How to Avoid Depressions? Foster Saving and Investment
Contrary to the popular thinking, economic depressions are not caused by a strong decline in…
Continue readingFrank Shostak
How Much Control Does the Central Bank Have over Interest Rates?
The central bank can manipulate the interest rate to whatever level it desires. However, it cannot…
Continue readingMoney Supply Growth Is Slowing: That Points to a Slowing Economy
The massive monetary pumping by the Fed has likely undermined the pool of savings already. Consequently, the economic growth rate will…
Continue readingBefore a Bust, There Is Always a Boom (and Malinvestment)
Once banks start to lend money not backed by savings, this sets in motion the…
Continue readingSavings Are the Foundation of Economic Growth
In the real world, one has to become a producer before one can demand goods and services…
Continue readingSound Money (Gold) Versus Fiat Money (Unbacked): Effects On The Boom-Bust Cycle
The key to the emergence of the boom-bust cycle is the expansion in money supply out of “thin air.” The increase in the supply of gold has…
Continue readingWhy Monetary “Stimulus” Won’t Prevent an Economic Bust
Economic bust is going to emerge regardless of whether the Fed is going to tighten its interest rate stance or not…
Continue readingWhy Economic Models Can’t Provide a Realistic Picture of Human Behavior
In many instances the forecast produced by an econometric model is heavily influenced by…
Continue readingMonetary Savings versus Real Savings
A decline in savings, which is an increase in spending, is considered as good news for economic activity. The…
Continue readingFed Transparency Won’t Get Us out of the Mess the Fed Created
It is not possible to deflate the present gigantic monetary bubble without a severe economic bust. A policy of transparency employed by the Fed cannot prevent the inevitable bust. Neither…
Continue readingTechnology Alone Won’t End Poverty: We Need Savings First
Regardless of how knowledgeable we are and regardless of various technological ideas, without an expanding pool of real savings, economic growth…
Continue readingTime Preference, Interest Rates, and Stagflation
Strong increases in money supply result in an exchange of nothing for something, which weakens the process of…
Continue readingFiscal Stimulus vs. Economic Growth
As the pace of government spending increases, a situation could emerge in which the…
Continue reading“Equilibrium Prices” and Real Prices: Supply, Demand, And The Prices Of Goods
By the popular way of thinking, the determination of the prices of goods is summarized by means of supply and demand curves, which describe…
Continue readingDeflation Doesn’t Undo the Problems Caused by Past Inflation
Freeing the economy from central bank interference with interest rates and money supply will arrest the process of wealth destruction. This is going to…
Continue readingWhy Government Stimulus Sometimes Looks like It Revives the Economy
More government and central bank stimulus policies are likely to further weaken the pool of real savings and place the economy on the path of…
Continue readingA Drop in the Money Supply Was Not the Cause of the Great Depression
The Great Depression of 1930s occurred because of the Fed’s loose monetary stance from October 1920 to August 1924, which undermined the…
Continue readingHow Easy Money Creates the Boom-Bust Cycle
Whenever the monetary stance is loosened, it sets in motion an economic boom by means of the diversion of real savings from wealth generators to…
Continue readingWhy Asset Bubbles Involve So Much More Than Just Rising Prices
To prevent the emergence of bubbles one needs to arrest the monetary pumping by the central bank and to curtail the…
Continue readingMoney Supply Vs Liquidity: What’s the Difference?
Changes in money supply and liquidity are not the same thing…
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