Booms and Busts

Politicians say "greedflation," and profits are what fuels rising prices, but the real culprit is fiat money creation fueled by the central bank. 

We are stuck in the middle of the road, far away from full socialism or the unhampered market.

Keynesians believe that if there is a bout of inflation, central banks can slowly guide the economy to a “soft landing” which minimizes unemployment and income losses. Such policies, however, only lead to further boom-and-bust scenarios.

The Nigerian government has passed a new minimum wage law, and the usual suspects are happy because the country "is getting a raise." Economic reality, however, will set in soon enough as people find that government edicts do not create wealth.

Although John Kenneth Galbraith promoted socialism and Keynesianism, at least he was an entertaining writer. His book, The Great Crash, 1929, provides a readable history of the stock market crash that helped bring on the Great Depression.

Keynesian economists claim that the economy needs at least 2-3% inflation in order to avoid business cycles. But these inflation rates over time are economically ruinous and they actually harm economic growth.

It is no surprise that "inflation" is one of the major political issues this election cycle, but few know what inflation really is, let alone what causes it.

After a dramatic couple of days in the markets, economists and political figures are calling for the Fed to cut interest rates. But if we ever want to see an end to all this economic chaos, what we need are not lower rates or higher rates, but accurate interest rates. 

More than two decades ago, the Federal Reserve joined with the federal government to make housing more affordable. The first housing bubble popped in 2008, and a second bubble is on its way to bursting.

Recorded in front of a live audience at the 2024 Mises University, Bob discusses recent market turbulence with Mark Thornton.