Monetary Policy

Mark Thornton explains why $50 silver is a psychological barrier.

After central bank expansionary efforts have unleashed inflation, officials then seek to contract the money supply in an attempt to undo the inflationary damage. No contractionary policy, however, can fix the problems caused by monetary manipulation.

Gold and silver make sense—until government “helps.”

Interest rates should be determined by the market, according to its needs, to operate efficiently and effectively distribute society’s financial resources.

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.

According to mainstream economists, inflation aids economic growth while deflation impairs growth. Austrian economists, however, point out that in much of US history, economic growth was accompanied by deflation.

Through its coercive monopoly over money creation, government constantly engages in silent theft through inflation, all done in the name of “stimulating” the economy.

According to mainstream economists, inflation aids economic growth while deflation impairs growth. Austrian economists, however, point out that in much of US history, economic growth was accompanied by deflation.

Mainstream economists have justified the creation of the Federal Reserve because they claim that a growing economy—especially the banking system—needs an “elastic” currency. In other words, the economy “needs” at least some inflation. Austrian economists know better.

The gold price is off and running this week. But, money creation isn’t listed as a cause.