The Fed

"There is no incentive for bank depositors to go to the trouble of determining a bank's soundness if the government is going to guarantee deposits."

In addition to his merciless evisceration of the propaganda surrounding specific New Deal programs, Murphy assembles some suggestive evidence, in addition to the clear testimony of economic theory, regarding the destructive, growth-inhibiting nature of the New Deal in general.

Government interventions are at the root of the problem as they disrupt the incentive structure that bankers face, limiting their propensity to abide by this sensible practice. The explicit guarantee by the Central Bank of Iceland altered bankers' risk preferences, and resulted in the risky undertaking being gingerly assumed to be sustainable.

But what happens when government sanctions, and in effect legalizes, counterfeiting, either by itself or by other institutions? Counterfeiting then becomes a grave economic and social problem indeed. For then there is no one to guard our guardians against their depredations of private property.

"Economic trends are finally beyond the control of the political class."

The downward manipulation of the interest rate drives a wedge between the (real) market interest rate and the societal time-preference rate, and therefore wreaks havoc with the economy's intertemporal production structure.

Austrian economists are not fooled, because they reject the idea of empirical data in the validation of theory in the social sciences.

"The Fed was set up to inflate, and that is what it does."

We suggest that inflation is not rises in prices as such but the debasement of money.

"Such aggregates have little meaning, as all human action consists of striving for individual goals."