Central Banks

Dr. Hülsmann offers his concluding thoughts on his debate with Philipp Bagus regarding the monetary consequences of closing the central bank of Argentina. 

While the NBER collects economic data ostensibly to aid policymakers, the data it acquires is useless without proper economic theory to correctly interpret the numbers.

It is an article of faith in mainstream economics that an economy cannot grow without a growing money supply. Yet, that is a false narrative, as increasing the supply of money over time ultimately sparks inflation and triggers business cycles.

Prominent central bankers have given conflicting statements concerning gold. What soaring gold prices might indicate is that the world is now turning to gold.

Keynesian orthodoxy claims that the cause of recessions is a decline in so-called aggregate demand. Besides confusing cause-and-effect, Keynesians don't understand that downturns are the result of malinvestments made during the boom because of central bank interference in the economy.

The US as a modern nation began in 1789, but between the Constitution and Alexander Hamilton’s national bank, the original ideal of liberty that drove the American Revolution had passed. We still are living in Hamilton’s country.

After central bank expansionary efforts have unleashed inflation, officials then seek to contract the money supply in an attempt to undo the inflationary damage. No contractionary policy, however, can fix the problems caused by monetary manipulation.

Interest rates should be determined by the market, according to its needs, to operate efficiently and effectively distribute society’s financial resources.

According to mainstream economists, inflation aids economic growth while deflation impairs growth. Austrian economists, however, point out that in much of US history, economic growth was accompanied by deflation.

Through its coercive monopoly over money creation, government constantly engages in silent theft through inflation, all done in the name of “stimulating” the economy.