As the credit expansion turns to bust, many capital goods remain unused, many investment processes cannot be completed, and capital goods produced are used in a manner not originally foreseen. A large portion of society’s scarce resources has been squandered.
Scratching beneath the surface of the debate around countercyclical capital buffers, we find the normal level of duplicity that characterizes most debates about monetary policy.
New York Fed Chief Dudley recently suggested asset bubbles "emerge from the way market participant’s process information and trade" — thus ignoring the role of the central bank.
Selgin thinks fractional reserve banking critics are akin to "flat-earthers", but he gets some important points wrong.
John Law's disastrous Mississippi Company bubble can still instruct us today.
It is impossible to force the economic development of society by artificially encouraging investment and initially financing it with credit expansion. This policy can only have benefits if economic actors also elect to begin saving more at the same time.
It's not really true that governments can always just print money to pay off their debts.
Since the government is not a wealth generating entity, how can an increase in government outlays revive the economy?
With cryptocurrencies, currency competition in the spirit of Hayek has become possible even in the absence of self-limitation by governments.
Under an inflationary monetary scheme, big financial-sector players who get the new money first benefit the most. Ordinary households down the line then bear the brunt of price inflation.
