In the preface of The Theory of Money and Credit , Ludwig von Mises wrote: “No very deep knowledge of economics is usually needed for grasping the immediate effects of a measure; but the task of economics is to foretell the remoter effects, and so to allow us to avoid such acts as attempts to remedy a present ill by sowing the seeds of a much
Eugen von Böhm-Bawerk (1851–1914) expressed concern that the interest rate might not get rid of its “moral shade” (”moralischer Schatten”). Indeed, people have actually been looking upon the interest rate phenomenon with animosity for centuries. Back in the middle ages those who dealt with money lending tended to be exposed to heavy
What constitutes stable money? Most people today would likely say that money is stable if the price level of a given basket of consumer goods and services remains constant over time, or at least rises no more than around 2% on an annual basis. Such an interpretation would echo what central banks — today’s monopoly suppliers of government paper
“It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of right.” So wrote Ludwig von Mises in The
[ Editor’s Note: This article was first published November 24, 2005. ] The US trade deficit is often viewed with alarm and has attracted considerable attention from both the public at large and policy makers. Much of the uneasiness about the US trade deficit can quite simply be attributed to the term “deficit” itself, which holds with it many
For governments in general and the US government in particular, Ludwig von Mises had a policy recommendation: do not increase the stock of money any further. He made this point in “Monetary Reconstruction” (written in 1952 and published in 1953): “The first step must be a radical and unconditional abandonment of any further inflation. The total
Experience has taught us that if too much money is chasing too few goods, inflation will be the inevitable result. And as inflation has proven itself to be a costly evil – damaging investment, production and employment –, great efforts have been taken to design a government controlled money system which shall preserve the value of the currency.
Investors in the international bond markets appear to be extremely confident about the outlook for inflation, expecting the loss of purchasing power of money to be low in the coming years. In fact, investors seem to view central banks’ promises to deliver low inflation as extremely credible, as indicated by inflation-linked bond prices. In view of
In virtually all major economies business sentiment indicators are promising additional production and employment gains. Most prominently, international stock market valuations, fueled by brightening expectations of future profitability gains, are regaining lost ground, swiftly moving back towards levels seen before the sharp price correction
What would the world economy and financial markets look like had government controlled central banks not followed a course of relentless increases in credit and fiat money supply? Any attempted answer to this question is sure to trigger a heated debate. In any case, however, answers would clearly depend on the alternative monetary systems that had
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The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard.
Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.