Why would an investor buy a bond that pays a negative interest rate? The answer lies in understanding how central banks manipulate the economy.
Audio Mises Wire
Audio recordings of Mises Wire articles, offering contemporary news and opinion through the lens of Austrian economics and libertarian political economy.
Prices of consumer goods have grown rather slowly in spite of sizable money supply growth. Why is there a gap?
In this crisis the money supply has already increased far more than during the last crisis. But it's hard to say when this will produce inflation because we're still in the midst of a demand shock and a collapse in oil prices.
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.
Although politicians lecture private companies for raising prices, it is governments that have for decades raised the prices of goods and services by limiting supply and raising costs.
Although many claim "nobody saw this coming," some entrepreneurs planned ahead and also have found ways to cater to customers under new conditions.
When it comes to understanding business cycles, Austrian school scholars stand on firm ground while critic John Tamny is all at sea.
More money creation doesn't necessarily mean higher consumer prices. But, if production is falling while consumers use their stimulus checks to buy food and clothing, we could see noticeable price inflation.
France faces a future of spiraling debt and declining economic growth. So Emmanuel Macron has now embraced economic nationalism as a way out. It's not likely to work.
The people who really run the country are unelected "experts" and bureaucrats at the central banks, at public health agencies, spy agencies, and an expanding network of boards and commissions.
Thirty million Americans are now unemployed, in part thanks to government "lockdowns." Meanwhile, unemployment in many cases doubles the unemployed person's risk of death through disease, suicide, or drug overdose.
Proponents of mandatory vaccines and enhanced surveillance are trying to blackmail the American people by arguing that the lockdown cannot end unless we create a healthcare surveillance state and make vaccination mandatory.
With oil prices in likely long-term tailspin, corrupt governments can't count on oil sales to bail them out anymore. But Mexico's government didn't get the memo and still clings to the state oil monopoly.
The lockdowns of the past month have not been conducive to the common good. While they have saved the lives of many people, they have also endangered—and are still endangering—the lives and livelihoods of many others. They have created a new and dangerous political precedent.
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.
Debt-ridden countries such as Italy will come to rely more and more on Germans and other northern Europeans to finance their debt. This will require a more unified Europe. Or the whole thing may collapse.
Thanks to the growth of the state over time, political stakes have become much higher, and groups fear that they will be crushed by the other side if they lose. Crisis-induced cohesion is not a silver bullet, but rather a ticking time bomb.
Many argue that unregulated markets would fail due to lack of consumer knowledge, or information asymmetry. But competition in free markets actually gives rise to all kinds of mechanisms that help consumers make informed decisions. This is as true of medical tests for any other good.
BBC images from India show the human toll of the coronavirus shutdown. Americans should take note, and soon.
The whole idea of government regulating so-called monopolies in order to promote competition is based on fallacies. If anything, such intervention only stifles market competition and lowers living standards.
