China has recently devalued its currency. Like many governments, the Chinese government thinks this will help the economy by increasing exports. But it will really just destroy real wealth in the process.
Governments have long hated physical cash because it allows for untraceable purchases. But a bigger problem for governments is the fact that holders of cash can signal a lack of trust in central banks by removing all their cash from the financial system.
Consumer prices have been stable, but we should pay attention to 2014's decline in the money supply which mirrors a similar decline from 1927 and 1928, which was followed by a collapse in industrial production.
Interviewed by host Paul Molloy, Mark Thornton discusses the consequences of having a minimum salary of $70,000. They also discuss the negative impact of the minimum wage, and how fair wage rates are determined by the market.
The European Monetary Union has failed to bring economic stability, and it has also increased nationalistic tensions among member nations. Some taxpayers, such as German taxpayers, view themselves as working to subsidize foreigners. Meanwhile, central banks continue to distort the economy.
Europe’s problems will not be solved by a Greek exit, and a breakup of the euro certainly won’t fix things as long as the Europeans remain in the thrall of many economic fallacies that have long driven the debate over the euro.
Physical cash has long been problematic for governments because it allows people to avoid the banking system, which in turn can lead to tax avoidance and bank runs. It’s much easier to control an economy when all money must remain in banks.
