Category: Economics & Investing

In an essay first published in 1969 and recently re-published, Murray Rothbard summarizes the causes and cures of economic depressions by drawing on the Business Cycle theory developed by the great Austrian economist Ludwig von Mises. Here’s an excerpt from this essay: “Mises, then, pinpoints the blame for the cycle on inflationary bank credit expansion propelled by the intervention of government and its central bank. What does Mises say should be done, say by government, once the depression arrives? What is the governmental role in the cure of depression? In the first place, government must cease inflating as soon as …

James: The letter [from reader PNG] has severe mistakes and is fundamentally misleading – your readers deserve even more refutation before anyone is lulled into a false sense of security. To quote: “Let’s say the Treasury just invents another two trillion dollars by printing currency and forgiving loans. Let’s say they do that every year for the next five years. How much inflation would that create? The absolute maximum inflation rate from this example is about 20%, because there’s ten trillion dollars in circulation already.” These numbers are incredibly far off the mark. Actually M1 is the narrow definition of …

Jim, You recently wrote: “The Treasury will undoubtedly be forced to monetize a good portion of the National Debt. This is effectively creating money out of thin air. Each new dollar so created will dilute the purchasing power of the dollars that are already in circulation (Both paper and electronic “dollars”.) This wholesale dollar fabrication will be outrageously inflationary. Be prepared for double digit and then triple digit inflation in the next few years.” Let’s say the Treasury just invents another two trillion dollars by printing currency and forgiving loans. Let’s say they do that every year for the next …

Jim, Thanks for the awesome blog. I consider it essential reading every day, especially now considering the terrible situation we find ourselves in. You keep speaking of mass inflation yet we see oil and other commodities falling in price along with, sadly, our home values. In a recent post you also mentioned being able to buy classic cars at rock bottom prices, closely followed by hyperinflation. Can you explain for all of us how this can come to pass and some of the warning signs? Thanks, – DZ in Louisiana. JWR Replies: To clarify, I mentioned buying older, fuel-inefficient vehicles …