What the New Nobel Winners Get Wrong about Economics

Frank Shostak

This year’s Nobel Prize in economics was awarded to David Card of the University of California, Berkeley, Joshua Angrist of Massachusetts Institute of Technology, and Guido Imbens of Stanford University. The laureates, according to the Nobel Committee have made an important contribution as to how to ascertain cause and effect from observational data.

Continue reading “What the New Nobel Winners Get Wrong about Economics”

Currency Debasement and Social Collapse

Ludwig von Mises

(Originally posted on Mises.org)

Knowledge of the effects of government interference with market prices makes us comprehend the economic causes of a momentous historical event, the decline of ancient civilization.

Continue reading “Currency Debasement and Social Collapse”

A Global Fiat Currency: “One Ring to Rule Them All”

Thorsten Polleit


Human history can be viewed from many angles. One of them is to see it as a struggle for power and domination, as a struggle for freedom and against oppression, as a struggle of good against evil.

Continue reading “A Global Fiat Currency: “One Ring to Rule Them All””

Remember When Conservatives “Canceled” Anyone against the War on Terror? I Do.

James Bovard

(Originally posted on Mises.org)

Life in American changed twenty years ago after the 9/11 attacks. Many Americans became enraged at anyone who did not swear allegiance to President George W. Bush’s anti terrorism crusade. Anyone who denied “they hate us for our freedoms” automatically became an enemy of freedom.

Continue reading “Remember When Conservatives “Canceled” Anyone against the War on Terror? I Do.”

Fiat Money Economies Are Built on Lies

Thorsten Polleit

(Originally posted on Mises.org)

Now and then, it pays to take a step back to get a broader perspective on things, to look beyond the daily financial news, to see through the short-term ups and downs in the market to find out what is really at the heart of the matter. If we do that, we will not miss the fact that we are living in the age of fiat currencies, a world in which basically everything bears their fingerprints: the economic and financial system, politics—even people’s cultural norms, values, and morals will not escape the broader consequences of fiat currencies.

Continue reading “Fiat Money Economies Are Built on Lies”

What Is the Purpose of the Economy? Carl Menger Explains.

Antony P. Mueller

(Originally posted on Mises.org)

This second part of the series about the Principles of Economics treats Menger’s exposition of the economy. In continuation of the first part, which covered the general concept of goods, the part on the economy treats the role of economic goods in relation to human wants. Based on the original version in German, published in 1871 as Grundsätze der Volkswirthschaftslehre, the following exposition tries to capture the spirit of the work, with all direct quotes in the text freshly translated for this article.

Continue reading “What Is the Purpose of the Economy? Carl Menger Explains.”

Will the Feds Try Price Controls to “Fix” Price Inflation?

Joseph Solis-Mullen

(Originally posted on Mises.org)

As it began rapidly expanding the money supply early in 2020, the Fed confidently assured the public there would be no unanticipated or serious rise in inflation. Now that their projections have failed to materialize (in fact, their forecasts were off by almost 40 percent), they assure us that this will be but a temporary spike.

Continue reading “Will the Feds Try Price Controls to “Fix” Price Inflation?”

Crypto Scammers Rip Off Billions as Pump-and-Dump Schemes Go Digital

Billions are getting pilfered annually through a variety of cryptocurrency scams. The way things are going, this will only get worse.

(Originally posted on Bloomberg.com)

By Misyrlena Egkolfopoulou and Charlie WellsJuly 8, 2021

Listen to The Money Chant of the Wolves of Crypto.

You remember The Money Chant: Matthew McConaughey thumping his chest, talking fools and money before — sniff! — a little lunchtime “tootski.”

Continue reading “Crypto Scammers Rip Off Billions as Pump-and-Dump Schemes Go Digital”

Keynes Said Inflation Fixed the Problems of Sticky Wages. He Was Wrong.

Robert Blumen

Originally posted on Mises.org)

Britain’s economy had been suffering chronic unemployment for a decade prior to 1936. Economic theory as it was then understood clearly showed that the cause of a market surplus was sellers asking a price in excess of what buyers are willing to pay.

Continue reading “Keynes Said Inflation Fixed the Problems of Sticky Wages. He Was Wrong.”

Can the Lightning Network Lead to “Hyperbitcoinization”?

