Reserve currencies serve an important economic purpose. If the dollar loses its status as a reserve currency, the resulting adjustments will be painful for many. So, the global economy would benefit from a new US monetary policy devoted to a sound dollar.
The Europeans have decided to limit funding and credit extended to the Greeks.
The Europeans have decided to limit funding and credit extended to the Greeks. This puts the Greek financial system under pressure, but there are free-market solutions that could set the Greeks on the path to a sound economy.
Money creation does not benefit equally. It creates a class of winners (those who get new money first) at the expense of losers (those who get new money later). Not surprisingly, an inflationary money supply increases the wealth and income gap in society.
Janet Yellen testified before Congress this week, but the Senate Republicans, who claim to be the guardians of monetary sanity, failed to show any true understanding of monetary policy and the damage the Fed has inflicted.
Austrians today are nearly alone in asserting what the classical economists all knew. You cannot create prosperity by creating more money, but only through increases in technological progress, frugality, trade, and a division of labor.
Central banks and their favorite economists are everywhere worried that central banks may be too weak to keep the current “expansion” going. If central banks are too weak now, what will happen when they get the strength they want?
When a central bank devalues a currency, it is often said that the devaluation will help exporters, and thus the whole country, as a result. But this simplistic analysis ignores the many downsides of inflating the currency.
Many people think of their investments and their money in the bank as their savings, but savings and money are not the same thing. Nor will creating more money create more savings.
