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The Myth that Central Banks Assure Economic Stability

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Greek The world has been plagued with periodic bouts of the economic rollercoaster of booms and busts, inflations and recessions, especially during the last one hundred years. The main culprits responsible for these destabilizing and disruptive episodes have been governments and their central banks. They have monopolized the control of their respective nation’s monetary and banking systems, and mismanaged them. There is really nowhere else to point other than in their direction. Yet, to listen to some prominent and respected writers on these matters, government has been the stabilizer and free markets have been the disturber of economic order. A recent instance of this line of reasoning is a short article by Robert Skidelsky on “Why Reinvent the Monetary Wheel?” Dr. Skidelsky is the noted author of a three-volume biography of John Maynard Keynes and a leading voice on public policy issues in Great Britain. Skidelsky: Central Banking Equals Stable Prices and Markets He argues ...

Monetary Fallacies and Inflationary Bubbles

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Looking to the next few years ahead, is America and the world going to continue riding a wave of economic growth, improving standards of living, falling and lower unemployment, and technological changes that will continue to raise the quality and variety of life? Or will this turn out to be, at least partly, an artificial economic boom that will end in another economic and financial bust? Reading the economic tealeaves is never an easy task. But the “Austrian” theory of the business cycle offers a guidebook to better see through the confusions and complexities of what the future may hold in store. Ninety years ago, in 1928, the famous Austrian economist, Ludwig von Mises, published a monograph called, Monetary Stabilization and Cyclical Policy. It was intended to be a partial restatement and extension of his earlier work, The Theory of Money and Credit, which first appeared in 1912, and in a revised edition in ...

The Calculation Flaw in Marx’s Socialism

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Mark my words: American leftists who are celebrating the 200th anniversary of Karl Marx’s birthday will not make any mention of the problem of economic calculation under socialism. The reason? The calculation problem reveals that socialism is an inherently flawed economic paradigm. It makes sense that American leftists would not want to talk about something that shows that the economic system they favor is fundamentally flawed. Imagine a socialist society as envisioned by Marx. The state owns and produces everything. That is what is meant by the socialist term “public ownership of the means of production.” All the factories, the businesses, stores, and enterprises are owned and operated by the state. Everyone in society is a government employee. Suppose state officials decide that it’s important to produce sweaters. How many do they produce? How many factories should be built to produce them? How much money should be spent on them? How many government employees should be allocated to the project? How ...

Reasons for Anti-Capitalism: Ignorance, Arrogance, and Envy

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Why is the free enterprise or capitalist economic system so widely disliked, hated and opposed? Given the success of the competitive market economy to “deliver the goods,” it presents something of a paradox. An economic system that has either radically reduced or even in some instances virtually eliminated poverty, that has created widely available opportunities for personal, social and ...

Public Goods, National Defense, and Central Planning

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The competitive market economy is a powerful institutional mechanism for bringing human ingenuity, energy and creativity to bear to improve both the material and cultural circumstances of multitudes of people around the world. Wherever relatively free market capitalism is operating, it succeeds in ending human poverty and brings about rising standards of living for hundreds of millions, indeed, now ...