Peter St. Onge

(Originally posted on Mises.org)

I spent the last week at the Bitcoin Lounge nestled cozily amid the Free State Project’s annual Porcfest in New Hampshire—named for the Porcupine, the libertarian mascot, and located just 7 miles from the infamous Bretton Woods as the crow flies.

Continue reading “Can the Lightning Network Lead to “Hyperbitcoinization”?”

Fannie and Freddie Are Just Government Agencies. They’re Likely to Stay that Way.

Ryan McMaken

(Originally posted on Mises.org)

Last Week, the US Supreme Court confirmed that Fannie Mae and Freddie Mac are essentially government-owned corporations, and are likely to stay that way.

The Court didn’t say this in so many words, but the ruling (namely, Collins v. Yellen) helps to end the fiction that Fannie and Freddie are private organizations only temporarily in a state of “conservatorship” under the control of the US government.

The ruling itself is seemingly extremely mundane. The Court ruled that the chief executive of the Federal Housing and Finance Agency (FHFA)—the government agency that effectively owns Fannie and Freddie—was for all practical purposes a government appointee like any other executive from a government agency. Moreover, the Court refused to intervene to end the federal government’s practice of “sweeping” funds from Fannie and Freddie and placing those funds in the US Treasury.

In effect, the rulings confirm what more cynical and savvy observers have long known: that Fannie and Freddie have always been quasi-government organizations, and are now full-on government bodies following the bailout and takeover of the two corporations which occurred in September 2008.

In other words, in practice, Fannie and Freddie are no more “private” entities than is Pemex, Mexico’s state-owned petroleum company.

As Lew Rockwell noted at the time of the government’s takeover in 2008:

This past week, the government announced that it would take Freddie Mac and Fannie Mae, the mortgage giants, under conservatorship, which is a nice way of saying that they will be nationalized.

We don’t use the word nationalize any more. We can try an experiment and read the new term “conservatorship” back into history. In fact, we might say that Stalin and Lenin put Russia’s industries under a kind of conservatorship. Or we might say that Mao pushed a kind of land conservatorship, or that Hitler’s policy was one of national conservatorship. Marx’s little book could be retitled The Conservatorship Manifesto.

You see, the government keeps having to make up new names for these things because the old policies, which were not that different in content, failed so miserably. The old terms become discredited and new terms become necessary, in an effort to fool the public.

So, although we now politely—nearly 13 years later—refer to Fannie and Freddie as companies “in conservatorship”—the reality is these companies have been nationalized.

Of course, they were never truly private. Fannie and Freddie were created by Congress to add liquidity to the mortgage markets by buying up mortgages in the secondary market. For investors, the desirability of their stock to investors long rested on the implicit promise—a de facto wink and nod—making it clear that Congress would never allow these companies to fail. Yet, not even this was enough for the management at Fannie and Freddie. As early as the late 1990s, Fannie Mae was likely “misstat[ing] its financial statements.” Freddie engaged in similar behavior.  None of t his affected what many investors were banking on: that in case of any major disruptions to the housing market, the federal government would force the taxpayers to bail these companies out.

That’s exactly what happened in 2008, as just the latest spasm of “financialization” which sucked ever more resources out of the non-financial economy in order to pour more cash into the financial sector.

Yet, investors perhaps did not expect the feds to expropriate the companies, although such terms were never used. Both investors and federal regulators have continued to fight over just how fully these companied had been nationalized. Last week’s ruling makes it clear they are indeed truly nationalized, and the money that flows into Fannie and Freddie is the federal government’s money.

Nor should we expect this to change any time soon. Approximately half of the mortgage market at this point is backed by Fannie and Freddie, and that means the stakes are high. Congress needs Fannie and Freddie to grease the wheels of the mortgage market and to ensure that there is always plenty of money sloshing around in the mortgage markets so that interest rates remain low and the homeownership rate is propped up.

To trust Fannie and Freddie to the “free market” might allow interest rates to adjust to a significantly higher rate, and that’s clearly not tolerable in the current climate in Washington, DC.

It’s clear Washington never intended these companies to be truly private, but the current housing market is so fragile and so reliant on artificial amounts of liquidity—and artificially low interest rates—that it appears clear federal officials will continue to insist on direct control.

It’s all just another example of how the modern US economy is heavily socialized, financialized, subsidized, and controlled by federal technocrats.

