The discrepancy between the relative position of the US economy in the world on the one hand and the relative position of the United States as to its military presence and the role of the US dollar on the other hand is moving towards a cracking point.
Unfortunately, this first essay failed to shine any light in the darkness because he is using advanced mathematics — econometrics — in an attempt to explain human beings.
He has chosen the wrong tool for the job.
After all, these intangible financial instruments can't be eaten or used to build a house, so what good are they? The present article seeks to answer just this question.
Perhaps most importantly, the very source of the crises would remain in place: the concept of "price index targeting," which rests on the erroneous "stabilization" idea, a concept that is in full contradiction to the notion of free markets: "Human action originates change. As far as there is human action there is no stability, but ceaseless alteration."
We must unmask the fact that they use the Federal Reserve to dupe the masses into supporting imperialism. The Fed must be stopped. Gold coins must return as our monetary standard. The ideas of the Austrian economists must prevail.
Contrary to popular way of thinking, the threat to US economy is not the high level of debt as such but credit that is not backed up by real savings. Also, the fall in the money stock that precedes price deflation and an economic slump is actually triggered by the previous loose monetary policies of the central bank and not the liquidation of debt.
My disagreement with Ms. Baum regarding central banking is at base a disagreement about what exactly is money and credit.
Both Phelps and another Nobel Laureate Milton Friedman have introduced more confusion rather than clarity regarding the explanation of the phenomenon of stagflation.
Our analysis shows that it is changes in past money supply, and not changes in the price of oil, that drive price inflation.
Presented at the Mises Circle in Manhattan: The Fed and War Finance (16 September 2006, University Club, New York, NY).
