Liberty Forged

the State has no money of its own, so it has no power of its own. ` Nock

Posts Tagged ‘central bank’

Freedom Works -> Deny Statism

Posted by Jesse on April 3, 2009

Mises on War

War…is harmful, not only to the conquered but to the conqueror. Society has arisen out of the works of peace; the essence of society is peacemaking. Peace and not war is the father of all things. Only economic action has created the wealth around us; labor, not the profession of arms, brings happiness. Peace builds, war destroys. (Socialism, p. 59)

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World Reserve Currency – China says yes.

Posted by Jesse on March 23, 2009

Bernanke: Oh no, no, no. No ones talking about a World Reserve Currency. We can print our way out of this mess.

Barack Obama: Geez, ya know. We’d be taking a stronger lead towards achieveing the goals I set forth during the campaign, but all these setbacks….this crisis, you know, we couldn’t have anticipated it.

Ron Paul: We are going to have a dollar crisis. I ran for Congress in the 70’s because Nixon removed the last remnants of the gold standard and I knew that would lead to disaster. We need to have sound money, move towards a new gold standard and abolish the Federal Reserve. (Also see: The Case for  a Genuine Gold Dollar)

Financial Times: China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

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LoL. Krugman the Neanderthal!! (& Hayek on Meet the Press on inflation)

Posted by Jesse on November 25, 2008

It seems the Austrian economist possesses more truth in his pinky finger than Paul Krugman in his entire Nobel Prize–winning body. What other explanation can there be for Krugman’s consistent policy “solutions” to the current economic crisis, which would actually exacerbate the problem and lead to a deepening and prolonging of a recession? Austrians not only predicted the current financial crisis but can accurately diagnose it and prescribe the proper antidote. Krugman’s recent New York Times article, “Depression Economics Returns,” continues to demonstrate his ignorance of economic truth by presenting even more antidepression policies as solutions. In this article, we will analyze Krugman’s recommendations and provide the Austrian cure, including what government can do to cure the recession.

……[Rothbard] lists six ways government could delay market adjustment, which he says would create the “favorite ‘anti-depression’ arsenal of government policy.” These include the following:

  1. Prevent or delay liquidation
  2. Inflate further
  3. Keep wage rates up
  4. Keep prices up
  5. Stimulate consumption and discourage saving
  6. Subsidize unemployment

Unfortunately, government is actively pursuing all of these measures.

Read the rest by Chris Brown ..

How many in the media have mentioned the fact that Krugman received his Prize from the world’s oldest central bank?

It was founded in 1668 and was then known as the Bank of the Estates of the Realm, in other words, parliament’s bank.,,,,It lent money to the general public and did not have a monopoly on issuing banknotes until 1904….Although Johan Palmstruch’s bank was private, its governors were chosen by the King and the bank’s activities were regulated in a document whereby the King gave Palmstruch permission to run a bank.

About the Central Bank

Monetary policy is the policy that affects a country’s interest rates, money supply and the value of money

The Bank has one objective – to ensure that inflation is low and stable.

The most common measure of inflation is the change in the Consumer Price Index, CPI.

The Riksbank has determined by law that the objective of Sweden’s monetary policy is to safeguard price stability.

There is no science that says what is the right level for an inflation target. It should be so low that no one takes it into account but it should be sufficiently high to provide scope for measurement errors.

When the Riksbank changes the policy rate, total demand is affected and ultimately also inflation, through various channels in the economy. The cost of borrowing and the compensation for saving are affected, as well as the demand for the good exported and imported, as the exchange rate is also affected.

Governance

The Riksbank is led by an Executive Board of six members. In normal cases the Executive Board can make a decision when at least half of the members are present. The Governor has the casting vote. The Executive Board is appointed by the General Council of the Riksbank, which has eleven members. The General Council is in turn appointed by the Riksdag, the Swedish parliament.

The Riksbank regularly participates in some 130 international committees and working groups. In addition, the Riksbank maintains bilateral contacts with central banks in other countries to discuss issues of mutual interest or to provide technical assistance in central bank matters.

The International Monetary Fund (IMF) is a central forum for international economic co-operation. Practically all countries in the world are members of the IMF

All Riksbank’s Economic Science Prize Recipients

If international speculators are the problem, should we allow international banks to speculate on how best to inflate or deflate currency? Fiat currency is speculation to its core. (Unfortunately, the only thing they speculate on is how long they can keep the charade going.) The big difference is who has the authority in such matters. It’s obvious its not the people, but a minority group of unelected and unaccountable international money changers and war mongers.

_____________UPDATE________________________UPDATE________________________

Jeffrey Tucker just posted this:

This is F.A. Hayek in 1975 on Meet the Press. If you have never listened to a Mises.org podcast before, you must listen to this. I heard this Friday and I’ve been haunted by it ever since. A number of points stand out to me.

1) Hayek is amazing here. He holds the line. He is patient and explains very well. He refuses to relent. The core of his message is rooted in the Austrian view of cycles, and this interview demonstrates that he never stepped away from it, despite some far-flung claims.

2) The line of questioning he endures is hilariously naive and idiotic. We think we have a Keynesian problem now; it’s clear that these people really believe that policy makers can manipulate the economy like a machine, trading off unemployment for inflation and back again, with no trouble. So they hit Hayek for his supposed personal opinion that unemployment is better than inflation, as if the trade off is direct and easy to manipulate. How far we’ve come!

3. In light of the present crises, and the appalling ignorance of the present generation of policy makers of any historical understanding, it is so helpful to remember that we’ve been down this road before, and done all the wrong things before. Forget learning from history. The present generation does even know enough history to learn anything from it. So this interview really makes it clear what has come before.

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Why were most people wrong about the economy?

Posted by Jesse on November 14, 2008

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The Hypocrisy of Greenspan

Posted by Jesse on October 24, 2008

Can Greenspan provide stable markets and prosperity? All evidence is again to the contrary. Smart? Obviously. Principled? Ha!

Those who tirade against President Bush do not believe what Bush says. Naturally the opposition will use examples provided by Bush’s failures to bolster and re-enforce the position that theirs is the correct view.

And Greenspan? Same principle. Opposition forces will employ the same means and exploit such failures to the same end.

Yet, what evidence is given to prove the opposition is therefore correct?

Let’s reproduce the evidence given by the opposition:

·”Greenspan claims to be representative of the practice of “laissez-faire capitalism”

·“Greenspan admitted there was a “flaw” in his ideology”

·“Therefore, “laissez-faire capitalism is to blame for the alleged “crisis”

Not only is this lacking in substance, but the facts are incorrect.

How does the Federal Reserve, of which Greenspan was the Chairman, in any way, represent laissez-faire capitalism? This question is never asked. Instead the emphasis and attack is on Greenspan’s alleged ideology.

Read it and weep. Greenspan abandoned “his” laissez-faire ideology a long time ago:

Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

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I would recommend listening to a man who has stayed principled and cannot be blamed for any of the current economic “crises” but instead has served as a teacher and voice of reason on these issues of our day.

The Economics of a Free Society [mp3]

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