The Court has just told us what we already knew, but now it’s getting harder to investors to deny this reality. Following the ruling last week, Fannie and Freddie stock plummeted 45 percent at one point, and remains at a multi-year low as investors now increasingly suspect hopes for “reprivatization” are in vain.Author:

Contact Ryan McMaken

Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for the Mises Wire and Power&Market, but read article guidelines first. Ryan has degrees in economics and political science from the University of Colorado and was a housing economist for the State of Colorado. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

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Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

Image source: ehpien via Flickr

Carl Menger’s Theory of the Origin of Money

Ludwig von Mises

(Originally posted on Mises.org)

Carl Menger has not only provided an irrefutable praxeological theory of the origin of money. He has also recognized the import of his theory for the elucidation of fundamental principles of praxeology and its methods of research.1

Continue reading “Carl Menger’s Theory of the Origin of Money”

The Stimulus Boom Is Already Over. Now Comes Stagnation.

Daniel Lacalle

Originally posted on Mises.org)

The United States retail sales and jobless claims weakness, significantly below estimates, coincides with the largest fiscal and monetary stimulus in history. Something is not right when these figures come significantly below estimates in an environment of massive upgrades to gross domestic product (GDP). Why?

The diminishing returns of stimulus plans are very evident. Artificially boosting GDP with large government spending and monetized debt generates a short-term sugar high that is rapidly followed by a sugar low. The alleged positive effects of a $1 trillion stimulus plan fade shortly after three months. I recently had a conversation with Judy Shelton where she mentioned that the recovery would be stronger without this latest massive stimulus package. The economic debacle happened due to lockdowns and the recovery comes from the reopening. We need to let the economy breathe and strengthen, not bloat it.

The diminishing returns of stimulus plans are evident. A $20 trillion fiscal and monetary boost is expected to deliver just a $4 trillion real GDP recovery followed by a rapid return to the historical trend of GDP growth this will likely lead to new record levels of debt, weaker productivity growth and slower job recovery. The pace of global recoveries since 1975, according to the OECD shows a weaker trend.

Deficit spending is mostly devoted to current spending, which leads to an almost negligible potential growth improvement. If any, evidence suggests fiscal multipliers are poor, even negative, in highly indebted and open economies.

We must be cautious of the excess of euphoria that emerges from many statements about the so-called European “Next Generation” funds. Many of the optimistic estimates seem to forget the negligible effect of previous similar plans.

The sharp increase in contributions to the European Union Budget and the tax increases announced by some countries like Spain will likely diminish the net effect of these funds.

All the success or failure of the European Recovery Plan rests on the estimates of the multiplier effect of the investments made. And the prospects are not good if we look at history.

The average impact of the last programs such as the 2009 Employment and Growth Plan, the Juncker Plan or the Green Directives to support investment in renewables has been extremely low. The empirical evidence from the last fifteen years shows a range that, when positive, moves between 0.5 and 1 at most … And in most of the peripheral countries, they have been negative.

According to the European Union’s own estimates, the Juncker Plan generated between 2014 and 2019 a total impact pf +0.9 percent in GDP and added 1.1 million jobs from €439 billion invested. The return on invested capital of this massive plan was beyond poor. And let us remember that the Juncker Plan was used entirely for investment projects with expected real economic return and without the amount of current spending and political intervention of the 2021 Recovery Plan.

Can we really believe in an impact of 4 percent on GDP in three years from these European funds as the average consensus estimates when the Juncker Plan generated—if we believe it—0.9 percent in five years?

The government of Spain, in its Recovery, Transformation and Resilience Plan, states that “in aggregate terms, the employment generated by the Plan will represent twelve jobs for every million euros invested.” Twelve jobs per million spent!

The multiplier effect and its structural impact depend on execution and efficiency factors that are more than questionable. The likelihood that these funds will be malinvested or squandered is enormous.

The idea that hundreds of magnificent and profitable projects will suddenly appear is also questionable. It is very difficult to believe that, suddenly, thousands of profitable and job-creating projects will appear when they were not carried out in recent years with interest rates at historic lows, unlimited liquidity and growing investment appetite.

These so-called stimulus plans have a huge risk: that they involve a huge transfer of wealth from the middle classes and taxpayers destined for political spending without real economic return and investments of doubtful profitability.

There has never been capital available for technology, digitization, and sustainability investment. These investments do not need political direction or funding.

