Achieving sound money

by | Oct 9, 2015 | Money

Constitutional prohibitions It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it...

Systemic risk

by | Oct 9, 2015 | Money

What can be done to prevent a disastrous collapse in credit in the first place? Forbid force-fed credit First and foremost the government should be prohibited from creating debt instruments, lending to banks, injecting liquidity into banks, setting interest rates,...

How government should deal with recession

by | Oct 9, 2015 | Money

Recessions are good Recessions are necessary to enable businesses and individuals to reconnect with reality and to address inefficiencies and misallocation of capital. Although many people suffer pain in the process, the net result is overwhelmingly beneficial. It is...

The credit cycle (credit inflation and deflation)

by | Oct 9, 2015 | Money

Fractional reserve banking Centuries ago merchants would deposit their gold coins for safekeeping with a goldsmith. The goldsmith would give the depositor a note which could be used to redeem the gold. Soon merchants found it more convenient to exchange the notes...

Exchange rates

by | Oct 8, 2015 | Money

Exchange rates reflect national prosperity. If a country is prosperous it will create surplus goods sought by the rest of the world. The rest of the world will need to purchase domestic currency to pay for those goods, and that will cause the currency to rise in...