China has recently devalued its currency. Like many governments, the Chinese government thinks this will help the economy by increasing exports. But it will really just destroy real wealth in the process.
Governments have long hated physical cash because it allows for untraceable purchases. But a bigger problem for governments is the fact that holders of cash can signal a lack of trust in central banks by removing all their cash from the financial system.
The Fed is talking about raising interest rates, but it knows that any move in that direction is likely to cause a recession and more economic pain. But it also knows it can't keep forcing down interest rates forever.
The European Monetary Union has failed to bring economic stability, and it has also increased nationalistic tensions among member nations. Some taxpayers, such as German taxpayers, view themselves as working to subsidize foreigners. Meanwhile, central banks continue to distort the economy.
Europe’s problems will not be solved by a Greek exit, and a breakup of the euro certainly won’t fix things as long as the Europeans remain in the thrall of many economic fallacies that have long driven the debate over the euro.
The old tricks of conventional monetary stimulus — low interest rates — no longer work, so we've entered the untested waters of zero-interest-rate policy.
The Mises University is the world's leading instructional program in the Austrian school of economics.
