[How Capitalism Saved America: The Untold History of Our Country, From the Pilgrims to the Present. By Thomas J. DiLorenzo. Crown Forum, 2004. 295 pages.]
 

An interesting piece of correspondence today from a person who observed how easy money dramatically transformed the technology industry, from rationality into mania.

 

I am deeply involved in the technology industry-- specifically computer software and the Internet-- and I lived through the tech bubble. What impressed me about the tech bubble was not only the mania and the crash, which you describe quite well, but also how much damage the tech bubble itself did to my industry.

NYT: After a brief tirade against the sport by the president on national television last month, pro-Chávez officials have moved in recent weeks to shut down two of the country’s best-known golf courses, in Maracay, a city of military garrisons near here, and in the coastal city of Caraballeda. “Let’s leave this clear,” Mr. Chávez said during a live broadcast of his Sunday television program. “Golf is a bourgeois sport,” he said, repeating the word “bourgeois” as if he were swallowing castor oil.

Listen to the Audio Mises Wire version of this article.

I. Warning against Fiduciary Media

Early in the 20th century, Ludwig von Mises warned against the consequences of granting the government control over the money supply. Such a regime inevitably creates money through bank credit that is not backed by real savings—a type of money that Mises termed “fiduciary media.”

In 1912, Mises wrote,

“Human action, unlike the movement of stones, is motivated.”

The mathematical method, like so many other fallacies, has entered and dominated present-day economic thought because of the pervading epistemology of positivism. Positivism is essentially an interpretation of the methodology of physics ballooned into a general theory of knowledge for all fields.