Cheap money, increased public intervention, and massive stimulus plans have not worked as drivers of productivity and potential growth. The path to stagnation and zombification was already a problem in 2018. We need private investment and free trade to boost productivity. We need open economies with a thriving entrepreneurial spirit, not an economy based on spending and debt. The problems created by the chain of the stimulus of the past years are clear: elevated debt and weak growth. More spending and debt will not solve them.Author:

Daniel Lacalle

Daniel Lacalle, PhD, economist and fund manager, is the author of the bestselling books Freedom or Equality (2020), Escape from the Central Bank Trap (2017), The Energy World Is Flat (2015), and Life in the Financial Markets (2014).

He is a professor of global economy at IE Business School in Madrid.

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Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

Image source: Getty

Beyond the Fed: “Shadow Banking” and the Global Market for Dollars

Robert P. Murphy

(Originally posted on Mises.org)

[This article is part of the Understanding Money Mechanics series, by Robert P. Murphy. The series will be published as a book in 2021.] Although it conjures up scary imagery, shadow banking is simply a term for banking operations that occur through financial intermediaries that are not traditional commercial banks. The term was coined in 2007 by economist Paul McCulley and is related to the fact that standard banking regulations often do not apply to nonbank institutions (such as hedge funds and private equity lenders), which are hence operating “in the shadows.” According to estimates of nonbank credit intermediation made by the Financial Stability Board, “the global shadow system peaked at $62 trillion in 2007, declined to $59 trillion during the crisis, and rebounded to $92 trillion by the end of 2015.”1

Continue reading “Beyond the Fed: “Shadow Banking” and the Global Market for Dollars”

The Fed: Why Federal Spending Soared in 2020 while State and Local Spending Flatlined

Ryan McMaken

(Originally posted on Mises.org)

In the wake of the Covid Recession and the drive to pour ever larger amounts of “stimulus” into the US economy, the Federal Government in 2020 spent more than double—as a percentage of all government spending—of what all state and local governments spent in 2020, combined.

Continue reading “The Fed: Why Federal Spending Soared in 2020 while State and Local Spending Flatlined”

Can Economics Save Medicine?

Jeff Deist

(Originally posted on Mises.org)

[This article is excerpted from a talk given June 17, 2021, at the Mises Institute’s Medical Freedom Summit in Salem, New Hampshire.]

Ladies and gentlemen, why are we here today?

First, in a certain sense medicine in America is broken. Doctors and patients are unhappy, the quality of care deteriorates, and costs keep increasing. Even before covid, US life expectancy declined three years running. Even before covid, too many Americans were sick, depressed, fat, and unhappy with their physical and mental health. I wonder if we’ll ever have accurate data about undiagnosed and untreated cancer and other serious illness as a result of the hospital and clinic lockdown. It strikes me this is the kind of information we might want before we consider another lockdown for any reason.

But at the very same time, medicine (broadly speaking) is absolutely poised for incredible entrepreneurial breakthroughs which will revolutionize not only the practice and delivery of medicine, but how we think about health altogether. From cash practices to medi-share programs to medical tourism and drug importation, the future promises huge innovations of the kind our speakers today will discuss—but only if we have the good sense to allow it.

One thing we cannot ignore: doctors are deeply dissatisfied. According to the 2018 Great American Physician Survey, only half of doctors would recommend the profession to young people, and less than half were happy with the direction of the profession. Their biggest complaint? Third-party interference, whether insurance or government, and correspondingly a lack of independence. Doctors think they are working harder for less money and less respect.

I’m sure most of us in this room would like to live into our eighties and nineties—and enjoy them in reasonably good health. But our golden years will be full of doctor visits, as anyone with aging parents can attest. Who will be the doctors treating us in those coming decades? Will they be the best and brightest young people? Will they forego tech or Wall Street or some more lucrative profession to spend fourteen hours per day looking at our aged feet or clouding eyes? Who will do this for $150,000 per year, as an HMO employee with little autonomy or status? Who will give up their twenties to medical school when “doctor” loses what’s left of its prestige?

So medicine desperately needs change. But what kind of changes, and decided by whom?

Fiat Medicine versus Market Medicine

It depends on which of two competing visions we accept.

The first vision is political; we’ll call it fiat medicine. “Fiat” means commanded by government, through legislative decree. We pass laws and people get healthcare, just as we pass laws and people get welfare, housing, education, entitlements, or any kind of government service.

