“When the Fed suppresses short term rates, this mechanism is broken: there is no incentive to curb short-term borrowing for non-essential purposes, and there is no incentive for those with cash balances to supply short term loans.”
A fantastic read 🤓 https://t.co/bGrlxZae9X
I don't think it's complicated to an Austrian pov. The recession happens for a reason, and the market is correcting itself, the fed have taken up the role of preventing the market from ever correcting itself. Unfortunately for them the market will always win in the long run so all they're doing is prolonging the inevitable, whilst making the problem even worse.
So simply, if the fed did nothing? The market would correct itself; and that would take a lot of suffering, an economy without savings would suddenly have to start saving; borrowing would be very expensive because no one has savings; asset prices would normalise ect.
Not only was that period probably the greatest period of economic growth in US history, but that also kind of negates the fact that the biggest recessions, the biggest stock market crashes, and the Great Depression all occurred under the feds watch.
>Not only was that period probably the greatest period of economic growth in US history,
How much growth did American Natives experience during this period? How much growth did America's black and Latino population enjoy?
It's weird to see people cite "growth" during the turn of the century without bothering to count the loses.
Like citing the Marshall Plan as an economic boom time for Western Europe, while neglecting what prompted it.
> but that also kind of negates the fact that the biggest recessions, the biggest stock market crashes, and the Great Depression all occurred under the feds watch.
If you stop the clock at 1932.
Post-40s, it's the largest improvement in education, life expectancy, real estate development, and number of billionaires in human history.
>How much growth did American Natives experience during this period? How much growth did America's black and Latino population enjoy?
Unless your arguing these examples were responsible for the historic economic growth we saw in this period, then its irrelevant. I can obviously agree with you that these were injustices, but they were in spite of the economic boom, not a cause of it cmon now.
And I think crediting the economic booming post 40's to having the fed around is a little disingenuous considering it was booming without the Fed. Like crediting Trump with the economy, when it just follows the same trend as Obamas.
No I’m suggesting that your being robbed blind. Family of 3 means 2 trillion dollars would be $60,000 per every family in America, and your getting $1,200 of that. All of that money is going anywhere but to corona virus issues. Nancy pelosi got 25 million for some museum in the bill. That’s just one of many examples. A trillion dollars is one million, millions. So double that.
Obviously, it's too much, because inflation will eventually happen.
Just look at the price of N95 masks and toilet paper. The Fed is literally doing a Venezuela, just like Papa Paul warned us about.
If the government would just get out of the way, we could go back to work and solve the virus problem with the Free Market and everything would be better.
Just look at South Korea! Or Germany! Or Russia! Free Market solved these problems. American Government is just making it all worse.
No, I will not explain any further. Just Google it.
Then the car would come to a safe slow halt assuming someone didn’t do something to affect the trajectory of the car unless it meant keep it on the road OR avoid hitting someone? Oh wait that’s a lot of area where someone could take advantage of the situation and insert their own agenda. Nvm.
Well, they should do something. They should raise the interest rates way above 2% so that the market can set interest and not the central bank. Also, they should back the dollar with gold and revalue it to 50000 per oz, so that when the debt ponzi scheme blows up, the money doesn't become toilet paper.
Great article, but can someone explain this part to me please:
A concept that can help keep these conversations grounded is the acknowledgment that there is no free lunch. When the Fed buys treasury bills, and the federal government uses those funds for bail-outs, even though the money is being printed fresh, the purchasing power has to come from somewhere. In this case, it’s coming from the diluted value of cash balances. So as we can now see, regardless of whether central banks intervene, the lifeline to the economy must come from the cash balances of savers.
Don't think in terms of paper bills, but instead think in terms of Charizard cards.
>While hoarders of it may be disappointed that the value of the card hasn't gone up that much over the years, a mint condition (graded by PSA) first-edition Charizard could be worth in the region of $1000 - $2000
But that's only with the current supply. If the Pokemon Company out of nowhere finds in one of their warehouses a hidden stock of thousands of of 1st edition Charizard cards which were never distributed, and then immediately puts all of those new cards up for sale on Ebay, what do you think happens to the value of Charizard cards? It tanks from $2000 each to basically worthless. The Pokemon Company has 'stolen' the value of the original cards.
Same thing happens with savings and the Fed. The Fed's only power is to 'print money' (albeit in a more round-a-bout way), but they can't create value only with new money not based on production - they can only steal value from existing money and existing savings.
Imagine you have $1000 in the bank. You make, say, $50k a year. It costs you $40k to stay alive, and you spend most of the rest on frivolities. The Fed prints enough to double the money supply. The price of everything doubles, because scarcity didn’t decrease. Now you make $100k a year, you spend $80k of that, and you don’t save anything else. Now what’s happened to your $1000? Since the price of everything doubled, the value of your $1000 *halved*. They didn’t “take any of your money”, but they robbed it of its value. Thus we say inflation is a tax on savings. If that behavior from the Fed continues, we will all have worthless fiat. Buy Bitcoin. Thank you for attending my TED talk.
To add to the previous poster.
This is assuming inflation travels instantly through the economy as well.
In reality it floods a couple sectors causing price discrepancies that ebb and flow hurting different sectors and people disproportionately.
So it's possible (likely) to destroy savings while wages lag behind the value shift. E.g. you make 50k and have 10k savings, but prices rise 10% in 1 year while wages rise 8% over 2 years as a potential secondary response.
Not only is savings and the dollar eroded, but the ability to save is also impaired.
"SocialismWins • 6 hours ago Utter rubish, conspiracy of rich capitalist would on one golf match decide it is better to stop competing and producing, whle start importing mexicans and start creating artificial scarcity to rise profits by lowering price of workers while making prices higher, and stopping borowing to competitors. Mises ideology is OVER! You ARE DONE! Private banking is over idiots. FED had been NATIONALIZED, and now you and your families will get Corona before you are given chance to kill your self or go to Gauntanamo. LONG LIVE TRUMP!!!! LONG LIVE SOCIALISM!!!"
[Mises.org](https://Mises.org) has a lot of long-time, entertaining trolls in their comment section. Money cranks, communist revolutionaries threatening death to Americans, Georgists who do nothing but post rants about Land Value Rents, etc.
It's almost as bad as r/Libertarian!