The ensuing debasement of the currency is the economically devastating outcome of central banks' unlimited power to suppress the interest rate. This, in turn, is the result of the government taking full control over money production.
"It's pointless to try to wade hip-deep into DeLong's calculations, because they are meaningless."
I will continue to repeat that all people will be made better off in the long run by lowering taxes, easing regulations, stopping fiscal-policy interventions, and not giving the state the power to print fiat money.
"By anticipating the future, speculators may bring about events earlier and reduce their potential harm."
Governments have caused the monetary and economic debacle by taking control of money production.
"There can be no such thing as a Keynesian state on the gold standard, any more then a cocaine addict or compulsive gambler can be on a strict budget."
"Do you think Alan might basically be a social climber?"—Ayn Rand
The truth of the matter is that, far from causing starvation and famines, it is the speculator who prevents them.
This is embarrassing. Here we have a textbook on money, banking, and financial markets, where, presumably, interest-rate theory should play a central role. But there is no theory of interest here.
Unless Hugo Chavez's government suddenly ends spending and returns to a free market, the most likely conclusion to current events in Venezuela is a crisis of interventionism, as the bolívar collapses and the government finds it more and more difficult to fund itself.
