Anyone who has taken a Keynesian-based macroeconomics course remembers the equation of exchange: MV = PY. This equation, however, is buried in fallacious economic thinking.
The US dollar is not the world's "reserve" currency because of responsibility on behalf of the monetary authorities. Instead, the dollar's "strength" wages from the USA's self-appointed role as the world's protector.
Standard economic theory states that as an economy grows, the money supply should grow with it. Appealing to the Austrian tradition, Frank Shostak shows that belief is mistaken.
While officials in the White House, Treasury, and the Fed give the appearance of being in control, but in truth, they cannot undo the damage they have done.
Why does money have value? Typical economists claim that money is valuable because the government declares it so. But that is impossible, given the true origins of money, which are best explained by Austrian economists.
For all of the talk about "our democracy," there is a better way to protect the lives and property of people than just electing politicians. It is called sound money.
When the Nixon administration ended the dollar's ties to gold, it was yet another sad chapter in the US government's abuse of its currency. And the government learned nothing.
Development economists often confuse natural resources with wealth and then are puzzled when countries rich in resources experience widespread poverty. Free markets lead to creation of wealth, period.