But in this vision healthcare is truly unique, unlike any other goods or services. It can and must be provided by the state, though perhaps with some grudging overlay of nominally private but equally centralized insurance companies and HMOs, nominally private practitioners, and nominally private medical schools—as we see in France, for example, compared to the purely state model of the NHS [National Health Service] in Britain.

This vision essentially says economics is not real and incentives don’t matter when it comes to medicine. Hand in hand with this, it also decrees free healthcare as a positive right. This means how healthcare is provided, by whom, where and when, in what amounts, and in some cases even whether it is provided at all becomes a political question decided politically. In sum, this is the single-payer vision: not yet reality in America, but with growing support. How many times have you heard “The US is the only advanced country without free healthcare for all”?

The second vision we’ll call market medicine. This vision relies on investment of private capital, profit and loss, market discipline, and market signals for the allocation of resources. It accepts economics as real, which means incentives matter and the realities of supply and demand cannot be legislated away. Healthcare is not a right, but something the marketplace can deliver, and deliver better than the centralized state. And just as with private markets for all kinds of things, it recognizes a robust role for private charity in helping to care for the poorest and most infirm among us.

A third vision of sorts, one we might call crony medicine, is the current reality in America. This combines state mandate but ostensibly private insurance systems, a vast overlay of senior Medicare services paid for by taxes but provided by private doctors, and restrictive licensing of providers, drugs, and devices, which has proven hugely susceptible to regulatory capture. An observer might call this corporatism, a cynic might call it fascist.

The point is this: each of these three visions has its own touchstones, its own key aspects. Under a system of political medicine, the touchstones are public money and public bureaucracy. Under a crony system, the touchstones are lobbying influence and private bureaucracy.

Under a market system, those touchstones are scarcity and choice.

So America has to choose, either expressly or by default, which of these three visions will prevail. But if we were building an aviation system we would probably want to understand gravity and lift. Scarcity and choice are simple reality, and reality asserts itself.

The Future of Market Medicine

So what might medicine look like in a free market, or at least a freed market? One where almost all doctors, nurses, and other providers were indeed truly private market actors? One where health insurance was not mandated, where any kind of à la carte plans were allowed—from barest of bare bones to Cadillac plans—where actuarial risk and personal habits operated to set premiums, and most importantly where most care was paid for with cash rather than insurance?

We can’t know, of course—but I suspect it will look something like this (not would, will—we should be optimistic!):

  • Cash for basic services and low-cost, high-deductible catastrophic insurance for serious illness or accidents;
  • A healthy market in secondary insurance to cover those high deductibles;
  • Cheaper and more ubiquitous long-term care policies for end-of-life costs;
  • A bevy of convenient frontline options for all of those common situations, from kids with a fever to twisted ankles: think urgent care, but with the convenience, efficiency, and low prices of a competitive cash market.
  • These frontline cash centers will be widely found in big-box stores, pharmacies, strip malls, and rural towns, not close to ERs;
  • Cash clinics will also provide dental and eye care, along with expanded capacity for one-stop blood testing, radiology and MRI, allergy testing, mental health services, cosmetic treatments, and the like. ER visits correspondingly will fall;
  • They will offer very fast or immediate appointments, with an app to let you stay comfortably at home until your visit rather than some dismal waiting room;
  • Telemedicine will explode, allowing for a far greater range of maladies to be treated without seeing a doctor in person—accelerated by covid;
  • Physician’s assistants and nurse practitioners will play a larger and larger role in patient care;
  • Both medically necessary and elective surgery will see a revolution in pricing, with transparency and unbundling along the lines of the Oklahoma Surgery Center;
  • Furthermore, the market increasingly will produce provide a range of surgery “experiences,” from bare-bones clinics to luxury experiences in resort-like settings;
  • Rehabilitation and sports medicine clinics will boom—recovery and mobility become understood as part of core health;
  • Demand for supplements and alternative treatments will increase as the over-65 population doubles in the coming decades, creating political pressure against greater regulation of such supplements and treatments;
  • As the private market expands, price elasticity of demand will reassert itself! The kind of conscious decision-making we see today with respect to cosmetic surgery and LASIK eye surgery will cut across all forms of treatment;
  • Finally, diet, stress management, personal knowledge, and personal habits will play a much bigger role in the future of medicine. Our approach to health as individuals will become more holistic. Price transparency and financial incentives will give us more ownership and accountability for our own health. If anything, the covid experience demonstrated that no one is coming to save us. Life expectancy and quality of life are in our hands; doctors and other providers are our agents, here to help facilitate things. The days of quietly and passively sitting in the examination room while doctors send us off with a pill are over.


