Macroeconomics

Bob responds to a new working paper from the Geo-chartalism project, which claims to offer a complete theory of the price level by combining insights from Menger, Cantillon, and Warren Mosler.

Garrison developed over the course of his career what has come to be called capital-based macroeconomics, a full-blown Austrian alternative to mainstream macroeconomics that he laid out in his great work, Time and Money: The Macroeconomics of the Capital Structure.

While most economists believe that central banks set interest rates, in reality, they are set by time preferences of individual actors in the economy. Central bank influences on interest rates ultimately result in setting off boom-and-bust cycles.

While J.M. Keynes likely is the most influential economist of our age, his economics were that of inflation, statism, and outright central planning.

Milton Friedman and the Monetarists believed that fluctuations in the money supply caused the boom-and-bust business cycles. Their solution—keeping money growth slow and steady—would still lead to business cycles.

An economy is no longer evaluated by what it produces, but by what it spends.

While Cantillon used the effects on family life to illustrate monetary theory, Degner lingers to employ sound monetary theory to trace out the effects on the family.

Keynesian orthodoxy claims that cuts in government spending mean less “aggregate demand,” and less “aggregate demand” leads to recessions. Economic experience, however, shows us this is a false theory, something Austrian economists have known for a long time.

Modern macroeconomic theory claims that government spending, taxation, and monetary creation is essential for economic growth. Austrian Economists, however, note that government stifles the economy.

Far from being a true measure of economic health, GDP is a misleading economic statistic that implies consumer and government spending grow the economy. When government spends, GDP increases.