Booms and Busts

What we observe today is a desperate fight against deflation. We know that this situation is unsustainable, but we do not know to which side the balloon will fall.

Brazilian journalist André de Godoy interviews economist and Mises Institute scholar Antony Mueller on the nature of money, banking, and prices.

Central banks are driving asset price inflation in stocks and real estate. That means people holding those assets get richer. But everyone else just gets higher prices.

Harry Dent believes that a major crash is coming, which will probably begin this year.

Central banks have done nothing to end the boom-and-bust cycle. Instead, their unscrupulous interventions in credit markets just prolong the boom. But it's a huge mistake to assume that bringing market interest rates to zero will create a perpetual boom.

It is not money that funds economic activity, but the saved pool of consumer goods. The existence of money only facilitates the flow of savings. Any attempt to replace savings with money ends in economic disaster.

Our flawed economic measure called GDP leads to a flawed and skewed view of the economy in which consumer spending is the most important metric.

In order to remove the threat of secular stagnation what is required is to shrink government outlays and to close all the loopholes for the creation of money out of thin air.

Many mortgages have not just been modified once, but twice, and sometimes more. Loan servicers are holding higher-end mortgages rather than foreclosing a decade after the crash. Thus, there is plenty of shadow inventory lurking, waiting for the next crash.

After lying dormant for several years in the aftermath of the Great Recession, the subprime market has returned with a vengeance. Subprime has become prevalent in every facet of the credit industry, and we should be terrified.