Monetary Policy

Dr. Jonathan Newman is back with Bob to break down Krugman's shifting economic predictions and to consider the trajectory of the US economy.

The common belief is that increases in the stock market drive overall economic growth. Expansionary monetary policies, however, are responsible for driving up stock prices even as they simultaneously damage the economy.

The US Government will face another round of federal debt expansion in 2024, but will there be enough creditors to allow their continued spending?

While the Fed tries to engineer the mythical “soft landing” for the economy, Austrian economists know that this is an exercise in futility. Once the credit-fueled boom occurs, the bust logically follows.

Advocates of unbacked paper money claim that theirs is the “civilized” choice, as opposed to gold, or what Keynes called “that barbarous relic.” These inflationists, however, are the ones wrecking civilization as we have known it.

According to mainstream economists, the expectation of inflation leads to higher prices. That is impossible, however, because actual inflation involves real increases in the money supply.

With US government debt skyrocketing past $33 trillion and possible recession looming, the Treasury faces the prospect of running out of suckers. Finding buyers for US debt will become much more difficult.

The new problem we now face arises from the fact that huge deficits are only manageable so long as interest rates remain very, very low. 

Nicolás Cachanosky was a co-author on the dollarization proposal for Argentina that Javier Milei publicly endorsed. He explains to Bob the outlines of the proposal, which involves replacing pesos with USD for bank deposits, currency in circulation, and central bank liabilities.

Regulations imposed on production or consumption place the economy on a lower value-creative trajectory and therefore a lower standard of living.