None of this is fantasy. Much of this is already happening. Of course, this is not to say government will not be involved, medical licensing or FDA (Food and Drug Administration) constraints will disappear, or pure free market mechanisms will create nirvana. If anything, insolvent governments, both federal and state, will be forced to adopt or allow some degree of market discipline to deal with entitlements and healthcare costs. Social Security, Medicare, Medicaid are not going to magically go on forever. The FDA will feel pressure from a world of globally importable drugs and medical devices obtainable in other countries. Even if an outright single-payer system is adopted, the bifurcation between private and state medicine will simply accelerate. The beautiful deflationary pressure of markets will not be denied in a country of 330 million people, so kinds of care once available only to the very rich—think Barbara Streisand and her concierge doctors—will become cheaper and cheaper. And all the while, cash prices will continue to fall while insurance premia, copays, and deductibles will continue to rise—even if that insurance takes the form of Medicare for All or some state program.

So that’s really why we are here today, to talk about the space, the opportunity, provided by the diminishing delta between cash and insurance costs, between the state and the market, between the reality of scarcity and the wishful thinking of bureaucrats promoting “free” healthcare. Each of our great speakers has something insightful to say about that space.

Thank you.Author:

Contact Jeff Deist

Jeff Deist is president of the Mises Institute. He previously worked as chief of staff to Congressman Ron Paul, and as an attorney for private equity clients. Contact: emailTwitter.

Sound Money versus Fiat Money: Effects on the Boom-Bust Cycle

Frank Shostak

(Originally posted on Mises.org)

According to the Austrian business cycle theory (ABCT), the boom-bust cycle emerges in response to a deviation in the market interest rate from the natural interest rate, or the equilibrium interest rate. It is held that the major cause for this deviation is increases in the money supply. Based on this it would appear that on a gold standard without the central bank, an increase in the supply of gold will set in motion boom-bust cycle.

Continue reading “Sound Money versus Fiat Money: Effects on the Boom-Bust Cycle”

Explaining Malinvestment and Overinvestment

Larry J. Sechrest

(Originally posted on Mises.org)

Mainstream macro-economists may—and do—disagree with such an assessment, but Austrian macro-economists rightly consider the Misesian/Hayekian theory of the business cycle to be one of the signal achievements of the entire Austrian School of thought. This Austrian business cycle theory (ABCT) offers a unique perspective on the destructive array of private sector incentives created by central bank manipulations of the supplies of money and credit

Continue reading “Explaining Malinvestment and Overinvestment”

Transitory Inflation or Stagflation?

Doug French

(Originally posted on Mises.org)

Bloomberg uses the price of a certain bike, the Santa Cruz Hightower C R, to make the case that price inflation is upon us. This bike will set you back $4,749, a 10 percent leap from the first of the year. By the way, I have three bikes for sale on OfferUp, each priced at less than 10 percent of the fancy Hightower. No one even wants to negotiate. I’m not so sure there has been an outbreak in bike riding, despite Justin Blum’s assertion that “Americans went on a bike-buying binge at the start of the Covid-19 lockdown, to get exercise, avoid public transportation or entertain kids stuck at home.” Here in Las Vegas, currently 105 degrees as I write, I don’t see too many bikers. 

Continue reading “Transitory Inflation or Stagflation?”

Central Banks See No Way out of the Low Interest Rate Trap

Thomas Mayer

Gunther Schnabl

(Originally posted on Mises.org)

Since the 1980s, slower economic growth in the industrial countries has been accompanied by declining interest rates. They have even turned negative in more recent years. At the same time, investment, productivity, and real GDP growth all have slowed. Recession caused by lockdowns of the economy to fight the corona pandemic in 2020/21 has accelerated the demise of interest. Even as the world economy recovers, central bankers around the world have signaled that interest rates will be kept low for a long time to come. What is going on here? Various economists have provided different theoretical and empirical explanations for the global decline of interest rates.

Continue reading “Central Banks See No Way out of the Low Interest Rate Trap”