Deflation: Who’s Afraid of Falling Prices?
In a sound monetary system and a free market, overall prices would generally fall as the economy grows faster than the money supply, enabling people to purchase more with their money.
In a sound monetary system and a free market, overall prices would generally fall as the economy grows faster than the money supply, enabling people to purchase more with their money.
Bankruptcy in the short term is painful. In the long term, it is cleansing decades of poor federal government choices.
People often confuse economic growth with growth in the stock market, but while these two things can be related, that is not always the case, especially during inflationary times.
Ultimately, interest rate caps would cost Americans access to a convenient and reliable source of credit. Instead of saving them money, a rate cap would push consumers into worse credit options.
While Austrian economists have engaged Modern Monetary Theorists on economic terms, one should not forget that this theory promotes totalitarian governance.
Following World War II, Congress imposed mandates on the Federal Reserve in the areas of employment, inflation, and interest rates. Not surprisingly, the Fed has failed in all three areas. It is time to recognize failure and abolish the Fed altogether.
Mainstream economists define inflation as the increase in an imaginary “price level” that is relatively neutral in its effects. Austrian economists, however, know better, as they realize that the effects of inflating the money supply are anything but neutral.
Politicians and central bankers assure us that they are diligently “fighting” inflation. Actually, they are fighting inflation the same way that an arsonist fights against the fires he just set. Government is the inflation arsonist.
Fiat money and state coercion have prevented us from seeing the threat to our well-being that would be apparent with sound money and true liberty.
Keynesians claim that through the “multiplier,” a country can spend itself into prosperity. All that is needed is for government to tax, borrow, print money and spend, and prosperity will follow. Austrian Economists, however, are not fooled by such myths.