhm-Bawerk exploded the productivity theory of capital.

The profound question which transcends all this day-to-day market drama over the holidays is the nature of the economic slowdown now occurring globally. This slowdown can be seen both inside and outside the US. In reviewing the laboratory of history — especially those experiments featuring severe asset inflation, unaccompanied by high official estimates of consumer price inflation — three possible “echoes” deserve attention in coming weeks and months. (History echoes rather than repeats!)

Jeff Deist recently published an editorial in the Washington Times challenging various proposals—popular among DC think tanks—to create monetary policy “rules” or targets based on statistical data related to inflation or GDP. 

Some highlights: