It seems the reach and influence of central banks has never been higher, yet they are increasingly flying blind in an environment where central bank tools are growing ever more imprecise and dangerous.
Since the trade balance has nothing to do as such with either the supply of money or the demand for money, we can conclude that trade balances do not determine the purchasing power of money of respective countries.
Ludwig von Mises viewed sound money as a limit on government power and as "an instrument for the protection of civil liberties against despotic inroads on the part of governments. "
Europe's path to long-term stagnation should serve as a reminder for the United States, again, of why it is not advisable to follow the eurozone policies. The results are invariably disastrous.
Despite double-digit unemployment rates, banks are keeping loan-loss provisions low, no doubt assuming Uncle Sam will keep everyone’s boat afloat. But all good things come to an end.
Economic growth results from increasing production, and the money supply is always sufficient to foster exchange. The boom-bust cycle only occurs when production is distorted by a growing money supply.
Euro governments are planning to use the banking system for widespread bailouts in the wake of the COVID-19 shutdowns. This could bring about a new financial crisis.
The COVID panic gave the world's regimes a new reason to claim that physical cash should be outlawed. But this is just one of many strategies now in play to end the relative privacy and freedom cash provides.
It is possible to conceive of a world where fractional reserve banking is understood by both banker and depositor and involves no deception or fraud. But in that world, deposits cease to be money and become complex credit securities.
