Financial Markets

Bob Murphy discusses the Mises-Hayek theory of the boom-bust cycle, and explains the predictive power of an "inverted yield curve".

People do not save and accumulate capital because there is interest. Interest is neither the impetus to saving nor the reward or the compensation granted for abstaining from immediate consumption. It is the ratio in the mutual valuation of present goods as against future goods.

If the world gets into a currency war — with the assault on wages and savings that devaluation entails — no one wins.

While much of the media remains focused on Trump and trade, the greatest threat to the Chinese economy may be reckoning with a massive financial bubble from within.

The fact that the most conservative investors are being forced to purchase bonds of nearly bankrupt companies for virtually no yield is not a success of monetary policy nor a tool for growth.

The market probably interprets correctly that the European Central Bank will become even more dovish under Lagarde. This will encourage more risk in the financial system.

Since Libra is an extended arm of the current financial system, first-world economies could benefit at the cost of developing economies.

 A major factor that can explain the apparent contradiction between weakening so-called fundamentals of today — and the stock market's continued march upward — is changes in monetary liquidity.

 Increased velocity of circulation is not, in itself, a contributing cause of higher commodity prices. It is not even a link in the chain of causation.

Contrary to popular thinking, the velocity of money does not have a life of its own.