Category Archives: Economics (Monetary)

“Money Heist”: State Counterfeiting on TV


Money Heist: State Counterfeiting on TV

By Duncan Whitmore

At first, Money Heist seems little different from any run-of-the-mill “cops vs. bad guys” series. A well-prepared group of eight, small time criminals, previously unknown to each other and using city names as pseudonyms, hijacks the Spanish Royal Mint in Madrid. Directed from the outside by their leader, the mysterious “Professor”, they capture tens of Mint staff and visitors to hold as hostages, including (deliberately) the teenage daughter of a prominent politician. Scores of armed police soon surround the building at the beginning of what turns into an epic, eleven-day siege.

One initial question concerns the objective of the hijackers. Is it robbery? Ransom? Terrorism? It soon becomes clear that the group, in spite of being armed to the hilt and having sequestered a major government institution, is imbued with an interesting set of morals. For they intend to neither a) kill anyone (although circumstance forces this scruple to be breached) nor b) steal as much as a penny from anyone’s bank account. They do, as it happens, intend to leave the Mint with more than one billion euros in cash. This, however, they plan to achieve by spending their eleven days holed up in the Mint printing the money they want (with the aid of the captured staff, whom they bribe with some of the loot) instead of raiding the vaults for cash that already exists. Their clever plan, therefore, is to escape with untold riches without having harmed a soul while, in the process, embarrassing the authorities and winning the sympathy of the public as “loveable rogues”. Read more

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Why Libertarians Should Read Mises – Part Three


Why Libertarians Should Read Mises 

Part Three 

By Duncan Whitmore

In this final part of three essays exploring the importance of Ludwig von Mises’ for libertarian thought, we will examine Mises’ views on the fundamental importance of economics in society, and the meaning of this for understanding the particular nature of the state and statism in our own time. We will then conclude (in a separate post) with an annotated bibliography of Mises’ major works.

 The Fundamental Importance of Economics in Society

Mises had a particularly insightful understanding of the special, foundational status of economics and the influence of economic theory in human society. In his own words:

Economics […] is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man’s human existence.

[…]

Economics deals with society’s fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen.

[…]

The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built. It rests with men whether they will make the proper use of the rich treasure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race.1

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Economic Myths #12 – The Deflation Danger


Politicians and mainstream economists are persistent in their warning of the so-called “deflation danger” – the idea that falling prices are calamitous for economic progress and that a perpetual, ceaseless price inflation is needed in order to bring us back to prosperity. Often, a deflation figure as small as 0.6% seems to be sufficient to trigger alarm – something of an hilarious travesty when, regardless of the merits of the deflation thesis, this figure amounts to little more than a rounding error.

The typical argument against deflation runs something like this: with continuous price deflation people expect prices to be lower tomorrow than they are today so that, as a result, they put off their purchases until a later date. This, in turn, causes prices to fall further and further and so we end up in an endless downward spiral of depression and impoverishment. Inflating prices, however, cause people to buy today so that they may insulate themselves from future price rises, thus bringing about economic prosperity and an increase in the standard of living. Read more

Economic Myths #6 – Price Stability


One of the mandates that our economic lords and masters have arrogated for themselves is that of maintaining so-called price stability, a constant purchasing power of the monetary unit in our wallets.

At first blush, price stability sounds rather appealing – not only does it “bless” us with the apparition of certainty but are we not also “protected” by the potential of higher prices in the future? If so we can assure ourselves that our cost of living will be sustained and manageable, relieved of the horror that the essential consumables may some day be out of our reach.

Unfortunately this ambition is not only disastrous for a complex economy but is also antithetical to the nature of human action in the first place. The whole purpose of economising action is to attempt to achieve more for less – to direct the scarce resources available to their most highly valued ends and to gain the highest possible outputs with the lowest possible inputs. In short, economic progress means that we are gradually able to attain more and more for the same amount of labour; or, to put it another way, we could attain the same quantity of goods for a lower amount of labour. Any consistent attempt to stabilise the prices in the economy would not only target the goods that we buy with our money but also the goods that we sell – and that, for most of us, means our labour! But if we cannot sell our labour for any more and if we cannot buy our wares for any less then it means that we will simply be locked into a repetitive cycle of working, buying, consuming and working again for the same prices for the whole of our lives with no improvement in the standard of living whatsoever. Instead of economic progress bringing goods at cheaper prices to the lowest earners, the only way to improve one’s wellbeing in such a world would be to become a higher earner – i.e. by working harder or longer. Read more

Economic Myths #5 – Banking is Capitalist


By both mainstream economists and the general public the cycle of “boom and bust” is believed to be a tendency inherent in any capitalist economy. The fact that the latest of such cycles, beginning in 2008 (and arguably not having ended), originated in the banking sector and that large banks and bankers ratcheted up huge earnings and bonuses only to cause disaster has implicated banking as representative of the very worst aspects of capitalism – the epitome of uncontrollable greed that ends in catastrophe.

Unfortunately this popular view of the mainstream could not be further from the truth. In fact, with its intimate ties to the state and its special, legal privileges it is hard to imagine a less capitalistic industry than banking. Part of the deception – wilfully inflamed by politicians and their lackeys – is one that engulfs other industries subject to state meddling such as utilities markets. This is the belief that, simply because the participants in the industry in question are private individuals or entities that are not officially part of the state, the enterprise must be classified as part of the free market and saddled with all of the supposed flaws of that system. Very often, however, private companies and brands are simply the public facade of what is essentially a state owned operation or state controlled cartel. Read more

Economic Myths #1 – Rising Prices = Economic Recovery


Economic Myths #1 = Rising Prices = Economic Recovery

By Duncan Whitmore

Author’s Note: This is in the first in a series of short posts which will seek to rebut popular, but wrong, economic beliefs.

One of the positive indicators of our so-called economic recovery bandied about not only in the media but also by our monetary lords and masters at the head of central banks is the idea that rising prices are a sign of economic recovery. This mistaken belief is part of a wider myth that views the economy as little more than a giant number – a number which, if going up, means things are good and getting better, and if going down means the situation is bad and getting worse.

Theoretically the market price for any good is never “good” or “bad”; it is simply a function of the supply and demand for that good. The only way in which we can say that the market price is “good” is that both parties to a transaction are satisfied with that price and, thus, both have received an increase in welfare as a result.

That aside, however, surely economic progress is marked by an increasing abundance of goods and services – that more and more stuff is being produced for each hour of work? Therefore, if goods and services are increasing in supply then shouldn’t this lead to decreasing prices rather than increasing prices? If so, then increasing prices must indicate the opposite – a decreasing supply of goods relative to the money used to buy them and, consequently, greater impoverishment. Read more

The Quality of Money


By Swithun Dobson

What is the purpose of money? Where does it come from? Inequality generates trade and specialisation creates the need for money .  A good money is widely marketable and must function as a genuine store of value, thus paper money should be consigned to the board game Monopoly.

Inequality Leads To Trade

In a state of subsistence farming money need not exist,  since a family, for example the Robinsons, might produce all the requirements for survival (food, shelter, clothing, water etc) and so have no reason to trade; however as soon as they come into contact with another family, the Andersons, group trade is possible and thus money could arise. Yet, why would anyone bother trading with another group in the first place? Mises cites three reasons:

  1. The natural inequality of man regarding their abilities to perform a task.
  2. The geographically unequal distribution of natural resources.
  3. Certain tasks require more than the labour of one man.[1]

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