Recessions emerge when the central bank reverses its loose monetary stance. But the seeds of recession were sown earlier by private lending practices that grew out of central-bank money creation.
The only way to end the booms and busts brought by inflationary credit is to eliminate the central bank's counterfeiting that constitutes and creates that inflation.
Increases in the money supply need not always be followed by general increases in prices, as prices are determined by both real and monetary factors.
The idea that money must grow in order to sustain economic growth gives the impression that money somehow sustains economic activity. But this has never been true.
Claims that private-money production is too expensive usually ignore the many costs of a government-controlled money system.
Decades ago, the Chinese state began to accumulate gold merely as part of a makeshift backup plan. But it may have ended up with enough gold to make a real move away from fiat currency, which would be a disaster for its Western competitors.
If the Chinese sell us stuff and then "hoard" the money we pay them, that increases the value of the dollars we continue to hold here in the US, while also leaving us with more stuff to sell elsewhere.
The future of Venezuela is grim. International reserves will be depleted, monetary expansion will not pay the deficit, and inflation will continue.
As the foundation of the economy weakens, bank lending weakens also. And then money begins to disappear from the banking system.
97% of consensus economists didn’t see the last recession the quarter before it started. Even worse, 77% didn’t see a recession when it was already happening!
